Document:

KBR-EX10.7_2013.12.31

INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made this ____ day of ____, 2014, by and between KBR, Inc., a Delaware corporation (the “Company”), and the undersigned Director (“Director”).
WITNESSETH
WHEREAS, Director is a member of the Board of Directors of the Company and in such capacity is performing a valuable service for the Company; and
WHEREAS, the Company has purchased and presently maintains a policy or policies of Directors’ and Officers’ Liability Insurance (“D&O Insurance”) covering certain liabilities which may be incurred by the directors and officers of the Company in the performance of their services for the Company; and
WHEREAS, developments with respect to the provisions of D&O Insurance and with respect to the application, amendment and enforcement of statutory, charter and bylaw indemnification provisions generally have raised questions concerning the adequacy and reliability of the protection accorded to directors thereby and may increase the difficulty of attracting and retaining qualified persons to serve as directors of the Company; and
WHEREAS, the Board of Directors of the Company has determined that difficulties relating to the attraction and retention of such persons would be detrimental to the best interests of the Company and of its stockholders and that the Company should act to assure such persons that there will be increased certainty of indemnification protection in the future; and
WHEREAS, the Delaware General Corporation Law and the Bylaws of the Company (the “Bylaws”) provide that they are not exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled, and thereby contemplate that contracts may be entered into between the Company and members of its Board of Directors with respect to indemnification of such directors; and
WHEREAS, in order to lessen or alleviate the aforementioned concerns and thereby induce Director to serve and to continue to serve as a member of the Board of Directors of the Company, the Company has determined that it is in its best interests to enter into this Agreement with Director;
NOW, THEREFORE, in consideration of the above premises and of Director’s continued service as a member of the Company’s Board of Directors after the date hereof, the parties hereto agree as follows:
1.Indemnification – General.  The Company shall, to the fullest extent, and only to the extent, permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may thereafter from time to time permit, indemnify and hold Director harmless from and against any and all losses, liabilities, claims, damages and Expenses (as hereinafter defined) whatsoever arising out of any event or occurrence related to the fact that Director is or was a Director of the Company or is or was serving in another Corporate Status (as hereinafter defined).  The rights of Director provided under the preceding sentence shall include, but shall not be limited to, the rights set forth in the other Sections of this Agreement.
2.    Proceedings Other than Proceedings by or in the Right of the Company.  Director shall be entitled to the indemnification rights provided in this Section 2 if, by reason of Director’s Corporate Status (as hereinafter defined), Director is, or is threatened to be made, a party to (or other participant in), or is, or is required to prepare to be, a witness to, any threatened, pending or completed Proceeding (as hereinafter defined), other than a Proceeding by or in the right of the Company.  Pursuant to this Section 2, Director shall be indemnified against Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by Director or on Director’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Director acted in good faith and in a manner Director reasonably believed to be in, or not opposed to, the best interests of the Company, and, with respect to any criminal Proceeding, had no reasonable cause to believe Director’s conduct was unlawful.
3.    Proceedings by or in the Right of the Company.  Director shall be entitled to the indemnification rights provided in this Section 3 if, by reason of Director’s Corporate Status, Director is, or is threatened to be made, a party to (or other participant in), or is or is required to prepare to be a witness to, any threatened, pending or completed Proceeding brought by or in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 3, Director shall be indemnified against Expenses actually and reasonably incurred by Director or on Director’s behalf in connection with such Proceeding if Director acted in good faith and in a manner Director reasonably believed to be in, or not opposed to, the best interests of the Company.  Notwithstanding the foregoing, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Director shall have been adjudged, in a final adjudication of the Proceeding not subject to further appeal, to be liable to the Company if applicable law prohibits such indemnification; provided, however, that, if applicable law so permits, indemnification against Expenses shall nevertheless be made by the Company despite any adjudication of liability, if and only to the extent that the Court of Chancery of the State of Delaware, or the court in which such Proceeding shall have been brought or is pending, shall determine.
4.    Indemnification for Expenses of a Party Who is Wholly or Partly Successful.  Notwithstanding any other provision of this Agreement, to the extent that Director is, by reason of Director’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Director shall be indemnified against all Expenses actually and reasonably incurred by Director or on Director’s behalf in connection therewith.  If Director is not wholly successful in such Proceeding but is successful on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Director against all Expenses actually and reasonably incurred by Director or on Director’s behalf in connection with each successfully resolved claim, issue or matter.  For the purposes of this Section 4 and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.
5.    Contribution.  In the event that the indemnity contained in Sections 2, 3 or 4 of this Agreement is unavailable or insufficient to hold Director harmless in a Proceeding described therein, then in accordance with the non-exclusivity provisions of the Delaware General Corporation Law and the Bylaws, and separate from and in addition to, the indemnity provided elsewhere herein, the Company shall contribute to Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by or on behalf of Director in connection with such Proceeding or any claim, issue or matter therein, in such proportion as appropriately reflects the relative benefits received by, and fault of, the Company on the one hand and Director on the other hand in the acts, transactions or matters to which the Proceeding relates and other equitable considerations.
6.    Procedure for Determination of Entitlement to Indemnification.
(a)    To obtain indemnification under this Agreement, Director shall submit to the Company a written request, including such documentation and information as is reasonably available to Director and is reasonably necessary to determine whether and to what extent Director is entitled to indemnification.  The determination of Director’s entitlement to indemnification shall be made not later than 60 days after receipt by the Company of the written request for indemnification.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Director has requested indemnification.
(b)    Director’s entitlement to indemnification or contribution under any of Sections 2, 3, 4 and 5 of this Agreement shall be determined in the manner provided under this Section 6(b).
(i)    If there has been no Change of Control (as hereinafter defined) at the time the request for indemnification is submitted, Director’s entitlement to indemnification shall be determined (i) by the Board of Directors by a majority vote of a quorum of the Board consisting of Disinterested Directors (as hereinafter defined); (ii) by Independent Counsel (as hereinafter defined), in a written opinion if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs; or (iii) by the stockholders of the Company.
(ii)    If there has been a Change of Control at the time the request for indemnification is submitted, Director’s entitlement to indemnification shall be determined in a written opinion by Independent Counsel.
(iii)    If, with regard to Section 5 of this Agreement, such a determination is not permitted by law or, in the case of a determination to be made pursuant to Section 6(b)(i), if a quorum of Disinterested Directors so directs, such determination shall be made by the Court of Chancery of the State of Delaware or the court in which the Proceeding giving rise to the claim for indemnification is brought.
(c)    In the event that the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b) of this Agreement, the Independent Counsel shall be selected as provided in this Section 6(c).
(i)    If there has been no Change of Control at the time the request for indemnification is submitted, the Independent Counsel shall be selected by the Board of Directors, and the Company shall give written notice to Director advising Director of the identity of the Independent Counsel so selected within ten days after receipt of the request for indemnification.  Director may, within fourteen days after receipt of such written notice of selection shall have been given, deliver to the Company a written objection to such selection.  Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 13 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  If, within 30 days after submission by Director of a written request for indemnification pursuant to Section 6(a) of this Agreement, no Independent Counsel shall have been selected pursuant to the terms of this Section 6(c)(i), or if selected shall have been objected to, in accordance with this Section 6(c)(i), either the Company or Director may petition the Court of Chancery of the State of Delaware for a determination as to whether Director’s objection, if any, has been made without a reasonable basis and/or for the appointment as Independent Counsel of a person selected by such court or by such other person as such court shall designate, and any person so appointed shall act as Independent Counsel under Section 6(b) of this Agreement.
(ii)    If there has been a Change of Control at the time the request for indemnification is submitted, Director shall give the Company written notice advising of the identity and address of the Independent Counsel selected by Director.  The Company may, within seven days after receipt of such written notice of selection, deliver to Director a written objection to such selection.  Director may, within five days after the receipt of such objection from the Company, submit the name of another Independent Counsel and the Company may, within seven days after receipt of such written notice of selection, deliver to Director a written objection to such selection.  Such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 13 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Director may petition the Court of Chancery of the State of Delaware for a determination that the Company’s objection to the first and/or second selection of Independent Counsel is without a reasonable basis and/or for the appointment as Independent Counsel of a person selected by such court.
(iii)    The Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c), regardless of the manner in which any Independent Counsel is selected or appointed.
(d)    The procedures and presumptions provided for under Article V, Section 8 of the Bylaws as in effect on the date hereof shall be applicable to any determination of entitlement to indemnification under this Section 6.
(e)    In the event that (i) it is determined in accordance with the foregoing provisions of this Section 6 that Director is not entitled to indemnification or other benefits hereunder, (ii) the Company (or other applicable person) fails to make a determination of entitlement, (iii) the Company fails to make timely payment of indemnifiable amounts or advancement of Expenses in accordance with this Agreement or (iv) the Company or any other person takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, Director the benefits provided or intended to be provided to Director hereunder, Director shall be entitled to an adjudication in the Court of Chancery of the State of Delaware as to his or her entitlement to such indemnification or other benefits afforded hereunder. 
7.    Advancement of Expenses.  The Company shall advance all reasonable Expenses incurred by or on behalf of Director in connection with any Proceeding within 20 days after the receipt by the Company of a statement or statements from Director requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Director shall, and hereby undertakes to, repay any Expenses advanced if it shall ultimately be determined that Director is not entitled to be indemnified against such Expenses.
8.    Presumptions and Effect of Certain Proceedings.  
(a)    Director shall be presumed to be entitled to indemnification and advancement of Expenses under this Agreement upon submission of a request therefor in accordance with this Agreement.  The Company shall have the burden of proof in overcoming such presumption, and such presumption shall be used as a basis for a determination of entitlement to indemnification and advancement or reimbursement of Expenses unless the Company overcomes such presumption by clear and convincing evidence.  The termination of any proceeding described in any of Sections 2, 3 or 4 of this Agreement, or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Director to indemnification or advancement of Expenses or create a presumption that Director did not act in good faith and in a manner which Director reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Director had reasonable cause to believe that Director’s conduct was unlawful.  Except as otherwise expressly provided in this Agreement, the knowledge and/or actions, or failure to act, of any other director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, limited liability company, association, joint venture, trust, employee benefit plan or other enterprise shall not be imputed to Director for purposes of determining any right to indemnification or advancement of Expenses under this Agreement.
(b)    If the Company (or other applicable person) selected under Section 6 of this Agreement to determine whether Director is entitled to indemnification shall not have made a determination within 60 days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Director shall be entitled to such indemnification, absent (i) a misstatement by Director of a material fact, or an omission of a material fact necessary to make Director’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.
9.    Term of Agreement.  All agreements and obligations of the Company contained herein shall commence as of the time Director commenced to serve as a director, officer, employee or agent of the Company (or commenced to serve at the request of the Company as a director, officer, employee or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise) and shall continue for so long as Director shall so serve or shall be, or could become, subject to any possible Proceeding in respect of which Director is granted rights of indemnification or advancement of Expenses hereunder even if Director may have ceased to be a director or hold any other Corporate Status.  For the avoidance of doubt, nothing contained herein shall be construed as giving Director any right to serve as a director of the Company or in any other Corporate Status.
10.    Notification and Defense of Claim.  Promptly after receipt by Director of notice of the commencement of any Proceeding, Director will, if a claim in respect thereof is to be made against the Company under this Agreement, notify the Company of the commencement thereof; but the omission to notify the Company will not relieve it from any liability which it may have to Director otherwise than under this Agreement.  With respect to any such Proceeding as to which Director notifies the Company of the commencement thereof:
(a)    The Company will be entitled to participate therein at its own expense.
(b)    Except as otherwise provided below, to the extent that it may wish, the Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel satisfactory to Director.  After notice from the Company to Director of its election so to assume the defense thereof, the Company will not be liable to Director under this Agreement for any legal or other Expenses subsequently incurred by Director in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below.  Director shall have the right to employ its counsel in such Proceeding but the fees and Expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Director unless (i) the employment of counsel by Director has been authorized by the Company, or (ii) Director shall have reasonably concluded that there may be a conflict of interest between the Company and Director in the conduct of the defense of such Proceeding, or (iii) the Company shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which cases the fees and Expenses of counsel shall be at the expense of the Company.  The Company shall not be entitled to assume the defense of any Proceeding brought by or on behalf of the Company or as to which Director shall have made the conclusion provided for in (ii) above.
(c)    The Company shall not be liable to indemnify Director under this Agreement for any amounts paid in settlement of any Proceeding or claim effected without its written consent.  The Company shall not settle any Proceeding or claim in any manner which would include an admission of fault of Director or impose any penalty or limitation on Director without Director’s written consent.  Neither the Company nor Director will unreasonably withhold, delay or condition its consent to any proposed settlement.
11.    Enforcement; Duplicate Payments; Insurance.
(a)    The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Director to continue as a director of the Company, and acknowledges that Director is relying upon this Agreement in continuing in such capacity.
(b)    In the event Director is required to bring any action to enforce rights or to collect moneys due under this Agreement and is successful in such action, the Company shall reimburse Director for all of Director’s reasonable Expenses in bringing and pursuing such action.
(c)    The Company shall not be liable under this Agreement to make payments of amounts otherwise indemnifiable hereunder to the extent that Director has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise of the amounts otherwise indemnifiable hereunder;
(d)    To the extent the Company maintains D&O Insurance, Director shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage provided to any other director or officer of the Company.  If, at the time the Company receives from Director any notice of the commencement of a Proceeding, the Company has such insurance in effect which would reasonably be expected to cover such Proceeding, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in such policy or policies.  The Company shall thereafter take all necessary or reasonably desirable action to cause such insurers to pay, on behalf of Director, all amounts payable as a result of such Proceeding in accordance with the terms of such policy or policies.  
12.    Non-Exclusivity of Rights.  The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Director may at any time be entitled under applicable law, the Certificate of Incorporation of the Company, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise.  None of the foregoing, including any amendment or alteration of the Certificate of Incorporation of the Company or the Bylaws or any other agreement, shall adversely affect the rights provided to Director under this Agreement.
13.    Definitions.  For purposes of this Agreement:
(a)    “Change of Control” means a change in control of the Company after the date Director acquired Director’s Corporate Status, which shall be deemed to have occurred in any one of the following circumstances occurring after such date:  (i) there shall have occurred an event which would be required to be reported with respect to the Company in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; (ii) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) shall have become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 35% or more of the combined voting power of the Company’s then outstanding voting securities without prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to the initial acquisition of beneficial ownership by such person who attains such percentage interest; (iii) the Company is a party to a merger, consolidation, sale of assets or other reorganization, or an actual or threatened election contest (as such terms are used in Rule 14a-12(c) promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors (collectively, an “Actual or Threatened Proxy Contest”), as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iv) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (including, for this purpose, any new director whose election or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period but not including any such new director whose initial assumption of office occurs as a result of an Actual or Threatened Proxy Contest, including by reason of any agreement intended to avoid or settle an Actual or Threatened Proxy Contest) cease for any reason to constitute at least a majority of the Board of Directors; provided, however, that notwithstanding the foregoing, the distribution of the shares of the Company’s common stock in one or multiple transactions by Halliburton Company, a Delaware corporation (“Halliburton”), to its stockholders shall not be a Change of Control.
(b)    “Corporate Status” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, limited liability company, association, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the request of the Company.
(c)    “Disinterested Director” means a director of the Company who is not and was not at any time a party to the Proceeding in respect of which indemnification is sought by Director.
(d)    “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating or being or preparing to be a witness in, or otherwise participating in, a Proceeding.  Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond, or other appeal bond or its equivalent.  
(e)    “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the five years previous to its selection or appointment has been, retained to represent:  (i) the Company or Director in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Director in an action to determine Director’s rights under this Agreement.
(f)    “Proceeding” includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative, except one initiated by Director pursuant to Article V, Section 10 of the Bylaws to enforce Director’s rights under Article V of the Bylaws or pursuant to Section 6(e) of this Agreement.
14.    Severability.  Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any provision hereof shall be held to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof.
15.    Governing Law; Binding Effect; Amendment and Termination; Specific Performance; Interpretation.
(a)    THIS AGREEMENT SHALL BE INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.  If a court of competent jurisdiction shall make a final determination that the provisions of the law of any state other than Delaware govern indemnification by the Company of Director, then the indemnification provided under this Agreement shall in all instances be enforceable to the fullest extent permitted under such law, notwithstanding any provision of this Agreement to the contrary.
(b)    This Agreement shall be binding upon Director and upon the Company, its successors and assigns, and shall inure to the benefit of Director, Director’s heirs, spouses, executors, administrators, personal representatives and assigns and to the benefit of the Company, its successors and assigns.  
(c)    No amendment, modification, termination or cancellation of this Agreement shall be effective unless executed in writing by both of the parties.
(d)    Each party hereto may enforce this Agreement by seeking specific performance hereof, without any necessity of showing irreparable harm or posting a bond, which requirements are hereby waived, and the parties agree that by seeking specific performance, Director shall not be precluded from seeking or obtaining any other relief to which he or she may be entitled.
(e)    It is understood that the parties hereto intend this Agreement to be interpreted and enforced so as to provide indemnification to Director to the fullest extent now or hereafter permitted by the Delaware General Corporation Law notwithstanding that such indemnification may not be specifically authorized by the Certificate of Incorporation of the Company or the Bylaws, or by statute as of the date hereof.  In the event of any change after the date of this Agreement in any applicable law, statute or rule which expands the right of a Delaware corporation to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, it is the intent of the parties hereto that Director shall enjoy by this Agreement the greater benefits afforded by such change.  In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its board of directors or an officer, employee, agent or fiduciary, such change, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder.
(f)    Both the Company and Director acknowledge that in certain instances, federal law or applicable public policy may prohibit the Company from indemnifying its directors, officers, employees, consultants, fiduciaries or agents under this Agreement or otherwise.  Director understands and acknowledges that the Company may be required to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right, under public policy, to indemnify Director.
The parties have executed this Agreement as of the day and year first above written.
KBR, INC.
By: __________________________ 
    Name:    Andrew D. Farley 
    Senior Vice President, General Counsel 
    and Secretary
__________________________
Name:     
Title:    DirectorKBR-EX10.10_2013.12.31

KBR SENIOR EXECUTIVE PERFORMANCE PAY PLAN
RESTATED JANUARY 1, 2013

INDEX

	
			
	ARTICLE I
	1
	

	PURPOSE
	1
	

	 
	 

	ARTICLE II
	1
	

	DEFINITIONS
	1
	

	2.1    Definitions
	1
	

	2.2    Number
	4
	

	2.3    Headings
	4
	

	 
	 

	ARTICLE III    
	4
	

	PARTICIPATION
	4
	

	3.1    Participants
	4
	

	3.2    Partial Plan Year Participation
	4
	

	3.3    No Right to Participate
	5
	

	3.4    Plan Exclusive
	5
	

	3.5    Consent to Dispute Resolution
	5
	

	 
	 

	ARTICLE IV
	5
	

	ADMINISTRATION
	5
	

	 
	 

	ARTICLE V
	5
	

	REWARD DETERMINATIONS
	5
	

	5.1    Performance Measures
	5
	

	5.2    Performance Requirements
	5
	

	5.3    Reward Determinations
	6
	

	5.4    Reward Opportunities
	6
	

	5.5    Discretionary Adjustments
	6
	

	 
	 

	ARTICLE VI
	7
	

	DISTRIBUTION OF REWARDS
	7
	

	6.1    Form and Timing of Payment
	7
	

	6.2    Elective Deferral
	7
	

	6.3    Tax Withholding
	7
	

	 
	 

	ARTICLE VII
	7
	

	TERMINATION OF EMPLOYMENT
	7
	

	7.1    Termination of Service During Plan Year
	7
	

	7.2    Termination of Service After End of Plan Year But Prior to the Payment Date
	7
	

	 
	 

	 
	 

i

	
			
	ARTICLE VIII
	8
	

	RIGHTS OF PARTICIPANTS AND BENEFICIARIES
	8
	

	8.1    Status as a Participant or Beneficiary
	8
	

	8.2    Employment
	8
	

	8.3    Nontransferability
	8
	

	8.4    Nature of Plan
	8
	

	 
	 

	ARTICLE IX
	9
	

	CORPORATE CHANGE
	9
	

	 
	 

	ARTICLE X
	9
	

	AMENDMENT AND TERMINATION
	9
	

	 
	 

	ARTICLE XI
	9
	

	MISCELLANEOUS
	9
	

	11.1    Governing Law
	9
	

	11.2    Severability
	9
	

	11.3    Successor
	9
	

	11.4    Other Agreements
	9
	

	11.5    Effective Date
	10
	

KBR SENIOR EXECUTIVE PERFORMANCE PAY PLAN

The Board of Directors of KBR, Inc. (the “Board”) previously established the KBR, Inc. 2006 Stock and Incentive Plan, as amended and restated (the “2006 Plan”).  Section XI of the 2006 Plan authorizes the Compensation Committee of the Board to grant “Performance Awards” with such terms as the Compensation Committee may establish in its discretion.  Effective January 1, 2013 (except as otherwise indicated in specific provisions of the Plan), the Compensation Committee hereby restates this KBR Senior Executive Performance Pay Plan (the “Plan”) pursuant to the provisions of Article XI of the 2006 Plan.  All awards under this Plan are intended to qualify as qualified performance-based compensation under Section 162(m) of the Code to the extent such awards are made to participants who are “covered employees” as that term is defined in Section 162(m) of the Internal Revenue Code of 1986, as amended.

ARTICLE I
PURPOSE

The purpose of the Plan is to reward management of the Company and its Affiliates for improving financial results which drive the creation of value for shareholders of the Company and thereby, serve to attract, motivate, reward, and retain high caliber employees required for the success of the Company.  The Plan provides a means to link total and individual cash compensation to Company performance.

ARTICLE II
DEFINITIONS

2.1    Definitions.  Where the following words and phrases appear in the Plan, they shall have the respective meanings set forth below, unless their context clearly indicates to the contrary.

“Affiliate” shall mean a Subsidiary of the Company or a division or designated group of the Company or a Subsidiary.

“Base Salary” shall mean the Participant’s annual base salary as determined on the first day of January during the applicable calendar year (or the first day an employee becomes eligible to participate in the Plan if such day occurs after the first day of January).  For purposes of this calculation, Base Salary includes base salary a Participant could have received in cash in lieu of (i) contributions made on such Participant’s behalf to a qualified plan maintained by the Company or to any cafeteria plan under Section 125 of the Code maintained by the Company and (ii) deferrals of compensation made at the Participant’s election pursuant to a plan or arrangement of the Company or an Affiliate, but excluding any Rewards under this Plan and any other bonuses, incentive pay or special awards.

“Beneficiary” shall mean the person, persons, trust or trusts entitled by will or the laws of descent and distribution to receive the benefits specified under the Plan in the event of the Participant’s death prior to full payment of a Reward.

“Board of Directors” shall mean the Board of Directors of the Company.

“CEO” shall mean the Chief Executive Officer of the Company.

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

“Committee” shall mean the Compensation Committee of Directors of the Company, appointed by the Board of Directors from among its members, no member of which shall be an employee of the Company or a Subsidiary.

“Common Stock” shall mean the common stock, par value $0.001 per share of KBR, Inc.

“Company” shall mean KBR, Inc. and its successors.

“Corporate Change” shall mean one of the following events: (i) the merger, consolidation or other reorganization of the Company in which the outstanding Common Stock is converted into or exchanged for a different class of securities of the Company, a class of securities of any other issuer (except a direct or indirect wholly owned Subsidiary), cash or property; (ii) the sale, lease or exchange of all or substantially all of the assets of the Company to another corporation or entity (except a direct or indirect wholly owned Subsidiary); (iii) the adoption by the stockholders of the Company of a plan of liquidation and dissolution; (iv) the acquisition (other than any acquisition pursuant to any other clause of this definition) by any person or entity, including, without limitation, a “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, of beneficial ownership, as contemplated by such Section, of more than twenty percent (based on voting power) of the Company’s outstanding capital stock, provided, however, that, this clause (iv) shall not apply to the acquisition or beneficial ownership by Halliburton Company of the Company’s outstanding capital stock so long as Halliburton Company is the beneficial owner of more than twenty percent (based on voting power) of the Company’s outstanding capital stock, unless and until such time as Halliburton Company shall cease to be the beneficial owner of more than twenty percent (based on voting power) of the Company’s outstanding capital stock and thereafter Halliburton Company, together with any persons or entities which could be included with Halliburton Company as a  “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, shall acquire beneficial ownership of more than twenty percent (based on voting power) of the Company’s outstanding capital stock; or (v) as a result of or in connection with a contested election of directors, the persons who were directors of  the Company before such election shall cease to constitute a majority of the Board.

“Dispute Resolution Program” shall mean the Halliburton Dispute Resolution Program or its successor, the KBR Dispute Resolution Program.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.

“Officer” shall mean a full officer of the Company or an Affiliate.

“Participant” shall mean any active employee of the Company or an Affiliate who participates in the Plan pursuant to the provisions of Article III hereof.  An employee shall not be eligible to participate in the Plan while on a leave of absence.

“Participant Category” shall mean a grouping of Participants determined in accordance with the applicable provisions of Article III.

“Payment Date” shall mean, with respect to a particular Plan Year, the date the Reward is actually paid, which shall be as soon as administratively practicable following the end of the applicable Plan Year, but in no event later than the March 15th following the end of the applicable Plan Year.

“Performance Goals” shall mean, for a particular Plan Year, established levels of applicable Performance Measures.

“Performance Measures” shall mean the criteria used in determining Performance Goals for particular Participant Categories, which may include one or more of the performance measures identified in Article XI of the 2006 Plan.  Performance Measures may vary from business unit to business unit and from Participant to Participant within a particular business unit as deemed appropriate.

“Plan” shall mean the KBR Senior Executive Performance Pay Plan restated effective January 1, 2013, and as the same may thereafter be amended from time to time.

“Plan Year” shall mean the calendar year ending each December 31.

“Reward” shall mean the dollar amount of incentive compensation payable to a Participant under the Plan for a Plan Year determined in accordance with Section 5.3.

“Reward Opportunity” shall mean, with respect to each Participant Category, incentive reward payment amounts, expressed as a percentage of Base Salary, which correspond to various levels of pre-established Performance Goals, determined pursuant to the Reward Schedule.

“Reward Schedule” shall mean the schedule which aligns the level of achievement of applicable Performance Goals with Reward Opportunities for a particular Plan Year, such that the level of achievement of the pre-established Performance Goals at the end of such Plan Year will determine the actual Reward.

“Senior Executive” shall mean (i) the CEO and (ii) any regular, full-time employee of the Company or an Affiliate who (A) is an Officer required to file reports with the Securities and Exchange Commission under Section 16 of the Securities Exchange Act of 1934, (B) is an Officer who reports directly to the CEO, (C) is the Chief Accounting Officer of the Company, or (D) is the highest ranking management position (with at least a title of Director or above) with direct oversight over internal audits of the Company.

“Subsidiary” shall mean at any given time, a company (whether a corporation, partnership, limited liability company or other form of entity) in which the Company or any other of its Subsidiaries or both owns, directly or indirectly, an aggregate equity interest of 50% or more.

2.2    Number.  Wherever appropriate herein, words used in the singular shall be considered to include the plural, and words used in the plural shall be considered to include the singular.

2.3    Headings.  The headings of Articles and Sections herein are included solely for convenience, and if there is any conflict between headings and the text of the Plan, the text shall control.
ARTICLE III
PARTICIPATION

3.1    Participants.  Active employees who are Senior Executives as of the beginning of each Plan Year shall be Participants for such Plan Year.

3.2    Partial Plan Year Participation.  If, after the beginning of a Plan Year, an employee who was not previously a Participant for such Plan Year (i) is newly appointed or elected as a Senior Executive or (ii) returns to active employment as a Senior Executive following a leave of absence, such employee shall become a Participant effective with the first day of the month following such appointment or election or return to active service, as the case may be, for the balance of the Plan Year, on a prorated basis, unless the Committee shall determine, in its sole discretion, that the participation shall be delayed until the beginning of the next Plan Year.

If an employee who has previously been designated as a Participant for a particular Plan Year takes a leave of absence during such Plan Year, the Committee may exercise its discretion to reduce Participant’s rights to a Reward for such Plan Year on a prorated basis corresponding to that portion of the Plan Year during which he or she was no longer an active Participant, in which case the prorated portion of the Reward shall be paid in accordance with the provisions of Section 6.1.

Each Participant shall be assigned to a Participant Category at the time he or she becomes a Participant for a particular Plan Year.  If a Participant thereafter incurs a change in status due to promotion, demotion, reassignment or transfer, such Participant’s Reward Opportunity shall be automatically adjusted to correspond with the Reward Opportunity for the new Participant Category, such adjustment to be made on a pro rata basis for the balance of the Plan Year effective with the first day of the month following such change in status, unless the Committee exercises its discretion to reduce Participant’s rights to a Reward for such Plan Year on a prorated basis corresponding to that portion of the Plan Year during which he or she had a change in status.

3.3    No Right to Participate.  Except as provided in Sections 3.1 and 3.2, no Participant or other employee of the Company or an Affiliate shall, at any time, have a right to participate in the Plan for any Plan Year, notwithstanding having previously participated in the Plan.

3.4    Plan Exclusive.  No employee shall simultaneously participate in this Plan and in any other short-term incentive plan of the Company or an Affiliate unless such employee’s participation in such other plan is approved by the CEO, or his delegate.

3.5    Consent to Dispute Resolution.  Participation in the Plan constitutes consent by the Participant to be bound by the terms and conditions of the Dispute Resolution Program which in substance requires that all disputes arising out of or in any way related to employment with the Company or its Affiliates, including any disputes concerning the Plan, be resolved exclusively through such program, which includes binding arbitration as the last step.

ARTICLE IV
ADMINISTRATION

Each Plan Year, the Committee shall establish the basis for payments under the Plan in relation to given Performance Goals, as more fully described in Article V hereof, and, following the end of each Plan Year, determine the actual Reward payable for each Participant Category.  The Committee shall construe and interpret the Plan, prescribe, amend and rescind rules, regulations and procedures relating to its administration and make all other determinations necessary or advisable for administration of the Plan.  Decisions of the Committee shall be conclusive and binding.  Subject only to compliance with the express provisions hereof, the Committee may act in its sole and absolute discretion with respect to matters within its authority under the Plan.

ARTICLE V
REWARD DETERMINATIONS

5.1    Performance Measures.  A combination of Performance Measures shall be used in determining Performance Goals for any Plan Year.

5.2    Performance Requirements.  No later than the first 90 days after the commencement of each Plan Year, (i) the Committee shall approve the Performance Measures applicable to certain Participants, and (ii) the Committee shall establish a Reward Schedule which aligns the level of achievement of applicable Performance Goals with Reward Opportunities, such that the level of achievement of the pre-established Performance Goals at the end of the Plan Year will determine the actual Reward.

5.3    Reward Determinations.  After the end of each Plan Year, the Committee shall determine the extent to which the Performance Goals have been achieved, and the amount of the Reward shall be computed for each Participant in accordance with the Reward Schedule.

5.4    Reward Opportunities.  The established Reward Opportunities may vary in relation to the Participant Categories and within the Participant Categories.  In the event a Participant changes Participant Categories during a Plan Year, the Participant’s Reward Opportunities shall be adjusted in accordance with the applicable provisions of Section 3.2.

5.5    Discretionary Adjustments.  Once established, Performance Goals will not be changed during the Plan Year.  However, if the Committee, in its sole and absolute discretion, 

determines that there has been (i) a change in the business, operations, corporate, or capital structure, (ii) a change in the manner in which business is conducted, (iii) any incorrect assumptions, omissions, forecasting, or budgeting used in the initial establishment of the Performance Goals, or (iv) any other material change or event which will impact one or more Performance Goals in a manner the Committee did not intend, then the Committee may, reasonably contemporaneously with such change, incorrect forecasting or budgeting, or event, make negative adjustments to reduce or eliminate the compensation that was due upon attainment of the Performance Goals as it shall deem appropriate and equitable.  In addition, if, within a two-year period beginning on the date that a Reward is paid, the basis upon which the Performance Goals were achieved for a Plan Year changes because of any material restatement of the Company’s financial results for the same Plan Year, and the Reward is determined to be an overpayment based on such Plan Year’s restated financial results, the Committee may, in its sole discretion, seek recovery of the amount of the Reward determined to be an overpayment or hold the overpayment as debit against future Rewards.  Effective January 1, 2010, Rewards based on Performance Goals that are measured during 2010 or after and paid in 2011 or after shall be subject to the same clawback provision in the preceding sentence except that any clawback shall be based on a restatement of the Company’s financial results instead of a material restatement of the Company’s financial results.  Notwithstanding the foregoing, the clawback in this Section 5.5 shall be automatically amended to meet any clawback policy adopted by the Company, including, but not limited to, any clawback policy adopted to satisfy the minimum clawback requirements adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the regulations thereunder or any other applicable law.

ARTICLE VI
DISTRIBUTION OF REWARDS

6.1    Form and Timing of Payment.  Except as otherwise provided below, the amount of each Reward shall be paid in a cash lump sum on the Payment Date.  In the event of termination of a Participant’s employment prior to the Payment Date for any reason other than death (in which case payment shall be made in accordance with the applicable provisions of Article VII), the amount of any Reward (or prorated portion thereof) payable pursuant to the provisions of Sections 7.1 or 7.2 shall be paid in cash on the Payment Date.

6.2    Elective Deferral.  Nothing herein shall be deemed to preclude a Participant’s election to defer receipt of a percentage of his or her Reward beyond the time such amount would have been payable hereunder pursuant to the KBR Elective Deferral Plan or other similar plan and in compliance with the requirements of Code Section 409A and related regulations and U.S. Department of Treasury pronouncements.

6.3    Tax Withholding.  The Company or employing entity through which payment of a Reward is to be made shall have the right to deduct from any payment hereunder any amounts that Federal, state, local or foreign tax laws require with respect to such payments.

ARTICLE VII
TERMINATION OF EMPLOYMENT

7.1    Termination of Service During Plan Year.  In the event a Participant’s employment is terminated prior to the last business day of a Plan Year for any reason other than death, normal retirement at or after age 65, or disability (as determined under the Company’s Long Term Disability Plan), all of such Participant’s rights to a Reward for such Plan Year shall be forfeited unless the Committee shall determine that such Participant’s Reward for such Plan Year shall be prorated based upon that portion of the Plan Year during which he or she was a Participant, in which case the prorated portion of the Reward shall be paid in accordance with the provisions of Section 6.1.  In the case of death during the Plan Year, the prorated amount of such Participant’s Reward shall be paid to the Participant’s estate, or if there is no administration of the estate, to the heirs at law, on the Payment Date.  In the case of disability or normal retirement at or after age 65, the prorated amount of a Participant’s Reward shall be paid in accordance with the provisions of Section 6.1.

7.2    Termination of Service After End of Plan Year But Prior to the Payment Date.  If a Participant’s employment is terminated for any reason other than death, normal retirement at or after age 65, or disability (as determined under the Company’s Long Term Disability Plan) after the end of the applicable Plan Year, but prior to the Payment Date, or if a Participant is employed but is not in good standing with the Company (or its Affiliates), as determined in the absolute and sole discretion of the Compensation Committee, on the Payment Date, all of such Participant’s rights to a Reward for such Plan Year shall be forfeited.  In the case of death after the end of the applicable Plan Year, but prior to the Payment Date, the amount of the Reward shall be paid to such Participant’s estate, or if there is no administration of the estate, to the heirs at law, as soon as practicable, but not later than the Payment Date.  In the case of disability or normal retirement at or after age 65 after the end of the applicable Plan Year, but prior to the Payment Date, or in the absolute and sole discretion of the Compensation Committee, the amount of the Reward then unpaid shall be paid to the Participant in accordance with the provisions of Section 6.1.

ARTICLE VIII
RIGHTS OF PARTICIPANTS AND BENEFICIARIES

8.1    Status as a Participant or Beneficiary.  Neither status as a Participant or Beneficiary shall be construed as a commitment that any Reward will be paid or payable under the Plan.

8.2    Employment.  Nothing contained in the Plan, or in any document related to the Plan or to any Reward, shall confer upon any Participant any right to continue as an employee or in the employ of the Company or an Affiliate or constitute any contract or agreement of employment for a specific term or interfere in any way with the right of the Company or an Affiliate to reduce such person’s compensation, to change the position held by such person or to terminate the employment of such person, with or without cause.

8.3    Nontransferability.  No benefit payable under, or interest in, this Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance 

or charge and any such attempted action shall be void and no such benefit or interest shall be, in any manner, liable for, or subject to, debts, contracts, liabilities or torts of any Participant or Beneficiary; provided, however, that, nothing in this Section 8.3 shall prevent transfer (i) by will, (ii) by applicable laws of descent and distribution, or (iii) pursuant to an order that satisfies the requirements for a “qualified domestic relations order” as such term is defined in section 206(d)(3)(B) of ERISA and section 414(p)(1)(A) of the Code, including an order that requires distributions to an alternate payee prior to a Participant’s “earliest retirement age” as such term is defined in section 206(d)(3)(E)(ii) of ERISA and section 414(p)(4)(B) of the Code.  Any attempt at transfer, assignment or other alienation prohibited by the preceding sentence shall be disregarded and all amounts payable hereunder shall be paid only in accordance with the provisions of the Plan.

8.4    Nature of Plan.  No Participant, Beneficiary or other person shall have any right, title, or interest in any fund or in any specific asset of the Company or any Affiliate by reason of any Reward hereunder.  There shall be no funding of any benefits which may become payable hereunder.  Nothing contained in the Plan (or in any document related thereto), nor the creation or adoption of the Plan, nor any action taken pursuant to the provisions of the Plan shall create, or be construed to create, a trust of any kind or a fiduciary relationship between the Company or an Affiliate and any Participant, Beneficiary or other person.  To the extent that a Participant, Beneficiary or other person acquires a right to receive payment with respect to a Reward hereunder, such right shall be no greater than the right of any unsecured general creditor of the Company or other employing entity, as applicable.  All amounts payable under the Plan shall be paid from the general assets of the Company or employing entity, as applicable, and no special or separate fund or deposit shall be established and no segregation of assets shall be made to assure payment of such amounts.  Nothing in the Plan shall be deemed to give any employee any right to participate in the Plan except in accordance herewith.

ARTICLE IX
CORPORATE CHANGE

Unless otherwise provided in an agreement pursuant to Section 11.4, in the event of an Involuntary Termination or termination for Good Reason within two years following a Corporate Change (as such terms are defined in the 2006 Plan and referenced herein as a “Double Trigger Event”), (i) with respect to a Participant’s Reward Opportunity for the Plan Year in which the Double Trigger Event occurred, such Participant shall be entitled to an immediate cash payment equal to the maximum amount of Reward he or she would have been entitled to receive for the Plan Year, prorated to the date of the Double Trigger Event; and (ii) with respect to a Double Trigger Event that occurs after the end of the Plan Year but prior to the Payment Date, a Participant shall be entitled to an immediate cash payment equal to the Reward earned for such Plan Year.

ARTICLE X
AMENDMENT AND TERMINATION
Notwithstanding anything herein to the contrary, the Committee may, at any time, terminate or, from time to time amend, modify or suspend the Plan; provided, however, that, without the prior consent of the Participants affected, no such action may adversely affect any rights or obligations with respect to any Rewards theretofore earned for a particular Plan Year, whether or not the amounts of such Rewards have been computed and whether or not such Rewards are then payable, subject to the Committee’s express rights as set forth herein.

ARTICLE XI
MISCELLANEOUS

11.1    Governing Law.  The Plan and all related documents shall be governed by, and construed in accordance with, the laws of the State of Texas, without giving effect to the principles of conflicts of law thereof, except to the extent preempted by federal law.  The Federal Arbitration Act shall govern all matters with regard to arbitrability.

11.2    Severability.  If any provision of the Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining provisions hereof; instead, each provision shall be fully severable and the Plan shall be construed and enforced as if said illegal or invalid provision had never been included herein.

11.3    Successor.  All obligations of the Company under the Plan shall be binding upon and inure to the benefit of any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

11.4    Other Agreements.  The terms of this Plan shall be subject to, and shall not modify, the terms and conditions of any employment, severance, and/or change-in-control agreement between the Company (or a Subsidiary) and a Participant.  Further, to the extent an umbrella program is established solely to provide funding to the Plan for purposes of complying with Section 162(m) of the Code, any payments under any employment, severance, and/or change-in-control agreement that are calculated based on the target bonus opportunity under the Plan shall be based on the sub-Plan target bonus opportunity (without applying any positive discretion) and not the target bonus opportunity under the umbrella program. 

11.5    Effective Date.  The effective date of this restatement is January 1, 2013.  This Plan shall be effective from and after such date, and shall remain in effect until such time as it may be terminated or amended pursuant to Article X.

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