EXHIBIT 10.7

INTELLECTUAL PROPERTY MATTERS AGREEMENT

BETWEEN

HALLIBURTON COMPANY

and

KBR, INC.

Dated November 20, 2006

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TABLE OF CONTENTS

 

          Page

ARTICLE I DEFINITIONS

   1

ARTICLE II OWNERSHIP OF INTELLECTUAL PROPERTY

   7

SECTION 2.1

   KBR’s Ownership    7

SECTION 2.2

   Halliburton’s Ownership    7

SECTION 2.3

   KBR Marks and Halliburton Marks    7

ARTICLE III LICENSES TO HALLIBURTON

   8

SECTION 3.1

   KBR Patents    8

SECTION 3.2

   KBR Licensed Other IP    8

SECTION 3.3

   KBR Third Party Patents    8

SECTION 3.4

   Technology Fees    8

SECTION 3.5

   Retained Rights    9

ARTICLE IV LICENSES TO KBR

   10

SECTION 4.1

   Halliburton Patents    10

SECTION 4.2

   Halliburton Licensed Other IP    10

SECTION 4.3

   Halliburton Third Party Patents    10

SECTION 4.4

   Retained Rights    10

ARTICLE V OTHER AGREEMENTS

   10

SECTION 5.1

   Conflict    10

SECTION 5.2

   Software License Agreement    10

ARTICLE VI MAINTENANCE AND ENFORCEMENT

   11

SECTION 6.1

   Prosecution and Maintenance of IP Rights    11

SECTION 6.2

   Enforcement of IP Rights    11

ARTICLE VII CONFIDENTIALITY

   11

SECTION 7.1

   Confidentiality    11

SECTION 7.2

   Equitable Relief    12

ARTICLE VIII WARRANTIES AND INDEMNIFICATION

   12

SECTION 8.1

   No Representation or Warranty    12

SECTION 8.2

   Indemnification by Halliburton    12

SECTION 8.3

   Indemnification by KBR    13

SECTION 8.4

   Procedures for Indemnification of Third Party Claims    13

SECTION 8.5

   Mitigation of Damages    15

ARTICLE IX TERM AND TERMINATION

   15

SECTION 9.1

   Term    15

SECTION 9.2

   Termination    15

 

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ARTICLE X GENERAL PROVISIONS

   16

SECTION 10.1

   Effect if IPO does not Occur    16

SECTION 10.2

   Relationship of Parties    16

SECTION 10.3

   Incorporation of Separation Agreement Provisions    16

SECTION 10.4

   Governing Law; Jurisdiction    16

SECTION 10.5

   Severability    17

SECTION 10.6

   Amendment    17

SECTION 10.7

   Assignment    17

SECTION 10.8

   No Strict Construction    17

SECTION 10.9

   Further Assurances    17

SECTION 10.10

   Counterparts    17

 

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INTELLECTUAL PROPERTY MATTERS AGREEMENT

This INTELLECTUAL PROPERTY MATTERS AGREEMENT (this “Agreement”) is entered into
as of the 20th day of November, 2006 by and between Halliburton Company, a
Delaware corporation (“Halliburton”), and KBR, Inc., a Delaware corporation
(“KBR”). Capitalized terms used herein and not otherwise defined shall have the
respective meanings assigned to them in Article I hereof or in the Master
Separation Agreement (as defined below).

WHEREAS, the Board of Directors of Halliburton has determined that it is in the
best interests of Halliburton and its shareholders to make an initial public
offering (“IPO”) of shares of KBR common stock;

WHEREAS, in order to effectuate the foregoing, Halliburton and KBR have entered
into a Master Separation Agreement, dated as of the date hereof (the “Separation
Agreement”), which provides, among other things, subject to the terms and
conditions thereof, for the Separation, the IPO, and the execution and delivery
of certain other agreements, including this Agreement, in order to facilitate
and provide for the foregoing; and

WHEREAS, in order to facilitate implementation of the Separation Agreement,
Halliburton, on behalf of itself and the Halliburton Group (as defined below),
and KBR, on behalf of itself and the KBR Group (as defined below), are entering
into this Agreement to allocate between them assets, liabilities and
responsibilities with respect to certain intellectual property.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, the parties, intending to be legally bound, agree
as follows:

ARTICLE I

DEFINITIONS

Wherever used in this Agreement, the following terms shall have the meanings
indicated below, unless a different meaning is plainly required by the context.
The singular shall include the plural, unless the context indicates otherwise.
Headings of sections are used for convenience of reference only, and in case of
conflict, the text of this Agreement, rather than such headings, shall control:

“Action” means any demand, action, suit, countersuit, arbitration, inquiry,
proceeding or investigation by or before any federal, state, local, foreign or
international Governmental Authority or any arbitration or mediation tribunal.

“Agreement” means this Intellectual Property Matters Agreement and all
amendments made hereto from time to time.

“Appropriate Members of the Halliburton Group” shall have the meaning set forth
in Section 8.2.

 

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“Appropriate Members of the KBR Group” shall have the meaning set forth in
Section 8.3.

“Change of Control” means that as the result of an event or series of events,
one or more parties unaffiliated with KBR or Halliburton, acquires 50% or more
of the ownership or control, direct or indirect, of KBR or Halliburton.

“Coal Gasification Field of Use” means the fields of business and operations,
whether or not previously conducted by Halliburton or KBR, related to the
engineering, construction and operation of facilities for coal gasification.

“Coal Gasification Technology” means the coal gasification technologies
identified in Attachment A hereto. For the avoidance of doubt, Coal Gasification
Technology is a subset of KBR Patents and KBR Other IP.

“Coal Producing and Processing Companies” means those Persons whose business
includes the production, sale or processing of coal, and excludes, without
limitation, those Persons whose principal business is the provision of
engineering and/or construction services and those Persons whose principal
business is the provision of upstream oilfield services.

“Confidential IP Information” shall have the meaning set forth in Section 7.1
hereof.

“Field Processing Field of Use” means the fields of business and operations,
whether or not previously conducted by Halliburton or KBR, related to the
engineering, construction and operation of facilities for the upgrading of
hydrocarbons or non-hydrocarbons associated with production from subterranean
formations via wells, and disposition of hydrocarbon and non-hydrocarbon
byproduct materials, all of the foregoing when performed generally proximate to
the location from which the hydrocarbons and/or non-hydrocarbons are produced in
conjunction with an integrated customer project which additionally includes
upstream field development activities (e.g., one or more of well construction;
formation or reservoir evaluation; completion; production enhancement,
monitoring, and/or optimization). To be clear, the Field Processing Field of Use
comprises the engineering, construction and operation of facilities for the
upgrading of hydrocarbons or non-hydrocarbons as aforesaid and does not comprise
the upstream field development activities associated therewith, and also does
not comprise the refining of hydrocarbons beyond the scope of the Upgrade
Technology.

“Government and Infrastructure Persons” means Persons of the kind and type with
which KBR conducts business through its Government and Infrastructure segment as
of the IPO Closing Date, and excludes those Persons whose principal business is
the provision of upstream oilfield services.

“Halliburton” means Halliburton Company, a Delaware corporation. In all such
instances in which “Halliburton” is referred to in this Agreement, it shall also
be deemed to include a reference to each or any member of the Halliburton Group,
unless it specifically provides otherwise; Halliburton shall be solely
responsible to KBR for ensuring that each member of the Halliburton Group
complies with the applicable terms of this Agreement.

 

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“Halliburton Fields of Use” means (a) the fields of the business and operations
conducted by Halliburton on the IPO Closing Date, (b) all fields of use other
than the KBR Fields of Use, (c) the Field Processing Field of Use, (d) the Coal
Gasification Field of Use, and (e) the Riser Field of Use.

“Halliburton Group” shall have the meaning set forth in the Separation
Agreement.

“Halliburton Indemnitees” shall have the meaning set forth in Section 8.3.

“Halliburton Licensed Other IP” means all Halliburton Other IP used by KBR prior
to the IPO Closing Date.

“Halliburton Marks” means all trademarks, service marks, logos, trade names,
business names and trade dress owned by Halliburton immediately prior to the IPO
Closing Date.

“Halliburton Other IP” means all intellectual property (including, without
limitation, trade secrets, copyrights, and know-how) owned by Halliburton
immediately prior to the IPO Closing Date, but excluding the Halliburton Patents
and the Halliburton Marks.

“Halliburton Patents” means those patents and patent applications which are
owned by Halliburton immediately prior to the IPO Closing Date.

“Halliburton Third Party Patents” means those patents that are not owned by
Halliburton or KBR but to which Halliburton has rights under a license agreement
with a third party immediately prior to the IPO Closing Date.

“Indemnifying Party” shall have the meaning set forth in Section 8.4(a).

“Indemnitee” shall have the meaning set forth in Section 8.4(a).

“IP Rights” means the Halliburton Patents, Halliburton Marks, Halliburton
Licensed Other IP, KBR Patents, KBR Marks, and KBR Licensed OtherIP.

“IPO” has the meaning set forth in the Recitals hereof, as the same is further
described in the Separation Agreement.

“IPO Closing Date” means the first date on which the proceeds of any sale of KBR
Common Stock to the underwriters in the IPO are received.

“KBR” means KBR, Inc., a Delaware corporation. In all such instances in which
KBR is referred to in this Agreement, it shall also be deemed to include a
reference to each or any member of the KBR Group, unless it specifically
provides otherwise; KBR shall be solely responsible to Halliburton for ensuring
that each member of the KBR Group complies with the applicable terms of this
Agreement.

“KBR Data” shall have the meaning set forth in Section 5.2.

 

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“KBR Fields of Use” means (a) the fields of the business and operations
conducted by KBR on the IPO Closing Date, (b) except as otherwise specifically
provided in the Separation Agreement, the fields of any terminated, divested or
discontinued business or operation that at the time of such termination,
divestiture or discontinuation was conducted by KBR, (c) the Field Processing
Field of Use, (d) the Coal Gasification Field of Use, (e) the Riser Field of
Use, and (f) the fields of the following global engineering, procurement,
construction, technology and other services provided to energy and industrial
customers and government entities worldwide:

 

  (i) construction, maintenance, procurement, training and logistics services
for government or military operations, facilities and installations;

 

  (ii) civil engineering, construction, consulting and project management
services for state and local government agencies and private industries;

 

  (iii) integrated security solutions, including threat definition assessments,
mitigation and consequence management; design, engineering and program
management; construction and delivery; and physical security, operations and
maintenance;

 

  (iv) dockyard, military or aircraft facilities operation and management, with
services that include design, construction, surface/subsurface/airborne fleet
maintenance, nuclear engineering and refueling, and weapons engineering;

 

  (v) privately financed initiatives such as a facility, service or
infrastructure for a government client, and the ownership, operation and
maintenance of same;

 

  (vi) engineering and construction capabilities, including global engineering
execution centers, as well as engineering, construction and program management
of liquefied natural gas, gas-to-liquids (“GTL”), ammonia, fertilizers,
petrochemicals, crude oil refineries, power generation facilities and natural
gas plants;

 

  (vii) oil and gas facilities engineering, marine technology and project
management;

 

  (viii) operations, maintenance and start-up services to the oil and gas,
petrochemical, forest product, power and commercial markets;

 

  (ix) technology licensing in the areas of: ammonia, fertilizers and synthesis
gas; petrochemicals; refining; upgrading of hydrocarbons; chemicals and polymers
in non-oil field services industries; subsea risers; and coal monetization at
the surface and associated downstream processing; and

 

  (x)

consulting services in the form of expert technical and management advice that
includes studies, conceptual and detailed engineering, project

 

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management, construction supervision and design, and construction verification
or certification in upstream, midstream and downstream markets.

Notwithstanding the above, “KBR Fields of Use” excludes the following fields of
product or service delivery and technology licensing (including, without
limitation, software and data processing):

 

  (A) exploration for hydrocarbons;

 

  (B) products used in well construction or within a well;

 

  (C) services relating to a well or proximate geological formation;

 

  (D) products or services relating to production and/or production optimization
from one or more wells and/or reservoirs, including, without limitation, the RTO
field of the intellectual properties assigned January 1, 2005 from Kellogg Brown
and Root, Inc. to Landmark Graphics Corporation of the Halliburton Group under
Contract Number 2005-COM-028432, but not including design or installation of
surface or sea-bottom facilities;

 

  (E) hydrocarbon reservoir engineering or modeling;

 

  (F) any of consulting services, project management, and/or supervision, in
relation to any of hydrocarbon exploration, well construction, production from
one or more wells and/or hydrocarbon reservoirs; and

 

  (G) any of the chemical compositions patented and owned by Halliburton.

“KBR Group” shall have the meaning set forth in the Separation Agreement.

“KBR Indemnitees” shall have the meaning set forth in Section 8.2.

“KBR Licensed Other IP” means the KBR Other IP used by Halliburton prior to the
IPO Closing Date, the Upgrade Technology, the Riser Technology, and the Coal
Gasification Technology.

“KBR Marks” means all trademarks, service marks, logos, trade names, business
names and trade dress owned by KBR immediately prior to the IPO Closing Date.

“KBR Other IP” means all intellectual property (including, without limitation,
trade secrets, copyrights, and know-how) owned by KBR immediately prior to the
IPO Closing Date, but excluding all KBR Patents and KBR Marks.

“KBR Patents” shall mean those patents and patent applications which are owned
by KBR immediately prior to the IPO Closing Date and any patents claiming any of
the Upgrade Technology, Riser Technology, or Coal Gasification Technology.

 

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“KBR Third Party Patents” means those patents that are not owned by Halliburton
or KBR but to which KBR has rights under a license agreement with a third party
immediately prior to the IPO Closing Date.

“Losses” shall have the meaning set forth in the Separation Agreement.

“Oil and Gas Producing Companies” means those Persons whose principal business
is the production and sale of oil and gas, and excludes, without limitation,
those Persons whose principal business is the provision of engineering and/or
construction services and those Persons whose principal business is the
provision of upstream oilfield services.

“Refining or Industrial Processing Companies” means those Persons whose
principal business is the refining of hydrocarbons and sale of refined products,
or Persons whose principal business is other industrial processing and whose
products are included in the KBR Fields of Use, and excludes, without
limitation, those Persons whose principal business is the provision of upstream
oilfield services.

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity or any department, agency
or political subdivision thereof.

“Riser Field of Use” means the fields of business and operations, whether or not
previously conducted by Halliburton or KBR, related to the engineering,
construction and operation of subsea riser facilities.

“Riser Technology” means the KBR Patents and KBR Other IP covering subsea
risers, their interface to other equipment (including, without limitation,
either subsea or on platforms), riser construction, operation, installation,
removal, and any riser related services, and specifically including KBR’s
“Compliant Vertical Access Riser” technology, owned by KBR on or before the
effective date of the Intellectual Property Matters Agreement. For the avoidance
of doubt, Riser Technology is a subset of KBR Patents and KBR Other IP.

“ROSE™ Technology” means the Residuum Oil Supercritical Extraction heavy oil
technology of KBR identified on Attachment B hereto.

“Separation” shall have the meaning set forth in the Separation Agreement.

“Separation Agreement” means the Master Separation Agreement between Halliburton
Company and KBR, Inc. entered into as of November 20, 2006.

“Software License Agreements” shall have the meaning set forth in Section 5.2.

“Third Party Claims” shall have the meaning set forth in Section 8.4(a).

“Upgrade Technology” means the field upgrade technologies identified in
Attachment B hereto including, without limitation, ROSE™ Technology. For the
avoidance of doubt, Upgrade Technology is a subset of KBR Patents and KBR Other
IP.

 

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ARTICLE II

OWNERSHIP OF INTELLECTUAL PROPERTY

SECTION 2.1 KBR’s Ownership. Halliburton expressly acknowledges that, as between
the parties, KBR is the sole and exclusive owner of the KBR Patents, the KBR
Other IP, and the KBR Marks, and Halliburton agrees that it shall do nothing
inconsistent with such ownership. KBR shall exercise full control over KBR
Patents, KBR Other IP, and the KBR Marks, which includes (a) the right to sell
or transfer its ownership interests in the KBR Patents, KBR Other IP, and the
KBR Marks, provided that any such sale or transfer shall be made subject to
Halliburton’s rights under this Agreement, and (b) the right to abandon its
proprietary rights in the trade secrets and know how which are part of the KBR
Other IP by disclosure or otherwise. Halliburton shall not claim or assert any
right of ownership in or to the KBR Patents, KBR Other IP, or the KBR Marks and
shall not initiate any litigation, administrative proceeding or regulatory or
other action that could destroy, damage, or impair in any way the ownership or
rights of KBR in and to the KBR Patents, KBR Other IP or the KBR Marks and shall
not assist any other Person in doing the same.

SECTION 2.2 Halliburton’s Ownership. KBR expressly acknowledges that, as between
the parties, Halliburton is the sole and exclusive owner of the Halliburton
Patents, Halliburton Other IP, and the Halliburton Marks, and KBR agrees that it
shall do nothing inconsistent with such ownership. Halliburton shall exercise
full control over Halliburton Patents, Halliburton Other IP and the Halliburton
Marks, which includes (a) the right to sell or transfer its ownership interests
in the Halliburton Patents, Halliburton Other IP, and the Halliburton Marks
provided that any such sale or transfer shall be made subject to KBR’s rights
under this Agreement, and (b) the right to abandon its proprietary rights in the
trade secrets and know how which are part of the Halliburton Other IP by
disclosure or otherwise. KBR shall not claim or assert any right of ownership in
or to the Halliburton Patents, Halliburton Other IP, or Halliburton Marks and
shall not initiate any litigation, administrative proceeding or regulatory or
other action that could destroy, damage, or impair in any way the ownership or
rights of Halliburton in and to the Halliburton Patents, the Halliburton Other
IP or the Halliburton Marks and shall not assist any other Person in doing the
same.

SECTION 2.3 KBR Marks and Halliburton Marks. Immediately upon the IPO Closing
Date, KBR shall cease all use of the Halliburton Marks, including without
limitation any such use on KBR’s websites, and Halliburton shall cease all use
of the KBR Marks, including without limitation any such use on Halliburton’s
websites. KBR shall not adopt any trademarks, service marks, logos, trade names,
business names, or trade dress confusingly similar to the Halliburton Marks, and
Halliburton shall not adopt any trademarks, service marks, logos, trade names,
business names or trade dress confusingly similar to the KBR Marks.
Notwithstanding the above, KBR agrees that Halliburton may continue, after the
IPO Closing Date, to use the term “Kellogg,” “KBR” or “Kellogg Brown & Root” as
part of the name of one Halliburton Group entity that will serve as a holding
company and will not directly provide any goods or services.

 

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ARTICLE III

LICENSES TO HALLIBURTON

SECTION 3.1 KBR Patents. Subject to the terms and conditions set forth in this
Agreement (and, with respect to the Coal Gasification Technology, to the extent
permitted under its current agreements with Southern Company Services, Inc.
(“Southern”) and the United States Department of Energy (“DOE”)), KBR hereby
grants to Halliburton a royalty-free, non-exclusive, worldwide license in the
Halliburton Fields of Use to all rights available under the KBR Patents, limited
only by Halliburton’s confidentiality and non-use obligations hereunder.
Halliburton shall have the right to grant sublicenses under such KBR Patents in
the Halliburton Fields of Use (and with respect to the Coal Gasification
Technology, to the extent permitted under KBR’s current agreements with Southern
and DOE) only to Oil and Gas Producing Companies and Coal Producing and
Processing Companies, and subject to Section 3.4. Except as otherwise provided
in this Agreement, the license in this Section 3.1 shall remain in effect for
the life of such KBR Patents.

SECTION 3.2 KBR Licensed Other IP. Subject to the terms and conditions set forth
in this Agreement, KBR hereby grants to Halliburton a royalty-free,
non-exclusive, worldwide license in the Halliburton Fields of Use (and with
respect to the Coal Gasification Technology, to the extent permitted under KBR’s
current agreements with Southern and DOE) to all rights available under the KBR
Licensed Other IP, limited only by Halliburton’s confidentiality and non-use
obligations hereunder. Halliburton shall have the right to grant sublicenses
only to Oil and Gas Producing Companies and Coal Producing and Processing
Companies under such KBR Licensed Other IP in the Halliburton Fields of Use (and
with respect to the Coal Gasification Technology, to the extent permitted under
KBR’s current agreements with Southern and DOE), subject to Section 3.4, for
such Oil and Gas Producing Companies’ and Coal Producing and Processing
Companies’ use of products or services that are provided by Halliburton and
embody the KBR Licensed Other IP. Except as otherwise provided in this
Agreement, the license in this Section 3.2 shall remain in effect for the life
of such KBR Licensed Other IP.

SECTION 3.3 KBR Third Party Patents. Upon the request of Halliburton and to the
extent permitted under KBR’s license agreements with third parties and under its
current agreements with Southern and DOE, KBR shall grant to Halliburton a
sublicense to the KBR Third Party Patents in the Halliburton Fields of Use to
the full extent, and on the most favorable terms, allowed under KBR’s license
agreements. Except as otherwise provided in this Agreement, any such sublicense
shall remain in effect so long as KBR’s right to grant sublicenses remains in
effect.

SECTION 3.4 Upgrade Technology, Riser Technology and Coal Gasification
Technology Fees. Halliburton acknowledges that KBR may charge its customers
license and engineering fees in connection with the design and use of the
Upgrade Technology, Riser Technology and the Coal Gasification Technology. In
the event of (a) a sub-license under the Upgrade Technology or Riser Technology
from Halliburton to an Oil and Gas Producing Company or a Coal Producing and
Processing Company to practice the Upgrade Technology or Riser Technology,
(b) Halliburton’s use of the Riser Technology in the Riser Field of Use,
(c) Halliburton’s use of the Upgrade Technology in the Field Processing Field of
Use, (d) a sub- license under the Coal Gasification Technology from Halliburton
to a Coal Producing and

 

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Processing Company or an Oil and Gas Producing Company to practice the Coal
Gasification Technology, or (e) Halliburton’s use of the Coal Gasification
Technology in the Coal Gasification Field of Use, Halliburton will pay to KBR
such license and engineering fees agreed to by KBR, being commercially
reasonable and consistent with KBR practices at the time, and upon terms and
conditions agreed to by KBR, such terms and conditions also being commercially
reasonable and consistent with KBR practices at the time. In the event of
Halliburton being a KBR customer (as differentiated from being a licensee, in
which case KBR shall include its license and engineering fees in accordance with
the preceding sentence) for KBR’s engineering, construction, and/or operation of
facilities utilizing Upgrade Technology, Riser Technology or Coal Gasification
Technology, then KBR shall include said license and engineering fees and terms,
which shall be commercially reasonable and consistent with KBR practices at the
time, in its pricing to Halliburton. In the event KBR is obligated to pay any
third party any amounts due to the use or sublicense by Halliburton of any
rights granted in this Agreement, such amounts being in addition to such license
and engineering fees and equally applicable to any party were such party to be
in Halliburton’s position, Halliburton shall, at KBR’s discretion, either pay
such amounts on KBR’s behalf to such third party when due, or pay such amounts
promptly to KBR.

SECTION 3.5 Retained Rights. Except as expressly set forth in Sections 3.1, 3.2
and 3.3 of this Agreement, no other intellectual property rights are granted to
Halliburton by KBR hereunder, whether by implication or otherwise, and KBR
hereby reserves all such intellectual property rights it otherwise has,
including the right to develop and own intellectual property in the Halliburton
Fields of Use.

SECTION 3.6 Reports; Audit Right. Halliburton shall provide KBR an annual report
on or prior to the first and each subsequent anniversary of the IPO Closing Date
describing all activities of Halliburton relating to the offering to sublicense
and/or sublicensing of any rights granted to it under this Agreement to which a
fee attaches pursuant to Section 3.4. Halliburton shall maintain for a period of
three (3) years following the date of each royalty report and payment due under
this Agreement accurate and complete books and records which support the
determination of the royalty payment which was due under this Agreement on the
date of that report and payment. Such books and records shall be kept in
accordance with generally accepted accounting principles. Upon twenty (20) days’
written notice, Halliburton shall permit the examination of such records, at
KBR’s expense, by the KBR or its designated representative, at any time during
normal business hours throughout the term of this Agreement and for three
(3) years following its termination, for the purpose of verifying the payments
due hereunder. If any such examination reveals that an error has been made in
Halliburton’s favor in the amount of royalties paid for any calendar year equal
to five percent (5%) or more of such payments, then the cost of the audit shall
be paid by Halliburton. Any error in royalty payments shall be corrected by
payment of an amount equal to one hundred ten percent (110%) of that which
Halliburton has failed to report or pay, within thirty (30) days of receipt by
Halliburton of written notice of such failure to pay.

 

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ARTICLE IV

LICENSES TO KBR

SECTION 4.1 Halliburton Patents. Subject to the terms and conditions set forth
in this Agreement, Halliburton hereby grants to KBR a royalty-free,
non-exclusive, worldwide license in the KBR Fields of Use to all rights
available under the Halliburton Patents, limited only by KBR’s confidentiality
and non-use obligations hereunder. KBR shall have the right to grant sublicenses
only to its customers who are Oil and Gas Producing Companies or Refining or
Industrial Processing Companies or Coal Producing and Processing Companies or
Government and Infrastructure Persons under the Halliburton Patents in the KBR
Fields of Use. Except as otherwise provided in this Agreement, the license in
this Section 4.1 shall remain in effect for the life of the Halliburton Patents.

SECTION 4.2 Halliburton Licensed Other IP. Subject to the terms and conditions
set forth in this Agreement, Halliburton hereby grants KBR a royalty-free,
non-exclusive, worldwide license in the KBR Fields of Use to all rights
available under the Halliburton Licensed Other IP, limited only by KBR’s
confidentiality and non-use obligations hereunder. KBR shall have the right to
grant sublicenses only to its customers who are Oil and Gas Producing Companies
or Refining or Industrial Processing Companies or Coal Producing and Processing
Companies or Government and Infrastructure Persons under the Halliburton
Licensed Other IP in the KBR Fields of Use for such customers’ use of products
or services that are provided by KBR and embody the Halliburton Licensed Other
IP. Except as otherwise provided in this Agreement, the license in this
Section 4.2 shall remain in effect for the life of the Halliburton Licensed
Other IP.

SECTION 4.3 Halliburton Third Party Patents. Upon the request of KBR and to the
extent permitted under Halliburton’s license agreements with third parties,
Halliburton shall grant to KBR a sublicense to the Halliburton Third Party
Patents in the KBR Fields of Use to the full extent, and on the most favorable
terms, allowed under Halliburton’s license agreements. Except as otherwise
provided in this Agreement, any such sublicense shall remain in effect so long
as Halliburton’s right to grant sublicenses remains in effect.

SECTION 4.4 Retained Rights. Except as expressly set forth in Sections 4.1, 4.2
and 4.3 of this Agreement, no other intellectual property rights are granted to
KBR by Halliburton hereunder, whether by implication or otherwise, and
Halliburton hereby reserves all such intellectual property rights it otherwise
has, including without limitation the right to develop and own intellectual
property in the KBR Fields of Use.

ARTICLE V

OTHER AGREEMENTS

SECTION 5.1 Conflict. In the event of any conflict between the provisions of
this Agreement and the Separation Agreement, the provisions of this Agreement
shall control.

SECTION 5.2 Software License Agreement. The terms and conditions of this
Agreement shall not apply to those Software License Agreements between
Halliburton Energy Services, Inc. and Kellogg Brown & Root LLC, dated November
20, 2006, providing licenses for the internal use of certain administrative
software (the “Software License Agreements”). Except as

 

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otherwise explicitly stated in the Software License Agreements, all data
associated with or contained in the software assigned or licensed under the
Software License Agreements shall be treated as follows: (a) data primarily
related to activities in the KBR Fields of Use prior to the IPO Closing Date
(“KBR Data”) shall be considered KBR Other IP hereunder and (b) all such data
other than KBR Data shall be considered Halliburton Other IP hereunder.

ARTICLE VI

MAINTENANCE AND ENFORCEMENT

SECTION 6.1 Prosecution and Maintenance of IP Rights. The party who is the owner
of any of the IP Rights shall, during the term of this Agreement, be responsible
for all actions and costs relating to the prosecution, protection, and
maintenance of such IP Rights, including without limitation prosecuting patent
applications and maintaining existing and future patents. The IP Rights subject
to this Agreement shall include all rights which result from any application,
prosecution, protection or maintenance of the IP Rights.

SECTION 6.2 Enforcement of IP Rights. In the event that a party learns that any
IP Rights licensed to it hereunder are being infringed or used improperly or
without authorization by any Person, such party shall promptly notify the owner
of such IP Rights. The owner of the infringed IP Rights shall decide in its sole
and exclusive discretion what action to take or not to take in response. The
owner shall have the right to act to terminate any infringement, including,
without limitation, prosecuting a lawsuit or other legal proceeding at its own
expense, and such party may retain in full any and all recovery it may receive
as a result of its actions to terminate such infringement. The licensee of any
IP Rights hereunder agrees to reasonably cooperate with the owner of such IP
Rights in connection with any actions of the owner to enforce or defend its IP
Rights.

ARTICLE VII

CONFIDENTIALITY

SECTION 7.1 Confidentiality. Notwithstanding anything to the contrary in the
Separation Agreement, Halliburton and KBR shall hold and shall each cause their
respective officers, employees, agents, consultants and advisors to hold, in
strict confidence and not to use, disclose or release without the prior written
consent of the other party, any and all Confidential IP Information (as defined
herein) of the other party; provided, that the parties may use the other party’s
Confidential IP Information pursuant to Sections 3.1, 3.2, 4.1, and/or 4.2, and
may disclose, or may permit disclosure of, the other party’s Confidential IP
Information under confidentiality and nonuse obligations which are at least as
strict as those provided in this Agreement (a) to their respective auditors,
attorneys, financial advisors, bankers and other appropriate consultants and
advisors who have a need to know such information and are informed of their
obligation to hold such information confidential to the same extent as is
applicable to the parties and in respect of whose failure to comply with such
obligations, Halliburton or KBR, as the case may be, will be responsible, (b) to
their customers who are Oil and Gas Producing Companies or Refining or
Industrial Processing Companies or Government and Infrastructure Persons to the
extent reasonably necessary for such customers’ use of products or services that
are provided under this Agreement by Halliburton or KBR, as the case may be, and
that embody Confidential IP Information, or (c) to the extent Halliburton or KBR
is

 

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compelled to disclose any such Confidential IP Information by judicial or
administrative process or, in the opinion of legal counsel, by other
requirements of law. Notwithstanding the foregoing, in the event that any demand
or request for disclosure of Confidential IP Information is made pursuant to
clause (c) above, Halliburton or KBR, as the case may be, shall promptly notify
the other of the existence of such request or demand and shall provide the other
a reasonable opportunity to seek an appropriate protective order or other
remedy, which both parties will cooperate in seeking to obtain. In the event
that such appropriate protective order or other remedy is not obtained, the
party whose Confidential IP Information is required to be disclosed shall or
shall cause the other party to furnish, or cause to be furnished, only that
portion of the Confidential IP Information that is legally required to be
disclosed. As used in this Section 7.1, “Confidential IP Information” shall mean
all proprietary, technical or operational information, data or material relating
to intellectual property, including without limitation all trade secrets and
know-how, of one party which, prior to or following the IPO Closing Date, has
been disclosed by Halliburton, on the one hand, or KBR, on the other hand, in
written, oral (including by recording), electronic, or visual form to, or
otherwise has come into the possession of, the other, including pursuant to any
other provision of this Agreement (except to the extent that such Confidential
IP Information can be shown to have been (i) in the public domain through no
fault of such party, (ii) later lawfully acquired from other sources by the
party to which it was furnished or (iii) created independently by such party
without the benefit of Confidential IP Information; provided, however, in the
case of (ii) that such sources did not provide such Confidential IP Information
in breach of any confidentiality obligations). Notwithstanding anything to the
contrary set forth herein, Halliburton, on the one hand, and KBR, on the other
hand, shall be deemed to have satisfied their obligations hereunder with respect
to Confidential IP Information if they exercise the same degree of care (but no
less than a reasonable degree of care) as they take to preserve confidentiality
for their own similar confidential intellectual property information.

SECTION 7.2 Equitable Relief. Each party acknowledges that a breach of its
obligations under Section 7.1 may cause the other party irreparable and
significant harm and that, in addition to any other remedies available to it,
such party may seek immediate injunctive relief without the need for posting any
bond in connection therewith.

ARTICLE VIII

WARRANTIES AND INDEMNIFICATION

SECTION 8.1 No Representation or Warranty. Halliburton and KBR make no
representations or warranties of any kind, express or implied, with respect to
any of the IP Rights licensed hereunder, all of which are provided “AS IS”, and
neither party makes any representations or warranties as to the completeness,
sufficiency or accuracy of any IP Rights licensed hereunder, or the freedom from
infringement of third party rights by the exercise of any IP Rights licensed
hereunder.

SECTION 8.2 Indemnification by Halliburton. Except as otherwise provided in this
Agreement, Halliburton and the Appropriate Members of the Halliburton Group
shall indemnify, defend and hold harmless KBR, each member of the KBR Group and
their respective successors and assigns (collectively, the “KBR Indemnitees”),
from and against any and all Losses of the KBR Indemnitees relating to, arising
out of or resulting from the Halliburton Business (as

 

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defined in the Separation Agreement), provided that (a) such Losses are in
connection with the subject matter of this Agreement and (b) the Losses do not
relate to, arise out of, or result from KBR Indemnitees operating in the
Halliburton Field of Use. Halliburton shall not indemnify, defend or hold
harmless the KBR Indemnitees for any Losses arising out of KBR’s use of the
Halliburton Patents or Halliburton Other IP. As used in this Section 8.2,
“Appropriate Members of the Halliburton Group” means the member or members of
the Halliburton Group, if any, whose acts, conduct or omissions or failures to
act caused, gave rise to or resulted in the Loss from and against which
indemnity is provided.

SECTION 8.3 Indemnification by KBR. Except as otherwise provided in this
Agreement, KBR and the Appropriate Members of the KBR Group shall indemnify,
defend and hold harmless Halliburton, each member of the Halliburton Group and
their respective successors and assigns, (collectively, the “Halliburton
Indemnitees”) from and against any and all Losses of the Halliburton Indemnitees
relating to, arising out of or resulting from the KBR Business (as defined in
the Separation Agreement), provided that (a) such Losses are in connection with
the subject matter of this Agreement and (b) the Losses do not relate to, arise
out of, or result from Halliburton Indemnitees operating in the KBR Field of
Use. KBR shall not indemnify, defend or hold harmless the Halliburton
Indemnitees for any such Losses arising out of Halliburton’s use of the KBR
Patents or KBR Other IP. As used in this Section 8.3, “Appropriate Members of
the KBR Group” means the member or members of the KBR Group, if any, whose acts,
conduct or omissions or failures to act caused, gave rise to or resulted in the
loss from and against which indemnity is provided.

SECTION 8.4 Procedures for Indemnification of Third Party Claims

(a) If any Person entitled to indemnification hereunder (“Indemnitee”) shall
receive notice or otherwise learn of the assertion by a Person (including any
Governmental Authority) who is not a member of the Halliburton Group or the KBR
Group of any claims or of the commencement by any such Person of any action
(collectively, a “Third Party Claim”) with respect to which any party (an
“Indemnifying Party”) may be obligated to provide indemnification to such
Indemnitee pursuant to this Article VIII, such Indemnitee shall give such
Indemnifying Party written notice thereof within twenty (20) days after becoming
aware of such Third Party Claim. Any such notice shall describe the Third Party
Claim in reasonable detail. Notwithstanding the foregoing, the failure of any
Indemnitee or other Person to give notice as provided in this Section 8.4(a)
shall not relieve the related Indemnifying Party of its obligations under this
Article VIII, except to the extent that such Indemnifying Party is actually
prejudiced by such failure to give notice.

(b) An Indemnifying Party may elect to defend (and, unless the Indemnifying
Party has specified any reservations or exceptions, to seek to settle or
compromise), at such Indemnifying Party’s own expense and by such Indemnifying
Party’s own counsel, any Third Party Claim for which indemnification is
available under this Article VIII. Within thirty (30) days after the receipt of
notice from an Indemnitee in accordance with Section 8.4(a) (or sooner, if the
nature of such Third Party Claim so requires), the Indemnifying Party shall
notify the Indemnitee of its election whether the Indemnifying Party will assume
responsibility for defending such Third Party Claim, which election

 

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shall specify any reservations or exceptions. After notice from an Indemnifying
Party to an Indemnitee of its election to assume the defense of a Third Party
Claim, such Indemnitee shall have the right to employ separate counsel and to
participate in (but not control) the defense, compromise or settlement thereof,
but the fees and expenses of such counsel shall be the expense of such
Indemnitee except as set forth in the next sentence. In the event that the
Indemnifying Party has elected to assume the defense of a Third Party Claim for
which indemnification is available under this Article VIII but has specified,
and continues to assert, any reservations or exceptions in such notice, then, in
any such case, the reasonable fees and expenses of one separate counsel for all
Indemnitees shall be borne by the Indemnifying Party.

(c) If an Indemnifying Party elects not to assume responsibility for defending a
Third Party Claim for which indemnification is available under this Article
VIII, or fails to notify an Indemnitee of its election as provided in
Section 8.4(b), such Indemnitee may defend such Third Party Claim at the cost
and expense (including allocated costs of in-house counsel and other personnel)
of the Indemnifying Party.

(d) Unless the Indemnifying Party has failed to assume the defense of the Third
Party Claim for which indemnification is available under this Article VIII in
accordance with the terms of this Agreement, no Indemnitee may settle or
compromise such Third Party Claim without the consent of the Indemnifying Party.

(e) No Indemnifying Party shall consent to entry of any judgment or enter into
any settlement of the Third Party Claim without the consent of an Indemnitee if
the effect thereof is to permit any injunction, declaratory judgment, other
order or other nonmonetary relief to be entered, directly or indirectly, against
such Indemnitee.

(f) In the event of payment by or on behalf of any Indemnifying Party to any
Indemnitee in connection with any Third Party Claim under this Article VIII,
such Indemnifying Party shall be subrogated to and shall stand in the place of
such Indemnitee as to any events or circumstances in respect of which such
Indemnitee may have any right, defense or claim relating to such Third Party
Claim against any claimant or plaintiff asserting such Third Party Claim or
against any other person. Such Indemnitee shall cooperate with such Indemnifying
Party in a reasonable manner, and at the cost and expense (including allocated
costs of in-house counsel and other personnel) of such Indemnifying Party, in
prosecuting any subrogated right, defense or claim. In the event of an Action in
which the Indemnifying Party is not a named defendant, if either the Indemnitee
or Indemnifying Party shall so request, the parties shall endeavor to substitute
the Indemnifying Party for the named defendant, if at all practicable. If such
substitution or addition cannot be achieved for any reason or is not requested,
the named defendant shall allow the Indemnifying Party to manage the Action as
set forth in this Section 8.4 and the Indemnifying Party shall fully indemnify
the named defendant against all costs of defending the Action (including court
costs, sanctions imposed by a court, attorneys’ fees, experts’ fees and all
other external expenses, and the allocated costs of in-house counsel and other
personnel), the costs of any judgment or settlement, and the costs of any
interest or penalties relating to any judgment or settlement.

 

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SECTION 8.5 Mitigation of Damages. The parties each agree to attempt to
mitigate, and to cause each of their respective Affiliates to attempt to
mitigate, any Losses that such party may suffer as a consequence of any matter
giving rise to a right to indemnification under this Article VIII by taking all
actions which a reasonable person would undertake to minimize or alleviate the
amount of Losses and the consequences thereof, as if such person would be
required to suffer the entire amount of such Losses and the consequences thereof
by itself, without recourse to any remedy against another person, including
pursuant to any right of indemnification hereunder.

ARTICLE IX

TERM AND TERMINATION

SECTION 9.1 Term. This Agreement shall be effective as of the IPO Closing Date
and shall continue until the last to expire of the KBR Patents or Halliburton
Patents. The licenses to use the trade secrets and know-how which are part of
the KBR Licensed Other IP or Halliburton Licensed Other IP shall survive the
expiration of this Agreement, except to the extent any such license is earlier
terminated under this Article IX.

SECTION 9.2 Termination.

(a) KBR may terminate this Agreement including any licenses granted in Article
III if Halliburton fails to cure a material breach of this Agreement within
sixty (60) days after Halliburton’s receipt of written notice of the alleged
breach, specifying the provisions of the Agreement at issue and the actions or
omissions alleged to constitute a material breach.

(b) Halliburton may terminate this Agreement including any licenses granted in
Article IV if KBR fails to cure a material breach of this Agreement within sixty
(60) days after KBR’s receipt of written notice of the alleged breach,
specifying the provisions of the Agreement at issue and the actions or omissions
alleged to constitute a material breach.

(c) KBR may terminate this Agreement including any licenses granted in Article
III upon written notice with respect to Halliburton if there has been a Change
of Control of Halliburton where the Person acquiring a controlling interest is a
competitor of KBR; provided, however, such termination shall be limited only to
the particular entity that has undergone a Change of Control. Halliburton may
terminate this Agreement including any licenses granted in Article IV upon
written notice with respect to KBR if there has been a Change of Control of KBR
where the Person acquiring a controlling interest is a competitor of
Halliburton; provided, however, such termination shall be limited only to the
particular entity that has undergone a Change of Control.

(d) The provisions of Articles 6, 7, 8, 9 and 10 shall survive the earlier
termination of this Agreement.

(e) Notwithstanding any termination of this Agreement, any sublicense extended
to an Oil and Gas Producing Company, a Coal Producing and Processing Company, a
Refining or Industrial Processing Company, or a Government and

 

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Infrastructure Person and/or any rights to use by KBR or Halliburton under
Sections 3.1, 3.2, 4.1, or 4.2 to which a party has already become committed for
a particular project to an Oil and Gas Producing Company, a Coal Producing and
Processing Company, a Refining or Industrial Processing Company, or a Government
and Infrastructure Person, shall continue in full force and effect so long as
all required payments are made and the participants in the project(s) continue
to abide by all other applicable terms and conditions which survive such
termination.

ARTICLE X

GENERAL PROVISIONS

SECTION 10.1 Effect if IPO does not Occur. If the IPO does not occur, then all
actions and events that are, under this Agreement, to be taken or occur
effective as of the IPO Closing Date, or otherwise in connection with the IPO,
shall not be taken or occur except to the extent specifically agreed by the
parties.

SECTION 10.2 Relationship of Parties. Nothing in this Agreement shall be deemed
or construed by the parties or any third party as creating a fiduciary
relationship, a relationship of principal and agent, partnership or joint
venture between the parties, the understanding and agreement being that no
provision contained herein, and no act of the parties, shall be deemed to create
any relationship between the parties other than the relationship set forth
herein. This Agreement shall be binding upon and inure solely to the benefit of
and be enforceable by each party and its respective successors and permitted
assigns. Nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

SECTION 10.3 Incorporation of Separation Agreement Provisions. If a dispute,
claim or controversy results from or arises out of or in connection with this
Agreement, the parties agree to use the procedures set forth in Article VII of
the Separation Agreement in lieu of other available remedies, to resolve same.
The provisions of Sections 9.1 (Limitation of Liability) and 9.5 (Notices) of
the Separation Agreement are hereby incorporated herein by reference, and unless
otherwise expressly specified herein, such provisions shall apply as if fully
set forth herein (references in this Section 10.3 to an “Article” or a “Section”
shall mean Articles or Sections of the Separation Agreement, and, except as
expressly set forth herein, references in the material incorporated herein by
reference shall be references to the Separation Agreement).

SECTION 10.4 Governing Law; Jurisdiction. This Agreement shall be governed by,
construed and interpreted in accordance with the laws of the United States and
the State of Texas, irrespective of the choice of law principles of the State of
Texas, as to all matters, including matters of validity, construction, effect,
performance and remedies. The parties hereby agree to submit to the exclusive
jurisdiction of the state and federal courts located in Houston, Texas, in
connection with any action or other proceeding relating to this Agreement or the
transactions contemplated hereby. Each party irrevocably waives and agrees not
to make, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the jurisdiction of any such court or to the laying of
venue of any such action or proceeding brought in any such court and any claim
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.

 

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SECTION 10.5 Severability. If any term or other provision of this Agreement is
determined 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 either party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible and in an
acceptable manner to the end that transactions contemplated hereby are fulfilled
to the fullest possible extent.

SECTION 10.6 Amendment. No change or amendment will be made to this Agreement
except by an instrument in writing signed on behalf of each of the parties to
this Agreement.

SECTION 10.7 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned by a party without the prior written
consent of the other party, except that either party may at any time assign any
or all of its rights or obligations hereunder to one of its wholly owned
subsidiaries (but no such assignment shall relieve such party of any of its
obligations under this Agreement).

SECTION 10.8 No Strict Construction. The language this Agreement uses shall be
deemed to be the language the parties hereto have chosen to reflect their mutual
intent, and no rule of strict construction or presumption based upon the party
that has drafted this Agreement shall be applied against any party hereto.

SECTION 10.9 Further Assurances. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement.

SECTION 10.10 Counterparts. This Agreement may be executed in two or more
counterparts each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same Agreement.

 

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IN WITNESS WHEREOF, each of the parties has caused this Intellectual Property
Matters Agreement to be executed on its behalf by its officers thereunto duly
authorized on the day and year first above written.

 

HALLIBURTON COMPANY By:   /s/ C. Christopher Gaut Name:    C. Christopher Gaut
Title:    Executive Vice President and Chief Financial Officer KBR, INC. By:  
/s/ William P. Utt Name:    William P. Utt Title:    President & CEO

 

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