Document:

exv10w4

Exhibit 10.4

EXECUTION COPY

 

INTELLECTUAL PROPERTY LICENSE AGREEMENT

between

NORTHROP GRUMMAN SYSTEMS CORPORATION

and

NORTHROP GRUMMAN SHIPBUILDING, INC.

Dated as of March 29, 2011

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	Section 1.1 Table of Definitions
	 	 	1	 
	Section 1.2 Certain Defined Terms
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II GRANT OF LICENSES
	 	 	4	 
	 
	 	 	 	 
	Section 2.1 Grant of Licenses
	 	 	4	 
	Section 2.2 Have Made Rights
	 	 	5	 
	Section 2.3 Right to Sublicense
	 	 	5	 
	Section 2.4 Licensed Software
	 	 	5	 
	Section 2.5 Delivery of Embodiments of IP
	 	 	6	 
	Section 2.6 Jointly Developed Intellectual Property
	 	 	6	 
	Section 2.7 Use of Intellectual Property in Connection with
Certain Intercompany Arrangements
	 	 	6	 
	Section 2.8 License to Use Background Intellectual Property
	 	 	7	 
	 
	 	 	 	 
	ARTICLE III OWNERSHIP
	 	 	8	 
	 
	 	 	 	 
	Section 3.1 Ownership
	 	 	8	 
	Section 3.2 Ownership of Improvements and Derivative Works
	 	 	8	 
	Section 3.3 No Other License
	 	 	8	 
	Section 3.4 Prosecution and Maintenance
	 	 	8	 
	 
	 	 	 	 
	ARTICLE IV CONFIDENTIALITY
	 	 	8	 
	 
	 	 	 	 
	Section 4.1 Proprietary Information
	 	 	8	 
	Section 4.2 Confidentiality
	 	 	9	 
	Section 4.3 Limited Exception
	 	 	10	 
	Section 4.4 Unauthorized Disclosure
	 	 	10	 
	 
	 	 	 	 
	ARTICLE V REPRESENTATIONS; DISCLAIMER
	 	 	10	 
	 
	 	 	 	 
	Section 5.1 Mutual Representations
	 	 	10	 
	Section 5.2 Disclaimer
	 	 	11	 
	Section 5.3 Limitations on Liability
	 	 	11	 
	Section 5.4 Indemnification
	 	 	11	 
	 
	 	 	 	 
	ARTICLE VI TERM
	 	 	11	 
	 
	 	 	 	 
	Section 6.1 Term
	 	 	11	 

 

 

TABLE OF CONTENTS

(Continued)

	 	 	 	 	 
	 	 	Page	 
	ARTICLE VII TRANSFERABILITY
	 	 	12	 
	 
	 	 	 	 
	Section 7.1 Assignment
	 	 	12	 
	 
	 	 	 	 
	ARTICLE VIII GENERAL PROVISIONS
	 	 	12	 
	 
	 	 	 	 
	Section 8.1 Amendment and Modification
	 	 	12	 
	Section 8.2 Waiver
	 	 	12	 
	Section 8.3 Notices
	 	 	13	 
	Section 8.4 Interpretation
	 	 	13	 
	Section 8.5 Entire Agreement
	 	 	14	 
	Section 8.6 No Third-Party Beneficiaries
	 	 	14	 
	Section 8.7 Governing Law
	 	 	14	 
	Section 8.8 Submission to Jurisdiction
	 	 	14	 
	Section 8.9 Enforcement
	 	 	15	 
	Section 8.10 Severability
	 	 	15	 
	Section 8.11 Waiver of Jury Trial
	 	 	15	 
	Section 8.12 Counterparts
	 	 	15	 
	Section 8.13 Facsimile Signature
	 	 	15	 
	Section 8.14 Effect if Distribution Does Not Occur
	 	 	16	 

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INTELLECTUAL PROPERTY LICENSE AGREEMENT

     INTELLECTUAL PROPERTY LICENSE AGREEMENT, dated as of March 29, 2011 (this “License
Agreement”), between Northrop Grumman Systems Corporation, a Delaware corporation
(“NGSC”) and Northrop Grumman Shipbuilding, Inc., a Virginia corporation (“NGSB”).

RECITALS

     A. NGSC, NGSB, Northrop Grumman Corporation, a Delaware corporation (“NGC”), New P,
Inc., a Delaware corporation (“New NGC”), and Huntington Ingalls Industries, Inc., a
Delaware corporation (“HII”), have entered into the Separation and Distribution Agreement
(the “Separation Agreement”), dated as of the date hereof, pursuant to which New NGC
intends to distribute to its stockholders its entire interest in HII by way of a stock dividend
(the “Distribution”).

     B. Following the Distribution, NGSC will be a wholly owned subsidiary of New NGC (which will
be renamed “Northrop Grumman Corporation”) and NGSB will be a wholly owned subsidiary of HII.

     C. The parties wish to set forth their agreements as to certain matters regarding Intellectual
Property (as defined below) under which each party shall grant to the other a non-exclusive license
of the Intellectual Property owned by such party or any of its Affiliates that is used by the other
party in the conduct of their respective businesses and within the Field of Use (as defined below).

AGREEMENT

     In consideration of the foregoing and the mutual covenants and agreements herein contained,
and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I

DEFINITIONS

     Section 1.1 Table of Definitions. The following terms have the meanings set forth on
the pages referenced below:

	 	 	 	 	 
	Definition	 	Page	 
	Affiliate 
	 	 	2	 
	Background Intellectual Property 
	 	 	7	 
	Background IP Owner 
	 	 	7	 
	Business Day 
	 	 	2	 
	Designated Intellectual Property 
	 	 	2	 
	Disclosing Party 
	 	 	8	 
	Distribution 
	 	 	1	 
	Field of Use 
	 	 	2	 
	Foreground Intellectual Property 
	 	 	7	 

 

 

	 	 	 	 	 
	Definition	 	Page	 
	Foreground IP Owner 
	 	 	7	 
	Governmental Authority 
	 	 	3	 
	HII 
	 	 	1	 
	Improved Software 
	 	 	5	 
	Indemnifying Party 
	 	 	11	 
	Intellectual Property 
	 	 	3	 
	License Agreement 
	 	 	1	 
	Licensed Intellectual Property 
	 	 	3	 
	Licensee 
	 	 	3	 
	Licensor 
	 	 	3	 
	Licensor Indemnitees 
	 	 	11	 
	Line of Business 
	 	 	3	 
	New NGC 
	 	 	1	 
	NGC 
	 	 	1	 
	NGSB 
	 	 	1	 
	NGSC 
	 	 	1	 
	Person 
	 	 	3	 
	Proprietary Information 
	 	 	8	 
	Receiving Party 
	 	 	8	 
	Relevant Usage Period 
	 	 	4	 
	Separation Agreement 
	 	 	1	 
	Software 
	 	 	4	 
	Subsidiary 
	 	 	4	 

     Section 1.2 Certain Defined Terms. For the purposes of this License
Agreement:

          “Affiliate” of any Person means a Person that controls, is controlled by, or is under
common control with such Person; provided, however, that for purposes of this
License Agreement, none of the New NGC Entities (as defined in the Separation Agreement) shall be
deemed to be an Affiliate of any HII Entity (as defined in the Separation Agreement) and none of
the HII Entities shall be deemed to be an Affiliate of any New NGC Entity. As used herein,
“control” means the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such entity, whether through ownership of voting
securities or other interests, by contract or otherwise.

          “Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to close.

          “Designated Intellectual Property” means the Intellectual Property identified on
Schedule C.

          “Field of Use” means, (a) as to any Licensed Intellectual Property other than the
Designated Intellectual Property, the use of such Intellectual Property that the Licensee

2

 

has made in the ordinary course of its business in the Relevant Usage Period prior to and including the
Distribution, including the general manner and scope of such use in the Line of Business for which
the Intellectual Property has been used during such Relevant Usage Period and (b) as to any
Designated Intellectual Property, the applicable field of use specified on Schedule C. In
the event of a dispute between the parties as to whether a particular use by a Licensee of Licensed
Intellectual Property licensed to such Licensee is within the applicable Field of Use, the Licensee
will have the burden of proof by a preponderance of the evidence. For the avoidance of doubt, the
general manner and scope of such use shall include broad uses of the Intellectual Property, such as
use in customer proposals.

          “Governmental Authority” means any United States or non-United States federal, state,
local, territorial, tribal or international court, government, department, commission, board,
bureau, agency, official or other legislative, judicial, regulatory, administrative or governmental
authority.

          “Intellectual Property” or “IP” means all of the following intellectual
property rights, whether arising under the laws of the United States or the laws of any other
jurisdiction: (a) patents, (b) copyrights, (c) trade secrets, know-how and other confidential and
proprietary information, and (d) all registrations and applications for registration of any of the
foregoing, but excluding (e) trademarks, service marks, domain names and similar rights.

          “Licensed Intellectual Property” means (a) all Intellectual Property owned by a party
or any of its Affiliates as of the Distribution that, in the Relevant Usage Period prior to or at
the time of the Distribution, has been or is being used by the other party or any of its Affiliates
in the ordinary course of such other party’s or any of its Affiliate’s businesses, excluding any
such Intellectual Property that prior to the Distribution, has been or is being used by the other
party or any of the other party’s Affiliates solely in connection with such other party or such
other party’s Affiliate performing as a party to an intercompany teaming agreement, intercompany
work order or similar intercompany agreement with such party or any of its Affiliates and (b) the
Designated Intellectual Property.

          “Licensee” means, collectively, a party and its Affiliates in their capacity as
licensees to which a license of Licensed Intellectual Property is granted by Licensor hereunder.

          “Licensor” means, collectively, a party and its Affiliates in their capacity as
licensors of Licensed Intellectual Property that is licensed to Licensee hereunder.

          “Line of Business” means a set of one or more highly related products which service a
particular business need.

          “Person” means an individual, corporation, partnership, limited liability company,
limited liability partnership, syndicate, person, trust, association, organization or

3

 

other entity, including any Governmental Authority, and including any successor, by merger or otherwise, of any
of the foregoing.

          “Relevant Usage Period” means the 12-month period prior to the Distribution.

          “Software” means computer software and databases, together with, as applicable, object
code, source code, firmware and embedded versions thereof and documentation related thereto.

          “Subsidiary” of any Person means any corporation or other organization, whether
incorporated or unincorporated, of which at least a majority of the securities or interests having
by the terms thereof ordinary voting power to elect at least a majority of the board of directors
or others performing similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries; provided,
however, that no Person that is not directly or indirectly wholly owned by any other Person
shall be a Subsidiary of such other Person unless such other Person controls, or has the right,
power or ability to control, that Person.

ARTICLE II

GRANT OF LICENSES

     Section 2.1 Grant of Licenses.

          (a) Subject to the terms and conditions of this License Agreement, each Licensor hereby grants
to the respective Licensee a non-exclusive, worldwide, fully paid, non-transferable (except as
expressly provided in Article VII), irrevocable and perpetual license, solely within such
Licensee’s Field of Use, to:

               (i) make (including the right to use any apparatus and practice any method in making), have
made, make improvements on, use, import, offer for sale, lease, sell and/or otherwise transfer
products and provide services under the patents included in such Licensor’s Licensed Intellectual
Property (including any patents that hereafter issue on patent applications that are pending as of
the Distribution);

               (ii) use, reproduce, distribute, prepare derivative works of, and publicly perform and
publicly display any original works of authorship (or any derivative works based thereon) that are
the subject of any of the copyrights included in such Licensor’s Licensed Intellectual Property;
and

               (iii) use and exploit any know-how or other trade secrets or proprietary information included
in such Licensor’s Licensed Intellectual Property, subject to compliance with the confidentiality
obligations set forth in Article IV.

          (b) Each party shall cause its Affiliates to grant the licenses contemplated to be granted by
such Affiliates hereunder and to perform all of their

4

 

obligations imposed hereunder, including the
confidentiality obligations set forth in Article IV.

          (c) Each Licensee will, and will cause its Affiliates to, comply with the Field of Use and all
other limitations or restrictions imposed under this License Agreement with respect to its and its
Affiliates’ use of the Licensed Intellectual Property licensed to it and its Affiliates hereunder.

     Section 2.2 Have Made Rights. The licenses granted in Sections 2.1(a)(i) by the
applicable Licensor to the applicable Licensee to have products made by a third party or to import
products: (a) apply only when the specifications for such Licensee’s products were created by or
specifically for Licensee (either solely or jointly with one or more third parties), (b) extend
only to those claims of Licensor’s licensed patents, the infringement of which would be
necessitated by compliance with such specifications and (c) do not apply to any methods used, or
any products in substantially the same form manufactured or marketed, by such third party, prior to
Licensee’s furnishing of such specifications.

     Section 2.3 Right to Sublicense. Except as otherwise provided on Schedule C
with respect to the Designated Intellectual Property, each Licensee shall have the right to
sublicense freely the rights and licenses granted by the applicable Licensor pursuant to Section
2.1(a) to Licensee’s contractors, sub-contractors and agents for use solely in connection with the
operation of Licensee’s business and within the Field of Use. Each Licensee shall ensure that all
such permitted sublicensees shall abide by the terms and conditions of this License Agreement, to
the extent applicable, and all such grants of sublicenses shall be made in writing and executed by
all parties thereto.

     Section 2.4 Licensed Software. The parties agree and acknowledge that any Software
that is licensed under this License Agreement shall be licensed only in the form in which it is
being used by the Licensee in the ordinary course of its business in the Relevant Usage Period
prior to and including the Distribution; provided that, in the case of any Software included in the
Designated Intellectual Property, such Software will be licensed in the form specified on
Schedule C. Accordingly, in the case of Software that is not included in the Designated
Intellectual Property, if a Licensee is using any source code of any Software licensed to it
hereunder by the Licensor in the ordinary course of its business in the Relevant Usage Period prior
to and including the Distribution, such Licensee will be permitted to retain such source code and
the licenses granted under Section 2.1(a) to such Licensee shall extend to such source code.
Notwithstanding the foregoing, for the Software identified on Schedule B hereto that is
undergoing improvement or as to which a derivative work is being prepared (“Improved
Software”), the parties agree and acknowledge that any such Improved
Software that is licensed under this License Agreement shall be licensed in such form existing immediately after successful
completion of testing of the improvement and/or derivative works that is in process of being made
or prepared as of the Distribution, even if such form comes into existence after the Distribution.
The respective Licensor hereby agrees to deliver such Improved Software in the licensed form, as
soon as practicable after successful completion of testing of the improvement and/or derivative work. Thereafter, the
Licensor shall have no further obligation to deliver any improvements or derivative works of such
Improved

5

 

 Software to each Licensee under this License Agreement. Accordingly, for such Improved
Software that has been used by the Licensee in source code form in the ordinary course of its
business in the Relevant Usage Period prior to and including the Distribution, such Licensee will
be permitted to obtain such source code in the form existing immediately after such successful
completion of testing and the licenses granted under Section 2.1(a) to such Licensee shall extend
to such source code. For the avoidance of doubt, this License Agreement provides for the licensing
of Intellectual Property that is owned by a party or an Affiliate thereof and nothing in this
License Agreement provides for any sublicensing of Software or any other Intellectual Property that
is owned by a third party or any assignment of any license of Software or any other Intellectual
Property that is owned by a third party.

     Section 2.5 Delivery of Embodiments of IP. To the extent that a Licensee is not in
possession as of the Distribution of any embodiment of Licensed Intellectual Property licensed to
such Licensee hereunder, the respective Licensor hereby agrees to deliver to such Licensee upon
request, as soon as practicable after the Distribution, copies of all such embodiments of such
Licensed Intellectual Property. Thereafter, each Licensor shall have no further obligation to
deliver any Licensed Intellectual Property, or copies thereof, to each Licensee under this License
Agreement. Each Licensor shall have no further access to, or any obligation to maintain or
service, any electronic copies of such Licensed Intellectual Property that is delivered to the
Licensee.

     Section 2.6 Jointly Developed Intellectual Property. If either party or any of its
Affiliates materially contributed to the development of any Intellectual Property that is owned by
the other party or any of the other party’s Affiliates as of the Distribution, and such
Intellectual Property does not constitute Licensed Intellectual Property that is licensed to such
party and such party’s Affiliates hereunder, the other party agrees that, if such party requests
that it and its Affiliates be granted a license to use such Intellectual Property within the scope
of their Lines of Business existing as of the Distribution, the other party will consider in good
faith granting such requested license.

     Section 2.7 Use of Intellectual Property in Connection with Certain Intercompany
Arrangements. Any Intellectual Property that, at the time of the Distribution, (a) is owned by
any member of the New NGC Group (as defined in the Separation Agreement), but is in the possession
of, or is being used by, a member of the HII Group (as defined in the Separation Agreement) in
connection with such member of the HII Group performing as a party to an intercompany teaming
agreement, intercompany work order or similar intercompany agreement with a member of the New NGC
Group, shall be licensed by such member of the New NGC Group to such member of the HII Group
pursuant to the terms of any intellectual property license granted to such member of the HII Group
in the applicable intercompany agreement or, if the applicable intercompany agreement does not set
forth the terms of such intellectual property license, then pursuant to the terms of an
intellectual property license that such member of the New NGC Group and such member of the HII
Group shall negotiate in good faith promptly after the Distribution, or (b) is owned by any member
of the HII Group, but is in the possession of,
or is being used by, a member of the New NGC Group in connection with such member of the New
NGC Group performing as a party to an intercompany teaming agreement,

6

 

intercompany work order or similar intercompany agreement with a member of the HII Group, shall be licensed by such member of
the HII Group to such member of the New NGC Group pursuant to the terms of any intellectual
property license granted to such member of the New NGC Group in the applicable intercompany
agreement or, if the applicable intercompany agreement does not set forth the terms of such
intellectual property license, then pursuant to the terms of an intellectual property license that
such member of the HII Group and such member of the New NGC Group shall negotiate in good faith
promptly after the Distribution.

     Section 2.8 License to Use Background Intellectual Property.

          (a) “Background Intellectual Property” means, with respect to an Intellectual Property
asset owned by one party or any of its Affiliates (“Foreground Intellectual Property”),
Intellectual Property that was owned by the other party or any of the other party’s Affiliates
prior to the creation or development of such Foreground Intellectual Property, and that is
essential to the effective use or practice of such Foreground Intellectual Property.

          (b) “Background IP Owner” means the party or any of its Affiliates that owns the
Background Intellectual Property.

          (c) “Foreground IP Owner” means the party or its Affiliates that owns or has been
licensed the Foreground Intellectual Property.

          (d) The Background IP Owner hereby grants to the Foreground IP Owner a non-exclusive,
worldwide, fully paid, irrevocable and perpetual license to use or practice and have had practiced
such Background Intellectual Property of the Background IP Owner that is essential to the effective
use or practice of the Foreground Intellectual Property.

          (e) The licenses granted in Section 2.8(d) shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. Notwithstanding any
other provisions in this License Agreement, the Foreground IP Owner shall not assign (in whole or
in part) or sublicense any licensed Background Intellectual Property to any known competitor of the
Background IP Owner in the technical field of such Background Intellectual Property.

          (f) As a further limitation on the provisions of Section 4.2(a), in the case of licensed
Background Intellectual Property, in maintaining the confidentiality of Proprietary Information of
the Disclosing Party related to such Background Intellectual Property, the Foreground IP Owner
shall not disclose or give access to any such Proprietary Information to any known competitor of
the Background IP Owner in the technical field of such Background Intellectual Property.

7

 

ARTICLE III

OWNERSHIP

     Section 3.1 Ownership. Each Licensee acknowledges that, as between the parties, each
Licensor owns all right, title and interest in and to its Licensed Intellectual Property. Each
Licensee agrees that it shall not, directly or indirectly, challenge the validity, enforceability
or ownership of the respective Licensor’s Licensed Intellectual Property.

     Section 3.2 Ownership of Improvements and Derivative Works. Each party or its
applicable Affiliate will own exclusively all improvements and derivative works created or
developed by such party or its Affiliate that are derived from or based on any Licensed
Intellectual Property licensed from the other party hereunder, subject to the other party’s
retained ownership of the Licensed Intellectual Property on which such improvements and derivative
works are based or from which they are derived. Other than for Improved Software as provided in
Section 2.4, neither party (nor any Affiliate thereof) shall have any obligation to disclose or
license any such improvements or derivative works to the other party.

     Section 3.3 No Other License. Except as expressly provided in this License Agreement,
nothing herein shall be construed as granting to a party any license or other rights under any
other Intellectual Property rights of the other party whether by implication or estoppel. Nothing
herein shall grant either party, in selling or promoting the sale of products or services, the
right to directly or indirectly use or refer to the trademarks or trademark type rights of the
other party or trademarks or other marks and names similar thereto.

     Section 3.4 Prosecution and Maintenance. Each Licensor shall have the sole and
exclusive right, but not the obligation, at its sole cost and expense: (a) to file, prosecute,
obtain and maintain, throughout the world, any patents, patent applications and other registrations
or applications for registration included in the Licensed Intellectual Property owned by such
Licensor, and (b) to conduct or participate, throughout the world, in any interference,
reexaminaton, opposition, cancellation, nullification and other interpartes, ex partes or other
types of proceedings before the U.S. Patent & Trademark Office and similar authorities, registries
or agencies, and all appeals thereof (regardless of forum) involving or relating to such Licensed
Intellectual Property. The manner in which any such filing, prosecution, maintenance or any other
action is conducted by such Licensor under this Section 3.4 shall be in such Licensor’s sole
control and discretion.

ARTICLE IV

CONFIDENTIALITY

     Section 4.1 Proprietary Information. For the purposes hereof, “Proprietary
Information” of a party (the “Disclosing Party”) means all business sensitive and/or
proprietary information of the Disclosing Party disclosed to, or in the possession of, the other
party (the “Receiving Party”), whether disclosed orally, verbally, visually,
electronically, in tangible form or otherwise, and regardless of whether marked, denoted or

8

 

otherwise indicated as “business sensitive,” “proprietary,” “private” or words of similar import.
Proprietary Information of Licensor shall include trade secrets and other business sensitive and
proprietary information included in the Licensed Intellectual Property, as well as any business
and/or sensitive information that has been made available by a Party or any of its Affiliates to
the other party or any of the other party’s Affiliates in connection with such other party or such
other party’s Affiliate performing as a party to an intercompany teaming agreement, intercompany
work order or similar intercompany agreement.

     Section 4.2 Confidentiality.

          (a) In maintaining the confidentiality of Proprietary Information of the Disclosing Party, the
Receiving Party shall exercise the same degree of care that it exercises with its own Proprietary
Information, but in no event less than a reasonable degree of care. Without limiting any of the
foregoing, the Receiving Party shall not disclose or give access to any such Proprietary
Information to any third party, other than its personnel, sublicensees or customers pursuant to
contract requirements, without the prior written consent of the Disclosing Party. The Receiving
Party shall restrict access to such Proprietary Information to those of its personnel and
sublicensees having a strict need for access thereto, and shall use commercially reasonable efforts
to ensure that each of its personnel and sublicensees holds in confidence the Proprietary
Information of the Disclosing Party in accordance with the terms and conditions hereof. The
Receiving Party shall, and shall cause its personnel and sublicensees to, make no use, directly or
indirectly, of any Proprietary Information of the Disclosing Party for any purpose other than as
authorized hereunder. The Receiving Party shall not copy or reproduce the Proprietary Information
or any portion thereof, or remove any tangible copies of the Proprietary Information or any portion
thereof from the Receiving Party’s facilities except as reasonably required in connection with
exercising the rights licensed hereunder or as expressly permitted by the Disclosing Party.

          (b) As a further limitation on the provisions of Section 4.2(a), in the case of assets listed
as Designated Intellectual Property, if Schedule C includes sublicensing limitations for an
asset and such sublicensing limitations prohibit sublicensing of such asset to known competitors
except under strict non-disclosure agreement, then in maintaining the confidentiality of
Proprietary Information of the Disclosing Party related to such asset, the Receiving Party shall
ensure that the strict non-disclosure agreement meets the non-disclosure requirements set forth at
the end of Schedule C.

          (c) The confidentiality obligations contained in Section 4.2(a) and (b) and Section 2.8(f)
shall not apply to any information that contemporaneous written records of the Receiving Party
demonstrate (a) was lawfully disclosed to the Receiving Party without restriction by an unrelated
third party who does not have any obligations of confidentiality to the Disclosing Party, (b) the
Receiving Party independently developed such information prior to the Distribution without any use
of or reference to the Proprietary Information of the Disclosing Party or (c) is or becomes part of
the public domain through no fault of the Receiving Party, it being understood that if only a
portion of any such information is or becomes part of the public domain (including by way of issued patents or

9

 

published patent applications), the confidentiality obligations of the Receiving Party with respect
to the rest of the Proprietary Information shall remain intact without modification.

     Section 4.3 Limited Exception. The obligation of confidentiality and non-disclosure
contained in this License Agreement shall not apply to the extent that the Receiving Party is
required to disclose any Proprietary Information of the Disclosing Party by a valid subpoena, order
or regulation of a governmental agency or a court of competent jurisdiction having jurisdiction
over the Receiving Party; provided, however, that the Receiving Party shall not
intentionally make any such disclosure without (a) first notifying the Disclosing Party and
allowing the Disclosing Party a reasonable opportunity to prevent or limit such disclosure (either
by challenging or quashing any such subpoena, order or regulation or obtaining injunctive relief
from, or a protective order with respect to, the obligation to make such disclosure), and (b)
reasonably cooperating, at Disclosing Party’s expense, with the Disclosing Party’s efforts to
prevent or limit such disclosure.

     Section 4.4 Unauthorized Disclosure. The Receiving Party acknowledges and confirms
that the Proprietary Information of the Disclosing Party constitutes proprietary information and
trade secrets valuable to the Disclosing Party, and that the unauthorized use, loss or outside
disclosure of such Proprietary Information shall cause irreparable injury to the Disclosing Party.
The Receiving Party shall notify the Disclosing Party immediately upon discovery of any
unauthorized use or disclosure of such Proprietary Information, and will cooperate with the
Disclosing Party in every reasonable way to help regain possession of such Proprietary Information
and to prevent its further unauthorized use. The Receiving Party acknowledges and agrees that
monetary damages may not be a sufficient remedy for unauthorized disclosure of Proprietary
Information of the Disclosing Party and that the Disclosing Party shall be entitled, without
waiving other rights or remedies, to such injunctive or equitable relief as may be deemed proper by
a court of competent jurisdiction. The prevailing party shall be entitled to recover reasonable
attorney’s fees incurred by it in connection with any action commenced by the Disclosing Party
against the Receiving Party arising out of or relating to any alleged disclosure of Proprietary
Information of the Disclosing Party by the Receiving Party in breach of this License Agreement.

ARTICLE V

REPRESENTATIONS; DISCLAIMER

     Section 5.1 Mutual Representations. Each party represents and warrants that (a) it
has the power and authority to enter into this License Agreement and has taken all necessary
corporate action to authorize its performance under this License Agreement; (b) this License
Agreement, when executed and delivered, will constitute a legal, valid and binding obligation of
each such party, enforceable in accordance with its terms; (c) no consent or authorization of,
filing with, or notice to any governmental authority is required in connection with its performance
under this License Agreement; and (d) its entering into this License Agreement or performance by it
hereunder will not violate any federal, state or local licensing or other statute, rule or
regulation, or any contractual obligation of such
party. Each party agrees to comply with all applicable Laws, rules and regulations in
connection with its activities under this License Agreement.

10

 

     Section 5.2 Disclaimer. Except as expressly set forth in this License Agreement, each
of the licenses of Licensed Intellectual Property granted by a Licensor hereunder are made “as-is”
and “where-is.” Each Licensor hereby disclaims all representations or warranties of any kind,
either express or implied, including any warranty of merchantability, fitness for a particular
purpose, non-infringement or any other matter with respect to any Licensed Intellectual Property
licensed by such Licensor, whether used alone or combined with other products or services.

     Section 5.3 Limitations on Liability. Except for any willful breach of Articles III
and IV, under no circumstances shall either party be liable to the other party for indirect,
incidental, consequential, punitive or exemplary damages (even if such other party has been advised
of the possibility of such damages) arising from a claim for breach of any provision of this
License Agreement. Notwithstanding the foregoing, the provisions of this Section 5.3 shall not
limit an Indemnifying Party’s indemnification obligations with respect to any Liability that any
Licensor Indemnitee may have to any third party that is not an Affiliate of any party.

     Section 5.4 Indemnification. Following the Distribution, each Licensee (an
“Indemnifying Party”) shall indemnify, defend and hold harmless the respective Licensor and
such Licensor’s Affiliates and its and their respective current, former and future directors,
officers and employees, and each of the heirs, executors, successors and assigns of any of the
foregoing (collectively, the “Licensor Indemnitees”), from and against any and all (a)
Third Party Claims (as defined in the Separation Agreement) asserted or brought against any of the
Licensor Indemnitees based on or relating to the exercise by the Indemnifying Party or any of its
Affiliates of the license to use the Licensed Intellectual Property that is granted to such
Licensee or any such Affiliates hereunder or otherwise relating to the Indemnifying Party’s or any
of its Affiliates’ use of the Licensed Intellectual Property licensed hereunder and (b) all
Liabilities relating to, arising out of or resulting from any such Third Party Claims. The notice
and other indemnification procedures set forth in Sections 5.4, 5.5 (other than Section 5.5(b)),
5.6, 5.7 and 5.8 of the Separation Agreement that apply to indemnification claims arising under
Article V of the Separation Agreement are hereby incorporated by reference and shall apply to any
indemnification claims arising under this Section 5.4.

ARTICLE VI

TERM

     Section 6.1 Term. The rights granted to each party under this License Agreement shall
be irrevocable and perpetual and shall not be terminable by either party, and such rights shall
continue in full force and effect notwithstanding any breach by the other party hereunder;
provided that, if any Licensee breaches any limitations or restrictions imposed on it in
Sections 2.1, 2.2, 2.3 or 2.8 with respect to its use of any Intellectual Property licensed to it
hereunder, or materially breaches any confidentiality
obligations set forth in Article IV with respect to its use of any Intellectual Property
licensed to it hereunder, then, effective upon 30 days’ prior written notice by the Licensor to the
Licensee, such Intellectual Property thereafter shall be excluded from the Intellectual Property
licensed to the Licensee hereunder and, upon the expiration of such 30-day

11

 

period, Licensee shall cease any and all use of such Intellectual Property unless, prior to expiration of such 30-day
period, Licensee has fully cured such breach.

ARTICLE VII

TRANSFERABILITY

     Section 7.1 Assignment. This License Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns. Neither party
may assign this License Agreement without the prior written consent of the other party.
Notwithstanding the foregoing, either party may assign or otherwise transfer this License Agreement
or its rights hereunder, in whole or in part, to any of its Affiliates or to a third party in
connection with the sale of all or substantially all of the assets of such party or any of its
Affiliates to which this License Agreement pertains or in connection with a merger, consolidation,
corporate reorganization or any change of control of such party or any of its Affiliates or a sale
or divestiture of any of the product lines, operating units or business divisions of such party or
any of its Affiliates; provided that (a) the assigning party shall provide written notice
to the other party of any such assignment, and (b) such assignee shall agree to assume all
applicable obligations of the assigning party hereunder, and to be subject to the terms of this
License Agreement. For the avoidance of doubt, any permitted assignee of any license granted under
Article II of this License Agreement is subject to the Field of Use and all other limitations or
restrictions imposed under this License Agreement with respect to such license, including in
particular the Field of Use limitation that limits use of Licensed Intellectual Property to use by
and in the Line of Business where and as the Licensed Intellectual Property was used during the
Relevant Usage Period prior to the Distribution; provided further that, in the case of Designated
Intellectual Property, the applicable Field of Use limitation and the applicable Sublicensing
Limitations will continue to be as specified on Schedule C.

ARTICLE VIII

GENERAL PROVISIONS

     Section 8.1 Amendment and Modification. This License Agreement may not be amended,
modified or supplemented in any manner, whether by course of conduct or otherwise, except by an
instrument in writing specifically designated as an amendment hereto, signed on behalf of each
party.

     Section 8.2 Waiver. No failure or delay of any party in exercising any right or
remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce such right or power,
or any course of conduct, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the parties hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have hereunder. Any agreement on the
part of any party to any such waiver shall be valid
only if set forth in a written instrument executed and delivered by a duly authorized officer
on behalf of such party.

12

 

     Section 8.3 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or if
by facsimile, upon written confirmation of receipt by facsimile, e-mail or otherwise, (b) on the
first Business Day following the date of dispatch if delivered utilizing a next-day service by a
recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth Business Day
following the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth
below, or pursuant to such other instructions as may be designated in writing by the party to
receive such notice:

	 	 	 	 	 

	 

	 	(i)
	 	if to NGSC prior to the date on which New NGC relocates its
corporate headquarters, to:
	 
	 	 	 	 
	 

	 	 	 	c/o Northrop Grumman Corporation
	 

	 	 	 	1840 Century Park East
	 

	 	 	 	Los Angeles, CA 90067-2199
	 

	 	 	 	Attention: General Counsel
	 

	 	 	 	Facsimile: (310) 556-4910
	 
	 	 	 	 
	 

	 	(ii)
	 	if to NGSC after the date on which New NGC relocates its
corporate headquarters, to:
	 
	 	 	 	 
	 

	 	 	 	c/o Northrop Grumman Corporation
	 

	 	 	 	2980 Fairview Park Drive
	 

	 	 	 	Falls Church, VA 22042
	 

	 	 	 	Attention: General Counsel
	 

	 	 	 	Facsimile: (703) 875-1852
	 
	 	 	 	 
	 

	 	(iii)
	 	 if to NGSB, to:
	 
	 	 	 	 
	 

	 	 	 	c/o Huntington Ingalls Industries, Inc.
	 

	 	 	 	4101 Washington Avenue
	 

	 	 	 	Newport News, VA 23607
	 

	 	 	 	Attention: General Counsel
	 

	 	 	 	Facsimile: (757) 688-1408

     Section 8.4 Interpretation. When a reference is made in this License Agreement to a
Section, Article or Exhibit such reference shall be to a Section, Article or Exhibit of this
License Agreement unless otherwise indicated. The table of contents and headings contained in this
License Agreement or in any Exhibit are for convenience of reference purposes only and shall not
affect in any way the meaning or interpretation of this License Agreement. All words used in this
License Agreement will be construed to be of such gender or number as the circumstances require.
Any capitalized terms used in any Exhibit but not otherwise defined therein shall have the meaning
as defined in this License Agreement. All Exhibits annexed hereto or referred to herein are hereby
incorporated in and made a part of this License Agreement as if set forth herein. The word “including” and
words of similar import when used in this License Agreement shall mean “including, without
limitation,” unless otherwise specified. Where either party’s consent is required

13

 

hereunder, except as otherwise specified herein, such party’s consent may be granted or withheld in such
party’s sole and absolute discretion. The word “day” when used in this License Agreement shall
mean “calendar day,” unless otherwise specified.

     Section 8.5 Entire Agreement. This License Agreement, the Separation Agreement and
the Exhibits, Schedules and Appendices hereto and thereto constitute the entire agreement, and
supersedes all prior written agreements, arrangements, communications and understandings and all
prior and contemporaneous oral agreements, arrangements, communications and understandings among
the parties with respect to the subject matter hereof. This License Agreement shall not be deemed
to contain or imply any restriction, covenant, representation, warranty, agreement or undertaking
of any party with respect to the transactions contemplated hereby other than those expressly set
forth herein or in any document required to be delivered hereunder. Notwithstanding any oral
agreement or course of action of the parties or their representatives to the contrary, no party to
this License Agreement shall be under any legal obligation to enter into or complete the
transactions contemplated hereby unless and until this License Agreement shall have been executed
and delivered by each of the parties.

     Section 8.6 No Third-Party Beneficiaries. Nothing in this License Agreement, express
or implied, is intended to or shall confer upon any Person other than the parties and their
respective successors and permitted assigns any legal or equitable right, benefit or remedy of any
nature under or by reason of this License Agreement.

     Section 8.7 Governing Law. This License Agreement and all disputes or controversies
arising out of or relating to this License Agreement or the transactions contemplated hereby shall
be governed by, and construed in accordance with, the internal laws of the State of New York,
without regard to the laws of any other jurisdiction that might be applied because of the conflicts
of laws principles of the State of New York (other than Section 5-1401 of the New York General
Obligations Law).

     Section 8.8 Submission to Jurisdiction. Each of the parties irrevocably agrees that
any legal action or proceeding arising out of or relating to this License Agreement brought by any
other party or its successors or assigns shall be brought and determined in any federal court
sitting in the Borough of Manhattan in the City of New York (or, if such court lacks subject matter
jurisdiction, in any appropriate New York State or federal court), and each of the parties hereby
irrevocably submits to the exclusive jurisdiction of the aforesaid courts for itself and with
respect to its property, generally and unconditionally, with regard to any such action or
proceeding arising out of or relating to this License Agreement and the transactions contemplated
hereby. Each of the parties agrees not to commence any action, suit or proceeding relating thereto
except in the courts described above in New York, other than actions in any court of competent
jurisdiction to enforce any judgment, decree or award rendered by any such court in New York as
described herein. Each of the parties further agrees that notice as provided in Section 8.3 shall
constitute sufficient service of process and the parties further waive any argument that such
service is insufficient. Each of the parties hereby irrevocably and unconditionally waives,
and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any
action or proceeding arising out of or relating to this License Agreement or the

14

 

transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the
courts in New York as described herein, (b) that it or its property is exempt or immune from
jurisdiction of any such court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such
court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is
improper or (iii) this License Agreement, or the subject matter hereof, may not be enforced in or
by such courts.

     Section 8.9 Enforcement. The parties agree that irreparable damage would occur in the
event that any of the provisions of this License Agreement were not performed in accordance with
their specific terms or were otherwise breached. Accordingly, each of the parties shall be
entitled to specific performance of the terms hereof, including an injunction or injunctions to
prevent breaches of this License Agreement and to enforce specifically the terms and provisions of
this License Agreement in any federal court sitting in the Borough of Manhattan in the City of New
York (or, if such court lacks subject matter jurisdiction, in any appropriate New York State or
federal court), this being in addition to any other remedy to which such party is entitled at law
or in equity. Each of the parties hereby further waives (a) any defense in any action for specific
performance that a remedy at law would be adequate and (b) any requirement under any law to post
security as a prerequisite to obtaining equitable relief.

     Section 8.10 Severability. Whenever possible, each provision or portion of any
provision of this License Agreement shall be interpreted in such manner as to be effective and
valid under applicable Law, but if any provision or portion of any provision of this License
Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law
or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any
other provision or portion of any provision in such jurisdiction, and this License Agreement shall
be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained herein.

     Section 8.11 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS LICENSE AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS LICENSE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     Section 8.12 Counterparts. This License Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same instrument and shall become
effective when one or more counterparts have been signed by each of the parties and delivered to
the other parties.

     Section 8.13 Facsimile Signature. This License Agreement may be executed by facsimile
signature and a facsimile signature shall constitute an original for all purposes.

15

 

     Section 8.14 Effect if Distribution Does Not Occur. If the Distribution does not
occur, then this License Agreement shall automatically be terminated and all actions and events
that are, under this License Agreement, to be taken or occur effective as of the Distribution, or
otherwise in connection with the Distribution shall not be taken or occur except to the extent
specifically agreed by the parties.

[The remainder of this page is intentionally left blank.]

16

 

     IN WITNESS WHEREOF, the parties have caused this License Agreement to be executed as of the
date first written above by their respective officers thereunto duly authorized.

	 	 	 	 	 
	 	NORTHROP GRUMMAN SYSTEMS CORPORATION

 	 
	 	By:  	/s/  Mark Rabinowitz
 	 
	 	 	Name:  	Mark Rabinowitz 	 
	 	 	Title:  	President and Treasurer 	 
	 
	 	NORTHROP GRUMMAN SHIPBUILDING, INC.

 	 
	 	By:  	/s/ C. Michael Petters
 	 
	 	 	Name:  	C. Michael Petters 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

[Signature Page to Intellectual Property License Agreement]exv10w5

Exhibit 10.5

EXECUTION COPY

 

TAX MATTERS AGREEMENT

by and among

NEW P, INC.

(to be renamed NORTHROP GRUMMAN CORPORATION),

HUNTINGTON INGALLS INDUSTRIES, INC.

and

NORTHROP GRUMMAN CORPORATION

(to be renamed TITAN II INC.)

Dated as of March 29, 2011

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 

	ARTICLE 1 DEFINITIONS
	 	 	2	 
	 
	 	 	 	 
	Section 1.1 Definitions
	 	 	2	 
	Section 1.2 Table of Additional Defined Terms
	 	 	7	 
	 
	 	 	 	 
	ARTICLE 2 PREPARATION AND FILING OF TAX RETURNS, PAYMENT OF TAXES DUE AFTER THE DISTRIBUTION DATE, AND
ADJUSTMENT REQUESTS
	 	 	8	 
	 
	 	 	 	 
	Section 2.1 Current Tax Group Federal Consolidated Returns
	 	 	8	 
	Section 2.2 New NGC Non-Federal Tax Returns
	 	 	8	 
	Section 2.3 HII Tax Returns
	 	 	8	 
	Section 2.4 Adjustment Requests
	 	 	9	 
	Section 2.5 Procedures
	 	 	9	 
	 
	 	 	 	 
	ARTICLE 3 GENERAL INDEMNIFICATION FOR TAXES
	 	 	9	 
	 
	 	 	 	 
	Section 3.1 Indemnification by New NGC
	 	 	9	 
	Section 3.2 Indemnification by HII
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 4 REFUNDS AND CARRYBACKS
	 	 	10	 
	 
	 	 	 	 
	Section 4.1 Refunds
	 	 	10	 
	Section 4.2 Carrybacks
	 	 	10	 
	 
	 	 	 	 
	ARTICLE 5 TAX PROCEEDINGS
	 	 	12	 
	 
	 	 	 	 
	Section 5.1 Control of Tax Proceedings
	 	 	12	 
	Section 5.2 Notices Relating to Tax Proceedings
	 	 	13	 
	Section 5.3 Statute of Limitations
	 	 	14	 
	 
	 	 	 	 
	ARTICLE 6 PAYMENTS BETWEEN HII AND NEW NGC FOR CERTAIN INCOME TAX ADJUSTMENTS
	 	 	14	 
	 
	 	 	 	 
	Section 6.1 Payments by HII to New NGC
	 	 	14	 
	Section 6.2 Payments by New NGC to HII
	 	 	15	 
	Section 6.3 Threshold Amount
	 	 	16	 
	Section 6.4 Separate Entity Provisions
	 	 	16	 
	Section 6.5 Acknowledgement
	 	 	17	 
	 
	 	 	 	 
	ARTICLE 7 ALLOCATION, CHARACTER, AND TREATMENT OF CERTAIN TAX ITEMS AND TRANSACTIONS
	 	 	17	 
	 
	 	 	 	 
	Section 7.1 Allocation of Certain Tax Items
	 	 	17	 
	Section 7.2 Tax Treatment of Payments between the Parties
	 	 	18	 
	Section 7.3 Tax Treatment of Novations of Shipbuilding Liabilities and Retained Liabilities
	 	 	18	 
	Section 7.4 Accounting Methods
	 	 	19	 
	Section 7.5 Indemnification for Taking Contrary Tax Treatment
	 	 	20	 
	Section 7.6 Tax Attributes
	 	 	21	 

 

 

TABLE OF CONTENTS

(Continued)

	 	 	 	 	 

	ARTICLE 8 TAX-FREE STATUS OF THE TRANSACTIONS
	 	 	21	 
	 
	 	 	 	 
	Section 8.1 Covenants, Undertakings, Agreements, Representations, and Warranties
	 	 	21	 
	Section 8.2 Restrictions Relating to the Distribution
	 	 	23	 
	Section 8.3 Procedures Regarding Rulings and Opinions
	 	 	26	 
	Section 8.4 Indemnification
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 9 COOPERATION
	 	 	28	 
	 
	 	 	 	 
	Section 9.1 General Cooperation
	 	 	28	 
	Section 9.2 Retention of Records
	 	 	29	 
	Section 9.3 Confidentiality
	 	 	29	 
	 
	 	 	 	 
	ARTICLE 10 NGC AS CURRENT TAX GROUP AGENT
	 	 	29	 
	 
	 	 	 	 
	Section 10.1 Purpose
	 	 	29	 
	Section 10.2 NGC Tax Officer
	 	 	29	 
	Section 10.3 Payments of Tax and Receipt of Refunds
	 	 	31	 
	Section 10.4 Indemnification
	 	 	31	 
	Section 10.5 Designation of Substitute Current Tax Group Agent
	 	 	32	 
	 
	 	 	 	 
	ARTICLE 11 MISCELLANEOUS
	 	 	32	 
	 
	 	 	 	 
	Section 11.1 Timing of Payments; Interest
	 	 	32	 
	Section 11.2 Dispute Resolution
	 	 	32	 
	Section 11.3 Survival of Covenants
	 	 	34	 
	Section 11.4 Termination of Agreements, Arrangements and Policies
	 	 	34	 
	Section 11.5 Severability
	 	 	34	 
	Section 11.6 Entire Agreement
	 	 	35	 
	Section 11.7 Assignment
	 	 	35	 
	Section 11.8 No Third-Party Beneficiaries
	 	 	35	 
	Section 11.9 Specific Performance and Other Equitable Relief
	 	 	35	 
	Section 11.10 Waiver of Jury Trial
	 	 	35	 
	Section 11.11 Governing Law
	 	 	36	 
	Section 11.12 Amendment
	 	 	36	 
	Section 11.13 Rules of Construction
	 	 	36	 
	Section 11.14 Notices
	 	 	36	 
	Section 11.15 Counterparts
	 	 	39	 
	Section 11.16 Coordination with the Employee Matters Agreement
	 	 	39	 
	Section 11.17 Conflict or Inconsistency Between Agreements
	 	 	39	 
	Section 11.18 Termination of this Agreement
	 	 	39	 
	 
	 	 	 	 
	EXHIBITS
	 	 	 	 
	 
	 	 	 	 
	Exhibit A            Form of Letter Waiving Conflict of Interest
	 	 	 	 
	Exhibit B            Form of Designation of Substitute Agent
	 	 	 	 

ii

 

TAX MATTERS AGREEMENT

     THIS TAX MATTERS AGREEMENT, dated as of March 29, 2011 (this “Agreement”), is made by
and among NEW P, INC., a Delaware corporation (“New NGC”), HUNTINGTON INGALLS INDUSTRIES,
INC., a Delaware corporation (“HII”), and NORTHROP GRUMMAN CORPORATION, a Delaware
corporation (“NGC”). Each of New NGC, HII and NGC is sometimes referred to herein as a
“Party”, and, collectively, New NGC, HII and NGC are referred to as the “Parties”.

RECITALS

     A. NGC, acting through itself and its direct and indirect Subsidiaries, currently conducts the
Shipbuilding Business and the Retained Business.

     B. The board of directors of NGC has determined that it is appropriate, desirable and in the
best interests of NGC and its stockholders to separate NGC into two publicly traded companies: (a)
HII, which following the Distribution, will own and conduct, directly and indirectly, the
Shipbuilding Business, and (b) New NGC, which, following the Distribution, will own and conduct,
directly and indirectly, the Retained Business.

     C. The Parties have entered into the Separation and Distribution Agreement, dated as of March
24, 2011 (the “Separation and Distribution Agreement”), pursuant to which they will
undertake the Holding Company Reorganization, the Internal Reorganization, and the Distribution
(each as defined in the Separation and Distribution Agreement) (collectively, the
“Transactions”).

     D. The Parties have entered into the Ancillary Agreements (as defined in the Separation and
Distribution Agreement), pursuant to which they will undertake certain other transactions and
arrangements relating to the separation of the Shipbuilding Business from the Retained Business.

     E. Prior to the Distribution, NGC will be renamed “Titan II Inc.” and New NGC will be renamed
“Northrop Grumman Corporation.”

     F. NGC is the common parent of an affiliated group of corporations that files consolidated
U.S. federal Income Tax Returns (the “Current Federal Tax Group”) and consolidated and
combined Tax Returns in certain other jurisdictions (each a “Current Non-Federal Tax Group”
and, collectively with the Current Federal Tax Group, the “Current Tax Group”), and NGC is
the Current Tax Group Agent for the Current Tax Group Members.

     G. Following the Distribution, HII will be the common parent of an affiliated group of
corporations that files consolidated U.S. federal Income Tax Returns and consolidated or combined
Tax Returns in certain other jurisdictions (the “HII Tax Group”), and HII will be the agent
for the HII Tax Group Members.

     H. Following the Distribution, the Current Federal Tax Group and certain Current Non-Federal
Tax Groups will remain in existence with all their respective previous Members other than the HII
Group Members.

1

 

     I. Following the Distribution, (1) New NGC will be the common parent of the Current Tax Group
and will be the Current Tax Group Agent with respect to U.S. federal Income Tax matters for Taxable
Periods ending December 31, 2011 and thereafter; and (2) New NGC will be the common parent of
certain Current Non-Federal Tax Groups and will be the Current Tax Group Agent with respect to
certain Tax matters (other than U.S. federal Income Tax matters) for certain Post-Distribution
Taxable Periods.

     J. Following the Distribution, and until NGC’s corporate existence terminates (or until the
relevant Tax Authority consents to or requires the appointment of a substitute Current Tax Group
Agent), (1) NGC will continue to be the Current Tax Group Agent with respect to U.S. federal Income
Tax matters for Taxable Periods ending on or prior to December 31, 2010; and (2) NGC will continue
to be the Current Tax Group Agent with respect to certain Tax matters (other than U.S. federal
Income Tax matters) for certain Pre-Distribution Taxable Periods.

     K. The Parties intend that, for U.S. federal Income Tax purposes, the Transactions shall
qualify for Tax-Free Status pursuant to Sections 351, 355, 361, 368(a) and related provisions of
the Code, and, in furtherance of such intent NGC has obtained the IRS Ruling and entered into the
IRS Closing Agreement.

     L. The Parties wish to provide for the payment of Tax liabilities and entitlement to refunds
thereof, to allocate responsibility for, and cooperation in, the filing of Tax Returns, to set
forth covenants, undertakings, agreements, representations, warranties, and indemnities relating to
the Tax-Free Status of the Transactions, to provide for the exercise of NGC’s functions as Current
Tax Group Agent, and to provide for certain other matters relating to Taxes.

AGREEMENT

     In consideration of the foregoing and the mutual covenants and agreements herein contained,
and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE 1

DEFINITIONS

     Section 1.1 Definitions.

     For the purposes of this Agreement:

     “Accounting Method” means a method of accounting under Section 446 of the Code.

     “Adjustment Request” means any formal or informal written claim or request made to a
Tax Authority by an NGC Group Member, a New NGC Group Member, or an HII Group
Member for an adjustment to Taxes, whether such adjustment is positive or negative (by refund,
credit, offset, or otherwise), including (i) an amended Tax Return claiming an adjustment to Taxes
as reported on the originally filed Tax Return or, if applicable, as previously adjusted or (ii) a
self-initiated adjustment or similar claim made, during the course of a Tax Proceeding or
otherwise. Such term shall not include an adjustment to Tax initiated by a Tax Authority during a
Tax Proceeding.

2

 

     “Affiliate” has the meaning set forth in the Separation and Distribution Agreement.

     “Agency Regulations” means Treasury Regulations Section 1.1502-77 and any similar
regulation in another Tax jurisdiction.

     “Business Day” has the meaning set forth in the Separation and Distribution Agreement.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Current Tax Group Agent” means the sole agent authorized to act in its own name for
Members of the Current Tax Group with respect to matters relating to liability for U.S. federal
Income Taxes and any other Taxes to which such agency applies.

     “Current Tax Group Federal Consolidated Return” means a U.S. federal Income Tax Return
filed or required to be filed by NGC or New NGC as the common parent of the Current Tax Group.

     “Current Tax Group Member” means a member of a Current Tax Group for a relevant
Taxable Period (or portion of a Taxable Period).

     “Distribution” has the meaning set forth in the Separation and Distribution Agreement.

     “Distribution Date” has the meaning set forth in the Separation and Distribution
Agreement.

     “Employee Matters Agreement” has the meaning set forth in the Separation and
Distribution Agreement.

     “Final Determination” means the final resolution of liability for any Tax, for any
issue and for any Taxable Period, by or as a result of (i) IRS Form 870-AD (or any successor form)
or a comparable form under any state, local or foreign law on the date of acceptance by or on
behalf of the relevant Tax Authority, except that a Form 870-AD or comparable form that reserves
the right of the taxpayer to file a claim for refund and/or the right of the Tax Authority to
assert a further deficiency shall not constitute a Final Determination with respect to the item or
items so reserved, (ii) a final decision, judgment, decree or other order by any court of competent
jurisdiction that can no longer be appealed or reheard, (iii) a closing agreement or similar
agreement entered into with a Tax Authority in connection with an administrative or judicial
proceeding, (iv) an allowance of a refund or credit in respect of an overpayment of Tax, but only
after the expiration of all periods of limitations during which such refund or credit may be
recovered by the jurisdiction imposing the Tax, (v) any other final resolution, including by
reason of the expiration of the applicable period of limitations or the execution of a pre-filing
agreement with the applicable Tax Authority, or (vi) the occurrence of any event which the parties
agree in writing is a Final Determination.

     “HII Group” means, for any relevant time beginning immediately after the Distribution,
HII and each Subsidiary of HII at such time.

3

 

     “HII Group Member” means HII, each Person that is a Subsidiary of HII immediately
after the Distribution (including NGC), and each Person that becomes a Subsidiary of HII after the
Distribution.

     “HII Tax Group Member” means a member of the HII Tax Group for a relevant Taxable
Period (or portion of a Taxable Period).

     “HII Tax Return” means a Tax Return filed or required to be filed by an HII Group
Member after the Distribution Date (excluding a Tax Return filed or required to be filed by NGC for
a Pre-Distribution Taxable Period or a Straddle Taxable Period and, for avoidance of doubt,
excluding a New NGC Non-Federal Tax Return and a Current Tax Group Federal Consolidated Return).

     “Holding Company Reorganization” has the meaning set forth in the Separation and
Distribution Agreement.

     “Income Tax” means a Tax based upon, measured by, or calculated with respect to (i)
net income or profits or net receipts (including, but not limited to, any capital gains, minimum
Tax or any Tax on items of Tax preference, but not including sales, use, real or personal property,
or transfer or similar Taxes) or (ii) multiple bases (including corporate franchise, doing business
and occupation Taxes) if one or more bases upon which such Tax may be based, by which such Tax may
be measured, or with respect to which such Tax may be calculated, is described in clause (i).

     “Income Tax Adjustment” means any change in any Income Tax Item, whether resulting
from a Tax Proceeding or an Adjustment Request; provided, however, that a claim for
refund resulting from a carryback of a loss, credit or other Tax Attribute in a Post-Distribution
Taxable Period to a Pre-Distribution Taxable Period or a Straddle Taxable Period is not an Income
Tax Adjustment.

     “Income Tax Item” means any item of income, gain, loss, deduction, credit, recapture
of credit, or any other item (including the adjusted basis of property) relating to the
determination of Income Taxes payable in any Taxable Period.

     “Income Tax Return” means any Tax Return relating to Income Taxes.

     “Independent Firm” means a nationally recognized law firm or accounting firm which, at
the relevant time, does not provide, and within the preceding two years has not provided,
substantial services to any of the Parties.

     “Information” has the meaning set forth in the Separation and Distribution Agreement.

     “Internal Reorganization” has the meaning set forth in the Separation and Distribution
Agreement.

     “IRS” means the U.S. Internal Revenue Service or any successor thereto.

4

 

     “IRS Closing Agreement” means the closing agreement, effective February 14, 2011,
between NGC (as parent of the Current Federal Tax Group), HII (as the parent of the HII Tax Group)
and the IRS, entered into in connection with the Transactions and the IRS Ruling.

     “IRS Ruling” means the U.S. federal income tax private letter ruling, issued October
14, 2010, and the supplement thereto, issued February 14, 2011, by the IRS in connection with the
Transactions.

     “Law” has the meaning set forth in the Separation and Distribution Agreement.

     “Member” refers to an NGC Group Member, a Current Tax Group Member, an HII Group
Member, an HII Tax Group Member or a New NGC Group Member, as the case may be.

     “New NGC Group” means, for any relevant time beginning immediately after the
Distribution, New NGC and each Subsidiary of New NGC at such time.

     “New NGC Group Member” means New NGC, each Person that is a Subsidiary of New NGC
immediately after the Distribution, and each Person that becomes a Subsidiary of New NGC after the
Distribution.

     “New NGC Non-Federal Tax Return” means a Tax Return (other than a Current Tax Group
Federal Consolidated Return) (i) that is filed or required to be filed by a New NGC Group Member
after the Distribution Date or (ii) that is filed or required to be filed after the Distribution
Date and includes an Income Tax Item or an asset of a New NGC Group Member, or otherwise relates to
the Retained Business (which shall include a Tax Return that is required to be filed after the
Distribution Date that includes an Income Tax Item or an asset of a New NGC Group Member and an
Income Tax Item or an asset of an HII Group Member).

     “NGC Group” means, for any relevant time ending immediately before the Holding Company
Reorganization, NGC and each Subsidiary of NGC at such time.

     “NGC Group Member” means NGC and each Subsidiary of NGC at any time before the Holding
Company Reorganization.

     “NGC Non-Federal Tax Return” means a Tax Return, other than a Current Tax Group
Federal Consolidated Return, required to be filed by an NGC Group Member prior to or on the
Distribution Date.

     “NGC Tax Officer” means the officer of NGC with full authority with respect to Tax
matters.

     “Opinion” means the opinion of Tax Counsel, dated March 14, 2011, with respect to
certain Tax aspects of the Transactions.

     “Person” has the meaning set forth in the Separation and Distribution Agreement.

     “Post-Distribution Taxable Period” means any Taxable Period (or portion thereof)
beginning after the Distribution Date.

5

 

     “Pre-Distribution Taxable Period” means any Taxable Period (or portion thereof) ending
on or before the Distribution Date.

     “Refund” means any refund of Taxes (including any overpayment of Taxes that can be
refunded or, alternatively, applied to other Taxes payable), including any interest paid on or with
respect to such refund of Taxes.

     “Retained Business” has the meaning set forth in the Separation and Distribution
Agreement.

     “Retained Liabilities” has the meaning set forth in the Separation and Distribution
Agreement.

     “Shared Gain” has the meaning set forth in the Separation and Distribution Agreement.

     “Shared Liability” has the meaning set forth in the Separation and Distribution
Agreement.

     “Shipbuilding Business” has the meaning set forth in the Separation and Distribution
Agreement.

     “Shipbuilding Liabilities” has the meaning set forth in the Separation and
Distribution Agreement.

     “Straddle Taxable Period” means a Taxable Period that begins on or before and ends
after the Distribution Date.

     “Subsidiary” has the meaning set forth in the Separation and Distribution Agreement.

     “Tax” means (i) a tax, charge, fee, duty, levy, impost or other similar assessment,
imposed by any U.S. federal, state or local or foreign governmental authority, including, but not
limited to, income, gross receipts, excise, property, sales, use, license, stock, franchise,
payroll, employment, withholding, social security, transfer, value added and other taxes, (ii)
interest attributable thereto, (iii) a penalty or addition attributable thereto or to a failure to
file a Tax Return or a form, schedule or information properly includible thereon, and (iv) a
liability in respect of any item described in clause (i), (ii) or (iii), payable by reason of
assumption, transferee or successor liability, operation of Law or several liability pursuant to
Treasury Regulations Section 1.1502-6(a).

     “Tax Attribute” means a net operating loss, capital loss, earnings and profits,
overall foreign loss, previously taxed income, separate limitation loss, and any other Tax
attribute.

     “Tax Authority” means a governmental authority or subdivision, agency, commission or
entity thereof or a quasi-governmental or private body having jurisdiction over the assessment,
determination, collection or imposition of a Tax (including the IRS).

     “Tax Counsel” means Ivins, Phillips & Barker, Chartered.

6

 

     “Tax-Free Status” means the Tax treatment accorded to the Transactions as set forth in
the IRS Ruling and the Opinion.

     “Tax Group” means any U.S. federal, state, local or foreign affiliated, consolidated,
combined, unitary or similar group or fiscal unity that joins in the filing of a single Tax Return.

     “Tax Materials” means, collectively, (i) the IRS Ruling, (ii) the IRS Closing
Agreement, (iii) each submission to the IRS in connection with the IRS Ruling, (iv) the Opinion,
(v) the representation letters from NGC, New NGC and HII, addressed to Tax Counsel supporting the
Opinion, and (vi) any other materials delivered or deliverable by NGC, New NGC or HII in connection
with the issuance of the IRS Ruling, the negotiation, drafting, execution and approval of the IRS
Closing Agreement and the rendering of the Opinion.

     “Tax Matters Dispute” means a dispute arising in connection with this Agreement
between the Parties, other than a Tax Proceeding (except to the extent provided in Section 5.1) or
a Tax Agency Dispute.

     “Tax Proceeding” means any audit, examination, investigation, action, suit, claim,
assessment, appeal, Adjustment Request, or other administrative or judicial proceeding relating to
Taxes.

     “Tax Return” means (i) a return, report, certificate, form or similar statement or
document (including any related or supporting information or schedule attached thereto and any
information return, or declaration of estimated Tax) required to be supplied to, or filed with, a
Tax Authority in connection with the payment, determination, assessment or collection of a Tax or
the administration of a Law relating to a Tax or (ii) an amended Tax Return.

     “Taxable Period” means any period for which a liability for Tax is determined.

     “Transactions Tax” means a Tax imposed on the Holding Company Reorganization, the
Internal Reorganization, or the Distribution, or by reason of a failure of the Holding Company
Reorganization, the Internal Reorganization, or the Distribution to qualify for Tax-Free Status
(including an intercompany transaction triggered by reason of such failure).

     “Treasury Regulations” means the final and temporary (but not proposed) Income Tax
regulations promulgated under the Code, as in effect at the relevant time (including any successor
regulation or rule of law), and any similar regulation or rule of law promulgated by another
relevant jurisdiction.

     “Unqualified Tax Opinion” means a “will” opinion, without substantive qualification,
rendered by a nationally recognized law firm, which law firm is reasonably acceptable to New NGC,
to the effect that a transaction or event, or a series of transactions and/or events, will not
affect the Tax-Free Status of the Transactions.

     Section 1.2 Table of Additional Defined Terms.

     The following terms have the meanings set forth in the Sections referenced below:

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	Definition	 	Section
	Agreement

	 	Preamble
	Carryback Election Request

	 	Section 4.2(b)(i)
	Current Federal Tax Group

	 	Recital F
	Current Non-Federal Tax Group

	 	Recital F
	Current Tax Group

	 	Recital F
	HII

	 	Preamble
	HII Restricted Action

	 	Section 8.2(c)
	HII Tax Group

	 	Recital G
	New NGC

	 	Preamble
	NGC

	 	Preamble
	Parties

	 	Preamble
	Party

	 	Preamble
	Payee Party

	 	Section 6.3(a)
	Payor Party

	 	Section 6.3(a)
	Restriction Period

	 	Section 8.2(c)
	Separation and Distribution Agreement

	Recital C
	Tax Arbitrator

	 	Section 11.2(b)
	Threshold Amount

	 	Section 6.3(a)
	Transactions

	 	Recital C

ARTICLE 2

PREPARATION AND FILING OF TAX RETURNS,

PAYMENT OF TAXES DUE AFTER THE DISTRIBUTION DATE,

AND ADJUSTMENT REQUESTS

     Section 2.1 Current Tax Group Federal Consolidated Returns.

     New NGC shall be responsible for preparing and filing all Current Tax Group Federal
Consolidated Returns filed or required to be filed after the Distribution Date and for paying all
Taxes shown payable on all such Tax Returns.

     Section 2.2 New NGC Non-Federal Tax Returns.

     New NGC shall be responsible for preparing and filing, or causing the relevant New NGC Group
Member to prepare and file, all New NGC Non-Federal Tax Returns and for paying or causing such New
NGC Group Member to pay all Taxes shown as payable on all New NGC Non-Federal Tax Returns.

     Section 2.3 HII Tax Returns.

     HII shall be responsible for preparing and filing, or causing the relevant HII Group Member to
prepare and file, all HII Tax Returns. HII shall pay or cause such HII Group Member to pay to the
appropriate Tax Authority all Taxes shown as payable on all HII Tax Returns.

8

 

     Section 2.4 Adjustment Requests.

     (a) New NGC Adjustment Requests. New NGC shall, in its sole discretion, be permitted
to make, or to decline to make, an Adjustment Request relating to an NGC Non-Federal Tax Return, a
Current Tax Group Federal Consolidated Return or a New NGC Non-Federal Tax Return, subject, in each
case, to ARTICLE 5.

     (b) HII Adjustment Requests. HII shall, in its sole discretion, be permitted to make,
or to decline to make, an Adjustment Request relating to any HII Tax Return.

     Section 2.5 Procedures.

     (a) In connection with the preparation of any Current Tax Group Federal Consolidated Return
pursuant to Section 2.1, any New NGC Non-Federal Tax Return pursuant to Section 2.2, or any
Adjustment Request pursuant to Section 2.4, HII shall, at its own cost and expense, provide pro
forma Tax Returns or equivalent financial and other data relating to HII and any relevant HII Group
Member, to be used in the preparation of such Tax Return or Adjustment Request, in accordance with
past practices, procedures, Accounting Methods, elections, and conventions, and shall assist and
cooperate with New NGC in any other manner reasonably requested by New NGC.

     (b) To the extent provided in ARTICLE 10, New NGC shall perform the actions described in
Section 2.1, Section 2.2, and Section 2.4(a) through NGC, the NGC Tax Officer and persons
designated by the NGC Tax Officer, at New NGC’s sole cost and expense.

     (c) In connection with the preparation of any HII Tax Return filed pursuant to Section 2.3,
New NGC shall, at its own cost and expense, assist and cooperate with HII in any manner reasonably
requested by HII.

     (d) Except as otherwise provided in this Agreement, each Party shall bear its own costs and
expenses incurred in connection with this ARTICLE 2.

ARTICLE 3

GENERAL INDEMNIFICATION FOR TAXES

     Section 3.1 Indemnification by New NGC.

     New NGC shall be responsible for paying, and shall indemnify and hold each HII Group Member
harmless from and against, (a) Taxes shown as payable on, and any increase in Taxes payable with
respect to, NGC Non-Federal Tax Returns, Current Tax Group Federal Consolidated Returns, and New
NGC Non-Federal Tax Returns, and (b) any other Taxes payable by New NGC Group Members or relating
to the Retained Business; provided, however, that New NGC’s obligations pursuant to
this Section 3.1 shall be separate from New NGC’s obligations to HII pursuant to Section 6.2,
Section 7.5, Section 8.4(b), and Section 10.4; provided further, that New NGC’s
obligations pursuant to this Section 3.1 shall not affect HII’s obligations to New NGC pursuant to
Section 6.1, Section 7.5, Section 8.4(a), and Section 10.4.

9

 

     Section 3.2 Indemnification by HII.

     HII shall be responsible for paying, and shall indemnify and hold each New NGC Group Member
harmless from and against, (a) Taxes shown as payable on, and any increase in Taxes payable with
respect to, HII Tax Returns and (b) any other Taxes payable by HII Group Members or relating to the
Shipbuilding Business for any Post-Distribution Taxable Period; provided, however,
that HII’s obligations pursuant to this Section 3.2 shall be separate from HII’s obligations to New
NGC pursuant to Section 6.1, Section 7.5, Section 8.4(a), and Section 10.4(a); provided
further that HII’s obligations pursuant to this Section 3.2 shall not affect New NGC’s
obligations to HII pursuant to Section 6.2, Section 7.5, Section 8.4(b), and Section 10.4.

ARTICLE 4

REFUNDS AND CARRYBACKS

     Section 4.1 Refunds.

     (a) New NGC shall be entitled to any Refund due with respect to an NGC Non-Federal Tax Return,
a Current Tax Group Federal Consolidated Return, and a New NGC Non-Federal Tax Return;
provided, however, that New NGC’s receipt of a Refund with respect to any such Tax
Return shall not affect New NGC’s obligations to HII pursuant to Section 6.2, Section
7.5, or Section 8.4(b) and shall not affect HII’s obligations to New NGC pursuant to Section
6.1, Section 7.5, or Section 8.4(a). If a Refund due with respect to an NGC Non-Federal Tax
Return, a Current Tax Group Federal Consolidated Return, or a New NGC Non-Federal Tax Return is
paid to an HII Group Member (including NGC) by a Tax Authority, such Member shall remit such Refund
to New NGC.

     (b) HII shall be entitled to any Refund due with respect to an HII Tax Return;
provided, however, that HII’s receipt of a Refund with respect to any such Tax
Return shall not affect HII’s obligations to New NGC pursuant to Section 6.1, Section 7.5, or
Section 8.4(a) and shall not affect New NGC’s obligations to HII pursuant to Section 6.2, Section
7.5, or Section 8.4(b). Except as provided in Section 4.2(b), if a Refund due with respect to an
HII Tax Return is paid to a New NGC Group Member by a Tax Authority, such Member shall remit such
Refund to HII.

     (c) To the extent provided in ARTICLE 10, New NGC shall perform the actions described in this
ARTICLE 4 through NGC, the NGC Tax Officer and persons designated by the NGC Tax Officer, at New
NGC’s sole cost and expense.

     Section 4.2 Carrybacks.

     (a) New NGC Carrybacks.

     (i) If the Current Tax Group or a New NGC Group Member realizes a loss, credit, or other
Tax Attribute that may be carried back to a Pre-Distribution Taxable Period or a Straddle
Taxable Period (whether by (i) electing to carry back such loss, credit, or other Tax
Attribute to a Pre-Distribution Taxable Period or a Straddle Taxable Period, or (ii) not
electing to waive the carryback of such loss, credit, or other Tax Attribute to a
Pre-Distribution Taxable Period or a Straddle Taxable Period), the Current Tax Group or such

10

 

Member may, in its sole discretion, carry back such loss, credit, or other Tax Attribute to
such Pre-Distribution Taxable Period or a Straddle Taxable Period. HII shall cooperate with
New NGC in seeking any Refund resulting from such carryback, at New NGC’s cost and expense.
New NGC shall be entitled to any Refund resulting from a carryback pursuant to this Section
4.2(a)(i). If any such Refund is paid to an HII Group Member (including NGC) by a Tax
Authority, such Member shall remit such Refund to New NGC.

     (ii) Notwithstanding Section 4.2(a)(i), if by Law the New NGC Group or a New NGC Group
Member may utilize a loss, credit, or other Tax Attribute only by a carryback of such loss,
credit, or other Tax Attribute to a Pre-Distribution Taxable Period or a Straddle Taxable
Period, HII shall cooperate with New NGC in seeking any Refund resulting from such carryback,
at New NGC’s cost and expense. New NGC shall be entitled to any Refund resulting from a
carryback pursuant to this Section 4.2(a)(ii).

     (b) HII Carrybacks.

     (i) If the HII Group or an HII Group Member realizes a loss, credit or other Tax
Attribute in a Post-Distribution Taxable Period that may be carried back to a Pre-Distribution
Taxable Period or a Straddle Taxable Period (whether by (i) electing to carry back such loss,
credit, or other Tax Attribute to a Pre-Distribution Taxable Period or a Straddle Taxable
Period, or (ii) not electing to waive the carryback of such loss, credit, or other Tax
Attribute to a Pre-Distribution Taxable Period or a Straddle Taxable Period), and HII wishes
to carry back such loss, credit, or other Tax Attribute to a Pre-Distribution Taxable Period
or a Straddle Taxable Period, HII shall notify New NGC in writing of HII’s wish to carry back
such loss, credit, or other Tax Attribute (a “Carryback Election Request”). A
Carryback Election Request shall include a computation of the amount of such loss, credit, or
other Tax Attribute, and a certification by an appropriate officer of HII setting forth HII’s
belief (together with supporting analysis) that the Tax treatment of such loss, credit, or
other Tax Attribute is more likely than not correct. New NGC shall have sole discretion to
deny a Carryback Election Request.

     (ii) New NGC may consent to the carryback of a loss, credit, or other Tax Attribute set
forth in the Carryback Election Request upon New NGC’s determination (in its sole discretion)
that the Parties have agreed to (A) the procedures for carrying back such loss, credit, or
other Tax Attribute (including by making an Adjustment Request, at HII’s cost and expense),
(B) the determination of the amount or portion of any Refund resulting from such carryback
that shall be paid to HII pursuant to this Section 4.2(b)(ii), and (C) the timing of any
payment to be made by New NGC to HII with respect to such carryback and any interest that
shall accrue on any late payment. To the extent any Refund subject to this Section 4.2(b)(ii)
is later reduced in a Final Determination, the Parties shall use their best efforts to agree
to the amount of such Refund that HII shall repay to New NGC, together with any interest,
fines, additions to Tax, penalties, or any additional amounts imposed by a Tax Authority
relating thereto.

     (iii) Notwithstanding Section 4.2(b)(ii), if by Law the HII Group or an HII Group Member
may utilize a loss, credit, or other Tax Attribute only by a carryback of such loss, credit,
or other Tax Attribute from a Post-Distribution Taxable Period to a New NGC

11

 

Non-Federal Tax
Return or an NGC Non-Federal Tax Return for a Pre-Distribution Taxable Period or a Straddle
Taxable Period, New NGC shall cooperate with HII in carrying back such loss, credit, or other
Tax Attribute (including by filing of an amended Current Tax Group Federal Consolidated Tax
Return, NGC Non-Federal Tax Return, or New NGC Non-Federal Tax Return or making an Adjustment
Request with respect to any such Tax Return, which shall be at HII’s cost and expense). The
Parties shall use their best efforts to agree with respect to the matters set forth in clauses
(A), (B) and (C) of Section 4.2(b)(ii). To the extent any Refund subject to this Section
4.2(b)(iii) is later reduced in a Final Determination, the Parties shall use their best
efforts to agree to the amount of such Refund that HII shall repay to New NGC, together with
any interest, fines, additions to Tax, penalties, or any additional amounts imposed by a Tax
Authority relating thereto.

ARTICLE 5

TAX PROCEEDINGS

     Section 5.1 Control of Tax Proceedings.

     (a) Control by New NGC.

     (i) New NGC shall be entitled to control and settle any Tax Proceeding relating to (A)
an NGC Non-Federal Tax Return, (B) a Current Tax Group Federal Consolidated Return, or (C) a
New NGC Non-Federal Tax Return (including, in each case, any Tax Proceedings relating to a
Transactions Tax).

     (ii) New NGC may take any and all actions necessary or incident to the control and
settlement of any Tax Proceeding relating to (A) an NGC Non-Federal Tax Return, (B) a
Current Tax Group Federal Consolidated Return (subject to the IRS Closing Agreement), or (C)
a New NGC Non-Federal Tax Return (including, in each case, any Tax Proceedings relating to a
Transactions Tax).

     (iii) To the extent provided in ARTICLE 10, New NGC shall perform any actions under
this ARTICLE 5 through NGC, the NGC Tax Officer and persons designated by the NGC Tax
Officer.

     (iv) If a settlement of a Tax Proceeding within the control of New NGC pursuant to this
ARTICLE 5 (or an action proposed to be taken with respect thereto) reasonably could be
expected to give rise to a payment by HII pursuant to Section 6.1, Section 7.5, or Section
8.4(a), or could be expected to give rise to a payment to HII pursuant to Section 6.2,
Section 7.5, or Section 8.4(b), then New NGC shall (and, if such Tax Proceeding is subject
to ARTICLE 10, shall cause NGC and the NGC Tax Officer to) provide copies of all
correspondence and all filings to be submitted to a Tax Authority or judicial authority in
connection with such Tax Proceeding for review by HII prior to submission to the Tax
Authority or judicial authority; provided, however, that failure by New NGC
to provide such correspondence to HII shall not relieve HII of any obligation pursuant to
Section 6.1, Section 7.5, or Section 8.4(a), except to the extent HII is actually prejudiced
by such failure.

12

 

     (v) New NGC shall (and, if such Tax Proceeding is subject to ARTICLE 10, shall cause
NGC and the NGC Tax Officer to) provide written notice to HII of any settlement with a Tax
Authority that reasonably could be expected to give rise to a payment by HII pursuant to
Section 6.1, Section 7.5, or Section 8.4(a), or a payment to HII pursuant to Section 6.2,
Section 7.5, or Section 8.4(b). HII shall not have the right to prevent any such settlement
but shall have the right to contest the amount of its liability to New NGC pursuant to
Section 6.1, Section 7.5, or Section 8.4(a) or the amount of its payment from New NGC
pursuant to Section 6.2, Section 7.5, or Section 8.4(b) resulting from such settlement. HII
shall provide written notice to New NGC of its intention to contest the amount of its
obligation to New NGC pursuant to Section 6.1, Section 7.5, or
Section 8.4(a) or the amount of New NGC’s obligation to HII pursuant to Section 6.2,
Section 7.5, or Section 8.4(b) prior to the time such settlement is entered into (but in any
event HII shall have no less than 10 days from the time it receives notice of such
settlement from New NGC to provide notice to New NGC of its intent to contest such
settlement). Any contest by HII pursuant to this Section 5.1(a)(v) shall be conducted as a
Tax Matters Dispute under the procedures set forth in Section 11.2. If the negotiations
required thereby are not successful, the Tax Arbitrator shall determine the amount of a
settlement with the relevant Tax Authority that would most accurately reflect the litigation
risk of the relevant issue. HII shall be liable to New NGC, or New NGC shall be liable to
HII, as the case may be, based solely on the determination of the Tax Arbitrator as if a
settlement implementing such determination had actually occurred, without regard to the
actual settlement with the Tax Authority. Neither HII nor New NGC shall be required to pay
any obligation arising from a contested settlement subject to this Section 5.1(a)(v) until
the contest is either decided by the Tax Arbitrator or resolved between the parties;
provided, however, that, pursuant to Section 11.1 interest shall accrue
with respect to such obligation with the written notice pursuant to this Section 5.1(a)(v)
treated as a demand for such payment.

     (b) Control by HII. HII shall be entitled to control, contest, compromise and settle
any adjustment proposed, asserted or assessed pursuant to any Tax Proceeding relating to any HII
Tax Return.

     Section 5.2 Notices Relating to Tax Proceedings.

     (a) Except as otherwise provided in Section 5.2(b), if any Party becomes aware of the
commencement of a Tax Proceeding that may give rise to Taxes for which another Party is responsible
pursuant to ARTICLE 3 or which may give rise to a payment obligation under ARTICLE 6, Section 7.5,
or Section 8.4, the Party that so becomes aware shall notify such other Party of such Tax
Proceeding within 10 days after so becoming aware and thereafter shall promptly provide to such
other Party copies of notices and communications relating to such Tax Proceeding.

     (b) If an HII Group Member (including NGC) receives a notice or correspondence relating to a
Tax Proceeding subject to Section 5.2(a), such HII Group Member shall promptly provide a copy of
such notice or correspondence to the NGC Tax Officer so as to allow New NGC to exercise the control
over such Tax Proceedings through NGC and the NGC Tax Officer, as provided in ARTICLE 10.

13

 

     (c) A failure by a Party to notify the other Party of the commencement of any such Tax
Proceeding or to forward any notice or communication, in either case in a timely manner, shall not
relieve the other Party of any obligation it may have pursuant to this Agreement, except to the
extent such Party is actually prejudiced by such failure.

     Section 5.3 Statute of Limitations.

     Any extension of the statute of limitations for any Taxes or a Tax Return for any
Pre-Distribution Taxable Period or a Straddle Taxable Period may be made only by the Party
responsible for the preparation and filing of such Tax Return pursuant to ARTICLE 2.

ARTICLE 6

PAYMENTS BETWEEN HII AND NEW NGC

FOR CERTAIN INCOME TAX ADJUSTMENTS

     Section 6.1 Payments by HII to New NGC.

     (a) General. Except as otherwise provided in Section 7.5 and Section 8.4(a), upon a
Final Determination resulting in an Income Tax Adjustment to (i) a Current Tax Group Federal
Consolidated Return, (ii) an NGC Non-Federal Tax Return, or (iii) a New NGC Non-Federal Tax Return,
in each case for a Pre-Distribution Taxable Period or a Straddle Taxable Period, HII shall pay to
New NGC the amount set forth in Section 6.1(b) (subject to the limitations in Section 6.1(c) and
Section 6.2(d)).

     (b) Payment by HII to New NGC for Income Tax Adjustments to Current Tax Group Federal
Consolidated Returns. In the event of an Income Tax Adjustment relating to an Income Tax Item
of an HII Group Member (except NGC) on a Current Tax Group Federal Consolidated Return for a
Pre-Distribution Taxable Period, the amount payable by HII to New NGC hereunder shall be 35 percent
of any increase, by reason of such Income Tax Adjustment, in (i) the taxable income of such Member
for such Pre-Distribution Taxable Period (as determined pursuant to Section 7.1(a)) or Straddle
Taxable Period (to the extent attributable to the portion of such Straddle Period ending on or
before the Distribution Date as determined pursuant to Section 7.1(b)) over (ii) the
taxable income of such Member that was included in the determination of Tax shown as payable (or
the Refund shown as due) on such Tax Return, as last filed before the Distribution Date and
modified by any subsequent Adjustment Request made before the Distribution Date.

     (c) Limitation on Payment Obligation. An Income Tax Adjustment resulting in an
increase in taxable income of an HII Group Member on a Current Tax Group Federal Consolidated
Return for a Pre-Distribution Taxable Period or a Straddle Taxable Period shall not result in a
payment obligation by HII pursuant to Section 6.1(b), unless such Income Tax Adjustment is of a
nature that could result in a correlative reduction in the taxable income of an HII Group Member
for a Post-Distribution Taxable Period (as determined pursuant to Section 7.1(a)) or a Straddle
Taxable Period (to the extent attributable to the portion of such Straddle Taxable Period beginning
on or after the Distribution Date as determined pursuant to Section 7.1(b)). In determining
whether such an increase in taxable income of an HII Group Member is of a nature that could result
in a reduction in taxable income of an HII Group Member for a Post-

14

 

Distribution Period or a
Straddle Period (to the extent attributable to the portion of the Straddle Period beginning on or
after the Distribution Date as determined pursuant to Section 7.1(b), the actual availability to
the HII Group or such Member of any Tax benefit attributable thereto
(whether due to losses incurred by the HII Group in a Post-Distribution Taxable Period or a
Straddle Period, Income Tax Adjustments relating to non-depreciable, non-amortizable assets, or
otherwise) shall not be taken into account. This Section 6.1(c) shall not apply to any payment due
under Section 7.5 or Section 8.4.

     (d) Tax Adjustments to NGC Non-Federal Tax Returns and New NGC Non-Federal Tax
Returns. Payments relating to adjustments for non-federal Taxes on NGC Non-Federal Tax Returns
and New NGC Non-Federal Tax Returns shall be determined solely in accordance with Section 8.7 of
the Separation and Distribution Agreement (relating to “Government Contract Matters”).

     Section 6.2 Payments by New NGC to HII.

     (a) General. Except as otherwise provided in Section 7.5 and Section 8.4(b), upon a
Final Determination resulting in an Income Tax Adjustment to (i) a Current Tax Group Federal
Consolidated Return, (ii) an NGC Non-Federal Tax Return, or (iii) a New NGC Non-Federal Tax Return,
in each case for a Pre-Distribution Taxable Period, New NGC shall pay to HII the amount set forth
in Section 6.2(b) (subject to the limitations in Section 6.2(c) and Section 6.2(d)).

     (b) Payment by New NGC to HII for Income Tax Adjustments to Current Tax Group Federal
Consolidated Returns. In the event of an Income Tax Adjustment relating to an Income Tax Item
of an HII Group Member on a Current Tax Group Federal Consolidated Return for a Pre-Distribution
Taxable Period or a Straddle Taxable Period, the amount payable by New NGC to HII hereunder shall
be 35 percent of any decrease, by reason of such Income Tax Adjustment, in (i) the taxable income
of such Member for such Pre-Distribution Taxable Period (as determined pursuant to Section 7.1(a))
or a Straddle Taxable Period (to the extent attributable to the portion of such Straddle Period
ending on or before the Distribution Date as determined pursuant to Section 7.1(b)) from
(ii) the taxable income of such Member that was included in the determination of Tax shown as
payable (or the Refund shown as due) on such Tax Return, as last filed before the Distribution Date
and modified by any subsequent Adjustment Request made before the Distribution Date.

     (c) Limitation on Payment Obligations. An Income Tax Adjustment resulting in a
decrease in taxable income of an HII Group Member on a Current Tax Group Federal Consolidated
Return for a Pre-Distribution Taxable Period or a Straddle Taxable Period shall not result in a
payment obligation by New NGC pursuant to Section 6.2(b), unless such Income Tax Adjustment is of a
nature that could result in a correlative increase in the taxable income of an HII Group Member for
a Post-Distribution Taxable Period (as determined pursuant to Section 7.1(a)) or a Straddle Taxable
Period (to the extent attributable to the portion of such Straddle Taxable Period beginning on or
after the Distribution Date as determined pursuant to Section 7.1(b). In determining whether such
a decrease in taxable income of an HII Group Member is of a nature that could result in an increase
in taxable income of an HII Group Member for a Post-Distribution Period or a Straddle Period, the
actual incurrence by the HII Group or such Member

15

 

of any Tax detriment attributable thereto shall not be taken into account. This Section
6.2(c) shall not apply to any payment due under Section 7.5, Section 8.4, or Section 10.4.

     (d) Tax Adjustments to NGC Non-Federal Tax Returns and New NGC Non-Federal Tax
Returns. Payments relating to adjustments for non-federal Taxes on NGC Non-Federal Tax Returns
and New NGC Non-Federal Tax Returns shall be determined solely in accordance with Section 8.7 of
the Separation and Distribution Agreement (relating to “Government Contract Matters”).

     Section 6.3 Threshold Amount.

     (a) HII shall not have an obligation to make a payment under Section 6.1(a), and New NGC shall
not have a payment obligation under Section 6.2(a), unless and until the aggregate amount of
payments otherwise due by such Party (the “Payor Party”) to the other Party (the “Payee
Party”) under Section 6.1(a) and Section 6.2(a) exceeds by more than $5,000,000 (the
“Threshold Amount”) the aggregate amount of payments otherwise due by the Payee Party to
the Payor Party under Section 6.1(a) and Section 6.2(a).

     (b) If the Threshold Amount is exceeded, the Payor Party shall be liable under Section 6.1(a)
and Section 6.2(a) only for a payment or payments in excess of the Threshold Amount.

     (c) If, after a payment becomes due under Section 6.1(a) and Section 6.2(a), a subsequent
payment becomes due under Section 6.1(a) and Section 6.2(a) by either the Payor Party or the Payee
Party (not taking account the Threshold Amount in Section 6.3(a)), the amount of the subsequent
payment due between the Parties shall be adjusted to effectuate the aggregate nature of the
Parties’ payment obligations under Section 6.1(a) and Section 6.2(a), including the Threshold
Amount in Section 6.3(a).

     (d) Section 6.3(a) shall not apply to any payment due under Section 7.5, Section 8.4, or
Section 10.4.

     Section 6.4 Separate Entity Provisions.

     (a) For purposes of computing the taxable income of an HII Group Member in determining the
amount payable in Section 6.1 or Section 6.2:

     (i) each HII Group Member shall be treated as a stand-alone corporation that filed a
separate Income Tax Return based solely on the Income Tax Items and apportionment factors of
such Member (but reflecting elections and Accounting Methods used by the NGC Group for the
relevant Current Tax Group Federal Consolidated Return, NGC Non-Federal Tax Return, or New
NGC Non-Federal Tax Return);

     (ii) no net operating loss, net capital loss, or other loss carryover or carryback
deduction shall be taken into account; and

16

 

     (iii) a decrease in an amount of net operating loss or capital loss shall be treated as
an increase in taxable income, and an increase in an amount of net operating loss or capital
loss shall be treated as a decrease in taxable income.

     (b) This Section 6.4 shall not apply to any payment due under Section 7.5, Section 8.4, or
Section 10.4.

     Section 6.5 Acknowledgement.

     New NGC and HII acknowledge and agree that the reason for the methodology for determining
payments as set forth in Section 6.1 or Section 6.2 is that the precise computation of actual Tax
detriment or Tax benefit resulting from an Income Tax Adjustment or combinations of Income Tax
Adjustments to taxable income may be difficult or impossible to determine and that the payments
provided for in Section 6.1 or Section 6.2 are in lieu of any payments or indemnities relating to
the actual amount of adjustment to Taxes.

ARTICLE 7

ALLOCATION, CHARACTER, AND TREATMENT

OF CERTAIN TAX ITEMS AND TRANSACTIONS

     Section 7.1 Allocation of Certain Tax Items.

     (a) Allocation Between Taxable Periods. If applicable law requires the Taxable Period
of any HII Group Member that was a member of the Current Tax Group to end as of the close of the
Distribution Date, Income Tax Items shall be included in each Taxable Period in accordance with
Treasury Regulations Section 1.1502-76(b)(2)(i) with no election under Treasury Regulations Section
1.1502-76(b)(2)(ii) or (iii).

     (b) Allocation Within a Straddle Taxable Period. If applicable law does not require
the Taxable Period of HII and each HII Group Member that was a member of the Current Tax Group to
end as of the close of the Distribution Date, then the amount of Income Tax Items attributable to
each portion of the Straddle Taxable Period shall be determined by means of a closing of the books
and records of such HII Group Member as of the close of the Distribution Date; provided,
however, that exemptions, allowances or deductions that are calculated on an annual or
periodic basis shall be allocated between such portions in proportion to the number of days in each
such portion.

     (c) Extraordinary Transactions. Notwithstanding anything to the contrary in this
Agreement, for all Tax purposes, New NGC and HII each shall report any transaction that is outside
the ordinary course of the normal day-to-day operations of the Shipbuilding Business that is
undertaken, caused, or permitted by any HII Group Member that occurs on the Distribution Date but
after the Distribution as occurring on the day after the Distribution Date pursuant to Treasury
Regulations Section 1.1502-76(b)(1)(ii)(B) or any similar or analogous provision of state, local or
foreign Law. New NGC shall not make a ratable allocation election
pursuant to Treasury Regulations Section 1.1502-76(b)(2)(ii)(D) or any similar or analogous
provision of state, local or foreign Law.

17

 

     Section 7.2 Tax Treatment of Payments between the Parties.

     (a) Payments Pursuant to this Agreement. Each of New NGC and HII covenants and agrees
that it will, and will cause each of its respective Subsidiaries to, treat the payments described
below in the following manner for all Tax purposes:

     (i) A payment by HII to New NGC under Section 6.1, Section 7.5, Section 8.4, or Section
10.4 and a payment by NGC to New NGC under Section 10.3(b) shall be treated as a
distribution by HII to New NGC immediately prior to the Distribution.

     (ii) A payment by New NGC to HII under Section 6.2, Section 7.5, Section 8.4, or
Section 10.4 and a payment by New NGC to NGC under Section 10.3(a) shall be treated as a
contribution by New NGC to HII immediately prior to the Distribution.

     (iii) A payment of interest under Section 11.1 shall be treated as taxable or
deductible, as the case may be, in either case except as otherwise required by applicable
Law.

     (b) Payments Pursuant to Separation and Distribution Agreement and Ancillary
Agreements.

     (i) In General. New NGC and HII each covenants and agrees that it will, and
will cause each of its respective Subsidiaries to, treat an indemnity payment pursuant to
the Separation and Distribution Agreement (other than payments made with respect to Shared
Gains or Shared Liabilities) or any Ancillary Agreement, to the extent attributable to a
Pre-Distribution Taxable Period or the portion of such Straddle Period ending on or before
the Distribution Date as determined pursuant to Section 7.1(b), as a contribution by New NGC
to HII or a distribution by HII to New NGC, as the case may be, immediately prior to the
Distribution.

     (ii) Shared Gains and Shared Liabilities. Consistent with Section 9.1, the
Parties shall consult and negotiate in determining the tax treatment of Shared Gains and
Shared Liabilities, as allocated in the Separation and Distribution Agreement, and of any
indemnity payments between the Parties with respect thereto. In such consultations and
negotiations, the Parties shall seek to achieve consistency in their respective Tax
treatment and reporting of such matters and, to the extent allowed by Law, Tax treatment
that is consistent with the economic benefits and burdens of such allocations and
indemnities.

     Section 7.3 Tax Treatment of Novations of Shipbuilding Liabilities and
Retained Liabilities.

     Each Party covenants and agrees that it will, and will cause each of its respective
Subsidiaries to, treat the novation of the Shipbuilding Liabilities and the Retained Liabilities
pursuant to Section 2.4 and 2.5 of the Separation and Distribution Agreement, respectively as (a) a
distribution by HII to New NGC immediately prior to the Distribution or (b) a contribution by New
NGC to HII immediately prior to the Distribution.

18

 

     Section 7.4 Accounting Methods.

     (a) No HII Group Member shall take any action with the IRS (whether by making an Adjustment
Request, filing a request for a change in Accounting Method, or otherwise) that would adversely
affect the application of any Accounting Method for any HII Group Member for any Pre-Distribution
Taxable Period, unless such action is required by the IRS in a Final Determination.

     (b) Each HII Group Member shall continue the use of any Accounting Method in effect
immediately prior to the Distribution Date for such Member (including the Accounting Methods
described in the IRS ruling letter dated February 26, 2010 relating to CVN 78), unless such Member
either (i) is required by the IRS to change such Accounting Method in a Post-Distribution Taxable
Period, or (ii) requests and receives consent from the IRS to change such Accounting Method in a
Post-Distribution Taxable Period.

     (c) Each HII Group Member shall continue the use of any Accounting Method agreed to by NGC or
New NGC and the IRS for such HII Group Member as a result of any Final Determination with respect
to Current Tax Group Federal Consolidated Returns for a Pre-Distribution Taxable Period or a
Straddle Taxable Period, unless such HII Group Member Group receives consent from, or is required
by, the IRS to change such Accounting Method in a Post-Distribution Taxable Period;
provided, however, that if such consent reasonably would be expected to have
material adverse impact on New NGC (including through an increase in Taxes or a reduction of a Tax
Attribute, regardless of whether or when such Tax Attribute otherwise would have been used), the
HII Tax Group (or such Member) shall not seek such consent.

     (d) Each HII Group Member that was granted permission by IRS to implement a change in
Accounting Method prior to the Distribution Date (including changes pursuant to IRS automatic
consent procedures) shall comply with all terms of the Accounting Method change consent agreement
or the terms imposed by the automatic consent procedure, including (i) the accounting method change
request relating to long-term contract accounting methods filed on behalf Northrop Grumman
Shipbuilding, Inc. on December 22, 2009 and for which consent was granted by the IRS in a ruling
letter dated July 19, 2010, and (ii) the automatic accounting method change, relating to contracts
with the Navy pursuant to Section 2203 of the Emergency Supplemental Appropriations Act for
Defense, the Global War on Terror, and Hurricane Recovery, 2006, Pub. L. No. 109-234, filed on
behalf of Northrop Grumman Shipbuilding, Inc. on January 27, 2010.

     (e) The Parties acknowledge and agree that any “long-term contract” (within the meaning of
Section 460(f) of the Code) being performed by any HII Group Member on the Distribution Date is
subject to Treasury Regulations Section 1.460-4(k)(3), relating to step-in-the-shoes transactions.

     (f) The Parties acknowledge and agree that any interest any HII Group Member owes to IRS, or
is owed by IRS, in a Post-Distribution Taxable Period under the look-back rules of Section
460(b)(2), (i) is payable by, or shall be payable to, respectively, such HII Group Member, and (ii)
shall not result in any payment obligation by any Party under ARTICLE 6,

19

 

notwithstanding the fact
that some period of contract performance covered by the look-back calculation occurred during a
Pre-Distribution Taxable Period or a Straddle Taxable Period.

     (g) The Parties acknowledge and agree that any adjustment to taxable income of any HII Group
Member in a Post-Distribution Taxable Period resulting from an adjustment under Section 481 of the
Code relating to an Accounting Method change effective as of a date prior to the Distribution Date
shall not result in any payment obligation by any Party under ARTICLE 6, notwithstanding the fact
that the adjustment period may have commenced in a Pre-Distribution Taxable Period or Straddle
Taxable Period.

     (h) The Parties acknowledge and agree that any adjustment to taxable income of any HII Group
Member in a Post-Distribution Taxable Period resulting from an adjustment under Section 481 of the
Code relating to an Accounting Method change effective as of a date subsequent to the Distribution
Date shall not result in any payment obligation by any Party under ARTICLE 6, notwithstanding the
fact that the adjustment may take into account the taxable income reported on an Accounting Method
in a Pre-Distribution Taxable Period or a Straddle Taxable Period.

     (i) The Parties acknowledge and agree that any increase in the tax liability of any HII Group
Member in a Post-Distribution Taxable Period resulting from the recapture of any tax benefit under
Section 708(b) of the American Jobs Creation Act of 2004, Pub. L. No. 108—357 shall not result in
any payment obligation by New NGC under Section 6.2, notwithstanding the fact that such recapture
may relate to taxable income of qualified naval ship contracts that would have been recognized by
such Member during a Pre-Distribution Taxable Period but for the application of Section 708(a)
thereof.

     Section 7.5 Indemnification for Taking Contrary Tax Treatment.

     (a) If either New NGC or HII or any of its Subsidiaries fails to comply with any covenant,
agreement, or undertaking in this ARTICLE 7, such Party shall indemnify and hold harmless the other
Party and each of its Subsidiaries from and against any (i) increase in Taxes resulting from a
Final Determination that the treatment of a Income Tax Item differs from the treatment of such
Income Tax Item described in this ARTICLE 7 and (ii) legal, accounting, or other fees and expenses
incurred in connection with a Tax Proceeding relating to the treatment of such Income Tax Item.

     (b) A Party’s obligation under this ARTICLE 7 to treat a receipt, payment or item of income,
gain, loss, deduction or credit in a prescribed manner (including timing) shall be satisfied if
such Party files all relevant Tax Returns and Adjustment Requests in a manner consistent with such
prescribed treatment.

     (c) For the purposes of this Section 7.5, any increase in Taxes shall be determined in
accordance with the methodology set forth in Section 6.1(b) and Section 6.1(d), on the one hand, or
Section 6.2(b) and Section 6.2(d), on the other; provided, however, that the
limitations under Section 6.1(c), Section 6.2(c), and Section 6.3 shall not apply to the
indemnities under this Section 7.5, it being the intention of the parties that any indemnity under
this Section 7.5 shall be determined without any minimum amount and without regard to the presence
or absence of any

20

 

possible future Tax benefit or Tax detriment to any member of the HII Group or
any member of the New NGC Group.

     (d) Any obligations of a Party pursuant to this Section 7.5 shall be separate from and shall
not affect the obligations of any Party to another Party pursuant to Section 6.1, Section 6.2,
Section 8.4(b), or Section 10.4.

     Section 7.6 Tax Attributes.

     (a) New NGC shall cooperate with HII, each at its own cost and expense, in determining the
allocation of Tax Attributes between the Current Tax Group and the HII Tax Group arising in
Pre-Distribution Taxable Periods or Straddle Taxable Periods in accordance with the Code and
Treasury Regulations (and any applicable state, local, and foreign Laws). New NGC and HII hereby
agree to compute all Taxes for Post-Distribution Taxable Periods and Straddle Taxable Periods
consistently with that determination unless otherwise required by a Final Determination.

     (b) To the extent that the amount of any Tax Attribute is later reduced or increased by a Tax
Authority, Tax Proceeding, or carrybacks of Tax Attributes from Post-Distribution Taxable Periods
of either the Current Tax Group or the HII Group, such reduction or increase shall be allocated to
the Party to which such Tax Attribute was allocated pursuant to Section 7.6(a).

ARTICLE 8

TAX-FREE STATUS OF THE TRANSACTIONS

     Section 8.1 Covenants, Undertakings, Agreements, Representations, and
Warranties.

     (a) HII Covenants, Undertakings, Agreements, Representations, and Warranties.

     (i) HII represents and warrants as follows:

     (A) All the facts presented and representations made in the Tax Materials
(singly and in combination), to the extent descriptive of the HII Group,
any HII Group Member, or the actions or intentions of any of them, at all times
have been, and as of the date of this Agreement are, true, correct, fairly presented
and complete in all respects and are not misleading in any respect.

     (B) No HII Group Member is aware of any respect in which any fact presented or
representation made in the Tax Materials (singly or in combination) is misleading in
any respect or is other than true, correct, fairly presented and complete in all
respects.

     (ii) HII covenants, undertakes and agrees as follows:

     (A) Each HII Group Member shall use its best efforts to ensure that the facts
presented and representations made in the Tax Materials (singly and in

21

 

combination)
will be true, correct, fairly presented and complete in all respects, and not
misleading in any respect, through and including the Distribution Date and
thereafter as relevant.

     (B) If an HII Group Member becomes aware that any fact presented or
representation made in the Tax Materials (singly or in combination) is, may be, or
may become misleading or other than true, correct, fairly presented and complete in
all respects, HII shall promptly notify the appropriate management personnel of NGC
(before the Distribution Date) or New NGC (after the Distribution Date) of the
situation in writing, and shall use its best efforts and fully cooperate in any
efforts by NGC and/or New NGC to correct the situation, all at its own expense.

     (C) No HII Group Member will take a position on a Tax Return (including on
Schedule UTP or any similar schedule or form) that could be reasonably likely to be
inconsistent in any respect with the rulings set forth in the IRS Ruling, the rights
and obligations set forth in the IRS Closing Agreement, the conclusions set forth in
the Opinion, or the Tax-Free Status of the Transactions.

     (b) New NGC Covenants, Undertakings, Agreements, Representations,
and Warranties.

     (i) New NGC represents and warrants as follows:

     (A) It has delivered complete and accurate copies of the Tax Materials to HII.

     (B) All the facts presented and representations made in the Tax Materials
(singly and in combination) at all times have been, and are as of the date of this
Agreement, true, correct, fairly presented and complete in all respects, and are not
misleading in any respect.

     (C) No New NGC Group Member is aware of any respect in which any fact presented
or representation made in the Tax Materials (singly or in
combination) is misleading in any respect or is other than true, correct,
fairly presented and complete in all respects.

     (ii) New NGC covenants, undertakes and agrees as follows:

     (A) Each New NGC Group Member shall use its best efforts to ensure that the
facts presented and representations made in the Tax Materials (singly and in
combination) will be true, correct, fairly presented and complete in all respects,
and will not be misleading in any respect, through and including the Distribution,
and thereafter as relevant.

     (B) If a New NGC Group Member becomes aware that any fact presented or
representation made in the Tax Materials (singly or in combination) is, may be, or
may become misleading in any respect or other than true, correct, fairly presented
and complete in all respects, New NGC shall promptly inform the

22

 

appropriate
management personnel of HII of the situation in writing, shall use its best efforts,
and shall fully cooperate in any efforts by HII, to correct the situation, all at
its own cost and expense.

     (C) No New NGC Group Member will take a position on a Tax Return (including on
Schedule UTP or any similar schedule or form) that could be reasonably likely to be
inconsistent in any respect with the rulings set forth in the IRS Ruling, the rights
and obligations set forth in the IRS Closing Agreement, the conclusions set forth in
the Opinion, or the Tax-Free Status of the Transactions.

     (c) No Contrary Knowledge. Each of New NGC and HII represents and warrants that it
knows of no fact (after due inquiry) that could be reasonably likely to cause the Tax treatment of
the Transactions to be other than the Tax-Free Status of the Transactions.

     (d) No Contrary Plan. Each of New NGC and HII represents and warrants that neither it
nor any of its Affiliates has any plan or intent to take any action that could be reasonably likely
to be inconsistent with any statement or representation in the Tax Materials.

     Section 8.2 Restrictions Relating to the Distribution.

     (a) General. Neither New NGC nor HII shall take, or permit any New NGC Group Member
or HII Group Member to take, any action that could be reasonably likely to be inconsistent with any
of the Tax Materials or to jeopardize all or any part of the Tax-Free Status of the Transactions.

     (b) IRS Closing Agreement. Neither New NGC nor HII shall take, or permit any New NGC
Group Member or HII Group Member to take, any action that could be reasonably likely to be
inconsistent with any provision of the IRS Closing Agreement.

     (c) HII Restricted Actions. HII shall not take, and shall not permit any HII Group
Member to take, any action described in paragraphs (i) through (vi) (each a “HII Restricted

Action”) prior to the first day following the second anniversary of the Distribution
(the “Restriction Period”).

     (i) No Liquidation or Dissolution. HII shall not take, and shall not permit
any HII Group Member to take, any action that reasonably could be expected to result in a
dissolution or liquidation (including any action that is a liquidation for federal Income
Tax purposes, whether or not as part of a reorganization within the meaning of Section
368(a) of the Code) of any HII Group Member, except NGC, or a merger in which any HII Group
Member, except NGC, is a party but not the surviving corporation.

     (ii) Continuation of Shipbuilding Business. HII shall not, and shall not
permit any HII Group Member to, take any action that could be reasonably likely to be
inconsistent with the continuation of the Shipbuilding Business as described in the Tax
Materials; provided, however, that the winding down or cessation of the HII
Group’s shipbuilding facilities in Avondale, Louisiana shall not be considered inconsistent
with the continuation of the Shipbuilding Business.

23

 

     (iii) Dispositions of Assets. HII shall not, and shall not permit any
HII Group Member to, sell, transfer, or otherwise dispose of or agree to, sell, transfer or
otherwise dispose (including in any transaction treated for federal Income Tax purposes as a
sale, exchange, transfer or disposition) of assets (including shares of stock of any HII
Group Member) in one or more transactions that, in the aggregate, could be reasonably likely
to constitute more than 30 percent of the consolidated gross assets of the HII Group. The
percentage of the consolidated gross assets of the HII Group sold, transferred or otherwise
disposed of shall be based on the fair market value of all relevant assets as of the
Distribution Date, or, if fair market value of any asset or group of assets is not readily
determinable, based on the net book value of such asset or group of assets under Generally
Accepted Accounting Principles, as of such date. The restrictions in this paragraph shall
not apply to (A) sales, transfers, or dispositions of assets for cash or cash equivalents in
the ordinary course of normal day-to-day operations of the Shipbuilding Business, (B)
acquisitions of assets from unrelated Persons in arm’s-length transactions, (C) transfers of
assets to Persons that are disregarded as entities separate from the transferors for federal
Income Tax purposes, (D) mandatory or optional payments (including pre-payments) of interest
or principal with respect to indebtedness of an HII Group Member, (E) redemptions or
repurchases of HII stock or rights to acquire stock for cash or cash equivalents within the
restrictions set forth in Section 8.2(c)(iv), (F) normal quarterly dividends, or (G) sales
of assets in connection with the winding down and cessation of the HII Group’s shipbuilding
facilities in Avondale, Louisiana.

     (iv) Redemptions and Other Acquisitions of HII Stock. HII shall not redeem or
otherwise acquire (directly or through an Affiliate) any HII stock or rights to acquire
stock of HII, except to the extent that such acquisitions (separately and together with any
other such acquisitions) are within the limitations described in the IRS Ruling;
provided, however, that an acquisition of a right to acquire stock in a
transaction subject to Safe Harbor VIII of Treasury Regulations Section 1.355-7(d) shall not
constitute an HII Restricted Action.

     (v) Transactions Implicating Section 355(e) of the Code.

     (A) HII shall not enter into a transaction described in Section 8.2(c)(v)(B)
(and, to the extent any HII Group Member has the right or authority to prevent any
such transaction, shall not permit any such transaction to occur), if in the
aggregate such transactions could be reasonably likely to cause or permit one or
more Persons (whether or not acting in concert) to acquire, directly or indirectly,
a number of shares of HII stock that would, when combined with any other changes in
ownership of HII stock, comprise 40 percent or more of either (I) the value of all
outstanding shares of stock of HII as of the date of such transaction, or in the
case of a series of transactions, the date of the last transaction of such series,
or (II) the total combined voting power of all outstanding shares of voting stock of
HII as of the date of such transaction, or in the case of a series of transactions,
the date of the last transaction of such series. For purposes of this Section
8.2(c)(v), a reference to an acquisition of stock and any similar term or variation
thereof includes an agreement, understanding or arrangement or substantial
negotiations, within the meaning of Treasury

24

 

Regulations Section 1.355-7 regarding any such transaction or series of
transactions or any similar transaction or series of transactions.

     (B) Subject to Section 8.2(c)(v)(C) and Section 8.2(c)(v)(D), a transaction
described in this Section 8.2(c)(v)(B) includes a transaction or part of a series of
transactions as a result of which (I) HII or any HII Group Member would merge or
consolidate with any other Person (except a merger or consolidation of two HII Group
Members), or (II) one or more Persons would (directly or indirectly) acquire, or
have the right to acquire, shares of HII stock from HII and/or one or more holders
of outstanding shares of HII stock. Such a transaction constitutes an HII
Restricted Action regardless of whether it is supported by HII’s board of directors,
management or shareholders, is a hostile acquisition, or otherwise.

     (C) For purposes of Section 8.2(c)(v)(B), (I) a recapitalization, amendment to
a certificate of incorporation (or other organizational documents), or any other
action, whether through a stockholder vote or otherwise, affecting the relative
voting rights of stock (including through conversion of any stock into another class
of stock) shall be treated as an acquisition of stock, and (II) a redemption of
stock (directly or, as appropriate, indirectly through Affiliates) shall be treated
as an indirect acquisition of stock by the non-redeeming shareholders.

     (D) A transaction described in Section 8.2(c)(v)(B) shall not include (I) an
adoption by HII of a shareholder rights or “poison pill” plan (of the type described
in Revenue Ruling 90-11), (II) an acquisition of HII stock that satisfies Safe
Harbor VII of Treasury Regulations Section 1.355-7(d) or (III) an issuance of stock
or a grant of an option to acquire stock by HII that satisfies Safe Harbor VIII or
Safe Harbor IX of such regulation.

     (vi) Section 355(a)(1)(B) of the Code. HII shall not take any action or
actions and, to the extent any HII Group Member has the right or authority to prevent such
action, shall not permit any action (in either case, whether or not inconsistent with any of
the Tax Materials), if, in the aggregate, such actions could be reasonably likely to cause
or permit one or more Persons (whether or not acting in concert) to dispose, directly or
indirectly, of a number of shares of HII stock that, when combined with any other changes in
ownership of HII stock pertinent for purposes of Section 355(a)(1)(B) of the Code, could be
reasonably likely to comprise 20 percent or more of the value of all of the outstanding
shares of stock of HII as of the date of such transaction, or in the case of a series of
transactions, the date of the last transaction of such series.

     (d) Permitted Actions. Notwithstanding Section 8.2(c), during the Restriction Period
HII may take an HII Restricted Action, if the conditions set forth in Section 8.2(d)(i), Section
8.2(d)(ii), or Section 8.2(d)(iii) are satisfied. For purposes of such provisions, in determining
whether a ruling or opinion is satisfactory, New NGC may consider, among other factors, the
appropriateness of any underlying assumptions or representations used as a basis for the ruling or

25

 

opinion and the views of New NGC’s outside tax advisors on the substantive merits of the
matters addressed in such ruling or opinion.

     (i) The conditions set forth in this Section 8.2(d)(i) shall be satisfied if HII shall
have requested New NGC to obtain a supplemental ruling in accordance with Section 8.3 to the
effect that such action or transaction will not affect the Tax-Free Status of the
Transactions, and New NGC shall have received such a supplemental ruling in form and
substance satisfactory to New NGC.

     (ii) The conditions set forth in this Section 8.2(d)(ii) shall be satisfied if HII
shall have provided to New NGC an Unqualified Tax Opinion in form and substance satisfactory
to New NGC.

     (iii) Solely with respect to the Restricted Actions described in Section 8.2(c)(i), the
conditions of this Section 8.2(d)(iii) shall be satisfied if HII notifies New NGC in writing
of the proposed dissolution, liquidation, or merger involving the relevant HII Group Member,
and New NGC consents, in writing, to such dissolution, liquidation, or merger, which consent
shall not be unreasonably withheld, conditioned or delayed; provided,
however, that this Section 8.2(d)(iii) shall not apply to a dissolution or
liquidation of HII or to a merger to which HII is a party.

     (e) Restrictions Relating to NGC. HII shall not, and shall not permit any HII Group
Member to, (i) sell, convey, assign or otherwise transfer any shares of capital stock of NGC, (ii)
transfer any asset to NGC, or (iii) take any action that could be reasonably likely to cause NGC to
engage in any business activity or otherwise to be inconsistent with the liquidation of NGC in the
Transactions for federal Income Tax purposes; provided, however, that nothing in
this Section 8.2(e) shall prevent HII or NGC from taking any action pursuant to ARTICLE 10 of this
Agreement or from approving the amendment to NGC’s Certificate of Incorporation as contemplated by
Section 8.2 of the Separation and Distribution Agreement.

     Section 8.3 Procedures Regarding Rulings and Opinions.

     (a) If HII notifies New NGC that it desires to undertake, or to cause an HII Group Member to
undertake, an HII Restricted Action, New NGC shall cooperate with HII and use its reasonable best
efforts to seek to obtain, as expeditiously as possible, at New NGC’s election, either a
supplemental ruling from the IRS or an Unqualified Tax Opinion for the purpose of permitting HII to
take such Restricted Action. HII shall bear its own costs and expenses and shall reimburse New NGC
for all reasonable costs and expenses incurred by the Current Tax Group in attempting to obtain a
supplemental ruling or an Unqualified Tax Opinion requested by HII.

     (b) Notwithstanding Section 8.3(a), New NGC shall have no obligation (i) to request a
supplemental or other ruling if, upon consultation with appropriate IRS personnel, New NGC
reasonably determines that IRS likely would not issue such ruling or (ii) to take any action to
obtain a supplemental or other ruling or an Unqualified Tax Opinion with respect to any HII
Restricted Action, if New NGC reasonably determines that such HII Restricted Action or the

26

 

process to attempt to obtain such ruling or opinion reasonably could be expected to have a
significant adverse effect on any New NGC Group Member.

     (c) Except in accordance with Section 8.3(a), no HII Group Member shall contact or seek any
guidance from the IRS or any other Tax Authority (whether written, verbal or otherwise) at any time
concerning the Transactions (including guidance as to the impact of any other transaction on the
Transactions).

     (d) New NGC shall have the right to obtain a ruling, determination or other guidance from any
Tax Authority (including a supplemental IRS Ruling) or an opinion, including an Unqualified Tax
Opinion, in its sole and absolute discretion and at any time. If New NGC decides to obtain such
guidance or opinion, HII shall, and shall cause the HII Group Members to, cooperate with New NGC
and take any and all actions reasonably requested by New NGC in connection with obtaining such
guidance or opinion. Such cooperation shall include the making of any reasonable representation,
warranty, undertaking or covenant, or the providing of any materials requested by the Tax Authority
or the law firm issuing such opinion; provided, that HII shall not be required to make (or cause an
Affiliate to make) any representation, warranty, undertaking or covenant that is inconsistent with
historical facts or as to future matters or events over which it has no control. In connection
with obtaining a ruling or determination from a Tax Authority, New NGC shall apply for such ruling
or determination and shall have sole and exclusive control over the process of obtaining such
ruling or determination, including the right to modify or withdraw such request at any time. New
NGC and HII each shall bear its own costs and expenses in obtaining a ruling, determination or Tax
Opinion requested by New NGC; provided, however, that, if HII incurs reasonable
legal or accounting fees in excess of $50,000, with prior consent of New NGC (which shall not be
unreasonably withheld, conditioned or delayed), in connection with a request by New NGC for
guidance or an opinion subject to this Section 8.1(d), and if such guidance or opinion does not
relate to an HII Restricted Action, New NGC shall reimburse HII for such excess amount.

     Section 8.4 Indemnification.

     (a) Indemnification by HII. HII shall indemnify and hold each New NGC Group Member
harmless from and against any loss, cost or expense (including Transactions Taxes and legal,
accounting and other fees and other expenses incurred in connection with any Tax Proceeding)
resulting from (1) a failure by any HII Group Member to comply with any covenant, agreement,
undertaking, representation or warranty made by HII in Section 8.1 or Section 8.2; or (2) the
taking of any HII Restricted Action during the Restriction Period (whether or not HII shall have
received a ruling or Unqualified Tax Opinion pursuant to Section 8.2(d) and Section 8.3).

     (b) Indemnification by New NGC. New NGC shall indemnify and hold each HII Group
Member harmless from and against any loss, cost or expense (including Transactions Taxes and legal,
accounting and other fees and other expenses incurred in connection with any Tax Proceeding)
resulting from a failure by any New NGC Group Member to comply with any covenant, agreement,
undertaking, representation or warranty made by New NGC in Section 8.1 or Section 8.2.

27

 

     (c) Interaction with ARTICLE 6. Transaction Taxes shall be determined without
reference to the methodology or limitations set forth in ARTICLE 6.

     (d) Interaction with Other Indemnities. Any obligations of a Party pursuant to this
Section 8.4 shall be separate from and shall not affect the obligations of any Party to another
Party pursuant to Section 6.1, Section 6.2, Section 7.5, or Section 10.4.

ARTICLE 9

COOPERATION

     Section 9.1 General Cooperation.

     Each of the Parties shall cooperate fully (and each shall cause its respective Subsidiaries to
cooperate fully) with all reasonable requests in writing from another Party, or from a
representative or advisor to such Party, in connection with the preparation and filing of Tax
Returns, Adjustment Requests, claims for Refund, Tax Proceedings and calculations of amounts
required to be paid pursuant to this Agreement, in each case, related or attributable to or arising
in connection with Taxes of any of the Parties or their respective Subsidiaries covered by this
Agreement and the establishment of any reserve required in connection with any financial reporting.
The Parties shall continue to cooperate with one another with respect to such matters without
regard to the time limitation set forth in Section 7.7(d) of the Separation and Distribution
Agreement. Except as provided in Section 7.3 of the Separation and Distribution Agreement, each
Party shall make its employees, advisors and facilities available, without charge, on a reasonable
and mutually convenient basis in connection with the foregoing matters, and the cooperation
required by this Section 9.1 shall include the providing of any information reasonably necessary or
helpful in connection with such matters and shall include, without limitation, at such Party’s own
cost and expense:

     (a) the providing of Tax Returns of the Parties and their respective Subsidiaries, books,
records (including information regarding ownership and Tax basis of property), documentation and
other information relating to such Tax Returns, including accompanying schedules, related work
papers, and documents relating to rulings or other determinations by Tax Authorities;

     (b) the execution of documents (including powers of attorney) in connection with any Tax
Proceedings of any of the Parties or their respective Subsidiaries, or the filing of Tax Returns or
a Refund claims of the Parties or their respective Subsidiaries;

     (c) the use of the Party’s reasonable best efforts to obtain any documentation in connection
with a Tax Matter; and

     (d) the use of the Party’s reasonable best efforts to obtain any Tax Returns (including
accompanying schedules, related work papers, and documents), documents, books, records or other
information in connection with the filing of any Tax Returns of any of the Parties or their
Subsidiaries.

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     Section 9.2 Retention of Records.

     In addition to complying with their respective obligations as set forth in Article VII of the
Separation and Distribution Agreement, (a) each of the Parties shall retain or cause to be retained
all Tax Returns, schedules and workpapers, and all material records or other documents relating
thereto in their possession, until sixty (60) days after the expiration of the applicable statute
of limitations (including any waivers or extensions thereof) of the Taxable Periods to which such
Tax Returns and other documents relate or until the expiration of any additional period that any
Party reasonably requests, in writing, with respect to specific material records or documents; (b)
a Party intending to destroy any material records or documents shall provide the other Parties with
reasonable advance notice and the opportunity to copy or take possession of such records and
documents; and (c) each of the Parties shall notify the other Parties in writing of any waivers or
extensions of the applicable statute of limitations that may affect the Taxable Period for which
the foregoing records or other documents must be retained.

     Section 9.3 Confidentiality.

     Section 7.8 and Section 7.9 of the Separation and Distribution Agreement shall apply to all
Information provided by the Parties to one another pursuant to this Agreement. Provided,
however, that, if a Party receiving such Information reasonably determines that any such
Information will be helpful in the resolution of a Tax Proceeding if disclosed to a Tax Authority,
then, upon request of such Party, the Party providing such Information shall promptly permit such
disclosure unless such Party reasonably determines that such disclosure is likely to have a
significant adverse effect on such Party or any of its Affiliates.

ARTICLE 10

NGC AS CURRENT TAX GROUP AGENT

     Section 10.1 Purpose.

     The purpose of this ARTICLE 10 is to ensure that matters relating to the Current Tax Group’s
U.S. federal Income Taxes and other Taxes for Pre-Distribution Taxable Periods with respect to
which NGC is, and after the Distribution will remain, the Current Tax Group Agent are managed and
administered, and Tax Proceedings with respect to such Tax matters are conducted, in an efficient
and orderly manner and in the interest of the New NGC Group, notwithstanding the fact that NGC will
be a Subsidiary of HII after the Distribution but will continue to be the Current Tax Group Agent
for the Current Tax Group’s U.S. federal Income Taxes and certain other Taxes for Pre-Distribution
Taxable Periods. It is the Parties’ intent that no Party shall obtain any advantage or sustain any
disadvantage vis-à-vis any other Party as a result of NGC, instead of a New NGC Group Member, being
the Current Tax Group Agent.

     Section 10.2 NGC Tax Officer.

     (a) NGC shall appoint and retain as the NGC Tax Officer the individual designated by New NGC
from time to time. It is expected but not required that New NGC shall designate its Vice President
— Tax as the NGC Tax Officer. HII shall cause the NGC Tax Officer to be appointed as Vice
President — Tax of NGC.

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     (b) The NGC Tax Officer shall have sole authority and responsibility to manage, administer,
make decisions for and bind NGC with respect to all matters within the scope of NGC’s authority and
responsibility as Current Tax Group Agent. Such matters shall include the matters listed in the
Agency Regulations as subject to agency and all similar matters, including the following:

     (i) Preparation, signing and filing of Tax Returns for NGC as the Current Tax Group
Agent,

     (ii) Making payments to Tax Authorities on behalf of NGC as the Current Tax Group
Agent,

     (iii) Conducting Tax Proceedings and agreeing to settlements thereof on behalf of NGC
as the Current Tax Group Agent,

     (iv) Obtaining the services of other officers and employees of New NGC Group Members on
behalf of NGC as the Current Tax Group Agent, and

     (v) Retaining and granting powers of attorney to professional advisers,
representatives, experts and other individuals or professional service firms on behalf of
NGC as the Current Tax Group Agent.

     (c) The authority, responsibility and duties of the NGC Tax Officer shall be limited to
matters described in Section 10.2(b). The NGC Tax Officer shall have no authority with respect to
Tax matters of the HII Tax Group or any member of the HII Group other than NGC. With respect to
NGC, the authority, responsibility and duties of the NGC Tax Officer shall be limited to matters
relating to Tax Returns and Taxable Periods as to which NGC is the Current Tax Group Agent.

     (d) HII shall, and shall cause the other HII Group Members (including NGC) to, cooperate with
the NGC Tax Officer in the performance of his or her responsibilities as described in Section
10.2(b). Upon request of the NGC Tax Officer, the board of directors and the officers of NGC shall
promptly take any action and execute any documents as reasonably requested by the NGC Tax Officer
for the purpose of conducting or settling a Tax Proceeding within the scope of this ARTICLE 10
(including documents in connection with settlement of a Tax Proceeding, even if HII may demand
arbitration under Section 5.1(a)(v) with respect to such settlement).

     (e) The NGC Tax Officer shall act in the interest of the New NGC Group regarding all Tax
matters, even if any such action is or may be contrary to the interest of the HII Group or its
Members, under this Agreement or otherwise. Each of the HII Group Members hereby waives any
conflict of interest that may arise from the activities and responsibilities of the NGC Tax
Officer, and HII and NGC each has executed a letter to such effect in the form attached as Exhibit
A. Upon request of New NGC, HII shall execute, or cause any HII Group Member (including NGC) to
execute, a letter to similar effect in form or substance requested by a Tax Authority.

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     (f) New NGC shall employ and be solely responsible for paying the costs and expenses incurred
in connection with the employment of the NGC Tax Officer and his or her activities, including cost
of compensation paid and benefits accorded to the Tax Officer, liability insurance coverage and all
costs associated with the use of services provided by other officers or employees of New NGC and
other Current Group Members and by outside advisers, representatives or experts.

     Section 10.3 Payments of Tax and Receipt of Refunds.

     (a) In accordance with Section 2.1 and Section 2.2, New NGC shall pay all Tax liabilities
incurred by NGC as Current Tax Group Agent (including any liability for Tax attributable to the
activities of NGC during a Pre-Distribution Taxable Period).

     (b) In accordance with Section 4.1(a) and Section 4.2, promptly upon receipt by NGC of a
Refund from a Tax Authority relating to a Tax Return for which NGC is the Current Tax Group Agent,
NGC shall (and HII shall cause NGC to) remit the full amount of such Refund to New NGC.

     Section 10.4 Indemnification.

     (a) HII shall indemnify and hold harmless all New NGC Group Members from and against any loss,
cost or expense (including Taxes and professional fees) resulting from a breach by NGC or any other
HII Group Member of an obligation under this ARTICLE 10.

     (b) New NGC shall indemnify and hold harmless all HII Group Members from and against any loss,
cost or expense (including Taxes and professional fees) resulting from—

     (i) any breach (including a delay in taking any action) by New NGC or any other New NGC
Group Member of an obligation under this ARTICLE 10, and

     (ii) any act or omission (including a delay in taking an action) by the NGC Tax Officer
(or by any person acting under direction of the NGC Tax Officer), arising out of or related
to this ARTICLE 10; provided, however, that this Section 10.4(b)(ii) shall
have no effect on any indemnity or payment obligation under ARTICLE 3, ARTICLE 4, ARTICLE 6,
ARTICLE 7, or ARTICLE 8.

     (c) No act or omission (including a delay in taking an action) by the NGC Tax Officer within
the scope of his or her authority and responsibility, under Section 10.2, shall result in any
indemnity under Section 10.4(b) due to such act or omission being contrary to the interest of the
HII Group or its Members, under this Agreement or otherwise.

     (d) Except as otherwise provided in ARTICLE 3, ARTICLE 4, ARTICLE 6, ARTICLE 7, and ARTICLE 8,
New NGC shall indemnify and hold harmless all HII Group Members from and against any Taxes for
which NGC is or becomes liable with respect to any Pre-Distribution Taxable Period and any Straddle
Taxable Period (and from and against any costs or expenses, including professional fees,
attributable to the determination of any such liability for Taxes).

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     (e) Any indemnity obligation under this ARTICLE 10 shall be separate from and in addition to
the indemnities and other payment obligations between the Parties under ARTICLE 3, ARTICLE 4,
ARTICLE 6, ARTICLE 7, and ARTICLE 8. None of the limitations or methodologies for computing any
such obligations in any of such Articles shall apply to the indemnities under this ARTICLE 10.

     Section 10.5 Designation of Substitute Current Tax Group Agent.

     (a) NGC hereby designates Northrop Grumman Systems Corporation, a Delaware corporation, as
successor Current Tax Group Agent in the form attached hereto as Exhibit B of even date herewith.
Such designation shall become effective immediately upon the termination of NGC’s corporate
existence (or, if sooner, upon the relevant Tax Authority’s consenting to or requiring such
designation). Within a reasonable time after the Distribution, the NGC Tax Officer shall execute a
designation in a form substantially identical to the form in Exhibit B and shall file such
designation with the IRS. If the IRS does not accept such filing at such time, the NGC Tax Officer
shall use his or her reasonable best efforts to file such designation at the earliest opportunity.
The NGC Tax Officer shall provide HII with a copy of the designation and any related correspondence
with the IRS.

     (b) Upon request of New NGC, HII shall cause NGC or any other HII Group Member to execute any
additional document or documents to effect or facilitate the designation of a substitute Current
Tax Group Agent selected by New NGC prior to the termination of NGC’s corporate existence. The NGC
Tax Officer shall be responsible for filing any such document with the IRS in a manner consistent
with Section 10.5(a).

     (c) HII agrees to cause the termination of NGC’s corporate existence, within the meaning of
Treasury Regulations Section 1.1502-77(e), so as to facilitate the designation pursuant to Section
10.5(a), as soon as such termination can be accomplished with no significant adverse effect with
respect to any contract between any HII Group Member and the United States Navy, and so long as the
IRS accepts a substitute designee. HII agrees to keep New NGC informed of the status of these
matters.

ARTICLE 11

MISCELLANEOUS

     Section 11.1 Timing of Payments; Interest.

     Amounts payable pursuant to this Agreement shall be paid within 30 days of the written demand
by the Party entitled to receive such payments. Such demand shall include documentation setting
forth the basis for the amount payable. Any payment not made within 30 days of the written demand
for such payment shall accrue interest at a rate per annum equal to the rate in effect for
underpayments pursuant to Section 6621(a)(2) of the Code (without taking into account increased
rates under Section 6621(c)) from such date, compounded annually.

     Section 11.2 Dispute Resolution.

     (a) Negotiations. New NGC and HII each shall endeavor, and shall cause their
respective Affiliates to endeavor, to resolve any Tax Matters Dispute in an amicable manner

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through negotiations in good faith for not less than 21 days involving senior executives of
the Parties who have authority resolve the matter.

     (b) Appointment of Tax Arbitrator by the Parties. Upon written notice by New NGC to
HII, or by HII to New NGC, after 21-day period provided in Section 11.2(a), such Parties shall
jointly select, retain and appoint one individual to resolve the Tax Matters Dispute (the “Tax
Arbitrator”). The Tax Arbitrator shall be a nationally-recognized tax attorney and shall be
either a current or retired member of an Independent Firm or a former or retired judge or
government official. In choosing a Tax Arbitrator, such Parties may consider, among other matters,
the professional expertise of each prospective Tax Arbitrator, such individual’s independence from
the Parties, the cost of retaining such individual and the availability of such individual to
perform the services of Tax Arbitrator on a timely basis. Neither of such Parties will
unreasonably withhold or delay giving consent to the appointment of any qualified individual as Tax
Arbitrator.

     (c) Appointment of Tax Arbitrator by Individuals Selected by the Parties. If, having
determined that the Tax Matters Dispute must be referred to a Tax Arbitrator, the Parties cannot,
after 21 days, retain a Tax Arbitrator who is acceptable to the Parties in good faith, then, upon
written notice by New NGC to HII, or by HII to New NGC, each such Party shall, within seven days
thereafter, designate and retain at its own expense an individual who shall have the qualifications
described in Section 11.2(b). Such individuals shall agree upon and appoint as the Tax Arbitrator
an individual (not either of such individuals or any member of a firm of which either of such
individuals is a member or a retired member) who shall have such qualifications and who shall have
agreed to serve as Tax Arbitrator at a cost no greater than the normal and customary charges for
tax services imposed by such individual (or the Independent Firm of which he or she is a member or
a retied member). Such individuals shall use reasonable best efforts to select the Tax Arbitrator
within 14 days of their being selected by the Parties and shall not consult with either of the
Parties prior to agreeing upon and appointing the Tax Arbitrator. The appointment of the Tax
Arbitrator by such individuals shall be final and binding on the Parties, except if they agree
otherwise.

     (d) Appointment of Tax Arbitrator by Tax Section Chair. If, having determined that
the Tax Matters Dispute must be referred to a Tax Arbitrator, (i) the Parties cannot appoint a Tax
Arbitrator pursuant to Section 11.2(b), and (ii) the individuals selected by the Parties pursuant
to Section 11.2(c) are unwilling or unable to agree upon and appoint a Tax Arbitrator in a timely
manner, then the Parties shall jointly request that the individual then serving as Chair of the New
York State Bar Association Tax Section appoint the Tax Arbitrator. If such individual is unable or
unwilling to appoint the Tax Arbitrator, then the Parties shall jointly request that the individual
then serving as Chair of the American Bar Association Tax Section appoint the Tax Arbitrator. Each
such individual, as the case may be, shall use reasonable best efforts to select the Tax Arbitrator
within 14 days and shall not consult with either of the Parties prior to appointing the Tax
Arbitrator. The appointment of the Tax Arbitrator by either such individual, as the case may be,
shall be final and binding on the Parties, except if they agree otherwise.

     (e) Proceedings Before Tax Arbitrator. The Tax Arbitrator shall decide all points
relating to the Tax Matters Dispute. Except to the extent jointly determined by agreement of the
Parties, the Tax Arbitrator shall conduct proceedings necessary to reach a decision, as he or she

33

 

reasonably determines, and may, in his or her reasonable discretion, obtain the services of
any individual (including other members or employees of an Independent Firm of which the Tax
Arbitrator is a current or retired member) to assist in deciding the Tax Matters Dispute. The Tax
Arbitrator shall use his or her best efforts to resolve the dispute as quickly as is reasonably
possible, and the Parties shall cooperate in efforts to do so. In the case of a dispute relating
to NGC’s role as the Current Tax Group Agent, the powers of the NGC Tax Officer, or otherwise
relating to any provision of ARTICLE 10, the Tax Arbitrator shall use his or her best efforts to
resolve all matters within 60 days after his or her appointment. All fees and expenses of the Tax
Arbitrator shall be shared equally by New NGC and HII.

     (f) Tax Arbitrator’s Written Decision. As soon as practicable after proceedings are
complete, the Tax Arbitrator shall furnish a written decision to the Parties. Such decision shall
set forth the decision of the Tax Matters Dispute but shall not include any rationale therefor,
discussion thereof or citations of legal authority, except to the extent necessary to make the
terms of the decision clear to the Parties. The decision of the Tax Arbitrator shall be final and
binding on the Parties, and the Parties shall take, or cause to be taken, any action necessary to
implement the decision.

     Section 11.3 Survival of Covenants.

     Except as otherwise contemplated by this Agreement, all covenants and agreements of the
Parties contained in this Agreement shall survive the Distribution and remain in full force and
effect in accordance with their applicable terms, provided, however, that the
representations and warranties and all indemnification for Taxes shall survive until 60 days
following the expiration of the applicable limitations period (taking into account all extensions
thereof), if any, for the Tax that gave rise to the indemnification, provided,
further, that, in the event that notice for indemnification has been given within the
applicable survival period, such indemnification shall survive until such time as such claim is
finally resolved.

     Section 11.4 Termination of Agreements, Arrangements and Policies.

     Except for this Agreement and except as otherwise provided herein, all tax allocation
agreements, arrangements or policies in effect between or among NGC Members shall be terminated
effective as of the Distribution Date, and thereafter no party (or any of its directors or
officers) shall have any liability or further obligation to any other party with respect to any
such agreement, arrangement or policy.

     Section 11.5 Severability.

     If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced pursuant to any Law or as a matter of public policy, all other conditions and provisions
of this Agreement shall remain in full force and effect. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the Parties to this Agreement
shall negotiate in good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in a mutually acceptable manner.

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     Section 11.6 Entire Agreement.

     Except as otherwise expressly provided in this Agreement, this Agreement constitutes the
entire agreement of the Parties hereto with respect to the subject matter of this Agreement and
supersedes all prior agreements and undertakings, both written and oral, between or on behalf of
the Parties hereto with respect to the subject matter of this Agreement.

     Section 11.7 Assignment.

     This Agreement shall not be assigned by either New NGC or HII without the prior written
consent of the other such Party hereto, except that New NGC and HII each may assign (i) any or all
of its rights and obligations pursuant to this Agreement to another New NGC Group Member or HII
Group Member, as the case may be, and (ii) any or all of its rights and obligations pursuant to
this Agreement in connection with a sale or disposition of any assets or entities or lines of
business; provided, however, that no such assignment shall release the assigning
Party from any liability or obligation pursuant to this Agreement.

     Section 11.8 No Third-Party Beneficiaries.

     This Agreement is for the sole benefit of the Parties, their respective Subsidiaries and the
permitted successors and assigns. Nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature
whatsoever pursuant to or by reason of this Agreement, provided, however, that the NGC Tax Officer
shall be a third-party beneficiary with respect to his or her rights under ARTICLE 10.

     Section 11.9 Specific Performance and Other Equitable Relief.

     In the event of any actual or threatened default in, or breach of, any of the terms,
conditions and provisions of this Agreement, the Party who is or is to be thereby aggrieved shall
have the right to specific performance and injunctive or other equitable relief of its rights
pursuant to this Agreement (whether relating to a Tax Matters Dispute subject to arbitration under
Section 11.2), in its sole discretion, in addition to any and all other rights and remedies at law
or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the
remedies at law for any breach or threatened breach, including monetary damages, may be inadequate
compensation for any loss and that any defense in any action for specific performance that a remedy
at law would be adequate is waived. Any requirements for the securing or posting of any bond with
such remedy are waived by the Parties to this Agreement.

     Section 11.10 Waiver of Jury Trial.

     EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.

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     Section 11.11 Governing Law.

     This Agreement and all disputes or controversies arising out of or relating to this Agreement
or the transactions contemplated hereby shall be governed by, and construed in accordance with, the
internal Laws of the State of New York, without regard to the Laws of any other jurisdiction that
might be applied because of the conflicts of laws principles of the State of New York (other than
Section 5-1401 of the New York General Obligations Law).

     Section 11.12 Amendment.

     No provision of this Agreement may be amended or modified except by a written instrument
signed by the Parties to this Agreement. No waiver by any Party of any provision of this Agreement
shall be effective unless explicitly set forth in writing and executed by the Party so waiving. The
waiver by any Party of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any other subsequent breach.

     Section 11.13 Rules of Construction.

     Interpretation of this Agreement shall be governed by the following rules of construction: (i)
words in the singular shall be held to include the plural and vice versa; (ii) words of one gender
shall be held to include the other gender as the context requires; (iii) references to the terms
Article, Section, paragraph, or clause, are references to the Articles, Sections, paragraphs, or
clauses of this Agreement unless otherwise specified; (iv) the terms “hereof,” “herein,” “hereby,”
“hereto,” and derivative or similar words refer to this entire Agreement; (v) the word “including”
and words of similar import shall mean “including without limitation,” unless otherwise specified;
(vi) references to “written” or “in writing” include in electronic form; (vii) the table of
contents and headings contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement; (viii) a reference to any Person
includes such Person’s successors and permitted assigns; (ix) a reference to a provision of the
Code, Treasury Regulations or any other Law mean the provision, or the successor provision thereto,
as in effect for the relevant period or periods; and (x) a reference to a Party’s taking an action
shall include the Party’s failure to take an action having the same result as the action referred
to.

     Section 11.14 Notices.

     All notices, notifications, requests, and other communications hereunder shall be in writing
and shall be deemed duly given (a) on the date of delivery if delivered personally, or if by
facsimile, upon written confirmation of receipt by facsimile, e-mail or otherwise, (b) on the first
Business Day following the date of dispatch if delivered utilizing a next-day service by a
recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth Business Day
following the date of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All such notices, notifications, requests, and other communications
shall be delivered to the addresses set forth below, or pursuant to such other instructions as may
be designated in writing by the party to receive such communication:

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     (a) if to New NGC or to any other New NGC Group Member, before the date New NGC
relocates its corporate headquarters, to:

Northrop Grumman Corporation

1840 Century Park East

Los Angeles CA 90067-2199

Attention: Vice President — Tax

Facsimile: (310) 556-4546

with a copy (which shall not constitute notice) to:

Northrop Grumman Corporation

1840 Century Park East

Los Angeles CA 90067-2199

Attention: General Counsel

Facsimile: (310) 556-4910

     (b) if to New NGC or any other New NGC Group Member on or after the date New NGC
relocates its corporate headquarters, to:

Northrop Grumman Corporation

2980 Fairview Park Drive

Falls Church VA 22042

Attention: Vice President — Tax

Facsimile: To be provided at relevant time

with a copy (which shall not constitute notice) to:

Northrop Grumman Corporation

2980 Fairview Park Drive

Falls Church VA 22042

Attention: General Counsel

Facsimile: (703) 875-1852

     (c) if to HII or any HII Group Member (other than NGC), to:

Huntington Ingalls Industries, Inc.

4101 Washington Avenue

Newport News VA 23607

Attention: Chief Financial Officer

Facsimile: (757) 688-0350

37

 

with a copy (which shall not constitute notice) to:

Huntington Ingalls Industries, Inc.

4101 Washington Avenue

Newport News VA 23607

Attention: General Counsel

Facsimile: (757) 688-1408

     (d) if by HII to NGC, before the date New NGC relocates its corporate headquarters,
to:

Titan II Inc.

c/o Northrop Grumman Corporation

1840 Century Park East

Los Angeles CA 90067-2199

Attention: Vice President — Tax

Facsimile: (310) 556-4546

with a copy (which shall not constitute notice) to:

Northrop Grumman Corporation

1840 Century Park East

Los Angeles CA 90067-2199

Attention: General Counsel

Facsimile: 310) 556-4910

     (e) if by HII to NGC, on or after the date New NGC relocates its corporate
headquarters, to:

Titan II Inc.

c/o Northrop Grumman Corporation

2980 Fairview Park Drive

Falls Church VA 22042

Attention: Vice President — Tax

Facsimile: To be provided at relevant time

with a copy (which shall not constitute notice) to:

Northrop Grumman Corporation

2980 Fairview Park Drive

Falls Church VA 22042

Attention: General Counsel

Facsimile: (703) 875-1852

38

 

     (f) if by New NGC to NGC, to:

Titan II Inc.

4101 Washington Avenue

Newport News VA 23607

Attention: Chief Financial Officer

Facsimile: (757) 688-0350

with a copy (which shall not constitute notice) to:

Huntington Ingalls Industries, Inc.

4101 Washington Avenue

Newport News VA 23607

Attention: General Counsel

Facsimile: (757) 688-1408

     Section 11.15 Counterparts.

     This Agreement may be executed in one or more counterparts each of which when executed shall
be deemed to be an original but all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile
or portable document format (PDF) shall be as effective as delivery of a manually executed
counterpart of any such Agreement.

     Section 11.16 Coordination with the Employee Matters Agreement.

     To the extent any covenants or agreements between the Parties with respect to employment Taxes
are set forth in the Employee Matters Agreement, such matters shall be governed exclusively by the
Employee Matters Agreement and not by this Agreement.

     Section 11.17 Conflict or Inconsistency Between Agreements.

     In the event of any conflict or inconsistency between any provision of this Agreement and any
provision of either the Separation and Distribution Agreement or any of the other Ancillary
Agreements, the applicable provision of this Agreement shall prevail.

     Section 11.18 Termination of this Agreement.

     This Agreement may be terminated by NGC at any time prior to the effectiveness of the Holding
Company Reorganization or by New NGC at any time at or after the effectiveness of the Holding
Company Reorganization and prior to the Distribution. In the event of termination of this
Agreement prior to the Distribution, no party (or any of its directors or officers) shall have any
Liability or further obligation to any other party with respect to this Agreement.

[The remainder of this page is intentionally left blank.]

39

 

     IN WITNESS WHEREOF, the Parties have caused this Tax Matters Agreement to be duly executed by
their duly authorized representatives as of the day and year first above written.

	 	 	 	 	 
	 	NEW P, INC.

 	 
	 	By:  	/s/ Mark Rabinowitz
 	 
	 	 	Name:  	Mark Rabinowitz 	 
	 	 	Title:  	President & Treasurer 	 
	 
	 	HUNTINGTON INGALLS INDUSTRIES, INC.

 	 
	 	By:  	/s/ C. Michael Petters
 	 
	 	 	Name:  	C. Michael Petters 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 
	 	NORTHROP GRUMMAN CORPORATION

 	 
	 	By:  	/s/ Mark Rabinowitz
 	 
	 	 	Name:  	Mark Rabinowitz 	 
	 	 	Title:  	Corporate Vice President & Treasurer 	 
	 

[Signature Page to Tax Matters Agreement]

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