Document:

exv10w5

EXHIBIT 10.5

 

TRANSITION SERVICES AGREEMENT

between

NEW P, INC.

and

HUNTINGTON INGALLS INDUSTRIES, INC.

Dated as of [__________]

      

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	Section 1.1 Table of Definitions
	 	 	1	 
	Section 1.2 Certain Defined Terms
	 	 	2	 
	Section 1.3 Other Capitalized Terms
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II SERVICES
	 	 	2	 
	 
	 	 	 	 
	Section 2.1 Provision of Services
	 	 	2	 
	Section 2.2 Standard of Care; Means of Providing Services
	 	 	2	 
	Section 2.3 Additional Services
	 	 	3	 
	Section 2.4 Services Not Provided by New NGC
	 	 	3	 
	Section 2.5 Use of Services
	 	 	3	 
	Section 2.6 Third-Party Providers
	 	 	3	 
	Section 2.7 Non-Exclusivity
	 	 	3	 
	Section 2.8 Cooperation
	 	 	4	 
	Section 2.9 Limitation on Services
	 	 	4	 
	Section 2.10 Personnel
	 	 	4	 
	Section 2.11 Right to Determine Priority
	 	 	5	 
	Section 2.12 Independent Contractor
	 	 	5	 
	Section 2.13 Independence
	 	 	5	 
	Section 2.14 Temporary Shutdowns for Maintenance
	 	 	5	 
	Section 2.15 Access
	 	 	5	 
	Section 2.16 Disclaimer of Warranty
	 	 	6	 
	Section 2.17 Duty of Good Faith and Fair Dealing
	 	 	6	 
	Section 2.18 Program Managers
	 	 	6	 
	 
	 	 	 	 
	ARTICLE III COMPENSATION
	 	 	6	 
	 
	 	 	 	 
	Section 3.1 Service Charge
	 	 	6	 
	Section 3.2 Invoicing and Payments
	 	 	6	 
	Section 3.3 Taxes
	 	 	7	 
	Section 3.4 Disputed Amounts
	 	 	7	 
	Section 3.5 Company’s Employees
	 	 	8	 
	Section 3.6 Third-Party Obligations
	 	 	8	 
	Section 3.7 Books and Records
	 	 	8	 
	 
	 	 	 	 
	ARTICLE IV TERM AND TERMINATION
	 	 	8	 
	 
	 	 	 	 
	Section 4.1 Term
	 	 	8	 
	Section 4.2 Extension of Term
	 	 	8	 
	Section 4.3 Termination
	 	 	9	 
	Section 4.4 Breach of Transition Services Agreement
	 	 	9	 

i

 

TABLE OF CONTENTS
(Continued)

	 	 	 	 	 
	 	 	Page	 
	Section 4.5 Sums Due
	 	 	9	 
	Section 4.6 Effect of Termination
	 	 	9	 
	Section 4.7 Return of Records
	 	 	9	 
	 
	 	 	 	 
	ARTICLE V FORCE MAJEURE
	 	 	9	 
	 
	 	 	 	 
	Section 5.1 Event of Force Majeure
	 	 	9	 
	Section 5.2 Reasonable Efforts
	 	 	10	 
	 
	 	 	 	 
	ARTICLE VI LIABILITIES
	 	 	10	 
	 
	 	 	 	 
	Section 6.1 Punitive and Consequential Damages
	 	 	10	 
	Section 6.2 Limitation of Liability
	 	 	10	 
	Section 6.3 Obligation to Re-Perform
	 	 	10	 
	Section 6.4 Release and Indemnity
	 	 	10	 
	 
	 	 	 	 
	ARTICLE VII CONFIDENTIALITY; TITLE TO DATA; INFORMATION SYSTEMS
	 	 	10	 
	 
	 	 	 	 
	Section 7.1 Confidentiality
	 	 	10	 
	Section 7.2 Title to Data
	 	 	11	 
	Section 7.3 Intellectual Property
	 	 	11	 
	Section 7.4 Use of New NGC’s Information Systems
	 	 	11	 
	 
	 	 	 	 
	ARTICLE VIII GENERAL PROVISIONS
	 	 	12	 
	 
	 	 	 	 
	Section 8.1 Effect if Distribution Does Not Occur
	 	 	12	 
	Section 8.2 Incorporation of Separation Agreement Provisions
	 	 	12	 

Schedule A Statement of Work

ii

 

TRANSITION SERVICES AGREEMENT

     TRANSITION SERVICES AGREEMENT, dated as of [__________] (this “Transition Services
Agreement”), between New P, Inc., a Delaware corporation (“New NGC”), and Huntington
Ingalls Industries, Inc., a Delaware corporation (“HII”).

RECITALS

     A. New NGC, HII, and Northrop Grumman Corporation, a Delaware corporation (“NGC”),
together with certain Subsidiaries of NGC, have entered into the Separation and Distribution
agreement (the “Separation Agreement”), dated as of the date hereof.

     B. Pursuant to the Separation Agreement, the business of NGC will be separated into two
publicly traded companies: (a) HII, which following the Separation will own and conduct, directly
and indirectly, the Shipbuilding Business (as defined in the Separation Agreement), and (b) New
NGC, which following the Separation will own and conduct, directly and indirectly, the Retained
Business (as defined in the Separation Agreement).

     C. HII desires to purchase certain services from New NGC during a transition period, for the
benefit of HII’s operation of the Shipbuilding Business.

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	 
	Authorized Users 
	 	 	12	 
	HII 
	 	 	2	 
	New NGC 
	 	 	2	 
	New NGC Indemnitees 
	 	 	10	 
	New NGC’s Banner 
	 	 	12	 
	New NGC’s Network 
	 	 	11	 
	NGC 
	 	 	1	 
	Program Manager 
	 	 	6	 
	Separation Agreement 
	 	 	1	 
	Service 
	 	 	2	 
	Service Charge 
	 	 	6	 

 

 

	 	 	 	 	 
	Definition	 	Page	 
	Services 
	 	 	2	 
	Services IP 
	 	 	11	 
	Term 
	 	 	8	 
	Third-Party Products and Services 
	 	 	3	 
	Third-Party Providers 
	 	 	3	 
	Transition Services Agreement 
	 	 	1	 

     Section 1.2 Certain Defined Terms. For purposes of this Transition Services
Agreement:

          “HII” has the meaning set forth in the preamble, and shall include its Subsidiaries
and successor(s).

          “New NGC” has the meaning set forth in the preamble or, unless context otherwise
requires, any of New NGC’s Subsidiaries when that Subsidiary performs the Services listed and
described on Schedule A.

          “Service” or “Services” means those services described on Schedule A
or otherwise provided by New NGC pursuant to Article II.

     Section 1.3 Other Capitalized Terms. Capitalized terms not defined in this Transition
Services Agreement shall have the meanings ascribed to them in the Separation Agreement.

ARTICLE II

SERVICES

     Section 2.1 Provision of Services.

          (a) New NGC shall provide or cause one of its Subsidiaries to provide to HII the services
listed and as specified on Schedule A, attached hereto.

          (b) For each Service, the parties have set forth on Schedule A, the time period during
which the Service will be provided (if different from the Term), a description of the Service and
certain related obligations, a dollar amount commensurate with the Services provided and certain
other terms applicable thereto.

     Section 2.2 Standard of Care; Means of Providing Services.

          (a) Subject to the limitations set forth in this Article II or unless otherwise agreed by the
parties, the Services shall be performed by New NGC for HII’s operation of the Shipbuilding
Business at a level of service that is substantially the same as the level of service in which such
Services were generally performed prior to the Distribution and HII shall use such Services for
substantially the same purposes and in substantially the same manner and level of service as HII
had used such Services prior to the date hereof.

2

 

          (b) Subject to Section 2.2(a), New NGC shall, in its sole discretion, determine the means,
manner and resources used to provide the Services in accordance with its reasonable business
judgment. Without limiting the foregoing, New NGC may elect to modify or replace at any time (i)
its policies and procedures, (ii) any Subsidiaries and/or third parties that provide any Services,
(iii) the location from which any Service is provided or (iv) the intellectual property rights,
information technology, products and services used to provide the Services.

     Section 2.3 Additional Services. Schedule A may be amended at any time by
amendment of this Transition Services Agreement to add additional services.

     Section 2.4 Services Not Provided by New NGC. No services provided under this
Transition Services Agreement shall be construed as accounting, legal or tax advice or shall create
any fiduciary obligations on the part of New NGC or any of its Subsidiaries or Affiliates to any
Person, including to HII or any of its Subsidiaries or Affiliates, or to any plan trustee or any
customer of any of them.

     Section 2.5 Use of Services. New NGC shall be required to provide Services only to
HII in connection with HII’s operation of the Shipbuilding Business. HII shall not resell any
Services to any Person whatsoever or permit the use of the Services by any Person other than in
connection with the conduct of business in the ordinary course by HII. This provision shall not,
however, prevent recovery by HII of all or any costs of such Services under any contract to which
the HII is a party.

     Section 2.6 Third-Party Providers. Each of HII and New NGC shall use commercially
reasonable efforts (a) to obtain any required consents of the providers (“Third-Party
Providers”) of any products or services to be used by New NGC in providing the Services
(“Third-Party Products and Services”) and (b) where necessary, to obtain new licenses or
similar agreements, to permit New NGC to use or receive the benefit of the Third-Party Products and
Services during the term of this Transition Services Agreement to provide the Services;
provided, however, that New NGC shall exclusively conduct all negotiations with
Third-Party Providers in connection with (a) and (b), and that HII shall provide reasonable
cooperation to New NGC in connection with such negotiations. Pursuant to Section 3.2, HII shall
pay for any additional Third-Party Products and Services, including payments for any licenses, and
any additional fees imposed by such Third-Party Providers, including any fees for services related
to “knowledge transfer,” in each case reasonably necessary for New NGC to provide the Services.
The parties understand and agree that provision of any Services requiring the use of any
Third-Party Products and Services shall be subject to receipt of any required consents of the
applicable Third-Party Providers. For the avoidance of doubt, the licenses and agreements referred
to in this Transition Services Agreement refer only to those licenses and agreements necessary to
permit New NGC to provide and for HII to receive Services under this Transition Services Agreement.
New licenses and agreements necessary for HII to stand up or separately operate its business after
completion of the Services are not provided for herein and are the sole responsibility of HII.

     Section 2.7 Non-Exclusivity. Subject to the provisions of Section 4.1(a)(i) governing
the termination of Services, nothing in this Transition Services Agreement shall

3

 

preclude HII from
obtaining, in whole or in part, services of any nature that may be obtainable from New NGC, from
its own employees or from providers other than New NGC.

     Section 2.8 Cooperation. HII shall, in a timely manner, take all such actions as may
be reasonably necessary or desirable in order to enable or assist New NGC in the provision of
Services to HII, including providing necessary information and specific written authorizations and
consents, and New NGC shall be relieved of its obligations hereunder to the extent that HII fails
to take any such action, or HII’s failure to conclude or maintain any such action renders
performance or ongoing performance by New NGC of such obligations unlawful, impracticable or
unreasonable, in New NGC’s sole determination. HII shall be liable to New NGC and its Subsidiaries
and Affiliates for any Liabilities resulting from, arising out of or relating to HII’s failure to
comply with the obligations set forth in this Section 2.8.

     Section 2.9 Limitation on Services. Unless expressly provided otherwise on
Schedule A:

          (a) New NGC shall only be required to provide the Services to or for the benefit of the
Shipbuilding Business as conducted immediately prior to the date of this Transition Services
Agreement;

          (b) HII shall not use the Services other than in a manner directly related to the operation of
the Shipbuilding Business as conducted immediately prior to the date of this Transition Services
Agreement;

          (c) New NGC shall not be required to expand its facilities, incur new long-term capital
expenses or employ additional personnel or maintain the employment of any specific employee in
order to provide the Services to HII;

          (d) New NGC shall not be required to provide Services hereunder that are greater in nature and
scope than the comparable services provided by New NGC to HII prior to the Distribution; and

          (e) New NGC shall not be obligated to provide any Services to the extent inconsistent with
applicable law or contract.

     Section 2.10 Personnel. In providing the Services, New NGC, as it deems necessary or
appropriate in its reasonable judgment, may (a) use the personnel of New NGC or its Affiliates and
(b) employ the services a Third-Party Provider to the extent the relevant Third-Party Products and
Services are routinely utilized to provide similar services to other businesses of any member of
the New NGC Group or are reasonably necessary for the efficient performance of any of such
Services; provided that if New NGC obtains the services of a Third-Party Provider not
routinely utilized to provide similar services to other business of New NGC, that HII consents
prior to the use of such Third-Party Provider, which consent shall not be unreasonably withheld.
New NGC will only
employ the services of Third-Party Providers who have entered into non-disclosure agreements
that obligate such third parties to maintain the confidentiality of HII’s

4

 

proprietary and business
sensitive information and that prohibit the Third-Party Provider from using such proprietary and
business sensitive information for any purpose other than in connection with providing the
Services.

     Section 2.11 Right to Determine Priority. If there is an unavoidable conflict between
the immediate needs of New NGC and those of HII as to the use of or access to a particular Service
to be provided by New NGC, New NGC shall have the right, in its sole discretion, to establish
reasonable priorities, at particular times and under particular circumstances, as between New NGC
and HII. In any such situation, New NGC shall provide notice to HII of any such changes at the
earliest practicable time.

     Section 2.12 Independent Contractor. New NGC shall act under this Transition Services
Agreement solely as an independent contractor and not as an agent of HII.

     Section 2.13 Independence. Unless otherwise agreed in writing, all employees and
representatives of New NGC who provide Services under this Transition Services Agreement shall be
deemed for purposes of all compensation and employee benefits matters to be employees or
representatives of New NGC and not employees or representatives of HII. In performing the
Services, such employees and representatives shall be under the direction, control and supervision
of New NGC (and not HII) and New NGC shall have the sole right to exercise all authority with
respect to the employment (including termination of employment), assignment and compensation of
such employees and representatives.

     Section 2.14 Temporary Shutdowns for Maintenance. New NGC shall have the right to
shut down temporarily for maintenance purposes the operation of the information technology
resources, networks, related infrastructure and facilities providing any Service whenever in its
judgment, reasonably exercised, such action is necessary; provided, however, that
New NGC shall notify HII at least 20 days prior to any scheduled maintenance, to the extent
reasonably practicable. In the event that it is not reasonably practicable to schedule the
maintenance 20 days or more in advance, HII shall be notified that maintenance is required. New
NGC shall give HII as much advance notice of any such shutdown as is reasonably practicable. When
feasible, this notice shall be given in writing. When written notice is not feasible, oral notice
shall be given and promptly confirmed in writing. New NGC shall be relieved of its obligations to
provide Services during the period that its facilities are so shut down but shall use reasonable
efforts to minimize each period of shutdown for such purpose and to schedule such shutdown so as
not to inconvenience or disrupt HII’s conduct of its business.

     Section 2.15 Access. HII shall make available on a timely basis to New NGC all
information and materials reasonably requested by New NGC to enable it to provide the Services.
HII shall give New NGC reasonable access, during regular business hours and at such other times as
are reasonably required, to the business premises for the purposes of providing Services. HII
shall fully inform New NGC of all of its applicable security and safety rules and regulations, and
when accessing HII’s business premises, New NGC shall
use reasonable efforts to comply with all of HII’s security and safety rules and regulations
as described to New NGC.

5

 

     Section 2.16 Disclaimer of Warranty. Except as expressly set forth in this Transition
Services Agreement, the Services and products to be purchased under this Transition Services
Agreement are furnished as is, where is, with all faults and without warranty of any kind, express
or implied, including any warranty of merchantability or fitness for any particular purpose. New
NGC does not make any warranty that any service complies with any law, domestic or foreign.

     Section 2.17 Duty of Good Faith and Fair Dealing. The parties recognize that prior to
the Distribution, New NGC was a provider of certain critical services necessary to the operations
of the Shipbuilding Business. If the parties failed to list a service in Schedule A that
is critical and essential to the Shipbuilding Business, then they agree to consider in good faith
whether they can reasonably modify Schedule A to include such service.

     Section 2.18 Program Managers. Each of HII and New NGC shall appoint a program
manager who will be responsible for managing the relationship between the parties (each a
“Program Manager”). The Program Managers shall be the preferred and primary points of
contact for the parties in relation to this Transition Services Agreement. The responsibilities
for the Program Managers shall include, and the Program Managers shall have the authority to:

          (a) manage and resolve any disputes that arise under this Transition Services Agreement; and

          (b) disseminate information obtained in their role as Program Managers, as appropriate,
throughout their respective organizations.

In the event that the Program Managers cannot resolve any dispute that arises under this Transition
Services Agreement within 30 days, then the dispute resolutions procedures set forth in Article X
of the Separation Agreement shall govern such dispute.

ARTICLE III

COMPENSATION

     Section 3.1 Service Charge. As consideration for the provision of the Services, HII
shall, for each Service performed, pay New NGC the applicable dollar amount for such Service set
forth in Schedule A (the “Service Charge”). In addition to the Service Charge for
such Services, New NGC shall also be entitled to reimbursement from HII upon receipt of reasonable
supporting documentation for all reasonable and necessary third-party and out-of-pocket expenses
incurred in connection with New NGC’s provision of the Services that are not included as part of
the Service Charge. In the event the Service is terminated, the Service Charge will be prorated
for the number of days of Service received in the calendar month (based on a 30-day month) in which
the Service is terminated.

     Section 3.2 Invoicing and Payments.

          (a) Invoices. Except as the parties shall otherwise agree, after the end of each
month, New NGC shall submit an invoice to HII for the costs it incurred under this

6

 

Transition
Services Agreement for that month. Each invoice shall include a line item level of detail for the
previously agreed-upon Services for which there is a Service Charge, together with documentation
supporting each of the invoiced amounts so that HII can make appropriate cost settlements to each
business unit and cost center. HII shall pay all amounts due and payable under such invoice in
accordance with
Section 3.2(c).

          (b) Notice. All invoices shall be in writing and shall be delivered by first class
mail, facsimile or e-mail to the attention of HII at the following address, or pursuant to such
other instructions as may be designated in writing by HII:

	 	 	 

	Huntington Ingalls Industries, Inc.

4101 Washington Avenue

Newport News, VA 23607
	Attention:
	 	 
	 

	 	 
	Facsimile:
	 	 
	 

	 	 
	E-mail:
	 	 
	 

	 	 

          (c) Payment. All payments described in this Section 3.2 shall be made by electronic
funds transmission in U.S. Dollars to an account designated by New NGC or HII, as applicable,
without any offset or deduction of any nature whatsoever, within 30 days of the date of receipt of
any properly submitted invoice. Invoices unpaid as of such date shall accrue interest at a rate
equal to the daily average one-month LIBOR plus one percent (1%); provided,
however, that interest shall not accrue for a period of up to one-month on past-due unpaid
invoices if the delay or failure to pay results from causes beyond HII’s reasonable control,
including any strikes, lock-outs or other labor difficulties, acts of any government, riot,
insurrection or other hostilities, embargo, fuel or energy shortage, fire, flood, acts of God,
wrecks or transportation delays, or inability to obtain necessary labor, materials or utilities.
If HII fails to pay any amount due hereunder when due, New NGC shall have the right, without any
liability to HII, or anyone claiming by or through HII, to cease providing any or all of the
Services provided by New NGC to HII unless HII cures such a failure to make payment within five
days of New NGC’s providing written notice of its intention to cease providing services, which
right may be exercised by New NGC in its sole and absolute discretion.

     Section 3.3 Taxes. All amounts invoiced by New NGC in connection with the Services
shall include all taxes, duties, assessments and other charges that are imposed now or in the
future by any Governmental Authority except that any applicable Virginia or Mississippi sales,
value added or similar tax will be paid by HII directly to the appropriate state under direct
payment permit No. 998008 (Virginia) and No. 57 (Mississippi).

     Section 3.4 Disputed Amounts. In the event HII disputes the accuracy of any invoice,
HII shall pay the full invoice. If HII fails to pay any undisputed amount owed under this
Transition Services Agreement, HII shall correct such failure promptly
following notice of the failure and shall pay New NGC interest on the amount paid late at an
interest rate equal to the daily average one-month LIBOR plus one percent (1%).

7

 

     Section 3.5 Company’s Employees. New NGC shall not be obligated to pay any amounts to
HII or any of their employees in respect of payroll, benefits or similar obligations.

     Section 3.6 Third-Party Obligations. New NGC shall not be required to use its own
funds for any third-party-provided service or payment obligation of HII.

     Section 3.7 Books and Records. New NGC shall keep books and records of the Services
provided and reasonable supporting documentation of all charges incurred in connection with
providing such Services and shall produce records that verify the Services were performed and when
such Services were performed, and shall make such books and records available to HII upon
reasonable notice, during normal business hours.

ARTICLE IV

TERM AND TERMINATION

     Section 4.1 Term.

          (a) This Transition Services Agreement shall become effective on the Distribution Date and
shall remain in effect until the expiration of the last time period for the performance of Services
scheduled on Schedule A (which in no event shall be longer than 12 months, unless extended
pursuant to Section 4.2, the “Term”) unless (i) earlier terminated with respect to a
particular Service by HII in accordance with Section 4.1(b) or by New NGC in accordance with
Section 4.1(c) or (ii) this Transition Services Agreement is earlier terminated pursuant to Section
4.3.

          (b) HII may cancel any Service upon 60 days’ written notice, subject to the requirement that,
in addition to any other amounts due under this Transition Services Agreement, HII pays to New NGC
the out-of-pocket costs reasonably incurred by New NGC to settle or terminate any agreements with
Third-Party Providers who provide Services to HII, as well as the incremental internal costs, but
excluding employee termination and severance costs, incurred by New NGC, as reasonably determined
by New NGC, as a result of such cancellation, which out-of-pocket and internal costs shall be set
forth in reasonable detail in a written invoice provided to HII.

          (c) New NGC may cease to provide any Service upon 60 days’ written notice to HII if New NGC
permanently ceases to provide such service to New NGC’s subsidiaries, sectors, divisions and
business units, provided that New NGC reasonably cooperates with HII in transitioning such
Service to another supplier; provided, further, that New NGC shall not unilaterally cease Services
that HII reasonably determines are necessary for the conduct of the Shipbuilding Business, and in
that event, the parties shall agree upon a limited transition period and plan.

     Section 4.2 Extension of Term. The term of any Services may only be extended by amendment
of this Transition Services Agreement.

8

 

     Section 4.3 Termination. This Transition Services Agreement shall terminate on the
earliest to occur of:

          (a) the expiration of the Term;

          (b) the date on which the provision of all Services has terminated or been canceled pursuant
to Section 4.1; or

          (c) the date on which this Transition Services Agreement is terminated pursuant to Section
4.4.

     Section 4.4 Breach of Transition Services Agreement. If either party shall breach of
any of its significant obligations under this Transition Services Agreement, including any failure
to make payments when due, and such party does not cure such default within 30 days after receiving
written notice thereof from the non-breaching party, the non-breaching party may terminate this
Transition Services Agreement, including the provision of the Services pursuant hereto, immediately
by providing written notice of termination.

     Section 4.5 Sums Due. In the event of a termination of this Transition Services
Agreement, New NGC shall be entitled to all outstanding amounts due from HII up to the date of
termination.

     Section 4.6 Effect of Termination. Sections 3.2 through 3.7, Section 4.5, Article VI,
Article VII, Article VIII and this Section 4.6 shall survive any termination of this Transition
Services Agreement.

     Section 4.7 Return of Records. Upon the termination of a Service or Services with respect
to which New NGC holds books, records or files, including current and archived copies of computer
files, owned by HII and used by New NGC in connection with the provision of a Service to HII, New
NGC will return all of such books, records or files as soon as reasonably practicable. HII shall
bear New NGC’s costs and expenses associated with the return of such documents. At its expense,
New NGC may make a copy of such books, records or files for its legal files.

ARTICLE V

FORCE MAJEURE

     Section 5.1 Event of Force Majeure. New NGC shall not be liable for any interruption
of Service, delay or failure to perform under this Transition Services Agreement when such
interruption, delay or failure results from causes beyond its reasonable control, including any
strikes, lock-outs or other labor difficulties, acts of any government, riot, insurrection or other
hostilities, embargo, fuel or energy shortage, fire, flood, acts of God, wrecks or transportation
delays, or inability to obtain necessary labor, materials or utilities. In any such event, New
NGC’s obligations hereunder shall be postponed for such time as its performance is suspended or
delayed on account thereof. New NGC will promptly notify HII either orally or in writing, upon
learning of the occurrence of such event of force majeure.

9

 

     Section 5.2 Reasonable Efforts. Upon the cessation of the force majeure event, New
NGC will use reasonable efforts to resume its performance with the least possible delay.

ARTICLE VI

LIABILITIES

     Section 6.1 Punitive and Consequential Damages. Except with respect to liabilities
owed to third-parties not affiliated with either Group, neither party shall be liable to the other,
whether in contract, in tort (including negligence and strict liability), or otherwise, for any
punitive, indirect, incidental or consequential damages, which in any way arise out of, relate to,
or are a consequence of, its performance or nonperformance hereunder, or the provision of or
failure to provide any Service or perform any other obligation hereunder, including loss of profits
and business interruptions.

     Section 6.2 Limitation of Liability. In any event, the liability of New NGC with
respect to this Transition Services Agreement or anything done in connection herewith, including
the performance or breach hereof, or from the sale, delivery, provision or use of any Service or
product provided under or covered by this Transition Services Agreement, whether in contract, tort
(including negligence or strict liability) or otherwise, shall not exceed the dollar amounts
previously paid to New NGC by HII in respect of the Service to which such liability relates.

     Section 6.3 Obligation to Re-Perform. In the event of any breach of this Transition
Services Agreement by New NGC with respect to any error or defect in the provision of any Service,
New NGC shall, at HII’s request, correct such error or defect or re-perform such Services at the
expense of New NGC.

     Section 6.4 Release and Indemnity. Except as specifically set forth in this
Transition Services Agreement, HII hereby releases New NGC, its employees, agents, officers and
directors (the “New NGC Indemnitees”) and agrees to indemnify and hold harmless the New NGC
Indemnitees from any and all claims, demands, complaints, liabilities, losses, damages and all
costs and expenses arising from or relating to the provision or use of any Service or product
provided hereunder to the extent not arising from the gross negligence or willful misconduct of New
NGC.

ARTICLE VII

CONFIDENTIALITY; TITLE TO DATA; INFORMATION

SYSTEMS

     Section 7.1 Confidentiality. Each of the parties agrees that any business-sensitive
and proprietary information of the other party marked or identified in writing as such and received
in the course of performance under this Transition Services Agreement shall be kept strictly in
confidence by the parties, except that either party may disclose such information for the purpose
of providing or facilitating Services pursuant to this Transition Services Agreement to any
subsidiary of either party or to third parties that provide such Services, provided, that
any such third party shall have agreed to be bound by this Section 7.1. Upon the expiration or
termination of this Transition Services Agreement,

10

 

each party shall return to the other party all of such other party’s business-sensitive and proprietary
information to the extent that such information has not been previously returned pursuant to
Section 4.7. In lieu of returning such information, the receiving party may, with the disclosing
party’s prior written approval, destroy such information and provide the disclosing party with a
certificate of destruction, signed by an officer of the receiving party.

     Section 7.2 Title to Data.

          (a) HII acknowledges and agrees that it will acquire no right, title or interest (including
any license rights or rights of use) in any firmware, software or hardware, and the licenses
therefor that are owned by New NGC, by reason of New NGC’s provision of the Services provided
hereunder.

          (b) New NGC agrees that all records, data, files, input materials and other information
received or computed for the benefit of HII and which relate to the conduct of HII’s operations are
the property of HII. Nothing in the previous sentence shall create any obligation on the part of
New NGC to provide hardware or other equipment to HII for the conduct of HII’s operations.

     Section 7.3 Intellectual Property. The parties agree that each of New NGC and HII, as
applicable, owns and shall retain sole ownership of its intellectual property, technology and data,
including any intellectual property, technology or data (or improvements or modifications to any of
the foregoing) created or developed by New NGC or HII, as applicable, in connection with the
performance of Services hereunder (“Services IP”); provided, however, all
data created pursuant to a Service and on behalf of HII as recipient of such Service shall be owned
by HII. To the extent necessary to give effect to the foregoing, upon the request of New NGC or
HII having created or developed Services IP, New NGC or HII, as applicable, shall promptly, and
shall cause its employees, agents and contractors to promptly (a) disclose all information and
provide copies of all documents relating to such Services IP to the developing party, (b) assign
all right, title and interest in any such Services IP to the developing party (other than the
business information created as the outcome of a Service delivered to HII, which shall be owned by
HII) and (c) execute such documents and do such other acts as the developing party may reasonably
request in relation to such Services IP. If the receipt or provision of the Services hereunder
requires the use by New NGC or HII, as applicable, of the intellectual property, technology or data
of New NGC or HII, as applicable, then New NGC or HII, as applicable, shall have the right to use
such intellectual property, technology and data during the Term for the sole purpose of, and only
to the extent necessary for, the receipt or provision of the Services hereunder, pursuant to the
terms and conditions of this Transition Services Agreement. Except as provided under Section
7.2(b), the transfer of intellectual property shall be governed exclusively by the Separation
Agreement and IP License Agreement.

     Section 7.4 Use of New NGC’s Information Systems.

          (a) HII acknowledges and agrees that use of New NGC’s computer network and Information
Solutions Services (collectively, the “New NGC’s Network”) by

11

 

HII, its employees,
contractors and anyone else that HII directly or indirectly authorizes to use New NGC’s Network
(“Authorized Users”) shall be subject to compliance with New NGC’s Corporate Policy CP R1,
“Computer Systems and Electronic Media,” and New NGC’s related corporate procedures, copies of
which have been made available to HII. HII shall provide a copy of New NGC’s Corporate Policy CP
R1 to all Authorized Users. New NGC shall use reasonable best efforts to provide HII with 20 days’
advance notice of any changes to Corporate Policy CP R1. This applies only to the New NGC network
and does not apply to any networks that are firewalled off from the New NGC network.

          (b) HII further acknowledges and agrees that all Authorized Users will see, at the time of
login to New NGC’s Network, a login banner that will state, in substantially similar form, that
individual users have no expectation of privacy in any information passing through or stored on New
NGC’s Network and that any communications or data that pass through or are stored on New NGC’s
Network may be monitored, intercepted, searched, disclosed or used for any lawful purpose by New
NGC or a third party (the “New NGC’s Banner”). HII shall require consent to the terms of
New NGC’s Banner as a condition precedent for use of New NGC’s Network by Authorized Users.

          (c) HII also specifically agrees and consents to the specific terms of and activities set
forth Section 7.4(b).

ARTICLE VIII

GENERAL PROVISIONS

     Section 8.1 Effect if Distribution Does Not Occur. If the Distribution does not
occur, then all actions and events that are, under this Transition Services 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.

     Section 8.2 Incorporation of Separation Agreement Provisions. The following
provisions of the Separation Agreement are hereby incorporated herein by reference, and unless
otherwise expressly specified herein, such provisions shall apply as if fully set forth herein
(references in this Section 8.2 to an “Article” or “Section” shall mean Articles or Sections of the
Separation Agreement, and references in the material incorporated herein by reference shall be
references to the Separation Agreement): Article V (relating to Mutual Releases; Indemnification);
Article VIII (relating to Further Assurances and Additional Covenants); Article IX (relating to
Termination); Article X (relating to Dispute Resolution) and Article XI (relating to
Miscellaneous). In the event of any conflict or inconsistency between any of the foregoing
provisions of the Separation Agreement and any provision of this Transition Services Agreement,
this Transition Services Agreement shall prevail with respect to matters governed by this
Transition Services Agreement.

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

12

 

     IN WITNESS WHEREOF, the parties have caused this Transition Services Agreement to be executed
by their duly authorized representatives.

	 	 	 	 	 
	 	NEW P, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HUNTINGTON INGALLS INDUSTRIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Signature Page to Transition Services Agreement]exv10w13

EXHIBIT 10.13

PERFORMANCE AND INDEMNITY AGREEMENT

[___________]

Between

Huntington Ingalls Industries, Inc. and Northrop Grumman Corporation

Relating to the performance guarantees entered into between Northrop Grumman

Corporation and the United States of America, Naval Sea Systems Command (the “Navy”)

in connection with certain shipbuilding contracts between Northrop Grumman

Shipbuilding, Inc. and the Navy

 

 

     THIS PERFORMANCE AND INDEMNITY AGREEMENT (this “Agreement”) is made as of [__________], by and
between Huntington Ingalls Industries, Inc., a Delaware corporation having its office at 4101
Washington Avenue, Newport News, VA 23607 (“HII”), and Northrop Grumman Corporation, a Delaware
corporation having its office at 4101 Washington Avenue, Newport News, VA 23607 (“NGC”).

RECITALS

A. Pursuant to the Separation and Distribution Agreement (the “Separation Agreement”), dated as of
the date hereof, among HII, NGC, New P, Inc., a Delaware corporation (“New NGC”) and certain
subsidiaries of NGC, the parties thereto have agreed, among other things, that New NGC will
distribute all of the outstanding shares of common stock of HII to the holders of common stock of
New NGC (the “Distribution”).

B. Pursuant to (a) the Performance Guaranty (the “2002 Performance Guaranty”), dated as of April
11, 2002, by NGC, as guarantor, to the United States of America, Naval Sea Systems Command (the
“Navy”), as beneficiary, (b) the Performance Guaranty (the “2006 Performance Guaranty”), dated
2006, by NGC, as guarantor, to the Navy, as beneficiary, (c) the Performance Guaranty (the “2007
Performance Guaranty”), dated as of April 24, 2007, by NGC, as guarantor, to the Navy, as
beneficiary, and (d) any other similar guarantee pursuant to which NGC has guaranteed the
performance of Northrop Grumman Shipbuilding, Inc., a Virginia corporation (“NGSB”), or any
affiliate of NGSB, under shipbuilding construction contracts with the Navy or a command or other
division thereof (any such guarantee, together with the 2002 Performance Guaranty, the 2006
Performance Guaranty and the 2007 Performance Guaranty, the “Navy Guarantees”), NGC has guaranteed
the full and prompt performance of obligations of NGSB under the related construction contracts
between NGSB and the Navy.

C. As a condition to the Distribution under the Separation Agreement, HII and NGC must execute and
deliver this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants, agreements and
conditions herein contained, the parties hereto agree as follows:

	1.	 	PERFORMANCE BY HII ON BEHALF OF NGC
	 
	1.1	 	HII shall comply, on behalf of NGC, with all the provisions of the Navy Guarantees with which
NGC is obligated to comply. HII shall have responsibility for the payment and performance of
all outstanding obligations and liabilities of every type and description of the guarantor
under the Navy Guarantees whether now existing or hereafter arising under the Navy Guarantees
and shall pay and perform such outstanding obligations and liabilities in the time and manner
required under the Navy Guarantees as the same fall due for payment and performance,
notwithstanding that a request for payment and/or performance may be directed to NGC.
	 
	1.2	 	HII shall remain responsible to comply with all the provisions of the Navy Guarantees on
behalf of NGC, even if such provisions are amended, supplemented or otherwise modified after
the date hereof.

 

 

	1.3	 	NGC will continue to be the guarantor of the Navy Contracts as provided in the Navy
Guarantees. Nothing in this Agreement will release NGC from its obligations as guarantor
under the Navy Guarantees.
	 
	2.	 	INDEMNIFICATION
	 
	 	 	HII shall indemnify NGC and keep NGC fully and effectively indemnified from and against and
hold NGC harmless from and against any and all past, present and future liabilities, losses,
damages, penalties, judgments, actions, proceedings, claims, demands, costs, fees and
expenses of any kind or nature whatsoever to which NGC may become subject or that may be
imposed on, incurred by, suffered by, made against or asserted against NGC, in any manner
relating to, arising out of or in connection with the Navy Guarantees and/or any failure by
HII to perform any of those obligations, including in respect of any failure on the part of
NGC to perform any of those obligations which by this Agreement are to be performed by HII,
or any claim, litigation, investigation or proceeding relating thereto and to reimburse NGC
upon demand for any legal or other expenses incurred in connection with investigating or
defending any of the foregoing.
	 
	3.	 	FURTHER ASSURANCES
	 
	 	 	HII, at its own expense, shall perform promptly such acts as may be reasonably necessary or
advisable, or that NGC may reasonably request at any time, to carry out the intent of this
Agreement, including, to execute and deliver (or cause any third party to execute and
deliver) any such additional agreements, documents and instruments to evidence HII’s
agreements to comply with the provisions of the Navy Guarantees on NGC’s behalf and to
indemnify NGC as set forth in Sections 1 and 2 hereof.
	 
	4.	 	ENTIRE AGREEMENT
	 
	 	 	This Agreement represents the entire agreement between the parties in relation to the
subject matter of this Agreement and supersedes any previous agreement whether written or
oral between the parties in relation to that subject matter.
	 
	5.	 	SEVERABILITY
	 
	 	 	If any term or provision of this Agreement shall be held to be illegal or unenforceable, in
whole or in part, under any enactment or rule of law, such term or provision, or part
thereof, to the extent that it is illegal or unenforceable, shall be deemed not to form part
of this Agreement but the enforceability of the remainder of this Agreement shall not be
affected. Subject to the preceding sentence, should any term or provision of this Agreement
be or become ineffective, in whole or in part, for reasons beyond the control of the
parties, the parties shall use reasonable efforts to agree upon a new provision which shall
as nearly as possible have the same commercial effect as the ineffective term or provision
or part thereof.

2

 

	6.	 	NOTICES
	 
	 	 	Any notice or other communications required or permitted hereunder shall be sufficiently
given if delivered in person, transmitted via facsimile (but only if followed by transmittal
by recognized overnight courier or hand delivery), or sent by registered or certified mail,
postage prepaid, or recognized overnight courier service addressed to the party concerned at
the relevant address shown at the beginning of this Agreement (or such other address as may
be notified from time to time in accordance with this Clause by the relevant party to the
other party), and such notice or communication shall be deemed to have been given (a) as of
the date so personally delivered or transmitted via facsimile, (b) on the third Business Day
after the mailing thereof or (c) on the first Business Day after delivery by recognized
overnight courier service. The term “Business Day” shall mean any 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.
	 
	7.	 	COUNTERPARTS
	 
	 	 	This Agreement may be executed in any number of counterparts and by the parties on separate
counterparts, each of which shall be deemed an original and all of which taken together
shall constitute a single agreement.
	 
	8.	 	GOVERNING LAW
	 
	 	 	THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (OTHER THAN CHOICE OF LAW RULES THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION).
	 
	9.	 	INTERPRETATION
	 
	9.1	 	References
	 
	 	 	In this Agreement, unless the context otherwise requires:

	 	(a)	 	any reference to an agreement or other document is to that document as amended,
supplemented or replaced from time to time; and
	 
	 	(b)	 	the definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined.

	9.2	 	Headings
	 
	 	 	In this Agreement the headings are for convenience only and shall not affect the
interpretation or construction of this Agreement.

[Remainder of page intentionally left blank.]

3

 

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

	 	 	 	 	 
	 	HUNTINGTON INGALLS INDUSTRIES, INC.

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 
	 	NORTHROP GRUMMAN CORPORATION

 	 
	 	By:  	 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

Signature Page to Performance and Indemnity Agreement — Navy Guarantees

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