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Exhibit 10.5
KBR, INC.
TRANSITIONAL STOCK ADJUSTMENT PLAN
NONSTATUTORY STOCK OPTION AWARD

for

________________________
(“Employee”)

As a result of the consummation of the Exchange Offer by Halliburton Company
(“Halliburton”) to dispose of its remaining interest in KBR, Inc., a Delaware
corporation (the “Company”), Halliburton and the Company have become independent
separate companies.  Halliburton and the Company have adopted the KBR, INC.
TRANSITIONAL STOCK ADJUSTMENT PLAN (the “Plan”) to convert options to purchase
shares of Halliburton common stock (the “Halliburton Options”) issued under the
HALLIBURTON COMPANY 1993 STOCK AND INCENTIVE PLAN ("Halliburton Plan") into
options to purchase shares of the Company’s common stock, par value $0.001 per
share (“KBR Common Stock”), in accordance with the applicable adjustment
provisions of the Halliburton Plan as a result of the separation of Halliburton
and the Company.

In accordance with the terms of the Plan, Employee is entitled to receive
option(s) to purchase a number of shares of KBR Common Stock, determined by a
formula set forth in the Plan, in lieu of outstanding Halliburton
Option(s).  Employee is entitled to option(s) to purchase a number of shares of
KBR Common Stock under the Plan, as set forth on Exhibit A hereto (the “KBR
Options”), pursuant to the terms described herein.

Capitalized terms used and not otherwise defined herein will have the meaning
given thereto in the Plan.

1.  General Terms of KBR Options.  Except to the extent otherwise in conflict as
provided below, the KBR Options shall be subject to all of the terms and
conditions contained in the corresponding original grant(s) of Halliburton
Options, as evidenced by the agreement(s) granting such Halliburton Options,
pursuant to the Halliburton Plan.

(a)           Converted Shares.  In accordance with the Plan, Employee’s
Halliburton Options set forth on Exhibit A are converted into KBR Options
identified on Exhibit A, and at the option price(s) so identified.

(b)           Plan Incorporated.  The KBR Options shall be subject to all of the
terms and conditions set forth in the Plan, including future amendments thereto,
if any, pursuant to the terms thereof, which Plan is incorporated herein by
reference.

2.           KBR Options.  The KBR Options are subject to the following terms:

(a)           Change in Control.  For all purposes concerning the KBR Options
hereunder, the definition for Change in Control shall be the definition in the
Plan.
 
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(b)           KBR Option Price.  The purchase price of KBR Common Stock to be
paid by Employee pursuant to the exercise of the KBR Options shall be the
applicable share price as indicated on Exhibit A.

(c)           Non-transferability.  The KBR Options are not transferable
otherwise than by will or the laws of descent and distribution or pursuant to a
“qualified domestic relations order” as defined by the Code and may be exercised
during Employee’s lifetime only by Employee, Employee’s guardian or legal
representative or a transferee under a qualified domestic relations order.  Upon
any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of the
KBR Option or of such rights contrary to the provisions hereof or in the Plan,
or upon the levy of any attachment or similar process upon the KBR Option or
such rights, the KBR Option and such rights shall immediately become null and
void.  The KBR Option may be exercised only while Employee remains an employee
of the Company, subject to any exceptions, as provided in the original agreement
granting such Halliburton Option.

3.           Exercise of KBR Options.  Subject to the earlier expiration of the
applicable KBR Option as herein provided, the KBR Options may be exercised, by
providing notice of exercise in the manner specified by the Company from time to
time, but, except as otherwise provided herein, the KBR Option shall not be
exercisable for more than a percentage of the aggregate number of shares of KBR
Common Stock offered by the KBR Option determined by the number of full years
from the date of grant of the applicable Halliburton Option to the date of such
exercise, in accordance with the schedule as contained in the agreement granting
such Halliburton Option.

To clarify, each KBR Option will continue to vest in accordance with the terms
and conditions of the agreement granting such corresponding Halliburton Option;
provided that Employee has been continuously employed by Halliburton or the
Company from the original date the applicable Halliburton Option was granted
through the lapse date.  Prior to the Effective Date, a Participant’s employment
or service with the Company, Halliburton or any of their respective Subsidiaries
shall be deemed to be employment or service with the Company for all purposes
hereunder and under the agreement granting the Halliburton Option(s) and from
and after the Effective Date, a Participant’s employment or service with the
Company or any of its Subsidiaries shall be deemed to be employment or service
with the Company for all purposes under such award.  The Effective Date, as
defined in the Plan, is indicated on Exhibit A.  

4.           Withholding of Tax.  To the extent that the exercise of a KBR
Option or the disposition of shares of KBR Common Stock acquired by exercise of
a KBR Option results in compensation income to Employee for federal or state
income tax purposes, Employee shall deliver to the Company at the time of such
exercise or disposition such amount of money or shares of KBR Common Stock as
the Company may require to meet its withholding obligation under applicable tax
laws or regulations, and, if Employee fails to do so, the Company is authorized
to withhold from any cash or KBR Common Stock remuneration then or thereafter
payable to Employee any tax required to be withheld by reason of such resulting
compensation income.  Upon an exercise of a KBR Option, the Company is further
authorized in its discretion to satisfy any such withholding requirement out of
any cash or shares of KBR Common Stock distributable to Employee upon such
exercise.
 
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5.           Status of KBR Options.  The Company shall not be obligated to issue
any KBR Common Stock pursuant to any KBR Option at any time, when the offering
of the KBR Common Stock covered by such KBR Option has not been registered under
the Securities Act of 1933, as amended (the “Act”) and such other country,
federal or state laws, rules or regulations as the Company deems applicable and,
in the opinion of legal counsel for the Company, there is no exemption from the
registration.  The Company intends to use its best efforts to ensure that no
such delay will occur.  In the event exemption from registration under the Act
is available upon an exercise of a KBR Option, Employee (or the person permitted
to exercise such KBR Option in the event of Employee’s death or incapacity), if
requested by the Company to do so, will execute and deliver to the Company in
writing an agreement containing such provisions as the Company may require to
assure compliance with applicable securities laws.

Employee agrees that the shares of KBR Common Stock which Employee may acquire
by exercising a KBR Option will not be sold or otherwise disposed of in any
manner which would constitute a violation of any applicable securities laws,
whether federal or state.  Employee also agrees (i) that the certificates
representing the shares of KBR Common Stock purchased under a KBR Option may
bear such legend or legends as the Company deems appropriate in order to assure
compliance with applicable securities laws, (ii) that the Company may refuse to
register the transfer of the shares of KBR Common Stock purchased under a KBR
Option on the stock transfer records of the Company if such proposed transfer
would in the opinion of counsel satisfactory to the Company constitute a
violation of any applicable securities law and (iii) that the Company may give
related instructions to its transfer agent, if any, to stop registration of the
transfer of the KBR Common Stock purchased under a KBR Option.

6.           Employment Relationship.  For purposes of the KBR Options, Employee
shall be considered to be in the employment of the Company as long as Employee
remains an employee of either the Company, any successor corporation or a parent
or subsidiary corporation (as defined in section 424 of the Code) of the Company
or any successor corporation.  Any question as to whether and when there has
been a termination of such employment, and the cause of such termination, shall
be determined by the Compensation Committee of the Company (“Compensation
Committee”) or the Chief Executive Officer of the Company (the “CEO”), as
appropriate, and such determination shall be final.

7.           Governance by the Compensation Committee.  The KBR Options
converted hereunder will hereby be governed by the Compensation Committee or the
CEO, as appropriate, and no longer governed by Halliburton.  No provision
contained herein shall in any way terminate, modify or alter, or be construed or
interpreted as terminating, modifying or altering any of the powers, rights or
authority vested in the Compensation Committee or the CEO pursuant to the terms
of the Plan or resolutions adopted in furtherance of the Plan, including,
without limitation, the right to make certain determinations and elections with
respect to the KBR Options.

8.           Binding Effect.  This award shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under
Employee.

9.           Governing Law.  This award shall be governed by, and construed in
accordance with, the laws of the State of Texas.
 
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IN WITNESS WHEREOF, the Company has caused this document to be executed by its
officer thereunto duly authorized evidencing the terms authorized by the
Transitional Stock Adjustment Plan adopted February 26, 2007.

    KBR, INC.              
By:
 

 
 
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