Exhibit 10.1

EMPLOYEE MATTERS AGREEMENT

by and between

EXELIS INC.

and

VECTRUS, INC.

dated as of

September 25, 2014

TABLE OF CONTENTS

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EMPLOYEE MATTERS AGREEMENT

THIS EMPLOYEE MATTERS AGREEMENT, dated as of September 25, 2014, is entered into by and between Exelis Inc. (“ Exelis ”), and Vectrus, Inc. (“ Vectrus ”). Exelis and Vectrus are also referred to in this Agreement individually as a “ Party ” and collectively as the “ Parties .”

RECITALS

WHEREAS, Exelis has determined that it would be appropriate, desirable and in the best interests of Exelis and the shareholders of Exelis to separate the Vectrus Business from Exelis;

WHEREAS, Exelis and Vectrus have entered into the Separation and Distribution Agreement, dated as of September 25, 2014 (the “ Distribution Agreement ”), in connection with the separation of the Vectrus Business from Exelis (the “ Transaction ”) and the Distribution of Vectrus Common Stock to shareholders of Exelis;

WHEREAS, the Distribution Agreement also provides for the execution and delivery of certain other agreements, including this Agreement, in order to facilitate and provide for the separation of Vectrus and its subsidiaries from Exelis; and

WHEREAS, to ensure an orderly transition under the Distribution Agreement, it will be necessary for the Parties to allocate between them Assets, Liabilities and responsibilities with respect to certain employee compensation and benefit plans and programs, and certain other employment matters.

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1. Definitions . As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1. Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Distribution Agreement.

“ 2012 TSR Award ” means a cash-based award granted under an Exelis Equity Plan that vests based upon total shareholder return over the performance period of January 1, 2012 through December 31, 2014.

“ 2013 TSR Award ” means a cash-based award granted under an Exelis Equity Plan that vests based upon total shareholder return over the performance period of January 1, 2013 through December 31, 2015.

“ 2012 TSR Proration Factor ” means the quotient obtained by dividing the elapsed time, measured in whole months, from January 1, 2012 through the last completed fiscal month ending on or before the Distribution Date by 36.

“ 2013 TSR Proration Factor ” means the quotient obtained by dividing the elapsed time, measured in whole months, from January 1, 2013 through the last completed fiscal month ending on or before the Distribution Date by 36.

“ Adjusted Exelis Option ” has the meaning set forth in Section 5.2(b)(I).

“ Adjusted Exelis RSU ” has the meaning set forth in Section 5.4(a).

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

“ Agreement ” means this Employee Matters Agreement, together with all schedules hereto and all amendments, modifications, and changes hereto entered into pursuant to Section 15.9.

“ Assets ” has the meaning set forth in the Distribution Agreement.

“ Beneficial Owner ” shall have the meaning ascribed to such term in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

“ Benefit Management Records ” has the meaning set forth in Section 4.3(b).

“ Benefit Plan ” means any contract, agreement, policy, practice, program, plan, trust, commitment or arrangement providing for benefits, perquisites or compensation of any nature to any Employee, or to any eligible family member, dependent, or beneficiary of any such Employee, including pension plans (qualified and nonqualified), thrift plans, deferred compensation plans (qualified and nonqualified), supplemental pension plans and welfare plans, and contracts, agreements, policies, practices, programs, plans, trusts, commitments and arrangements providing for terms of employment, fringe benefits, severance benefits, change in control protections or benefits, medical, retiree medical, dental, vision, travel and accident, life, disability and accident insurance, tuition reimbursement, travel reimbursement, vacation, sick, personal or bereavement days, leaves of absences and holidays of Exelis or Vectrus, as applicable.

“ Business Day ” means any day other than a Saturday or Sunday or a day on which banking institutions in McLean, Virginia are authorized or requested by Law to close.

“ Change in Control ” shall be deemed to have occurred as of the first day that any one or more of the following conditions have been satisfied:

(a) a report on Schedule 13D shall be filed with the Securities and Exchange Commission pursuant to Section 13(d) of the Exchange Act disclosing that any Person, other than Vectrus or a Subsidiary or any employee benefit plan sponsored by Vectrus or a Subsidiary (or related trust), is the Beneficial Owner directly or indirectly of twenty percent (20%) or more of the outstanding shares of Vectrus Common Stock;

(b) any Person, other than Vectrus or a Subsidiary, or any employee benefit plan sponsored by Vectrus or a Subsidiary (or related trust), shall purchase shares pursuant to a tender offer or exchange offer to acquire any shares of Vectrus Common Stock (or securities convertible into shares of Vectrus Common Stock) for cash, securities or any other consideration, provided that after consummation of the offer, the Person in question is the Beneficial Owner, directly or indirectly, of twenty percent (20%) or more of the outstanding shares of Vectrus Common Stock (calculated as provided in paragraph (d) of Rule 13d-3 under the Exchange Act in the case of rights to acquire shares of Vectrus Common Stock);

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(c) the consummation of:

(I) any consolidation, business combination or merger involving Vectrus, other than a consolidation, business combination or merger involving Vectrus in which holders of shares of Vectrus Common Stock immediately prior to the consolidation, business combination or merger (x) hold fifty percent (50%) or more of the combined voting power of Vectrus (or the corporation resulting from the consolidation, business combination or merger or the parent of such corporation) after the merger and (y) have the same proportionate ownership of common stock of Vectrus (or the corporation resulting from the consolidation, business combination or merger or the parent of such corporation), relative to other holders of shares of Vectrus Common Stock immediately prior to the consolidation, business combination or merger, immediately after the consolidation, business combination or merger as immediately before;

(II) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially all the assets of Vectrus; or

(III) there shall have been a change in a majority of the members of the board of directors of Vectrus within a 12-month period unless the election or nomination for election by Vectrus’s shareholders of each new director during such 12-month period was approved by the vote of two-thirds of the directors then still in office who (x) were directors at the beginning of such 12-month period or (y) whose nomination for election or election as directors was recommended or approved by a majority of the directors who were directors at the beginning of such 12-month period; or

(d) any Person, other than Vectrus or a Subsidiary or any employee benefit plan sponsored by Vectrus or a Subsidiary (or related trust), becomes the Beneficial Owner of twenty percent (20%) or more of the shares of Vectrus Common Stock.

“ COBRA ” means the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985, as codified at Section 601 et seq. of ERISA and at Section 4980B of the Code.

“ Code ” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

“ Disability Medical Benefits ” means medical, dental and vision benefits provided before the Welfare Plan Implementation Date by an Exelis Welfare Plan or, after the Welfare Plan Implementation Date, by a Vectrus Welfare Plan, to Vectrus Group Employees who are Former Management Benefitted Employees and who became disabled under an Exelis Welfare Plan that provided long-term disability benefits before the Welfare Plan Implementation Date.

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

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“ Distribution Agreement ” has the meaning set forth in the recitals to this Agreement.

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

“ Effective Time ” means the effective time of the Distribution.

“ Employee ” means any Exelis Group Employee, Former Exelis Group Employee or Vectrus Group Employee.

“ ERISA ” means the U.S. Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Exelis ” has the meaning set forth in the preamble to this Agreement.

“ Exelis Benefit Plan ” means any Benefit Plan sponsored or maintained by a member of the Exelis Group immediately prior to the Effective Time, excluding any such Benefit Plan that becomes a Vectrus Benefit Plan.

“ Exelis Bonus Plan ” means the Exelis Annual Incentive Plan for Executive Officers or the Exelis Inc. 1997 Annual Incentive Plan, as applicable, as may be amended from time to time.

“ Exelis Common Stock ” means the common stock, par value $0.01 per share, of Exelis.

“ Exelis Common Stock Unit Fund ” means an investment fund in the Exelis Salaried Investment and Savings Plan which holds Exelis Common Stock Units and cash.

“ Exelis Common Stock Units ” means units of the Exelis Common Stock Unit Fund.

“ Exelis Director ” means any individual who (a) is or was previously a non-employee member of the board of directors of Exelis, or (b) was a member of the board of directors of ITT Corporation prior to November 1, 2011.

“ Exelis Entity ” means any member of the Exelis Group.

“ Exelis Equity Plan ” means any equity incentive plan sponsored or maintained by Exelis immediately prior to the Effective Time.

“ Exelis Excess Pension Plans ” means collectively, the Exelis Inc. Excess Pension Plan IA, the Exelis Inc. Excess Pension Plan IIA, the Exelis Inc. Excess Pension Plan IB, and the Exelis Inc. Excess Pension Plan IIB.

“ Exelis Excess Savings Plan ” means the Exelis Inc. Excess Savings Plan.

“ Exelis FSA ” has the meaning set forth in Section 9.3(a)(I).

“ Exelis Group ” has the meaning set forth in the Distribution Agreement.

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“ Exelis Group Employee ” means any individual who is or was previously employed by a member of the Exelis Group immediately prior to the Effective Time, excluding any Vectrus Group Employee.

“ Exelis HRA ” has the meaning set forth in Section 9.2(h)(I).

“ Exelis HRA Participation Period ” means any period of participation by a Vectrus Welfare Plan Participant who is a Management Benefitted Employee in an Exelis HRA during the plan year in which the Distribution occurs.

“ Exelis Options ” means options to purchase Exelis Common Stock granted pursuant to any Exelis Equity Plan.

“ Exelis Pension Plan ” means the Exelis Salaried Retirement Plan.

“ Exelis Post-Distribution Share Value ” means the closing per share price of Exelis Common Stock on the last Trading Day prior to the Distribution Date based on “ex-distribution” trading on the NYSE during Regular Trading Hours.

“ Exelis Pre-Distribution Share Value ” means the closing per share price of Exelis Common Stock on the last Trading Day prior to the Distribution Date based on “regular way” trading on the NYSE during Regular Trading Hours.

“ Exelis Ratio ” means the quotient obtained by dividing the Exelis Post-Distribution Share Value by the Exelis Pre-Distribution Share Value.

“ Exelis Retiree Life Plan ” means the Exelis Salaried Retiree Life Insurance Plan.

“ Exelis Retiree Medical Plan ” means the Exelis Salaried Retiree Medical Plan.

“ Exelis RSAs ” means restricted stock awards issued under any Exelis Equity Plan.

“ Exelis RSUs ” means restricted share units granted under any Exelis Equity Plan.

“ Exelis Savings Plan ” means the Exelis Salaried Investment and Savings Plan.

“ Exelis Springing Rabbi Trust ” means the grantor trust established by Exelis with Wells Fargo Bank, N.A. on November 2, 2011.

“ Exelis Welfare Plan ” means any Welfare Plan sponsored or maintained by any one or more members of the Exelis Group as of immediately prior to the Effective Time.

“ FICA ” has the meaning set forth in Section 4.1(f).

“ FMLA ” means the U.S. Family and Medical Leave Act, as amended, and the regulations promulgated thereunder.

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“ Former Exelis Group Employee ” means all former employees of the Exelis Group who have an employment end date on or before the Effective Time, excluding all Vectrus Group Employees.

“ Former Management Benefitted Employee ” means a former Employee who (i) would have been a Management Benefitted Employee, but instead becomes entitled to long-term disability benefits under an Exelis Welfare Plan or (ii) who is or would have been a Management Benefitted Employee, but instead experiences a Qualifying Event prior to the Welfare Plan Implementation Date.

“ Former TARS Employee ” means a former Employee who (i) performed services to Exelis Tethered Radar, LLC prior to the Effective Time and who is entitled to long-term disability benefits under a Vectrus Welfare Plan or (ii) who is or was a TARS Employee who experiences a Qualifying Event before the Welfare Plan Implementation Date.

“ FUTA ” has the meaning set forth in Section 4.1(f).

“ HIPAA ” means the Health Insurance Portability and Accountability Act of 1996, as amended, and the regulations promulgated thereunder.

“ IRS ” means the Internal Revenue Service.

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

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

“ Management Benefitted Employee ” means any Vectrus Group Employee who, as of the Effective Time or after the Effective Time but before the Welfare Plan Implementation Date, is providing or commences to provide, as the case may be, services to Vectrus other than as a PP Employee, including without limitation, each Vectrus Group Employee who resides or performs services primarily outside of the United States.

“ NYSE ” means the New York Stock Exchange.

“ Notice of Creditable Coverage ” means a certificate of creditable coverage issued in accordance with HIPAA.

“ Party ” or “ Parties ” has the meaning set forth in the preamble to this Agreement.

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

“ PP Employee ” means any Vectrus Group Employee whose employment with Vectrus is covered by a contract or collective bargaining agreement listed on Appendix A or who works in a project management position identified on the then-attached “Exhibit A” to Amendment Four to the Exelis Systems Corporation Retirement and Savings Plan, including each Vectrus Group Employee who resides or performs services primarily outside the United States.

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“ Privacy Contract ” means any contract entered into in connection with applicable privacy protection Laws or regulations.

“ Qualified Beneficiary ” has the meaning set forth in Treasury Regulation Section 54.4980B-3, Q&A-1.

“ Qualifying Event ” has the same meaning as set forth in Treasury Regulation Section 54.4980B-4, Q&A-1.

“ Regular Trading Hours ” means the period beginning at 9:30 A.M. New York City time and ending at 4:00 P.M. New York City time.

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

“ TARS Employee ” means any employee of Exelis actively providing services to Exelis Tethered Radar LLC, a wholly owned subsidiary of Exelis, before January 1, 2015, who is covered by a contract or collective bargaining agreement listed on Appendix A or who works in a project management position, identified in the then-attached “Exhibit A” to the Second Amendment to the Exelis Systems Corporation Retirement and Savings Plan.

“ Tax ” has the meaning set forth in the Tax Matters Agreement.

“ Tax Matters Agreement ” means the Tax Matters Agreement, dated as of September 25, 2014 by and among Exelis and Vectrus.

“ Trading Day ” means the period of time during any given calendar day, commencing with the determination of the opening price on the NYSE and ending with the determination of the closing price on the NYSE, in which trading and settlement in Exelis Common Stock or Vectrus Common Stock are permitted on the NYSE.

“ Transaction ” has the meaning set forth in the recitals to this Agreement.

“ Transferred Group Entity ” means each Exelis Entity that will become a Vectrus Entity as of the Effective Time.

“ Transition Services Agreement ” has the meaning set forth in the Distribution Agreement.

“ TSR RSU ” has the meaning set forth in Section 6.2(a).

“ U.S. ” means the United States of America.

“ Vectrus ” has the meaning set forth in the preamble to this Agreement.

“ Vectrus 401(k) Plan ” means the plan formerly known as Exelis Systems Corporation Retirement and Savings Plan, as amended and restated effective as of the Effective Time.

“ Vectrus 401(k) Plan Beneficiaries ” has the meaning set forth in Section 8.2.

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“ Vectrus Benefit Plan ” means any Benefit Plan sponsored or maintained by a member of the Vectrus Group following the Effective Time.

“ Vectrus Business ” has the meaning set forth in the Distribution Agreement.

“ Vectrus Common Stock ” means the common stock, par value $0.01 per share, of Vectrus.

“ Vectrus Common Stock Unit Fund ” means an investment fund in the Vectrus 401(k) Plan that holds units of Vectrus Common Stock and cash.

“ Vectrus Employee Option ” has the meaning set forth in Section 5.2(b)(II).

“ Vectrus Entity ” means any member of the Vectrus Group, including any Transferred Group Entity.

“ Vectrus Equity Plan ” means the plan adopted by Vectrus prior to the Effective Time under which the Vectrus equity-based awards described in Article V shall be issued.

“ Vectrus Excess Savings Plan ” means the excess savings plan to be adopted by Vectrus as of the Effective Time, in accordance with Section 11.1.

“ Vectrus Group ” has the same meaning as the term “Vectrus Group” in the Distribution Agreement.

“ Vectrus Group Employee ” means any individual employed by any member of the Vectrus Group, including a Transferred Group Entity, immediately following the Effective Time.

“ Vectrus HRA ” has the meaning set forth in Section 9.2(h).

“ Vectrus Post-Distribution Share Value ” means the opening per share price of Vectrus Common Stock on the first Trading Day following the Effective Time based on “regular way” trading on the NYSE during Regular Trading Hours.

“ Vectrus Ratio ” means the quotient obtained by dividing the Vectrus Post-Distribution Share Value by the Exelis Pre-Distribution Share Value.

“ Vectrus RSUs ” has the meaning set forth in Section 5.4(b).

“ Vectrus Welfare Plan ” means any Welfare Plan sponsored or maintained by any one or more members of the Vectrus Group immediately after the Effective Time.

“ Vectrus Welfare Plan Participant ” means each Management Benefitted Employee, each PP Employee and each TARS Employee, and their eligible spouses, domestic partners and dependents, as the case may be, who is a participant in any of the Exelis Welfare Plans or the Vectrus Welfare Plans, as the case may be, prior to a Welfare Plan Implementation Date.

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“ WARN ” means the U.S. Worker Adjustment and Retraining Notification Act, as amended, and the regulations promulgated thereunder, and any applicable state or local Law equivalent.

“ Welfare Plan ” means, where applicable, a “welfare plan” (as defined in Section 3(1) of ERISA) or a “cafeteria plan” under Section 125 of the Code, and any benefits offered thereunder, and any other plan offering health benefits (including medical, funding mechanism for a health savings account, a health care reimbursement account, wellness, prescription drug, dental, vision, and mental health and substance abuse coverage), disability benefits, life, accidental death and dismemberment or death benefits, business travel insurance, medical and dependent care flexible spending arrangements (including any associated group medial or dependent care plan), employee assistance programs, and paid time off programs, as applicable.

“ Welfare Plan Implementation Date ” means, with respect to (a) each Vectrus Welfare Plan, (i) for Management Benefitted Employees, January 1, 2015; and (ii) for PP Employees, the later of (A) the Effective Time or (B) the date on which Vectrus, or another Vectrus Entity, establishes and adopts the Vectrus Welfare Plan and (b) each Exelis Welfare Plan for TARS Employees, January 1, 2015.

Section 1.2. Interpretation . In this Agreement, unless the context clearly indicates otherwise:

(a) words used in the singular include the plural and words used in the plural include the singular;

(b) if a word or phrase is defined in this Agreement, its other grammatical forms, as used in this Agreement, shall have a corresponding meaning;

(c) reference to any gender includes the other gender and the neuter;

(d) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

(e) the words “shall” and “will” are used interchangeably and have the same meaning;

(f) the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

(g) relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

(h) all references to a specific time of day in this Agreement shall be based upon Eastern Standard Time or Eastern Daylight Saving Time, as applicable, on the date in question;

(i) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified;

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(j) accounting terms used herein shall have the meanings historically ascribed to them by Exelis and its Subsidiaries, including Vectrus for this purpose, in its and their internal accounting and financial policies and procedures in effect immediately prior to the date of this Agreement;

(k) reference to any Article, Section or schedule means such Article or Section of, or such schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition;

(l) the words “this Agreement,” “herein,” “hereunder,” “hereof,” “hereto” and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision of this Agreement;

(m) the term “commercially reasonable efforts” means efforts which are commercially reasonable to enable a Party, directly or indirectly, to satisfy a condition to, or otherwise assist in, the consummation of a desired result and which do not require the performing Party to expend funds or assume Liabilities other than expenditures and Liabilities which are customary and reasonable in nature and amount in the context of a series of related transactions similar to the Distribution;

(n) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and not prohibited by this Agreement;

(o) reference to any Law (including statutes and ordinances) means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

(p) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution and any reference to a third party shall be deemed to mean a Person who is not a Party or an Affiliate of a Party;

(q) if there is any conflict between the provisions of the main body of this Agreement and the schedules hereto, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in such schedule;

(r) unless otherwise specified in this Agreement, all references to dollar amounts herein shall be in respect of lawful currency of the U.S.;

(s) the titles to Articles and headings of Sections contained in this Agreement, in any schedule and Exhibit and in the table of contents to this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement; and

(t) any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be.

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ARTICLE II

GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES

Section 2.1. General Principles . It is the intention of Exelis and Vectrus that all employment-related Liabilities associated with Vectrus Group Employees, whether prior to, on or after the Effective Time, are to be assumed by Vectrus, except as otherwise specifically set forth herein. Each member of the Exelis Group and each member of the Vectrus Group shall take any and all reasonable action as shall be necessary or appropriate so that active participation in the Exelis Benefit Plans by all Vectrus Group Employees shall terminate in connection with the Distribution as and when provided under this Agreement (or if not specifically provided under this Agreement, as of the Effective Time).

(a) Except as otherwise provided in this Agreement, effective as of the Effective Time, one or more members of the Vectrus Group (as determined by Vectrus) shall assume, or continue the sponsorship of, and no member of the Exelis Group shall have any further Liability with respect to, or under, and Vectrus shall indemnify each member of the Exelis Group, and the officers, directors, and employees of each member of the Exelis Group, and hold them harmless with respect to any and all:

(I) individual agreements entered into between any member of the Exelis Group and any Vectrus Group Employee;

(II) agreements entered into between any member of the Exelis Group and any individual who is an independent contractor, or leasing organization, providing services primarily for the business activities of the Vectrus Group;

(III) collective bargaining agreements, collective agreements, trade union or works council agreements entered into between any member of the Exelis Group and any union, works council or other body representing only Vectrus Group Employees;

(IV) wages, salaries, incentive compensation (as the same may be modified by this Agreement), commissions, bonuses, and any other employee compensation or benefits payable to or on behalf of any Vectrus Group Employees after the Effective Time, without regard to when such wages, salaries, incentive compensation, commissions, bonuses, or other employee compensation or benefits are or may have been earned;

(V) moving expenses and obligations including those related to taxes (foreign and home), relocation, repatriation, international assignments, transfers or similar items incurred by or owed to any Vectrus Group Employees that have not been paid prior to the Effective Time;

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(VI) immigration-related, visa, work application or similar rights, obligations and Liabilities related to any Vectrus Group Employees;

(VII) Liabilities under any Vectrus Benefit Plan; and

(VIII) Liabilities and obligations whatsoever with respect to claims made by, or with respect to any Vectrus Group Employees, in connection with any Exelis Benefit Plan, including but not limited to, such Liabilities relating to actions or omissions of or by any member of the Vectrus Group or any officer, director, employee or agent thereof on or prior to the Effective Time.

(b) Except as otherwise provided in this Agreement, effective as of the Effective Time, no member of the Vectrus Group shall have any further Liability for, and Exelis shall indemnify each member of the Vectrus Group, and the officers, directors, and employees of each member of the Vectrus Group, and hold them harmless with respect to any and all Liabilities and obligations whatsoever with respect to, claims made by or with respect to any Exelis Group Employees or Former Exelis Group Employees in connection with any Exelis Benefit Plan (other than with respect to Liabilities relating to Vectrus Group Employees), including such Liabilities relating to actions or omissions of or by any member of the Exelis Group or any officer, director, employee or agent thereof prior to, on or after the Effective Time.

Section 2.2. Service Credit .

(a) Service for Eligibility, Vesting, and Benefit Purposes . Except as otherwise provided in any other provision of this Agreement, the Vectrus Benefit Plans shall, and Vectrus shall cause each member of the Vectrus Group to, recognize each Vectrus Group Employee’s full service history with the Exelis Group for purposes of eligibility, vesting, determination of level of benefits and, to the extent applicable and subject to Section 2.4, benefit accruals under any Vectrus Benefit Plan for such Vectrus Group Employee’s service with any member of the Exelis Group on or prior to the Effective Time to the same extent such service would be credited under the Exelis Benefit Plans, as applicable. Notwithstanding anything to the contrary, in connection with any Employee’s break in service, any determination as to service credit shall be made under and in accordance with the applicable Vectrus Benefit Plan document, the terms of which shall control in the case of any conflict with this Section 2.2.

(b) Evidence of Prior Service . Notwithstanding anything to the contrary, but subject to applicable Law, upon reasonable request by one Party to the other Party, the first Party will provide to the other Party copies of any records reasonably available to the first Party to document such service, plan participation and membership of such Employees and reasonably cooperate with the first Party to resolve any discrepancies or obtain any missing data for purposes of determining benefit eligibility, participation, vesting and calculation of benefits with respect to any Employee.

Section 2.3. Plan Administration .

(a) Transition Services . The Parties acknowledge that the Exelis Group or the Vectrus Group may provide administrative services for certain of the other Party’s benefit programs for a transitional period under the terms of the Transition Services Agreement. The Parties agree to enter into a business associate agreement (if required by HIPAA or other applicable health information privacy Laws) in connection with such Transition Services Agreement.

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(b) Participant Elections and Beneficiary Designations . Prior to the Effective Time, each participant in a Vectrus Benefit Plan shall execute such elections and beneficiary designations as are promulgated by the administrator of each Vectrus Benefit Plan. Notwithstanding the foregoing, if and to the extent a Vectrus Benefit Plan participant has failed to execute and file an updated election and/or designation, the participant elections and beneficiary designations made under any corresponding Exelis Benefit Plan prior to the Effective Time with respect to which Assets or Liabilities are transferred or allocated to Vectrus Benefit Plans in accordance with this Agreement shall continue in effect under the applicable Vectrus Benefit Plan to the extent permitted under the applicable Vectrus Benefit Plan, including deferral and payment form elections, dividend elections, coverage options and levels, beneficiary designations and the rights of alternate payees under qualified domestic relations orders, in each case, to the extent allowed by applicable Law.

Section 2.4. No Duplication or Acceleration of Benefits . Notwithstanding anything to the contrary in this Agreement or the Distribution Agreement, no participant in the Vectrus Benefit Plans shall receive benefits that duplicate benefits provided by the corresponding Exelis Benefit Plan. Furthermore, unless expressly provided for in this Agreement, the Distribution Agreement or required by applicable Law, no provision in this Agreement shall be construed to create any right to accelerate vesting, distribution of benefits or entitlements to any compensation or Benefit Plan on the part of any Exelis Group Employee, Former Exelis Group Employee, or Vectrus Group Employee.

Section 2.5. No Expansion of Participation . Unless otherwise expressly provided in this Agreement, as otherwise determined or agreed to by Exelis and Vectrus, as required by applicable Law, or as explicitly set forth in a Vectrus Benefit Plan, a Vectrus Group Employee shall be entitled to participate in the Vectrus Benefit Plans only to the extent that such Employee was entitled to participate in the corresponding Exelis Benefit Plan as in effect immediately prior to the Effective Time, with it being the intent of the Parties that this Agreement does not result in any expansion of the number of Vectrus Group Employees participating or the participation rights therein that they had prior to the Effective Time.

Section 2.6. Special Provisions . Notwithstanding any other provision in this Agreement to the contrary, each of the Chief Executive Officer and President, Senior Vice President and Chief Human Resources Officer, and Senior Vice President, Chief Legal Officer and Corporate Secretary of Exelis shall have the discretion, power and authority to adopt and implement special provisions, rules or procedures applicable to the employment, compensation and benefit arrangements of one or more individuals as are deemed equitable, necessary or advisable to give effect to the intentions of this Agreement, including without limitation, special provisions relating to (i) different equitable adjustments than as set forth in Article V, in the case of a grantee who has outstanding equity-based awards granted under any Exelis Equity Plan, where such grantee’s circumstances warrant a different treatment (including, but not limited to, grantees in jurisdictions outside of the U.S., to the extent applicable) to the extent that such Chief Executive Officer and President, Senior Vice President and Chief Human Resources Officer, and Senior Vice President, Chief Legal Officer and Corporate Secretary of Exelis deem such different treatment to be equitable, necessary or advisable, based on the advice of counsel; (ii) the good faith determination of the employer or former employer, as applicable, of each Employee; (iii) errors in the timing of employment transfers; (iv) issues pertaining to immigration Law requirements; (v) compliance with foreign, state and/or local Laws and (vi) any other decisions regarding the employment, compensation and benefit arrangements of one or more individuals as are deemed equitable, necessary or advisable that are not otherwise contemplated by this Agreement.

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ARTICLE III

RETAINED LIABILITIES

Section 3.1. Liability for Exelis Pension Plan and Exelis Excess Pension Plans . Notwithstanding anything in Section 2.1 to the contrary, Exelis shall completely retain all Liabilities under the Exelis Pension Plan and the Exelis Excess Pension Plans, as well as any future benefits of any kind whatsoever, relating to Vectrus Group Employees, and no member of the Vectrus Group shall have any obligations or rights to any future benefits of any kind whatsoever, with respect thereto.

Section 3.2. Exelis Retiree Medical Plan . Notwithstanding anything in Section 2.1 to the contrary, Exelis shall retain all Liabilities under the Exelis Retiree Medical Plan relating to Vectrus Group Employees, and no member of the Vectrus Group shall have any obligations with respect thereto. Prior to the Effective Time, Exelis and Vectrus shall identify the Vectrus Group Employees who may become eligible to participate in the Exelis Retiree Medical Plan. For purposes of eligibility only and not towards the Exelis subsidy, the Exelis Retiree Medical Plan shall take into account the periods of service of the Vectrus Group Employee that Vectrus credits to the individual through the earliest of (1) the last day of the month preceding the date as of which payments from the Exelis Pension Plan begin, (2) the individual’s termination of employment with Vectrus and its Affiliates, (3) a Change in Control or (4) December 31, 2016. During the period from the Effective Time through December 31, 2016, Vectrus Systems Corporation shall provide to Exelis an updated record of service with Vectrus for each Vectrus Group Employee who is entitled to benefits under the Exelis Retiree Medical Plans.

Section 3.3. Exelis Retiree Life Plan . Notwithstanding anything in Section 2.1 to the contrary, all Liabilities under the Exelis Retiree Life Plan relating to Vectrus Group Employees shall be retained solely by Exelis, and no member of the Vectrus Group shall have any obligations with respect thereto. All eligibility service ends at the Effective Time and no future services with Vectrus will be recognized.

Section 3.4. Retirement Eligibility under the Exelis Pension Plan . Benefit accruals for Vectrus Group Employees under the Exelis Pension Plan shall end at the Effective Time. Each Vectrus Group Employee who has accrued a vested benefit under the Exelis Pension Plan may elect to begin distribution of his or her benefit following the Effective Time, subject to the terms of the Exelis Pension Plan as in effect at the time of such distribution or distributions. For purposes of determining an individual’s eligibility to receive a subsidized retirement benefit from the Exelis Pension Plan, the Exelis Pension Plan shall take into account the periods of service of the Vectrus Group Employee that Vectrus credits to the individual through the earliest of (1) the last day of the month preceding the date as of which payments from the Exelis Pension Plan begin, (2) the individual’s termination of employment with Vectrus and its Affiliates, (3) the individual’s death, (4) a Change in Control or (5) December 31, 2016. During the period from the Effective Time through December 31, 2016, Vectrus Systems Corporation shall provide to Exelis an updated record of each Vectrus Group Employee’s service with Vectrus through December 31, 2016.

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Section 3.5. Additional Retirement Eligibility under the Exelis Excess Pension Plans . Benefit accruals under the Exelis Excess Pension Plans shall stop for Vectrus Group Employees at the Effective Time. For purposes of determining an individual’s eligibility to receive a subsidized retirement benefit from the Exelis Excess Pension Plans, the Exelis Excess Pension Plans shall take into account the periods of service of the Vectrus Group Employee that Vectrus credits to the individual through the earliest of (1) the last day of the month preceding the date as of which payments from the Exelis Excess Pension Plans begin, (2) the individual’s termination of employment with Vectrus and its Affiliates, (3) a Change in Control or (4) December 31, 2016. Notwithstanding the foregoing, no payments of benefits in respect of a Vectrus Group Employee shall be made or begin until the individual has incurred a separation from service from the Vectrus Group under the terms of the applicable Exelis Excess Pension Plans. During the period from the Effective Time through December 31, 2016, Vectrus Systems Corporation shall provide to Exelis an updated record of service with Vectrus for each Vectrus Group Employee who is entitled to benefits under the Exelis Excess Pension Plans through December 31, 2016.

Section 3.6. Vesting Under the Exelis Pension Plan and the Exelis Excess Pension Plans . The accrued benefits of a Vectrus Group Employee who has been credited with at least one year of service before the Effective Time under the Exelis Pension Plan and the Exelis Excess Pension Plans shall become fully vested and nonforfeitable at the Effective Time.

ARTICLE IV

ASSIGNMENT OF EMPLOYEES

Section 4.1. Active Employees .

(a) Vectrus Group Employees . Except as otherwise set forth in this Agreement, effective not later than immediately preceding the Effective Time, the employment of each Vectrus Group Employee shall be continued by a member of the Vectrus Group or shall be assigned and transferred to a member of the Vectrus Group (in each case, with such member as determined by Vectrus).

(b) Exelis Group Employees . Except as otherwise set forth in this Agreement, effective not later than immediately preceding the Effective Time, the employment of each Exelis Group Employee shall be continued by a member of the Exelis Group or shall be assigned and transferred to a member of the Exelis Group (in each case as determined by Exelis).

(c) At-Will Status . Notwithstanding the above or any other provision of this Agreement, nothing in this Agreement shall create any obligation on the part of any member of the Exelis Group or any member of the Vectrus Group to (i) continue the employment of any Employee or permit the return from a leave of absence for any period following the date of this Agreement or the Effective Time (except as required by applicable Law) or (ii) change the employment status of any Employee from “at will,” to the extent such Employee is an “at will” employee under applicable Law.

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(d) Severance . The Parties acknowledge and agree that the Distribution and the assignment, transfer or continuation of the employment of Employees as contemplated by this Section 4.1 shall not be deemed a severance of employment of any Employee for purposes of this Agreement or any Benefit Plan of any member of the Exelis Group or any member of the Vectrus Group.

(e) Not a Change of Control/Change in Control . The Parties acknowledge and agree that neither the consummation of the Distribution nor any transaction in connection with the Distribution shall be deemed a “change of control,” “change in control,” “acceleration event” or term of similar import for purposes of any Exelis Benefit Plan, Vectrus Benefit Plan, Exelis Equity Plan or Vectrus Equity Plan.

(f) Payroll and Related Taxes . With respect to each Vectrus Group Employee, Exelis and Vectrus shall, and shall cause their respective Affiliates to (to the extent permitted by applicable Law and practicable) (a) treat Vectrus (or the applicable Vectrus Entity) as a “successor employer” and Exelis (or the applicable Exelis Entity) as a “predecessor,” within the meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, to the extent appropriate, for purposes of Taxes imposed under the United States Federal Insurance Contributions Act, as amended (“ FICA ”), or the United States Federal Unemployment Tax Act, as amended (“ FUTA ”) and (b) file tax returns, exchange wage payment information, and report wage payments made by the respective predecessor and successor employer on separate IRS Forms W-2 or similar earnings statements to each such Vectrus Group Employee for the tax year in which the Effective Time occurs, in a manner provided in Section 4.02(l) of Revenue Procedure 2004-53. For the avoidance of doubt, the collection of payroll taxes under FICA and FUTA will not restart upon or following the Effective Time with respect to each Vectrus Group Employee for the tax year during which the Effective Time occurs.

(g) Employment and Severance Arrangements; Expatriate Obligations . Vectrus will assume and honor, or will cause a Vectrus Entity to assume and honor, any agreements to which any Vectrus Group Employee is party with either any Exelis Entity or any joint venture with an Exelis Entity, including any (i) employment contract or (ii) retention or severance arrangement.

Section 4.2. Employment Law Obligations .

(a) WARN . After the Effective Time, (i) Exelis shall be responsible for providing any necessary WARN notice (and meeting any similar state Law notice requirements) with respect to any termination of employment of any Exelis Group Employee and (ii) Vectrus shall be responsible for providing any necessary WARN notice (and meeting any similar state Law notice requirements) with respect to any termination of employment of any Vectrus Group Employee.

(b) Compliance with Employment Laws . On and after the Effective Time, (i) each member of the Exelis Group shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related Laws and requirements relating to the employment of Exelis Group Employees and the treatment of any applicable Former Exelis Group Employees in respect of their former employment, and (ii) each member of the Vectrus Group shall be responsible for adopting and maintaining any policies or practices, and for all other actions and inactions, necessary to comply with employment-related Laws and requirements relating to the employment of Vectrus Group Employees.

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Section 4.3. Employee Records .

(a) Sharing of Information . Subject to any limitations imposed by applicable Law, Exelis and Vectrus (acting directly or through members of the Exelis Group or the Vectrus Group, respectively) shall provide to the other and their respective agents and vendors all information necessary for the Parties to perform their respective duties under this Agreement. The Parties also hereby agree to enter into any business associate arrangements that may be required for the sharing of any information pursuant to this Agreement to comply with the requirements of HIPAA.

(b) Transfer of Personnel Records and Authorization . Subject to any limitation imposed by applicable Law, as of the Effective Time or as soon as administratively practicable thereafter, Exelis shall transfer and assign to Vectrus all personnel records, all immigration documents, including I-9 forms and work authorizations, all payroll deduction authorizations and elections, whether voluntary or mandated by Law, including but not limited to W-4 forms and deductions for benefits under the applicable Vectrus Benefit Plan and all absence management records, Family and Medical Leave Act records, insurance beneficiary designations, flexible spending account enrollment confirmations, attendance, and return to work information relating to Vectrus Group Employees who participate in Vectrus Benefit Plans (“ Benefit Management Records ”). Subject to any limitations imposed by applicable Law, Exelis, however, may retain originals of, copies of, or access to personnel records, immigration records, payroll forms and Benefit Management Records as long as necessary to provide services to Vectrus (acting on its behalf pursuant to the Transition Services Agreement between the Parties entered into as of the date of this Agreement). Immigration records will, if and as appropriate, become a part of Vectrus’s public access file. Vectrus will use personnel records, payroll forms and Benefit Management Records for lawful purposes only, including calculation of withholdings from wages and personnel management. It is understood that following the Effective Time, Exelis records so transferred and assigned may be maintained by Vectrus (acting directly or through one of its Subsidiaries) pursuant to Vectrus’s applicable records retention policy.

(c) Access to Records . To the extent not inconsistent with this Agreement and any applicable privacy protection Laws or regulations or Privacy Contracts, reasonable access to Employee-related records after the Effective Time will be provided to members of the Exelis Group and members of the Vectrus Group pursuant to the terms and conditions of Sections 5.4 and 6.4 of the Distribution Agreement. In addition, notwithstanding anything to the contrary, Vectrus shall provide Exelis with reasonable access to those records necessary for its administration of any Benefit Plans or programs, or employment and compensation matters, on behalf of Exelis Group Employees and Former Exelis Group Employees after the Effective Time as permitted by any applicable privacy protection Laws or regulations or Privacy Contracts. Exelis shall also be permitted to retain copies of all restrictive covenant agreements with any Vectrus Group Employee in which any member of the Exelis Group has a valid business interest. In addition, Exelis shall provide Vectrus with reasonable access to those records necessary for its administration of any Benefit Plans or programs, or employment and compensation matters, on behalf of Vectrus Group Employees after the Effective Time as permitted by any applicable privacy protection Laws or regulations or Privacy Contracts. Vectrus shall also be permitted to retain copies of all restrictive covenant agreements with any Exelis Group Employee in which any member of the Vectrus Group has a valid business interest.

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(d) Maintenance of Records . With respect to retaining, destroying, transferring, sharing, copying and permitting access to all Employee-related information, Exelis and Vectrus shall comply with all applicable Laws, regulations and internal policies, and shall indemnify and hold harmless each other from and against any and all Liability, claims, actions, and damages that arise from a failure (by the indemnifying party or its Subsidiaries or their respective agents) to so comply with all applicable Laws, regulations, Privacy Contracts and internal policies applicable to such information.

(e) Confidentiality . Except as otherwise set forth in this Agreement, all records and data relating to Employees shall, in each case, be subject to the confidentiality provisions of the Distribution Agreement and any other applicable agreement and applicable Law, and the provisions of this Section 4.3 shall be in addition to, and not in derogation of, the provisions of the Distribution Agreement governing confidential information, including Section 8.6 of the Distribution Agreement.

(f) Cooperation . Each Party shall use commercially reasonable efforts to cooperate in sharing, retaining, and maintaining data and records that are necessary or appropriate to further the purposes of this Section 4.3 and for each Party to administer its respective Benefit Plans to the extent consistent with this Agreement and applicable Law, and each Party agrees to cooperate as long as is reasonably necessary to further the purposes of this Section 4.3. No Party shall charge another Party a fee for such cooperation.

(g) Labor Relations . To the extent required by applicable Law or any agreement with a labor union, works council or similar employee organization, Vectrus shall provide notice, engage in consultation and take any similar action which may be required on its part in connection with the Distribution and shall fully indemnify Exelis against any Liabilities arising from its failure to comply with such requirements.

ARTICLE V

EQUITY AND EQUITY-BASED COMPENSATION

Section 5.1. General Principles .

(a) Exelis and Vectrus shall take any and all reasonable actions as shall be necessary and appropriate to further the provisions of this Article V, including, to the extent practicable, providing written notice or similar communication to each Employee or director who holds one or more awards granted under any Exelis Equity Plan informing such Employee or director, as applicable, of (i) the actions contemplated by this Article V with respect to such awards and (ii) whether (and during what time period) any “blackout” period shall be imposed upon holders of awards granted under any Exelis Equity Plan during which time awards may not be exercised or settled, as the case may be.

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(b) Following the Effective Time, a grantee who has outstanding equity-based awards under one or more of the Exelis Equity Plans and/or replacement equity-based awards under the Vectrus Equity Plan shall be considered to have been employed by the applicable plan sponsor before and after the Effective Time for purposes of (i) vesting and (ii) determining the date of termination of employment as it applies to any such award.

(c) No award described in this Article V, whether outstanding or to be issued, adjusted, substituted or cancelled by reason of or in connection with the Distribution, shall be adjusted, settled, cancelled, or exercisable, until in the judgment of the administrator of the applicable plan or program such action is consistent with all applicable Laws, including federal securities Laws. With respect to each outstanding stock option, the period during which such option is exercisable and the ultimate expiration date of the option will not be extended.

(d) From and after the Effective Time, all awards adjusted pursuant to this Article V shall be subject to the terms and conditions set forth in the applicable Exelis Equity Plan or Vectrus Equity Plan and corresponding award agreements. Without limiting the generality of the foregoing, from and after the Effective Time, all references to the applicable company in such Exelis Equity Plan or Vectrus Equity Plan, as applicable, including but not limited to, “Acceleration Event” and other administrative provisions requiring interpretation shall refer to the appropriate company to reflect the Transaction (e.g., the definition of “Acceleration Event” under the applicable Vectrus Equity Plan and corresponding award agreement shall mean an Acceleration Event with respect to Vectrus rather than Exelis).

(e) The adjustment or conversion of Exelis Options and Exelis RSUs shall be effected in a manner that is intended to avoid the imposition of any accelerated, additional, penalty or other Taxes on the holders thereof pursuant to Section 409A of the Code.

Section 5.2. Stock Options .

(a) General Principles . The adjustments provided for in this Section 5.2 with respect to the Exelis Options and Vectrus Options are intended to be effected in a manner compliant with Section 424(a) of the Code.

(b) Treatment of Stock Options Held by Exelis Employees, Former Exelis Group Employees and Exelis Directors .

(I) Exelis Group Employees, Former Exelis Group Employees and Exelis Directors . Each Exelis Option held by an Exelis Group Employee, a Former Exelis Group Employee or an Exelis Director shall remain an option to purchase Exelis Common Stock issued under the Exelis Equity Plan (each such option, an “ Adjusted Exelis Option ”). Subject to Section 5.1, each Adjusted Exelis Option shall be subject to the same terms and conditions from and after the Effective Time as the terms and conditions applicable to the corresponding Exelis Option immediately prior to the Effective Time; provided , however , that from and after the Effective Time:

(x) the number of Exelis Common Stock subject to each such Adjusted Exelis Option shall be equal to (A) the number of Exelis Common Stock subject to the corresponding Exelis Option immediately prior to the Effective Time divided by (B) the Exelis Ratio, with any fractional share rounded down to the nearest whole share; and

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(y) the per-share exercise price of each such Adjusted Exelis Option shall be equal to (A) the per-share exercise price of the corresponding Exelis Option immediately prior to the Effective Time multiplied by (B) the Exelis Ratio, rounded up to the fourth decimal place.

(II) Vectrus Group Employees . Each Exelis Option held by a Vectrus Group Employee immediately prior to the Effective Time shall be converted as of the Effective Time into an option to purchase Vectrus Common Stock (each such award, a “ Vectrus Employee Option ”) pursuant to the terms of the Vectrus Equity Plan, subject to Section 5.1, subject to the same terms and conditions from and after the Effective Time as the terms and conditions applicable to the corresponding Exelis Option immediately prior to the Effective Time; provided , however , that from and after the Effective Time:

(x) the number of Vectrus Common Stock subject to each such Vectrus Employee Option shall be equal to (A) the number of Exelis Common Stock subject to the corresponding Exelis Option immediately prior to the Effective Time divided by (B) the Vectrus Ratio, with any fractional share rounded down to the nearest whole share; and

(y) the per-share exercise price or base price, as applicable, of each such Vectrus Employee Option shall be equal to (A) the per-share exercise price of the corresponding Exelis Option immediately prior to the Effective Time multiplied by (B) the Vectrus Ratio, rounded up to the fourth decimal place.

Section 5.3. Treatment of Exelis RSAs Held by Exelis Directors . Each outstanding Exelis RSA held immediately prior to the Effective Time by an Exelis Director shall participate in the Distribution on the same basis as other shares of Exelis Common Stock in accordance with the terms of the Distribution Agreement; provided , however , that any shares of Vectrus Common Stock received in connection with the Distribution shall be subject to the same vesting conditions, as applicable, to such Exelis RSA.

Section 5.4. Restricted Stock Units .

(a) Treatment of Exelis RSUs Held by Exelis Group Employees, Former Exelis Group Employees and Exelis Directors . Exelis RSUs held by an Exelis Group Employee, a Former Exelis Group Employee or an Exelis Director immediately prior to the Effective Time shall be adjusted by dividing (i) the number of Exelis RSUs subject to each grant by (ii) the Exelis Ratio (each such RSU, an “ Adjusted Exelis RSU ”). If the resulting quotient includes a fractional share, then the number of Exelis RSUs shall be rounded down to the nearest whole share. Subject to Section 5.1, the Adjusted Exelis RSUs shall be subject to the same terms and conditions from and after the Effective Time as the terms and conditions applicable to the corresponding Exelis RSUs immediately prior to the Effective Time.

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(b) Treatment of Exelis RSUs Held by Vectrus Group Employees . Exelis RSUs held by a Vectrus Group Employee immediately prior to the Effective Time shall be replaced with an award under the Vectrus Equity Plan of a number of Vectrus restricted stock units (the “ Vectrus RSUs ”) determined by dividing (i) the number of Exelis RSUs subject to each grant by (ii) the Vectrus Ratio. If the resulting quotient includes a fractional share, then the number of Vectrus RSUs shall be rounded down to the nearest whole share. Subject to Section 5.1, the Vectrus RSUs shall be subject to the same terms and conditions (including, to the extent applicable, any Exelis dividend equivalent rights that have accrued on or prior to August 29, 2014) from and after the Effective Time as the terms and conditions applicable to the corresponding Exelis RSUs immediately prior to the Effective Time.

Section 5.5. Section 16(b) of the Exchange Act . By approving the adoption of this Agreement, the respective Board of Directors of each of Exelis and Vectrus intend to exempt from the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, by reason of the application of Rule 16b-3 thereunder, all acquisitions and dispositions of equity incentive awards by directors and officers of each of Exelis and Vectrus, and the respective Boards of Directors of Exelis and Vectrus also intend expressly to approve, in respect of any equity-based award, the use of any method for the payment of an exercise price and the satisfaction of any applicable Tax withholding (specifically including the actual or constructive tendering of shares in payment of an exercise price and the withholding of option shares from delivery in satisfaction of applicable Tax withholding requirements) to the extent such method is permitted under the applicable Exelis Equity Plan, Vectrus Equity Plan and any award agreement.

Section 5.6. Liabilities for Settlement of Awards .

(a) Settlement of Exelis Options . Exelis shall be responsible for all Liabilities associated with Exelis Options (regardless of the holder of such awards), including any option exercise, share delivery, registration or other obligations related to the exercise of the Exelis Options.

(b) Settlement of Vectrus Options . Vectrus shall be responsible for all Liabilities associated with Vectrus Options (regardless of the holder of such awards), including any option exercise, share delivery, registration or other obligations related to the exercise of the Vectrus Options.

(c) Settlement of Exelis RSAs and Exelis RSUs . Exelis shall be responsible for all Liabilities associated with Exelis RSAs and Exelis RSUs, including any share delivery, registration or other obligations related to the settlement of the Exelis RSAs and Exelis RSUs.

(d) Settlement of Vectrus RSAs and Vectrus RSUs . Vectrus shall be responsible for all Liabilities associated with Vectrus RSAs and Vectrus RSUs, including any share delivery, registration or other obligations related to the settlement of the Vectrus RSAs and Vectrus RSUs.

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Section 5.7. Form S-8 . Upon or as soon as reasonably practicable and subject to applicable Law, Vectrus shall prepare and file with the Securities Exchange Commission a registration statement on Form S-8 (or another appropriate form) registering under the Exchange Act the offering of a number of Vectrus Common Stock at a minimum equal to the number of shares subject to the Vectrus RSUs and the Vectrus Options. Vectrus shall use commercially reasonable efforts to cause any such registration statement to be kept effective (and the current status of the prospectus or prospectuses required thereby to be maintained) as long as any Vectrus RSUs and Vectrus Options remain outstanding.

Section 5.8. Tax Reporting and Withholding for Equity-Based Awards . Unless otherwise required by applicable Law, Exelis (or one of its Subsidiaries) will be responsible for all income, payroll, fringe benefit, social, payment on account or other tax reporting related to income of or otherwise owed by Exelis Group Employees or Former Exelis Group Employees from equity-based awards, and Vectrus (or one of its Subsidiaries) will be responsible for all income, payroll, fringe benefit, social, payment on account or other tax reporting related to or otherwise owed on income of Vectrus Group Employees from equity-based awards. Further, Exelis (or one of its Subsidiaries) shall be responsible for remitting applicable tax withholdings and related payments for Exelis Group Employees to each applicable taxing authority, and Vectrus (or one of its Subsidiaries) shall be responsible for remitting applicable tax withholdings and related payments for Vectrus Group Employees to each applicable taxing authority; provided , however , that to the extent necessary (and permissible) to effectuate the foregoing, either Exelis or Vectrus may act as agent for the other company by remitting amounts withheld in the form of shares or in conjunction with an exercise transaction and related payments to an appropriate taxing authority. For non-employee directors of Exelis or Vectrus, all compensation income realized from either Exelis equity-based awards or Vectrus equity-based awards will be reflected by a Form 1099 provided to such non-employee director by Exelis or Vectrus, as applicable, for each year. There will be no tax withholding made by either Exelis or Vectrus with respect to any equity-based awards for non-employee directors of Exelis or Vectrus.

Section 5.9. Cooperation . Each Party acknowledges and agrees to use commercially reasonable efforts to cooperate with each other and with third-party providers to effect withholding and remittance of Taxes, as well as required tax reporting, in a timely, efficient and appropriate manner to further the purposes of this Article V and to administer all employee equity awards that are outstanding immediately following the Effective Time (including all such equity awards that are adjusted in accordance with this Article V) to the extent consistent with this Agreement and applicable Law, for as long as is reasonably necessary to further the purposes of this Article V. No Party shall charge another Party a fee for such cooperation.

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ARTICLE VI

TOTAL SHAREHOLDER RETURN AWARDS

Section 6.1. Treatment of 2012 TSR Awards for Vectrus Group Employees and Exelis Group Employees . On the Distribution Date, each 2012 TSR Award shall be converted into the right to receive (a) a cash payment, if any, equal to the product of (i) the 2012 TSR Proration Factor multiplied by (ii) the value of the 2012 TSR Award based on actual total shareholder return through the last completed fiscal month ending on or before the Distribution Date, and (b) a cash payment, if any, equal to the product of (i) (x) one (1)  minus the (y) 2012 TSR Proration Factor multiplied by (ii) the value of the 2012 TSR Award based on assumed total shareholder return being achieved at target (i.e., 100%). Following the Distribution Date, the 2012 TSR Award, as adjusted pursuant to this Section 6.1, shall be paid at the time or times the 2012 TSR Award would otherwise have been paid in the ordinary course had the adjustments contemplated hereby and Distribution not occurred, in accordance with the terms of the applicable Exelis Equity Plan and corresponding 2012 award agreement.

Section 6.2. Treatment of 2013 TSR Awards .

(a) Treatment of 2013 TSR Awards for Vectrus Group Employees . On the Distribution Date, each 2013 TSR Award shall be converted into the right to receive (a) a cash payment, if any, equal to the product of (i) the 2013 TSR Proration Factor multiplied by (ii) the value of the 2013 TSR Award based on Exelis’ actual total shareholder return through the last completed fiscal month ending on or before the Distribution Date, and (b) Vectrus RSUs, to be approved no later than the first meeting of the compensation committee of the board of directors of Vectrus that is held following the Distribution Date, covering a number of shares of Vectrus Common Stock equal to the quotient of (i) the product of (x) (A) one (1)  minus (B) the 2013 TSR Proration Factor multiplied by (y) the value of the 2013 TSR Award based on assumed total shareholder return being achieved at target divided by (ii) the closing fair market value of Vectrus Common Stock on the date such Vectrus RSU is granted (the “ TSR RSU ”). Following the Distribution Date, the 2013 TSR Award, as adjusted pursuant to this Section 6.2 (if any), shall, subject to the corresponding 2013 award agreement, vest on December 4, 2015. The cash payment with respect to the 2013 TSR Proration Factor (for the completed portion of the 2013 award) will be paid at the time or times the corresponding original 2013 TSR Award would otherwise have been paid in the ordinary course had the adjustments contemplated hereby and the Distribution not occurred, in accordance with the terms of the applicable Exelis Equity Plan and corresponding 2013 award agreement.

(b) Treatment of 2013 TSR Award for Exelis Group Employees . With respect to Exelis Group Employees, the original performance period to which the 2013 TSR Award relates shall continue and, subject to Section 5.1, be subject to the same terms and conditions of the 2013 TSR Award as in effect immediately prior to the Distribution Date; provided , however , that for purposes of determining whether the applicable total shareholder return previously approved for such 2013 TSR Award has been achieved, the Distribution shall be deemed to be a stock dividend with such proceeds reinvested in Exelis Common Stock.

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ARTICLE VII

TREATMENT OF ANNUAL BONUSES FOR FISCAL YEAR 2014

As of the Effective Time, with respect to each Vectrus Group Employee who is eligible to receive an annual bonus pursuant to the terms of the Exelis Bonus Plan immediately prior to the Effective Time, Vectrus will (a) assume any such annual bonus liability, and (b) establish a new annual bonus plan with the same financial metrics applicable to each Vectrus Group Employee, payment provisions and other terms and conditions, in each case, as in effect under the Exelis Bonus Plan immediately prior to the Distribution, such that, subject to the required determinations by the compensation committee of the board of directors of Vectrus, such annual bonuses shall be paid to each Vectrus Group Employee in accordance with the terms of such annual bonus plan.

ARTICLE VIII

U.S. QUALIFIED DEFINED CONTRIBUTION PLANS

Section 8.1. Vectrus 401(k) Plan . At the Effective Time, Vectrus shall have assumed as the plan sponsor the Vectrus

401(k) Plan and shall take all action necessary to make each Vectrus Entity employing Vectrus Group Employees a participating employer in the Vectrus 401(k) Plan. Vectrus (acting directly or through its Affiliates) shall be responsible for any and all Liabilities and other obligations with respect to the Vectrus 401(k) Plan.

Section 8.2. Transfer of Exelis Savings Plan Assets . Not later than ninety (90) days following the Effective Time (or such later time as mutually agreed by the Parties), Exelis shall cause the accounts (including any outstanding loan balances) in the Exelis Savings Plan attributable to (A) Management Benefitted Employees who will participate in the Vectrus 401(k) Plan and (B) PP Employees who have account balances in the Exelis Savings Plan (collectively, the “ Vectrus 401(k) Plan Beneficiaries ”) and all of the assets in the Exelis Savings Plan related thereto to be transferred to the Vectrus 401(k) Plan, and Vectrus shall cause the Vectrus 401(k) Plan to accept such transfer of accounts and underlying assets and, effective as of the date of such transfer, to assume and to fully perform, pay, and discharge, all obligations of the Exelis Savings Plan relating to the accounts of the Vectrus 401(k) Plan Beneficiaries (to the extent the assets related to those accounts are actually transferred from the Exelis Savings Plan to the Vectrus 401(k) Plan). The transfer of assets invested in the Exelis Savings Plan shall be conducted in accordance with Section 414(l) of the Code, Treasury Regulation Section 1.414(1)-1, and Section 208 of ERISA.

Section 8.3. Treatment of Vectrus Common Stock and Exelis Common Stock .

(a) Vectrus Common Stock Unit Fund; Vectrus Common Stock Held in Exelis Savings Plan Accounts . The Vectrus 401(k) Plan will provide, effective as of the Effective Time: (i) for the establishment of a Vectrus Common Stock Unit Fund; and (ii) that such Vectrus Common Stock Unit Fund shall receive a transfer of and hold all Vectrus Common Stock distributed in connection with the Distribution in respect of Exelis Common Stock Units held in Exelis Savings Plan accounts of Vectrus 401(k) Plan Beneficiaries. Vectrus Common Stock distributed in connection with the Distribution in respect of Exelis Common Stock Units held in Exelis Savings Plan accounts of Exelis Group Employees or Former Exelis Group Employees who participate in the Exelis Savings Plan shall be deposited in a Vectrus Common Stock Unit Fund under the Exelis Savings Plan. Any Vectrus Common Stock Units held in Exelis Savings Plan accounts of Vectrus 401(k) Plan Beneficiaries shall be transferred in kind to the trust underlying the Vectrus

401(k) Plan pursuant to Section 8.2 of this Agreement.

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(b) Exelis Common Stock Units in Vectrus 401(k) Plan Accounts . Without limiting the generality of the provisions of Section 8.2, Exelis Common Stock Units held in Exelis Savings Plan accounts of Vectrus 401(k) Plan Beneficiaries prior to the Effective Time shall be transferred in kind to an Exelis Common Stock Unit Fund under the Vectrus 401(k) Plan pursuant to Section 8.2 of this Agreement.

Section 8.4. Tax Qualified Status . Vectrus will take all steps and make any necessary filings with the IRS to maintain the Vectrus 401(k) Plan so that such plan remains qualified under Section 401(a) of the Code and the related trust remains tax-exempt under Section 501(a) of the Code, including timely seeking and obtaining a favorable determination letter from the IRS as to such qualification at the times prescribed under Revenue Procedure 2007-44, 2007-28 I.R.B. 54, or corresponding successor guidance.

ARTICLE IX

U.S. WELFARE PLANS

Section 9.1. Establishment of Vectrus Welfare Plans .

(a) Management Benefitted Employees . On the Welfare Plan Implementation Date, Vectrus or another Vectrus Entity shall cause the Vectrus Welfare Plan Participants who are Management Benefitted Employees to become covered by a corresponding Vectrus Welfare Plan under terms and conditions that are similar to those of the Exelis Welfare Plans. The Exelis Welfare Plans shall cover the Vectrus Welfare Plan Participants who are Management Benefitted Employees for the portion of the 2014 calendar year following the Effective Time, as set forth in this Article IX, and to the extent not set forth in this Article IX, pursuant to a Transition Services Agreement, so that Management Benefitted Employees shall not experience an interruption in coverage. Schedule 9.1(a) sets forth all Vectrus Welfare Plans, all Exelis Welfare Plans and identifies the participating employers in each, before and after the Welfare Plan Implementation Date.

(b) PP Employees and TARS Employees . Vectrus or another Vectrus Entity shall ratify the adoption of the Vectrus Welfare Plans and assume sponsorship of the Vectrus Welfare Plans no later than the Effective Time. The Vectrus Welfare Plans shall cover the Vectrus Welfare Plan Participants who are PP Employees and, for the remainder of the 2014 calendar year, pursuant to a Transition Services Agreement, TARS Employees, so that there shall be no interruption of coverage. On the Welfare Plan Implementation Date, Exelis or another Exelis Entity shall cause the Vectrus Welfare Plan Participants who are TARS Employees to become covered by corresponding Exelis Welfare Plans.

(c) Coordination for Cessation of Coverages . For the avoidance of doubt, Vectrus Welfare Plan Participants who are:

(I) Subject to the conditions set forth in Section 9.2(a) and notwithstanding Section 9.2(i)(III), Management Benefitted Employees shall not participate in any Exelis Welfare Plan on or after the relevant Welfare Plan Implementation Date that applies to a corresponding Vectrus Welfare Plan;

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(II) TARS Employees shall begin participating in Exelis Welfare Plans on January 1, 2015;

(III) PP Employees shall not participate in any Exelis Welfare Plans on and after the Effective Time;

(IV) Subject to the condition set forth in Section 9.2(b) and notwithstanding Section 9.2(i)(VIII), TARS Employees shall not participate in any Vectrus Welfare Plans after December 31, 2014; and

(V) Except as provided in subsection (II) above, Exelis Group Employees shall not participate in any Vectrus Welfare Plans at any time on or after the Effective Time.

Section 9.2. Transitional Matters Under Vectrus Welfare Plans and Exelis Welfare Plans; Treatment of Claims Incurred and Other Miscellaneous Matters .

(a) Liability for Claims Incurred Under Exelis Welfare Plans . The applicable Exelis Welfare Plans shall remain responsible for the adjudication and/or payment of unpaid covered claims that any Management Benefitted Employee incurs under any of the Exelis Welfare Plans before the Welfare Plan Implementation Date. Exelis shall cause such Exelis Welfare Plans to fully perform, pay and discharge all such claims. Claims for ongoing care for a Management Benefitted Employee under any of the Exelis Welfare Plans shall be allocated as follows:

(I) Outpatient Care . The applicable Exelis Welfare Plan shall be liable for the portion of ongoing outpatient care that is provided before the Welfare Plan Implementation Date, and the applicable Vectrus Welfare Plan shall be responsible for the portion of ongoing outpatient care that is provided after the Welfare Plan Implementation Date.

(II) Inpatient Care . The applicable Exelis Welfare Plan shall be liable for ongoing inpatient care (such as continuous hospitalization) that is provided without interruption before and after the Welfare Plan Implementation Date.

(III) Claims Incurred . For purposes of this Section 9.2(a), a claim or expense is deemed to be incurred (A) with respect to medical (including continuous hospitalization), dental, vision and/or prescription drug benefits, upon the rendering of health services giving rise to such claim or expense; (B) with respect to life insurance, accidental death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or expense; and (C) with respect to long-term disability benefits, upon the date of an individual’s disability, as determined by the disability benefit insurance carrier or claims administrator, giving rise to such claim or expense.

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(b) Liability for Claims Incurred Under Vectrus Welfare Plans . The applicable Vectrus Welfare Plans shall remain responsible for the adjudication and/or payment of unpaid covered claims that any TARS Employee incurs under any of the Vectrus Welfare Plans before the Welfare Plan Implementation Date. Vectrus shall cause such Vectrus Welfare Plans to fully perform, pay and discharge all such claims. Claims for ongoing care for a TARS Employee under any of the Vectrus Welfare Plans that are also group medical plans shall be allocated as follows:

(I) Outpatient Care . The applicable Vectrus Welfare Plan shall be liable for the portion of ongoing outpatient care that is provided before the Welfare Plan Implementation Date, and the applicable Exelis Welfare Plan shall be responsible for the portion of ongoing outpatient care that is provided after the Welfare Plan Implementation Date.

(II) Inpatient Care . The applicable Vectrus Welfare Plan shall be liable for ongoing inpatient care (such as continuous hospitalization) that is provided without interruption before and after the Welfare Plan Implementation Date.

(III) Claims Incurred . For purposes of this Section 9.2(b) a claim or expense is deemed to be incurred (A) with respect to medical (including continuous hospitalization), dental, vision and/or prescription drug benefits, upon the rendering of health services giving rise to such claim or expense; (B) with respect to life insurance, accidental death and dismemberment and business travel accident insurance, upon the occurrence of the event giving rise to such claim or expense; and (C) with respect to long-term disability benefits, upon the date of an individual’s disability, as determined by the disability benefit insurance carrier or claims administrator, giving rise to such claim or expense.

(c) For the avoidance of doubt, there shall be no allocation between Exelis and Vectrus with respect to unpaid covered claims that are either incurred but not processed or that are incurred but unreported prior to the Welfare Plan Implementation Date for any of the PP Employees participating in the Vectrus Welfare Plans.

(d) Credit for Deductibles and Other Limits .

(I) With respect to each Management Benefitted Employee, Vectrus and Exelis shall use reasonable efforts to provide that for purposes of any maximum benefit payable under any of the Vectrus Welfare Plans, the Vectrus Welfare Plans will recognize any expenses paid or reimbursed by the Exelis Welfare Plans with respect to such participant before the Welfare Plan Implementation Date, to the same extent such expense payments or reimbursements would be recognized in respect of an active plan participant under any of the applicable Exelis Welfare Plans.

(II) With respect to each TARS Employee, Exelis and Vectrus shall use reasonable efforts to provide that for purposes of any maximum benefit payable under any of the Exelis Welfare Plans, the Exelis Welfare Plans will recognize any expenses paid or reimbursed by the Vectrus Welfare Plans with respect to such participant before the Welfare Plan Implementation Date, to the same extent such expense payments or reimbursements would be recognized in respect of an active plan participant under any of the applicable Vectrus Welfare Plans.

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(III) For the avoidance of doubt, PP Employees and TARS Employees shall remain in all Vectrus Welfare Plans as of the Effective Time. With regard to the plan year in which the Effective Time occurs, no credit toward deductibles, out-of-pocket maximums, limits on number of services or visits, or other similar limitations shall be given to a PP Employee or a TARS Employee, to the extent such amounts and usages are taken into account under the Vectrus Welfare Plans. Furthermore no special credits against any lifetime maximum benefit limit under any of the Vectrus Welfare Plans shall be made for any PP Employee or before the Welfare Plan Implementation Date, TARS Employees, because the Vectrus Welfare Plans will recognize any expenses paid or reimbursed by the Vectrus Welfare Plans with respect to such participant before the Effective Time.

(e) COBRA .

(I) Exelis shall be responsible for complying with the group health coverage continuation requirements of COBRA for Qualifying Events occurring before the Welfare Plan Implementation Date affecting a Management Benefitted Employee or a Former Management Benefitted Employee or his or her Qualified Beneficiaries with respect to each Management Benefitted Employee and Former Management Benefitted Employee who becomes a Qualified Beneficiary before the Welfare Plan Implementation Date.

(II) Vectrus shall be responsible for complying with the group health coverage continuation requirements of COBRA for Qualifying Events occurring before the Welfare Plan Implementation Date affecting a TARS Employee or a Former TARS Employee or his or her Qualified Beneficiaries with respect to each TARS Employee and Former TARS Employee who becomes a Qualified Beneficiary before the Welfare Plan Implementation Date.

(III) Exelis shall be responsible for complying with the group health coverage continuation requirements of COBRA for Qualifying Events occurring on or after the Welfare Plan Implementation Date affecting a TARS Employee or his or her Qualified Beneficiaries with respect to each TARS Employee who becomes a Qualified Beneficiary on or after the Welfare Plan Implementation Date.

(IV) Vectrus shall be responsible for complying with the group health coverage continuation requirements of COBRA for Qualifying Events occurring on or after the Welfare Plan Implementation Date affecting a Management Benefitted Employee or his or her Qualified Beneficiaries with respect to each Management Benefitted Employee who becomes a Qualified Beneficiary on or after the Welfare Plan Implementation Date.

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(V) For the avoidance of doubt, Vectrus shall be responsible for complying with the group health care coverage requirements of COBRA for Qualifying Events with respect to each PP Employee or his or her Qualified Beneficiaries with respect to each PP Employee who becomes a Qualified Beneficiary on or after the Effective Time.

(VI) For the avoidance of doubt, Exelis and Vectrus shall cause such Exelis Welfare Plans or Vectrus Welfare Plans, as the case may be, to fully perform, pay and discharge all such claims for any Management Benefitted Employees, PP Employees and TARS Employees as set forth under subsections (I) through (V) of this subsection (e) for the duration of COBRA continuation coverage, as determined pursuant to Treasury Regulation Section 4980B-7, so that the Vectrus Welfare Plans shall not be liable for the payment of claims incurred under the Exelis Welfare Plans pursuant to subsections (I) and (III) of this subsection (e) and the Exelis Welfare Plans shall not be liable for the payment of claims incurred under the Vectrus Welfare Plans for claims incurred pursuant to subsections (II), (IV) and (V) of this subsection (e).

(f) HIPAA Notices of Creditable Coverage .

(I) The Exelis Welfare Plans shall be responsible for providing Notices of Creditable Coverage to all Management Benefitted Employees prior to the Welfare Plan Implementation Date. The Vectrus Welfare Plans shall be responsible for providing Notices of Creditable Coverage to all Management Benefitted Employees on and after the Welfare Plan Implementation Date; provided , however , that for periods during which coverage for Management Benefitted Employees under the Exelis Welfare Plans is at issue, Exelis will cooperate and use commercially reasonable efforts to provide Vectrus with information necessary for the Vectrus Welfare Plans to issue correct and complete Notices of Creditable Coverage.

(II) The Vectrus Welfare Plans shall be responsible for providing Notices of Creditable Coverage to all TARS Employees prior to the Welfare Plan Implementation Date. The Exelis Welfare Plans shall be responsible for providing Notices of Creditable Coverage to all TARS Employees on and after the Welfare Plan Implementation Date; provided , however , that for periods during which coverage for TARS Employees under the Vectrus Welfare Plans is at issue, Vectrus will cooperate and use commercially reasonable efforts to provide Exelis with information necessary for the Exelis Welfare Plans to issue correct and complete Notices of Creditable Coverage.

(III) For the avoidance of doubt, the Vectrus Welfare Plans shall be responsible for providing Notices of Creditable Coverage to all PP Employees on and after the Effective Time.

(g) Assumption of Liability for Disability Medical Benefits . Effective as of the Welfare Plan Implementation Date, any liability to provide Disability Medical Benefits to any Former Management Benefitted Employees who, under Section 9.2(i)(III) began receiving long-term disability benefits under an Exelis Welfare Plan before the Welfare Plan Implementation Date, shall be transferred to Vectrus, and no member of the Exelis Group shall have any obligations with respect thereto; provided , however , that neither Vectrus nor any member of the Vectrus Group shall have any obligation pursuant to the terms of this Agreement to continue any Disability Medical Benefits on or after the Welfare Plan Implementation Date.

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(h) Additional Details Regarding HRA . Pursuant to Section 9.1, Vectrus or another Vectrus Entity shall establish and adopt Vectrus Welfare Plans that will no later than the Welfare Plan Implementation Date provide HRA benefits to eligible Vectrus Welfare Plan Participants who are Management Benefitted Employees. To the extent that any of the Vectrus Welfare Plans provides HRA benefits (each, a “ Vectrus HRA ”), such Vectrus Welfare Plans shall be effective as of the Welfare Plan Implementation Date.

(I) It is the intention of the Parties that all activity under an HRA attributable to a Vectrus Welfare Plan Participant who is a Management Benefitted Employee for the plan year prior to the plan year in which the Welfare Plan Implementation Date occurs, be deemed to be activity under the Exelis Welfare Plans providing HRA benefits (each, an “ Exelis HRA ”). Accordingly, (A) the Exelis HRA Participation Period will be deemed to include a period when the Vectrus Welfare Plan Participant who is a Management Benefitted Employee participated in the corresponding Exelis HRA; (B) pursuant to Section 9.1(a), Exelis shall cause its wellness program benefits and incentives to be continued for Vectrus Welfare Plan Participants who are Management Benefitted Employees until August 31, 2014, under a Transition Services Agreement; (C) effective January 1, 2015, Vectrus shall, or shall cause another Vectrus Entity to, adopt its wellness program and incentives to extend benefits in satisfaction of Section 9.1(a) and Section 9.1(b); (D) all expenses incurred during the Exelis HRA Participation Period will be deemed to be incurred for Management Benefitted Employees under the corresponding Exelis HRA; and (E) any balance accrued under an Exelis HRA as of the Welfare Plan Implementation Date shall become a balance under the Vectrus HRA.

Notwithstanding anything in this Section 9.2(h), at and after the relevant Welfare Plan Implementation Date, the Vectrus Group shall assume, and cause the Vectrus Welfare Plans to be solely responsible for, all claims by Vectrus Welfare Plan Participants under the applicable Exelis HRA that were incurred but not paid, whether incurred prior to, on, or after the later of the Effective Time or the Welfare Plan Implementation Date, that have not been paid in full as of the Welfare Plan Implementation Date.

(i) Employees on Vacation, Leave or Disability .

(I) As of the Effective Time, Vectrus shall assume all Liabilities with respect to any Vectrus Group Employee who is a Management Benefitted Employee and, as of or following the Effective Time and prior to the Welfare Plan Implementation Date, who is or goes on vacation or who is on or commences an approved leave of absence, whether paid or unpaid (including leave under FMLA or corresponding state Law, short-term disability, military leave and other approved leave, including Liabilities for salary continuation, paid leave or continuing Benefit Plans).

(II) As of the Effective Time and until the Welfare Plan Implementation Date, Exelis shall cause the Exelis Welfare Plans to treat any Vectrus Group Employee who is a Management Benefitted Employee and, as of or following the Effective Time and prior to the Welfare Plan Implementation Date, who is or goes on vacation or who is on or commences an approved leave of absence, whether paid or unpaid (including leave under FMLA or corresponding state Law, short-term disability, military leave and other approved leave, including Liabilities for salary continuation, paid leave or continuing Benefit Plans) the same as an Exelis Group Employee or Former Exelis Group Employee would be treated under the Exelis Welfare Plans in the same or similar circumstance.

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(III) For the avoidance of doubt, any Vectrus Group Employees who are Former Management Benefitted Employees and who qualify before the Welfare Plan Implementation Date for long-term disability benefits under an Exelis Welfare Plan shall remain in such long-term disability plan.

(IV) Notwithstanding subsections (I) and (II) above, any individual residing in California or another jurisdiction with specific rules that are not reflected in this provision and that must be followed, as the case may be, who would have become a Vectrus Group Employee as of the Effective Time but was on an approved leave of absence at the Effective Time shall become a Vectrus Group Employee following the conclusion of his or her approved leave or as Exelis and Vectrus shall agree pursuant to Section 2.6, as the case may be.

(V) As of the Effective Time, Vectrus shall assume and satisfy all Liabilities with respect to any Vectrus Group Employee who is a PP Employee and, as of or following the Effective Time, who is or goes on vacation or who is on or commences an approved leave of absence, whether paid or unpaid (including leave under FMLA or corresponding state Law, short-term disability, military leave and other approved leave, including Liabilities for salary continuation, paid leave or continuing Benefit Plans).

(VI) As of the Effective Time, Exelis shall assume all Liabilities with respect to any Exelis Group Employee who is a TARS Employee and, as of or following the Effective Time and prior to the Welfare Plan Implementation Date, who is or goes on vacation or who is on or commences an approved leave of absence, whether paid or unpaid (including leave under FMLA or corresponding state Law, short-term disability, military leave and other approved leave, including Liabilities for salary continuation, paid leave or continuing Benefit Plans).

(VII) As of the Effective Time and until the Welfare Plan Implementation Date, Vectrus shall cause the Vectrus Welfare Plans to treat any Exelis Group Employee who is a TARS Employee and, as of or following the Effective Time and prior to the Welfare Plan Implementation Date, who is on or goes on vacation or who is on or commences an approved leave of absence, whether paid or unpaid (including leave under FMLA or corresponding state Law, short-term disability, military leave and other approved leave, including Liabilities for salary continuation, paid leave or continuing Benefit Plans) the same as a PP Employee would be treated under the Vectrus Welfare Plans in the same or similar circumstance.

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(VIII) For the avoidance of doubt, any Vectrus Group Employees who are PP Employees or Former TARS Employees and who qualify before the Welfare Plan Implementation Date for long-term disability benefits provided under a Vectrus Welfare Plan shall remain in such long-term disability plan.

(IX) Notwithstanding subsections (V), (VI) and (VII) above, any individual residing in California or another jurisdiction with specific rules that are not reflected in this provision and that must be followed, as the case may be, who would have become a Vectrus Group Employee as of the Effective Time but was on an approved leave of absence at the Effective Time shall become a Vectrus Group Employee following the conclusion of his or her approved leave or as Exelis and Vectrus shall agree pursuant to Section 2.6, as the case may be.

Section 9.3. Continuity of Benefits .

(a) Additional Details Regarding Flexible Spending Accounts .

(I) Pursuant to Section 9.1, Exelis shall cause its health care flexible spending account or dependent care flexible spending account (each, an “ Exelis FSA ”) benefits to be continued for Vectrus Welfare Plan Participants who are Management Benefitted Employees through December 31, 2014, pursuant to a Transition Services Agreement. Exelis shall bear the burden of experience losses and the benefit of experience gains for each Exelis FSA for the entirety of 2014.

(II) Effective as of the Effective Time, Vectrus or another Vectrus Entity shall withhold payroll deductions made pursuant to the terms of the Exelis FSAs as in effect prior to and after the Effective Time and remit such amounts to the Exelis FSAs within the period required by Labor Regulation Section 2510.3-102(a)(1) and any other applicable guidance for the health care flexible spending account and as soon as practicable for the dependent care flexible spending account.

(III) Effective January 1, 2015, Vectrus or another Vectrus Entity shall cause Vectrus Welfare Plan Participants who are Management Benefitted Employees to become eligible for health care flexible spending account benefits and dependent care flexible spending account benefits.

(IV) Vectrus or another Vectrus Entity shall establish and adopt Vectrus Welfare Plans that will provide health care flexible spending account benefits and dependent care flexible spending account benefits to Vectrus Welfare Plan Participants who are PP Employees and, pursuant to a Transition Services Agreement, all TARS Employees, effective as of the Effective Time. Vectrus shall bear the burden of experience losses and the benefit of experience gains with respect to the PP Employees and TARS Employees for the entirety of 2014.

(b) Additional Details Regarding Health Savings Accounts .

(I) Exelis shall cause its health savings account benefits to be continued for Vectrus Welfare Plan Participants who are Management Benefitted Employees through December 31, 2014 under the terms of a Transition Services Agreement.

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(II) Pursuant to Section 9.1, Vectrus or another Vectrus Entity shall establish and adopt Vectrus Welfare Plans no later than the relevant Welfare Plan Implementation Date for each plan and will coordinate with a health savings account custodian to make available a health savings account option for eligible Vectrus Welfare Plan Participants who are Management Benefitted Employees. The health savings account option will provide health savings account benefits to eligible Management Benefitted Employees similar to the benefits provided to eligible participants in the Health Savings Plan option of the Exelis Welfare Plans. The health savings account made available in connection with the Vectrus Welfare Plans shall be effective as of the Welfare Plan Implementation Date.

(III) Pursuant to Section 9.1 and no later than the Effective Time, Vectrus or another Vectrus Entity shall ratify the adoption of the Vectrus Welfare Plans and assume sponsorship of the Vectrus Welfare Plans and will coordinate with a health savings account custodian to make available a health savings account option for eligible Vectrus Welfare Plan Participants who are PP Employees and, pursuant to a Transition Services Agreement, TARS Employees. The eligible Vectrus Welfare Plan Participants who are PP Employees or TARS Employees will remain covered by the Vectrus Welfare Plans without interruption of coverage.

(c) Employer Non-Elective Contributions .

(I) As of the Effective Time, Vectrus shall cause any Vectrus Welfare Plans that constitute a “ cafeteria plan ” under Section 125 of the Code to recognize and give effect to all non-elective employer contributions credited toward coverage of a Vectrus Welfare Plan Participant who is either a Management Benefitted Employee or a PP Employee under the corresponding Exelis Welfare Plan that is a cafeteria plan under Section 125 of the Code for the applicable plan year.

(II) For the avoidance of doubt, Vectrus shall cause all contributions for coverage made before the Welfare Plan Implementation Date for all Vectrus Welfare Plan Participants who are Management Benefitted Employees participating in Exelis Welfare Plans to be remitted to Exelis within the period required by Labor Regulation Section 2510.3-102(a)(1) and any other applicable guidance.

(d) Waiver of Conditions or Restrictions .

(I) Unless prohibited by applicable Law, the Vectrus Welfare Plans will waive all limitations, exclusions, service conditions, waiting period limitations or evidence of insurability requirements that would otherwise be applicable to a Vectrus Welfare Plan Participant who is a Management Benefitted Employee following the Welfare Plan Implementation Date to the extent that such Employee had previously satisfied such limitations under the corresponding Exelis Welfare Plans.

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(II) Unless prohibited by applicable Law, the Exelis Welfare Plans will waive all limitations, exclusions, service conditions, waiting period limitations or evidence of insurability requirements that would otherwise be applicable to a Vectrus Welfare Plan Participant who is a TARS Employee following the Welfare Plan Implementation Date to the extent that such Employee had previously satisfied such limitations under the corresponding Exelis Welfare Plans.

Section 9.4. Welfare Plan Implementation Date . For the avoidance of doubt, the Parties may vary the Welfare Plan Implementation Date for each of the Vectrus Welfare Plans.

ARTICLE X

NON-U.S. WELFARE PLANS.

Section 10.1. Establishment of Non-U.S. Welfare Plans .

(a) Management Benefitted Employees . On the Welfare Plan Implementation Date, Vectrus or another Vectrus Entity shall cause the Vectrus Welfare Plan Participants who are Management Benefitted Employees and who reside or work outside the United States to become covered by Vectrus Welfare Plans set forth in Schedule 10.1(a). The Exelis Welfare Plans shall cover for the portion of the 2014 calendar year following the Effective Time the Vectrus Welfare Plan Participants who are Management Benefitted Employees and who reside or work outside the United States as set forth in this Article X and to the extent not set forth in this Article X, pursuant to a Transition Services Agreement, so that there shall be no interruption of coverage. To the extent such coverage does not commence until following the Effective Time, Vectrus shall indemnify Exelis for any continued participation by such employee in the corresponding Exelis Welfare Plan. Exelis will reasonably cooperate with Vectrus in complying with the immediately preceding sentence. Schedule 10.1(a) may be updated by mutual written consent of Exelis and Vectrus.

(b) PP Employees . Effective as of the Effective Time (or as soon as practicable thereafter), Vectrus, or another Vectrus Entity, shall ratify the adoption of the Vectrus Welfare Plans set forth in Schedule 10.1(a) and assume sponsorship of the Vectrus Welfare Plans no later than the Effective Time. The Vectrus Welfare Plans set forth in Schedule 10.1(a) shall cover the Vectrus Welfare Plan Participants who are PP Employees and who reside or work outside the United States and, for the remainder of 2014, pursuant to a Transition Services Agreement, TARS Employees who reside or work outside the United States so that there shall be no interruption of coverage. Exelis shall indemnify Vectrus for any continued participation by such TARS Employees in the corresponding Vectrus Welfare Plan. Vectrus will reasonably cooperate with Exelis in complying with the immediately preceding sentence. Schedule 10.1(a) may be updated by mutual written consent of Exelis and Vectrus at any time up to 60 days after the Effective Time.

(c) Coordination for Cessation of Coverages . For the avoidance of doubt, Vectrus Welfare Plan Participants who immediately prior to the Effective Time reside or work outside the United States and participate in a Vectrus Welfare Plan shall be treated as follows:

(I) Management Benefitted Employees shall not participate in an Exelis Welfare Plan on or after the relevant Welfare Plan Implementation Date for a corresponding Vectrus Welfare Plan;

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(II) TARS Employees shall begin participating in Exelis Welfare Plans on January 1, 2015;

(III) PP Employees shall not participate in any Exelis Welfare Plans on and after the Effective Time;

(IV) TARS Employees shall not participate in any Vectrus Welfare Plans after December 31, 2014; and

(V) Except as provided in subsection (II) above, Exelis Group Employees shall not participate in any Vectrus Welfare Plans at any time on or after the Effective Time.

Section 10.2. Transitional Matters Under Vectrus Welfare Plans; Credit for Deductibles and Other Limits .

(a) Management Benefitted Employees . With respect to each Management Benefitted Employee who resides or works outside the United States and participates in an Exelis Welfare Plan listed on Schedule 10.1(a) immediately prior to the Effective Time, Vectrus and Exelis shall use reasonable efforts to provide that for purposes of any lifetime maximum benefit limit payable under any of the Vectrus Welfare Plans listed on Schedule 10.1(a), such Vectrus Welfare Plans will recognize any expenses paid or reimbursed by the Exelis Welfare Plans listed on Schedule 10.1(a) with respect to such participant before the Welfare Plan Implementation Date to the same extent such expense payments or reimbursements would be recognized in respect of an active plan participant under any of the applicable Exelis Welfare Plans listed on Schedule 10.1(a).

(b) TARS Employees . With respect to each TARS Employee who resides or works outside the United States and participates in a Vectrus Welfare Plan listed on Schedule 10.1(a) immediately prior to the Effective Time, Vectrus and Exelis shall use reasonable efforts to provide that for purposes of any lifetime maximum benefit limit payable under any of the Vectrus Welfare Plans listed on Schedule 10.1(a), the applicable Exelis Welfare Plans will recognize any expenses paid or reimbursed by the Vectrus Welfare Plans listed on Schedule 10.1(a) with respect to such participant before the Welfare Plan Implementation Date to the same extent such expense payments or reimbursements would be recognized in respect of an active plan participant under any of the applicable Exelis Welfare Plans listed on Schedule 10.1(a).

(c) PP Employees . For the avoidance of doubt, PP Employees who reside or work outside the United States and participate in a Vectrus Welfare Plan listed on Schedule 10.1(a) immediately prior to the Effective Time shall remain in all Vectrus Welfare Plans listed on Schedule 10.1(a) as of the Effective Time. No additional credit shall be given for the plan year in which the Effective Time occurs for any amount paid, number of services obtained or provider visits by such PP Employee toward deductibles, out-of-pocket maximums, limits on number of services or visits, or other similar limitations to the extent such amounts have already been taken into account under the Vectrus Welfare Plans set forth in Schedule 10.1(a). Any PP Employee who resides or works outside the United States shall not be credited with any additional lifetime maximum benefit limit under any of the Vectrus Welfare Plans set forth in Schedule 10.1(a) to the extent the Vectrus Welfare Plans have recognized expenses paid or reimbursed such expenses for such participant prior to the Effective Time.

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ARTICLE XI

EXCESS SAVINGS PLAN

Section 11.1. Vectrus Excess Savings Plan . Effective as of the Effective Time, Vectrus shall, or shall cause another Vectrus Entity to, establish and adopt the Vectrus Excess Savings Plan. As of the Effective Time, no Vectrus Group Employee shall participate in the Exelis Excess Savings Plan, and any liabilities to a Vectrus Group Employee under the Exelis Excess Savings Plan shall be transferred to the Vectrus Excess Savings Plan. Any benefits payable from the Vectrus Excess Savings Plan shall be paid in accordance with the terms of that plan. To the extent that the benefits transferred to the Vectrus Excess Savings Plan are only payable upon a separation from service as determined under Treasury Regulation Section 1.409A-1(h), such benefits shall be payable only after the Vectrus Excess Savings Plan participant has incurred a separation from service from the Vectrus Group.

Section 11.2. Vectrus Springing Rabbi Trust . As soon as practicable following the Effective Time, Vectrus shall, or shall cause another Vectrus Entity to, adopt one or more grantor trusts in a form or forms that are substantially comparable to the Exelis Springing Rabbi Trust as in effect immediately prior to the Effective Time.

ARTICLE XII

WORKERS’ COMPENSATION AND UNEMPLOYMENT COMPENSATION

Section 12.1. Vectrus Workers’ Compensation . Effective as of the Effective Time, Vectrus, acting through the Vectrus Group Entity employing each Vectrus Group Employee, will be responsible for (and, to the extent it has not previously had such obligations, such Vectrus Entity shall assume): (a) the obligations for all claims and Liabilities relating to unemployment compensation benefits for all Vectrus Group Employees employed by that Vectrus Entity and (b) obtaining workers’ compensation insurance, including providing all collateral required by the insurance carriers.

Section 12.2. Vectrus Unemployment Compensation . Effective as of the Effective Time, the Vectrus Entity employing each Vectrus Group Employee shall have (and, to the extent it has not previously had such obligations, such Vectrus Entity shall assume) the obligations for all claims and Liabilities relating to unemployment compensation benefits for all Vectrus Group Employees employed by that Vectrus Entity. Effective as of the Effective Time, Vectrus, acting through the Vectrus Group Entity employing each Vectrus Group Employee, will be responsible for establishing new or transferred unemployment insurance employer accounts, policies and claims handling contracts with the applicable government agencies.

Section 12.3. Exelis Workers’ Compensation . Effective as of the Effective Time, the Exelis Entity employing each Exelis Group Employee shall have (and, to the extent it has not previously had such obligations, such Exelis Entity shall assume) the obligations for all claims and Liabilities relating to workers’ compensation for all Exelis Group Employees and Former Exelis Group Employees. Effective as of the Effective Time, the Exelis Entity formerly employing each Exelis Group Employee shall have (and, to the extent it has not previously had such obligations, such Exelis Entity shall assume) the obligations for all claims and Liabilities relating to workers’ compensation for all Former Exelis Group Employees.

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Section 12.4. Exelis Unemployment Compensation . Effective as of the Effective Time, the Exelis Entity employing each Exelis Group Employee shall have (and, to the extent it has not previously had such obligations, such Exelis Entity shall assume) the obligations for all claims and Liabilities relating to unemployment compensation benefits for all Exelis Group Employees and Former Exelis Group Employees. Effective as of the Effective Time, the Exelis Entity formerly employing each Exelis Group Employee shall have (and, to the extent it has not previously had such obligations, such Exelis Entity shall assume) the obligations for all claims and Liabilities relating to unemployment compensation benefits for all Former Exelis Group Employees.

Section 12.5. Assignment of Contribution Rights . Exelis will transfer and assign (or cause another member of the Exelis Group to transfer and assign) to a member of the Vectrus Group all rights to seek contribution or damages from any applicable third party (such as a third party who aggravates an injury to a worker who makes a workers’ compensation claim) with respect to any workers’ compensation claim for which Vectrus is responsible pursuant to this Article XII. Vectrus will transfer and assign (or cause another member of the Vectrus Group to transfer and assign) to a member of the Exelis Group all rights to seek contribution or damages from any applicable third party (such as a third party who aggravates an injury to a worker who makes a workers’ compensation claim) with respect to any workers’ compensation claim for which Exelis is responsible pursuant to this Article XII.

Section 12.6. Collateral . On and after the Effective Time, Vectrus (acting directly or through a member of the Vectrus Group) shall be responsible for providing all collateral required by insurance carriers in connection with workers’ compensation claims for which Liability is allocated to the Vectrus Group under this Article XII. Exelis (acting directly or through a member of the Exelis Group) shall be responsible for providing all collateral required by insurance carriers in connection with workers’ compensation claims for which Liability is allocated to the Exelis Group under this Article XII.

Section 12.7. Cooperation . Vectrus and Exelis shall use commercially reasonable efforts to provide that workers’ compensation and unemployment insurance costs are not adversely affected for either of them by reason of the Distribution.

ARTICLE XIII

SEVERANCE

Exelis shall have no Liability or obligation under any Exelis severance plan(s) or policies with respect to Vectrus Group Employees who did not have a termination event prior to the Effective Time giving rise to a severance payment under such Exelis severance plan(s) or policies. Vectrus shall be liable for all severance payments to be paid to any Vectrus Group Employee under the applicable Exelis severance plan(s) or policies in which such Vectrus Group Employee participated immediately prior to the Effective Time, if, and to the extent that, the events giving rise to such severance payments occurred prior to the Effective Time. By no later than the Effective Time, Vectrus shall, or shall cause another Vectrus Entity to, adopt severance plan(s) or policies under which Vectrus Group Employees who, immediately prior to the Effective Time, shall be eligible to participate immediately following the Effective Time. Such Vectrus severance plan(s) or policies will provide terms and conditions for Vectrus Group Employees who are severed from the Vectrus Group following the Effective Time that are substantially similar to the terms and conditions provided under the applicable Exelis severance plan(s) or policies in which such Vectrus Group Employees participated immediately prior to the Effective Time. For the avoidance of doubt, the Distribution and the assignment, transfer or continuation of the employment of Vectrus Group Employees contemplated by Section 4.1 shall not be deemed a severance of employment for purposes of this Agreement and, effective as of the Effective Time, Vectrus Group Employees shall not be eligible to receive any severance payments or other benefits under any Exelis severance arrangements, plans, policies or guidelines, or agreements.

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ARTICLE XIV

BENEFIT ARRANGEMENTS AND OTHER MATTERS

Section 14.1. Termination of Participation . Except as otherwise provided under this Agreement, effective as of immediately after the Effective Time, Vectrus Group Employees shall not be eligible to participate in any Exelis Benefit Plan.

Section 14.2. Restrictive Covenants in Employment and Other Agreements . To the fullest extent permitted by the agreements described in this Section 14.2 and applicable Law, Exelis shall assign, or cause an applicable member of the Exelis Group to assign, to Vectrus or a member of the Vectrus Group, as designated by Vectrus, all agreements containing restrictive covenants (including confidentiality, non-competition and non-solicitation provisions) between a member of the Exelis Group and a Vectrus Group Employee, with such assignment to be effective as of the Effective Time. To the extent that assignment of such agreements is not permitted, effective as of the Effective Time, each member of the Vectrus Group shall be considered to be a successor to each member of the Exelis Group for purposes of, and a third-party beneficiary with respect to, all agreements containing restrictive covenants (including confidentiality, non-competition and non-solicitation provisions) between a member of the Exelis Group and a Vectrus Group Employee, such that each member of the Vectrus Group shall enjoy all the rights and benefits under such agreements (including rights and benefits as a third-party beneficiary), with respect to the business operations of the Vectrus Group; provided , however , that in no event shall Exelis be permitted to enforce such restrictive covenant agreements against Vectrus Group Employees for action taken in their capacity as employees of a member of the Vectrus Group; provided , further , that for three years following the Effective Time, Exelis and Vectrus shall not be considered competitors under any non-competition provision applicable to any Exelis Group Employee or Vectrus Group Employee.

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ARTICLE XV

GENERAL PROVISIONS

Section 15.1. Preservation of Rights to Amend . The rights of each member of the Exelis Group and each member of the Vectrus Group to amend, waive, or terminate any Benefit Plan shall not be limited in any way by this Agreement.

Section 15.2. Confidentiality . Each Party agrees that any information conveyed or otherwise received by or on behalf of a Party in conjunction herewith that is not otherwise public through no fault of such Party is confidential and is subject to the terms of the confidentiality provisions set forth herein and in the Distribution Agreement, including Section 4.3(e) of this Agreement and Section 8.6 of the Distribution Agreement.

Section 15.3. Administrative Complaints/Litigation . Except as otherwise provided in this Agreement, on and after the Effective Time, Vectrus shall assume, and be solely liable for, the handling, administration, investigation, and defense of actions, including ERISA, occupational safety and health, employment standards, union grievances, wrongful dismissal, discrimination or human rights, and unemployment compensation claims asserted at any time against Exelis or any member of the Exelis Group by any Vectrus Group Employee (including any dependent or beneficiary of any such Employee) or any other person, to the extent such actions or claims arise out of or relate to employment or the provision of services (whether as an employee, contractor, consultant, or otherwise) to or with respect to the business activities of any member of the Vectrus Group after the Effective Time. To the extent that any legal action relates to a putative or certified class of plaintiffs, which includes both Exelis Group Employees (or Former Exelis Group Employees) and Vectrus Group Employees and such action involves employment or benefit plan related claims, reasonable costs and expenses incurred by the Parties in responding to such legal action shall be allocated among the Parties equitably in proportion to a reasonable assessment of the relative proportion of Employees included in or represented by the putative or certified plaintiff class. The procedures contained in the indemnification and related litigation cooperation provisions of the Distribution Agreement shall apply with respect to each Party’s indemnification obligations under this Section 15.3.

Section 15.4. Reimbursement and Indemnification . Each Party agrees to reimburse the other Party, within 30 days of receipt from the other Party of reasonable verification or except as otherwise provided in the Transition Services Agreement, for all costs and expenses which the other Party may incur on its behalf as a result of any of the respective Exelis and Vectrus Welfare Plans, 401(k) plans, savings plans, retirement plans, Benefit Plans, and pension plans and, as contemplated by Article XIII, any termination or severance payments or benefits. All Liabilities retained, assumed, or indemnified against by Vectrus pursuant to this Agreement, and all Liabilities retained, assumed, or indemnified against by Exelis pursuant to this Agreement, shall in each case be subject to the indemnification provisions of the Distribution Agreement. Notwithstanding anything to the contrary, (i) no provision of this Agreement shall require any member of the Vectrus Group to pay or reimburse to any member of the Exelis Group any benefit-related cost item that a member of the Vectrus Group has paid or reimbursed to any member of the Exelis Group prior to the Effective Time; and (ii) no provision of this Agreement shall require any member of the Exelis Group to pay or reimburse to any member of the Vectrus Group any benefit-related cost item that a member of the Exelis Group has paid or reimbursed to any member of the Vectrus Group prior to the Effective Time.

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Section 15.5. Costs of Compliance with Agreement . Except as otherwise provided in this Agreement, each Party shall pay its own expenses in fulfilling its obligations under this Agreement.

Section 15.6. Fiduciary Matters . Exelis and Vectrus each acknowledges that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable Law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good-faith determination (as supported by advice from counsel experienced in such matters) that to do so would violate such a fiduciary duty or standard. Each Party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any Liabilities caused by the failure to satisfy any such responsibility.

Section 15.7. Entire Agreement . This Agreement, together with the documents referenced herein (including the Distribution Agreement and the Benefit Plans), constitutes the entire agreement and understanding among the Parties with respect to the subject matter hereof and supersedes all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof. To the extent any provision of this Agreement conflicts with the provisions of the Distribution Agreement, the provisions of this Agreement shall be deemed to control with respect to the subject matter hereof.

Section 15.8. Binding Effect; No Third-Party Beneficiaries; Assignment . This Agreement shall inure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns. Except as otherwise expressly provided in this Agreement, this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon any third parties any remedy, claim, liability, reimbursement, cause of action, or other right in excess of those existing without reference to this Agreement. Nothing in this Agreement is intended to amend any Benefit Plan or affect the applicable plan sponsor’s right to amend or terminate any Benefit Plan pursuant to the terms of such plan. The provisions of this Agreement are solely for the benefit of the Parties, and no current or former Employee, officer, director, or independent contractor or any other individual associated therewith shall be regarded for any purpose as a third-party beneficiary of this Agreement. This Agreement may not be assigned by any Party, except with the prior written consent of the other Parties.

Section 15.9. Amendment; Waivers . No change or amendment may be made to this Agreement except by an instrument in writing signed on behalf of each of the Parties. Any Party may, at any time, (i) extend the time for the performance of any of the obligations or other acts of another Party, (ii) waive any inaccuracies in the representations and warranties of another Party contained herein or in any document delivered pursuant hereto, and (iii) waive compliance by another Party with any of the agreements, covenants, or conditions contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by an authorized person of the Party to be bound thereby. No failure or delay on the part of any Party in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty, covenant, or agreement contained herein, nor shall any single or partial exercise of any such right preclude other or further exercises thereof or of any other right.

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Section 15.10. Remedies Cumulative . All rights and remedies existing under this Agreement or the schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available.

Section 15.11. Notices . Unless otherwise expressly provided herein, all notices, claims, certificates, requests, demands and other communications hereunder shall be in writing and shall be deemed to be duly given: (i) when personally delivered, (ii) if mailed by registered or certified mail, postage prepaid, return receipt requested, on the date the return receipt is executed or the letter is refused by the addressee or its agent, (iii) if sent by overnight courier which delivers only upon the executed receipt of the addressee, on the date the receipt acknowledgment is executed or refused by the addressee or its agent, or (iv) if sent by facsimile or electronic mail, on the date confirmation of transmission is received (provided that a copy of any notice delivered pursuant to this clause (iv) shall also be sent pursuant to clause (i), (ii) or (iii)), addressed to the attention of the addressee’s General Counsel at the address of its principal executive office or to such other address or facsimile number for a Party as it shall have specified by like notice.

Section 15.12. Counterparts . This Agreement, including the schedules hereto and the other documents referred to herein, may be executed in multiple counterparts, each of which when executed shall be deemed to be an original but all of which together shall constitute one and the same agreement.

Section 15.13. Severability . If any term or other provision of this Agreement or the schedules attached hereto is determined by a non-appealable decision by a court, administrative agency, or arbitrator to be invalid, illegal, or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the court, administrative agency, or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

Section 15.14. Governing Law . This Agreement shall be governed by and construed in accordance with the Laws, but not the Laws governing conflicts of Laws (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law), of the State of New York; provided that the Indiana Business Corporation Law, including the provisions thereof governing the fiduciary duties of directors of a Indiana corporation, shall govern, as applicable, the internal affairs of Exelis and Vectrus, as the case may be.

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Section 15.15. Dispute Resolution; Consent to Jurisdiction and Waiver of Jury Trial . The procedures for negotiation and binding arbitration set forth in Article IX and Sections 11.18 and 11.19 of the Distribution Agreement shall apply to any dispute, controversy or claim (whether sounding in contract, tort or otherwise) that arises out of or relates to this Agreement, any breach or alleged breach hereof, the transactions contemplated hereby (including all actions taken in furtherance of the transactions contemplated hereby on or prior to the date hereof), or the construction, interpretation, enforceability, or validity hereof.

Section 15.16. Performance . Each of Exelis and Vectrus shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any member of the Exelis Group and any member of the Vectrus Group, respectively. The Parties each agree to take such further actions and to execute, acknowledge, and deliver, or to cause to be executed, acknowledged, and delivered, all such further documents as are reasonably requested by the other for carrying out the purposes of this Agreement or of any document delivered pursuant to this Agreement.

Section 15.17. Construction . This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against any Party.

Section 15.18. Effect if Distribution Does Not Occur . Notwithstanding anything in this Agreement to the contrary, if the Distribution Agreement is terminated prior to the Effective Time, this Agreement shall be of no further force and effect and shall be void ab initio .

Section 15.19. Code Sections 162(m) and 409A . Notwithstanding anything in this Agreement to the contrary (including the treatment of non-qualified deferred compensation plans, outstanding long-term incentive awards and annual incentive awards as described herein), Exelis and Vectrus agree to negotiate in good faith regarding the need for any treatment different from that otherwise provided herein to ensure that (i) a federal income tax deduction for the payment of any non-qualified deferred compensation plan, long-term incentive award, annual incentive award or other compensation is, to the extent prescribed under the terms of the applicable plan and award agreement, not limited by reason of Section 162(m) of the Code, and (ii) the treatment of any non-qualified deferred compensation plan, long-term incentive award, annual incentive award or other compensation does not cause the imposition of a penalty tax under Section 409A of the Code.

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed in their names by a duly authorized officer as of the date first written above.

[ Signature Page to Employee Matters Agreement ]

Schedule 9.1(a)

to the

EMPLOYEE MATTERS AGREEMENT

by and between

EXELIS INC.

and

VECTRUS, INC.

2

3

Schedules 10.1(a) and (b)

to the

EMPLOYEE MATTERS AGREEMENT

by and between

EXELIS INC.

and

VECTRUS, INC.

Exhibit 10.2

TAX MATTERS AGREEMENT

This TAX MATTERS AGREEMENT is dated as of September 25, 2014, by and among Exelis Inc., an Indiana corporation (“ Exelis ”), Vectrus, Inc., an Indiana corporation (“ Vectrus ” and, together with Exelis, the “ Parties ”, and each individually, a “ Party ”), Exelis Systems Corporation, a Delaware corporation (“ Systems ”) (solely for the purposes of Section 4.5(b) and (c)) and Exelis Holdings Inc., a Delaware corporation (“ Holdings ”) (solely for the purposes of Section 4.5(c)).

WHEREAS, as of the date hereof, Exelis is the common parent of an affiliated group of domestic corporations within the meaning of Section 1504(a) of the Code (the “ Affiliated Group ”), and the members of the Affiliated Group have heretofore joined in filing consolidated federal Income Tax Returns;

WHEREAS, Exelis, acting through its direct and indirect Subsidiaries, currently conducts a number of businesses, including the Exelis Retained Business and the Vectrus Business;

WHEREAS, the Board of Directors of Exelis (the “ Board ”) has determined that it is appropriate, desirable and in the best interests of Exelis, its shareholders and its other constituents, to separate Exelis into two separate, publicly traded companies, one for each of (i) the Exelis Retained Business, which shall be owned and conducted, directly or indirectly, by Exelis and (ii) the Vectrus Business, which shall be owned and conducted, directly or indirectly, by Vectrus;

WHEREAS, in order to effect such separation, the Board has determined that it is appropriate, desirable and in the best interests of Exelis and its shareholders and other constituents (i) to undertake the Plan of Separation and (ii) for Exelis to distribute on the Distribution Date to holders of record of shares of its common stock, par value $.01 per share (the “ Exelis Common Stock ”), as of the Distribution Record Date, on a pro rata basis (in each case without consideration being paid by such shareholders) all of the outstanding shares of common stock, par value $.01 per share, of Vectrus (the “ Vectrus Common Stock ”) owned by Exelis on the basis of one (1) share[s] of Vectrus Common Stock for each eighteen (18) outstanding share[s] of Exelis Common Stock (the “ External Distribution ”).

WHEREAS, it is the intention of the Parties that the contribution of all of the issued and outstanding shares of the common stock of Systems to Vectrus prior to the External Distribution, together with the External Distribution, qualify as a reorganization within the meaning of Section 368(a)(1)(D) and 355 of the Code;

WHEREAS, it is the intention of the Parties, Systems and Holdings that the contribution of all of the membership interests of TARS and proceeds from the Financing Arrangements to Holdings prior to the distribution of all of the issued and outstanding common stock of Holdings to Exelis (the “ Internal Distribution ”), together with the Internal Distribution, qualify as a reorganization within the meaning of Section 368(a)(1)(D) and 355 of the Code;

WHEREAS, as a result of the Distributions, the Parties desire to enter into this Tax Matters Agreement to provide for certain Tax matters, including the assignment of responsibility for the preparation and filing of Tax Returns, the payment of and indemnification for Taxes (including Taxes with respect to the Distributions and related transactions as contemplated in the Distribution Agreement and the other Ancillary Agreements), entitlement to refunds of Taxes, and the prosecution and defense of any Tax controversies; and

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the Parties hereby agree as follows:

ARTICLE I. DEFINITIONS

SECTION 1.1.  General . Capitalized terms used in this Agreement and not defined herein shall have the meanings that such terms have in the Distribution Agreement. As used in this Agreement, the following terms shall have the following meanings:

“ Affiliate ” is defined in the Distribution Agreement.

“ Affiliated Group ” is defined in the preamble hereof.

“ Afghani Taxes ” means any Taxes imposed by the Islamic Republic of Afghanistan, including, any state, municipality, political subdivision or governmental agency thereof or therein.

“ Agreement ” means this Tax Matters Agreement.

“ Breaching Party ” is defined in Section 4.3.

“ Business Day ” or “ Business Days ” means any day that is not a Saturday, a Sunday or any other day on which banks are required or authorized by law to be closed in New York City or Virginia.

“ Closing of the Books Method ” means the apportionment of items between portions of a taxable period based on a closing of the books and records on the Distribution Date (as if the Distribution Date was the end of the taxable period).

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

“ Consolidated Return ” means any Income Tax Return filed pursuant to Section 1502 of the Code, or any comparable combined, consolidated, or unitary group Income Tax Return filed under state or local Tax law with respect to which Exelis or any Exelis Subsidiary is the parent entity.

“ Distribution ” or “ Distributions ” means the External Distribution and the Internal Distribution, individually or collectively.

“ Distribution Agreement ” means the Distribution Agreement, dated as of September 25, 2014, between Exelis and Vectrus.

“ Distribution Date ” means the Business Day on which the External Distribution is effected.

“ Effective Time ” is defined in the Distribution Agreement.

“ Exelis ” is defined in the preamble hereof.

“ Exelis Common Stock ” is defined in the preamble hereof.

“ Exelis Retained Business ” is defined in the Distribution Agreement.

“ Exelis Subsidiary ” means any Subsidiary of Exelis other than Vectrus or any Vectrus Subsidiary.

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“ External Distribution ” is defined in the preamble hereof.

“ Final Determination ” means the final resolution of liability for any Tax for any taxable period, including any related interest or penalties, by or as a result of: (i) a final and unappealable decision, judgment, decree or other order by any court of competent jurisdiction; (ii) a closing agreement or accepted offer in compromise under Section 7121 or 7122 of the Code, or comparable agreement under the laws of other jurisdictions which resolves the entire Tax liability for any taxable period; (iii) any allowance of a refund or credit in respect of an overpayment of Tax, but only after the expiration of all periods during which such refund may be recovered by the jurisdiction imposing the Tax; or (iv) any other final disposition.

“ Force Majeure ” is defined in the Distribution Agreement.

“ Included Party ” is defined in Section 3.3(c).

“ Income Tax ” means any income, franchise or similar Taxes imposed on (or measured by) net income or net profits.

“ Income Tax Returns ” means all Tax Returns relating to Income Taxes.

“ Indemnified Liability ” means any liability subject to indemnification pursuant to Section 4.3.

“ IRS ” means the United States Internal Revenue Service.

“ Internal Distribution ” is defined in the Distribution Agreement.

“ ITT Tax Matters Agreement ” means the Tax Matters Agreement by and among ITT Corporation, an Indiana corporation, Xylem Inc., an Indiana corporation, and Exelis , dated as of October 25, 2011.

“ Knowledge Party ” is defined in Section 4.4.

“ LIBOR ” is defined in the Distribution Agreement.

“ Losses ” has the meaning ascribed to the term “Indemnifiable Losses” in the Distribution Agreement.

“ Non-Breaching Party ” is defined in Section 4.3.

“ Opinion ” means the opinion delivered by Simpson Thacher & Bartlett LLP pursuant to Section 4.4(c) of the Distribution Agreement.

“ Party ” is defined in the preamble hereof.

“ Payment Period ” is defined in Section 2.4(d).

“ Preparing Party ” is defined in Section 3.3(c).

“ Proceeding ” means any audit, examination or other proceeding brought by a Taxing Authority with respect to Taxes.

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“ Prohibited Acts ” is defined in Section 4.2.

“ Pro-Rated Method ” means the apportionment of items between portions of a taxable period based on the number of days in such taxable period on or before the Distribution Date in comparison to the number of days in such taxable period after the Distribution Date (i.e., without regard to when any items are realized within such taxable period).

“ Requesting Party ” is defined in Section 4.2.

“ Restricted Period ” means the two-year period commencing on the Distribution Date.

“ Separation Taxes ” is defined in Section 2.1(b).

“ SGRS Distribution Agreement ” means the Amended and Restated Distribution Agreement, effective as of August 24, 2012, by and between Systems and Exelis (including any predecessor to such agreement).

“ Shared Taxes ” is defined in Section 2.1(a).

“ Sharing Percentage ” means (i) eight-two percent (82%) in the case of Exelis and (ii) eighteen percent (18%) in the case of Vectrus.

“ Subsidiary ” is defined in the Distribution Agreement.

“ Stub Taxable Period ” is defined in Section 3.3(b).

“ TARS ” means Exelis Tethered Radar LLC, a Delaware limited liability company.

“ Tax ” or “ Taxes ” means (i) all taxes, charges, fees, imposts, levies or other assessments imposed by a Taxing Authority, including all net income, gross receipts, capital, sales, use, gains, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, custom duties, fees, assessments and charges of any kind whatsoever and (ii) liability for the payment of any amount of the type described in clause (i) above arising as a result of being (or having been) a member of any group or being (or having been) included or required to be included in any Tax Return related thereto. Whenever the term “Tax” or “Taxes” is used it shall include penalties, fines, additions to tax and interest thereon.

“ Taxing Authority ” means any governmental authority (whether United States or non-United States, and including, any state, municipality, political subdivision or governmental agency) responsible for the imposition of any Tax.

“ Tax Package ” is defined in Section 3.3(c).

“ Tax Returns ” means all reports or returns (including information returns and amended returns) required to be filed or that may be filed for any period with any Taxing Authority in connection with any Tax or Taxes (whether domestic or foreign).

“ Tax Sharing Agreement ” is defined in Section 5.6.

“ Vectrus ” is defined in the preamble hereof.

“ Vectrus Business ” is defined in the Distribution Agreement.

“ Vectrus Common Stock ” is defined in the preamble hereof.

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“ Vectrus Subsidiary ” means (i) any Subsidiary of Vectrus after the Distribution Date and (ii) any Subsidiary of Vectrus before the Distribution Date the successor of which is described in (i) above.

SECTION 1.2. References; Interpretation . References in this Agreement to any gender include references to all genders, and references to the singular include references to the plural and vice versa. The words “include,” “includes” and “including” when used in this Agreement shall be deemed to be followed by the phrase “without limitation.” Unless the context otherwise requires, references in this Agreement to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, such Agreement. Unless the context otherwise requires, the words “hereof,” “hereby” and “herein” and words of similar meaning when used in this Agreement refer to this Agreement in its entirety and not to any particular Article, Section or provision of this Agreement.

ARTICLE II. ALLOCATION OF TAX LIABILITIES

SECTION 2.1. Payment of Taxes .

(a) Taxes Upon Filing and Adjusted Taxes . The Party responsible for the preparation of a Tax Return pursuant to Sections 3.1 and 3.2 shall pay to the relevant Taxing Authority all Taxes due or payable in connection with such Tax Return (including any amounts relating to adjustments to such Tax Return) and shall be entitled to any refunds (including, for the avoidance of doubt, any similar credit or offset against Taxes) in connection therewith; provided, however, with respect to any Income Tax Return (other than a Consolidated Return or any Tax Return in respect of Afghani Taxes) of Vectrus or any Vectrus Subsidiary for (i) any taxable period that ends on or before the Distribution Date, Exelis shall be liable for, and shall be entitled to any refunds of, Income Taxes (including any amounts relating to adjustments to such Income Tax Return) relating to such taxable period and (ii) any taxable period that begins before and includes but does not end on the Distribution Date, Exelis shall be liable for, and shall be entitled to any refunds of, Income Taxes (including any amounts relating to adjustments to such Income Tax Return) relating to the portion of the taxable period ending on the Distribution Date and Vectrus shall be liable for, and shall be entitled to any refunds of, Income Taxes relating to the portion of the taxable period beginning after the Distribution Date. Notwithstanding the foregoing, Exelis shall be liable for Taxes (other than Income Taxes) for which Exelis or any Exelis Subsidiary is responsible under applicable law, and Vectrus shall be liable for Taxes (other than Income Taxes) for which Vectrus or any Vectrus Subsidiary is responsible under applicable law; provided, however, that Exelis shall be responsible for any Taxes (other than Income Taxes) arising with respect to the assets transferred to TARS for any taxable period (or portion thereof) that begins on or after October 1, 2013 and any contracts transferred to Exelis pursuant to the SGRS Distribution Agreement. Notwithstanding the foregoing, the Parties shall be responsible for any Income Taxes (other than Separation Taxes) for (a) any taxable period that ends on or before the Distribution Date and (b) for the portion of the taxable period ending on the Distribution Date of any taxable period that begins before and includes but does not end on the Distribution Date, in each case for (x) for all Income Tax Returns (including any adjustments thereto) filed pursuant to Section 3.1 of Exelis, Vectrus, any Exelis Subsidiary or any Vectrus Subsidiary and (y) for all Income Tax Returns (including any adjustments thereto) (other than a Consolidated Return) of Vectrus or any Vectrus Subsidiary, in each case other than any Income Taxes arising as a result of any deferred intercompany item (or any similar item under state, local or foreign Tax law) resulting from the transactions undertaken pursuant to the SGRS Distribution Agreement being taken into account in connection with the Distributions pursuant to Section 1502 of the Code and the regulations promulgated thereunder (or any similar provision of state, local or foreign Tax law) or any estimated Income Tax payments in respect of the quarterly period ended September 30, 2014 or Income Tax payments due with respect to any initial extension of any Income Tax Return for any taxable period that ends on the Distribution Date or December 31, 2014 (collectively, “ Shared Taxes ”), in accordance with their respective Sharing Percentages if (and to the extent) Exelis would be responsible hereunder for an amount of such Shared Taxes in excess of $3,300,000; provided, however, that Income Taxes shall not be considered Shared Taxes to the extent Exelis or any Exelis Subsidiary is indemnified for such Income Taxes under any Tax Sharing Agreement. Any refunds of Shared Taxes that are received by Exelis or any Exelis Subsidiary (or otherwise paid over to Exelis pursuant to this Section 2.1(a)) shall be treated as reducing the amount of Shared Taxes for which Exelis has been responsible hereunder (but

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only to the extent that Exelis or any Exelis Subsidiary is entitled to retain such refund). If any Shared Taxes have been shared by the Parties in accordance with their Sharing Percentages, the Party that receives any refund of Shared Taxes shall make payments to the other Party in accordance with their respective Sharing Percentages to reflect the prior liability, if any, for Shared Taxes. For the purposes of this Section 2.1(a), (i) Taxes imposed on a periodic basis (such as real or personal property Taxes) shall be apportioned between the two portions of a taxable period in accordance with the Pro-Rated Method and (ii) Taxes not described in clause (i) above (such as franchise Taxes, Taxes that are based upon or related to income or receipts, based upon occupancy or imposed in connection with any sale or other transfer or assignment of property) shall be apportioned between the two portions of a taxable period in accordance with the Closing of the Books Method.

(b) Separation Taxes . Notwithstanding anything in this Section 2.1 to the contrary, and except as provided in Article IV, Exelis shall be liable for, and shall be entitled to any refunds of, any Taxes for a taxable period that begins before the Distribution Date that are (i) imposed or incurred as a result of any Distribution failing to qualify as a reorganization within the meaning of Section 368(a)(1)(D) and Section 355 of the Code (or any similar provision of state, local or foreign Tax law), (ii) imposed or incurred as a result of the stock of Vectrus distributed in the External Distribution or the stock of Exelis Holdings distributed in the Internal Distribution failing to be treated as qualified property pursuant to Section 355(d) or Section 355(e) of the Code (or any similar provision of state, local or foreign Tax law) and (iii) imposed or incurred as a result of Exelis or Systems otherwise recognizing any gain for Income Tax purposes in connection with any Distribution (other than as a result of any deferred intercompany item (or any similar item under state, local or foreign Tax law) generated by transactions other than any Distribution or the Plan of Separation being taken into account in connection with the Distributions pursuant to Section 1502 of the Code and the regulations promulgated thereunder (or any similar provision of state, local or foreign Tax law)) (collectively, “ Separation Taxes ”).

SECTION 2.2. Indemnity .

(a) Subject to Article IV, Exelis shall indemnify Vectrus and its Affiliates from all liability for Taxes for which Exelis is responsible pursuant to Section 2.1 and any related Losses.

(b) Subject to Article IV, Vectrus shall indemnify Exelis and its Affiliates from all liability for Taxes for which Vectrus is responsible pursuant to Section 2.1 and any related Losses.

(c) Unless otherwise agreed in writing, the indemnifying Party shall pay to the indemnified Party the amount required to be paid pursuant to Section 2.2(a) or (b) above within thirty (30) days of being notified of the amount due by the indemnified Party. The notice by the indemnified Party requesting such payment shall be accompanied by the calculations and other information used to determine the indemnifying Party’s obligations hereunder. Such payment shall be paid by the indemnifying Party to the indemnified Party by wire transfer of immediately available funds to an account designated by the indemnified Party by written notice to the indemnifying Party prior to the due date of such payment.

SECTION 2.3. Contests .

(a) Subject to Article IV, the right to control the conduct of any Proceeding shall belong to the Party responsible, pursuant to Sections 3.1 and 3.2, for the preparation of the Tax Return to which such Proceeding relates. If the Party not controlling a Proceeding could have an indemnification obligation for an adjustment to Tax pursuant to such Proceeding, such Party shall be entitled to participate in (but not control) such Proceeding at its own cost and expense; provided, however, that if Vectrus controls the Proceeding, it shall not settle such Proceeding in a manner that would result in an indemnity payment

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from Exelis under this Agreement without the consent of Exelis (such consent not to be unreasonably withheld, conditioned or delayed); provided, further, that if Vectrus controls such Proceeding it may settle such Proceeding without the consent of Exelis so long as Vectrus waives its indemnification rights hereunder in respect of such Proceeding.

(b) After the Distribution Date, each Party shall promptly notify the other Party in writing upon receipt of written notice of the commencement of any Proceeding or of any demand or claim upon it, which, if determined adversely, would be grounds for indemnification from such other Party pursuant to Section 2.2; provided that failure to provide notice pursuant to this sentence shall not relieve any Party of its obligations pursuant to this Agreement except to the extent such Party is actually prejudiced as a result thereof. Each Party shall, on a timely basis, keep the other Party informed of all developments in the Proceeding and provide such other Party with copies of all pleadings, briefs, orders, and other correspondence pertaining thereto.

SECTION 2.4. Treatment of Payments; After Tax Basis .

(a) Unless otherwise required by a Final Determination, this Agreement or as otherwise agreed to between the Parties, any payment made pursuant to this Agreement (other than any payment of interest pursuant to Section 2.4(d)) by: (i) Vectrus to Exelis shall be treated for all Tax purposes as a distribution by Vectrus to Exelis with respect to the stock of Vectrus occurring immediately before the External Distribution; or (ii) Exelis to Vectrus shall be treated for all Tax purposes as a tax-free contribution by Exelis to Vectrus with respect to its stock occurring after Vectrus is directly owned by Exelis and immediately before the External Distribution; and in each case, no Party shall take any position inconsistent with such treatment. In the event that a Taxing Authority asserts that a Party’s treatment of a payment pursuant to this Agreement should be other than as required pursuant to this Agreement (ignoring any potential inconsistent or adverse Final Determination), such Party shall use its commercially reasonable efforts to contest such challenge.

(b) If the receipt or accrual of any payment pursuant to this Agreement (other than payments of interest pursuant to Section 2.4(d)) results in taxable income to the indemnified Party or any of its Affiliates, such payment shall be increased so that, after the payment of any Taxes with respect to the payment, the indemnified Party and its Affiliates shall have realized the same net amount they would have realized had the payment not resulted in taxable income.

(c) To the extent that any liability for Taxes or Losses that is subject to indemnification under this Agreement gives rise to a deduction, credit or other Tax benefit to the indemnified Party or any of its Affiliates, the amount of any payment made under this Agreement shall be decreased by taking into account any actual reduction in Taxes (determined on a with and without basis) of the indemnified Party or any of its Affiliates resulting from such Tax benefit (including as a result of any election set forth in Section 4.5). If (i) such actual reduction in Taxes of the indemnified Party or its Affiliate occurs in a taxable period following the period in which the indemnification payment is made or (ii) any adjustment to the liability for Taxes for which one Party or any Affiliates is responsible hereunder gives rise to a deduction, credit or other Tax benefit (including as a result of any election set forth in Section 4.5) to the other Party or any of its Affiliates, the indemnified Party (or, in the case of (ii), the other Party) shall on an annual basis pay the indemnifying Party (or, in the case of (ii), the responsible Party) the amount of the actual reduction in Taxes (determined on a with and without basis); provided, however, that no such payment shall be required if the actual reduction in Taxes for the relevant year and any unpaid reduction in Taxes for all prior years is less than $50,000.

(d) Payments made pursuant to this Agreement that are not made within the period prescribed in this Agreement or, if no period is prescribed, within thirty (30) days after demand for payment is made

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(the “ Payment Period ”) shall bear interest for the period from and including the date immediately following the last date of the Payment Period through and including the date of payment at a rate of simple interest per annum equal to LIBOR. Such interest will be payable at the same time as the payment to which it relates and shall be calculated on the basis of a year of 365 days and the actual number of days for which due.

ARTICLE III. PREPARATION AND FILING OF TAX RETURNS

SECTION 3.1. Exelis’s Responsibility for the Preparation and Filing of Tax Returns .

(a) Exelis shall prepare or cause to be prepared (i) all Consolidated Returns, (ii) all other Tax Returns that it or any Exelis Subsidiary is legally obligated to file after the Distribution Date according to the laws of the relevant taxing jurisdiction and (iii) all Income Tax Returns of Exelis, Vectrus, any Exelis Subsidiary or any Vectrus Subsidiary for taxable periods ending on or before the Distribution Date (other than any Income Tax Returns of Vectrus or any Vectrus Subsidiary in respect of Afghani Taxes). Exelis shall file or cause to be filed all such Tax Returns (other than any Tax Returns for which it or an Exelis Subsidiary is not legally obligated to file after the Distribution Date) with the appropriate Taxing Authority.

(b) To the extent that Vectrus or any Vectrus Subsidiary is included in any Consolidated Return for a taxable period that includes the Distribution Date, Exelis shall include in such Consolidated Return the results of Vectrus and the Vectrus Subsidiaries on the basis of the Closing of the Books Method consistent with Treas. Reg. Section 1.1502-76(b)(2)(i).

SECTION 3.2. Vectrus’s Responsibility for the Preparation and Filing of Tax Returns . Subject to Section 3.1(a)(iii) and Section 3.3(a), Vectrus shall prepare or cause to be prepared all Tax Returns that it or any Vectrus Subsidiary is legally obligated to file after the Distribution Date according to the laws of the relevant taxing jurisdiction and any Tax Returns of Vectrus or any Vectrus Subsidiary in respect Afghani Taxes. Vectrus shall file or cause to be filed all such Tax Returns (and any other Tax Returns for which it or an Vectrus Subsidiary is legally obligated to file after the Distribution Date) with the appropriate Taxing Authority.

SECTION 3.3. Manner of Preparation .

(a) Notwithstanding Section 3.2 of this Agreement, Exelis shall have the right to review and comment with respect to items on any Tax Returns prepared by Vectrus if and to the extent such items directly relate to Taxes for which Exelis would be liable under Section 2.1, such comment not to be unreasonably rejected. Vectrus shall deliver to Exelis any such Tax Returns forty-five (45) days prior to the date on which they are required to be filed and Exelis shall respond with any comments on such returns within twenty (20) days of receipt. In the event the Parties are unable to agree on any items included in such Tax Returns, any disputed issues shall be submitted to an independent accounting firm for a final binding resolution, the cost of which shall be shared equally by the Parties.

(b) To the extent permitted by law, any taxable period of Vectrus or any Vectrus Subsidiary for any state, local or foreign Income Tax purposes that would otherwise include but not end on the Distribution Date shall be bifurcated into two separate taxable periods, one ending on the Distribution Date and the other beginning on the day following the Distribution Date (each a “ Stub Taxable Period ”), and a separate Income Tax Return for each Stub Taxable Period shall be prepared and filed by the Party responsible for such preparation and filing pursuant to Sections 3.1 and 3.2.

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(c) To the extent any Tax Return required to be prepared by Exelis pursuant to Section 3.1 contains items relating to the Vectrus Business or any Tax Return required to by prepared by Vectrus pursuant to Section 3.2 contains items relating to the Exelis Retained Business, the Party not responsible for preparing such Tax Return (the “ Included Party ”) shall, at its own cost and expense, prepare and deliver to the Party responsible for preparing such Tax Return (the “ Preparing Party ”) a true and correct accounting of all relevant Tax items (in a form reasonably requested by the Preparing Party) relating to the Included Party (or any of its Subsidiaries) for the taxable period covered by such Tax Return (a “ Tax Package ”) within thirty (30) days following the written request of the Preparing Party or such shorter period as may be necessary for timely filing of such Tax Return. In the event an Included Party does not fulfill its obligations pursuant to this Section 3.3(c), the Preparing Party shall be entitled to prepare or cause to be prepared the information required to be included in the Tax Package for purposes of preparing any such Tax Return, and the Included Party shall reimburse the Preparing Party for any out-of-pocket expenses incurred in the preparation of such information.

(d) All Tax Returns for taxable periods (or portions thereof) beginning before the Distribution Date that are required to be filed after the Distribution Date that could give rise to an indemnity obligation pursuant to Section 2.2 shall be prepared in a manner consistent with past practices (e.g., accounting methods and accelerating deductions through bonus depreciation or otherwise) and the preparing Party shall, at the other Party’s request, share any such Tax Return with such other Party after the filing thereof.

(e) All Income Tax Returns filed on or after the Distribution Date shall be prepared in a manner that is consistent with the Opinion, or any rulings obtained from other Taxing Authorities in connection with the Distributions (in the absence of a Final Determination to the contrary) and shall be filed on a timely basis (including pursuant to extensions) by the Party responsible for such filing pursuant to Sections 3.1 and 3.2. In the absence of a Final Determination to the contrary or a change in law, all Income Tax Returns of Vectrus and its Subsidiaries for taxable periods beginning before the Distribution Date shall be prepared consistent with the Tax Returns of the Affiliated Group. Exelis shall deliver the information set forth on Schedule 3.3(e) that is reasonably necessary for Vectrus and its Subsidiaries to comply with its financial reporting obligations to Vectrus within forty five (45) days after the Distribution Date.

(f) Except to the extent required by a Final Determination, Vectrus and any Vectrus Subsidiary shall not amend any Income Tax Return relating to a taxable period (or portion thereof) ending on or before to the Distribution Date without the written consent of Exelis (which consent may be withheld in its sole discretion).

SECTION 3.4. Costs and Expenses of Preparation . Subject to Section 3.3(c), the Party responsible for preparing any Tax Return under Sections 3.1 or 3.2 shall be responsible for the costs and expenses associated with preparing such Tax Returns.

SECTION 3.5. Carrybacks . To the extent permitted by law, Vectrus and any Vectrus Subsidiaries shall elect to forego a carryback of any net operating losses, capital losses or credits for any taxable period ending after the Distribution Date to a taxable period, or portion thereof, ending on or before the Distribution Date. Notwithstanding anything herein to the contrary, Vectrus and any Vectrus Subsidiaries shall not have any right to receive the benefit of any carryback of Tax attributes created in a taxable period beginning after the Distribution Date into a Consolidated Return.

SECTION 3.5. Retention of Records; Access .

(a) Exelis and Vectrus shall, and shall cause each of their Subsidiaries to, retain adequate records, documents, accounting data and other information (including computer data) necessary for the

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preparation and filing of all Tax Returns required to be filed by Exelis or Vectrus hereunder and for any Proceeding relating to such Tax Returns or to any Taxes payable by Exelis or Vectrus hereunder.

(b) Exelis and Vectrus shall, and shall cause each of their Subsidiaries to, provide reasonable access to (i) all records, documents, accounting data and other information (including computer data) necessary for the preparation and filing of all Tax Returns required to be filed by Exelis or Vectrus and for any Proceeding relating to such Tax Returns or to any Taxes payable by Exelis or Vectrus and (ii) its personnel and premises, for the purpose of the preparation, review or audit of such Tax Returns, or in connection with any Proceeding, as reasonably requested by either Exelis or Vectrus.

(c) The obligations set forth above in Sections 3.5(a) and 3.5(b) shall continue until the longer of (i) the time of a Final Determination or (ii) expiration of all applicable statutes of limitations, to which the records and information relate. For purposes of the preceding sentence, each Party shall assume that no applicable statute of limitations has expired unless such Party has received notification or otherwise has actual knowledge that such statute of limitations has expired.

SECTION 3.6. Confidentiality; Ownership of Information; Privileged Information . The provisions of Article VIII of the Distribution Agreement relating to confidentiality of information, ownership of information, privileged information and related matters shall apply with equal force to any records and information prepared and/or shared by and among the Parties in carrying out the intent of this Agreement.

ARTICLE IV. DISTRIBUTIONS AND RELATED TAX MATTERS

Notwithstanding anything herein to the contrary, the provisions of this Article IV shall govern all matters among the parties hereto related to an Indemnified Liability.

SECTION 4.1. Compliance with the Opinion . Exelis and Vectrus hereby confirm and agree to comply with (and cause their respective Subsidiaries to comply with) any and all covenants, agreements and representations in the Opinion applicable to Exelis and Vectrus (or their respective Subsidiaries), respectively.

SECTION 4.2. Opinion Requirement for Major Transactions Undertaken by Vectrus During the Restricted Period . Other than pursuant to the transactions contemplated by the Distribution Agreement, Vectrus agrees that during the Restricted Period it shall not (and shall not cause or permit Systems to) (i) merge or consolidate with or into any other entity, (ii) liquidate or partially liquidate (within the meaning of such terms as defined in Section 346 and Section 302, respectively, of the Code), (iii) sell or transfer (a) all or substantially all of its assets (within the meaning of Rev. Proc. 77-37, 1977-2 C.B. 568) in a single transaction or series of related transactions, or sell or transfer any portion of its assets that would violate the “continuity of business enterprise” requirement of Treas. Reg. Section 1.368-1(d) or (b) 35 percent or more of its assets (or those of its Subsidiaries), (iv) redeem or otherwise repurchase any of its capital stock other than pursuant to open market stock repurchase programs meeting the requirements of section 4.05(1)(b) of Rev. Proc. 96-30, 1996-1 C.B. 696, (v) cease the active conduct of its trade or business within the meaning of Section 355(b) of the Code or the active conduct of the Vectrus Business, (vi) enter into any negotiations, agreements or arrangements with respect to transactions or events (including any transactions described in Sections 4.2(i)-(iv) (and, for this purpose, including any redemptions made pursuant to open market stock repurchase programs), stock issuances (pursuant to the exercise of options or otherwise), option grants, capital contributions or acquisitions, entering into any partnership or joint venture arrangements, or a series of such transactions or events, but excluding any Distribution) that may cause any Distribution to be treated as part of a plan pursuant to which one or more persons acquire directly or indirectly stock of Vectrus or Systems representing a “35-

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percent or greater interest” (i.e., stock possessing at least 35 percent of the total combined voting power of all classes of stock entitled to vote or at least 35 percent of the total value of shares of all classes of stock, as such terms are used in Section 355(d)(4) of the Code), or (vii) take any other action (or series of actions), or permit any Subsidiary to take any such action (or series of actions), where the taking of such action (or series of actions) could reasonably be expected to cause any Distribution to fail to qualify under Section 355 of the Code or cause the stock of Vectrus or Systems distributed in any Distribution to fail to be treated as qualified property pursuant to Section 355(e) of the Code (the acts listed in (i)-(vii) collectively, the “ Prohibited Acts ”). Notwithstanding the foregoing, Vectrus (and Systems, if applicable) (the “ Requesting Party ”) may take any of the Prohibited Acts, subject to Section 4.3, if (x) the Requesting Party first obtains (at its expense) an opinion in form and substance reasonably acceptable to Exelis of a nationally recognized law firm or a “big four” accounting firm reasonably acceptable to Exelis, which opinion may be based on usual and customary factual representations (reasonably acceptable to Exelis) or (y) at the Requesting Party’s request, Exelis (at the expense of the Requesting Party) obtains a ruling from the IRS, that such Prohibited Act or Prohibited Acts, and any transaction related thereto, will not (a) affect (i) any of the conclusions set forth in the Opinion, (ii) the qualification of any Distribution as a reorganization within the meaning of Section 368(a)(1)(D) and Section 355 of the Code (or any similar provision of state, local or foreign Tax law), (ii) imposed or incurred as a result of the stock of Vectrus distributed in the External Distribution or the stock of Exelis Holdings distributed in the Internal Distribution failing to be treated as qualified property pursuant to Section 355(d) or Section 355(e) of the Code (or any similar provision of state, local or foreign Tax law) and (iii) the nonrecognition of gain to Exelis in the External Distribution and the Plan of Separation and Systems in the Internal Distribution and the Plan of Separation, or (b) cause the stock of Vectrus distributed in the External Distribution or the stock of Holdings distributed in the Internal Distribution to fail to be treated as qualified property pursuant to Sections 355(d) or 355(e) of the Code (or any similar provision of state, local or foreign Tax law). Vectrus (and Systems, if applicable) may also take any of the Prohibited Acts, subject to Section 4.3, with the consent of the other Party in its sole and absolute discretion. During the Restricted Period, a Party shall provide all information reasonably requested by the other Party relating to any transaction involving an acquisition (directly or indirectly) of the stock of Exelis, Holdings, Vectrus or Systems within the meaning of Section 355(e) of the Code.

SECTION 4.3. Indemnification for Distribution Taxes . If, after the External Distribution, a Party or any of its Affiliates takes any action or enters into any agreement to take any action, including any of the Prohibited Acts as defined in Section 4.2 of this Agreement, or if there is a breach by any Party of Section 4.1 hereof, or if there is any direct or indirect acquisition of a Party’s stock (or, in the case of Exelis, Holdings’s stock, or, in the case of Vectrus, Systems’s stock), and as a result any Separation Taxes are imposed or incurred, then such Party (the “ Breaching Party ”) shall indemnify and hold harmless the other Party (the “ Non-Breaching Party ”) and any of its Affiliates against any such Separation Taxes (and any related Losses) imposed upon or incurred by the Non-Breaching Party or any of its Affiliates (and any Separation Taxes of Exelis shareholders to the extent the Non-Breaching Party or any of its Affiliates is liable with respect to such Separation Taxes, whether to a Taxing Authority, to a shareholder or to any other person) as a result, unless such Separation Taxes would, in any event, have been imposed upon or incurred by the Non-Breaching Party or any or its Affiliates without regard to such actions, breaches or events, as determined at such time. The Non-Breaching Party and any of its Affiliates shall be indemnified and held harmless under this Section 4.3 without regard to whether an opinion pertaining to the action pursuant to Section 4.2 was obtained, and without regard to whether the Non-Breaching Party gave its consent to such action pursuant to Section 4.2 or otherwise.

SECTION 4.4. Procedural Matters .

(a) Notice . If either Vectrus or Exelis (or any of their Affiliates) receives any written notice of deficiency, claim or adjustment or any other written communication from a Taxing Authority that may

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result in an Indemnified Liability, the Party receiving (or whose Affiliate has received) such notice or communication shall promptly give written notice thereof to the other Party, provided that any delay in such notification shall not relieve the indemnifying Party of any liability to the other Party hereunder except to the extent the indemnifying Party is materially and adversely prejudiced by such delay. Vectrus and Exelis (and any of their Affiliates) undertake and agree that from and after such time as any Party obtains knowledge that any representative of a Taxing Authority has begun to investigate or inquire into any Distribution (whether or not such investigation or inquiry is a formal or informal investigation or inquiry), such Party (the “ Knowledge Party ”), shall (i) notify the other Party thereof, provided that any delay by any Knowledge Party in so notifying the other Party shall not relieve such other Party of any liability hereunder, except to the extent such other Party is materially and adversely prejudiced by such delay, (ii) consult with the other Party from time to time as to the conduct of such investigation or inquiry, (iii) provide the other Party with copies of all correspondence between the Knowledge Party or its representatives and such Taxing Authority or any representative thereof pertaining to such investigation or inquiry, and (iv) cooperate with the other Party to permit a representative (reasonably satisfactory to the Knowledge Party) of the other Party to be present at, and participate in (but not control), all meetings with such Taxing Authority or any representative thereof pertaining to such investigation or inquiry, provided, that any costs relating to the other Party’s representation at such meetings shall be borne by such Party.

(b) Tax Proceedings Controlled by Exelis . With respect to any Proceeding that may result in an Indemnified Liability with respect to which Vectrus would be entitled to indemnification from Exelis, Exelis shall be entitled to direct and control the defense or settlement of such Proceeding at its own expense.

(c) Tax Proceedings Controlled by Vectrus . With respect to any Proceeding that may result in an Indemnified Liability with respect to which Exelis would be entitled to indemnification from Vectrus, Vectrus shall be entitled to direct and control the defense or settlement of such Proceeding at its own expense; provided that Vectrus shall not settle such Proceeding without the prior written consent of Exelis (not to be unreasonably withheld, conditioned or delayed). Vectrus undertakes and agrees to (i) consult with Exelis from time to time as to the conduct of any such Proceeding over which it exercises direction and control, (iii) provide Exelis with copies of all correspondence between Vectrus or its representatives and such Taxing Authority or any representative thereof pertaining to such Proceeding, and (iv) cooperate with Exelis to permit a representative (reasonably satisfactory to Vectrus) of Exelis to be present at, and participate in (but not control), all meetings with such Taxing Authority or any representative thereof pertaining to such Proceeding, provided, that any costs relating to Exelis’s representation at such meetings shall be borne by Exelis.

(d) Time and Manner of Payment . Unless otherwise agreed in writing, Exelis or Vectrus, as the case may be, shall pay to the other Party the amount with respect to an Indemnified Liability determined pursuant to a Final Determination (less any amount paid directly by the indemnifying Party to the Taxing Authority) at least two Business Days prior to the date payment of the Indemnified Liability is required to be made to the Taxing Authority. Such payment shall be paid by wire transfer of immediately available funds to an account designated by the indemnified Party by written notice to the indemnifying Party prior to the due date of such payment.

(e) Refund of Amounts . Should a Party or any of its Affiliates receive a refund in respect of an Indemnified Liability or other Taxes for which the other Party was responsible under this Article 4, or should any such amounts that would otherwise be refundable to such Party or any of its Affiliates be applied or credited by the Taxing Authority to obligations of such Party or any of its Affiliates unrelated to an Indemnified Liability, then such Party shall, promptly following receipt (or notification of credit),

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remit such refund or an amount equal to such credit (including any statutory interest that is included in such refund or credited amount) to the other Party.

(h) Cooperation . Subject to the provisions of Section 3.6, Exelis and Vectrus shall (and shall cause their respective Subsidiaries to) reasonably cooperate with one another in a timely manner in any Proceeding involving any matter that may result in an Indemnified Liability. Exelis and Vectrus agree that such cooperation shall include, without limitation, making available to the other Party, during normal business hours, all books, records and information, officers and employees (without substantial interruption of employment) necessary or useful in connection with any such judicial or administrative Proceeding. The Party requesting or otherwise entitled to any books, records, information, officers or employees pursuant to this Section 4.4(h) shall bear all reasonable out-of-pocket costs and expenses (except reimbursement of salaries, employee benefits and general overhead) incurred in connection with providing such books, records, information, officers or employees.

SECTION 4.5. Protective Section 336(e) Elections .

(a) For Vectrus . Exelis and Vectrus shall make a protective election under Section 336(e) of the Code (and any similar election under state or local law) with respect to the External Distribution in accordance with Treas. Reg. Section 1.336-2(h) and (j) (and any applicable provisions under state and local law) and shall cooperate in the timely completion and/or filings of such elections and any related filings or procedures (including filing or amending any Tax Returns to implement an election that becomes effective). This Section 4.5(a) is intended to constitute a binding, written agreement to make an election under Section 336(e) of the Code with respect to the External Distribution.

(b) For Systems . In connection with the elections set forth in Section 4.5(a), Vectrus and Systems shall make a protective election under Section 336(e) of the Code (and any similar election under state or local law) with respect to Systems in accordance with Treas. Reg. Section 1.336-2(h) and (j) (and any applicable provisions under state and local law), and Exelis, Vectrus and Systems shall cooperate in the timely completion and/or filings of such elections and any related filings or procedures (including filing or amending any Tax Returns to implement an election that becomes effective). This Section 4.5(b) is intended to constitute a binding, written agreement to make an election under Section 336(e) of the Code with respect to Systems.

(c) For Holdings . Systems and Holdings shall make a protective election under Section 336(e) of the Code (and any similar election under state or local law) with respect to Holdings in accordance with Treas. Reg. Section 1.336-2(h) and (j) (and any applicable provisions under state and local law), and Exelis, Systems and Holdings shall cooperate in the timely completion and/or filings of such elections and any related filings or procedures (including filing or amending any Tax Returns to implement an election that becomes effective). This Section 4.5(c) is intended to constitute a binding, written agreement to make an election under Section 336(e) of the Code with respect to Holdings. If an election under Section 336(e) of the Code is unavailable to Systems and Holdings in connection with the Internal Distribution, Exelis and Vectrus shall (and shall cause their Affiliates to) cooperate in making an effective election under Section 338(h)(10) of the Code (and any similar election under state or local law) with respect to the Internal Distribution and cooperate with respect to any related filings or procedures (including having Exelis and Systems file an election under Section 338(h)(10) of the Code under the relief provisions of Treas. Reg. Sections 301.9100-1, et. seq . and filing or amending any Tax Returns to implement an election that becomes effective).

ARTICLE V. MISCELLANEOUS

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SECTION 5.1. Notices . All notices, requests, claims, demands and other communications under this Agreement shall be made and delivered in conformity with Section 11.6 of the Distribution Agreement.

SECTION 5.2. Amendment and Waiver . This Agreement may be terminated, modified or amended at any time prior to the Effective Time by and in the sole discretion of Exelis without the approval of Vectrus or the shareholders of Exelis. In the event of such termination, no Party shall have any liability of any kind to the other Party or any other Person. After the Effective Time, this Agreement may not be terminated, modified or amended except by an agreement in writing signed by Exelis, Vectrus and Systems. No failure to exercise and no delay in exercising, on the part of any Party, any right, remedy, power or privilege hereunder shall operate as a waiver hereof or thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

SECTION 5.3. Entire Agreement . This Agreement shall constitute the entire agreement between the Parties (which, for purposes of this Article V, shall include Systems and Holdings) with respect to the subject matter hereof and shall supersede all previous negotiations, commitments, course of dealings and writings with respect to such subject matter.

SECTION 5.4. Assignment; Successors and Assigns . This Agreement shall not be assignable, in whole or in part, directly or indirectly, by any Party hereto without the prior written consent of the other Party (not to be unreasonably withheld or delayed), and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void. Notwithstanding the foregoing, this Agreement shall be assignable in whole in connection with a merger or consolidation or the sale of all or substantially all the assets of a Party hereto so long as the resulting, surviving or transferee entity assumes all the obligations of the relevant Party hereto by operation of law or pursuant to an agreement in form and substance reasonably satisfactory to the other parties to this Agreement. No assignment permitted by this Section 5.4 shall release the assigning Party from liability for the full performance of its obligations under this Agreement. The provisions of this Agreement and the obligations and rights hereunder shall be binding upon, inure to the benefit of and be enforceable by (and against) the Parties and their respective successors and permitted transferees and assigns

SECTION 5.5. Severability . In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The Parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

SECTION 5.6. Tax Sharing Agreements . Any benefit or liability resulting from any Tax sharing, indemnification or similar agreements, written or unwritten, including but not limited to the ITT Tax Matters Agreement, as between any of the Parties or their respective Subsidiaries, on the one hand, and any other Party or its respective Subsidiaries, on the other hand (other than this Agreement or in any other Ancillary Agreement) (“ Tax Sharing Agreements ”), shall remain the benefit or liability of such Party or its respective Subsidiary; provided, however, that the Party responsible under this Agreement for any Taxes shall be responsible for any related liability in respect of such Taxes under any Tax Sharing Agreement, and be entitled to any related benefit in respect of such Taxes under any Tax Sharing Agreement. No Party shall be entitled to indemnification under this Agreement in respect of Taxes to the extent such Party or one of its Subsidiaries is indemnified under any Tax Sharing Agreement, and the Parties shall (and shall cause their Subsidiaries to) use commercially reasonable efforts to pursue any

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indemnification rights under any Tax Sharing Agreement if such indemnification would reduce the other Party’s responsibility for such Taxes under this Agreement.

SECTION 5.7. Governing Law; Jurisdiction . This Agreement shall be governed by and construed in accordance with the Laws, but not the Laws governing conflicts of Laws (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law), of the State of New York; provided that the Indiana Business Corporation Law, including the provisions thereof governing the fiduciary duties of directors of a Indiana corporation, shall govern, as applicable, the internal affairs of Exelis and Vectrus, as the case may be. Subject to the provisions of Article IX of the Distribution Agreement, each of the Parties irrevocably submits to the exclusive jurisdiction of (a) the Fairfax County Circuit Court and any appeals courts thereof or (b) the United States District Court for the Eastern District of Virginia and any appeals courts thereof (the courts referred to in clauses (a) and (b), the “Virginia Courts”), for the purposes of any suit, action or other proceeding to compel arbitration or for provisional relief in aid of arbitration in accordance with Article IX of the Distribution Agreement or to prevent irreparable harm, and to the non-exclusive jurisdiction of the Virginia Courts for the enforcement of any award issued thereunder. Each of the Parties further agrees that service of any process, summons, notice or document by U.S. registered mail to such Party’s respective address set forth in Section 11.6 of the Distribution Agreement shall be effective service of process for any action, suit or proceeding in the Virginia Courts with respect to any matters to which it has submitted to jurisdiction in this Section 5.7. Each of the Parties irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in the Virginia Courts, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.

SECTION 5.8. Waiver of Jury Trial . EACH OF THE PARTIES HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH OF THE PARTIES HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.8.

SECTION 5.9. Counterparts . This Agreement may be executed in more than one counterpart, all of which shall be considered one and the same agreement, and shall become effective when one or more such counterparts have been signed by each of the Parties and delivered to each of the Parties.

SECTION 5.10. Third Party Beneficiaries . This Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement.

SECTION 5.11. Force Majeure . No Party (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement, so long as and to the extent to which the fulfillment of such obligation is prevented,

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frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the other applicable Parties of the nature and extent of any such Force Majeure condition and (b) use due diligence to remove any such causes and resume performance under this Agreement as soon as feasible.

SECTION 5.12. Double Recovery . Nothing in this Agreement is intended to confer to or impose upon any Party a duplicative right, entitlement, obligation or recovery with respect to any matter arising out of the same facts and circumstances.

SECTION 5.13. Title and Headings . Titles and headings to sections herein are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

SECTION 5.14. Construction . The Parties have participated jointly in the negotiation and drafting of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

[ Remainder of page intentionally left blank ]

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IN WITNESS WHEREOF, the Parties, Systems (solely with respect to Section 4.5(b) and (c)) and Holdings (solely with respect to Section 4.5(c)), have caused this Agreement to be duly executed as of the day and year first above written.

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Schedule 3.3(e)

Information with regard to the following book tax differences that give rise to deferred tax liabilities, deferred tax assets and taxes payable information:

Contract Losses

Partnership Income / (Losses)

Unrealized Foreign Exchange Gains (Losses)

Compensation Accruals

Inventory Reserves

Contingency Reserves

Restructuring Reserves

State Income Taxes

Unbilled Retainages, Receivables & Deferred Revenue

Accrued Sub-Contractor Costs

Change in accounting methods

Fixed Assets

Intangible assets

Environmental Reserves

Accrued Award Fees

Stock based compensation

Taxes payable / receivable balances

Estimates as necessary

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Exhibit 10.3

MASTER TRANSITION SERVICES AGREEMENT

This Master Transition Services Agreement (this “ Agreement ”) is entered into as of September 25, 2014, between Exelis Inc., an Indiana corporation (“ Exelis ”) and Vectrus, Inc., an Indiana corporation (“ Vectrus ”). Each of Exelis and Vectrus is sometimes referred to herein as a “Party” and collectively as the “Parties.” Capitalized terms used herein and not otherwise defined herein have the meanings given to such terms in the Distribution Agreement of even date herewith, between Exelis and Vectrus (as such may be amended from time to time, the “ Distribution Agreement ”).

W I T N E S S E T H :

WHEREAS, the Board of Directors of Exelis has determined that it is appropriate, desirable and in the best interests of Exelis, Exelis’s shareholders and Exelis’s other constituents, to separate, pursuant to and in accordance with the Distribution Agreement, Exelis into two separate, publicly traded companies, one for each of (i) the Exelis Retained Business, which shall be owned and conducted, directly or indirectly, by Exelis and (ii) the MS Business, which shall be owned and conducted, directly or indirectly, by Vectrus.

WHEREAS, in order to provide for an orderly transition under the Distribution Agreement, each of Exelis and Vectrus desires to provide to the other certain services for specified periods following the Distribution Date, all in accordance with and subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the Parties contained herein, the Parties agree as follows:

(a) With respect to each Service (as defined in Section 1(b) ), the Party required to provide such Service is the “ Service Provider ” and the other Party is the “ Service Recipient ”. In performing the Services, Service Provider and each of its Affiliates shall use commercially reasonable efforts to provide, or to ensure that any Third Party Provider (as defined in Section 1(b) ) shall provide, the Services in the same manner, within the same amount of time and at the same level of service (including, as applicable, with respect to type, frequency, quality, and quantity), with the same degree of reasonable skill and care and with the same level of security and control as provided and used in providing the Services during the twelve month period prior to the Distribution Date (excluding any actions taken in contemplation of the Distribution). Notwithstanding the foregoing, if there is an increase in the complexity of a Service (whether as a result of increased quantity or quality, changing frequency or regulatory requirements or otherwise), Service Recipient acknowledges and agrees that such Service may not be provided within the same amount of time as it had previously taken during such period, and, in such a case, Service Provider and each of its Affiliates shall use commercially reasonable efforts to provide, or to ensure that any Third Party Provider shall provide, such Service in a timely manner. Notwithstanding anything herein to the contrary, the Services are to be provided in a manner that does not disparately treat Service Recipient (or its Subsidiaries or its or their

personnel or business) as compared to Service Provider’s treatment of itself (or its Affiliates or its or their personnel or business) in connection with the provision of a Self-Service (as defined in Section 2(a)(v) ).

(b) During the period commencing on the Distribution Date and ending on the date that is two (2) years from the date thereof, unless an earlier or later date is otherwise specified for a Service on Schedule A or Schedule B hereto (for each such Service, such end date being herein referred to as the “ Termination Date ”, with Schedule A and Schedule B being herein referred to as the “ Services Schedules ”), Service Provider shall provide, or shall cause one or more of its Affiliates or a contractor, subcontractor, vendor or other third-party service provider (each, a “ Third Party Provider ”) to provide, upon the terms and subject to the conditions set forth herein, the services described on the Services Schedules, including under the headings “General Services Description” and “Scope of Services” (the “ Services ”); provided , Service Provider shall obtain the consent of Service Recipient (not to be unreasonably withheld, delayed or conditioned) in the event any such Service is to be provided by a Third Party Provider or Affiliate if such Services were not provided by such Third Party Provider or Affiliate to Service Recipient during the twelve month period prior to the Distribution Date; provided further , Service Provider shall remain primarily responsible for the performance by any such Affiliate or Third Party Provider of its obligations hereunder. Irrespective of whether Service Provider, an Affiliate or a Third Party Provider is providing a Service, Service Recipient may direct that any such Service be provided directly to Service Recipient or any other member of such Party’s Group.

(c) Each Service provided hereunder shall be terminated on its applicable Termination Date (as defined in Section 1(b) ), unless otherwise terminated earlier by Service Recipient pursuant to Section 11 . Service Provider shall be under no obligation to provide a Service to Service Recipient after the Termination Date applicable to such Service, except to the extent otherwise agreed in writing by Service Provider and Service Recipient.

(a) Costs and Fees .

(i) For each Service, Service Recipient shall pay (in accordance with Section 2(b) ) Service Provider an amount equal to the Monthly Costs (as defined in Section 2(a)(i)(1) ); provided that (i) for any Service performed from and after January 1, 2015 through and including the day before the expiration date of the Minimum Service Period (as defined in Section 11(b) ) for such Service, Service Recipient shall pay, along with and in addition to such Monthly Costs, an amount equal to 2% of such Monthly Costs, and (ii) for any Service performed from and after the expiration date of the Minimum Service Period for such Service through and including the date as of which the provision of such Service hereunder has been terminated, Service Recipient shall pay, along with and in addition to the Monthly Costs, an amount equal to 10% of such Monthly Costs, unless, upon request by Service Recipient to terminate a Service, Service Provider is unable to transition the Service to Service Recipient or its designated Subsidiary in a commercially reasonable manner which does not unduly disrupt the Service and as a result, Service Recipient is unable to terminate such Service on or after the date on which the Minimum Service Period expires (in which case any third party, out-of-pocket costs resulting to Service Recipient shall be shared in accordance with Section 11(b) ).

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(1) The “Monthly Costs” for each Service shall be an amount equal to the sum of (A) the costs or expenses incurred as set forth on the applicable Services Schedule; provided that if a Services Schedule is silent regarding costs and expenses, the amount under this subsection (A) shall be equal to Service Provider’s allocated costs (including salary, wages and benefits, but excluding severance and retention costs, which shall be handled pursuant to Section 2(a)(ii) ) for any of its (or its Affiliates’) employees involved in providing Services, plus (B) any reasonable out-of-pocket costs and expenses incurred in connection with retaining Third Party Providers, including any fees for any Third Party License, Third Party Consent or Alternate Method, or pursuing any warranty or indemnity against a Third Party Provider in accordance with Section 3(d) ; plus (C) any sales, transfer, goods, services, value added, gross receipts or similar taxes, fees, charges or assessments (including any such taxes that are required to be withheld); provided that the Parties agree to use commercially reasonable efforts to minimize any such tax with respect to the Services, plus (D) other reasonable miscellaneous out-of-pocket costs and expenses; provided , however , that any such expenses exceeding $5,000 per month for each Service (other than routine business travel and related expenses) shall require advance approval of Service Recipient. The Monthly Costs for a Service shall not include any severance and retention costs incurred by Service Provider as a result of retaining the necessary employees to supply such Service to Service Recipient in accordance with the terms of this Agreement, which costs shall be handled pursuant to Section 2(a)(ii) below.

(2) Any costs and expenses provided for on a Services Schedule shall be subject to an increase of 4.5% per annum beginning on January 1, 2015 in order to adjust for inflation.

(3) Service Provider shall notify Service Recipient of any event that may reasonably be expected to increase the Monthly Costs by more than 5%.

(ii) Subject to the terms of this Section 2(a)(ii) , Service Provider shall use commercially reasonable efforts to retain its workforce required to provide the Services and, consistent with its severance and retention policies then in effect, may make severance and retention payments to employees providing the Services. As provided for on Annex A (the “ Severance and Retention Schedule ”), Service Recipient shall be responsible for the percentage as therein provided of Service Provider’s actual severance and retention costs (which are estimated in the Severance and Retention Schedule) for those individuals or job descriptions as set forth therein; provided that Service Recipient shall only be so responsible for its portion of severance costs if such costs were incurred as a result of terminating such an employee in connection with the termination of a Service; provided further that (a) if the severance and retention costs change from the estimates provided in the Severance and Retention Schedule, Service Recipient shall be responsible for its percentage of such costs so long as such change in costs is consistent

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with the Service Provider’s severance and retention policies as then in effect and (b) any such employee is actually terminated and not rehired for at least ninety (90) days following such termination. Service Provider shall prepare and deliver, within thirty (30) days following the end of each quarterly period ending each March 31, June 30, September 30 and December 31 (it being understood that the first such period shall be shorter than one quarter), to Service Recipient an invoice setting forth the amount of severance and retention costs to be paid by Service Recipient in accordance with the foregoing provisions of this Section 2(a)(ii) , which invoice Service Recipient shall pay pursuant to the terms of Section 2(b) .

(iii) Unless the Parties otherwise agree in writing, (i) where Services are provided in a country outside of the United States by a Person located in the same country, amounts shall be invoiced and paid in the local currency of the entity providing the Services and (ii) if payments are to be made between legal entities not within the same country, such amounts shall be invoiced and paid in U.S. Dollars. To the extent necessary, local currency conversion on any such invoice shall be based on Service Provider’s internal exchange rate for the then-current month, based upon the average for such month, as calculated consistently with how such local currency conversion was calculated in the twelve month period prior to the Distribution Date.

(iv) All charges based on a monthly or other time basis will be pro-rated based on actual calendar days elapsed during the period of service.

(v) With respect to any service that a Service Provider provides or causes an Affiliate to provide to itself or its Affiliates that is the same or substantially similar to a Service provided to Service Recipient or its Subsidiaries hereunder (such service, a “ Self- Service ”), if Service Provider determines to no longer provide such Self –Service to itself or its Affiliates, Service Provider shall notify Service Recipient of such termination no later than the number of days prior to such termination as is provided in Section 11(b) for terminating the corresponding Service. If Service Provider terminates a Self-Service prior to the end of the Minimum Service Period applicable for the corresponding Service, the Monthly Costs of such Service following any such termination and up to but not including date on which the Minimum Service Period expires shall be calculated as if Service Provider had not terminated such Self-Service. Notwithstanding the foregoing, Service Provider shall continue to provide the Service in accordance with the provisions of this Agreement, unless such Service is otherwise terminated pursuant to Section 11, and Service Provider shall not be permitted to terminate any Self-Service prior to the Termination Date for the applicable Service if such termination would adversely affect the level of service, security or control of such Service or the scope or content thereof required pursuant to Sections 1(a) and 4(a ).

(b) Invoices and Payment .

(i) Service Provider shall invoice Service Recipient for the amounts owed hereunder in arrears on a calendar monthly basis or, in the case of Section 2(a)(ii) , as provided therein, and shall provide reasonable documentation supporting such amounts

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owed pursuant to Section 2(a) , except to the extent such amounts are set forth on the Services Schedules. Service Recipient shall pay the amount of such invoice by electronic transfer of immediately available funds not later than forty-five (45) days after of the date of such invoice. Neither Party nor any of its respective Subsidiaries shall have a right of set-off against the other Party or its Subsidiaries, except in connection with any amounts billed hereunder. In the event Service Recipient does not pay Service Provider in accordance with the terms hereof (i) all amounts so payable and past due shall accrue interest from the 46th day after the date of the invoice to the receipt of payment at a rate per annum equal to the six (6)-month LIBOR rate (as quoted in the “Money Rates” section of The Wall Street Journal or any other similarly reputable published source on the 31st day after the date of the invoice, or the next Business Day, if such day is not a Business Day) plus 3% (the “ Interest Rate ”, with the applicable rate to be recalculated every six months), until such amounts, together with all accrued and unpaid interest thereon, are paid in full, and (ii) Service Recipient shall pay, as additional fees, all reasonable out-of-pocket costs and expenses incurred by Service Provider in attempting to collect and collecting amounts due under this Section 3 , including all reasonable attorneys fees and expenses.

(ii) In the event that Service Recipient in good faith disputes an invoice submitted by Service Provider, Service Recipient may withhold payment of any amount subject to the dispute; provided , however , that (x) Service Recipient shall continue to pay all undisputed amounts in accordance with the terms hereof, (y) Service Recipient shall notify Service Provider, in writing, of any disputed amounts and the reason for any dispute by the due date for payment of the invoice containing any disputed charges and (z) in the event any dispute is resolved in the Service Provider’s favor, any amount that the Service Recipient should have paid shall be deemed to have accrued interest at the Interest Rate from the date such payment should have been made. In the event of a dispute regarding the amount of any invoice, the Parties shall use all reasonable efforts to resolve such dispute within thirty (30) days after Service Recipient provides written notification of such dispute to Service Provider. Each Party shall provide full supporting documentation concerning any disputed amount or invoice within thirty (30) days after written notification of the dispute. Unpaid fees that are under good faith dispute shall not be considered a basis for default hereunder. To the extent that a dispute regarding the amount of any invoice cannot be resolved pursuant to this Section 2(b)(ii) , the dispute resolution procedures set forth in Section 9 herein shall apply.

(a) At either Party’s request, Service Recipient and Service Provider shall cooperate and work together in good faith to develop a global transition plan in order to facilitate a smooth and orderly termination of a Service by its applicable Termination Date or at such earlier time as Service Recipient terminates Service Provider’s performance of the Services in accordance with Section 11 . In furtherance of the foregoing, Service Provider will, if requested and at Service Recipient’s expense, provide Service Recipient with reasonable support necessary to transition or migrate the services to Service Recipient or any third party or parties chosen by the Service Recipient, which may include consulting and training and providing reasonable

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access to data and other information and to Service Provider’s employees; provided , however , that such activities shall not unduly burden or interfere with Service Provider’s business and operations.

(b) It is understood that it will require significant efforts by the Parties to implement this Agreement and ensure performance hereunder. Service Recipient shall (i) cooperate with and provide Service Provider with such information and documentation as is reasonably necessary for Service Provider to perform the Services; and (ii) perform such other duties and tasks as may be reasonably required to permit Service Provider to perform the Services, including (x) cooperating in obtaining any consents or approvals from third parties necessary to facilitate Service Provider’s ability to provide the Services and (y) upon thirty (30) days prior written notice by the Service Provider, conducting such testing as may be reasonably required by Service Provider in connection with any updates or changes to the applicable systems or processes involved in providing a Service. A Service Provider shall not be deemed to be in breach of its obligations to provide or make available any Service to the extent that Service Recipient has not provided information and access to appropriate personnel that is reasonably necessary for the performance of such Service.

(c) Service Recipient shall use commercially reasonable efforts to make or obtain any approvals, permits and licenses and implement any systems as may be necessary for it to perform the Services independently in each country and applicable jurisdiction as soon as practicable following the Distribution Date.

(d) Upon Service Recipient’s written request and without prejudice to Service Recipient’s direct rights against a Third Party Provider, Service Provider shall use commercially reasonable efforts to pursue any warranty or indemnity under any contract Service Provider or its Subsidiaries may have with a Third Party Provider with respect to any Service provided to Service Recipient by such Third Party Service Provider.

(e) Service Provider shall use commercially reasonable efforts to obtain, if required, the consent of any relevant Third Party Provider (a “ Third Party Consent ”) or a license from any relevant Third Party Provider (a “ Third Party License ”), and Service Recipient shall, as necessary, cooperate with Service Provider in obtaining any such Third Party Consent or Third Party License. If a Third Party Consent or Third Party License cannot be obtained on reasonable terms, the Parties will use commercially reasonable efforts to arrange for an alternative method of obtaining any such Service on Service Recipient’s behalf (“ Alternative Method” ), which may include Service Provider providing such Service itself. If there is any Third Party Consent or Third Party License which was not required as of the date hereof but will subsequently be required before the Minimum Service Period expires for a particular Service, Service Provider shall identify in writing to Service Recipient such Third Party Consent or Third Party License within sixty (60) days of the date hereof.

(f) The Parties shall use the fiscal month, quarter and year ends as set forth in Schedule C in connection with the provision and receipt of applicable Services hereunder, for so long as such Services are being provided.

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(g) In connection with the provision of Services hereunder, except as provided pursuant to Section 2(a)(iii) for local currency conversion for invoices, the Parties shall use the same methodology to determine the appropriate foreign exchange conversion rate as used in the twelve month period prior to the Distribution Date, which may be determined or based upon the average for the month or other applicable period or the spot rate at the end of such month or period or otherwise.

(a) Except as otherwise provided in the Services Schedule and Section 1(a) herein, nothing in this Agreement shall require or be interpreted to require Service Provider to provide a Service to Service Recipient beyond the scope and content of such Service as provided by Service Provider to the Exelis Retained Business or MS Business, as the case may be, during the twelve month period prior to the Distribution Date, excluding any actions taken in contemplation of the Distribution.

(b) Service Provider shall not make changes in the manner of providing a Service unless (i) Service Provider is making similar changes in a Self-Service being performed for itself or its Subsidiaries or such changes are de minimus , in each case so long as such changes do not adversely affect the level of service, security or control of such Service or the scope or content thereof required pursuant to Sections 1(a) and 4(a ) above, (ii) such changes are required by Service Provider or Service Recipient pursuant to applicable Law (including changes required by Service Provider or Service Recipient in connection with the provision of the Services to the other Party) or (iii) Service Recipient provides its prior written consent (which shall not be unreasonably withheld, conditioned or delayed) to such changes (in each case, for the avoidance of doubt, with the costs of any such change to be included in the calculation of Monthly Costs). In the event Service Provider determines to change the location of delivery of any Service, Service Provider shall provide Service Recipient with thirty (30) days prior written notice. All Services shall be performed in compliance with applicable Law, including all applicable U.S. and non-U.S. laws and regulations relating to export controls, sanctions, and imports, including without limitation those regulations maintained by the U.S. Department of the Treasury’s Office of Foreign Assets Control, the Export Administration Regulations maintained by the U.S. Department of Commerce, Bureau of Industry and Security, and the International Traffic in Arms Regulations maintained by the U.S. Department of State, Directorate of Defense Trade Controls.

(c) In performing the Services, Service Provider shall prepare and furnish to Service Recipient reports concerning the Services with such reports to contain substantially the same data, in substantially the same format, and prepared and delivered on substantially the same timetable, as reports prepared during the twelve month period prior to the Distribution Date (excluding any reports solely prepared in contemplation of the Distribution), except as may be otherwise required by Service Recipient or Service Provider pursuant to applicable Law. Upon Service Recipient’s written request for modifications to the reporting and data transfer practices reasonably required to assist Service Recipient in transitioning off the Service, Service Provider shall cooperate and consult in good faith with Service Recipient to make such modifications; provided that if Service Provider reasonably determines in its sole discretion that any such modification may cause Service Provider to be in breach of its obligations to the other Party

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hereunder (including as a result of breaching its obligations as a Service Provider to the other Party as Service Recipient), then Service Provider shall not be under any obligation to make such modifications.

(d) Service Provider shall use commercially reasonable efforts consistent with past practice to make available such personnel as may be required to provide the Services. Service Provider shall have the right to designate which personnel it will assign to perform the Services. Service Provider also shall have the right to remove and replace any such personnel at any time or designate any of its Subsidiaries or a Third Party Provider (subject to Section 1(a) herein) at any time to perform the Transition Services; provided , however , that Service Provider shall use its commercially reasonable efforts consistent with past practice to limit the disruption to Service Recipient in the transition of the Services to different personnel. Subject to and consistent with Section 2(a)(ii) , Service Provider shall have no obligation to retain any individual employee for the sole purpose of providing a particular Transition Service.

(e) In the event Service Recipient or any of its Subsidiaries hires away an employee of Service Provider or its Subsidiaries, and such employee was providing Services to Service Recipient and will not continue to provide such Service, Service Provider shall have the option, in its sole discretion (in addition to any other remedies available to it under the Distribution Agreement or otherwise), upon ten (10) Business Days written notice to Service Recipient to reduce its obligations with respect to such Service (with a proportionate reduction in the applicable Monthly Costs) effective on the date of such employee’s termination of employment with Service Provider. Any provision of Service thereafter pursuant to such a reduction in Service Provider’s obligations shall be deemed to be consistent with Service Provider’s obligations under this Agreement, so long as Service Provider satisfies the other obligations contained in this Section 4 with respect to such Service.

(f) Each Party agrees that it shall take appropriate action by instruction of or agreement with its personnel (including any Third Party Provider) to ensure that all such personnel performing or otherwise involved with Services shall be bound by and comply with all of the terms and conditions of this Agreement.

(g) In the event Service Provider has received a notice of default or breach in the performance of a Service hereunder (including as a result of substantial errors in the performance of such Service), it will use its commercially reasonable efforts to cure such default or breach. In the event Service Provider is unable to cure such default within thirty (30) days from receipt of notice thereof, in addition to the rights available under Section 11 , there shall be an adjustment to Monthly Costs to reflect the costs to Service Recipient associated with such default, breach or error, including any reasonable out-of-pocket costs and expenses incurred by Service Recipient in retaining any Third Party Provider to provide such Service or in providing such Service itself.

(h) Each Party shall notify the other Party as promptly as practicable after becoming aware of any breach of this Agreement committed by either it or the other Party. Service Provider shall notify Service Recipient of any event that may reasonably be expected to materially impact a Service provided hereunder, which may include a

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Termination Notice (as defined in Section 11(b) ) provided by the other Party as Service Recipient hereunder or a notice of termination of a Self-Service, issued pursuant and in accordance with, Section 2(a)(v) .

If, after the date hereof and on or prior to December 31, 2014, or, with respect to Services provided in connection with any Transfer that, pursuant to Section 2.6(a) of the Distribution Agreement, is not consummated at or prior to the Effective Time, one hundred (100) days following the actual date of such Transfer (notwithstanding that under Section 2.6(b) of the Distribution Agreement such Transfer may be deemed to have occurred on the Effective Time) the Parties determine that a service required by Service Recipient and provided by Service Provider or one of its Subsidiaries prior to the Distribution Date was inadvertently omitted from the Services Schedules, Service Recipient may request that Service Provider perform such service (“ New Service ”) in addition to the Services being provided hereunder, provided that Service Recipient may not request any New Service if, at the time of the request, the Service Provider no longer provides such service internally. Service Provider shall promptly begin performing any New Service consistent with past practice upon a timely written request from Service Recipient (which request may be in the form of email) including (i) a description of the work Service Recipient anticipates being performed by Service Provider in connection with such New Service and (ii) a schedule for commencing and completing such New Service, and Service Provider and Service Recipient shall enter into good faith negotiations to agree to an amendment to the Services Schedules providing for such New Service; provided that if no agreement for an Additional Service Schedule Amendment has been reached in writing in thirty (30) days, such New Service shall be deemed to have a Minimum Service Period expiring on March 31, 2015 and a Termination Date of two years from the Distribution Date, with Monthly Costs as provided for in Section 2(a)(i) , calculated as if the amendment to the Services Schedule for such New Service were silent regarding costs and expenses (such amendment or deemed amendment pursuant to the foregoing proviso, an “ Additional Service Schedule Amendment ”). Any New Service shall be considered a Service hereunder and the Services Schedules shall incorporate, and be deemed to be duly amended by, such Additional Service Schedule Amendment.

(a) Except as provided in the Services Schedules, the Monthly Costs shall include the allocable portion of any amounts that are required to be paid by Service Provider to any third party licensors of software that is used by Service Provider in connection with the provision of any Services hereunder, including (i) license, right-to-use and royalty fees and (ii) any amounts required to obtain the consent of such licensors to allow Service Provider to provide any of the Services hereunder. Service Recipient agrees to comply and cause its Subsidiaries to comply with the terms of any license or other agreement of Service Provider or any of its Subsidiaries relating to software that is provided to Service Recipient and is used in connection with the provision of any Services hereunder; provided that in the event that Service Provider enters into new software licenses after the Distribution Date, Service Recipient shall have the prior opportunity to review and confirm its ability to comply therewith, which it shall do in good faith. In the event that Service Recipient provides notice of its inability to comply therewith,

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Service Provider may at its sole discretion discontinue its provision of any Services under such new software licenses effective after thirty (30) days’ notice of the same, and Service Recipient shall indemnify Service Provider for any claims by third parties arising out of or in connection with Service Recipient’s noncompliance or violation of such software licenses. Subject to the foregoing, Service Provider shall use commercially reasonable efforts to obtain any consent that may be required from such licensors in order to provide any of the Services hereunder and the Parties shall cooperate to identify any material licenses or consents necessary for such provision and shall use commercially reasonable efforts to minimize the costs associated therewith.

(b) If the receipt or provision of any Service hereunder requires the use by a Party of the Intellectual Property (other than Trademarks) of the other Party, then such Party and its Subsidiaries shall have the non-exclusive, royalty-free, non-sublicensable (except as required for its and its Subsidiaries’ receipt or provision of Services) right and license to use such Intellectual Property for the sole purpose of, and only to the extent necessary for, the receipt or provision of such Services hereunder, pursuant to the terms and conditions of this Agreement. This license does not permit a Party to access, possess, or modify the source code of the other Party or to reverse engineer the software of the other Party. Upon the Termination Date applicable to such Service, or the earlier termination of any Services in accordance with Section 11, the license herein to the applicable Intellectual Property will terminate; and the applicable Service Recipient and/or Service Provider shall cease all use of the Intellectual Property licensed hereunder. Nothing in this Section 6(b) shall be deemed to limit, modify or terminate any License Agreement between the Parties.

(c) Subject to the limited licenses granted in Section 6(b) , each Party shall exclusively own any Intellectual Property that it alone creates, develops or invents in connection with the provision of any Services hereunder. The Parties shall jointly own any Intellectual Property created, developed or invented jointly by the Parties in connection with the provision of the Services hereunder.

(d) While using or accessing any computers, systems, software, networks, information technology or related infrastructure or equipment (including any data stored thereon or transmitted thereby) (“ Systems ”) of the other Party (whether or not a Service), each Party shall and shall cause each of its Subsidiaries to, adhere in all respects to the other Party’s controlled processes, policies and procedures (including any of the foregoing with respect to Confidential Information, data, communications and system privacy, operation, security and proper use) as in effect on the Distribution Date or as communicated to such Party from time to time in writing.

(e) Those employees of Service Recipient and Service Provider (or their respective Affiliates) having access to the other Party’s Systems may be required by Service Provider or Service Recipient, as the case may be, to enter into a customary non-disclosure agreement in connection with, and as a condition to, such access.

Service Provider shall provide to Service Recipient, taking into consideration the financial reporting, internal controls and other public company requirements of Service

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Recipient, all information and records reasonably required to maintain full and accurate books relating to the provision of Services to the extent any such information and/or records were provided or maintained during the twelve month period prior to the Distribution Date, excluding any actions taken in contemplation of the Distribution. Upon reasonable notice and reasonable request from the Service Receiver, and at the Service Receiver’s cost, Service Provider shall (a) make available for inspection and copying by Service Receiver’s agents or representatives such information, books and records relating to the Services during reasonable business hours and (b) certify that the controls in effect prior to the Distribution Date continue to be in effect, or if Service Provider is aware of any instances where such controls are not so in effect, in lieu of certification for such instances, provide a list of such instances and descriptions of the change in such controls thereof.

Neither Party (or any Person acting on its behalf) shall have any liability or responsibility for failure to fulfill any obligation (other than a payment obligation) under this Agreement so long as and to the extent to which the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event: (a) notify the other Party of the nature and extent of any such Force Majeure condition and (b) use due diligence to remove any such causes and resume performance under this Agreement as soon as feasible. Notwithstanding the foregoing, Service Recipient shall be entitled to terminate Services so affected by a Force Majeure upon fifteen (15) days prior written notice in respect of any such delay or failure resulting from any such Force Majeure without any penalty or obligation to pay for Services not performed; provided that, for the avoidance of doubt, Service Recipient shall remain responsible, pursuant to and in accordance Section 2(a)(ii), for its portion of any severance and retention costs for any such Services.

(a) Each Party shall nominate in writing one representative to act as the primary contact with respect to the provision and receipt of Services (a “ TSA Manager ”), with the initial TSA Managers as listed on Schedule D . Each Party may, at its discretion, from time to time select another individual to serve in these capacities during the term of this Agreement; provided , however , each Party shall notify the other Party promptly (and in any event within five (5) Business Days) of any change in an individual serving in this capacity, setting forth the name and contact information of the replacement, and stating that such replacement is authorized to act for such Party in accordance with this Section 9(a) .

(b) The TSA Managers shall meet as expeditiously as possible to resolve any dispute hereunder, and notwithstanding anything in Article IX (Dispute Resolution) of the Distribution Agreement to the contrary, in the event any dispute is not so resolved within thirty (30) days, a TSA Manager may provide written notice of such dispute to the Chief Financial Officer of each Party (or such other executive as designated by the Chief Executive Officer of

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such Party), who shall attempt within a period of fifteen (15) days following the end of such previous thirty (30) day period to conclusively resolve any such issue, and in the event the dispute remains unresolved following such fifteen (15) day period, either Party may submit the dispute to mediation in accordance with Section 9.2 (Mediation) of the Distribution Agreement (provided that, for the avoidance of doubt, the forty-five (45) day waiting period referenced therein shall be inapplicable), and if any dispute remains unresolved after the Mediation Period (as defined in the Distribution Agreement), such dispute shall be determined, at the request of either Party, by arbitration in accordance with Section 9.3 (Arbitration) of the Distribution Agreement and the other applicable provisions of Article IX (Dispute Resolution) of the Distribution Agreement. Each Party may treat an act of any other Party’s TSA Manager or Chief Financial Officer (or such other executive as designated by the Chief Executive Officer of such other Party), in each case that is consistent with the provisions of this Agreement, as being authorized by such other Party to resolve such dispute without inquiring behind such act or ascertaining whether such TSA Manager or Chief Financial Officer (or such other executive as designated by the Chief Executive Officer of such other Party) had authority to so act; provided, however, that none of the TSA Managers or Chief Financial Officer or other executives so designated shall have authority to amend this Agreement, except as otherwise provided pursuant to Section 16 .

(c) In the event of any dispute between the Parties regarding a Service, prior to the applicable Termination Date, Service Provider shall not discontinue the supply of any such Service, unless so provided for in a settlement agreement between the Parties or arbitral determination pursuant to and in accordance with Section 9(b) herein and Article IX of the Distribution Agreement or as requested by Service Recipient pursuant to a Termination Notice.

(a) Service Recipient acknowledges that Service Provider is not in the business of providing the Services and that the Services being provided pursuant to this Agreement are provided as an accommodation to Service Recipient. Other than in the event of Service Provider’s gross negligence or willful misconduct, Service Provider will not be liable for any error or omission in rendering Services under this Agreement, or for any defect in Services so rendered; provided that if there is a substantial error in any of the Services, Service Provider shall use commercially reasonable efforts to attempt to correct the error, or if Service Provider is unable to so correct such error, to provide an adjustment to the Monthly Cost for such Service in reasonable proportion to that which the error bears to the Service provided for such month, which adjustment may, pursuant to Section 4(g) , include any reasonable out-of-pocket costs and expenses incurred by Service Recipient in retaining a Third Party Provider to provide such Service or in providing such service itself. Other than in the event of Service Recipient’s gross negligence or willful misconduct, and other than for the Monthly Costs, severance and retention costs owed under Section 2(a)(ii) and other amounts expressly owed hereunder, Service Recipient will not be liable for any damages caused in connection with the Services provided under this Agreement.

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(b) Service Provider shall have no responsibility to maintain insurance to cover any loss or damage to goods or equipment to which Service Recipient has title that are in the possession or control of Service Provider, its Subsidiaries or a Third Party Provider as a result of this Agreement and the risk of loss with respect to such goods or equipment shall be solely with Service Recipient. Service Recipient shall obtain from its insurance company a waiver of subrogation on behalf of Service Provider and its Subsidiaries effective as of Distribution Date; provided , that Service Recipient shall only be obligated to obtain such waiver if it is aware that any such goods or equipment is in the possession or control of Service Provider, its Subsidiaries or a Third Party Provider. Service Recipient shall have no responsibility to maintain insurance to cover any loss or damage to goods or equipment to which Service Provider has title that are in the possession or control of Service Recipient or its Subsidiaries as a result of this Agreement and the risk of loss with respect to such goods or equipment shall be solely with Service Provider. Service Provider shall obtain from its insurance company a waiver of subrogation on behalf of Service Recipient and its Subsidiaries effective as of the Distribution Date; provided , that Service Provider shall only be obligated to obtain such waiver if it is aware that any such goods or equipment is in the possession or control of Service Recipient or its Subsidiaries.

(c) NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESSED OR IMPLIED (INCLUDING WARRANTIES OF NON-INFRINGEMENT, MERCHANTABILITY, ACCURACY, SATISFACTORY QUALITY, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO ANY REPRESENTATION OR DESCRIPTION), ARE MADE BY SERVICE PROVIDER OR ANY OF ITS AFFILIATES WITH RESPECT TO THE PROVISION OF SERVICES UNDER THIS AGREEMENT AND, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ALL SUCH REPRESENTATIONS OR WARRANTIES ARE HEREBY WAIVED AND DISCLAIMED. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, UNDER NO CIRCUMSTANCES, INCLUDING THE FAILURE OF THE ESSENTIAL PURPOSE OF ANY REMEDY, SHALL SERVICE PROVIDER BE LIABLE FOR, INCLUDING BUT NOT LIMITED TO, ANY LOST PROFITS, REMITTANCES, COLLECTIONS, INVOICES, PENALTIES, INTEREST OR SPECIAL, INCIDENTAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES CAUSE BY THE PERFORMANCE OF, ANY DELAY IN THE PERFORMING, FAILURE TO PERFORM OR DEFECTS IN THE PERFORMANCE OF, THE SERVICES CONTEMPLATED TO BE PERFORMED BY SERVICE PROVIDER PURSUANT TO THIS AGREEMENT, REGARDLESS OF WHETHER A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

(a) This Agreement (other than Sections 9 , 10 , 11 and 13 ) shall terminate upon the last of the Termination Dates in respect of all Services to be provided hereunder; provided that the rights of the parties in respect of any claims that have accrued prior to such termination shall survive such termination.

(b) For each Service, the minimum service period (“ Minimum Service Period ”) during which Service Provider is obligated to provide such Service to Service Recipient is set forth on the Services Schedule. The Parties agree to cooperate if necessary to adjust such Minimum Service Period (and the applicable Termination Date) to end on a date that is the end

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of a calendar or fiscal month, as deemed appropriate. Service Recipient may terminate any Service prior to its Termination Date by providing to Service Provider written notice of termination, which shall be deemed irrevocable upon delivery (a “ Termination Notice ”), not less than (i) sixty (60) days before the date of such earlier termination if the Service is to be terminated after September 30, 2014 but on or before March 31, 2015, (iii) ninety (90) days before the date of such earlier termination if Service is to be terminated after March 31, 2015 but on or before September 30, 2015 and (iv) one hundred and twenty (120) days before the date of such earlier termination if Service is to be terminated on or after October 1, 2015; provided that if the Services Schedule indicates that any Service is dependent on one or more other Services, then each such Service must be terminated together; provided further that any termination may be on a location by location basis if so indicated on the Services Schedules. In the event a Service is terminated prior to the end of its Minimum Service Period pursuant to Service Recipient’s Termination Notice, Service Recipient shall pay a make-whole fee equal to the actual out-of-pocket costs and any additional costs that would have been incurred by Service Provider if such Service had not been terminated (which costs, for the avoidance of doubt, exclude the 2% and 10% increases described in Section 2(a)(i) ) between the actual date of termination of the Service and the applicable date on which the Minimum Service Period expires (subject to Service Provider exercising commercially reasonable efforts to mitigate such costs). Notwithstanding the foregoing, upon the receipt of a Termination Notice, if Service Provider is unable to transition the applicable Service to the Service Recipient or its designee in a commercially reasonable manner which does not unduly disrupt the Service on the requested termination date, Service Provider shall use commercially reasonable efforts consistent with past practice to transition such Service as soon as possible, and any resulting third party, out-of-pocket costs to Service Recipient shall be shared equally between Service Provider and Service Recipient.

(c) In the event either Party defaults in the performance of any of its obligations under this Agreement, and if such default is not excused and not cured within thirty (30) days after written notice from the other Party specifying such default, then the non-defaulting Party may at any time thereafter terminate, at its option, any such Service that is the subject of such default by giving five (5) days prior written notice; provided that if no such termination notice is given within fifteen (15) days after the end of the thirty (30) day cure period, then the non-defaulting Party waives all rights to terminate such Service with respect to such default; provided further , that such fifteen (15) day period referred to in the immediately foregoing proviso shall be extended if (x) the Parties dispute whether there has been a default hereunder or (y) agree that there has been a default hereunder and have a dispute related to such default, and in either case are attempting to resolve such dispute pursuant to Section 9(b) until ten (10) days after there has been a final determination pursuant to the procedures in Section 9(b) .

(d) Any Service can be terminated prior to the Distribution Date, with no fee, penalty or ongoing obligation, if Service Recipient provides a Termination Notice to Service Provider (which may be via email) prior to the Distribution Date.

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The Parties hereto understand and agree that this Agreement does not make either of them an agent or legal representative of the other for any purpose whatsoever. Neither Party is granted, by this Agreement or otherwise, any right or authority to assume or create any obligation or responsibilities, express or implied, on behalf of or in the name of the other Party, or to bind the other Party in any manner whatsoever. The Parties expressly acknowledge (i) that Service Provider is an independent contractor with respect to Service Recipient in all respects, including the provision of the Services, and (ii) that the parties are not partners, joint venturers, employees or agents of or with each other.

(a) Any Confidential Information of either Party shall be subject to Section 8.6 of the Distribution Agreement. With respect to any information disclosed by one Party to another Party for the purpose of this Agreement or otherwise accessible to such other Party during the performance hereunder (“ Confidential Information ”), the Party receiving such Confidential Information agrees that it will use the same skill and care as set forth in Section 4(a) to prevent the disclosure or accessibility to others of the disclosing Party’s Confidential Information and will use such Confidential Information only for the purposes of this Agreement, the Distribution Agreement and the Ancillary Agreements. The receiving Party and its employees, representatives and agents (including any Third Party Provider) (collectively, the “ Recipient Parties ”) shall only disclose and permit access to the other’s Party’s Confidential Information to such Recipient Parties who have a need to know such Confidential Information for the purposes of this Agreement, the Distribution Agreement and the Ancillary Agreements. For Confidential Information provided with respect to any Service, the obligations of the Recipient Parties pursuant to this Section 13 shall expire on the date that is five (5) years from the termination of such Service, or on such later date as prescribed by privacy laws. Each Party shall provide prompt written notice of any breach of the obligations under this Section 13 by such Party or its Recipient Parties and shall use commercially reasonable efforts to assist the other Party in remedying any such breach.

(b) Specifically excluded from the definition of Confidential Information is any and all information that:

(i) is independently developed by or on behalf of a Recipient Party without use of or reference to Confidential Information;

(ii) is or becomes available to the public, other than as the result of a breach by a Recipient Party of the confidentiality obligations under this Agreement; or

(iii) is rightfully received from a third party not known by the Recipient Party to be bound by an obligation of confidentiality to the disclosing Party.

(c) If the Recipient Party is required to disclose Confidential Information by law, process or regulation, to the extent legally permissible, such Recipient Party shall promptly notify the disclosing Party, reasonably cooperate with the disclosing Party to the extent it may seek to limit such disclosure and, insofar as a protective order or waiver from the disclosing Party is not obtained, only disclose such Confidential Information as is required to be disclosed.

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(d) In connection with any permitted disclosure of this Agreement to any third party, each Party shall redact the portions of the Services Schedules that are not relevant to such third party’s inquiry.

(e) It is further understood and agreed that money damages may not be a sufficient remedy for breach of this Section 13 and that each Party shall be entitled to seek equitable relief, including injunction and specific performance, as remedy for any such breach. Such remedies shall not be deemed to be the exclusive remedies for a breach, but shall be in addition to all other remedies herein described available at law or equity.

This Agreement is for the sole benefit of the Parties hereto, and nothing expressed or implied shall give or be construed to give any person any legal or equitable rights hereunder, whether as a third-party beneficiary or otherwise. Each Party agrees, and each Party in its capacity as a Service Recipient represents and warrants, that the Services shall be provided solely to, and shall be used solely by, Service Recipient and its Subsidiaries. Service Recipient shall not resell or provide the Services to any other Person, or permit the use of the Services by any Person other than Service Recipient and its Subsidiaries.

This Agreement, together with the Distribution Agreement and the other Ancillary Agreements, constitutes the entire agreement of the Parties with respect to the subject matter hereof, and supersedes all prior agreements, understandings and negotiations, both written and oral, between the Parties with respect to the subject matter hereof. In the event and to the extent that there shall be a conflict between the provisions of this Agreement and the provisions of the Distribution Agreement or any other Ancillary Agreement, the Parties agree that this Agreement shall govern. The Parties agree that, in the event of an express conflict between the terms of this Agreement and a Services Schedule, the terms of the Services Schedule shall govern.

This Agreement and the Services Schedules may be amended, and any provision of this Agreement may be waived, if but only if such amendment or waiver is in writing and signed, in the case of an amendment, by each of the Parties, or in the case of a waiver, by the Party against whom the waiver is effective. No failure or delay by either Party in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

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All notices, requests and other communications to any Party hereunder shall be in writing and shall be given as follows:

if to Exelis or to any of its Affiliates:

Exelis Inc.

1650 Tysons Boulevard

Suite 1700

McLean, VA 22102

Attn: Chief Legal Officer

if to Vectrus or to any of its Affiliates:

Vectrus, Inc.

655 Space Center Drive

Colorado Springs, CO 80915

Attn: Chief Legal Officer

or to such other address and with such other copies, as such Party may hereafter specify for the purpose of notice to the other parties. Each such notice, request or other communication shall be effective upon delivery by overnight courier service or refusal of delivery thereof at the address specified in this Section 17 .

Neither this Agreement nor any of the rights, interests or obligations of either Party hereunder may be assigned or transferred by any such Party without the prior written consent of the other Party (not to be unreasonably withheld, delayed or conditioned), and any purported assignment, without such prior written consent shall be null and void; provided a Party may assign or transfer all its rights hereunder without such consent to an acquirer in connection with a sale of all or substantially all of its assets or other similar change in control of such Party.

From time to time after the date hereof, without further consideration, each Party shall use commercially reasonable efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things reasonably proper or advisable under applicable Law, and execute and deliver such documents as may be required or appropriate to carry out the provisions of this Agreement and to consummate, perform and make effective the transition contemplated hereby.

(a) Defined terms used in this Agreement have the meanings ascribed to them by definition in this Agreement or in the Distribution Agreement.

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(b) This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting or causing any instrument to be drafted.

(c) Whenever the words “include”, “including”, or “includes” appear in this Agreement, they shall be read to be followed by the words “without limitation” or words having similar import.

(d) As used in this Agreement, the plural shall include the singular and the singular shall include the plural.

This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall be deemed to be one and the same instrument. Copies of executed counterparts transmitted by telecopy, telefax or other electronic transmission service shall be considered original executed counterparts for purposes of this Section 21 , provided that receipt of copies of such counterparts is confirmed. This Agreement shall become effective when each Party has received a counterpart hereof signed by the other Party hereto.

The section headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

If any provision of this Agreement shall be declared by any court of competent jurisdiction to be illegal, void or unenforceable, all other provisions of this Agreement shall not be affected and shall remain in full force and effect, and the Parties shall negotiate in good faith to replace such illegal, void or unenforceable provision with a provision that corresponds as closely as possible to the intentions of the parties as expressed by such illegal, void, or unenforceable provision.

This Agreement shall be governed by and construed in accordance with the Laws, but not the Laws governing conflicts of Laws (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law), of the State of New York.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

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Annex A

Severance and Retention Schedule

Benefits TSA = Payroll Manager, Exelis 50%, Vectrus 50%

SCHEDULE A

Service Provider: Exelis Inc.

Service Recipient: Vectrus, Inc.

Service to be provided:

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Schedule A1

A1 ACCOUNTS PAYABLE

Capitalized terms used herein and not otherwise defined shall have the meaning assign such term in the Agreement. The Services provided hereunder are subject in all respects to the terms and conditions of the Agreement, except where expressly noted.

GENERAL SERVICE DESCRIPTION

Service Provider will perform Accounts Payable Scanning and Indexing as well as Vendor Maintenance for Service Receiver. Service Provider will also provide as needed support for provisioning of invoice images from the legacy systems as well as coordinate provisioning of invoice images from ITT in support of audit requests. If required, Service Provider will provide support for the creation and distribution of 1099s for Service Receiver.

Service Receiver and its Subsidiaries will utilize Service Provider’s resources based on the functionality, processes, input and output screens, and documents that support the Service Provider’s business and business processes in the twelve months prior to the Distribution date.

SCOPE OF SERVICES

Upon the terms and subject to the conditions of this Services Schedule and the Agreement, Service Provider shall provide to Service Recipient the services identified below (collectively, the “Services”).

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