Document:

Master Separation Agreement between Hal and KBR 112006

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        10.1 

       

      MASTER
        SEPARATION AGREEMENT 

       

      BETWEEN
        

       

      HALLIBURTON
        COMPANY 

       

      AND
        

       

      KBR,
        INC.

       

      Dated
        as
        of November 20, 2006 

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      TABLE
        OF
        CONTENTS 

       

      
        	 	 	 
	
                 

                ARTICLE
                  I DEFINITIONS

                 

              	
                1

                 

              
	 	 
	
                 

                ARTICLE
                  II SEPARATION AND RELATED TRANSACTIONS

                 

              	
                15

                 

              
	 	 	 
	
                 

                2.1

                 

              	
                 

                Separation
                  Date; Separation Time

                 

              	
                15

                 

              
	
                 

                2.2

                 

              	
                 

                Instruments
                  of Transfer and Assumption

                 

              	
                16

                 

              
	
                 

                2.3

                 

              	
                 

                Ancillary
                  Agreements

                 

              	
                16

                 

              
	
                 

                2.4

                 

              	
                 

                Performance
                  of Non-Novated Contracts

                 

              	
                17

                 

              
	
                 

                2.5

                 

              	
                 

                Other
                  Matters

                 

              	
                17

                 

              
	 	 
	
                 

                ARTICLE
                  III MUTUAL RELEASES; INDEMNIFICATION

                 

              	
                18

                 

              
	 	 	 
	
                 

                3.1

                 

              	
                 

                Mutual
                  Release of Pre-IPO Closing Date Claims

                 

              	
                18

                 

              
	
                 

                3.2

                 

              	
                 

                Indemnification
                  by KBR

                 

              	
                19

                 

              
	
                 

                3.3

                 

              	
                 

                Indemnification
                  by Halliburton

                 

              	
                20

                 

              
	
                 

                3.4

                 

              	
                 

                Indemnifications
                  Relating to FCPA Subject Matters

                 

              	
                21

                 

              
	
                 

                3.5

                 

              	
                 

                Indemnifications
                  Relating to Barracuda-Caratinga Project

                 

              	
                26

                 

              
	
                 

                3.6

                 

              	
                 

                Indemnification
                  Obligations Net of Insurance Proceeds and Other Amounts

                 

              	
                28

                 

              
	
                 

                3.7

                 

              	
                 

                Procedures
                  for Indemnification of Third Party Claims

                 

              	
                29

                 

              
	
                 

                3.8

                 

              	
                 

                Additional
                  Matters

                 

              	
                30

                 

              
	
                 

                3.9

                 

              	
                 

                Remedies
                  Cumulative

                 

              	
                31

                 

              
	
                 

                3.10

                 

              	
                 

                Survival
                  of Indemnities

                 

              	
                31

                 

              
	
                 

                3.11

                 

              	
                 

                Indemnification
                  of Directors and Officers

                 

              	
                31

                 

              
	
                 

                3.12

                 

              	
                 

                Mitigation
                  of Damages

                 

              	
                31

                 

              
	 	 
	
                 

                ARTICLE
                  IV THE IPO AND ACTIONS PENDING THE IPO

                 

              	
                31

                 

              
	 	 	 
	
                 

                4.1

                 

              	
                 

                Transactions
                  Prior to the IPO

                 

              	
                31

                 

              
	
                 

                4.2

                 

              	
                 

                Use
                  of Proceeds

                 

              	
                32

                 

              
	
                 

                4.3

                 

              	
                 

                Cooperation
                  for IPO

                 

              	
                32

                 

              
	
                 

                4.4

                 

              	
                 

                Conditions
                  Precedent to Consummation of the IPO

                 

              	
                32

                 

              
	 	 
	
                 

                ARTICLE
                  V CORPORATE GOVERNANCE AND OTHER MATTERS

                 

              	
                34

                 

              
	 	 	 
	
                 

                5.1

                 

              	
                 

                Charter
                  and Bylaws

                 

              	
                34

                 

              
	
                 

                5.2

                 

              	
                 

                KBR
                  Board Representation

                 

              	
                34

                 

              
	
                 

                5.3

                 

              	
                 

                Committees

                 

              	
                36

                 

              
	
                 

                5.4

                 

              	
                 

                Subscription
                  Right.

                 

              	
                36

                 

              
	
                 

                5.5

                 

              	
                 

                Issuance
                  of Stock

                 

              	
                38

                 

              
	
                 

                5.6

                 

              	
                 

                Settlement
                  of KBR Benefit Plan Awards

                 

              	
                38

                 

              
	
                 

                5.7

                 

              	
                 

                Applicability
                  of Rights to Parent in the Event of an Acquisition

                 

              	
                39

                 

              
	
                 

                5.8

                 

              	
                 

                Transfer
                  of Halliburton’s Rights Under Article V

                 

              	
                39

                 

              
	
                 

                5.9

                 

              	
                 

                Restricted
                  Opportunities Under KBR Charter

                 

              	
                39

                 

              
	 	 
	
                 

                ARTICLE
                  VI SUBSEQUENT TRANSACTION

                 

              	
                40

                 

              
	 	 	 
	
                 

                6.1

                 

              	
                 

                Sole
                  Discretion of Halliburton

                 

              	
                40

                 

              
	
                 

                6.2

                 

              	
                 

                Cooperation
                  for Halliburton Transfers

                 

              	
                40

                 

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      
        	 	 	 
	
                 

                6.3

                 

              	
                 

                Cooperation
                  for Halliburton Distribution

                 

              	
                40

                 

              
	
                 

                6.4

                 

              	
                 

                Registration
                  Rights Agreement

                 

              	
                41

                 

              
	 	 
	
                 

                ARTICLE
                  VII ARBITRATION; DISPUTE RESOLUTION

                 

              	
                41

                 

              
	 	 	 
	
                 

                7.1

                 

              	
                 

                Agreement
                  to Arbitrate

                 

              	
                41

                 

              
	
                 

                7.2

                 

              	
                 

                Escalation

                 

              	
                42

                 

              
	
                 

                7.3

                 

              	
                 

                Demand
                  for Arbitration

                 

              	
                42

                 

              
	
                 

                7.4

                 

              	
                 

                Arbitrators

                 

              	
                43

                 

              
	
                 

                7.5

                 

              	
                 

                Hearings

                 

              	
                43

                 

              
	
                 

                7.6

                 

              	
                 

                Discovery
                  and Certain Other Matters

                 

              	
                44

                 

              
	
                 

                7.7

                 

              	
                 

                Certain
                  Additional Matters

                 

              	
                45

                 

              
	
                 

                7.8

                 

              	
                 

                Continuity
                  of Service and Performance

                 

              	
                45

                 

              
	
                 

                7.9

                 

              	
                 

                Law
                  Governing Arbitration Procedures

                 

              	
                45

                 

              
	 	 
	
                 

                ARTICLE
                  VIII COVENANTS AND OTHER MATTERS

                 

              	
                46

                 

              
	 	 	 
	
                 

                8.1

                 

              	
                 

                Other
                  Agreements

                 

              	
                46

                 

              
	
                 

                8.2

                 

              	
                 

                Further
                  Instruments

                 

              	
                46

                 

              
	
                 

                8.3

                 

              	
                 

                Provision
                  of Corporate Records

                 

              	
                46

                 

              
	
                 

                8.4

                 

              	
                 

                Agreement
                  For Exchange of Information

                 

              	
                47

                 

              
	
                 

                8.5

                 

              	
                 

                Auditors
                  and Audits; Annual and Quarterly Statements and Accounting

                 

              	
                49

                 

              
	
                 

                8.6

                 

              	
                 

                Audit
                  Rights

                 

              	
                52

                 

              
	
                 

                8.7

                 

              	
                 

                Preservation
                  of Legal Privileges

                 

              	
                52

                 

              
	
                 

                8.8

                 

              	
                 

                Payment
                  of Expenses

                 

              	
                53

                 

              
	
                 

                8.9

                 

              	
                 

                Governmental
                  Approvals

                 

              	
                53

                 

              
	
                 

                8.10

                 

              	
                 

                Continuance
                  of Halliburton Credit Support

                 

              	
                53

                 

              
	
                 

                8.11

                 

              	
                 

                Confidentiality

                 

              	
                56

                 

              
	
                 

                8.12

                 

              	
                 

                Receipt
                  of Notices

                 

              	
                57

                 

              
	
                 

                8.13

                 

              	
                 

                Non
                  Solicitation of Employees

                 

              	
                58

                 

              
	
                 

                8.14

                 

              	
                 

                Halliburton
                  Policies and Procedures

                 

              	
                58

                 

              
	
                 

                8.15

                 

              	
                 

                Antitrust
                  Matters

                 

              	
                59

                 

              
	
                 

                8.16

                 

              	
                 

                Cooperation
                  for Litigation

                 

              	
                60

                 

              
	
                 

                8.17

                 

              	
                 

                Performance
                  Standard

                 

              	
                60

                 

              
	 	 
	
                 

                ARTICLE
                  IX MISCELLANEOUS

                 

              	
                60

                 

              
	 	 	 
	
                 

                9.1

                 

              	
                 

                Limitation
                  of Liability

                 

              	
                60

                 

              
	
                 

                9.2

                 

              	
                 

                Conflicting
                  Agreements; Entire Agreement

                 

              	
                60

                 

              
	
                 

                9.3

                 

              	
                 

                Governing
                  Law

                 

              	
                61

                 

              
	
                 

                9.4

                 

              	
                 

                Termination

                 

              	
                61

                 

              
	
                 

                9.5

                 

              	
                 

                Notices

                 

              	
                61

                 

              
	
                 

                9.6

                 

              	
                 

                Counterparts

                 

              	
                62

                 

              
	
                 

                9.7

                 

              	
                 

                No
                  Third Party Beneficiaries; Assignment

                 

              	
                62

                 

              
	
                 

                9.8

                 

              	
                 

                Severability

                 

              	
                62

                 

              
	
                 

                9.9

                 

              	
                 

                Failure
                  or Indulgence Not Waiver; Remedies Cumulative

                 

              	
                62

                 

              
	
                 

                9.10

                 

              	
                 

                Amendment

                 

              	
                62

                 

              
	
                 

                9.11

                 

              	
                 

                Authority

                 

              	
                62

                 

              
	
                 

                9.12

                 

              	
                 

                Interpretation

                 

              	
                63

                 

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      MASTER
        SEPARATION AGREEMENT 

       

      THIS
        MASTER SEPARATION AGREEMENT (this “Agreement”)
        is
        entered into as of November 20, 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 meanings
        set forth in Article I hereof. 

       

      RECITALS
        

       

      WHEREAS,
        KBR is an indirect wholly-owned subsidiary of Halliburton; 

       

      WHEREAS,
        KBR, together with its direct and indirect U.S. and foreign subsidiaries,
        provides a wide range of services, including global engineering, procurement,
        construction, technology and other services, to energy and industrial customers
        and government entities worldwide; 

       

      WHEREAS,
        the Board of Directors of Halliburton has determined that it is appropriate
        and
        desirable, on the terms and conditions contemplated hereby, to initiate the
        separation of the KBR Group from the Halliburton Group, and has approved
        this
        Agreement and the transactions contemplated hereby; 

       

      WHEREAS,
        Halliburton currently contemplates that KBR will effect an initial public
        offering (“IPO”)
        of
        less than 20% of the shares of KBR Common Stock pursuant to a registration
        statement on Form S-1 filed with the Commission pursuant to the Securities
        Act;

       

      WHEREAS,
        the parties intend to set forth in this Agreement, including the Schedules
        hereto and the Ancillary Agreements contemplated hereby, the principal
        arrangements between and among them and the members of their respective Groups
        regarding the separation of the KBR Group from the Halliburton Group, the
        IPO
        and certain future transactions. 

       

      NOW,
        THEREFORE, in consideration of the foregoing and the covenants and agreements
        set forth below, the parties hereto agree as follows: 

       

      ARTICLE
        I

       

      DEFINITIONS
        

       

      The
        following terms used in this Agreement are defined as set forth below or
        in the
        sections indicated, as applicable: 

       

      “AAA”
has
        the
        meaning set forth in Section 7.4. 

       

      “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. 

       

      An
        “Affiliate”
of
        any
        Person means another Person that directly, or indirectly through one or more
        intermediaries, controls, is controlled by, or is under common control with,
        such Person. For this purpose “control” means the possession, directly or
        indirectly, of the power to direct or cause the direction of the management
        and
        policies of the Person controlled, whether through ownership of voting
        securities, by contract or otherwise. Notwithstanding anything herein to
        the
        contrary, no member of the KBR Group shall be deemed to be an Affiliate of
        any
        member of the Halliburton Group, and no member of the Halliburton Group shall
        be
        deemed to be an Affiliate of any member of the KBR Group. 

       

      “Agreement”
has
        the
        meaning given such term in the Preamble. 

       

      “Ancillary
        Agreements”
has
        the
        meaning set forth in Section 2.3. 

       

      “Antitrust
        Matters”
are
        alleged or actual violations of antitrust, competition or other applicable
        Law
        that occurred prior to the date of this Agreement relating to investigations
        by
        the DOJ or other Governmental Authorities into whether in the conduct of
        the KBR
        Business (including, without limitation, conduct by a member of the KBR Group
        or
        its current or former directors, officers, employees, agents or representatives)
        coordinated bidding with one or more competitors on projects occurred, as
        described under the heading “Bidding practices investigation” in Note 12 of the
        condensed consolidated financial statements included in the Halliburton
        Quarterly Report on Form 10-Q for the quarter ended September 30, 2006.

       

      “Applicable
        FCPA Law”
means
        (a) the Council of Europe Criminal Law Convention on Corruption entered
        into force July 1, 2002, (b) Council of Europe Civil Law Convention on
        Corruption entered into force November 1, 2003, (c) Organization of
        American States Inter-American Convention against Corruption adopted on
        March 29, 1996, (d) African Union Convention on Preventing and
        Combating Corruption adopted July 11, 2003, (e) United Nations
        Convention against Corruption adopted October 31, 2003, (f) OECD
        Convention on Combating Bribery of Foreign Public Officials in International
        Business Transactions adopted November 21, 1997, (g) the FCPA and
        (h) any and all implementing legislation in respect of clauses
        (a) through (g) above, including, without limitation, any laws,
        statutes, regulations and rules issued by any Governmental Authority of similar
        purpose and scope. 

       

      “Applicable
        Deadline”
has
        the
        meaning set forth in Section 7.3. 

       

      “Arbitration
        Demand Date”
has
        the
        meaning set forth in Section 7.3. 

       

      “Arbitration
        Demand Notice”
has
        the
        meaning set forth in Section 7.3. 

       

      “Barracuda-Caratinga
        Bolts Matter”
means
        threatened, pending or future claims against any KBR B-C Indemnitee by
        Barracuda & Caratinga Leasing Company B.V. and/or Petrobras or its
        Affiliates, and threatened, pending or future claims by any KBR B-C Indemnitee
        against Barracuda & Caratinga Leasing Company B.V. and/or Petrobras or
        its Affiliates, arising out of the subsea flow-line bolts installed in
        connection with the Barracuda-Caratinga Project. 

       

      “Barracuda-Caratinga
        Project”
means
        the turnkey engineering, procurement and construction contract, dated as
        of
        June 30, 2000, as amended, and related agreements by and among members of
        the KBR Group, Barracuda & Caratinga Leasing Company B.V., Petrobras or
        its Affiliates relating to the development of the Barracuda and Caratinga
        oilfields located in the Campos Basin offshore of Brazil. 

       

      “best
        efforts”
means
        a
        Person’s good faith best efforts to achieve such goal as expeditiously as
        possible, which may require the incurrence of expense or hardship in order
        to
        achieve the reasonable expectations of the parties as agreed hereunder.

       

      “Business
        Day”
means
        a
        day other than a Saturday, a Sunday or a day on which banking institutions
        located in the State of Texas are authorized or obligated by law or executive
        order to close. 

       

      “Code”
means
        the Internal Revenue Code of 1986, as amended, or any successor statute.
        

       

      “Commission”
means
        the U.S. Securities and Exchange Commission. 

       

      “Confidential
        Information”
has
        the
        meaning set forth in Section 8.11. 

       

      “Credit
        Support Agreements”
means
        any and all surety bonds, letters of credit, reimbursement agreements, surety
        contracts, performance guarantees, financial guarantees, indemnities and
        other
        credit support instruments and agreements relating to or for the benefit
        of the
        KBR Business or a customer or lender thereof for which a member of the
        Halliburton Group is a primary obligor, secondary obligor, guarantor,
        indemnitor, account party or otherwise may become liable (i) entered into
        or obtained prior to the Separation Date and (ii) entered into or obtained
        following the Separation Date as provided under Section 8.10(b) hereof or
        at Halliburton’s sole discretion. Non-exclusive lists of certain Credit Support
        Agreements are set forth on Schedule
        C-1
        (Surety
        Bonds and Related Indemnity Agreements), Schedule
        C-2
        (Letters
        of Credit and Related Reimbursement Agreements), Schedule
        C-3
        (Performance and Financial Guarantees) and Schedule
        C-4 (Other
        Credit Support Agreements). 

       

      “Current
        Investigations”
        means
        the investigations ongoing as of the date hereof by (a) the DOJ,
        (b) the Commission, (c) the Tribunal de Grande Instance de Paris
        (investigation number: 25/03 and Public Prosecution Service ID: P 02/29192509)
        in the French Republic, (d) the Serious Frauds Office in the United
        Kingdom, (e) officials at the Federal Police Office (proceeding B 0152492
        BOT) of the Swiss Confederation, (f) the Economic and Financial Crimes
        Commission, an agency of the executive branch of the government of the Federal
        Republic of Nigeria, (g) the Committee on Public Petitions of the House of
        Representatives of the Federal Republic of Nigeria, and (h) a public
        prosecutor or an investigating judge in the People’s Democratic Republic of
        Algeria with respect to contracts awarded to Brown & Root - Condor Spa.

       

      “Disposition”
means
        any resolution or termination of any Proceeding, whether adjudicated or
        consensual. 

       

      “Distribution”
means
        a
        tax-free distribution under Section 355 of the Code or any corresponding
        provision of any successor statute of all or any portion of the KBR Common
        Stock
        beneficially owned by Halliburton to Halliburton stockholders by way of a
        dividend, exchange or otherwise. 

       

      “DOJ”
means
        the United States Department of Justice. 

       

      “Employee
        Matters Agreement”
means
        the Employee Matters Agreement dated the date hereof between Halliburton
        and
        KBR. 

       

      “Environmental
        Law”
means
        any and all Laws or determinations of any Governmental Authority (including
        common law duties established by courts or other Governmental Authorities)
        pertaining to pollution or the protection of human health, the environment,
        natural resources or plant or animal species including Laws relating to
        emissions, discharges, releases or threatened releases of pollutants,
        contaminants or chemical, industrial, hazardous, radioactive, or toxic materials
        or wastes into ambient or indoor air, surface water, ground water or lands
        or
        otherwise relating to the manufacture, processing, distribution (including
        the
        sale or marketing of goods containing), use, treatment, storage, disposal,
        transportation or handling of pollutants, contaminants or chemical, industrial,
        hazardous. radioactive, or toxic materials or wastes, in any jurisdiction,
        federal, state, local or foreign, in which the Halliburton Business or KBR
        Business is or has operated; including, without limitation, in United States
        jurisdictions the Comprehensive Environmental Response, Compensation, and
        Liability Act, 42 U.S.C. Section 9601 et
        seq.
        (“CERCLA”), the Superfund Amendments Reauthorization Act, 42 U.S.C.
        Section 11001 et
        seq.,
        the
        Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
        seq.,
        the
        Clean Air Act, 42 U.S.C. Section 7401 et
        seq.,
        the
        Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et
        seq.,
        the Oil
        Pollution Act of 1990, 33 U.S.C. Section 2701 et
        seq.,
        the
        Toxic Substances Control Act, 15 U.S.C. Section 2601 et
        seq.,
        and the
        Safe Drinking Water Act, 42 U.S.C. Section 300f et
        seq.,
        other
        similar state or local laws or laws or decrees in non-U.S. jurisdictions,
        and
        all other environmental conservation and protection laws, both foreign and
        domestic, and any applicable state or local statutes, and the regulations
        promulgated thereto, as each has been and may be amended and supplemented
        from
        time to time, provided,
        however,
        that
        Environmental Laws shall not include Laws pertaining primarily to workplace
        safety, such as the Occupational Safety and Health Act, except to the extent
        such Laws govern environmental conditions, including the management of
        asbestos-containing materials, or employee exposure or potential exposure
        to
        pollutants, contaminants or chemical, industrial, hazardous, radioactive,
        or
        toxic materials or wastes. 

       

      “Escalation
        Notice”
has
        the
        meaning set forth in Section 7.2. 

       

      “Excess
        Director Number”
has
        the
        meaning set forth in Section 5.2. 

       

      “Exchange
        Act”
means
        the Securities Exchange Act of 1934, as amended, or any successor statute.
        

       

      “Existing
        Authority”
has
        the
        meaning set forth in Section 8.9. 

       

      “FCPA”
means
        the United States Foreign Corrupt Practices Act of 1977, as amended.

       

      “FCPA
        Subject Matters”
are
        alleged or actual violations of the FCPA or other Applicable FCPA Law that
        occurred prior to the date of this Agreement in the conduct of the KBR Business
        (including, without limitation, conduct by a member of the KBR Group or its
        current or former directors, officers, employees, agents or representatives)
        in
        connection with (a) the
        construction and subsequent expansion by TSKJ of a natural gas liquefaction
        complex and related facilities at Bonny Island in Rivers State, Nigeria or
        (b) such other projects, whether located inside or outside of Nigeria, in
        each case including without limitation the use of agents in connection with
        such
        projects, that are identified by Governmental Authorities of the United States,
        France, the United Kingdom, Switzerland, Nigeria or Algeria in connection
        with
        the Current Investigations and the continuation of such Current Investigations
        after the date hereof. 

       

      “Governmental
        Approvals”
means
        any notices, reports or other filings to be made, or any consents,
        registrations, approvals, permits or authorizations to be obtained from,
        any
        Governmental Authority. 

       

      “Governmental
        Authority”
means
        any nation or government, any state, province, city, municipal entity or
        other
        political subdivision thereof, and any governmental, executive, legislative,
        judicial, administrative or regulatory agency, department, authority,
        instrumentality, commission, board, bureau or similar body, whether federal,
        state, provincial, territorial, local or foreign. 

       

      “Governmental
        FCPA Claim”
means
        a
        claim, whether civil or criminal, made by any Governmental Authority of the
        United States, France, the United Kingdom, Switzerland, Nigeria or Algeria,
        or
        by a court of competent jurisdiction therein relating to the FCPA Subject
        Matters. 

       

      “Group”
means
        either the Halliburton Group or the KBR Group, as the context requires.

       

      “Halliburton”
has
        the
        meaning given such term in the Preamble. 

       

      “Halliburton’s
        Auditors”
means
        Halliburton’s independent certified public accountants. 

       

      “Halliburton
        Books and Records”
means
        originals or true and complete copies thereof, including electronic copies
        (if
        available) of (a) minute books, corporate charters and bylaws or comparable
        constitutive documents, records of share issuances and related corporate
        records, of the Halliburton Group; (b) all books and records primarily
        relating to (i) Persons who are employees of the Halliburton Group as of
        the Separation Date, (ii) the purchase of materials, supplies and services
        for the Halliburton Business and (iii) dealings with customers of the
        Halliburton Business; and (c) all files relating to any Action the
        Liability with respect to which is a Halliburton Liability. 

       

      “Halliburton
        Business”
means
        any business of the Halliburton Group (whether conducted independently or
        in
        association with one or more third parties through a partnership, joint venture
        or other mutual enterprise) other than the KBR Business, including without
        limitation the Non-Novated ESG Contracts. The parties intend that each member
        of
        the KBR Group which is party to a Non-Novated ESG Contract shall remain a
        party
        thereto following the Separation, and the parties hereby agree that each
        Non-Novated ESG Contract shall be considered to be part of the Halliburton
        Business for all purposes under this Agreement. 

       

      “Halliburton
        Cash Management Note”
means
        the promissory note dated as of December 1, 2005 made by Halliburton Energy
        Services, Inc. to KBR Holdings, LLC. 

       

      “Halliburton
        Designee”
has
        the
        meaning set forth in Section 5.2. 

       

      “Halliburton
        Environmental Liabilities”
means
        all Liabilities arising under or relating to Environmental Law to the extent,
        as
        between the Halliburton Group and the KBR Group, such Liabilities relate
        to,
        arise out of or result from: (a) the ownership, operation or conduct of the
        Halliburton Business at any time prior to, on or after the Separation Time
        except for those Liabilities included in clause (ii) of the definition of
“KBR Environmental Liabilities” below, or (b) any properties or assets
        owned, leased, used or held for use in connection with any terminated, divested
        or discontinued business or other activities which, at the time of such
        termination, divestiture or discontinuation, related to the Halliburton Business
        as then conducted. It is understood that, consistent with the foregoing,
        Halliburton Environmental Liabilities shall include without limitation all
        Liabilities arising under or relating to Environmental Law attributable to
        (1) investigation or remediation activities involving the sites listed on
        Part 1 of the attached Schedule
        D;
        and
        (2) the transportation, treatment, storage, or disposal of waste generated
        by the operations of members of the Halliburton Group, including liability
        under
        CERCLA or a comparable law allocated by the applicable Governmental Authority
        or
        potentially responsible party group, as appropriate, to members of the
        Halliburton Group, which shall include the liability ultimately allocated
        to
        members of the Halliburton Group at the sites listed on Part 2 of Schedule
        D.
        

       

      “Halliburton
        Group”
means
        Halliburton, each current and former subsidiary of Halliburton (other than
        any
        member of the KBR Group), including the subsidiaries set forth in Schedule
        A,
        and
        each Person that becomes a subsidiary of Halliburton after the Separation
        Time.

       

      “Halliburton
        Indemnified Barracuda-Caratinga Matters”
has
        the
        meaning set forth in Section 3.5. 

       

      “Halliburton
        Indemnified FCPA Matters”
has
        the
        meaning set forth in Section 3.4. 

       

      “Halliburton
        Indemnitees”
has
        the
        meaning set forth in Section 3.2. 

       

      “Halliburton
        Liabilities”
shall
        mean (a) any and all Liabilities that are expressly contemplated by a Prior
        Transfer Agreement, this Agreement or any Ancillary Agreement as Liabilities
        to
        be retained or assumed by Halliburton or any other member of the Halliburton
        Group, (b) all agreements, obligations and Liabilities of any member of the
        Halliburton Group under a Prior Transfer Agreement, this Agreement or any
        of the
        Ancillary Agreements, (c) any liability arising under or relating to a
        claim made against Halliburton by a Halliburton stockholder in its capacity
        as
        such other than a claim for which KBR and the KBR Group have agreed to indemnify
        Halliburton and the Halliburton Group pursuant to Section 3.2(f) hereof and
        (d) any Liability of any member of the Halliburton Group other than the KBR
        Liabilities. 

       

      “Halliburton
        Transferee”
has
        the
        meaning set forth in Section 5.7. 

       

      “Indebtedness”
of
        any
        Person means (a) all obligations of such Person for borrowed money,
        (b) all obligations of such Person evidenced by bonds, debentures, notes or
        similar instruments, (c) all obligations of such Person upon which interest
        charges are customarily paid, (d) all obligations of such Person under
        conditional sale or other title retention agreements relating to property
        or
        assets purchased by such Person, (e) all obligations of such Person issued
        or assumed as the deferred purchase price of property or services, (f) all
        Indebtedness of others secured by (or for which the holder of such Indebtedness
        has an existing right, contingent or otherwise, to be secured by) any mortgage,
        lien, pledge, or other encumbrance on property owned or acquired by such
        Person,
        whether or not the obligations secured thereby have been assumed, (g) all
        guarantees by such Person of Indebtedness of others, (h) all capital lease
        obligations of such Person and (i) all securities or other similar
        instruments convertible or exchangeable into any of the foregoing, but excluding
        daily cash overdrafts associated with routine cash operations. 

       

      “Indemnifying
        Party”
has
        the
        meaning set forth in Section 3.6. 

       

      “Indemnitee”
shall
        have the meaning set forth in Section 3.6. 

       

      “Indemnity
        Payment”
has
        the
        meaning set forth in Section 3.6. 

       

      “Information”
means
        information, whether or not patentable or copyrightable, in written, oral,
        electronic or other tangible or intangible forms, stored in any medium,
        including studies, reports, records, books, contracts, instruments, surveys,
        discoveries, ideas, concepts, know-how, techniques, designs, specifications,
        drawings, blueprints, diagrams, models, prototypes, samples, flow charts,
        data,
        computer data, disks, diskettes, tapes, computer programs or other software,
        marketing plans, customer names, communications by or to attorneys (including
        attorney-client privileged communications), memos and other materials prepared
        by attorneys or under their direction (including attorney work product),
        and
        other technical, financial, employee or business information or data, but
        excluding the Halliburton Books and Records and the KBR Books and Records.
        

       

      “Insurance
        Proceeds”
means
        those monies: 

       

      (a)
        received by an insured from an insurance carrier; or 

       

      (b)
        paid
        by an insurance carrier on behalf of the insured; 

       

      in
        any
        such case net of any applicable premium adjustments (including reserves and
        retrospectively rated premium adjustments) and net of any costs or expenses
        (including allocated costs of in-house counsel and other personnel) incurred
        in
        the collection thereof. 

       

      “Intercompany
        Note”
means
        the promissory note dated as of December 1, 2005 made by KBR Holdings, LLC
        to Halliburton Energy Services, Inc. in an amount not to exceed $489 million.
        

       

      “Intellectual
        Property Matters Agreement”
means
        the Intellectual Property Matters Agreement dated the date hereof between
        Halliburton and KBR. 

       

      “IPO”
has
        the
        meaning given such term in the Recitals. 

       

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

       

      “IPO
        Prospectus”
means
        the prospectus included in the IPO Registration Statement, including any
        prospectus subject to completion, final prospectus or any supplement to or
        amendment of any of the foregoing. 

       

      “IPO
        Registration Statement”
means
        the Registration Statement on Form S-1 (Registration No. 333-133302) of KBR
        filed with the Commission pursuant to the Securities Act, registering the
        shares
        of KBR Common Stock to be issued in the IPO, together with all amendments
        thereto. 

       

      “Issuance
        Event”
has
        the
        meaning set forth in Section 5.4. 

       

      “Issuance
        Event Date”
has
        the
        meaning set forth in Section 5.4. 

       

      “KBR”
has
        the
        meaning given such term in the Preamble. 

       

      “KBR
        Auditors”
means
        KBR’s independent certified public accountants. 

       

      “KBR
        Balance Sheets”
means
        (a) the KBR Holdings, LLC Consolidated Balance Sheet as of
        December 31, 2005 and (b) the KBR Holdings, LLC Consolidated Balance
        Sheet as of September 30, 2006. 

       

      “KBR
        B-C Indemnitees”
shall
        mean KBR and its Majority Owned Subsidiaries as of the date hereof.

       

      “KBR
        Books and Records”
means
        originals or true and complete copies thereof, including electronic copies
        (if
        available), of (a) all minute books, corporate charters and bylaws or
        comparable constitutive documents, records of share issuances and related
        corporate records of the KBR Group; (b) all books and records primarily
        relating to (i) Persons who are employees of the KBR Group as of the
        Separation Date, (ii) the purchase of materials, supplies and services for
        the KBR Business and (iii) dealings with customers of the KBR Business; and
        (c) all files relating to any Action the Liability with respect to which is
        a KBR Liability; except that no portion of the Halliburton Books and Records
        shall be included in the “KBR Books and Records.” 

       

      “KBR
        Business”
means
        (a) the business and operations conducted by KBR and the members of the KBR
        Group (whether conducted independently or in association with one or more
        third
        parties through a partnership, joint venture or other mutual enterprise)
        prior
        to, on and after the Separation Time, including without limitation the following
        global engineering, procurement, construction, technology and other services
        provided to energy and industrial customers and government entities worldwide
        as
        conducted by the Energy and Chemicals and the Government and Infrastructure
        segments of Halliburton (such segments as referenced in the Halliburton Form
        10-K for the year ended December 31, 2005) prior to the Separation:

       

      (i)
        construction, maintenance and logistics services for government 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 operation and management, with services that include design,
        construction, surface/subsurface 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)
        downstream engineering and construction capabilities, including global
        engineering execution centers, as well as engineering, construction and program
        management of liquefied natural gas, ammonia, petrochemicals, crude oil
        refineries and natural gas plants; 

       

      (vii)
        upstream oil and gas 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 fertilizers and synthesis gas, olefins,
        refining and chemicals and polymers; 

       

      (x)
        consulting services in the form of expert technical and management advice
        that
        includes studies, conceptual and detailed engineering, project management,
        construction supervision and design, and construction verification or
        certification in upstream, midstream and downstream markets; 

       

      (xi)
        effective from and after April 11, 2006, the business and operations of
        MMM-SS Holdings, LLC and its subsidiaries MMM S.R.L. de C.V., AGRH S.R. L.
        de
        C.V. and CCC Cayman Ltd.; and 

       

      (xii)
        the
        Non-Novated KBR Contracts. The parties intend that each member of the
        Halliburton Group which is party to a Non-Novated KBR Contract shall remain
        a
        party thereto following the Separation, and the parties hereby agree that
        each
        Non-Novated KBR Contract shall be considered to be part of the KBR Business
        for
        all purposes under this Agreement; 

       

      and
        (b) except as otherwise specifically provided herein, any terminated,
        divested or discontinued business or operations that at the time of such
        termination, divestiture or discontinuation related primarily to the KBR
        Business as then conducted. 

       

      “KBR
        Cash Management Note”
means
        the promissory note dated as of December 1, 2005 made by KBR Holdings, LLC
        to Halliburton Company and Halliburton Energy Services, Inc. 

       

      “KBR
        Charter”
means
        the Amended and Restated Certificate of Incorporation of KBR as in effect
        on the
        date hereof. 

       

      “KBR
        Common Stock”
means
        Common Stock, par value $0.001 per share, of KBR. 

       

      “KBR
        Credit Agreement”
means
        the $850 million Five Year Revolving Credit Agreement dated as of
        December 16, 2005 among KBR Holdings, LLC, as borrower, and the issuing
        banks named therein, as amended by Amendment No. 1 dated April 13,
        2006 and Amendment No. 2 dated October 31, 2006, and as further
        amended from time to time. 

       

      “KBR
        Debt Obligations”
means
        all Indebtedness of KBR or any other member of the KBR Group, including without
        limitation the Intercompany Note but excluding all Indebtedness of any member
        of
        the Halliburton Group to the extent it constitutes Indebtedness of KBR by
        virtue
        of clause (f) or clause (g) of the definition of Indebtedness. KBR
        Debt Obligations shall include, as of the date of the most recent balance
        sheet
        of KBR Holdings, LLC included in the IPO Prospectus, the Indebtedness of
        KBR
        Holdings, LLC reflected on such balance sheet. 

       

      “KBR
        Environmental Liabilities”
means
        all Liabilities arising under or relating to Environmental Law to the extent,
        as
        between the Halliburton Group and the KBR Group, such Liabilities relate
        to,
        arise out of, or result from (i) the ownership, operation or conduct of the
        KBR Business at any time prior to, on or after the Separation Time except
        for
        those Liabilities included in clause (b) of the definition of “Halliburton
        Environmental Liabilities” above, or (ii) any properties or assets owned,
        leased, used or held for use in connection with any terminated, divested
        or
        discontinued business or other activities which, at the time of such
        termination, divestiture or discontinuation, related to the KBR Business
        as then
        conducted. It is understood that, consistent with the foregoing, KBR
        Environmental Liabilities shall include without limitation all Liabilities
        arising under or relating to Environmental Law attributable to
        (1) investigation or remediation activities involving the sites listed on
        Part 1 of the attached Schedule
        E;
        and
        (2) the transportation, treatment, storage, or disposal of waste generated
        by the operations of members of the KBR Group, including liability under
        CERCLA
        or a comparable law allocated by the applicable Governmental Authority or
        potentially responsible party group, as appropriate, to members of the KBR
        Group, which shall include the liability ultimately allocated to members
        of the
        KBR Group at the sites listed on Part 2 of Schedule
        E.
        

       

      “KBR
        FCPA Indemnitees”
shall
        mean KBR and its Majority Owned Subsidiaries as of the date hereof.

       

      “KBR
        Group”
means
        KBR, each current and former subsidiary of KBR, including the subsidiaries
        set
        forth in Schedule
        B,
        and
        each Person that becomes a subsidiary of KBR after the Separation Time.

       

      “KBR
        Indemnitees”
has
        the
        meaning assigned to that term in Section 3.3. 

       

      “KBR
        Liabilities”
shall
        mean (without duplication): 

       

      (i)
        any
        and all Liabilities that are expressly contemplated by a Prior Transfer
        Agreement, this Agreement or any Ancillary Agreement to be assumed by KBR
        or any
        member of the KBR Group, and all agreements, obligations and Liabilities
        of any
        member of the KBR Group under a Prior Transfer Agreement, this Agreement
        or any
        of the Ancillary Agreements; 

       

      (ii)
        all
        Liabilities (other than Taxes that are not treated as liabilities of KBR
        under
        the Tax Sharing Agreement) primarily relating to, arising out of or resulting
        from the operation of the KBR Business, as conducted at any time prior to,
        on or
        after the Separation Time including, without limitation: 

       

      (A)
        any
        Liability relating to, arising out of or resulting from any act or failure
        to
        act by any director, officer, employee, agent or representative of KBR (whether
        or not such act or failure to act is or was within such Person’s authority);

       

      (B)
        any
        KBR Environmental Liabilities; 

       

      (C)
        liabilities primarily relating to, arising out of or resulting from any KBR
        Assets; 

       

      (D)
        the
        KBR Debt Obligations; and 

       

      (E)
        any
        liability arising under or relating to a claim made against KBR by a KBR
        stockholder in its capacity as such (other than Halliburton) other than a
        claim
        for which Halliburton and the Halliburton Group have agreed to indemnify
        KBR and
        the KBR Group pursuant to Section 3.3(f) hereof; and 

       

      (iii)
        all
        Liabilities reflected as liabilities or obligations of KBR in the KBR Balance
        Sheets, subject to any discharge of such Liabilities subsequent to the date
        of
        such KBR Balance Sheets. 

       

      Notwithstanding
        the foregoing, the KBR Liabilities shall not include the Halliburton
        Liabilities. 

       

      “KBR
        Non-Voting Stock”
means
        any class or series of KBR capital stock, and any warrant, option or right
        in
        such stock, other than KBR Voting Stock. 

       

      “KBR
        Voting Stock”
means
        the KBR Common Stock and any other capital stock of KBR entitled to vote
        generally in the election of directors but excluding any class or series
        of
        capital stock only entitled to vote in the event of dividend arrearages thereon,
        whether or not at the time of determination there are any such dividend
        arrearages. 

       

      “Law”
means
        any law, statute, ordinance, rule, regulation, order, writ, judgment, injunction
        or decree of any Governmental Authority. 

       

      “Liabilities”
shall
        mean any and all Indebtedness, liabilities and obligations of any nature,
        whether accrued, fixed or contingent, mature or inchoate, known or unknown,
        reflected on a balance sheet or otherwise, including, but not limited to,
        those
        arising under any law, rule, regulation, Action, order, injunction or consent
        decree of any Governmental Authority or any judgment of any court of any
        kind or
        any award of any arbitrator of any kind, and those arising under any contract,
        commitment or undertaking. 

       

      “Losses”
shall
        mean any and all damages, losses, deficiencies, Liabilities, obligations,
        penalties, judgments, settlements, claims, payments, fines, interest costs
        and
        expenses (including, without limitation, the costs and expenses of any and
        all
        Actions and demands, assessments, judgments, settlements and compromises
        relating thereto, and attorneys’, accountants’, consultants’ and other
        professionals’ fees and expenses incurred in the investigation or defense
        thereof or the enforcement of rights hereunder), excluding losses that are
        special, indirect, derivative or consequential, lost profits or punitive
        damages
        (other than punitive damages awarded to any third party against an Indemnified
        Party). 

       

      “Majority
        Owned Subsidiary”
of
        any
        Person means any corporation (including a business trust), partnership, joint
        stock company, trust, unincorporated association, joint venture or other
        entity
        of which more than 50% of the outstanding capital stock, securities or other
        ownership interests having ordinary voting power to elect directors of such
        corporation or, in the case of any other entity, other persons performing
        similar functions (irrespective of whether or not at the time capital stock,
        securities or other ownership interests of any other class or classes of
        such
        corporation or such other entity shall or might have voting power upon the
        occurrence of any contingency) is, as of the date hereof, directly or indirectly
        owned by such Person, by such Person and one or more other subsidiaries of
        such
        Person or by one or more other subsidiaries of such Person. 

       

      “Market
        Price”
of
        any
        shares of KBR Voting Stock or KBR Non-Voting Stock on any date means
        (i) the last sale price during regular trading hours of such shares on such
        date on the New York Stock Exchange, Inc. or, if such shares are not listed
        thereon, on the principal national securities exchange or automated interdealer
        quotation system on which such shares are traded; or (ii) if such sale
        price is unavailable or such shares are not so traded, the value of such
        shares
        on such date determined in accordance with agreed-upon procedures reasonably
        satisfactory to Halliburton and KBR. 

       

      “Non-Novated
        ESG Contracts”
means
        those contracts and other agreements entered into by the Energy Services
        Group
        segments of Halliburton (such segments as referenced in the Halliburton Form
        10-K for the year ended December 31, 2005) prior to the Separation Date for
        which a member of the KBR Group is a signator or contract party, including
        without limitation certain contracts entered into by Kellogg Brown &
Root LLC (and its predecessor), Kellogg Brown & Root Limited, Rockwell
        B.V., Kellogg Brown & Root International, Inc., Halliburton AS, Asian
        Marine Contractors Limited, KBR Overseas, Inc., Breswater Marine Contracting
        B.V., Corporación Mexicana de Mantenimiento Integral, S. de R.L. de C.V., PT KBR
        Indonesia and Halliburton Australia Pty. Ltd. (B&R Div.). A non-exclusive
        list of outstanding contract jobs associated with the Non-Novated ESG Contracts
        is set forth on Schedule
        G
        hereto.

       

      “Non-Novated
        KBR Contracts”
means
        those contracts and other agreements entered into by the Energy and Chemicals
        or
        the Government and Infrastructure segments of Halliburton (such segments
        as
        referenced in the Halliburton Form 10-K for the year ended December 31,
        2005) prior to the Separation Date for which a member of the Halliburton
        Group
        is a signator or contract party, including without limitation certain contracts
        entered into by Servicios Professionales Petroleros, S. de R.L. de C.V.,
        Halliburton Far East Pte Ltd., Halliburton International, Inc., Servicios
        Halliburton De Venezuela, S.R.L., Halliburton West Africa Ltd., Halliburton
        Operations Nigeria Limited and Halliburton SAS. A non-exclusive list of
        outstanding contract jobs associated with the Non-Novated KBR Contracts is
        set
        forth on Schedule
        F
        hereto.

       

      “NYSE”
means
        the New York Stock Exchange, Inc. 

       

      “Ownership
        Percentage”
means
        with respect to any class or series of KBR Non-Voting Stock, at any time,
        the
        fraction, expressed as a percentage and rounded to the nearest thousandth
        of a
        percent, whose numerator is the number of shares of such class or series
        of KBR
        Non-Voting Stock beneficially owned by the Halliburton Group and whose
        denominator is the total number of outstanding shares of such class or series
        of
        KBR Non-Voting Stock; provided, however, that any shares of such KBR Non-Voting
        Stock issued by KBR in violation of its obligations under Article V of this
        Agreement shall not be deemed outstanding for the purpose of determining
        the
        Ownership Percentage. 

       

      “Penalty”
means
        a
        fine or other monetary penalty or direct monetary damage, including
        disgorgement, in each case as a result of a Governmental FCPA Claim, assessed
        against a KBR FCPA Indemnitee or paid by a KBR FCPA Indemnitee. 

       

      “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 and a Governmental Authority or any department, agency or political
        subdivision thereof. 

       

      “Prior
        Transfer”
means
        a
        transfer in contemplation of the Separation occurring prior to the Separation
        Date of any part of the KBR Business contained in the Halliburton Group to
        the
        KBR Group and an assumption in contemplation of the Separation occurring
        prior
        to the Separation Date by the KBR Group of any of the KBR Liabilities, and
        a
        transfer in contemplation of the Separation occurring prior to the Separation
        Date of any part of the Halliburton Business contained in the KBR Group to
        the
        Halliburton Group and an assumption in contemplation of the Separation occurring
        prior to the Separation Date by the Halliburton Group of any of the Halliburton
        Liabilities. 

       

      “Prior
        Transfer Agreements”
means
        all agreements, deeds, certificates, instruments or other documents entered
        into
        by a member of the Halliburton Group or a member of the KBR Group in order
        to
        implement the Prior Transfers. 

       

      “Privilege”
has
        the
        meaning set forth in Section 8.7. 

       

      “Providing
        Company”
has
        the
        meaning set forth in Section 8.6. 

       

      “reasonable
        best efforts”
means
        a
        Person’s good faith best efforts to achieve such goal as soon as reasonably
        practicable and consistent with reasonable commercial practice and without
        payment of any assignment, consent or similar fee requested by any person
        or the
        incurrence of unreasonable expense or hardship, and/or the requirement to
        engage
        in litigation. 

       

      “Receiving
        Company”
has
        the
        meaning set forth in Section 8.6. 

       

      “Registration
        Rights Agreement”
means
        the Registration Rights Agreement dated the date hereof between Halliburton
        and
        KBR. 

       

      “Regulatory
        Proceedings”
shall
        mean filings, notices, adjudicatory proceedings, rulemakings, enforcement
        actions before a Governmental Authority relating to regulatory activity,
        any
        other proceedings at or before any regulatory or administrative agency, and
        any
        investigation instituted by the Audit Committee of the Board of Directors
        of a
        Party in response to or in anticipation of the foregoing. The term shall
        also
        refer to appellate activities relating to any of the foregoing, including
        actions seeking injunctions, writs of mandamus and appeals. 

       

      “Securities
        Act”
means
        the Securities Act of 1933, as amended, or any successor statute. 

       

      “Separation”
means
        (i) the transfer of those assets (including funds relating to the KBR
        Business) relating primarily to the KBR Business as conducted immediately
        prior
        to the IPO that are contained in the Halliburton Group immediately prior
        to the
        IPO to the KBR Group and the assumption by KBR and the members of the KBR
        Group
        of the KBR Liabilities, and (ii) the transfer of those assets (including
        funds relating to the Halliburton Business) relating primarily to the
        Halliburton Business as conducted immediately prior to the IPO that are
        contained in the KBR Group immediately prior to the IPO to the Halliburton
        Group
        and the assumption by the Halliburton Group of the Halliburton Liabilities,
        all
        as more fully described in this Agreement and the Ancillary Agreements.

       

      “Separation
        Date”
has
        the
        meaning set forth in Section 2.1. 

       

      “Separation
        Time”
has
        the
        meaning set forth in Section 2.1. 

       

      “Silica
        Note”
means
        the Senior Secured Note dated January 20, 2005 made jointly and severally
        by DII Industries, LLC and Kellogg Brown & Root LLC (as successor to
        Kellogg Brown & Root, Inc., a Delaware corporation) to the DII
        Industries, LLC Silica PI Trust. 

       

      “Subscription
        Right”
has
        the
        meaning set forth in Section 5.4. 

       

      “Subscription
        Right Notice”
has
        the
        meaning set forth in Section 5.4. 

       

      “Tax
        Sharing Agreement”
means
        the Tax Sharing Agreement dated as of January 1, 2006 by and among
        Halliburton and its affiliated companies and KBR and its affiliated companies.
        

       

      “Taxes”
has
        the
        meaning set forth in the Tax Sharing Agreement. 

       

      “Third
        Party Claim”
has
        the
        meaning set forth in Section 3.7. 

       

      “Third-Party
        FCPA Claim”
means
        a
        claim resulting in a monetary judgment against a KBR FCPA Indemnitee, or
        a
        settlement in lieu thereof, to the extent relating to the FCPA Subject Matters
        and as a result of demands or claims made against a KBR FCPA Indemnitee by
        a
        Person other than a Governmental Authority, including without limitation
        by
        Persons who are customers of, joint venture partners in or financing parties
        of
        projects of a KBR FCPA Indemnitee. 

       

      “Transition
        Services Agreements”
means
        the two Transition Services Agreements dated the date hereof between Halliburton
        Energy Services, Inc. and KBR. 

       

      “TSKJ”
means
        the private limited liability company registered in Madiera, Portugal whose
        members are Technip, SA, Snamprogetti Netherlands B.V., JGC Corporation and
        Kellogg, Brown and Root. 

       

      “Underwriters”
means
        the several underwriters of the IPO named in the Underwriting Agreement.
        

       

      “Underwriting
        Agreement”
has
        the
        meaning set forth in Section 4.1. 

       

      “Voting
        Percentage”
means,
        at any time, the fraction, expressed as a percentage and rounded to the nearest
        thousandth of a percent, whose numerator is the number of votes entitled
        to be
        cast with respect to all of the outstanding shares of KBR Voting Stock
        beneficially owned by the Halliburton Group and whose denominator is the
        number
        of votes entitled to be cast with respect to all of the outstanding shares
        of
        KBR Voting Stock; provided, however, that any shares of such KBR Voting Stock
        issued by KBR in violation of its obligations under Article V of this Agreement
        shall not be deemed outstanding for the purpose of determining the Voting
        Percentage. 

       

      ARTICLE
        II 

       

      SEPARATION
        AND RELATED TRANSACTIONS 

       

      2.1
        Separation
        Date; Separation Time.
        Unless
        otherwise provided in this Agreement, or in any agreement to be executed
        in
        connection with this Agreement, the effective time and date of each action
        in
        connection with the Separation shall be as of 11:59 p.m., Houston, Texas
        time
        (the “Separation
        Time”),
        on
        the date that is immediately prior to the IPO Closing Date, or such other
        date
        as may be fixed by Halliburton (the “Separation
        Date”).
        The
        effective time and date of each action in connection with a Prior Transfer
        shall
        be as specified in such Prior Transfer Agreement. Notwithstanding the
        Separation, each of the KBR Cash Management Note and the Halliburton Cash
        Management Note shall continue in full force and effect pursuant to
        Section 9.2 hereof. 

       

      2.2
        Instruments
        of Transfer and Assumption.
        Halliburton and KBR agree that (a) transfers of assets required to be
        transferred by this Agreement or an Ancillary Agreement shall be effected
        by
        delivery by Halliburton or the other transferring entity, as applicable,
        to the
        transferee, of (i) with respect to those assets that constitute stock,
        certificates endorsed in blank or evidenced or accompanied by stock powers
        or
        other instruments of transfer endorsed in blank, against receipt, (ii) with
        respect to any real property interest or any improvements thereon, a special
        warranty deed with general warranty of limited application limiting recourse
        and
        remedies to title insurance and warranties by predecessors in title to the
        transferor, and (iii) with respect to all other assets, such good and
        sufficient instruments of contribution, conveyance, assignment and transfer,
        in
        form and substance reasonably satisfactory to Halliburton and KBR, as shall
        be
        necessary to vest in the designated transferee, all of the title and ownership
        interest of the transferor in and to any such asset, and (b) to the extent
        necessary, the assumption of the Liabilities contemplated hereby shall be
        effected by delivery by the transferee to the transferor of such good and
        sufficient instruments of assumption, in form and substance reasonably
        satisfactory to Halliburton and KBR, as shall be necessary for the assumption
        by
        the transferee of such Liabilities. Each of the parties hereto also agrees
        to
        deliver to the other party hereto such other documents, instruments and writings
        as may be reasonably requested by such other party hereto in connection with
        the
        transactions contemplated hereby. Except as set forth in this Section 2.2,
        (x) THE TRANSFERS AND ASSUMPTIONS REFERRED TO HEREIN WILL BE MADE WITHOUT
        ANY REPRESENTATION OR WARRANTY OF ANY NATURE (A) AS TO THE VALUE OR FREEDOM
        FROM ENCUMBRANCE OF, ANY ASSETS, (B) AS TO MERCHANTABILITY OR FITNESS FOR A
        PARTICULAR PURPOSE OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OR (C) AS
        TO THE LEGAL SUFFICIENCY TO CONVEY TITLE TO ANY ASSETS, and (y) the
        instruments of transfer or assumption referred to herein shall not include
        any
        representations and warranties other than as specifically provided herein.
        Halliburton and KBR hereby acknowledge and agree that ALL ASSETS ARE BEING
        TRANSFERRED “AS IS, WHERE IS.” 

       

      2.3
        Ancillary
        Agreements.
        On or
        prior to the Separation Date, Halliburton and KBR shall execute and deliver
        (or
        shall cause the appropriate members of their respective Groups to execute
        and
        deliver, as applicable) the agreements between them designated as follows:
        

       

      (a)
        the
        Transition Services Agreements; 

       

      (b)
        the
        Employee Matters Agreement; 

       

      (c)
        the
        Tax Sharing Agreement; 

       

      (d)
        the
        Registration Rights Agreement; 

       

      (e)
        the
        Intellectual Property Matters Agreement; and 

       

      (f)
        such
        other agreements, documents or instruments as the parties may agree are
        necessary or desirable and which specifically state that they are Ancillary
        Agreements within the meaning of this Agreement 

       

      (collectively,
        the “Ancillary
        Agreements”).
        To
        the extent such documents are not executed and delivered on the Separation
        Date,
        they shall be executed and delivered as soon as practicable thereafter and
        (except as otherwise provided therein) shall be effective as of the Separation
        Time. 

       

      2.4
        Performance
        of Non-Novated Contracts.
        

       

      (a)
        Non-Novated
        KBR Contracts.
        The
        parties intend that each member of the Halliburton Group which is party to
        a
        Non-Novated KBR Contract shall remain a party thereto following the Separation
        Date, and the parties hereby agree that each Non-Novated KBR Contract shall
        be
        considered to be part of the KBR Business for all purposes under this Agreement.
        Notwithstanding the foregoing, Halliburton will cause each member of the
        Halliburton Group which is a party to a Non-Novated KBR Contract to continue
        to
        timely perform each such Non-Novated KBR Contract on behalf of the KBR Group.
        The benefits and/or liabilities of the performance of each such Non-Novated
        KBR
        Contract, and the costs associated with such performance, from and after
        the
        Separation Time shall be for the account of the KBR Group. 

       

      (b)
        Non-Novated
        ESG Contracts.
        The
        parties intend that each member of the KBR Group which is party to a Non-Novated
        ESG Contract shall remain a party thereto following the Separation Date,
        and the
        parties hereby agree that each Non-Novated ESG Contract shall be considered
        to
        be part of the Halliburton Business for all purposes under this Agreement.
        Notwithstanding the foregoing, KBR will cause each member of the KBR Group
        which
        is a party to a Non-Novated ESG Contract to continue to timely perform each
        such
        Non-Novated ESG Contract on behalf of the Halliburton Group. The benefits
        and/or
        liabilities of the performance of each such Non-Novated ESG Contract, and
        the
        costs associated with such performance, from and after the Separation Time
        shall
        be for the account of the Halliburton Group. 

       

      (c)
        Settlement
        of Intercompany Balances.
        From
        time to time following the Separation Date, the parties shall settle the
        intercompany account balances relating to the Non-Novated KBR Contracts and
        the
        Non-Novated ESG Contracts with cash payments. 

       

      2.5
        Other
        Matters.
        From
        and after the Separation Date, except as contemplated under this Agreement
        or
        any Ancillary Agreement, KBR covenants and agrees that it will not, and will
        not
        permit any member of the KBR Group to, enter into any commitment or agreement
        that binds or purports to bind Halliburton or any member of the Halliburton
        Group. 

       

      ARTICLE
        III 

       

      MUTUAL
        RELEASES; INDEMNIFICATION 

       

      3.1
        Mutual
        Release of Pre-IPO Closing Date Claims.
        

       

      (a)
        KBR
        Release.
        Except
        as expressly provided in this Agreement, effective as of the Separation Time,
        KBR does hereby, for itself and each other member of the KBR Group and their
        respective successors and assigns, remise, release and forever discharge
        Halliburton, each member of the Halliburton Group and their respective
        successors and assigns, from any and all Liabilities whatsoever to KBR and
        each
        other member of the KBR Group, whether at law or in equity (including any
        right
        of contribution), whether arising under any contract or agreement, by operation
        of law or otherwise, existing or arising from any acts or events occurring
        or
        failing to occur or alleged to have occurred or to have failed to occur or
        any
        conditions existing or alleged to have existed on or before the Separation
        Time,
        including in connection with the transactions and all other activities to
        implement any Prior Transfers, the Separation, the IPO and any Distribution.
        

       

      (b)
        Halliburton
        Release.
        Except
        as expressly provided in this Agreement, effective as of the Separation Time,
        Halliburton does hereby, for itself and each other member of the Halliburton
        Group and their respective successors and assigns, remise, release and forever
        discharge KBR, each member of the KBR Group and their respective successors
        and
        assigns, from any and all Liabilities whatsoever to Halliburton and each
        other
        member of the Halliburton Group, whether at law or in equity (including any
        right of contribution), whether arising under any contract or agreement,
        by
        operation of law or otherwise, existing or arising from any acts or events
        occurring or failing to occur or alleged to have occurred or to have failed
        to
        occur or any conditions existing or alleged to have existed on or before
        the
        Separation Time, including in connection with the transactions and all other
        activities to implement any Prior Transfers, the Separation, the IPO and
        any
        Distribution. 

       

      (c)
        Surviving
        Liabilities.
        Nothing
        contained in Section 3.1(a) or (b) shall impair any right of any
        Person to enforce a Prior Transfer Agreement, this Agreement, any Ancillary
        Agreement or any agreements, arrangements, commitments or understandings
        that
        are specified in, or are contemplated to continue pursuant to, a Prior Transfer
        Agreement, this Agreement or in any Ancillary Agreement. Furthermore, nothing
        contained in Section 3.1(a) or (b) shall release any Person from:

       

      (i)
        any
        Liability, contingent or otherwise, assumed, transferred, assigned or allocated
        to the Group of which such Person is a member in accordance with, or any
        other
        Liability of any member of any Group under, a Prior Transfer Agreement, this
        Agreement or any Ancillary Agreement; 

       

      (ii)
        any
        Liability for unpaid amounts for the sale, lease, construction or receipt
        of
        goods, property or services purchased, obtained or used in the ordinary course
        of business by a member of one Group from a member of any other Group within
        180
        days prior to the IPO Closing Date; 

       

      (iii)
        any
        Liability for unpaid amounts for products or services or refunds owing on
        products or services for work done by a member of one Group at the request
        or on
        behalf of a member of another Group within 180 days prior to the IPO Closing
        Date; 

       

      (iv)
        any
        Liability that the parties may have with respect to indemnification or
        contribution pursuant to this Agreement, any Ancillary Agreement or any Prior
        Transfer Agreement, which Liability shall be governed by the provisions of
        this
        Article III and, if applicable, the appropriate provisions of such Ancillary
        Agreement or such Prior Transfer Agreement; or 

       

      (v)
        any
        Liability the release of which would result in the release of any Person
        other
        than a Person released pursuant to this Section 3.1; provided that the
        parties agree not to bring suit, seek to collect any amounts or file any
        liens
        or encumbrances against any Person, or permit any member of their Group to
        bring
        suit, seek to collect any amounts or file any liens or encumbrances against
        any
        Person, with respect to any Liability to the extent that such Person would
        be
        released with respect to such Liability by this Section 3.1 but for the
        provisions of this clause (v). 

       

      (d)
        Agreement
        to Make No Claims.
        Except
        as provided in this Article III, KBR shall not make, and shall not permit
        any
        member of the KBR Group to make, any claim or demand, or commence any Action
        asserting any claim or demand, including any claim of contribution or any
        indemnification, against Halliburton or any member of the Halliburton Group,
        or
        any other Person released pursuant to Section 3.1(a), with respect to any
        Liabilities released pursuant to Section 3.1(a). Except as provided in this
        Article III, Halliburton shall not make, and shall not permit any member
        of the
        Halliburton Group to make, any claim or demand, or commence any Action asserting
        any claim or demand, including any claim of contribution or any indemnification,
        against KBR or any member of the KBR Group, or any other Person released
        pursuant to Section 3.1(b), with respect to any Liabilities released
        pursuant to Section 3.1(b). 

       

      (e)
        Further
        Assurances.
        Except
        as expressly set forth in Section 3.1(c), it is the intent of each of
        Halliburton and KBR by virtue of the provisions of this Section 3.1 to
        provide for a full and complete release and discharge of all Liabilities
        existing or arising from all acts and events occurring or failing to occur
        or
        alleged to have occurred or to have failed to occur and all conditions existing
        or alleged to have existed on or before the Separation Time, between or among
        KBR or any member of the KBR Group, on the one hand, and Halliburton or any
        member of the Halliburton Group, on the other hand (including any contractual
        agreements or arrangements existing or alleged to exist between or among
        any
        such members on or before the Separation Time). At any time, at the request
        of
        any other party, each party shall cause each member of its respective Group
        to
        execute and deliver releases reflecting the provisions hereof. 

       

      3.2
        Indemnification
        by KBR.
        Except
        as provided in this Article III, 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 any of the following (without duplication):
        

       

      (a)
        any
        KBR Liability, including the failure of KBR or any other member of the KBR
        Group
        or any other Person to pay, perform or otherwise promptly discharge any KBR
        Liabilities in accordance with their respective terms, whether prior to or
        after
        the Separation Time; 

       

      (b)
        the
        KBR Business; 

       

      (c)
        any
        breach by KBR or any member of the KBR Group of this Agreement or any of
        the
        Ancillary Agreements; 

       

      (d)
        the
        Credit Support Agreements; 

       

      (e)
        certain pending or threatened litigation described on Schedule
        3.2(e)
        hereto;
        and 

       

      (f)
        any
        untrue statement or alleged untrue statement of a material fact or omission
        or
        alleged omission to state a material fact required to be stated therein or
        necessary to make the statements therein not misleading, with respect to
        all
        information (i) contained in the IPO Registration Statement or any IPO
        Prospectus (other than information provided by Halliburton to KBR specifically
        for inclusion in the IPO Registration Statement or any IPO Prospectus and
        set
        forth on Schedule
        3.3(f)),
        (ii) contained in any public filings made by KBR with the Commission
        following the IPO Closing Date and (iii) provided by KBR to Halliburton
        specifically for inclusion in Halliburton’s annual or quarterly reports
        following the IPO Closing Date. 

       

      As
        used
        in this Section 3.2, “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. 

       

      3.3
        Indemnification
        by Halliburton.
        Except
        as provided in this Article III, 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 any of the following (without duplication): 

       

      (a)
        the
        Halliburton Liabilities, including the failure of Halliburton or any other
        member of the Halliburton Group or any other Person to pay, perform or otherwise
        promptly discharge any Halliburton Liabilities, in accordance with their
        respective terms, whether prior to or after the Separation Time; 

       

      (b)
        the
        Halliburton Business; 

       

      (c)
        any
        breach by Halliburton or any member of the Halliburton Group of this Agreement
        or any of the Ancillary Agreements; 

       

      (d)
        any
        Halliburton Environmental Liabilities; 

       

      (e)
        certain pending or threatened litigation described on Schedule
        3.3(e)
        hereto;

       

      (f)
        any
        untrue statement or alleged untrue statement of a material fact or omission
        or
        alleged omission to state a material fact required to be stated therein or
        necessary to make the statements therein not misleading, with respect to
        all
        information contained in the IPO Registration Statement or any IPO Prospectus
        provided by Halliburton specifically for inclusion therein and set forth
        on
Schedule
        3.3(f);
        and

       

      (g)
        the
        Silica Note and any reimbursement obligations of the Halliburton Group to
        the
        KBR Group with respect thereto. 

       

      As
        used
        in this Section 3.3, “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. 

       

      3.4
        Indemnifications
        Relating to FCPA Subject Matters 

       

      (a)
        Halliburton
        Indemnity.
        Halliburton agrees to indemnify and hold harmless the KBR FCPA Indemnitees
        from
        and against any Penalties (such Penalties hereinafter referred to as
“Halliburton
        Indemnified FCPA Matters”);
        provided, that with respect to any KBR FCPA Indemnitee that is not wholly
        owned,
        directly or indirectly, by the KBR Group as of the date hereof (a “non-wholly
        owned majority subsidiary”),
        the
        Halliburton indemnity provided under this Section 3.4(a) shall be limited
        to that percentage of Penalties assessed against or paid by such non-wholly
        owned majority subsidiary equal to the KBR Group’s ownership interest in such
        non-wholly owned majority subsidiary as of the date hereof. 

       

      For
        avoidance of doubt, the Halliburton indemnification provided under this
        Section 3.4(a) shall not apply to any losses, claims, liabilities or
        damages relating to the FCPA Subject Matters that are not Halliburton
        Indemnified FCPA Matters (and the indemnity provided under Section 3.4(a)
        will not include any such other losses, claims, liabilities or damages),
        regardless of how denominated or the cause of action, whether in tort, contract,
        a criminal proceeding or otherwise. Without limiting the foregoing, “Halliburton
        Indemnified FCPA Matters” shall not include, and the indemnity provided under
        this Section 3.4(a) shall not apply to: (x) Third-Party FCPA Claims;
        (y) losses, claims, liabilities or damages that (I) are special,
        indirect, derivative or consequential, (II) relate to or result in threatened
        or
        actual suspension or debarment from bidding or continued activity under
        government contracts, (III) relate to alleged or actual damage to business
        or
        other reputation or loss of, or adverse effect on, cash flow, assets, goodwill,
        results of operations, business, prospects, profits or business value, whether
        in the present or future, (IV) relate to alleged or actual adverse consequences
        in obtaining, continuing or termination of financing for current or future
        projects, and/or (V) are as a result of claims by directors, officers,
        employees, Affiliates, advisors, attorneys, agents, debt holders or other
        interest holders or constituents of KBR or any member of the KBR Group in
        their
        capacity as such; or (z) costs or expenses incurred for any monitor
        required by or agreed to with, a Governmental Authority to review continued
        compliance by the KBR Group with Applicable FCPA Law. 

       

      (b)
        Sole
        Beneficiaries.
        The
        indemnity provided under Section 3.4(a) is solely for the benefit of the
        KBR FCPA Indemnitees, and no provision of this Agreement shall create any
        third
        party beneficiary or other rights in any Person or Persons other than the
        KBR
        FCPA Indemnitees. 

       

      (c)
        Control
        of Proceedings.
        Until
        such time, if ever, that KBR exercises its right to assume control over the
        investigation, defense and/or settlement of FCPA Subject Matters with respect
        to
        KBR pursuant to Section 3.4(e), Halliburton and its Majority Owned
        Subsidiaries shall at all times, in their sole discretion, have and maintain
        control over the investigation, defense and/or settlement of, any FCPA Subject
        Matter. Even if KBR exercises its right pursuant to Section 3.4(e) hereof,
        Halliburton and its Majority Owned Subsidiaries shall at all times, in their
        sole discretion, have and maintain control over the investigation, defense
        and/or settlement of FCPA Subject Matters with respect to Halliburton.
        Notwithstanding the foregoing, (i) no settlement by KBR of any claims
        relating to FCPA Subject Matters effected without the prior written consent
        of
        Halliburton will be effective or binding upon Halliburton, any member of
        the
        Halliburton Group or their respective successors or assigns, and (ii) no
        settlement by Halliburton of any claims relating to FCPA Subject Matters
        effected without the prior written consent of KBR will be effective or binding
        upon any KBR FCPA Indemnitee. The parties agree that Halliburton may terminate
        its indemnity provided under Section 3.4(a) upon the settlement by KBR of
        any claims relating to FCPA Subject Matters effected without the prior written
        consent of Halliburton. 

       

      (d)
        Cooperation.
        At all
        times during the term of this Agreement, including whether or not or before
        or
        after KBR exercises its right to assume control over the investigation, defense
        and/or settlement of FCPA Subject Matters pursuant to Section 3.4(e)
        hereof, KBR, at Halliburton’s expense, shall use best efforts to assist with
        Halliburton’s full cooperation with any Governmental Authority in Halliburton’s
        investigation of FCPA Subject Matters and its investigation, defense and/or
        settlement of any Governmental FCPA Claim. Without limiting the foregoing,
        KBR’s
        best efforts to assist with Halliburton’s full cooperation contemplated by the
        preceding sentence shall include: 

       

      (i)
        At
        the request of Halliburton, the voluntary and truthful disclosure to
        Halliburton, the DOJ, the Commission or other Governmental Authority of all
        information in KBR’s possession, custody or control (in any form or medium,
        including documents) respecting the activities of KBR, Halliburton and its
        or
        their current and former directors, officers, employees, agents, distributors
        and Affiliates relating to FCPA Subject Matters about which Halliburton inquires
        or which is material to the investigation conducted by Halliburton, the DOJ,
        the
        Commission or other Governmental Authority into the FCPA Subject Matters.
        

       

      (ii)
        At
        the written request of Halliburton, the voluntary production to Halliburton,
        the
        DOJ, the Commission or other Governmental Authority, of all documents, records
        or other tangible evidence in KBR’s possession, custody or control relating to
        FCPA Subject Matters. Without limiting the foregoing, KBR will assemble,
        organize and produce, or take reasonable steps to effectuate the production
        of,
        all documents, records, or other tangible evidence related to FCPA Subject
        Matters in KBR’s possession, custody, or control in such reasonable format as
        Halliburton, the DOJ, the Commission or other Governmental Authority requests.
        KBR shall preserve, maintain and retain all such documents, records and other
        tangible evidence related to FCPA Subject Matters. KBR shall provide Halliburton
        access to all electronic mail, metadata, computer hard drives, computer tape
        or
        other electronic data necessary to answer a subpoena of any Governmental
        Authority. 

       

      (iii)
        At
        the request of Halliburton, the provision of access to copies of KBR’s original
        documents and records relating to FCPA Subject Matters in KBR’s possession,
        custody or control and, using reasonable best efforts, in the custody or
        control
        of all current and former directors, officers, employees, agents, distributors,
        attorneys and Affiliates. 

       

      (iv)
        At
        the written request of Halliburton, using reasonable best efforts,
        (A) making available any of KBR’s current and former directors, officers,
        employees, agents, distributors, attorneys and Affiliates who may have been
        involved in FCPA Subject Matters and whose cooperation is requested by
        Halliburton, the DOJ, the Commission or other Governmental Authority;
        (B) recommending orally and in writing that any and all such Persons
        cooperate fully (including by appearing for interviews with Governmental
        Authorities or testimony, including sworn testimony before a grand jury)
        with
        (x) any investigation conducted by Halliburton, the DOJ, the Commission or
        other Governmental Authority with respect to FCPA Subject Matters, or
        (y) any prosecution of individuals (including without limitation the
        cooperation of current or former directors, officers or employees of KBR
        who are
        not defendants in the prosecution) or entities; and (C) taking appropriate
        disciplinary action with respect to such of KBR’s current and former directors,
        officers, employees, agents, distributors and Affiliates who do not cooperate,
        or who cease to cooperate, fully as contemplated herein. 

       

      (v)
        At
        the written request of Halliburton, the provision of testimony and other
        information deemed necessary by Halliburton to identify or establish the
        original location, authenticity or other evidentiary foundation necessary
        to
        admit into evidence documents in any criminal or other proceeding as requested
        by Halliburton related to FCPA Subject Matters. 

       

      (vi)
        At
        the written request of Halliburton, using reasonable best efforts, the provision
        of access to the outside accounting and legal consultants of KBR whose work
        includes or relates to FCPA Subject Matters, as well as the records, reports
        and
        documents of those outside consultants related to FCPA Subject Matters.

       

      (vii)
        At
        the request of Halliburton, KBR shall not assert a claim of attorney-client
        or
        work-product privilege as to: (i) any KBR original documents or records, or
        any copies thereof, in possession of attorneys of KBR relating to FCPA Subject
        Matters, (ii) any memoranda of witness interviews (including exhibits
        thereto) by attorneys or employees of KBR relating to FCPA Subject Matters;
        (iii) due diligence reports by attorneys of KBR relating to agents of KBR
        that are or have been created contemporaneously with and related to transactions
        or events underlying FCPA Subject Matters; or (iv) documents that are or
        have been created by attorneys of KBR in connection with internal investigations
        by Halliburton or KBR into FCPA Subject Matters. 

       

      Notwithstanding
        anything to the contrary contained in this Agreement, in making production
        of
        any documents, disclosure of any information or available any people, pursuant
        to this Section 3.4(d), KBR shall not be required to (1) expressly or
        implicitly waive its right to assert any privilege that is available under
        law
        against Persons other than the Governmental Authority at issue concerning
        the
        documents or information at issue or the subject matters thereof; or
        (2) produce, disclose or make available any legal advice or attorney work
        product relating to or given in connection with (A) internal investigations
        by Halliburton or KBR; (B) investigations conducted by any Governmental
        Authority, proceedings related thereto or resulting therefrom; or (C) any
        Third-Party Claims. 

       

      KBR
        shall
        promptly inform and disclose to Halliburton any developments, communications
        or
        negotiations between KBR, on the one hand, and any Governmental Authority
        or
        third party, on the other hand, with respect to FCPA Subject Matters, except
        as
        prohibited by law or lawful order of a Governmental Authority. Halliburton
        may
        terminate its indemnity provided under Section 3.4(a) upon the material
        breach by KBR of its obligations under this Section 3.4(d); provided,
        however, that if, despite using KBR’s best efforts or reasonable best efforts,
        as the case may be, to assist with Halliburton’s full cooperation in accordance
        with this Section 3.4(d), KBR is unable to achieve the desired goal
        contemplated by any of the foregoing subsections (i)-(vii), Halliburton shall
        not have grounds to terminate such indemnity. Termination of Halliburton’s
        indemnity provided under Section 3.4(a) pursuant to this
        Section 3.4(d) shall not preclude Halliburton from pursuing any other
        rights or seeking any and all other available remedies against KBR for material
        breach by KBR of its obligations under this Section 3.4(d). 

       

      (e)
        Assumption
        of Control by KBR; Refusal of Settlement.
        KBR, by
        written notice to Halliburton, may (i) take control over the investigation,
        defense and/or settlement of FCPA Subject Matters with respect to KBR or
        (ii) refuse (in KBR’s sole discretion) to agree to a settlement of FCPA
        Subject Matters negotiated and presented by Halliburton. In either such event,
        Halliburton may terminate its indemnity provided under Section 3.4(a).
        Notwithstanding the foregoing, a member of the KBR Group that is not a Majority
        Owned Subsidiary as of the date hereof may control the investigation, defense
        and/or settlement of FCPA Subject Matters solely with respect to such
        subsidiary, and may agree to a settlement of FCPA Subject Matters solely
        with
        respect to such subsidiary without the prior written consent of Halliburton,
        and
        any such control or agreement to a settlement shall not allow Halliburton
        to
        terminate its indemnity provided under Section 3.4(a). 

       

      (f)
        No
        Admission.
        Each of
        Halliburton and KBR do not, by the making of the indemnities in this
        Section 3.4 or by any other provision of this Agreement, concede that it or
        any of its Affiliates have violated applicable Law. 

       

      (g)
        Expenses.
        Until
        such time, if ever, that KBR exercises its right to assume control over the
        investigation, defense and/or settlement of FCPA Subject Matters pursuant
        to
        Section 3.4(e), Halliburton shall bear, at its sole expense, all
        attorneys’, accountants’, consultants’ and other professionals’ fees and
        expenses and all other costs incurred on behalf of Halliburton and KBR in
        the
        investigation, defense, and/or settlement of FCPA Subject Matters, except
        as
        contemplated by Section 3.11. After such time, if ever, that KBR exercises
        its right to assume control over the investigation, defense and/or settlement
        of
        FCPA Subject Matters pursuant to Section 3.4(e), Halliburton shall continue
        to bear, at its sole expense, all attorneys’, accountants’, consultants’, and
        other professionals’ fees and expenses and all other costs incurred on its own
        behalf in the investigation, defense, and/or settlement of FCPA Subject Matters,
        but shall no longer be responsible for such fees, expenses and costs incurred
        on
        behalf of KBR. Nothing in this Section 3.4(g) shall prohibit KBR from at
        any time engaging (at KBR’s own expense) its own legal advisors, accountants,
        consultants or other professionals with respect to the FCPA Subject Matters.
        

       

      (h)
        Communication.
        Notwithstanding the rights and obligations set forth in Section 3.4(d),
        each of Halliburton and KBR agrees to provide, or cause to be provided, to
        each
        other as soon as reasonably practicable after written request therefor, any
        Information relating to FCPA Subject Matters in the possession or under the
        control of such party that the requesting party reasonably needs (i) to
        comply with reporting, disclosure, filing or other requirements imposed on
        the
        requesting party (including under applicable securities laws) by a Governmental
        Authority having jurisdiction over the requesting party, (ii) for use in
        any Regulatory Proceeding, judicial proceeding or other proceeding or in
        order
        to satisfy audit, accounting, claims, regulatory, litigation or other similar
        requirements, (iii) to allow the other party to investigate, defend and/or
        settle any Governmental FCPA Claim or Third-Party FCPA Claim for which such
        party is responsible under this Agreement, or (iv) to comply with its
        obligations under this Agreement or any Ancillary Agreement; provided, however,
        that in the event that any party determines that any such provision of
        Information could violate any Law or agreement, or waive any attorney-client
        or
        work-product privilege other than as contemplated by Section 3.4(d)(vii),
        the parties shall take all reasonable measures to permit the compliance with
        such obligations in a manner that avoids any such harm or consequence. Until
        such time, if ever, that KBR exercises its right pursuant to Section 3.4(e)
        hereof, Halliburton shall provide to KBR copies of all correspondence between
        Halliburton and any Governmental Authority with respect to the FCPA Subject
        Matters insofar as such correspondence relates to KBR. In addition, until
        such
        time, if ever, that KBR exercises its right pursuant to Section 3.4(e)
        hereof, from time to time and upon KBR’s reasonable request, the attorneys,
        accountants, consultants or other advisors of the Board of Directors of
        Halliburton or any special committee of independent directors thereof shall
        brief the Board of Directors of KBR, the special committee of independent
        directors formed pursuant to Section 5.3(c) or the agents or
        representatives of either of them, concerning the status of or issues arising
        under or relating to Halliburton’s investigation of FCPA Subject Matters and its
        defense and/or settlement of any Governmental FCPA Claim. 

       

      (i)
        Procedures
        for Foreign Agents.
        The
        parties agree that Halliburton may terminate its indemnity provided under
        Section 3.4(a) upon the material breach by KBR of its obligations under
        Section 8.14(b). 

       

      3.5
        Indemnifications
        Relating to Barracuda-Caratinga Project.
        

       

      (a)
        Halliburton
        Indemnity.
        Halliburton agrees to indemnify and hold harmless the KBR B-C Indemnitees
        from
        and against (i) all out-of-pocket cash costs and expenses they incur after
        the date hereof as a result of the replacement of the subsea flow-line bolts
        installed in connection with the development of the Barracuda-Caratinga Project,
        and (ii) any cash damages, losses, liabilities, obligations, judgments,
        claims, payments, interest costs, expenses or other award assessed against
        the
        KBR B-C Indemnitees in connection with the arbitration of the
        Barracuda-Caratinga Bolts Matter, and/or any cash settlement or compromise
        amounts agreed to in lieu thereof (the foregoing (i) and (ii), the
“Halliburton
        Indemnified Barracuda-Caratinga Matters”).
        

       

      For
        avoidance of doubt, the Halliburton indemnification provided under this
        Section 3.5(a) shall not apply to any other losses, claims, liabilities or
        damages relating to the Barracuda-Caratinga Project that are not Halliburton
        Indemnified Barracuda-Caratinga Matters (and the indemnity provided under
        Section 3.5(a) will not include any such other losses, claims, liabilities
        or damages), regardless of how denominated or the cause of action, whether
        in
        tort, contract, a criminal proceeding or otherwise. Without limiting the
        foregoing, “Halliburton Indemnified Barracuda-Caratinga Matters” shall not
        include, and the Halliburton indemnity provided under this Section 3.5(a)
        shall not apply to: (x) Third Party Claims other than claims commenced by
        Barracuda & Caratinga Leasing Company B.V. or Affiliates of Petrobras
        with respect to the Barracuda-Caratinga Bolts Matter, or (y) losses,
        claims, liabilities or damages that (I) are special, indirect, derivative
        or consequential, (II) relate to alleged or actual damage to business or
        other
        reputation or loss of, or adverse effect on, cash flow, assets, goodwill,
        results of operations, business, prospects, profits or business value, whether
        in the present or future, or (III) relate to alleged or actual adverse
        consequences in obtaining, continuing or termination of financing for current
        or
        future projects. 

       

      (b)
        Sole
        Beneficiaries.
        The
        indemnity provided under Section 3.5(a) is solely for the benefit of the
        KBR B-C Indemnitees, and no provision of this Agreement shall create any
        third
        party beneficiary or other rights in any Person or Persons other than the
        KBR
        B-C Indemnitees. 

       

      (c)
        Control
        of Proceedings.
        Until
        such time, if ever, that Halliburton exercises its right pursuant to
        Section 3.5(e) hereof, the KBR B-C Indemnitees shall at all times, in their
        sole discretion, have and maintain control over the defense, counterclaim
        and/or
        settlement of the Barracuda-Caratinga Bolts Matter in respect of which indemnity
        may be sought under Section 3.5(a). Notwithstanding the foregoing,
        (i) no settlement by KBR of any claims relating to the Barracuda-Caratinga
        Bolts Matter effected without the prior written consent of Halliburton will
        be
        effective or binding upon Halliburton, any member of the Halliburton Group
        or
        their respective successors and assigns, and (ii) no settlement by
        Halliburton of any claims relating to the Barracuda-Caratinga Bolts Matter
        effected without the prior written consent of KBR will be effective or binding
        upon any KBR B-C Indemnitee. The parties agree that Halliburton may terminate
        its indemnity provided under Section 3.5(a) upon the settlement by KBR of
        any claims relating to the Barracuda-Caratinga Bolts Matter effected without
        the
        prior written consent of Halliburton. 

       

      (d)
        Cooperation;
        Provision of Information.
        Upon
        such time, if ever, that Halliburton exercises its right pursuant to
        Section 3.5(e), KBR shall use best efforts to fully cooperate with
        Halliburton in the defense, counterclaim and/or settlement of the
        Barracuda-Caratinga Bolts Matter. At all times under this Agreement, KBR
        shall
        promptly inform and disclose to Halliburton any developments, communications
        or
        negotiations between KBR, on the one hand, and Petrobras, its Affiliates
        or any
        third party, on the other hand, with respect to the Barracuda-Caratinga Bolts
        Matter, except as prohibited by law or lawful order of a government or
        Governmental Authority or a court of competent jurisdiction. Halliburton
        may
        terminate its indemnity provided under Section 3.5(a) upon the material
        breach by KBR of its obligations under this Section 3.5(d). Termination of
        the Halliburton indemnity provided under Section 3.5(a) pursuant to this
        Section 3.5(d) shall not preclude Halliburton from pursuing any other
        rights or seeking any and all other available remedies against KBR for material
        breach by KBR of its obligations under this Section 3.5(d). 

       

      (e)
        Assumption
        of Control by Halliburton; Refusal of Settlement.
        Halliburton, by written notice to KBR, may (i) take control over the
        defense, counterclaim and/or settlement of the Barracuda-Caratinga Bolts
        Matter
        or (ii) refuse (in Halliburton’s sole discretion) to agree to a settlement
        of the Barracuda-Caratinga Bolts Matter negotiated and presented by KBR.
        If
        Halliburton exercises its right pursuant to this Section 3.5(e) to control
        the defense, counterclaim and/or settlement of the Barracuda-Caratinga Bolts
        Matter, and KBR refuses to agree to a settlement of the Barracuda-Caratinga
        Bolts Matter negotiated and presented by Halliburton, Halliburton may terminate
        its indemnity provided under Section 3.5(a). 

       

      (f)
        Expenses.
        Until
        such time, if ever, that Halliburton exercises its right to assume control
        over
        the defense, counterclaim and/or settlement of the Barracuda-Caratinga Bolts
        Matter pursuant to Section 3.5(e), KBR shall bear, at its sole expense, all
        attorney’s, accountants’, consultants’ and other professionals’ fees and
        expenses and other costs incurred on behalf of Halliburton and KBR in the
        defense, counterclaim and/or settlement of the Barracuda-Caratinga Bolts
        Matter,
        except as contemplated by Section 3.11. Nothing in this Section 3.5(f)
        shall prohibit Halliburton from at any time engaging (at Halliburton’s own
        expense) its own legal advisors, accountants, consultants or other professionals
        with respect to the Barracuda-Caratinga Bolts Matter. 

       

      (g)
        Master
        Intercompany Reimbursement Agreement.
        The
        parties agree that the rights and obligations set forth in this Section 3.5
        shall supersede the rights and obligations of the parties under, and control
        over, the Master Intercompany Reimbursement Agreement dated as of
        December 16, 2005 between Halliburton and KBR Holdings, LLC solely with
        respect to the Barracuda-Caratinga Bolts Matter. 

       

      (h)
        Communication.
        Each of
        Halliburton and KBR agrees to provide, or cause to be provided, to each other
        as
        soon as reasonably practicable after written request therefor, any Information
        relating to the Barracuda-Caratinga Bolts Matters in the possession or under
        the
        control of such party that the requesting party reasonably needs (i) to
        comply with reporting, disclosure, filing or other requirements imposed on
        the
        requesting party (including under applicable securities laws) by a Governmental
        Authority having jurisdiction over the requesting party, (ii) for use in
        any Regulatory Proceeding, judicial proceeding or other proceeding or in
        order
        to satisfy audit, accounting, claims, regulatory, litigation or other similar
        requirements, (iii) to allow the other party to defend, counterclaim and/or
        settle the Barracuda-Caratinga Bolts Matter or any Third Party Claim relating
        to
        the Barracuda-Caratinga Bolts Matter for which such party is responsible
        under
        this Agreement, or (iv) to comply with its obligations under this Agreement
        or any Ancillary Agreement; provided, however, that in the event that any
        party
        determines that any such provision of Information could violate any law or
        agreement, or waive any attorney-client or work-product privilege, the parties
        shall take all reasonable measures to permit the compliance with such
        obligations in a manner that avoids any such harm or consequence. In addition,
        until such time, if ever, that Halliburton exercises its right pursuant to
        Section 3.5(e) hereof, from time to time and upon Halliburton’s reasonable
        request, the attorneys, accountants, consultants or other advisors of the
        Board
        of Directors of KBR or any special committee of independent directors thereof
        shall brief members of Halliburton senior management, the Board of Directors
        of
        Halliburton or any special committee of independent directors thereof concerning
        the status of or issues arising under or relating to KBR’s defense, counterclaim
        and/or settlement of the Barracuda-Caratinga Bolts Matters. 

       

      (i)
        Arbitration
        Recovery.
        The
        parties agree that KBR shall be entitled to retain the cash proceeds of any
        judgment, decision or award entered in favor of a member of the Halliburton
        Group and/or the KBR Group (including any judgment, decision or award for
        any
        counterclaim), or any cash settlement or compromise in lieu thereof received
        from Petrobras or its Affiliate by a member of the Halliburton Group and/or
        the
        KBR Group, in connection with the Barracuda-Caratinga Bolts Matter; provided,
        however, that Halliburton shall be entitled to any portion of such judgment,
        decision or award or any settlement or compromise amount (i) which is
        designated by an arbitration panel or otherwise agreed by Petrobras or its
        Affiliate with Halliburton and/or KBR to constitute recovery of legal fees,
        costs or expenses paid by Halliburton or advanced to KBR by Halliburton and
        (ii) which constitutes recovery by KBR of out-of-pocket cash costs and
        expenses advanced to KBR by Halliburton or paid by Halliburton pursuant to
        the
        Halliburton indemnity provided under Section 3.5(a). 

       

      3.6
        Indemnification
        Obligations Net of Insurance Proceeds and Other Amounts.
        

       

      (a)
        The
        parties intend that any Loss subject to indemnification or reimbursement
        pursuant to this Article III will be net of Insurance Proceeds that actually
        reduce the amount of the Loss. Accordingly, the amount which any party (an
        “Indemnifying
        Party”)
        is
        required to pay to any Person entitled to indemnification under this Article
        III
        (an “Indemnitee”)
        will
        be reduced by any Insurance Proceeds theretofore actually recovered by or
        on
        behalf of the Indemnitee in reduction of the related Loss. If an Indemnitee
        receives a payment (an “Indemnity
        Payment”)
        required by this Agreement from an Indemnifying Party in respect of any Loss
        and
        subsequently receives Insurance Proceeds, then the Indemnitee will pay to
        the
        Indemnifying Party an amount equal to the excess of the Indemnity Payment
        received over the amount of the Indemnity Payment that would have been due
        if
        the Insurance Proceeds recovery had been received, realized or recovered
        before
        the Indemnity Payment was made. Notwithstanding anything to the contrary
        in the
        Transition Services Agreements, the parties agree that if any such Insurance
        Proceeds were paid by an insurance company under a plan, such as a retrospective
        premium or large deductible program, where such Insurance Proceeds are
        subsequently billed back to one of the parties by the insurance company,
        then
        (i) if billed to the Indemnifying Party, it will pay the insurance company
        and will not charge such amount to the Indemnitee, or (ii) if billed to the
        Indemnitee, the Indemnifying Party will pay on behalf of or reimburse, as
        appropriate, the Indemnitee for such amount. 

       

      (b)
        An
        insurer who would otherwise be obligated to pay any claims shall not be relieved
        of the responsibility with respect thereto or, solely by virtue of the
        indemnification provisions hereof, have any subrogation rights with respect
        thereto, it being expressly understood and agreed that no insurer or any
        other
        third party shall be entitled to a “windfall” (i.e., a benefit they would not be
        entitled to receive in the absence of these indemnification provisions) by
        virtue of the indemnification provisions herein. Nothing contained in this
        Agreement or any Ancillary Agreement shall obligate any member of any Group
        to
        seek to collect or recover any Insurance Proceeds. 

       

      3.7
        Procedures
        for Indemnification of Third Party Claims.
        

       

      (a)
        If an
        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 an Indemnifying Party may be obligated to provide
        indemnification to such Indemnitee pursuant to this Article III, such Indemnitee
        shall give such Indemnifying Party written notice thereof within 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 3.7(a) shall not relieve the related Indemnifying Party of its
        obligations under this Article III, 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 III. Within 30 days after the receipt of notice from an Indemnitee
        in
        accordance with Section 3.7(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 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 III 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 III,
        or
        fails to notify an Indemnitee of its election as provided in
        Section 3.7(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 III
        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)
        Except with respect to Halliburton Indemnified FCPA Matters and the
        Barracuda-Caratinga Bolts Matter, which shall be governed by Section 3.4
        and Section 3.5 respectively, 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 III, 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 3.7 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.
        

       

      3.8
        Additional
        Matters.
        (a) Any claim under this Article III on account of a Loss which does not
        result from a Third Party Claim shall be asserted by written notice given
        by the
        Indemnitee to the Indemnifying Party. Such Indemnifying Party shall have
        a
        period of 30 days after the receipt of such notice within which to respond
        thereto. If such Indemnifying Party does not respond within such 30-day period,
        such Indemnifying Party shall be deemed to have refused to accept responsibility
        to make payment. If such Indemnifying Party does not respond within such
        30-day
        period or rejects such claim in whole or in part, such Indemnitee shall be
        free
        to pursue such remedies as may be available to such party as contemplated
        by
        this Agreement and the Ancillary Agreements. 

       

      (b)
        THE
        PARTIES UNDERSTAND AND AGREE THAT THE INDEMNIFICATION OBLIGATIONS HEREUNDER
        AND
        UNDER THE ANCILLARY AGREEMENTS MAY INCLUDE INDEMNIFICATION FOR LOSSES RESULTING
        FROM, OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, AN INDEMNIFIED PARTY’S OWN
        NEGLIGENCE OR STRICT LIABILITY. 

       

      (c)
        The
        provisions of Sections 3.2 through 3.8 shall not apply with respect to
        indemnification or indemnification procedures concerning: Taxes (which are
        governed exclusively by the Tax Sharing Agreement), employee benefits matters
        (which are governed exclusively by the Employee Matters Agreement), intellectual
        property matters (which are governed exclusively by the Intellectual Property
        Matters Agreement) or services provided under the Transition Services Agreements
        (which are governed exclusively by the Transition Services Agreements).

       

      3.9
        Remedies
        Cumulative.
        The
        remedies provided in this Article III shall be cumulative and, subject to
        the
        provisions of Article VII, shall not preclude assertion by any Indemnitee
        of any
        other rights or the seeking of any and all other remedies against any
        Indemnifying Party. 

       

      3.10
        Survival
        of Indemnities.
        The
        rights and obligations of each of Halliburton and KBR and their respective
        Indemnitees under this Article III shall survive the sale or other transfer by
        any party of any assets or businesses or the assignment by it of any
        Liabilities. 

       

      3.11
        Indemnification
        of Directors and Officers.
        It is
        the parties’ intent that each of KBR and Halliburton, as applicable, shall be
        responsible for the costs and expenses incurred pursuant to any indemnification
        obligations to its current and former officers, directors, employees and
        agents.
        To the extent that a party’s current or former officer, director, employee or
        agent shall receive indemnification or an advancement of funds from the other
        party (the party so indemnifying or advancing funds, the “advancing
        party”)
        pursuant to an indemnification obligation of the advancing party to such
        person
        under its certificate of incorporation or by-laws, an employment agreement
        or
        otherwise, then the advancing party shall be reimbursed promptly and in full
        by
        the other party. The parties agree that reimbursement pursuant to this
        Section 3.11 shall not be construed to expand or limit the parties’
respective indemnification rights and obligations under this Article III
        or to
        confer upon any Person any rights of indemnification. For purposes of this
        Section 3.11, persons who serve on the Board of Directors of KBR and who
        serve as officers of Halliburton after the IPO Closing Date shall be deemed
        to
        be directors and officers of Halliburton. 

       

      3.12
        Mitigation
        of Damages.
        The
        parties each agree to attempt to mitigate, and to cause each of the members
        of
        their respective Groups 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 III 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
        IV 

       

      THE
        IPO
        AND ACTIONS PENDING THE IPO 

       

      4.1
        Transactions
        Prior to the IPO.
        Subject
        to the conditions specified in Section 4.4, Halliburton and KBR shall use
        their reasonable best efforts to consummate the IPO on or before 

       

      November 30,
        2006. Such efforts shall include, but not necessarily be limited to, those
        specified in this Section 4.1 (to the extent not previously accomplished):

       

      (a)
        KBR
        has filed the IPO Registration Statement, and shall use its reasonable best
        efforts to cause such IPO Registration Statement to become effective, including
        by filing such amendments thereto as may be necessary or appropriate, responding
        promptly to any comments of the Commission and taking such other action with
        respect to the IPO Registration Statement as may be reasonably requested
        by
        Halliburton. Halliburton and KBR shall also cooperate in preparing, filing
        with
        the Commission and causing to become effective a registration statement
        registering the KBR Common Stock under the Exchange Act, and any information
        statement or registration statement or amendments thereto which are required
        to
        reflect the establishment of, or amendments to, any employee benefit and
        other
        plans necessary or appropriate in connection with the IPO, any Prior Transfers,
        the Separation or the other transactions contemplated by this Agreement.
        

       

      (b)
        KBR
        shall enter into an underwriting agreement with the Underwriters (the
“Underwriting
        Agreement”),
        in
        form and substance reasonably satisfactory to Halliburton, and shall comply
        with
        its obligations thereunder. 

       

      (c)
        Halliburton and KBR shall consult with each other and the Underwriters regarding
        the timing, pricing and other material matters with respect to the IPO, it
        being
        understood that decisions on such matters may be dictated by Halliburton
        in its
        sole discretion. 

       

      (d)
        KBR
        shall take all such action as may be necessary or appropriate under state
        securities and blue sky laws of the United States (and any comparable laws
        under
        any foreign jurisdictions) in connection with the IPO. 

       

      (e)
        KBR
        shall prepare, file and use reasonable best efforts to seek to make effective,
        an application for listing of the KBR Common Stock issued in the IPO on the
        NYSE, subject to official notice of issuance. 

       

      4.2
        Use
        of
        Proceeds.
        KBR
        shall use the net proceeds from the IPO (after deduction of all expenses
        in
        connection with the IPO payable by KBR as provided in Section 8.8) as
        described under the heading “Use of Proceeds” in the IPO Prospectus.

       

      4.3
        Cooperation
        for IPO.
        KBR
        shall, at Halliburton’s direction, promptly take any and all actions necessary
        or desirable to consummate the IPO as contemplated by the IPO Registration
        Statement and the Underwriting Agreement. Notwithstanding anything to the
        contrary contained herein, as between Halliburton and KBR, Halliburton may
        in
        its sole discretion choose to terminate, abandon or amend any aspect of the
        IPO
        at any time prior to the IPO Closing Date, and KBR promptly shall take all
        actions directed by Halliburton in that regard. 

       

      4.4
        Conditions
        Precedent to Consummation of the IPO.
        The
        parties hereto shall use their reasonable best efforts to satisfy the conditions
        listed below to the consummation of the IPO as soon as practicable. The
        obligations of the parties to use their reasonable best efforts to consummate
        the IPO shall be conditioned on the satisfaction, or waiver by Halliburton,
        of
        the following conditions. The conditions set forth below are for the sole
        benefit of Halliburton and 

       

      shall
        not
        give rise to or create any duty on the part of Halliburton or the Halliburton
        Board of Directors to waive or not waive any such condition. 

       

      (a)
        The
        IPO Registration Statement shall have been filed and declared effective by
        the
        Commission, and there shall be no stop order in effect with respect thereto.
        

       

      (b)
        The
        actions and filings with regard to state securities and blue sky laws of
        the
        United States (and any comparable laws under any foreign jurisdictions)
        described in Section 4.1(d) shall have been taken and, where applicable,
        have become effective or been accepted. 

       

      (c)
        The
        KBR Common Stock to be issued in the IPO shall have been accepted for listing
        on
        the NYSE, subject to official notice of issuance. 

       

      (d)
        KBR
        shall have entered into the Underwriting Agreement and all conditions to
        the
        obligations of KBR and the Underwriters shall have been satisfied or waived.
        

       

      (e)
        Halliburton shall be satisfied, in its sole discretion, that (i) following
        the IPO, Halliburton and other members of the Halliburton Group will
        collectively own KBR Common Stock representing control of KBR within the
        meaning
        of Section 368(c) of the Code and (ii) to Halliburton’s actual
        knowledge (with no duty to investigate), all other conditions to permit any
        future Distribution to qualify as a tax-free distribution to Halliburton,
        KBR
        and Halliburton’s stockholders shall, to the extent applicable as of the time of
        the IPO, be satisfied, and there shall be no event or condition that is likely
        to cause any of such conditions not to be satisfied as of the time of the
        Distribution or thereafter. 

       

      (f)
        Any
        material Governmental Approvals necessary to consummate the IPO shall have
        been
        obtained and be in full force and effect. 

       

      (g)
        No
        order, injunction or decree issued by any court or agency of competent
        jurisdiction or other legal restraint or prohibition preventing the consummation
        of the IPO or any of the other transactions contemplated by a Prior Transfer
        Agreement, this Agreement or any Ancillary Agreement shall be in effect.
        

       

      (h)
        The
        Separation shall have become effective. 

       

      (i)
        Such
        other actions as the parties hereto may, based upon the advice of underwriters,
        accountants or counsel, reasonably request to be taken prior to the IPO in
        order
        to assure the successful completion of the IPO shall have been taken.

       

      (j)
        This
        Agreement and all Ancillary Agreements shall have been executed and shall
        not
        have been terminated. 

       

      (k)
        A
        pricing committee for the IPO designated by the Board of Directors of KBR
        shall
        have determined that the terms of the IPO are acceptable to KBR. 

       

      (l)
        Halliburton shall have determined that the terms of the IPO are acceptable
        to
        Halliburton. 

       

      ARTICLE
        V

       

      CORPORATE
        GOVERNANCE AND OTHER MATTERS 

       

      5.1
        Charter
        and Bylaws.
        As of
        the IPO Closing Date, the KBR Charter and Amended and Restated Bylaws of
        KBR
        shall be in the forms of Schedule
        5.1(a)
        and
Schedule
        5.1(b),
        respectively, with such changes therein as may be agreed to in writing by
        Halliburton. 

       

      5.2
        KBR
        Board Representation.
        

       

      (a)
        Beginning on the IPO Closing Date, and for so long as the Halliburton Group
        beneficially owns shares of KBR Common Stock representing a majority of the
        total voting power of all of the outstanding KBR Voting Stock, Halliburton
        shall
        have the right to designate for nomination by the KBR Board (or any nominating
        committee thereof) for election to the KBR Board (each person so designated,
        a
“Halliburton
        Designee”)
        a
        majority of the members of the KBR Board, including the Chairman of the Board.
        For so long as the Halliburton Group beneficially owns shares of KBR Common
        Stock representing less than a majority but at least 15% of the total voting
        power of all of the outstanding shares of KBR Voting Stock, Halliburton shall
        have the right to designate for nomination by the KBR Board (or any nominating
        committee thereof) for election to the KBR Board a proportionate number of
        Halliburton Designees to the KBR Board, as calculated in accordance with
        Section 5.2(d). Notwithstanding anything to the contrary set forth herein,
        (i) KBR’s obligations with respect to the election or appointment of
        Halliburton Designees shall be limited to the obligations set forth under
        this
        Section 5.2 and (ii) shall be further limited by KBR’s compliance with
        Law and any applicable Commission or stock exchange director independence
        requirements. 

       

      (b)
        For
        so long as the Halliburton Group beneficially owns shares of KBR Common Stock
        representing a majority of the total voting power of all of the outstanding
        shares of KBR Voting Stock, KBR shall use reasonable best efforts to avail
        itself of the “Controlled Companies” exemption set forth in Rule 303A of the
        NYSE Listed Company Manual, and any exemption to any analogous Commission
        rule
        or requirement, to exempt KBR from compliance with corporate governance
        requirements relating to director independence. For so long as the Halliburton
        Group beneficially owns shares of KBR Common Stock representing a majority
        of
        the total voting power of all of the outstanding shares of KBR Voting Stock,
        commencing with the annual meeting of stockholders of KBR to be held in 2007
        and
        prior to each annual meeting of stockholders of KBR thereafter, Halliburton
        shall be entitled to present to the KBR Board or any nominating committee
        thereof for nomination thereby such number of Halliburton Designees for election
        to the KBR Board (or if there is a classified board, the class of directors
        up
        for election) at such annual meeting as would result in Halliburton having
        the
        appropriate number of Halliburton Designees on the KBR Board as determined
        pursuant to this Section 5.2. 

       

      (c)
        KBR
        shall at all such times exercise all authority under applicable Law and use
        reasonable best efforts to cause all such Halliburton Designees to be nominated
        for election as KBR Board members by the KBR Board (or any nominating committee
        thereof). KBR shall cause each Halliburton Designee for election to the KBR
        Board to be included in the slate of nominees recommended by the KBR Board
        to
        holders of KBR Common Stock (including at any special meeting of stockholders
        held for the election of directors) and shall use reasonable best efforts
        to
        cause the election of each such Halliburton Designee, including soliciting
        proxies in favor of the election of such persons. In the event that any
        Halliburton Designee elected to the KBR Board shall cease to serve as a director
        for any reason, the vacancy resulting therefrom shall be filled by the KBR
        Board
        with a substitute Halliburton Designee. In the event that as a result of
        any
        increase in the size of the KBR Board, Halliburton is entitled to have one
        or
        more additional Halliburton Designees elected to the KBR Board pursuant to
        this
        Section 5.2, the KBR Board shall appoint the appropriate number of such
        additional Halliburton Designees. 

       

      (d)
        If at
        any time the Halliburton Group beneficially owns shares of KBR Common Stock
        representing less than a majority but at least 15% of the total voting power
        of
        all of the outstanding shares of KBR Voting Stock, the number of persons
        Halliburton shall be entitled to designate for nomination by the KBR Board
        (or
        any nominating committee thereof) for election to the KBR Board shall be
        equal
        to the number of directors computed using the following formula (rounded
        to the
        nearest whole number): the product of (i) the percentage of the total
        voting power of all of the outstanding shares of KBR Voting Stock beneficially
        owned by the Halliburton Group and (ii) the number of directors then on the
        KBR Board (assuming no vacancies exist). Notwithstanding the foregoing, if
        the
        calculation set forth in the foregoing sentence would result in Halliburton
        being entitled to elect a majority of the members of the KBR Board, the formula
        will be recalculated with the product being rounded down to the nearest whole
        number; provided, however, that if the Halliburton Group, at any time, acquires
        additional shares of KBR Common Stock so that the Halliburton Group beneficially
        owns shares of KBR Common Stock representing a majority of the total voting
        power of all of the outstanding shares of KBR Voting Stock, then the number
        of
        persons Halliburton shall be entitled to designate for nomination by the
        KBR
        Board (or any nominating committee thereof) for election to the KBR Board
        shall
        be adjusted upward, if appropriate as a result of rounding, in accordance
        with
        the provisions of this Section 5.2(d). If the number of Halliburton
        Designees serving on the KBR Board exceeds the number determined pursuant
        to the
        foregoing sentences of this Section 5.2(d) (such difference being herein
        called the “Excess
        Director Number”),
        then
        Halliburton in its sole discretion shall instruct such Halliburton Designees
        (the number of which designees shall be equal to the Excess Director Number)
        to
        promptly resign from the KBR Board, and, to the extent such persons do not
        so
        resign, Halliburton shall assist KBR in increasing the size of the KBR Board,
        so
        that after giving effect to such increase, the number of Halliburton Designees
        on the KBR Board is in accordance with the provisions of this
        Section 5.2(d). 

       

      (e)
        The
        parties hereto agree that the KBR Board shall consist of seven directors
        as of
        the IPO Closing Date, including at least four Halliburton Designees consisting
        of Messrs. Albert O. Cornelison, Jr., C. Christopher Gaut, Andrew R. Lane
        and
        Mark A. McCollum, and including Mr. William Utt, the KBR President and CEO.

       

      (f)
        For
        so long as the Halliburton Group beneficially owns shares of KBR Common Stock
        representing a majority of the total voting power of all of the outstanding
        shares of KBR Voting Stock, the parties agree that the Halliburton Board
        of
        Directors will review and approve all KBR Group projects with an estimated
        value
        in excess of $250 million. 

       

      5.3
        Committees.
        

       

      (a)
        Effective as of the IPO Closing Date and for so long as the Halliburton Group
        beneficially owns shares of KBR Common Stock representing a majority of the
        total voting power of all of the outstanding shares of KBR Voting Stock,
        any
        committee of the Board of Directors of KBR (other than the Audit Committee
        and a
        special committee of independent directors of KBR to be formed pursuant to
        Section 5.3(c) hereof) shall, unless Halliburton consents otherwise, be
        composed of directors at least a majority of which are Halliburton Designees.
        Effective as of the IPO Closing Date and for so long as the Halliburton Group
        beneficially owns shares of KBR Common Stock representing less than a majority
        but at least 15% of the total voting power of all of the outstanding shares
        of
        KBR Voting Stock, each committee of the KBR Board of Directors (other than
        the
        Audit Committee and the special committee of independent directors of KBR
        to be
        formed pursuant Section 5.3(c) hereof) shall, unless Halliburton consents
        otherwise, include at least one Halliburton Designee to the extent permitted
        by
        Law or applicable Commission or stock exchange requirement. 

       

      (b)
        The
        parties agree that the KBR Board shall form and maintain an executive committee,
        which committee shall exercise the authority of the KBR Board of Directors
        when
        the KBR Board of Directors is not in session in reviewing and approving the
        analysis, preparation and submission of significant project bids, managing
        the
        review, negotiation and implementation of significant project contracts,
        and
        reviewing the business and affairs of the KBR Group to ensure that Halliburton’s
        business practices and standards with respect to internal controls and the
        Halliburton Code of Business Conduct are consistently implemented and maintained
        by the KBR Group. For so long as the Halliburton Group beneficially owns
        shares
        of KBR Common Stock representing a majority of the total voting power of
        all
        outstanding shares of KBR Voting Stock, the executive committee shall consist
        solely of Halliburton Designees. If at any time the Halliburton Group
        beneficially owns shares of KBR Common Stock representing less than a majority
        but at least 15% of the total voting power of all of the outstanding shares
        of
        KBR Voting Stock, then Halliburton shall be entitled to designate for
        appointment by the Board to the executive committee at least one Halliburton
        Designee. 

       

      (c)
        The
        parties agree that the KBR Board shall form a special committee of independent
        directors of KBR which shall exercise the authority of the KBR Board of
        Directors with respect to FCPA Subject Matters and the rights and obligations
        of
        KBR under Section 3.4 hereof. The members of such special committee shall
        satisfy in all material respects the independence standards of Rule 303A
        of the
        NYSE Listed Company Manual, as if those standards applied. 

       

      5.4
        Subscription
        Right.
        

       

      (a)
        KBR
        hereby grants to Halliburton, on the terms and conditions set forth herein,
        a
        continuing right (the “Subscription
        Right”)
        to
        purchase from KBR, at the times set forth herein: 

       

      (i)
        with
        respect to the issuance of a class or series of shares of KBR Voting Stock,
        the
        number of such shares as is necessary to allow Halliburton to maintain its
        Voting Percentage (or, in the case of a class or series not outstanding prior
        to
        such issuance, 80% of the total number of shares of such class or series
        being
        issued); and 

       

      (ii)
        with
        respect to the issuance of a class or series of shares of KBR Non-Voting
        Stock,
        the number of such shares as is necessary to allow Halliburton to maintain
        its
        Ownership Percentage with respect to such class or series of shares (or,
        in the
        case of a class or series not outstanding prior to such issuance, 80% of
        the
        total number of shares of such class or series being issued). 

       

      The
        Subscription Right shall be assignable, in whole or in part and from time
        to
        time, by Halliburton to any member of the Halliburton Group or to a Halliburton
        Transferee pursuant to Section 5.8. The exercise price for each share
        purchased pursuant to an exercise of the Subscription Right shall be:
        (i) in the event of the issuance by KBR of shares in exchange for cash
        consideration, the per share price paid to KBR in the related Issuance Event
        (defined below); and (ii) in the event of the issuance by KBR of shares for
        consideration other than cash, the per share Market Price of such shares
        at the
        Issuance Event Date (defined below). 

       

      (b)
        The
        provisions of Section 5.4(a) hereof notwithstanding, and subject to
        Section 5.6 hereof, the Subscription Right granted pursuant to
        Section 5.4(a) shall not apply and shall not be exercisable in connection
        with the issuance by KBR of any shares of KBR Common Stock pursuant to any
        stock
        option or other executive, director or employee benefit, compensation or
        incentive plan maintained by KBR, to the extent such issuance: (i) would
        not result in Halliburton and other members of the Halliburton Group losing
        collective control of KBR within the meaning of Section 368(c) of the Code,
        (ii) would not cause Halliburton to fail to satisfy the stock ownership
        requirements of Section 1504(a)(2) of the Code with respect to the stock of
        KBR or (iii) would not cause a change of control under the provisions of
        Section 355(e) of the Code. The Subscription Right granted pursuant to
        Section 5.4(a) shall terminate if at any time the Voting Percentage, or the
        Ownership Percentage with respect to any class or series of KBR Non-Voting
        Stock, is less than 80%. 

       

      (c)
        At
        least 20 Business Days prior to the issuance of any shares of KBR Stock (other
        than pursuant to any stock option or other executive or employee benefit
        or
        compensation plan maintained by KBR in the circumstances described in
        Section 5.4(b) above and other than issuances of shares to any member of
        the Halliburton Group) or the first date on which any event could occur that,
        in
        the absence of a full or partial exercise of the Subscription Right, would
        result in a reduction in the Voting Percentage, a reduction in any Ownership
        Percentage or the issuance of any shares of a class or series of KBR Non-Voting
        Stock not outstanding prior to such issuance, KBR will notify Halliburton
        in
        writing (a “Subscription
        Right Notice”)
        of any
        plans it has to issue such shares and the date on which such issuance could
        first occur (such issuance being referred to herein as an “Issuance
        Event”
and
        the
        closing date of such issuance an “Issuance
        Event Date”).
        The
        Subscription Right Notice shall also specify the number of shares KBR intends
        to
        issue or may issue (or, if an exact number is not known, a good faith estimate
        of the range of shares KBR may issue) and the other terms and conditions
        of such
        Issuance Event. 

       

      (d)
        The
        Subscription Right may be exercised by Halliburton (or any member of the
        Halliburton Group to which all or any part of the Subscription Right has
        been
        assigned) for a number of shares equal to or less than the number of shares
        the
        Halliburton Group is entitled to purchase pursuant to Section 5.4(a). The
        Subscription Right may be exercised at any time after receipt of an applicable
        Subscription Right Notice and prior to the applicable Issuance Event Date
        by the
        delivery to KBR of a written notice to such effect specifying (i) the
        number of shares to be purchased by Halliburton or any member of the Halliburton
        Group, and (ii) a determination of the exercise price for such shares. Upon
        any such exercise of the Subscription Right, KBR will, on or prior to the
        applicable Issuance Event Date, deliver to Halliburton (or any member of
        the
        Halliburton Group designated by Halliburton), against payment therefor,
        certificates (issued in the name of Halliburton or its permitted assignee
        hereunder or as directed by Halliburton) representing the shares being purchased
        upon such exercise. Payment for such shares shall be made by wire transfer
        or
        intrabank transfer of immediately-available funds to such account as shall
        be
        specified by KBR, for the full purchase price of such shares. 

       

      (e)
        Except as provided in Section 5.4(f), any failure by Halliburton to
        exercise the Subscription Right, or any exercise for less than all shares
        purchasable under the Subscription Right, in connection with any particular
        Issuance Event shall not affect Halliburton’s right to exercise the Subscription
        Right in connection with any subsequent Issuance Event; provided, however,
        that
        the Voting Percentage and any Ownership Percentage following such Issuance
        Event
        in connection with which Halliburton so failed to exercise such Subscription
        Right in full or in part shall be recalculated to account for the dilution
        of
        Halliburton’s interest. 

       

      (f)
        The
        Subscription Right, or any part thereof, assigned to any member of the
        Halliburton Group other than Halliburton, shall terminate in the event that
        such
        member ceases to be a Majority Owned Subsidiary of Halliburton for any reason
        whatsoever. 

       

      5.5
        Issuance
        of Stock.
        Notwithstanding anything to the contrary in this Article V, following the
        IPO
        Closing Date and until the earliest to occur of (i) the date of any
        Distribution or (ii) the date that Halliburton ceases to control KBR within
        the meaning of Section 368(c) of the Code, without the prior written
        consent of Halliburton, KBR shall not issue any stock of KBR or any securities,
        securities-based awards, options, warrants or rights convertible into or
        exercisable or exchangeable for stock of KBR if such issuance would cause
        Halliburton to fail to control KBR within the meaning of Section 368(c) of
        the Code, would cause Halliburton to fail to satisfy the stock ownership
        requirements of Section 1504(a)(2) of the Code with respect to the stock of
        KBR or would cause a change of control under the provisions of
        Section 355(e) of the Code. 

       

      5.6
        Settlement
        of KBR Benefit Plan Awards.
        Following the IPO Closing Date and until the earliest to occur of (i) the
        date of any Distribution or (ii) the date that Halliburton ceases to
        control KBR within the meaning of Section 368(c) of the Code, without the
        prior written consent of Halliburton, KBR shall not issue any stock of KBR
        (or
        any securities, security-based awards, options, warrants or rights convertible
        into or exercisable or exchangeable for stock of KBR) in settlement of any
        award, including without limitation any KBR restricted stock unit, phantom
        stock, option, stock appreciation right or other securities-based award,
        granted
        pursuant to any stock option or other executive, director or employee benefit,
        compensation or incentive plan maintained by KBR. The parties hereby acknowledge
        and agree that it is their mutual intent that settlement of any such KBR
        award
        shall be made in cash, in treasury shares or via purchase by KBR of KBR Common
        Stock in the open marketplace. 

       

      5.7
        Applicability
        of Rights to Parent in the Event of an Acquisition.
        In the
        event KBR merges into, consolidates, sells substantially all of its assets
        to or
        otherwise becomes an Affiliate of a Person (other than Halliburton), pursuant
        to
        a transaction or series of related transactions in which Halliburton or any
        member of the Halliburton Group receives equity securities of such Person
        (or of
        any Affiliate of such Person) in exchange for KBR Common Stock held by
        Halliburton or any member of the Halliburton Group, all of the rights of
        Halliburton set forth in this Article V and in Section 8.5 shall continue
        in full force and effect and shall apply to the Person the equity securities
        of
        which are received by Halliburton pursuant to such transaction or series
        of
        related transactions (it being understood that all other provisions of this
        Agreement will apply to KBR notwithstanding this Section 5.7). KBR agrees
        that, without the consent of Halliburton, it will not enter into any agreement
        which will have the effect set forth in the first clause of the preceding
        sentence, unless such Person agrees to be bound by the foregoing provision.
        

       

      5.8
        Transfer
        of Halliburton’s Rights Under Article V.
        Halliburton may transfer all or any portion of its rights under this Article
        V
        to a transferee of any KBR Common Stock from any member of the Halliburton
        Group
        (a “Halliburton
        Transferee”)
        holding at least 15% of the voting power of all of the outstanding shares
        of KBR
        Common Stock. Halliburton shall give written notice to KBR of its transfer
        of
        rights under this Article V no later than 30 days after Halliburton enters
        into a binding agreement for such transfer of rights. Such notice shall state
        the name and address of the Halliburton Transferee and identify the amount
        of
        KBR Common Stock transferred and the scope of rights being transferred under
        this Article V. In connection with any such transfer, the term “Halliburton” as
        used in this Article V shall, where appropriate to give effect to the
        assignment of rights and obligations hereunder to such Halliburton Transferee,
        be deemed to refer to such Halliburton Transferee. Halliburton and any
        Halliburton Transferee may exercise the rights under this Article V in such
        priority, as among themselves, as they shall agree upon among themselves,
        and
        KBR shall observe any such agreement of which it shall have notice as provided
        above. 

       

      5.9
        Restricted
        Opportunities Under KBR Charter.
        For so
        long as Article Eighth of the KBR Charter remains in effect in accordance
        with
        its current terms, Halliburton, on behalf of itself and each member of the
        Halliburton Group, hereby agrees to renounce, to the fullest extent permitted
        by
        applicable Law, any and all rights, interest or expectancy with respect to
        each
        investment, commercial activity or other opportunity that, in each case,
        is a
“Restricted Opportunity” (as such term is defined in the KBR Charter as in
        effect on the date hereof). 

       

      ARTICLE
        VI 

       

      SUBSEQUENT
        TRANSACTION 

       

      6.1
        Sole
        Discretion of Halliburton.
        

       

      (a)
        Halliburton shall, in its sole and absolute discretion, determine whether
        one or
        more transfers of its KBR Common Stock or a Distribution shall occur, the
        date
        of the consummation of such transfer(s) or Distribution and all terms of
        such
        transfer(s) or Distribution, including, without limitation, the form, structure
        and terms of any transaction(s), exchange(s) and/or offering(s) to effect
        such
        transfer(s) or Distribution and the timing of and conditions to the consummation
        of such transfer(s) or Distribution. In addition, Halliburton may at any
        time
        decide to abandon such transfer(s) or Distribution or to modify or change
        the
        terms of such transfer(s) or Distribution, including, without limitation,
        by
        accelerating or delaying the timing of the consummation of all or part of
        such
        transfer(s) or Distribution. In the case of a Distribution, this Agreement
        is
        intended to be, and is hereby adopted as, a plan of reorganization under
        Section 368 of the Code. 

       

      (b)
        Halliburton shall select any investment banker(s) and manager(s) in connection
        with the transfer(s) or Distribution, as well as any financial printer,
        solicitation and/or exchange agent and outside counsel; provided, however,
        that
        nothing herein shall prohibit KBR from engaging (at its own expense) its
        own
        financial, legal, accounting and other advisors in connection with such transfer
        or Distribution. 

       

      6.2
        Cooperation
        for Halliburton Transfers.
        KBR
        agrees, at KBR’s sole expense, that it, and the members of the KBR Group, will
        use reasonable best efforts to assist Halliburton in any transfer of all
        or any
        portion of its KBR Common Stock, whether in a public or private sale, exchange
        or other transaction to a Halliburton Transferee, including the execution
        and
        delivery of instruments of conveyance, assignment, assumption and delivery
        of
        stock certificates, stock powers and other agreements or documents, in form
        and
        substance reasonably satisfactory to Halliburton, as shall be necessary to
        transfer such KBR Common Stock to the Halliburton Transferee and to vest
        in such
        Halliburton Transferee all related rights and obligations as shall be assigned
        to it by Halliburton hereunder and under any Ancillary Agreement. The rights
        and
        obligations of the parties in this Section 6.2 are in addition to any
        rights and obligations set forth in any Ancillary Agreement. 

       

      6.3
        Cooperation
        for Halliburton Distribution.
        KBR
        agrees, at KBR’s sole expense, to take all actions requested by Halliburton to
        facilitate a Distribution, including, without limitation, internal
        restructurings and continuation of businesses necessary to achieve such tax-free
        Distribution. KBR shall cooperate with Halliburton in all respects to accomplish
        any Distribution and shall, at Halliburton’s direction, promptly take any and
        all actions necessary or desirable to effect such Distribution, including,
        without limitation, the following actions: 

       

      (a)
        Halliburton and KBR shall prepare, file with the Commission and mail, prior
        to
        the date of the Distribution to the holders of common stock of Halliburton
        such
        information statement, registration statement or other information concerning
        KBR and the Distribution (and such other matters as Halliburton shall reasonably
        determine) as is necessary and as may be required by Law and applicable stock
        exchange requirement. Halliburton and KBR will prepare, and KBR will, to
        the
        extent required under applicable Law, file with the Commission any such
        registration statement or other documentation which Halliburton and KBR
        determine is necessary or desirable to effectuate the Distribution, and
        Halliburton and KBR shall each use reasonable best efforts to respond promptly
        to any comments of the Commission thereto and to obtain all necessary approvals
        from the Commission with respect thereto as soon as practicable. 

       

      (b)
        Halliburton and KBR shall take all such actions as may be necessary or
        appropriate under the securities or blue sky laws of the United States (and
        any
        comparable laws under any foreign jurisdiction) in connection with the
        Distribution. 

       

      (c)
        KBR
        shall prepare and file, and shall use its reasonable best efforts to have
        approved, an application for the listing of the KBR Common Stock to be
        distributed in the Distribution on the NYSE or such other exchange on which
        KBR
        Common Stock shall then be listed, subject to official notice of distribution.
        

       

      (d)
        Halliburton and KBR shall enter into a Distribution Agreement in form and
        substance acceptable to Halliburton, a form of which is attached hereto as
        Schedule
        6.3.
        

       

      6.4
        Registration
        Rights Agreement.
        The
        Registration Rights Agreement sets forth the rights and obligations of the
        parties with respect to the registration and subsequent offering of shares
        of
        KBR Common Stock held by the Halliburton Group. 

       

      ARTICLE
        VII 

       

      ARBITRATION;
        DISPUTE RESOLUTION 

       

      7.1
        Agreement
        to Arbitrate.
        The
        procedures for discussion, negotiation and arbitration set forth in this
        Article
        VII shall be the final, binding and exclusive means to resolve, and shall
        apply
        to all disputes, controversies or claims (whether in contract, tort or
        otherwise) that may rise out of or relate to, or arise under or in connection
        with: (a) this Agreement , any Prior Transfer Agreement and/or any
        Ancillary Agreement, (b) the transactions contemplated hereby or thereby,
        including all actions taken in furtherance of the transactions contemplated
        hereby or thereby on or prior to the date hereof, or (c) for a period of
        ten years after the IPO Closing Date, the commercial or economic relationship
        of
        the parties, in each case between or among any member of the Halliburton
        Group
        and the KBR Group. Each party agrees on behalf of itself and each member
        of its
        respective Group that the procedures set forth in this Article VII shall
        be the
        final, binding and exclusive remedy in connection with any dispute, controversy
        or claim relating to any of the foregoing matters and irrevocably waives
        any
        right to commence any Action in or before any Governmental Authority, except
        as
        expressly provided in Section 7.7(b) and except to the extent provided
        under the Federal Arbitration Act in the case of judicial review of arbitration
        results or awards. Each party on behalf of itself and each member of its
        respective Group irrevocably waives any right to any trial by jury with respect
        to any dispute, controversy or claim covered by this Section 7.1.

       

      7.2
        Escalation.
        (a) It is the intent of the parties to use their respective reasonable best
        efforts to resolve expeditiously any dispute, controversy or claim between
        or
        among them with respect to the matters covered by this Article VII pursuant
        to
        Section 7.1 that may arise from time to time on a mutually acceptable
        negotiated basis. In furtherance of the foregoing, any party involved in
        a
        dispute, controversy or claim may deliver a notice (an “Escalation
        Notice”)
        demanding an in-person meeting involving representatives of the parties at
        a
        senior level of management (or if the parties agree, of the appropriate business
        function or division within such entity) who have not previously been directly
        engaged in asserting or responding to the dispute. A copy of any such Escalation
        Notice shall be delivered addressed to the General Counsel, or like chief
        legal
        officer or official, of each party involved in the dispute, controversy or
        claim
        (which copy shall state that it is an Escalation Notice pursuant to this
        Agreement). Any agenda, location or procedures for such discussions or
        negotiations between the parties may be established by agreement of the parties
        from time to time; provided, however, that the parties shall use their
        reasonable best efforts to meet within 20 days of the Escalation Notice.
        

       

      (b)
        Following delivery of an Escalation Notice, the parties shall undertake good
        faith, diligent efforts to negotiate a commercially reasonable resolution
        of the
        dispute, controversy or claim. The parties may, by mutual consent, retain
        a
        mediator to aid the parties in their discussions and negotiations by informally
        providing advice to parties. Any opinion expressed by the mediator shall
        be
        strictly advisory and shall not be binding on the parties, nor shall any
        opinion
        expressed by the mediator be admissible in any arbitration proceedings. The
        mediator may be chosen from a list of mediators previously selected by the
        parties or by other agreement of the parties. Costs of the mediation shall
        be
        borne equally by the parties involved in the matter, except that each party
        shall be responsible for its own expenses. Mediation is not a prerequisite
        to an
        Arbitration Demand Notice under Section 7.3. 

       

      7.3
        Demand
        for Arbitration.
        (a) At any time following 60 days after the date of an Escalation Notice
        (the “Arbitration
        Demand Date”),
        any
        party involved in the dispute, controversy or claim (regardless of whether
        such
        party delivered the Escalation Notice) may deliver a notice demanding
        arbitration of such dispute, controversy or claim (an “Arbitration
        Demand Notice”).
        Delivery of an Escalation Notice by a party shall be a prerequisite to delivery
        of an Arbitration Demand Notice by either party, provided, however, that
        in the
        event that any party shall deliver an Arbitration Demand Notice to another
        party, such other party may itself deliver an Arbitration Demand Notice to
        such
        first party with respect to any related dispute, controversy or claim with
        respect to which the Applicable Deadline has not passed without the requirement
        of delivering an Escalation Notice. No party may assert that the failure
        to
        resolve any matter during any prior discussions or negotiations, the course
        of
        conduct during such prior discussions or negotiations, or the failure to
        agree
        on a mutually acceptable time, agenda, location or procedures for a meeting
        is a
        prerequisite to an Arbitration Demand Notice under Section 7.3. In the
        event that any party delivers an Arbitration Demand Notice with respect to
        any
        dispute, controversy or claim that is the subject of any then pending
        arbitration proceeding or of a previously delivered Arbitration Demand Notice,
        all such disputes, controversies and claims shall be resolved in the arbitration
        proceeding for which an Arbitration Demand Notice was first delivered unless
        the
        arbitrators in their sole discretion determine that it is impracticable or
        otherwise inadvisable to do so. 

       

      (b)
        Except as may be expressly provided in any Ancillary Agreement or Prior Transfer
        Agreement, any Arbitration Demand Notice may be given until the date that
        is two
        years after the later of the occurrence of the act or event giving rise to
        the
        underlying claim or the date on which such act or event was, or should have
        been, in the exercise of reasonable due diligence, discovered by the party
        asserting the claim (as applicable and as it may in a particular case be
        specifically extended by the parties in writing, the “Applicable
        Deadline”).
        Any
        discussions, negotiations or mediations between the parties pursuant to this
        Agreement or otherwise will not toll the Applicable Deadline unless expressly
        agreed in writing by the parties. Each of the parties agrees on behalf of
        itself
        and each member of its Group that if an Arbitration Demand Notice with respect
        to a dispute, controversy or claim is not given prior to the expiration of
        the
        Applicable Deadline, as between or among the parties and the members of their
        Groups, such dispute, controversy or claim will be barred. Subject to
        Section 7.7(b) and Section 7.9, upon delivery of an Arbitration Demand
        Notice pursuant to Section 7.3(a) prior to the Applicable Deadline, the
        dispute, controversy or claim, and all substantive and procedural issues
        related
        thereto, shall be decided by a three member panel of arbitrators in accordance
        with this Article VII. 

       

      7.4
        Arbitrators.
        (a) The party delivering the Arbitration Demand Notice shall notify the
        American Arbitration Association (“AAA”)
        and
        the other parties in writing describing in reasonable detail the nature of
        the
        dispute. Within 20 days of the date of the Arbitration Demand Notice, each
        party
        to the dispute shall select one arbitrator from the members of a panel of
        arbitrators of the AAA. The selected arbitrators shall then jointly select
        a
        third arbitrator from the members of a panel of arbitrators of the AAA, and
        such
        third arbitrator shall be disinterested with respect to each of the parties
        and
        shall be experienced in complex commercial arbitration. In the event that
        the
        parties’ selected arbitrators are unable to agree on the selection of the third
        arbitrator, the AAA shall select the third arbitrator, within 45 days of
        the
        date of the Arbitration Demand Notice. In the event that any arbitrator is
        unable to serve, his replacement will be selected in the same manner as the
        arbitrator to be replaced. The vote of two of the three arbitrators shall
        be
        required for any decision under this Article VII. 

       

      (b)
        The
        arbitrators will set a time for the hearing of the matter which will commence
        no
        later than 180 days after the date of appointment of the third arbitrator
        and
        which hearing will be no longer than 30 days (unless in the judgment of the
        arbitrators the matter is unusually complex and sophisticated and thereby
        requires a longer time, in which event such hearing shall be no longer than
        90
        days). The final decision of such arbitrators will be rendered in writing
        to the
        parties not later than 60 days after the last day of the hearing, unless
        otherwise agreed by the parties in writing. 

       

      (c)
        The
        place of any arbitration hereunder will be Houston, Texas and the language
        of
        any arbitration hereunder will be English, unless otherwise agreed by the
        parties. Unless otherwise agreed by the parties, the arbitration hearing
        shall
        be conducted on consecutive days. 

       

      7.5
        Hearings.
        Within
        the time period specified in Section 7.4(b), the matter shall be presented
        to the arbitrators at a hearing by means of written submissions of memoranda
        and
        verified witness statements, filed simultaneously, and responses, if necessary
        in the judgment of the arbitrators or both of the parties. If the arbitrators
        deem it to be essential to a fair resolution of the dispute, live
        cross-examination or direct examination may be permitted, but is not generally
        contemplated to be necessary. The arbitrators shall actively manage the
        arbitration with a view to achieving a just, speedy and cost-effective
        resolution of the dispute, claim or controversy. The arbitrators may, in
        their
        discretion, set time and other limits on the presentation of each party’s case,
        its memoranda or other submissions, and may refuse to receive any proffered
        evidence, which the arbitrators, in their discretion, find to be cumulative,
        unnecessary, irrelevant or of low probative nature. Any arbitration hereunder
        shall be conducted in accordance with the Commercial Arbitration Rules of
        the
        AAA in effect on the date the notice of Arbitration Demand Notice is served.
        The
        decision of the arbitrators will be final and binding on the parties, and
        judgment thereon may be had and will be enforceable in any court having
        jurisdiction over the parties. Arbitration awards will bear interest at an
        annual rate of the then-prevailing prime rate plus 2% per annum, subject to
        any maximum amount permitted by applicable law. To the extent that the
        provisions of this Agreement and the prevailing rules of the AAA conflict,
        the
        provisions of this Agreement shall govern. 

       

      7.6
        Discovery
        and Certain Other Matters.
        (a) Any party involved in a dispute, controversy or claim subject to this
        Article VII may request document production from the other party or parties
        of
        specific and expressly relevant documents, with the reasonable expenses of
        the
        producing party incurred in such production paid by the requesting party.
        Any
        such discovery shall be conducted in accordance with the International Bar
        Association Rules on the Taking of Evidence in International Commercial
        Arbitration, subject to the discretion of the arbitrators. Any such discovery
        shall be conducted expeditiously and shall not cause the hearing to be adjourned
        except upon consent of all parties involved in the applicable dispute or
        upon an
        extraordinary showing of cause demonstrating that such adjournment is necessary
        to permit discovery essential to a party to the proceeding. Disputes concerning
        the scope of document production and enforcement of the document production
        requests will be determined by written agreement of the parties involved
        in the
        applicable dispute or, failing such agreement, will be referred to the
        arbitrators for resolution. All discovery requests will be subject to the
        parties’ rights to claim any applicable privilege. The arbitrators will adopt
        procedures to protect the proprietary rights of the parties and to maintain
        the
        confidential treatment of the arbitration proceedings (except as may be required
        by law). Subject to the foregoing, the arbitrators shall have the power to
        issue
        subpoenas to compel the production of documents relevant to the dispute,
        controversy or claim. 

       

      (b)
        The
        arbitrators shall have full power and authority to determine issues of
        arbitrability but shall otherwise be limited to interpreting or construing
        the
        applicable provisions of this Agreement, any Ancillary Agreement or any Prior
        Transfer Agreement, and will have no authority or power to limit, expand,
        alter,
        amend, modify, revoke or suspend any condition or provision of this Agreement,
        any Ancillary Agreement or any Prior Transfer Agreement; it being understood,
        however, that the arbitrators will have full authority to implement the
        provisions of this Agreement, any Ancillary Agreement or any Prior Transfer
        Agreement, and to fashion appropriate remedies for breaches of this Agreement
        (including interim or permanent injunctive relief); provided that the
        arbitrators shall not have (i) any authority in excess of the authority a
        court having jurisdiction over the parties and the controversy or dispute
        would
        have absent these arbitration provisions or (ii) any right or power to
        award punitive or treble damages. It is the intention of the parties that
        in
        rendering a decision the arbitrators give effect to the applicable provisions
        of
        this Agreement, the Ancillary Agreements and the Prior Transfer Agreements
        and
        follow applicable law (it being understood and agreed that this sentence
        shall
        not give rise to a right of judicial review of the arbitrators’ award).

       

      (c)
        If a
        party fails or refuses to appear at and participate in an arbitration hearing
        after due notice, the arbitrators may hear and determine the controversy
        upon
        evidence produced by the appearing party. 

       

      (d)
        Arbitration costs will be borne equally by each party involved in the matter,
        and each party will be responsible for its own attorneys’ fees and other costs
        and expenses, including the costs of witnesses selected by such party.

       

      7.7
        Certain
        Additional Matters.
        (a) Any arbitration award shall be a bare award limited to a holding for or
        against a party and shall be without findings as to facts, issues or conclusions
        of law (including with respect to any matters relating to the validity or
        infringement of patents or patent applications) and shall be without a statement
        of the reasoning on which the award rests, but must be in adequate form so
        that
        a judgment of a court may be entered thereupon. Judgment upon any arbitration
        award hereunder may be entered in any court having jurisdiction thereof.
        

       

      (b)
        Prior
        to the time at which all of the arbitrators have been appointed pursuant
        to
        Section 7.4, any party may seek one or more temporary restraining orders in
        a court of competent jurisdiction if necessary in order to preserve and protect
        the status quo. Neither the request for, nor grant or denial of, any such
        temporary restraining order shall be deemed a waiver of the obligation to
        arbitrate as set forth herein and the arbitrators may dissolve, continue
        or
        modify any such order. Any such temporary restraining order shall remain
        in
        effect until the first to occur of the expiration of the order in accordance
        with its terms or the dissolution thereof by the arbitrators. 

       

      (c)
        Except as required by law, the parties shall hold, and shall cause their
        respective officers, directors, employees, agents and other representatives
        to
        hold, the existence, content and result of mediation or arbitration in
        confidence in accordance with the provisions of Section 8.11 and except as
        may be required in order to enforce any award. Each of the parties shall
        request
        that any mediator or arbitrator comply with such confidentiality requirement.
        

       

      7.8
        Continuity
        of Service and Performance.
        Unless
        otherwise agreed in writing, the parties will continue to provide service
        and
        honor all other commitments under this Agreement, each Ancillary Agreement,
        each
        Prior Transfer Agreement and any other agreement between or among any members
        of
        the Halliburton Group and the KBR Group during the course of the dispute
        resolution procedures pursuant to this Article VII with respect to all matters
        not subject to such dispute, controversy or claim. 

       

      7.9
        Law
        Governing Arbitration Procedures.
        The
        interpretation of the provisions of this Article VII, only insofar as they
        relate to the agreement to arbitrate and any procedures pursuant thereto,
        shall
        be governed by the Federal Arbitration Act, as amended, and other applicable
        federal law. In all other respects, the interpretation of this Agreement
        shall
        be governed as set forth in Section 9.3. 

       

      ARTICLE
        VIII 

       

      COVENANTS
        AND OTHER MATTERS 

       

      8.1
        Other
        Agreements.
        In
        addition to the specific agreements, documents and instruments contemplated
        by
        this Agreement, Halliburton and KBR agree to execute or cause to be executed
        by
        the appropriate parties and deliver, as appropriate, such other agreements,
        instruments and other documents as may be necessary or desirable in order
        to
        effect the purposes of this Agreement and the Ancillary Agreements.

       

      8.2
        Further
        Instruments.
        The
        parties intend to separate the KBR Business from the Halliburton Business
        hereby, and to convey, assign or otherwise transfer to the KBR Group the
        assets,
        rights and other items relating to the KBR Business, and to convey, assign
        or
        otherwise transfer to the Halliburton Group the assets, rights and other
        items
        relating to the Halliburton Business. At the request of either Halliburton
        or
        KBR following the Separation Date, and without further consideration, the
        other
        party will execute and deliver, and will cause the applicable members of
        its
        Group to execute and deliver, to the requesting party and the applicable
        members
        of its Group such other instruments of transfer, conveyance, assignment,
        substitution and confirmation and take such action as the requesting party
        may
        reasonably deem necessary or desirable in order more effectively to transfer,
        convey and assign to the requesting party and the members of its Group and
        confirm the requesting party’s and the members of its Group’s title to all of
        the assets, rights and other items contemplated to be transferred to the
        requesting party and the members of its Group pursuant to a Prior Transfer
        Agreement, this Agreement, the Ancillary Agreements, and any documents referred
        to therein, to put the requesting party and the members of its Group in actual
        possession and operating control thereof and to permit the requesting party
        and
        the members of its Group to exercise all rights with respect thereto (including,
        without limitation, rights under contracts and other arrangements as to which
        the consent of any third party to the transfer thereof shall not have previously
        been obtained). At the request of either Halliburton or KBR following the
        Separation Date, and without further consideration, the other party will
        execute
        and deliver, and will cause the applicable members of its Group to execute
        and
        deliver, to the requesting party and the applicable members of its Group
        all
        instruments, assumptions, novations, undertakings, substitutions or other
        documents and take such other action as the requesting party may reasonably
        deem
        necessary or desirable in order to have the other party fully and
        unconditionally assume and discharge the Liabilities contemplated to be assumed
        by the other party under a Prior Transfer Agreement, this Agreement, any
        Ancillary Agreement or any document in connection herewith and to relieve
        the
        Halliburton Group or the KBR Group, as applicable, of any liability or
        obligation with respect thereto and evidence the same to third parties. Neither
        the requesting party nor the other party shall be obligated, in connection
        with
        the foregoing, to expend money other than reasonable out-of-pocket expenses,
        attorneys’ fees and recording or similar fees. Furthermore, each party, at the
        request of another party hereto, shall execute and deliver such other
        instruments and do and perform such other acts and things as may be necessary
        or
        desirable for effecting completely the consummation of the transactions
        contemplated hereby. 

       

      8.3
        Provision
        of Corporate Records.
        Except
        as contemplated by Sections 3.4 and 3.5, as soon as practicable after the
        Separation Date, subject to the provisions of this Section 8.3 and the
        provisions of Section 6.2 of the Transition Services Agreements,
        Halliburton shall use reasonable best efforts to deliver or cause to be
        delivered to KBR all KBR Books and Records in the possession of Halliburton
        or
        any member of the Halliburton Group, and KBR shall use reasonable best efforts
        to deliver or cause to be delivered to Halliburton all Halliburton Books
        and
        Records in the possession of KBR or any member of the KBR Group. The foregoing
        shall be limited by the following: 

       

      (a)
        To
        the extent any document (including computer files, as applicable) can be
        subdivided without unreasonable effort or cost into two portions, one of
        which
        constitutes a KBR Book and Record and the other of which constitutes a
        Halliburton Book and Record, such document (including computer files, as
        applicable) shall be so subdivided and the appropriate portions shall be
        delivered to the parties. 

       

      (b)
        In
        the case of this Section 8.3, “reasonable best efforts” shall require only
        deliveries of (i) specific and discrete books and records or a reasonably
        limited class of items requested by the other party and (ii) specific and
        discrete books and records identified by either party in the ordinary course
        of
        business and determined by such party to be material to the other’s business.

       

      (c)
        Each
        party may retain copies of books and records delivered to the other, subject
        to
        holding in confidence in accordance with Section 8.11 information contained
        in such books and records. 

       

      (d)
        Each
        party may in good faith refuse to furnish any books and records under this
        Section 8.3 if it reasonably believes in good faith that doing so could
        materially adversely affect its ability to successfully assert a claim of
        Privilege. 

       

      (e)
        Neither party shall be required to deliver to the other books and records
        or
        portions thereof which are subject to any Law or confidentiality agreements
        which would by their terms prohibit such delivery; provided, however, that
        if
        requested by the other party, such party shall use reasonable best efforts
        to
        seek a waiver of or other relief from such confidentiality restriction.

       

      (f)
        Nothing in this Section 8.3 shall affect the rights and obligations of any
        party to the Tax Sharing Agreement with respect to the sharing of information
        related to Taxes. 

       

      8.4
        Agreement
        For Exchange of Information.
        

       

      (a)
        Each
        of Halliburton and KBR agrees to provide, or cause to be provided, to each
        other
        as soon as reasonably practicable after written request therefor, any
        Information in the possession or under the control of such party that the
        requesting party reasonably needs: (i) to comply with reporting,
        disclosure, filing or other requirements imposed on the requesting party
        (including under applicable securities laws) by a Governmental Authority
        having
        jurisdiction over the requesting party, (ii) for use in any Regulatory
        Proceeding, judicial proceeding or other proceeding or in order to satisfy
        audit, accounting, claims, regulatory, litigation, subpoena or other similar
        requirements, (iii) to comply with its obligations under this Agreement or
        any Ancillary Agreement or (iv) in connection with its ongoing businesses
        as it relates to the conduct of such business, as the case may be; provided,
        however, that in the event that any party determines that any such provision
        of
        Information could be commercially detrimental, violate any Law or agreement,
        or
        waive any attorney-client privilege, the parties shall take all reasonable
        measures to permit the compliance with such obligations in a manner that
        avoids
        any such harm or consequence. 

       

      (b)
        After
        the Separation Date, notwithstanding the parties’ rights and obligations in
        Section 8.5 hereof, (i) each party shall maintain in effect at its own
        cost and expense adequate systems and controls for its business to the extent
        necessary to enable the other party to satisfy its reporting, accounting,
        audit
        and other obligations in compliance with all applicable Law and stock exchange
        requirements, and (ii) each party shall provide, or cause to be provided,
        to the other party and the applicable members of its Group in such form as
        such
        requesting party shall request, at no charge to the requesting party, all
        financial and other data and information as the requesting party determines
        necessary or advisable in order to prepare its financial statements and reports
        or filings with any Governmental Authority. 

       

      (c)
        Any
        Information owned by a party that is provided to a requesting party pursuant
        to
        this Section 8.4 shall be deemed to remain the property of the providing
        party. Unless specifically set forth herein, nothing contained in this Agreement
        shall be construed as granting or conferring rights of license or otherwise
        in
        any such Information. 

       

      (d)
        To
        facilitate the possible exchange of Information pursuant to this
        Section 8.4 and other provisions of this Agreement, each party agrees to
        use reasonable best efforts to retain all Information in its respective
        possession or control substantially in accordance with its record retention
        policies as in effect on the Separation Date. For so long as the Halliburton
        Group collectively beneficially owns shares of KBR Common Stock representing
        at
        least 15% or more of the total voting power of all of the outstanding shares
        of
        KBR Voting Stock, KBR shall not amend its or any member of its Group’s record
        retention policies without the consent of Halliburton. However, except as
        set
        forth in the Tax Sharing Agreement, at any time after the date that the
        Halliburton Group collectively beneficially owns shares of KBR Common Stock
        representing less than 15% of the total voting power of all of the outstanding
        shares of KBR Voting Stock, KBR may amend its record retention policies at
        KBR’s
        discretion; provided, however, that KBR must give Halliburton thirty
        (30) days prior written notice of such change in the policy. No party will
        destroy, or permit any member of its Group to destroy, any Information that
        exists on the Separation Date (other than Information that is permitted to
        be
        destroyed under the Halliburton record retention policy in effect as of the
        date
        hereof) without first using its reasonable best efforts to notify the other
        party of the proposed destruction and giving the other party the opportunity
        to
        take possession of such Information prior to such destruction. 

       

      (e)
        No
        party shall have any liability to any other party in the event that any
        Information exchanged or provided pursuant to this Section 8.4 is found to
        be inaccurate, in the absence of willful misconduct by the party providing
        such
        Information. No party shall have any duty to update any Information exchanged
        or
        provided pursuant to this Section 8.4. No party shall have any liability to
        any other party if any Information is destroyed or lost after reasonable
        best
        efforts by such party to comply with the provisions of Section 8.4(d).

       

      (f)
        The
        rights and obligations granted under this Section 8.4 are subject to any
        specific limitations, qualifications or additional provisions on the sharing,
        exchange or confidential treatment of Information set forth in Sections 3.4
        and
        3.5 of this Agreement and any Ancillary Agreement. 

       

      (g)
        Each
        party hereto shall, except in the case of a dispute subject to Article VII
        brought by one party against another party (which shall be governed by such
        discovery rules as may be applicable under Article VII or otherwise), use
        reasonable best efforts to make available to each other party, upon written
        request, the former, current and future directors, officers, employees, other
        personnel and agents of such party as witnesses and any books, records or
        other
        documents within its control or which it otherwise has the ability to make
        available, to the extent that any such person (giving consideration to business
        demands of such directors, officers, employees, other personnel and agents)
        or
        books, records or other documents may reasonably be required by the other
        party
        in connection with any Regulatory Proceeding, judicial proceeding or other
        proceeding in which the requesting party may from time to time be involved,
        regardless of whether such Regulatory Proceeding, judicial proceeding or
        other
        proceeding is a matter with respect to which indemnification may be sought
        hereunder. The requesting party shall bear all costs and expenses in connection
        therewith; provided that witnesses shall be made available under this
        Section 8.4(g) without cost other than reimbursement of actual
        out-of-pocket expenses and reasonable attorneys’ fees and expenses incurred.

       

      8.5
        Auditors
        and Audits; Annual and Quarterly Statements and Accounting.
        (a) Each party agrees that, for so long as the Halliburton Group
        beneficially owns shares of KBR Common Stock representing 15% or more of
        the
        total voting power of all of the outstanding shares of KBR Voting Stock,
        and
        with respect to any financial reporting period during which the Halliburton
        Group collectively beneficially owns shares of KBR Common Stock representing
        15%
        or more of the total voting power of all of the outstanding shares of KBR
        Voting
        Stock: 

       

      (i)
        Selection
        of Auditor.
        KBR
        shall not select a different accounting firm than the firm selected by
        Halliburton to audit its financial statements to serve as its independent
        certified public accountants for purposes of providing an opinion on its
        consolidated financial statements without Halliburton’s prior written consent
        (which shall not be unreasonably withheld). At all times, KBR shall retain
        a
        nationally recognized accounting firm to serve as its independent certified
        public accountants for purposes of providing an opinion on KBR’s consolidated
        financial statements (the “KBR
        Auditors”).
        

       

      (ii)
        Annual
        and Quarterly Reviews.
        KBR
        shall use reasonable best efforts to enable the KBR Auditors to complete
        their
        audit such that they will date their opinion on KBR’s audited annual financial
        statements on the same date that Halliburton’s Auditors date their opinion on
        Halliburton’s audited annual financial statements, and to enable Halliburton to
        meet its timetable for the printing, filing and public dissemination of
        Halliburton’s annual financial statements, including press releases relating to
        earnings information. KBR shall use reasonable best efforts to enable the
        KBR
        Auditors to complete their quarterly review procedures such that they will
        provide clearance on KBR’s quarterly financial statements on the same date that
        Halliburton’s Auditors provide clearance on Halliburton’s quarterly financial
        statements, and to enable Halliburton to meet its timetable for the printing,
        filing and public dissemination of Halliburton’s quarterly financial statements,
        including press releases relating to earnings information. 

       

      (iii)
        Information
        for Preparation of Financial Statements.
        KBR
        shall provide to Halliburton on a timely basis all Information that Halliburton
        reasonably requires to meet its schedule for the preparation, printing, filing
        and public dissemination of Halliburton’s annual, quarterly and periodic
        financial statements, including press releases relating to earnings information.
        Without limiting the generality of the foregoing, KBR will provide all required
        financial information with respect to the KBR Group to the KBR Auditors in
        a
        sufficient and reasonable time and in sufficient detail to permit the KBR
        Auditors to take all steps and perform all reviews necessary to provide
        sufficient assurance to Halliburton’s Auditors with respect to Information to be
        included or contained in Halliburton’s annual, quarterly and periodic financial
        statements, including press releases relating to earnings information.
        Similarly, Halliburton shall provide to KBR on a timely basis all Information
        that KBR reasonably requires to meet its schedule for the preparation, printing,
        filing and public dissemination of KBR’s annual, quarterly and periodic
        financial statements, including press releases relating to earnings information.
        Without limiting the generality of the foregoing, Halliburton will provide
        all
        required financial Information with respect to the Halliburton Group to
        Halliburton’s Auditors in a sufficient and reasonable time and in sufficient
        detail to permit Halliburton’s Auditors to take all steps and perform all
        reviews necessary to provide sufficient assurance to the KBR Auditors with
        respect to Information to be included or contained in KBR’s annual, quarterly
        and periodic financial statements, including press releases relating to earnings
        information. 

       

      (iv)
        Access
        to Auditors and Work Papers.
        KBR
        shall authorize the KBR Auditors to make available to Halliburton’s Auditors
        both the personnel who performed or are performing the annual audits and
        quarterly reviews of KBR and work papers related to such reviews of KBR,
        in all
        cases within a reasonable time prior to the KBR Auditors’ opinion date, so that
        Halliburton’s Auditors are able to perform the procedures they consider
        necessary to take responsibility for the work of the KBR Auditors as it relates
        to Halliburton’s Auditors’ report on Halliburton’s financial statements, all
        within sufficient time to enable Halliburton to meet its timetable for the
        printing, filing and public dissemination of Halliburton’s annual and quarterly
        financial statements, including press releases relating to earnings information.
        Similarly, Halliburton shall authorize Halliburton’s Auditors to make available
        to the KBR Auditors both the personnel who performed or are performing the
        annual audits and quarterly reviews of Halliburton and work papers related
        to
        such reviews of Halliburton, in all cases within a reasonable time prior
        to
        Halliburton’s Auditors’ opinion date, so that the KBR Auditors are able to
        perform the procedures they consider necessary to take responsibility for
        the
        work of Halliburton’s Auditors as it relates to the KBR Auditors’ report on
        KBR’s financial statements, all within sufficient time to enable KBR to meet
        its
        timetable for the printing, filing and public dissemination of KBR’s annual and
        quarterly financial statements, including press releases relating to earnings
        information. 

       

      (v)
        Accounting
        Principles and Practices.
        Without
        the prior written consent of Halliburton, KBR may not change its accounting
        principles or practices if a change in such accounting principle or practice
        would be required to be disclosed in KBR’s financial statements as filed with
        the SEC or otherwise publicly disclosed, except for such changes which are
        required by GAAP and as to which there is no discretion on the part of KBR,
        as
        concurred in by the KBR Auditors prior to its implementation. KBR shall give
        Halliburton as much prior notice as reasonably practical of any proposed
        determination of, or any significant changes in, its accounting estimates
        or,
        subject as aforesaid, accounting principles from those in effect on the
        Separation Date. KBR will consult with Halliburton and, if requested by
        Halliburton, KBR will consult with Halliburton’s Auditors with respect thereto.
        Halliburton shall give KBR as much prior notice as reasonably practical of
        any
        proposed determination of, or any significant changes in, its accounting
        estimates or accounting principles pertaining to KBR from those in effect
        on the
        Separation Date. 

       

      (vi)
        Comfort
        Letters.
        Upon
        Halliburton’s request, KBR shall use reasonable best efforts to cause to be
        delivered “comfort letters” of the KBR Auditors with regard to KBR’s financial
        statements, dated as of the pricing dates and the closing dates and addressed
        to
        the underwriters, in any offering of securities by Halliburton or any member
        of
        the Halliburton Group for which such comfort letters are required by
        underwriters. Such “comfort letters” shall be in form reasonably satisfactory to
        Halliburton and customary in scope and substance for “comfort letters” delivered
        by independent public accountants in connection with public securities
        offerings. 

       

      (vii)
        Auditor
        Consents.
        KBR
        shall use reasonable best efforts to cause the KBR Auditors to consent to
        inclusion of the information described in this Section 8.5 and to be named
        in Halliburton’s filings with the Commission with respect to any such
        information as is customary for such consents. 

       

      (b)
        Provision
        of Financial Information.
        For so
        long as the Halliburton Group collectively beneficially owns 15% or more
        of the
        total voting power of all of the outstanding shares of KBR Voting Stock:
        (i) KBR will furnish Halliburton within ten (10) Business Days after
        the end of each quarter and ten (10) Business Days after the end of each
        fiscal year, the unaudited balance sheet, income statement and statement
        of cash
        flows of the KBR Group as at the end of such period, (ii) KBR shall furnish
        to Halliburton such financial information or documents in the possession
        of KBR
        and any member of its Group as Halliburton may reasonably request, and
        (iii) KBR shall furnish to Halliburton on a monthly basis such management
        and other periodic reports related to financial information in the form and
        substance consistent with the practice of KBR as of the date of this Agreement.
        

       

      (c)
        Assignment
        to Halliburton Transferee.
        Halliburton may transfer all or any portion of its rights under this
        Section 8.5 to a Halliburton Transferee holding at least 15% of the voting
        power of all of the outstanding KBR Common Stock. Halliburton shall give
        written
        notice to KBR of its transfer of rights under this Section 8.5 no later
        than 30 days after Halliburton enters into a binding agreement for such transfer
        of rights. Such notice shall state the name and address of the Halliburton
        Transferee and identify the amount of KBR Common Stock transferred and the
        scope
        of rights being transferred under this Section 8.5. In connection with any
        such transfer, the term “Halliburton” as used in this Section 8.5 shall,
        where appropriate to give effect to the assignment of rights and obligations
        hereunder to such Halliburton Transferee, be deemed to refer to such Halliburton
        Transferee. Halliburton and any Halliburton Transferee may exercise the rights
        under this Section 8.5 in such priority, as among themselves, as they shall
        agree upon among themselves, and KBR shall observe any such agreement of
        which
        it shall have notice as provided above. 

       

      8.6
        Audit
        Rights.
        To the
        extent any member of the Halliburton Group provides goods or services to
        any
        member of the KBR Group, or any member of the KBR Group provides goods or
        services to a member of the Halliburton Group, under this Agreement or under
        any
        Ancillary Agreement (other than pursuant to the Transition Services Agreements),
        the company providing such goods or services (the “Providing
        Company”)
        shall
        maintain complete and accurate books and records relating to costs and charges
        made to the company receiving such goods and services (the “Receiving
        Company”).
        Books
        and accounts shall be maintained in accordance with generally accepted
        accounting principles, consistently applied. Annually, the Receiving Company,
        at
        its expense, shall be entitled to audit the Providing Company’s books and
        records related to the goods and services provided during the preceding year,
        using its own personnel or personnel from its independent auditing firm.
        Discrepancies identified as a result of any audit shall be promptly reconciled
        and agreed between the parties or, if no such reconciliation is agreed by
        the
        parties, shall be resolved in accordance with the dispute resolution provisions
        of Article VII of this Agreement. Any charge which is not questioned by the
        Receiving Company within the calendar year after the calendar year in which
        the
        charge was rendered shall be deemed incontestable. 

       

      8.7
        Preservation
        of Legal Privileges.
        (a) Halliburton and KBR recognize that the members of their respective
        groups possess and will possess information and advice that has been previously
        developed but is legally protected from disclosure under legal privileges,
        such
        as the attorney-client privilege or work product exemption and other concepts
        of
        legal protection (“Privilege”).
        Each
        party recognizes that they shall be jointly entitled to the Privilege with
        respect to such privileged information and that each shall be entitled to
        maintain, preserve and assert for its own benefit all such information and
        advice, but both parties shall ensure that such information is maintained
        so as
        to protect the Privileges with respect to the other party’s interest. To that
        end, neither party will knowingly waive or compromise any Privilege associated
        with such information and advice without the prior written consent of the
        other
        party. In the event that privileged information is required to be disclosed
        to
        any arbitrator or mediator in connection with a dispute between the parties,
        such disclosure shall not be deemed a waiver of Privilege with respect to
        such
        information, and any party receiving it in connection with a proceeding shall
        be
        informed of its nature and shall be required to safeguard and protect it.
        

       

      (b)
        The
        rights and obligations created by this Section 8.7 shall apply to all
        information relating to the KBR Business as to which, but for the Separation,
        either party would have been entitled to assert or did assert the protection
        of
        a Privilege, including (i) any and all information generated prior to the
        Separation Date but which, after the Separation, is in the possession of
        either
        party and (ii) all information generated, received or arising after the
        Separation Date that refers to or relates to information described in the
        preceding clause (i). 

       

      (c)
        Upon
        receipt by either party of any subpoena, discovery or other request that
        may
        call for the production or disclosure of information that is the subject
        of a
        Privilege, or if a party obtains knowledge that any current or former employee
        of a party has received any subpoena, discovery or other request that may
        call
        for the production or disclosure of such information, such party shall provide
        the other party a reasonable opportunity to review the information and to
        assert
        any rights it may have under this Section 8.7 or otherwise to prevent the
        production or disclosure of such information. Absent receipt of written consent
        from the other party to the production or disclosure of information that
        may be
        covered by a Privilege, each party agrees that it will not produce or disclose
        any information that may be covered by a Privilege unless a court of competent
        jurisdiction has entered a final, nonappealable order finding that the
        information is not entitled to protection under any applicable Privilege.
        

       

      (d)
        Nothing in this Section 8.7 shall limit or qualify the rights and
        obligations of the parties in Section 3.4(d), Section 3.5(d) and
        Section 8.15. 

       

      8.8
        Payment
        of Expenses.
        KBR
        shall pay all underwriting fees, discounts and commissions and other direct
        costs incurred in connection with the IPO. Except as otherwise provided in
        this
        Agreement, the Ancillary Agreements or any other agreement between the parties
        relating to the Separation, the IPO or the Distribution, all other out-of-pocket
        costs and expenses of the parties hereto in connection with the preparation
        of
        this Agreement and the Ancillary Agreements, the Separation, the IPO and
        the
        Distribution shall be paid by Halliburton. Notwithstanding the foregoing,
        KBR
        shall pay any internal fees, costs and expenses incurred by KBR in connection
        with the Separation, the IPO and the Distribution. 

       

      8.9
        Governmental
        Approvals.
        The
        parties acknowledge that certain of the transactions contemplated by this
        Agreement and the Ancillary Agreements may be subject to certain conditions
        established by applicable government regulations, orders, and approvals
        (“Existing
        Authority”).
        The
        parties intend to implement this Agreement, the Ancillary Agreements and
        the
        transactions contemplated hereby and thereby consistent with and to the extent
        permitted by Existing Authority and to cooperate toward obtaining and
        maintaining in effect such Governmental Approvals as may be required in order
        to
        implement this Agreement and each of the Ancillary Agreements as fully as
        possible in accordance with their respective terms. To the extent that any
        of
        the transactions contemplated by this Agreement or any Ancillary Agreement
        require any Governmental Approvals, the parties will use their reasonable
        best
        efforts to obtain any such Governmental Approvals. 

       

      8.10
        Continuance
        of Halliburton Credit Support.
        (a) Duration
        of Existing Credit Support Agreements.
        Notwithstanding any other provision of this Agreement or any Ancillary Agreement
        to the contrary, and except as set forth in Section 8.10(b) below, the
        parties hereby agree that Halliburton and each applicable member of the
        Halliburton Group shall maintain in full force and effect each Credit Support
        Agreement which is issued and outstanding as of the Separation Date until
        the
        earlier of: (i) such time as the project contract, or all obligations of
        any member of the KBR Group thereunder, to which such Credit Support Agreement
        relates terminates or (ii) such time as such Credit Support Agreement or
        the underlying instrument to which it relates expires in accordance with
        its
        terms or is otherwise released; provided, that KBR shall use reasonable best
        efforts to attempt to release or replace the liability of Halliburton and
        the
        members of its Group under any Credit Support Agreement for which such
        replacement or release is reasonably available. 

       

      (b)
        Additional
        Credit Support Agreements Post Separation Date.
        

       

      (i)
        Until
        December 31, 2009, KBR may from time to time request, and Halliburton
        agrees to provide or cause to be provided such additional guarantees,
        indemnification or reimbursement obligations or extensions of existing
        guarantees, indemnification or reimbursement obligations as are required
        with
        respect to: (i) the issuance of additional letters of credit necessary to
        comply with KBR’s obligations under the Egypt Basic Industries Corporation
        ammonia plant project contract, the U.K. Ministry of Defense Allenby &
Connaught project contract and all other KBR project contracts existing as
        of
        December 15, 2005; (ii) the issuance of additional surety bonds
        necessary to support new task orders pursuant to the Little Rock Job Order
        Contract, the U.K. Ministry of Defense Allenby & Connaught project
        contract, the State of Missouri Job Order Contract and all other KBR project
        contracts existing as of December 15, 2005; and (iii) the issuance of
        performance guarantees necessary to support the Egypt Basic Industries
        Corporation ammonia plant project contract, the U.K. Ministry of Defense
        Allenby & Connaught project contract, the Little Rock Job Order
        Contract, the State of Missouri Job Order Contract and all other KBR project
        contracts existing as of December 15, 2005. Halliburton and each applicable
        member of the Halliburton Group shall maintain in full force and effect each
        additional Credit Support Agreement which is obtained pursuant to this
        Section 8.10(b) until the earlier of: (i) such time as the project
        contract, or all obligations of any member of the KBR Group thereunder, to
        which
        such Credit Support Agreement relates terminates or (ii) such time as such
        Credit Support Agreement or the underlying instrument to which it relates
        expires in accordance with its terms or is otherwise released; provided,
        that
        KBR shall use reasonable best efforts to attempt to release or replace the
        liability of Halliburton and the members of its Group under any such Credit
        Support Agreement for which such replacement or release is reasonably available.
        

       

      (ii)
        Except as expressly provided in this Section 8.10(b), the parties agree
        that after the Separation Date, KBR shall not: (i) request the issuance of
        any new letter of credit, surety bond or other instrument pursuant to the
        Credit
        Support Agreements, (ii) request the issuance by Halliburton of any
        additional guarantee, indemnification or reimbursement obligation for the
        benefit of any member of the KBR Group or any customer or lender thereof,
        or
        (iii) extend the term of, increase the obligations under, or otherwise
        materially amend or modify any Credit Support Agreement, in each case without
        the prior written consent of Halliburton (which consent may be withheld in
        Halliburton’s sole discretion). 

       

      (c)
        Carry
        Charge for Letters of Credit.
        For so
        long as any Credit Support Agreement that is a letter of credit remains
        outstanding prior to December 31, 2009, KBR shall pay to Halliburton a
        quarterly carry charge for continuance of such letters of credit pursuant
        to
        this Section 8.10 equal to the sum of: (i) 0.40% per annum of the
        then outstanding aggregate principal amount of all letters of credit for
        such
        quarter meeting the definition of “Performance Letters of Credit” or “Commercial
        Letters of Credit” (as such terms are defined by the KBR Credit Agreement as of
        the date hereof), and (ii) 0.80% per annum of the then outstanding
        aggregate principal amount of all letters of credit constituting financial
        letters of credit for such quarter, pro rated on a daily basis, payable on
        the
        last day of each calendar quarter by intercompany settlement or otherwise
        as the
        parties may from time to time agree. Following December 31, 2009, KBR shall
        pay to Halliburton a quarterly carry charge for continuance of any Credit
        Support Agreement that is a letter of credit pursuant to this Section 8.10
        equal to the sum of: (i) 0.90% per annum of the then outstanding
        aggregate principal amount of all letters of credit for such quarter meeting
        the
        definition of “Performance Letters of Credit” or “Commercial Letters of Credit”
(as such terms are defined by the KBR Credit Agreement as of the date hereof),
        and (ii) 1.65% per annum of the then outstanding aggregate principal
        amount of all letters of credit constituting financial letters of credit
        for
        such quarter, pro rated on a daily basis, payable on the last day of each
        calendar quarter by intercompany settlement or otherwise as the parties may
        from
        time to time agree. 

       

      (d)
        Carry
        Charge for Surety Bonds.
        For so
        long as any Credit Support Agreement that is a surety bond remains outstanding
        prior to December 31, 2009, KBR shall pay to Halliburton a quarterly carry
        charge for continuance of such surety bonds pursuant to this Section 8.10
        equal to 0.25% per annum of the then outstanding aggregate principal amount
        of such surety bonds for such quarter, pro rated on a daily basis, payable
        on
        the last day of each calendar quarter by intercompany settlement or otherwise
        as
        the parties may from time to time agree. Following December 31, 2009, KBR
        shall pay to Halliburton a quarterly carry charge for continuance of such
        surety
        bonds pursuant to this Section 8.10 equal 0.50% per annum of the then
        outstanding aggregate principal amount of such surety bonds for such quarter,
        pro rated on a daily basis, payable on the last day of each calendar quarter
        by
        intercompany settlement or otherwise as the parties may from time to time
        agree.

       

      (e)
        No
        Other Financing Obligations.
        Except
        as expressly set forth in this Section 8.10 or as contemplated by the
        agreements listed on Schedule
        9.2
        hereto,
        following the Separation Date, Halliburton shall have no obligation to provide
        or continue any credit support to, or advance any funds to or on behalf of,
        any
        member of the KBR Group. 

       

      (f)
        KBR
        Liabilities; Performance Covenants.
        

       

      (i)
        All
        obligations under the Credit Support Agreements shall be deemed to be KBR
        Liabilities, as between the Halliburton Group and the KBR Group, for purposes
        of
        this Agreement. 

       

      (ii)
        For
        so long as Halliburton or any member of the Halliburton Group remains liable
        to
        any third party with respect to any Credit Support Agreement: (i) KBR shall
        pay or perform, or cause the Person in the KBR Group for whose benefit the
        Credit Support Agreement is provided to pay or perform, the underlying
        obligation as and when the same shall become due and/or payable, to the end
        that
        no member of the Halliburton Group shall be required to make any payment
        under
        or by reason of its obligation under such Credit Support Agreement and
        (ii) each member of the Halliburton Group shall retain all rights of
        reimbursement and subrogation it may have, whether arising by law, by contract
        or otherwise, with respect to such Credit Support Agreement and such rights
        shall be enforceable against KBR as well as the member of the KBR Group for
        whose benefit the Credit Support Agreement was made. 

       

      (iii)
        For
        so long as any Credit Support Agreement remains in effect, to the extent
        that
        covenants and agreements contained in the KBR Credit Agreement, any loan
        or
        other credit agreement or other material agreement in effect on the date
        of this
        Agreement to which any member of the Halliburton Group is a party requires,
        or
        requires such party to cause, any member of the KBR Group to take or refrain
        from taking any action, or provides for a default or event of default if
        any
        member of the KBR Group takes or refrains from taking any action, such member
        of
        the KBR Group shall at all times take or refrain from taking any such action
        as
        would result in a breach or violation of, or a default under, such agreement.
        

       

      8.11
        Confidentiality.
        

       

      (a)
        Until
        the date that is five (5) years from the date hereof, Halliburton and KBR
        shall hold and shall cause the members of the Halliburton Group and the KBR
        Group, respectively, to hold, and shall each cause their respective officers,
        employees, agents, consultants and advisors to hold, in strict confidence
        and
        not to disclose or release without the prior written consent of the other
        party,
        any and all Confidential Information (as defined herein); provided, that
        the
        parties may disclose, or may permit disclosure of, Confidential Information:
        (i) 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 hereto and
        in
        respect of whose failure to comply with such obligations, Halliburton or
        KBR, as
        the case may be, will be responsible or (ii) to the extent any member of
        the Halliburton Group or the KBR Group is compelled to disclose any such
        Confidential 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 Information is made pursuant to clause (ii) 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 being compelled to disclose
        the
        Confidential Information shall furnish or cause to be furnished only that
        portion of the Confidential Information that is legally required to be
        disclosed. As used in this Section 8.11, “Confidential
        Information”
shall
        mean all proprietary, technical or operational information, data or material
        of
        one party which, prior to or following the Separation Date, has been disclosed
        by Halliburton or members of the Halliburton Group, on the one hand, or KBR
        or
        members of the KBR Group, 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 provision of this Agreement
        (except to the extent that such Confidential Information can be shown to
        have
        been (a) in the public domain through no fault of such party or
        (b) later lawfully acquired from other sources by the party to which it was
        furnished; provided, however, in the case of (b) that such sources did not
        provide such Confidential Information in breach of any confidentiality
        obligations). 

       

      (b)
        Notwithstanding anything to the contrary set forth herein, (i) Halliburton
        and the other members of the Halliburton Group, on the one hand, and KBR
        and the
        other members of the KBR Group, on the other hand, shall be deemed to have
        satisfied their obligations hereunder with respect to Confidential 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
        Information and (ii) confidentiality obligations provided for in any
        agreement between Halliburton or any other member of the Halliburton Group,
        or
        KBR or any other members of the KBR Group, on the one hand, and any employee
        of
        Halliburton or any other member of the Halliburton Group, or KBR or any other
        members of the KBR Group, on the other hand, shall remain in full force and
        effect. Confidential Information of Halliburton or any other member of the
        Halliburton Group, on the one hand, or KBR or any other member of the KBR
        Group,
        on the other hand, in the possession of and used by the other as of the
        Separation Date may continue to be used by such Person in possession of the
        Confidential Information in and only in the operation of the Halliburton
        Business or the KBR Business, as the case may be, and may be used only so
        long
        as the Confidential Information is maintained in confidence and not disclosed
        in
        violation of Section 8.11(a). Such continued right to use may not be
        transferred to any third party unless the third party purchases all or
        substantially all of the business and assets in which the relevant Confidential
        Information is used or employed in one transaction or in a series or related
        transactions. In the event that such right to use is transferred in accordance
        with the preceding sentence, the transferring party shall not disclose the
        source of the relevant Confidential Information. 

       

      (c)
        Nothing in this Section 8.11 shall limit or qualify the rights and
        obligations of the parties with respect to Sections 3.4 and 3.5 hereof.

       

      (d)
        Nothing in Sections 8.3, 8.4 or 8.5 shall require KBR to violate any agreement
        with any third parties regarding the confidentiality of confidential and
        proprietary information relating to that third party or its business; provided,
        however, that in the event that KBR is required under Sections 8.3, 8.4 or
        8.5
        to disclose any such information, KBR shall use reasonable best efforts to
        seek
        to obtain such third party’s consent to the disclosure of such information.
        Similarly, nothing in Sections 8.3, 8.4 or 8.5 shall require Halliburton
        to
        violate any agreement with any third parties regarding the confidentiality
        of
        confidential and proprietary information relating to that third party or
        its
        business; provided, however, that in the event that Halliburton is required
        under Sections 8.3, 8.4 or 8.5 to disclose any such information, Halliburton
        shall use reasonable best efforts to seek to obtain such third party’s consent
        to the disclosure of such information. 

       

      (e)
        Nothing in this Section 8.11 shall limit or qualify the rights and
        obligations of the parties under the Intellectual Property Matters Agreement.
        

       

      8.12
        Receipt
        of Notices.
        If a
        party receives a notice or other communication from any Governmental Authority
        or third party, or otherwise becomes aware of any fact or circumstance after
        the
        Separation Date relating to an asset, contract or ownership interest transferred
        to the other party or liability assumed by the other party, it will promptly
        forward the notice or other communication to the other party or give notice
        to
        the other party of such fact or circumstance of which it has become aware.
        Each
        of Halliburton and KBR will comply, and will cause members of their respective
        Groups to comply, with this Section 8.12. 

       

      8.13
        Non
        Solicitation of Employees.
        

       

      (a)
        Halliburton
        No Hire.
        For a
        period of one (1) year from the Separation Date, Halliburton agrees not to
        (i) solicit, recruit or hire any employees, independent contractors or
        officers of the KBR Group who have worked for or been contracted to the KBR
        Business immediately prior to the Separation Date and who are employed full-time
        by KBR or a member of the KBR Group immediately after the Separation Date
        or
        (ii) solicit or encourage any current employee or independent contractor of
        the KBR Group who has worked full-time for the KBR Business to leave the
        employment of KBR or a member of the KBR Group. Nothing in this
        Section 8.13 shall prevent or restrict Halliburton or any member of the
        Halliburton Group from employing any individual who responds to a general
        solicitation for employment made by or on behalf of Halliburton or any member
        of
        the Halliburton Group that is not specifically directed at employees,
        independent contractors or officers of KBR who have worked in the KBR Business
        or any individual who, after the Separation Date, initiates contact with
        Halliburton or any member of the Halliburton Group for purposes of seeking
        employment. 

       

      (b)
        KBR
        No
        Hire.
        For a
        period of one (1) year from the Separation Date, KBR agrees not to
        (i) solicit, recruit or hire any employees, independent contractors or
        officers of the Halliburton Group who have worked for or been contracted
        to the
        Halliburton Business immediately prior to the Separation Date and who are
        employed full-time by Halliburton or a member of the Halliburton Group
        immediately after the Separation Date or (ii) solicit or encourage any
        current employee or independent contractor of the Halliburton Group who has
        worked full-time for the Halliburton Business to leave the employment of
        Halliburton or a member of the Halliburton Group. Nothing in this
        Section 8.13 shall prevent or restrict KBR or any member of the KBR Group
        from employing any individual who responds to a general solicitation for
        employment made by or on behalf of KBR or any member of the KBR Group that
        is
        not specifically directed at employees, independent contractors or officers
        of
        Halliburton who have worked in the Halliburton Business or any individual
        who,
        after the Separation Date, initiates contact with KBR or any member of the
        KBR
        Group for purposes of seeking employment. 

       

      8.14
        Halliburton
        Policies and Procedures.
        (a) For so long as the Halliburton Group beneficially owns shares of KBR
        Common Stock representing a majority of the total voting power of all of
        the
        outstanding shares of KBR Voting Stock, the KBR Group will consistently
        implement and maintain Halliburton’s business practices and standards with
        respect to internal controls and the Halliburton Code of Business Conduct,
        which
        Halliburton may amend or supplement from time to time in its sole discretion.
        

       

      (b)
        Notwithstanding the foregoing, for a period of five (5) years following the
        Separation Date, the KBR Group will consistently implement and maintain the
        business practices and standards adopted by the Halliburton Board of Directors
        in July 2006 for the KBR Group with respect to internal control procedures
        relating to use of foreign agents; provided, however, that the KBR Group
        may
        amend such procedures during such 5-year period upon the prior written consent
        of Halliburton, not to be unreasonably withheld. 

       

      8.15
        Antitrust
        Matters.
        KBR and
        Halliburton each agree, on behalf of itself and the members of its Group,
        to at
        all times during the term of this Agreement use reasonable best efforts to
        assist with the other party’s full cooperation with any Governmental Authority
        in its investigation of Antitrust Matters and such other party’s investigation,
        defense and/or settlement of any claim by any Governmental Authority relating
        to
        or arising out of the Antitrust Matters. Without limiting the foregoing,
        a
        party’s reasonable best efforts to assist with the other party’s full
        cooperation contemplated by the preceding sentence shall include: 

       

      (a)
        Without limiting or qualifying the parties’ rights and obligations in
        Section 8.4 or Section 3.4, each of Halliburton and KBR agrees, on
        behalf of itself and the members of its Group, to provide, or cause to be
        provided, to each other as soon as reasonably practicable after written request
        therefor, any Information relating to the Antitrust Matters, in the possession
        or under the control of such party that the requesting party reasonably needs:
        (i) to comply with reporting, disclosure, filing or other requirements
        imposed on the requesting party (including under applicable securities laws)
        by
        a Governmental Authority having jurisdiction over the requesting party,
        (ii) for use in any Regulatory Proceeding, judicial proceeding or other
        proceeding or in order to satisfy audit, accounting, claims, regulatory,
        litigation, subpoena or other similar requirements, (iii) to allow the
        other party to defend or settle any claim relating to Antitrust Matters for
        which such party may be responsible, or (iv) to comply with its obligations
        under this Agreement or any Ancillary Agreement; provided, however, that
        neither
        party shall be required by this Section 8.15 to violate any Law or waive
        any attorney-client or other work-product privilege. In the event that any
        party
        determines that such provision of Information pursuant to this Section 8.15
        could violate any Law or agreement, or waive any attorney-client or work-product
        privilege, the parties shall take all reasonable measures to permit the
        compliance with such obligations in a manner that avoids any such harm or
        consequence. 

       

      (b)
        Notwithstanding Section 8.4, each party hereby undertakes, on behalf of
        itself and the members of its Group, to preserve, maintain and retain all
        documents, records and other tangible evidence related to Antitrust Matters.
        

       

      (c)
        Each
        party agrees, on behalf of itself and the members of its Group, to use
        reasonable best efforts to (i) make available any of its current and former
        directors, officers, employees, agents, distributors, attorneys and Affiliates
        who may have been involved in the Antitrust Matters and whose cooperation
        is
        requested by the other party, the DOJ or other Governmental Authority; and
        (ii) recommend orally and in writing that any and all such persons
        cooperate fully (including by appearing for interviews with Governmental
        Authorities or testimony, including sworn testimony before a grand jury)
        with
        any investigation conducted by a party, the DOJ or other Governmental Authority
        with respect to the Antitrust Matters. 

       

      (d)
        Each
        party agrees to promptly inform and disclose to the other party any
        developments, communications or negotiations between such party or any member
        of
        its Group, on the one hand, and any Governmental Authority or third party,
        on
        the other hand, with respect to Antitrust Matters, except as prohibited by
        law
        or lawful order of a Governmental Authority. In addition, upon either party’s
        reasonable request, the attorneys, accountants, consultants or other advisors
        of
        the Board of Directors or any committee thereof of a requested party shall
        brief
        the Board of Directors or any committee thereof of the requesting party
        concerning the status of or issues arising under or relating to the Antitrust
        Matters. 

       

      8.16
        Cooperation
        for Litigation.
        In
        addition to the rights and obligations of the parties as set forth in Article
        III and Sections 8.4 and 8.7 herein, KBR and Halliburton each agree, on behalf
        of itself and the members of its Group, to at all times during the term of
        this
        Agreement use reasonable best efforts to assist with such other party’s
        investigation, litigation, defense and/or settlement of any claim by or against
        any Third Party or Governmental Authority relating to or arising out of the
        KBR
        Business or the Halliburton Business, as applicable, other than with respect
        to
        a dispute subject to Article VII brought by one party against another party;
        provided, however, that nothing in this Section 8.16 shall be interpreted
        to limit or qualify in any respect the parties’ additional cooperation
        obligations with respect to the FCPA Subject Matters, the Barracuda-Caratinga
        Bolts Matter and the Antitrust Matters, as set forth in Sections 3.4, 3.5
        and
        8.15, respectively. 

       

      8.17
        Performance
        Standard.
        Each of
        Halliburton and KBR agrees to at all times exercise good faith and fair dealing
        in the performance of its rights and obligations under this Agreement.

       

      ARTICLE
        IX 

       

      MISCELLANEOUS
        

       

      9.1
        Limitation
        of Liability.
        NOTWITHSTANDING
        ANYTHING TO THE CONTRARY IN ANY ANCILLARY AGREEMENT, IN NO EVENT SHALL ANY
        MEMBER OF THE HALLIBURTON GROUP OR THE KBR GROUP OR THEIR RESPECTIVE DIRECTORS,
        OFFICERS AND EMPLOYEES BE LIABLE TO ANY OTHER MEMBER OF THE HALLIBURTON GROUP
        OR
        THE KBR GROUP FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE
        DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY
        (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT OR ANY ANCILLARY
        AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY
        OF SUCH
        DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT
        EACH
        PARTY’S INDEMNIFICATION OBLIGATIONS FOR LIABILITIES TO THIRD PARTIES AS SET
        FORTH IN THIS AGREEMENT OR ANY ANCILLARY AGREEMENT. 

       

      9.2
        Conflicting
        Agreements; Entire Agreement.
        For
        avoidance of doubt, the parties agree that the agreements set forth on
Schedule
        9.2
        hereto
        shall continue in full force and effect notwithstanding the execution of
        this
        Agreement, and nothing in this Agreement shall be construed to obligate either
        party hereto to take any action or refrain from taking any action that would
        result in a breach under any agreement listed on Schedule
        9.2.
        This
        Agreement, the Prior Transfer Agreements, the Ancillary Agreements and the
        agreements listed on Schedule
        9.2,
        and the
        schedules referenced or attached hereto and thereto, constitute the entire
        agreement of the parties to date with respect to the separation of KBR and
        Halliburton, and supersede all prior written and oral agreements and all
        contemporaneous oral agreements and understandings with respect to such
        separation. Except as otherwise expressly provided herein, in the event of
        a
        conflict between this Agreement and any Prior Transfer Agreement, any Ancillary
        Agreement or any agreement set forth on Schedule
        9.2
        hereto,
        the provisions of such Prior Transfer Agreement, such Ancillary Agreement
        or
        such agreement set forth on Schedule
        9.2
        hereto,
        as applicable, shall prevail over the provisions hereof. 

       

      9.3
        Governing
        Law.
        Except
        as set forth in Section 7.9, this Agreement shall be governed and construed
        and enforced in accordance with the laws of the State of Delaware as to all
        matters regardless of the laws that might otherwise govern under the principles
        of conflicts of laws applicable thereto. 

       

      9.4
        Termination.
        This
        Agreement and all Ancillary Agreements may be terminated at any time prior
        to
        the IPO Closing Date by and in the sole discretion of Halliburton without
        the
        approval of KBR. This Agreement and any Ancillary Agreement may be terminated
        at
        any time after the IPO Closing Date by mutual consent of Halliburton and
        KBR. In
        the event of termination pursuant to this Section 9.4 prior to the IPO
        Closing Date, neither party shall have any liability of any kind to the other
        party other than as set forth in Section 8.8 hereof. In the event of
        termination after the IPO Closing Date, the provisions of Article I, Article
        VII, Section 8.11 and Article IX shall survive. 

       

      9.5
        Notices.
        (a) Unless expressly provided herein, all notices, claims, certificates,
        requests, demands and other communications hereunder shall be in writing
        addressed to the attention of the addressee’s General Counsel at the address of
        its principal executive office or to such other address or facsimile number
        for
        a party as it shall have specified by like notice, and shall be deemed to
        be
        duly given: (i) when personally delivered or (ii) if mailed registered
        or certified mail, postage prepaid, return receipt requested, on the date
        the
        return receipt is executed or the letter refused by the addressee or its
        agent
        or (iii) if sent by overnight courier which delivers only upon the signed
        receipt of the addressee, on the date the receipt acknowledgment is executed
        or
        refused by the addressee or its agent or (iv) if sent by facsimile or other
        generally accepted means of electronic transmission, on the date confirmation
        of
        transmission is received (provided that a copy of any notice delivered pursuant
        to this clause (iv) shall also be sent pursuant to clause (ii) or
        (iii)). 

       

      (b)
        Any
        delivery, notice, or other communication to Halliburton in accordance with
        this
        Agreement will be conclusively deemed for all purposes to be delivery, notice
        or
        other communication to the appropriate member of the Halliburton Group and
        any
        delivery, notice or other communication given by Halliburton will be
        conclusively deemed for all purposes to be a delivery, notice or communication
        given by the appropriate member of the Halliburton Group. 

       

      (c)
        Any
        delivery, notice or other communication to KBR in accordance with this Agreement
        will be conclusively deemed for all purposes to be delivery, notice or other
        communication to the appropriate member of the KBR Group and any delivery,
        notice or other communication given by KBR will be conclusively deemed for
        all
        purposes to be a delivery, notice or communication given by the appropriate
        member of the KBR Group. 

       

      9.6
        Counterparts.
        This
        Agreement, including the Schedules hereto and the other documents referred
        to
        herein, may be executed in counterparts, each of which shall be deemed to
        be an
        original but all of which shall constitute one and the same agreement.

       

      9.7
        No
        Third Party Beneficiaries; Assignment.
        This
        Agreement shall inure to the benefit of and be binding upon the parties hereto
        and their respective legal representatives, successors and assigns, and nothing
        in this Agreement, express or implied, is intended to confer upon any other
        Person any rights or remedies of any nature whatsoever under or by reason
        of
        this Agreement. Except as expressly provided herein or as otherwise agreed
        by
        the parties, this Agreement may not be assigned by any party hereto.

       

      9.8
        Severability.
        If any
        term or other provision of this Agreement or the Schedules attached hereto
        is
        determined by a nonappealable decision by a court, administrative agency
        or
        arbitrator to be invalid, illegal or incapable of being enforced by any rule
        of
        law or public policy, all other conditions and provisions of this Agreement
        shall nevertheless remain in full force and effect so long as the economic
        or
        legal substance of the transactions contemplated hereby is not affected in
        any
        manner materially adverse to 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 in an
        acceptable manner to the end that transactions contemplated hereby are fulfilled
        to the fullest extent possible. 

       

      9.9
        Failure
        or Indulgence Not Waiver; Remedies Cumulative.
        No
        failure or delay on the part of either party hereto in the exercise of any
        right
        hereunder shall impair such right or be construed to be a waiver of, or
        acquiescence in, any breach of any representation, warranty or agreement
        herein,
        nor shall any single or partial exercise of any such right preclude other
        or
        further exercise thereof or of any other right. All rights and remedies existing
        under this Agreement or the Schedules attached hereto are cumulative to,
        and not
        exclusive of, any rights or remedies otherwise available. 

       

      9.10
        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. 

       

      9.11
        Authority.
        Each of
        the parties hereto represents to the other that (a) it has, or its Group
        member shall have, the corporate or other requisite power and authority to
        execute, deliver and perform this Agreement and the Ancillary Agreements,
        (b) the execution, delivery and performance of this Agreement and the
        Ancillary Agreements by it have been, or by its Group member will be, duly
        authorized by all necessary corporate or other actions, (c) it has, or its
        Group member shall have, duly and validly executed and delivered this Agreement
        and the Ancillary Agreements to be executed and delivered on or prior to
        the
        Separation Date, and (d) this Agreement and such Ancillary Agreements are
        legal, valid and binding obligations, enforceable against it or its Group
        member
        in accordance with their respective terms subject to applicable bankruptcy,
        insolvency, reorganization, moratorium or other similar laws affecting
        creditors’ rights generally and general equity principles. 

       

      9.12
        Interpretation.
        The
        headings contained in this Agreement, in any Schedule hereto and in the table
        of
        contents to this Agreement are for reference purposes only and shall not
        affect
        in any way the meaning or interpretation of this Agreement. Any capitalized
        term
        used in any Schedule but not otherwise defined therein, shall have the meaning
        assigned to such term in this Agreement. When a reference is made in this
        Agreement to an Article or a Section, or a Schedule, such reference shall
        be to
        an Article or Section of, or a Schedule to, this Agreement unless otherwise
        indicated. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      WHEREFORE,
        the parties have signed this Master Separation Agreement effective as of
        the
        date first set forth above. 

       

      
        	 	 
	
                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
                  & CEOTax Sharing Agreement between Hal and KBR Holdings

    EXHIBIT
      10.2 

     

    TAX
      SHARING AGREEMENT 

     

    BY
      AND AMONG 

     

    HALLIBURTON
      COMPANY 

     

    AND
      ITS AFFILIATED COMPANIES 

     

    AND
      

     

    KBR
      INC. 

     

    AND
      ITS AFFILIATED COMPANIES 

     

    January 1,
      2006 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

    TABLE
      OF CONTENTS 

     

    
      	 	 	 
	
               

              ARTICLE
                I. DEFINITIONS

               

            	
              2

               

            
	
               

              Section 1.01

               

            	
               

              Definitions

               

            	
              2

               

            
	 	 
	
              ARTICLE
                II. PREPARATION AND FILING OF TAX RETURNS PRIOR TO DECONSOLIDATION
                YEAR

            	
              9

               

            
	
               

              Section 2.01

               

            	
               

              Manner
                of Filing

               

            	
              9

               

            
	 	 
	
              ARTICLE
                III. ALLOCATION OF TAXES PRIOR TO DECONSOLIDATION YEAR

            	
              10

               

            
	
               

              Section 3.01

               

            	
               

              Liability
                of the ESG Group for Consolidated and Combined Taxes

               

            	
              10

               

            
	
               

              Section 3.02

               

            	
               

              Liability
                of the KBR Group for Consolidated and Combined Taxes

               

            	
              10

               

            
	
               

              Section 3.03

               

            	
               

              ESG
                Group Federal Income Tax Liability

               

            	
              10

               

            
	
               

              Section 3.04

               

            	
               

              KBR
                Group Federal Income Tax Liability

               

            	
              10

               

            
	
               

              Section 3.05

               

            	
               

              ESG
                Group Combined Tax Liability

               

            	
              11

               

            
	
               

              Section 3.06

               

            	
               

              KBR
                Group Combined Tax Liability

               

            	
              11

               

            
	
               

              Section 3.07

               

            	
               

              Preparation
                and Delivery of Pro Forma Tax Returns

               

            	
              11

               

            
	
               

              Section 3.08

               

            	
               

              Intercompany
                Payables and Receivables

               

            	
              11

               

            
	
               

              Section 3.09

               

            	
               

              Credit
                for Use of Attributes

               

            	
              12

               

            
	
               

              Section 3.10

               

            	
               

              Subsequent
                Changes in Treatment of Tax Items

               

            	
              13

               

            
	
               

              Section 3.11

               

            	
               

              Foreign
                Corporations

               

            	
              13

               

            
	
               

              Section 3.12

               

            	
               

              KBR
                Holdings Not Disregarded

               

            	
              13

               

            
	
               

              Section 3.13

               

            	
               

              State
                and Local Filings

               

            	
              13

               

            
	
               

              Section 3.14

               

            	
               

              Group
                Relief

               

            	
              14

               

            
	 	 
	
              ARTICLE
                IV. PREPARATION AND FILING OF TAX RETURNS FOR AND AFTER THE
                DECONSOLIDATION YEAR

            	
              16

               

            
	
               

              Section 4.01

               

            	
               

              Manner
                of Filing

               

            	
              16

               

            
	
               

              Section 4.02

               

            	
               

              Pre-Deconsolidation
                Tax Returns

               

            	
              16

               

            
	
               

              Section 4.03

               

            	
               

              Post-Deconsolidation
                Tax Returns

               

            	
              16

               

            
	
               

              Section 4.04

               

            	
               

              Accumulated
                Earnings and Profits, Initial Determination and Subsequent
                Adjustments

               

            	
              17

               

            
	
               

              Section 4.05

               

            	
               

              Tax
                Basis of Assets Transferred

               

            	
              17

               

            
	 	 
	
              ARTICLE
                V. ALLOCATION OF TAXES FOR AND AFTER DECONSOLIDATION YEAR; ALLOCATION
                OF
                ADDITIONAL TAX LIABILITIES

            	
              17

               

            
	
               

              Section 5.01

               

            	
               

              Liability
                of the ESG Group for Consolidated and Combined Taxes

               

            	
              17

               

            
	
               

              Section 5.02

               

            	
               

              Liability
                of the KBR Group for Consolidated and Combined Taxes

               

            	
              17

               

            
	
               

              Section 5.03

               

            	
               

              ESG
                Group Federal Income Tax Liability

               

            	
              18

               

            
	
               

              Section 5.04

               

            	
               

              KBR
                Group Federal Income Tax Liability

               

            	
              18

               

            
	
               

              Section 5.05

               

            	
               

              ESG
                Group Combined Tax Liability

               

            	
              19

               

            
	
               

              Section 5.06

               

            	
               

              KBR
                Group Combined Tax Liability

               

            	
              19

               

            
	
               

              Section 5.07

               

            	
               

              Preparation
                and Delivery of Pro Forma Tax Returns

               

            	
              19

               

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	 	 	 
	
               

              Section 5.08

               

            	
               

              HESI
                Intercompany Payables and Receivables; KBR Payment

               

            	
              19

               

            
	
               

              Section 5.09

               

            	
               

              Credit
                for Use of Attributes

               

            	
              19

               

            
	
               

              Section 5.10

               

            	
               

              Subsequent
                Changes in Treatment of Tax Items

               

            	
              20

               

            
	
               

              Section 5.11

               

            	
               

              Foreign
                Corporations

               

            	
              21

               

            
	
               

              Section 5.12

               

            	
               

              Allocation
                of Additional Tax Liabilities

               

            	
              21

               

            
	
               

              Section 5.13

               

            	
               

              Tax
                Attributes of KBR Not Carried Back

               

            	
              27

               

            
	 	 
	
              ARTICLE
                VI. TAX DISPUTE INDEMNITY; CONTROL OF PROCEEDINGS; COOPERATION AND
                EXCHANGE OF INFORMATION

            	
              27

               

            
	
               

              Section 6.01

               

            	
               

              Tax
                Dispute Indemnity and Control of Proceedings

               

            	
              27

               

            
	
               

              Section 6.02

               

            	
               

              Cooperation
                and Exchange of Information

               

            	
              29

               

            
	
               

              Section 6.03

               

            	
               

              Reliance
                on Exchanged Information

               

            	
              30

               

            
	
               

              Section 6.04

               

            	
               

              Payment
                of Tax and Indemnity

               

            	
              30

               

            
	
               

              Section 6.05

               

            	
               

              Prior
                Tax Years

               

            	
              31

               

            
	 	 
	
              ARTICLE
                VII. WARRANTIES AND REPRESENTATIONS; INDEMNITY

            	
              32

               

            
	
               

              Section 7.01

               

            	
               

              Warranties
                and Representations Relating to Actions of Halliburton and
                KBR

               

            	
              32

               

            
	
               

              Section 7.02

               

            	
               

              Warranties
                and Representations Relating to the Distribution

               

            	
              32

               

            
	
               

              Section 7.03

               

            	
               

              Covenants
                Relating to the Tax Treatment of the Distribution

               

            	
              32

               

            
	
               

              Section 7.04

               

            	
               

              Spinoff
                Indemnification

               

            	
              36

               

            
	
               

              Section 7.05

               

            	
               

              Indemnified
                Liability - Spinoff

               

            	
              36

               

            
	
               

              Section 7.06

               

            	
               

              Amount
                of Indemnified Liability for Income Taxes - Spinoff

               

            	
              36

               

            
	
               

              Section 7.07

               

            	
               

              Indemnity
                Amount - Spinoff

               

            	
              37

               

            
	
               

              Section 7.08

               

            	
               

              Additional
                Indemnity Remedy - Spinoff

               

            	
              37

               

            
	
               

              Section 7.09

               

            	
               

              Calculation
                of Indemnity Payments

               

            	
              37

               

            
	
               

              Section 7.10

               

            	
               

              Prompt
                Performance

               

            	
              38

               

            
	
               

              Section 7.11

               

            	
               

              Interest

               

            	
              38

               

            
	
               

              Section 7.12

               

            	
               

              Tax
                Records

               

            	
              38

               

            
	
               

              Section 7.13

               

            	
               

              KBR
                Representations and Covenants

               

            	
              38

               

            
	
               

              Section 7.14

               

            	
               

              Halliburton
                Representations and Covenants

               

            	
              39

               

            
	
               

              Section 7.15

               

            	
               

              Continuing
                Covenants

               

            	
              39

               

            
	 	 
	
              ARTICLE
                VIII. MISCELLANEOUS PROVISIONS

            	
              39

               

            
	
               

              Section 8.01

               

            	
               

              Notice

               

            	
              39

               

            
	
               

              Section 8.02

               

            	
               

              Required
                Payments

               

            	
              40

               

            
	
               

              Section 8.03

               

            	
               

              Injunctions

               

            	
              40

               

            
	
               

              Section 8.04

               

            	
               

              Further
                Assurances

               

            	
              40

               

            
	
               

              Section 8.05

               

            	
               

              Parties
                in Interest

               

            	
              40

               

            
	
               

              Section 8.06

               

            	
               

              Setoff

               

            	
              41

               

            
	
               

              Section 8.07

               

            	
               

              Change
                of Law

               

            	
              41

               

            
	
               

              Section 8.08

               

            	
               

              Termination
                and Survival

               

            	
              41

               

            
	
               

              Section 8.09

               

            	
               

              Amendments;
                No Waivers

               

            	
              41

               

            
	
               

              Section 8.10

               

            	
               

              Governing
                Law and Interpretation

               

            	
              41

               

            
	
               

              Section 8.11

               

            	
               

              Resolution
                of Certain Disputes

               

            	
              41

               

            
	
               

              Section 8.12

               

            	
               

              Confidentiality

               

            	
              42

               

            
	
               

              Section 8.13

               

            	
               

              Costs,
                Expenses and Attorneys’ Fees

               

            	
              42

               

            
	
               

            	 	 
	
               

              Section 8.14

               

            	
               

              Counterparts

               

            	
              42

               

            
	
               

              Section 8.15

               

            	
               

              Severability

               

            	
              42

               

            
	
               

              Section 8.16

               

            	
               

              Entire
                Agreement; Termination of Prior Agreements

               

            	
              43

               

            
	
               

              Section 8.17

               

            	
               

              Assignment

               

            	
              43

               

            
	
               

              Section 8.18

               

            	
               

              Fair
                Meaning

               

            	
              43

               

            
	
               

              Section 8.19

               

            	
               

              Commencement

               

            	
              43

               

            
	
               

              Section 8.20

               

            	
               

              Titles
                and Headings

               

            	
              44

               

            
	
               

              Section 8.21

               

            	
               

              Construction

               

            	
              44

               

            
	
               

              Section 8.22

               

            	
               

              Termination

               

            	
              44

               

            

    

     

    TAX
      SHARING AGREEMENT 

     

    BY
      AND
      BETWEEN 

    HALLIBURTON
      COMPANY AND KBR, INC. 

     

    This
      Tax
      Sharing Agreement (the “Agreement”), dated as of this 1st day of January, 2006,
      by and between HALLIBURTON COMPANY, a Delaware corporation (“Halliburton”), KBR
      Holdings LLC, a Delaware limited liability company (“KBR Holdings”), and KBR,
      Inc., a Delaware corporation (“KBR, Inc.”), is entered into as of the 15th day
      of November, 2006. 

     

    RECITALS
      

     

    WHEREAS,
      Halliburton is the common parent of an affiliated group of corporations within
      the meaning of Section 1504(a) of the Code (as defined herein), which
      currently files a consolidated federal income tax return; 

     

    WHEREAS,
      Halliburton Energy Services, Inc., a Delaware corporation (“HESI”), and certain
      other entities and divisions comprise the Energy Services Group of Halliburton
      (collectively, the “ESG Group”), and KBR (as defined herein) and certain other
      entities and divisions comprise the Energy & Chemicals Group and
      Government & Infrastructure Group of Halliburton (collectively, the
“KBR Group”); 

     

    WHEREAS,
      the ESG Group and the KBR Group each include various corporations that join
      with
      Halliburton in the filing of a consolidated U.S. federal income tax return,
      as
      well as limited liability companies and other entities organized under the
      laws
      of domestic and foreign jurisdictions; 

     

    WHEREAS,
      Halliburton and KBR determined it would be appropriate and desirable, effective
      as of December 31, 2005, for KBR to reorganize its operations to separate
      the operations traditionally associated with KBR from the operations
      traditionally associated with Halliburton (the “Restructuring”); 

     

    WHEREAS,
      Halliburton and KBR contemplate that as part of the Restructuring, KBR may
      make
      an initial public offering (the “IPO”) of KBR common stock that would reduce
      Halliburton’s ownership of KBR to not less than the amount required for
      Halliburton to control KBR within the meaning of Section 368(c) of the Code
      with respect to the stock of KBR and to not less than the amount required for
      Halliburton to control KBR within the meaning of Section 1504(a)(2) of the
      Code with respect to the stock of KBR; 

     

    WHEREAS,
      Halliburton may determine that it is in the best interests of the Parties to
      cause (1) Kellogg Energy Services, Inc. to distribute the shares of KBR
      common stock to DII Industries, LLC, a Delaware limited liability company
      (“DII”), (2) DII in turn to distribute the shares of KBR common stock to
      HESI and (3) HESI in turn to distribute the shares of KBR common stock to
      Halliburton, subject to the terms and conditions of the Master Separation
      Agreement or the Master Separation and Distribution Agreement (as applicable)
      (collectively, the “Preliminary Distributions”); 

    WHEREAS,
      in connection with the Preliminary Distributions, Halliburton may determine
      that
      it is in the best interests of the Parties for Halliburton to distribute all
      of
      its shares of KBR common stock, on a pro rata basis, to the holders of the
      common stock of Halliburton, subject to the terms and conditions of the Master
      Separation Agreement or the Master Separation and Distribution Agreement (as
      applicable) (the “Distribution”); 

     

    WHEREAS,
      the Preliminary Distributions and the Distribution are intended to qualify
      as
      tax free distributions under Section 355 of the Code; 

     

    WHEREAS,
      upon the Deconsolidation (as defined herein), Halliburton and KBR will cease
      to
      be members of the same affiliated group for federal income tax purposes;

     

    WHEREAS,
      the Parties wish to set forth the general principles under which they will
      allocate and share various Taxes (as defined herein) and related liabilities;
      

     

    WHEREAS,
      in contemplation of the IPO and the Deconsolidation, Halliburton, on behalf
      of
      itself and its present and future subsidiaries other than KBR (“Halliburton
      Group”), and KBR, on behalf of itself and its present and future subsidiaries
      (“KBR Group”) are entering into this Agreement to provide for the allocation
      between the Halliburton Group and the KBR Group of all responsibilities,
      liabilities and benefits relating to all Taxes paid or payable by either group
      for all taxable periods beginning on or after the Effective Date (as defined
      herein) and to provide for certain other matters; 

     

    WHEREAS,
      the Parties intend and agree that the Effective Date with respect to the
      provisions of Articles II, III, VI and VIII is January 1, 2001.

     

    NOW,
      THEREFORE, in consideration of the mutual agreements, provisions, and covenants
      contained in this Agreement, and other good and valuable consideration, the
      receipt and sufficiency of which is hereby acknowledged, the parties hereby
      agree as follows: 

     

    ARTICLE
      I. 

     

    DEFINITIONS
      

     

    Section
      1.01 Definitions.
      The
      following terms shall have the following meanings (such meanings to be equally
      applicable to both the singular and the plural forms of the terms defined):
      

     

    “Accounting
      Referee”
is
      defined in Section 8.11 herein. 

     

    “Additional
      ESG Group Relief”
is
      defined in Section 3.14(a). 

     

    “Additional
      KBR Group Relief”
is
      defined in Section 3.14(a). 

     

    “Adequate
      Assurances”
means
      posting a bond or providing a letter of credit reasonably acceptable to the
      Indemnified Party; provided, however, if the Indemnifying Party fails to post
      such bond or provide such letter of credit, the Indemnifying Party shall provide
      cash equal to the Indemnity Amount to the Indemnified Party not less than thirty
      (30) days prior to the date on which such Tax would become due and payable
      by the Indemnified Party. 

     

    “Affiliate”
of
      any
      person means any person, corporation, partnership or other entity directly
      or
      indirectly controlling, controlled by or under common control with such person.
      

     

    “Affiliated
      Group”
means
      an affiliated group of corporations within the meaning of Section 1504(a)
      (excluding Section 1504(b)) of the Code for the taxable period in question.

     

    “Code”
means
      the Internal Revenue Code of 1986, as amended, or any successor thereto, as
      in
      effect for the taxable period in question. 

     

    “Combined
      Group”
means
      a
      group of corporations or other entities that files a Combined Return.

     

    “Combined
      Return”
means
      any Tax Return (other than for Federal Income Taxes) filed on a consolidated,
      combined (including nexus combination, worldwide combination, domestic
      combination, line of business combination or any other form of combination),
      unitary or Group Relief basis that includes activities of members of the ESG
      Group or the KBR Group, or both, as the case may be. 

     

    “Compensatory
      Transaction”
has
      the
      meaning set forth in Section 7.03(b)(iii). 

     

    “Consolidated
      Group”
means
      the affiliated group of corporations (as defined in Section 1504(a) of the
      Code) of which Halliburton is the common parent corporation. 

     

    “Consolidated
      Return”
means
      a
      Tax Return filed with respect to Federal Income Taxes for the Consolidated
      Group. 

     

    “Control”
means
      stock constituting a 50% or greater interest under Section 355(e) of the
      Code. 

     

    “Deconsolidation”
means
      the event that reduces the amount of KBR stock owned directly or indirectly
      by
      Halliburton to be less than the amount required for Halliburton to control
      KBR
      within the meaning of Section 1504(a)(2) of the Code. 

     

    “Deconsolidation
      Date”
means
      the date the Deconsolidation occurs. 

     

    “Deconsolidation
      Year”
means
      the taxable year in which the Deconsolidation Date occurs. 

     

    “Displaced
      ESG Tax Attribute”
has
      the
      meaning set forth in Section 5.12(g) of this Agreement. 

     

    “Disputed
      Tax Issue”
is
      defined in Section 6.01(a) herein. 

     

    “Disputed
      Tax Issue Indemnitee”
is
      defined in Section 6.01(a) herein. 

     

    “Disputed
      Tax Issue Indemnitor”
is
      defined in Section 6.01(a) herein. 

     

    “Disqualifying
      Action”
is
      defined in Section 7.03(a)(i) hereof. 

     

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

     

    “Distribution
      Date”
is
      the
      date the Distribution occurs. 

     

    “Dual
      Consolidated Loss”
has
      the
      meaning ascribed to such term in Treasury Regulation § 1.1503-2(c)(5),
      Treasury Regulation § 1.1503-2A(b)(2), or any successor regulations
      promulgated under section 1503 of the Code. 

     

    “Effective
      Date”
is
      January 1, 2006, provided, however that the Effective Date with respect to
      Articles II, III, VI and VIII is January 1, 2001. 

     

    “ESG
      Allocated Attributes”
has
      the
      meaning set forth in Section 3.09 or Section 5.09 of this Agreement as
      the case requires. 

     

    “ESG
      Group”
has
      the
      meaning set forth in the Recitals to this Agreement. 

     

    “ESG
      Group Combined Tax Liability”
means,
      with respect to any taxable period, the ESG Group’s liability for Taxes owed
      with respect to Combined Returns, as determined under Section 3.05 or
      Section 5.05 of this Agreement as the case requires. 

     

    “ESG
      Group Federal Income Tax Liability”
means,
      with respect to any taxable period, the ESG Group’s liability for Federal Income
      Taxes, as determined under Section 3.03 or Section 5.03 of this
      Agreement as the case requires. 

     

    “ESG
      Group Members”
means
      those entities or divisions of entities included in the ESG Group as set forth
      on Exhibit A, hereto. 

     

    “ESG
      Group Pro Forma Combined Return”
means
      a
      pro forma Combined Return or other schedule prepared pursuant to
      Section 3.05 or Section 5.05 of this Agreement as the case requires.

     

    “ESG
      Group Pro Forma Consolidated Return”
means
      a
      pro forma consolidated U.S. Federal Income Tax Return or other schedule prepared
      pursuant to Section 3.03 or Section 5.03 of this Agreement as the case
      requires. 

     

    “ESG
      Group Relief Tax Attribute”
is
      defined in Section 3.14(a). 

     

    “ESG
      Stand-Alone Attributes”
has
      the
      meaning set forth in Section 3.09(a) or Section 5.09(a) of this
      Agreement as the case requires. 

     

    “Federal
      Income Tax”
means
      any Tax imposed under Subtitle A of the Code or any other provision of United
      States Federal Income Tax law (including, without limitation, the Taxes imposed
      by Sections 11, 55, 59A, and 1201(a) of the Code), and any interest, additions
      to Tax or penalties applicable or related thereto. 

     

    “Final
      Determination”
means
      the final resolution of any Tax (or other matter) for a taxable period,
      including related interest or penalties, that, under applicable law, is not
      subject to further appeal, review or modification through proceedings or
      otherwise, including (i) by the expiration of a statute of limitations or a
      period for the filing of claims for refunds, amending Tax Returns, appealing
      from adverse determinations, or recovering any refund (including by offset),
      (ii) by a decision, judgment, decree, or other order by a court of
      competent jurisdiction, which has become final and unappealable, (iii) by a
      closing agreement or an accepted offer in compromise under Section 7121 or
      7122 of the Code, or comparable agreements under laws of other jurisdictions,
      (iv) by execution of an Internal Revenue Service Form 870 or 870-AD, or by
      a comparable form under the laws of other jurisdictions (excluding, however,
      with respect to a particular Tax Item for a particular taxable period any such
      form that reserves (whether by its terms or by operation of law) the right
      of
      the taxpayer to file a claim for refund and/or the right of the Tax Authority
      to
      assert a further deficiency with respect to such Tax Item for such period),
      or
      (v) by any allowance of a refund or credit, but only after the expiration
      of all periods during which such refund may be adjusted. 

     

    “Foreign
      Tax Credit Adjustment”
has
      the
      meaning set forth in Section 5.12(f) hereof. 

     

    “Group
      Relief”
has
      the
      meaning set forth in Section 3.14(a) hereof. 

     

    “Halliburton
      Affiliated Group”
means,
      for each taxable period, the Affiliated Group of which Halliburton or any
      successor of Halliburton is the common parent. 

     

    “Halliburton
      Affiliated Group Federal Income Tax Return”
means
      the consolidated Federal income Tax Return of the Halliburton Affiliated Group.
      

     

    “Halliburton
      Group”
is
      defined in the Recitals to this Agreement. 

     

    “Indemnified
      Liability”
has
      the
      meaning set forth in Section 7.05. 

     

    “Indemnified
      Party”
has
      the
      meaning set forth in Section 7.04(b) of this Agreement. 

     

    “Indemnity
      Amount”
has
      the
      meaning set forth in Section 7.07. 

     

    “Indemnifying
      Party”
has
      the
      meaning set forth in Section 7.04(b) of this Agreement. 

     

    “IPO”
is
      defined in the Recitals to this Agreement. 

     

    “IRS”
means
      the United States Internal Revenue Service or any successor thereto, including,
      but not limited to, its agents, representatives, and attorneys. 

     

    “KBR”
means
      KBR Holdings from the Effective Date to the day immediately prior to the earlier
      of (i) the Deconsolidation Date or (ii) the date of the IPO and means
      KBR, Inc. from and after such date. 

     

    “KBR
      Affiliated Group”
means,
      for each taxable period, the Affiliated Group of which KBR or any successor
      of
      KBR is the common parent. 

     

    “KBR
      Allocated Attributes”
has
      the
      meaning set forth in Section 3.09 or Section 5.09 of this Agreement as
      the case requires. 

     

    “KBR
      Businesses”
means
      the present, former and future subsidiaries, divisions and businesses of any
      member of the KBR Group which are not, or are not contemplated by the Master
      Separation Agreement or the Master Separation and Distribution Agreement (as
      applicable) to be, part of the Halliburton Group immediately after the
      Deconsolidation Date. 

     

    “KBR
      Foreign Taxes”
has
      the
      meaning set forth in Section 5.12(f) of this Agreement. 

     

    “KBR
      Group”
is
      defined in the Recitals to this Agreement. 

     

    “KBR
      Group Combined Tax Liability”
means,
      with respect to any taxable period, the KBR Group’s liability for Taxes owed
      with respect to Combined Returns, as determined under Section 3.06 or
      Section 5.06 of this Agreement as the case requires. 

     

    “KBR
      Group Federal Income Tax Liability”
means,
      with respect to any taxable period, the KBR Group’s liability for U.S. Federal
      Income Taxes, as determined under Section 3.04 or Section 5.04 of this
      Agreement as the case requires. 

     

    “KBR
      Group Members”
means
      those entities or divisions of entities included in the KBR Group as set forth
      on Exhibit B, hereto. 

     

    “KBR
      Group Pro Forma Combined Return”
means
      a
      pro forma Combined Return or other schedule prepared pursuant to
      Section 3.06 or Section 5.06 of this Agreement as the case requires.

     

    “KBR
      Group Pro Forma Consolidated Return”
means
      a
      pro forma consolidated U.S. Federal Income Tax Return or other schedule prepared
      pursuant to Section 3.04 or Section 5.04 of this Agreement as the case
      requires. 

     

    “KBR
      Group Relief Tax Attribute”
has
      the
      meaning set forth in Section 3.14(a) of this Agreement. 

     

    “KBR
      Losses”
has
      the
      meaning set forth in Section 5.12(g) of this Agreement. 

     

    “KBR
      Restructuring Issue”
is
      defined in Section 6.01(c) herein. 

     

    “KBR
      Stand-Alone Attributes”
has
      the
      meaning set forth in Section 3.09(b) or Section 5.09(b) of this
      Agreement as the case requires. 

     

    “Loss
      Adjustment”
has
      the
      meaning set forth in Section 5.12(g) of this Agreement. 

     

    “Master
      Separation Agreement”
means
      that certain Master Separation Agreement entered into by Halliburton and KBR,
      dated November 20, 2006, together with that certain Distribution Agreement
      entered into between Halliburton and KBR attached as a Schedule to such Master
      Separation Agreement. 

     

    “Master
      Separation and Distribution Agreement”
means
      that certain Master Separation and Distribution Agreement entered into by
      Halliburton and KBR, dated November 20, 2006. 

     

    “Non-Transacting
      Party”
is
      defined in Section 7.03(b)(i) herein. 

     

    “Notice”
is
      defined in Section 8.01 herein. 

     

    “Party”
means
      each of Halliburton and KBR, and, solely for purposes of this definition,
“Halliburton” includes the Halliburton Group and “KBR” includes the KBR Group,
      all as of the Deconsolidation Date. Each of Halliburton and KBR shall cause
      the
      Halliburton Group and the KBR Group, respectively, to comply with this
      Agreement. 

     

    “Post-Deconsolidation
      Period”
means
      any period beginning after the Deconsolidation Date. 

     

    “Potential
      Disqualifying Action”
is
      defined in Section 7.03(a)(iii) hereof. 

     

    “Pre-Deconsolidation
      Period”
means
      any period ending on or before the Deconsolidation Date. 

     

    “Preliminary
      Distributions”
is
      defined in the Recitals to this Agreement. 

     

    “Private
      Letter Ruling”
means
      the private letter ruling issued by the IRS to Halliburton in connection with
      the Spinoff. 

     

    “Project
      Constructor”
means
      the transaction, effective December 15, 2003, pursuant to which Halliburton
      separated the ESG Group, on the one hand, from the Energy & Chemicals
      Group and the Government & Infrastructure Group (formerly the
      Engineering & Construction Group), on the other hand, with HESI acting
      as the holding company for the ESG Group and DII acting as the holding company
      for the Energy & Chemicals Group and the Government &
Infrastructure Group. 

     

    “Required
      Tax Attribute Carryback”
is
      defined in Section 5.13 hereof. 

     

    “Restricted
      Period”
means
      the period beginning two years before the Distribution Date and ending two
      years
      after the Distribution Date. 

     

    “Restructuring”
is
      defined in the Recitals to this Agreement. 

     

    “Restructuring
      Taxes”
means
      any and all Taxes resulting from the Restructuring or from Project Constructor,
      and shall include any related interest, penalties, Tax credit recapture or
      other
      additions to Tax, including, without limitation, any Tax imposed pursuant to,
      or
      as a result of, the application of Section 311 of the Code. 

     

    “Ruling
      Documents”
means
      (1) the request for a ruling under Section 355 and various other
      sections of the Code, that have been or will be filed with the IRS in connection
      with the Spinoff, together with any supplemental filings or ruling requests
      or
      other materials subsequently submitted on behalf of Halliburton, its
      subsidiaries and shareholders to the IRS, the appendices and exhibits thereto,
      and any rulings issued by the IRS to Halliburton in connection with the Spinoff
      or (2) any similar filings submitted to, or rulings issued by, any other
      Tax Authority in connection with the Spinoff. 

     

    “Section
      171A”
has
      the
      meaning set forth in Section 3.14(c). 

     

    “Spinoff”
means
      the separation of KBR from Halliburton through the Distribution. 

     

    “Subsequent
      Ruling”
has
      the
      meaning set forth in Section 7.03(a)(iii). 

     

    “Subsequent
      Opinion”
has
      the
      meaning set forth in Section 7.03(a)(iii). 

     

    “Tainting
      Act”
means
      (i) any act of omission or commission, including but not limited to, any
      transaction, representation, or election which would constitute a breach by
      KBR
      (or its successors) of the warranties, representations and covenants of Sections
      7.02 or 7.03 hereof (without regard to whether a Subsequent Opinion had been
      obtained); (ii) any breach of any representation or covenant given by KBR
      in connection with the Private Letter Ruling, Subsequent Ruling, Tax Opinion
      or
      Subsequent Opinion which relates to the qualification of the Distribution as
      a
      Tax Free Spinoff; or (iii) any transaction involving the stock or assets of
      KBR (or its successors) occurring after the Deconsolidation Date. 

     

    “Tax”
means
      any of the Taxes. 

     

    “Tax
      Attribute”
means
      one or more of the following attributes of a member of either the ESG Group
      or
      the KBR Group: (i) with respect to the Consolidated Return, a net operating
      loss, a net capital loss, an unused investment credit, an unused foreign tax
      credit, an excess charitable contribution, a U.S. federal minimum tax credit
      or
      U.S. federal general business credit (but not tax basis or earnings and profits)
      and (ii) any comparable Tax Item reflected on a Combined Return.

     

    “Tax
      Authority”
means
      a
      governmental authority (foreign or domestic) or any subdivision, agency,
      commission or authority thereof or any quasi-governmental or private body having
      jurisdiction over the assessment, determination, collection or imposition of
      any
      Tax (including, without limitation, the U.S. Internal Revenue Service).

     

    “Tax
      Controversy”
means
      any audit, examination, dispute, suit, action, litigation or other judicial
      or
      administrative proceeding initiated by KBR, Halliburton, the IRS or any other
      Tax Authority. 

     

    “Tax
      Free Spinoff”
is
      defined in Section 7.02(a) hereof. 

     

    “Tax
      Item”
means
      any item of income, gain, loss, deduction or credit, or other item reflected
      on
      a Tax Return or any Tax Attribute. 

     

    “Tax
      Counsel”
means
      a
      nationally recognized law firm selected by Halliburton and engaged to deliver
      the Tax Opinion. 

     

    “Tax
      Opinion”
means
      an opinion of Tax Counsel to the effect that the Preliminary Distributions
      and
      the Distribution should qualify as a Tax Free Spinoff. 

     

    “Tax
      Opinion Documents”
means
      the officer’s certificates and other documents submitted to Tax Counsel and
      relied on by Tax Counsel in rendering the Tax Opinion. 

     

    “Tax
      Return”
means
      any return, report, certificate, form or similar statement or document
      (including, any related or supporting information or schedule attached thereto
      and any information return, amended Tax Return, claim for refund or declaration
      of estimated tax) required to be supplied to, or filed with, a Tax Authority
      in
      connection with the determination, assessment or collection of any Tax or the
      administration of any laws, regulations or administrative requirements relating
      to any Tax. 

     

    “Taxes”
means
      all forms of taxation, whenever created or imposed, and whenever imposed by
      a
      national, local, municipal, governmental, state, federation or other body,
      and
      without limiting the generality of the foregoing, shall include net income,
      alternative or add-on minimum tax, gross income, sales, use, ad valorem, gross
      receipts, value added, franchise, profits, license, transfer, recording,
      withholding, payroll, employment, excise, severance, stamp occupation, premium,
      property, windfall profit, custom duty, or other tax, governmental fee or other
      like assessment or charge of any kind whatsoever, together with any related
      interest, penalties, or other additions to tax, or additional amounts imposed
      by
      any such Tax Authority. 

     

    “Transacting
      Party”
is
      defined in Section 7.03(b)(i) herein. 

     

    Any
      term
      used but not capitalized herein that is defined in the Code or in the Treasury
      Regulations thereunder, shall to the extent required by the context of the
      provision at issue, have the meaning assigned to it in the Code or such
      regulation. 

     

    ARTICLE
      II. 

     

    PREPARATION
      AND FILING OF TAX 

    RETURNS
      PRIOR TO DECONSOLIDATION YEAR 

     

    Section
      2.01 Manner
      of Filing.
      

     

    (a)
      For
      periods after the Effective Date and prior to the Deconsolidation Year and
      except as provided in Section 2.0l(b) hereof, Halliburton shall have the
      sole and exclusive responsibility for the preparation and filing of, and shall
      prepare and file or cause to be prepared and filed: (1) all Consolidated
      Returns and (2) all Combined Returns. 

     

    (b)
      For
      periods after the Effective Date and prior to the Deconsolidation Year and
      except as otherwise provided in Section 2.0l(a) hereof, the ESG Group and
      the KBR Group shall have the sole and exclusive responsibility for the
      preparation and filing of, and shall prepare and file or cause to be prepared
      and filed, all Tax Returns of the ESG Group Members and the KBR Group Members
      that are not required to be filed on a consolidated or combined basis. With
      respect to any Combined Return required to be filed in a foreign taxing
      jurisdiction, Halliburton shall determine, in its sole discretion, whether
      ESG
      Group Members or KBR Group Members, rather than Halliburton, shall have the
      responsibility for preparing and filing such Combined Return and the manner
      in
      which Taxes related to such Combined Return shall be allocated and paid.

     

    ARTICLE
      III. 

     

    ALLOCATION
      OF TAXES PRIOR TO DECONSOLIDATION YEAR 

     

    Section
      3.01 Liability
      of the ESG Group for Consolidated and Combined Taxes.
      For
      each taxable year ending prior to the Deconsolidation Year and beginning on
      or
      after the Effective Date, the ESG Group shall be liable to Halliburton for
      an
      amount equal to the ESG Group Federal Income Tax Liability and the ESG Group
      Combined Tax Liability. 

     

    Section
      3.02 Liability
      of the KBR Group for Consolidated and Combined Taxes.
      For
      each taxable year ending prior to the Deconsolidation Year and beginning on
      or
      after the Effective Date, the KBR Group shall be liable to Halliburton for
      an
      amount equal to the KBR Group Federal Income Tax Liability and the KBR Group
      Combined Tax Liability to the extent such liabilities are paid by Halliburton
      or
      by a member of the ESG Group. 

     

    Section
      3.03 ESG
      Group Federal Income Tax Liability.
      With
      respect to each taxable year ending prior to the Deconsolidation Year and
      beginning on or after the Effective Date, the ESG Group Federal Income Tax
      Liability for such taxable period shall be the Federal Income Taxes for such
      taxable period, as determined on an ESG Group Pro Forma Consolidated Return
      prepared: 

     

    (a)
      assuming that the members of the ESG Group were not included in the Consolidated
      Group and by including only Tax Items of members of the ESG Group that are
      included in the Consolidated Return; 

     

    (b)
      except as provided in Section 3.03(e) hereof, using all elections,
      accounting methods and conventions used on the Consolidated Return for such
      period; 

     

    (c)
      applying the highest statutory marginal corporate income Tax rate in effect
      for
      such taxable period; 

     

    (d)
      excluding any Tax Attributes for which HESI has been compensated pursuant to
      Section 3.09 hereof; 

     

    (e)
      assuming that the ESG Group elects not to carry back any net operating losses;
      and 

     

    (f)
      assuming that the ESG Group’s utilization of any Tax Attribute carryforward or
      carryback is limited to the Tax Attributes of the ESG Group that would be
      available if the ESG Group Federal Income Tax Liability for each taxable year
      ending after January 1, 2001 were determined in accordance with this
      Section 3.03. 

     

    Section
      3.04 KBR
      Group Federal Income Tax Liability.
      With
      respect to each taxable year ending prior to the Deconsolidation Year and
      beginning on or after the Effective Date, the KBR Group Federal Income Tax
      Liability for such taxable period shall be the Federal Income Taxes for such
      taxable period, as determined on an KBR Group Pro Forma Consolidated Tax Return
      prepared: 

     

    (a)
      assuming that the members of the KBR Group were not included in the Consolidated
      Group and by including only Tax Items of members of the KBR Group that are
      included in the Consolidated Return; 

     

    (b)
      except as provided in Section 3.04(e) hereof, using all elections,
      accounting methods and conventions used on the Consolidated Return for such
      period; 

     

    (c)
      applying the highest statutory marginal corporate income Tax rate in effect
      for
      such taxable period; 

     

    (d)
      excluding any Tax Attributes for which KBR has been compensated pursuant to
      Section 3.09 hereof; 

     

    (e)
      assuming that the KBR Group elects not to carry back any net operating losses
      and may elect either to deduct or take a credit for foreign Taxes paid or deemed
      paid (and to carryback or carryforward any excess foreign Taxes); and

     

    (f)
      assuming that the KBR Group’s utilization of any Tax Attribute carryforward or
      carryback is limited to the Tax Attributes of the KBR Group that would be
      available if the KBR Group Federal Income Tax Liability for each taxable year
      ending after January 1, 2001 were determined in accordance with this
      Section 3.04. 

     

    Section
      3.05 ESG
      Group Combined Tax Liability.
      With
      respect to any taxable year ending prior to the Deconsolidation Year and
      beginning on or after the Effective Date, the ESG Group Combined Tax Liability
      shall be the sum for such taxable period of the ESG Group’s liability for Taxes
      owed with respect to Combined Returns, as determined on the ESG Group Pro Forma
      Combined Returns prepared in a manner consistent with the principles and
      procedures set forth in Section 3.03 hereof. 

     

    Section
      3.06 KBR
      Group Combined Tax Liability.
      With
      respect to any taxable year ending prior to the Deconsolidation Year and
      beginning on or after the Effective Date, the KBR Group Combined Tax Liability
      shall be the sum for such taxable period of the KBR Group’s liability for Taxes
      owed with respect to Combined Returns, as determined on the KBR Group Pro Forma
      Combined Returns prepared in a manner consistent with the principles and
      procedures set forth in Section 3.04 hereof. 

     

    Section
      3.07 Preparation
      and Delivery of Pro Forma Tax Returns.
      Not
      later than ninety (90) days following the date on which the related
      Consolidated Return or Combined Return, as the case may be, is filed with the
      appropriate Tax Authority, Halliburton shall prepare and deliver to HESI and
      KBR, respectively, pro forma Tax Returns calculating (i) the ESG Group
      Federal Income Tax Liability or the ESG Group Combined Tax Liability, and
      (ii) the KBR Group Federal Income Tax Liability or the KBR Group Combined
      Tax Liability, which is attributable to the period covered by such filed Tax
      Return. 

     

    Section
      3.08 Intercompany
      Payables and Receivables.
      The
      liability of the ESG Group and the KBR Group for (i) the ESG Group Federal
      Income Tax Liability and (ii) the KBR Group Federal Income Tax Liability,
      respectively, shall be reflected in the intercompany accounts of Halliburton
      and
      HESI or KBR, as the case may be. 

     

    Section
      3.09 Credit
      for Use of Attributes.
      Not
      later than ninety (90) days following the filing of the Consolidated Return
      for each taxable year, Halliburton shall determine the aggregate amount of
      the
      Tax Attributes of the Consolidated Group and all Combined Groups that are
      allocable to the ESG Group (the “ESG Allocated Attributes”) and the KBR Group
      (the “KBR Allocated Attributes”) as of the end of such year and shall inform
      HESI and KBR, respectively, of such determination. 

     

    (a)
      If
      the amount of the ESG Allocated Attributes is less than the amount of Tax
      Attributes (as reasonably determined by Halliburton) that would have been
      available to the ESG Group at the end of such year had the ESG Group Members
      not
      been included in the Consolidated Return and the Combined Returns (the “ESG
      Stand-Alone Attributes”), the value of such shortfall, to the extent such
      shortfall is attributable to the use of the ESG Group’s Tax Attributes by KBR
      Group Members, shall be reflected in the intercompany accounts as an amount
      payable by Halliburton to HESI. If the amount of the ESG Allocated Attributes
      is
      greater than the ESG Stand-Alone Attributes, the value of such excess, to the
      extent such excess is attributable to the use of Tax Attributes of KBR Group
      Members by ESG Group Members during such year, shall be reflected in the
      intercompany accounts as an amount payable by HESI to Halliburton. For this
      purpose, a Tax Attribute shall be treated as used by KBR Group Members or ESG
      Group Members only to the extent that such Tax Attribute is necessary to reduce
      the KBR Group Federal Income Tax Liability or ESG Group Federal Income Tax
      Liability (computed in accordance with Section 3.04 or 3.03) for such year.
      In calculating the ESG Stand-Alone Attributes, the utilization of any Tax
      Attribute carryforward by ESG Group Members shall be subject to the limitation
      described in Section 3.03(f) hereof. For purposes of this section, the
      value of any Tax Attribute shall be equal to the amount of Taxes (computed
      in
      accordance with Section 3.03 hereof) that would be avoided by the payor if
      it had sufficient income to fully utilize such Tax Attribute in such year.
      

     

    (b)
      If
      the amount of the KBR Allocated Attributes is less than the amount of Tax
      Attributes (as reasonably determined by Halliburton) that would have been
      available to the KBR Group at the end of such year had the KBR Group Members
      not
      been included in the Consolidated Return and the Combined Returns (the “KBR
      Stand-Alone Attributes”), the value of such shortfall, to the extent such
      shortfall is attributable to the use of the KBR Group’s Tax Attributes by ESG
      Group Members, shall be reflected in the intercompany accounts as an amount
      payable by Halliburton to KBR. If the amount of the KBR Allocated Attributes
      is
      greater than the KBR Stand-Alone Attributes, the value of such excess, to the
      extent such excess is attributable to the use of Tax Attributes of ESG Group
      Members by KBR Group Members during such year, shall be reflected in the
      intercompany accounts as an amount payable by KBR to Halliburton. For this
      purpose, a Tax Attribute shall be treated as used by ESG Group Members or KBR
      Group Members only to the extent that such Tax Attribute is necessary to reduce
      the ESG Group Federal Income Tax Liability or KBR Group Federal Income Tax
      Liability (computed in accordance with Section 3.03 or 3.04) for such year.
      In calculating the KBR Stand-Alone Attributes, the utilization of any Tax
      Attribute carryforward by KBR Group Members shall be subject to the limitation
      described in Section 3.04(f) hereof. For purposes of this section, the
      value of any Tax Attribute shall be equal to the amount of Taxes (computed
      in
      accordance with Section 3.04 hereof) that would be avoided by the payor if
      it had sufficient income to fully utilize such Tax Attribute in such year.
      

     

    Section
      3.10 Subsequent
      Changes in Treatment of Tax Items.
      For any
      taxable year ending prior to the Deconsolidation Year and beginning on or after
      the Effective Date, in the event of a change in the treatment of any Tax Item
      of
      any member of the Consolidated Group or a Combined Group as a result of a Final
      Determination, Halliburton shall calculate (i) the change to the ESG Group
      Federal Income Tax Liability or ESG Group Combined Tax Liability and/or the
      KBR
      Group Federal Income Tax Liability or the KBR Group Combined Tax Liability
      and
      (ii) any change to the Allocated Attributes and/or the Stand-Alone
      Attributes of the ESG Group and the KBR Group, and such changes shall be
      properly reflected in the intercompany accounts described in Section 3.09
      hereof. 

     

    Section
      3.11 Foreign
      Corporations.
      Any
      Taxes associated with the filing of a separate Tax Return in a foreign
      jurisdiction with respect to an ESG Group Member or a KBR Group Member shall
      be
      allocated to and paid directly by such member. Any Taxes and Tax Attributes
      associated with the filing of a separate Tax Return in a foreign jurisdiction
      that includes the Tax Items of one or more ESG Group Members and one or more
      KBR
      Group Members shall be allocated to such members by Halliburton in a manner
      consistent with the principles set forth in this Article III. 

     

    Section
      3.12 KBR
      Holdings Not Disregarded.
      Notwithstanding KBR Holding’s classification as an entity disregarded as an
      entity separate from its owner under Treasury Regulations § 301.7701-3:

     

    (a)
      Tax
      Attributes of the KBR Group shall include the income and deductions of KBR
      Holdings and such income and deductions of KBR Holdings shall not be included
      in
      the ESG Group’s Tax Attributes. 

     

    (b)
      Intercompany accounts payable between Halliburton and KBR Holdings under
      Section 3.09(b) hereof shall remain intercompany accounts payable between
      Halliburton and KBR Holdings and shall not be treated instead as intercompany
      accounts payable between Halliburton and Kellogg Energy Services, Inc.

     

    (c)
      Amounts payable between Halliburton and KBR Holdings under Section 5.09(b)
      hereof shall remain amounts payable between Halliburton and KBR Holdings and
      shall not be treated instead as amounts payable between Halliburton and Kellogg
      Energy Services, Inc. 

     

    Section
      3.13 State
      and Local Filings.
      Any
      Taxes associated with the filing of a separate Tax Return in a state or local
      jurisdiction with respect to an ESG Group Member or a KBR Group Member shall
      be
      allocated to and paid directly by such member. Any Taxes and Tax Attributes
      associated with the filing of a Combined Return in a state or local jurisdiction
      that includes the Tax Items of one or more ESG Group Members and one or more
      KBR
      Group Members shall be allocated to such members by Halliburton in a manner
      consistent with the principles set forth in this Article III and consistent
      with
      past practices. 

     

    Section
      3.14 Group
      Relief.
      For any
      accounting period ending prior to the Deconsolidation Year and beginning on
      or
      after the Effective Date: 

     

    (a)
      Group
      Relief Indemnification. 

     

    (i)
      In
      the event a Final Determination causes Halliburton or any member of the ESG
      Group to recognize additional income directly as a result of the reduction
      of
      the amount of “Group Relief” (as defined in Section 402 et seq. of the UK
      Income and Corporation Taxes Act 1988, as amended) that was surrendered by
      any
      member of the KBR Group (a “KBR Group Relief Tax Attribute”), then KBR shall pay
      to Halliburton, no later than 90 days following the date of the Final
      Determination, the amount of additional Tax incurred by Halliburton or any
      member of the ESG Group that is directly attributable to the loss of the KBR
      Group Relief Tax Attribute. In the event a Final Determination causes
      Halliburton or any member of the ESG Group to recognize less income directly
      as
      a result of an increase in the amount of Group Relief that is surrendered by
      any
      member of the KBR Group (the “Additional KBR Group Relief”), then Halliburton
      shall pay to KBR, no later than 90 days following the date of the Final
      Determination, the amount of the reduction in Tax realized by Halliburton or
      any
      member of the ESG Group that is directly attributable to the use of the
      Additional KBR Group Relief. 

     

    (ii)
      In
      the event a Final Determination causes KBR or any member of the KBR Group to
      recognize additional income directly as a result of the reduction of the amount
      of Group Relief that was surrendered by any member of the ESG Group (an “ESG
      Group Relief Tax Attribute”), then Halliburton shall pay to KBR, no later than
      90 days following the date of the Final Determination, the amount of additional
      Tax incurred by KBR or any member of the KBR Group that is directly attributable
      to the loss of the ESG Group Relief Tax Attribute. In the event a Final
      Determination causes KBR or any member of the KBR Group to recognize less income
      directly as a result of an increase in the amount of Group Relief that is
      surrendered by any member of the ESG Group (the “Additional ESG Group Relief”),
      then KBR shall pay to Halliburton, no later than 90 days following the date
      of
      the Final Determination, the amount of the reduction in Tax realized by KBR
      or
      any member of the KBR Group that is directly attributable to the use of the
      Additional ESG Group Relief. 

     

    (b)
      Group
      Relief Payment. 

     

    (i)
      No
      later than 90 days following the filing of any U.K. Tax Return for the
      accounting period in which a Group Relief is surrendered by KBR or any member
      of
      the KBR Group to Halliburton or any member of the ESG Group, Halliburton shall
      pay to KBR an amount equal to the product of: (x) the aggregate amount of
      Group Relief that was surrendered to Halliburton or any member of the ESG Group
      multiplied by (y) the highest U.K. Corporation Tax rate applicable to
      corporations at the time the Group Relief was surrendered by the member of
      the
      KBR Group. 

     

    (ii)
      No
      later than 90 days following the filing of any U.K. Tax Return for the
      accounting period in which a Group Relief is surrendered by Halliburton or
      any
      member of the ESG Group to KBR or any member of the KBR Group, KBR shall pay
      to
      Halliburton an amount equal to the product of: (x) the aggregate amount of
      Group Relief that was surrendered to KBR or any member of the KBR Group
      multiplied by (y) the highest U.K. Corporation Tax rate applicable to
      corporations at the time the Group Relief was surrendered by Halliburton or
      any
      member of the ESG Group. 

     

    (c)
      Notional Asset Transfer and Indemnification. 

     

    (i)
      No
      later than 90 days following the filing of any U.K. Tax Return for the
      accounting period in which a capital asset was notionally transferred under
      Section 171A of the Taxation of Chargeable Gains Act 1992 (“Section 171A”)
      in order to enable Halliburton or any member of the ESG Group to utilize a
      capital loss of any member of the KBR Group, Halliburton shall pay to KBR an
      amount equal to the product of: (x) the aggregate amount of the capital
      gain transferred, multiplied by (y) the highest U.K. Corporation tax rate
      applicable to corporations at the time the asset was notionally transferred.
      

     

    (ii)
      No
      later than 90 days following the filing of any U.K. Tax Return for the
      accounting period in which a capital asset was notionally transferred under
      Section 171A in order to enable KBR or any member of the KBR Group to
      utilize a capital loss of any member of the ESG Group, KBR shall pay to
      Halliburton an amount equal to the product of: (x) the aggregate amount of
      the capital gain transferred, multiplied by (y) the highest U.K.
      Corporation tax rate applicable to corporations at the time the asset was
      notionally transferred. 

     

    (iii)
      In
      the event that either KBR or any member of the KBR Group is required to pay
      Tax
      (whether currently or as a result of a Final Determination) as a result of
      a
      notional capital asset transfer described in Section 3.14(c)(i) hereof,
      Halliburton shall pay to KBR the amount of such Tax within 90 days following
      the
      filing of the U.K. Tax Return for the accounting period in which such Tax is
      owed or within 90 days following a Final Determination with respect to such
      Tax,
      as the case may be. 

     

    (iv)
      In
      the event that either Halliburton or any member of the ESG Group is required
      to
      pay Tax (whether currently or as a result of a Final Determination) as a result
      of a notional capital asset transfer described in Section 3.14(c)(ii)
      hereof, KBR shall pay to Halliburton the amount of such Tax within 90 days
      following the filing of the U.K. Tax Return for the accounting period in which
      such Tax is owed or within 90 days following a Final Determination with respect
      to such Tax, as the case may be. 

     

    (v)
      Notwithstanding anything to the contrary in this Agreement, the parties agree
      that no payment or indemnification shall be required from Halliburton, KBR
      or
      any Affiliate thereof with respect to any notional transfer of capital asset
      under Section 171A relating to the sale of European Marine Contractors,
      Ltd. 

     

    (d)
      The
      consequences of any utilization of a KBR or KBR Group member U.K. Tax Attribute
      by Halliburton or any member of the ESG Group, and any utilization of a
      Halliburton or ESG Group U.K. Tax Attribute by KBR or any member of the KBR
      Group, that is not attributable to Group Relief or notional capital asset
      transfer under Section 171A shall be determined in a manner consistent with
      the principles of this Section 3.14. 

     

    (e)
      The
      provisions of this Section 3.14, Section 5.12(c), Section 6.01(a)
      and Section 6.05 are intended to be the exclusive governing provisions with
      respect to indemnification and compensation rights and obligations among the
      parties relating to U.K. Group Relief and notional capital asset transfers
      under
      Section 171A. 

     

    ARTICLE
      IV. 

     

    PREPARATION
      AND FILING OF TAX RETURNS FOR AND AFTER THE DECONSOLIDATION
      YEAR 

     

    Section
      4.01 Manner
      of Filing.
      

     

    (a)
      Except to the extent otherwise provided herein, all Tax Returns filed with
      federal and state Tax Authorities of the United States for the Deconsolidation
      Year and for two taxable years following the Deconsolidation Year by Halliburton
      or by KBR shall be prepared (in the absence of a controlling change in law
      or
      circumstances or consent of Halliburton with such consent not to be unreasonably
      withheld) consistent with past practices, elections, accounting methods,
      conventions, and principles of taxation used for the most recent taxable periods
      for which Tax Returns involving similar items have been filed prior to the
      Deconsolidation Date. 

     

    (b)
      For a
      period of two (2) fiscal years following the Distribution Date, all Tax
      Returns filed by Halliburton and KBR after the Distribution Date shall be
      prepared on a basis that is consistent with the Private Letter Ruling or Tax
      Opinion obtained by Halliburton in connection with the Distribution (in the
      absence of a controlling change in law or circumstances), and shall be filed
      on
      a timely basis by the Party responsible for such filing under this Agreement.
      

     

    Section
      4.02 Pre-Deconsolidation
      Tax Returns.
      Except
      as provided in Section 4.03(b) hereof, all Tax Returns required to be filed
      for the portion of the Deconsolidation Year ending on the Deconsolidation Date
      shall be filed by the party who would bear responsibility under
      Section 2.01 hereof if such Tax Returns were for periods prior to the
      Deconsolidation Year. 

     

    Section
      4.03 Post-Deconsolidation
      Tax Returns. 

     

    (a)
      All
      Tax Returns of the KBR Group for the portion of the Deconsolidation Year
      beginning after the Deconsolidation Date and all periods after the
      Deconsolidation Year shall be filed by KBR and all Tax Returns of the
      Halliburton Group for the portion of the Deconsolidation Year beginning after
      the Deconsolidation Date and all periods after the Deconsolidation Year shall
      be
      filed by Halliburton. 

     

    (b)
      All
      KBR Group foreign, state or local income Tax Returns for the Deconsolidation
      Year that are filed based on a complete fiscal year (i.e. there is not a Tax
      year end as of the Deconsolidation Date) shall be filed by KBR. 

     

    (c)
      If
      Deconsolidation occurs for federal Tax purposes but not for Combined Return
      purposes, i.e.,
      there
      is more than 50% but less than 80% ownership of KBR stock by Halliburton, the
      HESI and KBR Tax departments will develop procedures consistent with this
      Agreement for handling such Combined Returns. 

     

    Section
      4.04 Accumulated
      Earnings and Profits, Initial Determination and Subsequent
      Adjustments.
      Within
      ninety (90) days following the Distribution Date, Halliburton shall notify
      KBR of the balance of accumulated earnings and profits on Halliburton’s Tax
      records as of the Distribution Date which are allocable to the KBR Businesses,
      as calculated in accordance with the appropriate provisions of the Code and
      the
      Treasury Regulations thereunder (including Section 312(h) of the Code and
      Treasury Regulations § 1.312-10 or any successor regulation thereto) by
      Halliburton. The notice provided by Halliburton to KBR hereunder shall include
      supporting documentation which details the calculation of earnings and profits
      allocated to the KBR Businesses as of the Distribution Date. Within sixty
      (60) days after filing the Halliburton Affiliated Group Federal Income Tax
      Return for the taxable year that includes the Distribution Date, Halliburton
      shall notify KBR of any adjustments in the Halliburton earnings and profits
      as
      of the Distribution Date and shall provide to KBR supporting documentation
      which
      details the recalculation of Halliburton earnings and profits allocable to
      the
      KBR Businesses as of the Distribution Date. If in subsequent Tax years, a Final
      Determination results in an adjustment to the accumulated earnings and profits
      on the Tax records of Halliburton as of the Distribution Date, Halliburton
      shall
      promptly notify KBR of the adjustment within sixty (60) days after
      receiving written notice of such Final Determination, and shall provide KBR
      with
      supporting documentation which details the recalculation of Halliburton earnings
      and profits allocable to the KBR Businesses as of the Distribution Date.

     

    Section
      4.05 Tax
      Basis of Assets Transferred.
      Within
      ninety (90) days following the Distribution Date, Halliburton shall notify
      KBR of the Tax basis of the stock of any controlled foreign corporations (as
      defined in Section 957 of the Code) transferred to KBR in the
      Restructuring. In the event that a Final Determination results in an adjustment
      to the basis of such stock, Halliburton shall notify KBR within sixty
      (60) days of receiving written notice of such Final Determination, of the
      nature and amount of the adjustments and shall provide KBR with supporting
      documentation which details the calculation of such adjustments. 

     

    ARTICLE
      V. 

     

    ALLOCATION
      OF TAXES FOR AND AFTER DECONSOLIDATION YEAR; 

    ALLOCATION
      OF ADDITIONAL TAX LIABILITIES 

     

    Section
      5.01 Liability
      of the ESG Group for Consolidated and Combined Taxes.
      For the
      Deconsolidation Year and all taxable years following the Deconsolidation Year,
      the ESG Group shall be liable to Halliburton for an amount equal to the ESG
      Group Federal Income Tax Liability and the ESG Group Combined Tax Liability.
      

     

    Section
      5.02 Liability
      of the KBR Group for Consolidated and Combined Taxes.
      For the
      Deconsolidation Year, the KBR Group shall be liable to Halliburton for an amount
      equal to the KBR Group Federal Income Tax Liability and the KBR Group Combined
      Tax Liability to the extent such liability was paid by Halliburton or by a
      member of the ESG Group. 

     

    Section
      5.03 ESG
      Group Federal Income Tax Liability.
      With
      respect to the Deconsolidation Year and all taxable years following the
      Deconsolidation Year, the ESG Group Federal Income Tax Liability for such
      taxable period shall be the Federal Income Taxes for such taxable period, as
      determined on an ESG Group Pro Forma Consolidated Return prepared: 

     

    (a)
      assuming that the members of the ESG Group were not included in the Consolidated
      Group and by including only Tax Items of members of the ESG Group that are
      included in the Consolidated Return; 

     

    (b)
      except as provided in Section 5.03(e) hereof, using all elections,
      accounting methods and conventions used on the Consolidated Return for such
      period; 

     

    (c)
      applying the highest statutory marginal corporate income Tax rate in effect
      for
      such taxable period; 

     

    (d)
      excluding any Tax Attributes for which HESI has been compensated pursuant to
      Section 5.09 hereof; 

     

    (e)
      assuming that the ESG Group elects not to carry back any net operating losses;
      and 

     

    (f)
      assuming that the ESG Group’s utilization of any Tax Attribute carryforward or
      carryback is limited to the Tax Attributes of the ESG Group that would be
      available if the ESG Group Federal Income Tax Liability for each taxable year
      ending after January 1, 2001 were determined in accordance with this
      Section 5.03. 

     

    Section
      5.04 KBR
      Group Federal Income Tax Liability.
      With
      respect to the Deconsolidation Year,
      the KBR
      Group Federal Income Tax Liability for such taxable period shall be the Federal
      Income Taxes for such taxable period, as determined on an KBR Group Pro Forma
      Consolidated Tax Return prepared: 

     

    (a)
      assuming that the members of the KBR Group were not included in the Consolidated
      Group and by including only Tax Items of members of the KBR Group that are
      included in the Consolidated Return; 

     

    (b)
      except as provided in Section 5.04(e) hereof, using all elections,
      accounting methods and conventions used on the Consolidated Return for such
      period; 

     

    (c)
      applying the highest statutory marginal corporate income Tax rate in effect
      for
      such taxable period; 

     

    (d)
      excluding any Tax Attributes for which KBR has been compensated pursuant to
      Section 5.09 hereof; 

     

    (e)
      assuming that the KBR Group elects not to carry back any net operating losses
      and may elect either to deduct or take a credit for foreign Taxes paid or deemed
      paid (and to carryback or carryforward any excess foreign Taxes); and

     

    (f)
      assuming that the KBR Group’s utilization of any Tax Attribute carryforward or
      carryback is limited to the Tax Attributes of the KBR Group that would be
      available if the KBR Group Federal Income Tax Liability for each taxable year
      ending after January 1, 2001 were determined in accordance with this
      Section 5.04. 

     

    Section
      5.05 ESG
      Group Combined Tax Liability.
      With
      respect to the Deconsolidation Year and all taxable years following the
      Deconsolidation Year, the ESG Group Combined Tax Liability shall be the sum
      for
      such taxable period of the ESG Group’s liability for Taxes owed with respect to
      Combined Returns, as determined on the ESG Group Pro Forma Combined Returns
      prepared in a manner consistent with the principles and procedures set forth
      in
      Section 5.03 hereof, without recalculating the state apportionment factors.

     

    Section
      5.06 KBR
      Group Combined Tax Liability.
      With
      respect to the Deconsolidation Year, the KBR Group Combined Tax Liability shall
      be the sum for such taxable period of the KBR Group’s liability for Taxes owed
      with respect to Combined Returns, as determined on the KBR Group Pro Forma
      Combined Returns prepared in a manner consistent with the principles and
      procedures set forth in Section 5.04 hereof, without recalculating the
      state apportionment factors and assuming that Tax Items of the KBR Group are
      not
      included in the Combined Returns of the Halliburton Group following the
      Deconsolidation Date. 

     

    Section
      5.07 Preparation
      and Delivery of Pro Forma Tax Returns.
      Not
      later than ninety (90) days following the date on which the related
      Consolidated Return or Combined Return, as the case may be, is filed with the
      appropriate Tax Authority, Halliburton shall prepare and deliver to HESI and
      KBR, respectively, pro forma Tax Returns calculating (i) the ESG Group
      Federal Income Tax Liability or the ESG Group Combined Tax Liability, and
      (ii) the KBR Group Federal Income Tax Liability or the KBR Group Combined
      Tax Liability, which is attributable to the period covered by such filed Tax
      Return. 

     

    Section
      5.08 HESI
      Intercompany Payables and Receivables; KBR Payment.
      The
      liability of the ESG Group for the ESG Group Federal Income Tax Liability and
      ESG Group Combined Tax Liability shall be reflected in the intercompany accounts
      of Halliburton and HESI. For the Deconsolidation Year, KBR will pay Halliburton
      for the KBR Group Federal Income Tax Liability and the KBR Group Combined Tax
      Liability within sixty (60) days following the delivery to KBR by
      Halliburton of a KBR Group Pro Forma Consolidated Tax Return or a KBR Group
      Pro
      Forma Combined Return, as the case may be, to the extent such Tax liabilities
      are paid by Halliburton or other person who is not a member of the KBR Group.
      For the Deconsolidation Year, any payment due from KBR described in the previous
      sentence shall be decreased by the cumulative amount of payments made by KBR
      to
      Halliburton to fund Halliburton’s estimated Tax payments with respect to Taxes
      for the Deconsolidation Year. 

     

    Section
      5.09 Credit
      for Use of Attributes.
      Not
      later than ninety (90) days following the filing of the Consolidated Return
      for the Deconsolidation Year and all taxable years following the Deconsolidation
      Year, Halliburton shall determine the aggregate amount of the Tax Attributes
      of
      the Consolidated Group and all Combined Groups that are allocable to the ESG
      Group (the “ESG Allocated Attributes”) as of the end of such year and shall
      inform HESI of such determination. Not later than sixty (60) days following
      the filing of the Consolidated Return for the Deconsolidation Year, Halliburton
      shall determine the aggregate amount of the Tax Attributes of the Consolidated
      Group and all Combined Groups that are allocable to the KBR Group (the “KBR
      Allocated Attributes”) as of the end of such year and shall inform KBR of such
      determination. 

     

    (a)
      If
      the amount of the ESG Allocated Attributes is less than the amount of Tax
      Attributes (as reasonably determined by Halliburton) that would have been
      available to the ESG Group at the end of such year had the ESG Group Members
      not
      been included in the Consolidated Return and the Combined Returns (the “ESG
      Stand-Alone Attributes”), the value of such shortfall, to the extent such
      shortfall is attributable to the use of the ESG Group’s Tax Attributes by KBR
      Group Members, shall be reflected in the intercompany accounts as an amount
      payable by Halliburton to HESI. If the amount of the ESG Allocated Attributes
      is
      greater than the ESG Stand-Alone Attributes, the value of such excess, to the
      extent such excess is attributable to the use of Tax Attributes of KBR Group
      Members by ESG Group Members during such year, shall be reflected in the
      intercompany accounts as an amount payable by HESI to Halliburton. For this
      purpose, a Tax Attribute shall be treated as used by KBR Group Members or ESG
      Group Members only to the extent that such Tax Attribute is necessary to reduce
      the KBR Group Federal Income Tax Liability or ESG Group Federal Income Tax
      Liability (computed in accordance with Section 5.04 or 5.03) for such year.
      In calculating the Stand-Alone Attributes, the utilization of any Tax Attribute
      carryforward by ESG Group Members shall be subject to the limitation described
      in Section 5.03(f) hereof. For purposes of this section, the value of any
      Tax Attribute shall be equal to the amount of Taxes (computed in accordance
      with
      Section 5.03 hereof) that would be avoided by the payor if it had
      sufficient income to fully utilize such Tax Attribute in such year.

     

    (b)
      If
      the amount of the KBR Allocated Attributes for the Pre-Deconsolidation Period
      is
      less than the amount of Tax Attributes (as reasonably determined by Halliburton)
      that would have been available to the KBR Group for the Pre-Deconsolidation
      Period had the KBR Group Members not been included in the Consolidated Return
      and the Combined Returns (the “KBR Stand-Alone Attributes”), the value of such
      shortfall, to the extent such shortfall is attributable to the use of the KBR
      Group’s Tax Attributes by ESG Group Members, shall be paid by Halliburton to KBR
      within thirty (30) days of the date the KBR Allocated Attributes are
      determined. If the amount of the KBR Allocated Attributes for the
      Pre-Deconsolidation Period is greater than the amount of the KBR Stand-Alone
      Attributes, the value of such excess, to the extent such excess is attributable
      to the use of Tax Attributes of ESG Group Members by KBR Group Members during
      such period, shall be paid by KBR to Halliburton within thirty (30) days of
      the date the KBR Allocated Attributes are determined. For this purpose, a Tax
      Attribute shall be treated as used by ESG Group Members or KBR Group Members
      only to the extent that such Tax Attribute is necessary to reduce the ESG Group
      Federal Income Tax Liability or KBR Group Federal Income Tax Liability (computed
      in accordance with Section 5.03 or 5.04) for such year. In calculating the
      KBR Stand-Alone Attributes, the utilization of any Tax Attribute carryforward
      by
      KBR Group Members shall be subject to the limitation described in
      Section 5.04(f) hereof. For purposes of this section, the value of any Tax
      Attribute shall be equal to the amount of Taxes (computed in accordance with
      Section 5.04 hereof) that would be avoided by the payor if it had
      sufficient income to fully utilize such Tax Attribute in such year.

     

    Section
      5.10 Subsequent
      Changes in Treatment of Tax Items.
      For the
      Deconsolidation Year and all taxable years following the Deconsolidation Year,
      in the event of a change in the treatment of any Tax Item of any member of
      the
      Consolidated Group or a Combined Group as a result of a Final Determination,
      Halliburton shall calculate (i) the change to the ESG Group Federal Income
      Tax Liability or ESG Group Combined Tax Liability and (ii) any change to
      the Allocated Attributes and/or the Stand-Alone Attributes of the ESG Group,
      and
      such changes shall be properly reflected in the intercompany accounts described
      in Section 5.09(a) hereof. For the Deconsolidation Year, in the event of a
      change in the treatment of any Tax Item of any member of the Consolidated Group
      or a Combined Group as a result of a Final Determination, Halliburton shall
      calculate (i) the change to the KBR Group Federal Income Tax Liability or
      KBR Group Combined Tax Liability and (ii) any change to the Allocated
      Attributes and/or the Stand-Alone Attributes of the KBR Group and such changes
      shall be properly reflected in payments from Halliburton to KBR, or from KBR
      to
      Halliburton, as the case may be. 

     

    Section
      5.11 Foreign
      Corporations.
      Any
      Taxes associated with the filing of a separate Tax Return in a foreign
      jurisdiction with respect to an ESG Group Member or a KBR Group Member shall
      be
      allocated to and paid directly by such member. For the Deconsolidation Year
      any
      Taxes and Tax Attributes associated with the filing of a separate Tax Return
      in
      a foreign jurisdiction that includes the Tax Items of one or more ESG Group
      Members and one or more KBR Group Members shall be allocated to such members
      by
      Halliburton in a manner consistent with the principles set forth in this
      Article V. 

     

    Section
      5.12 Allocation
      of Additional Tax Liabilities.
      

     

    (a)
      Restructuring
      Taxes.
      Notwithstanding that the Restructuring and Project Constructor occurred prior
      to
      the Effective Date, notwithstanding any other provision of this Agreement to
      the
      contrary, and except as otherwise provided in the Master Separation Agreement
      or
      the Master Separation and Distribution Agreement (as applicable) and
      Section 5.12(a)(i) hereof, Halliburton shall pay and shall indemnify and
      hold harmless KBR and any member of the KBR Group from and against any and
      all
      Restructuring Taxes, without regard to any benefit that any member of the KBR
      Group might derive as a result of the payment of the Restructuring Taxes by
      Halliburton. Halliburton shall also be liable for all fees, costs and expenses,
      including reasonable attorneys’ fees, arising out of, or incident to, any
      proceedings before any Tax Authority, or any judicial authority, with respect
      to
      any amount for which it is liable for under Section 5.12(a) hereof.

     

    (i)
      In
      the event any Restructuring Taxes are attributable to a Tainting Act of KBR
      or
      any member of the KBR Group, then KBR shall pay and shall indemnify and hold
      harmless Halliburton from and against any and all Restructuring Taxes and from
      and against any costs whatsoever connected with such Taxes, including, but
      not
      limited to, fees, interest, penalties, and expenses, including reasonable
      attorneys’ fees. For purposes of this Section 5.12(a)(i), a Restructuring
      Tax is attributable to a Tainting Act if (1) such Tax would not have been
      imposed but for the Tainting Act, or (2) the Tainting Act would have
      independently caused the imposition of such Tax; provided, however, that in
      no
      event shall a Restructuring Tax be considered attributable to a Tainting Act
      to
      the extent such Tax would not have been incurred but for a breach by Halliburton
      of any warranty, representation or covenant contained in Article VII hereof.
      

     

    (ii)
      An
      indemnification payment required to be made by one Party pursuant to
      Section 5.12(a) hereof shall be paid in immediately available funds within
      thirty (30) days after receiving a written demand from the other Party for
      such payment; however, no Party shall make a written demand for an
      indemnification payment attributable to Restructuring Taxes under
      Section 5.12(a) hereof until such Tax liability is established by a Final
      Determination. Any indemnification payment required to be made by either Party
      under Section 5.12(a) hereof which is not paid timely shall bear interest
      (compounded daily) at the Federal short-term rate or rates established pursuant
      to Section 6621 of the Code for the period during which such payment is due
      but unpaid. 

     

    (b)
      Dual
      Consolidated Losses.
      

     

    (i)
      Notwithstanding anything else to the contrary in this Agreement (including,
      without limitation, any provision of Article III or Article V hereof) other
      than
      Section 5.12(b)(iii), KBR and each member of the KBR Affiliated Group shall
      not be liable for, and Halliburton shall indemnify and hold KBR and each member
      of the KBR Affiliated Group harmless against (A) any and all Tax or other
      loss resulting from a recapture of a Dual Consolidated Loss resulting from
      the
      Spinoff and (B) any loss attributable to the reduction of an ESG Allocated
      Attribute otherwise available to Halliburton or any member of the Halliburton
      Affiliated Group resulting from a recapture of a Dual Consolidated Loss
      resulting from the Spinoff. 

     

    (ii)
      Without limiting the generality of Section 6.02(a), KBR agrees to
      reasonably cooperate with Halliburton and take any action (including executing
      any agreement or filing any document) or refrain from taking any action as
      reasonably requested by Halliburton in order to permit the deduction of a Dual
      Consolidated Loss incurred by Halliburton or any of its present or former
      Affiliates prior to the Spinoff or during the Deconsolidation Year, including
      but not limited to filing for relief pursuant to Section 9100 of the Code
      or pursuant to any other published guidance of the Internal Revenue Service
      with
      respect to the late filing of any documents, agreements or certifications,
      and
      entering into a closing agreement within the meaning of Section 7121 of the
      Code with the Internal Revenue Service (a “Closing Agreement”) with respect to
      all Dual Consolidated Losses that Halliburton determines may be required to
      be
      recaptured as a result of the Spinoff. Halliburton will be responsible for
      and
      shall bear all costs relating to the preparation of any required Closing
      Agreements (as defined in Treasury Regulations § 1.1503-2T(a)(2)) and for any
      other filings required under Section 9100 of the Code or any other
      provision of the Code or Treasury Regulations thereunder with respect to Dual
      Consolidated Losses. Halliburton shall propose in writing to KBR the Dual
      Consolidated Losses relating to the KBR Group for which any agreement or filing
      with the Internal Revenue Service would be necessary to permit the deduction
      of
      a Dual Consolidated Loss or avoid the recapture of the Dual Consolidated Losses
      that would otherwise result from the Spinoff. The final determination of the
      Dual Consolidated Losses for which such agreements or filings will be submitted
      shall be subject to the written consent of KBR, which consent shall not be
      unreasonably withheld. 

     

    (iii)
      Notwithstanding Section 5.12(b)(i) hereof, in the event KBR or any of its
      Affiliates takes or fails to take any action following the Spinoff (including,
      but not limited to, a failure to execute and deliver the Closing Agreement
      contemplated by Section 5.12(b)(ii)) that results in a triggering event (as
      defined in Treasury Regulations § 1.1503-2(g)(2)(iii)) with respect to a
      Dual Consolidated Loss identified by Halliburton pursuant to
      Section 5.12(b)(ii) which requires recapture of such Dual Consolidated
      Loss, KBR shall indemnify and hold harmless Halliburton and its present and
      former Affiliates for any and all Tax payable by Halliburton resulting from
      the
      recapture of the Dual Consolidated Loss or any actual loss recognized by
      Halliburton attributable to the reduction of an ESG Allocated Attribute
      resulting from the recapture of the Dual Consolidated Loss. For the avoidance
      of
      doubt, neither Halliburton nor any of its Affiliates shall be entitled to more
      than one recovery of any Tax or loss resulting from the Dual Consolidated Loss
      recapture described in this Section 5.12(b)(iii). 

     

    (iv)
      Notwithstanding any other provision of this Agreement to the contrary, KBR
      shall
      not indemnify Halliburton and its present and former Affiliates with respect
      to
      any Dual Consolidated Loss recapture attributable to Halliburton Productos
      Ltd.,
      such Dual Consolidated Loss recapture shall not be treated as an item of income
      of the KBR Group for any purpose of this Agreement, and Halliburton shall
      indemnify and hold harmless KBR and its Affiliates from any Tax payable by
      KBR
      or its Affiliates as a result of such Dual Consolidated Loss recapture.

     

    (c)
      Group
      Relief.
      For any
      accounting period beginning after the accounting periods described in
      Section 3.14 hereof: 

     

    (i)
      Group
      Relief Indemnification. 

     

    (1)
      In
      the event a Final Determination causes Halliburton or any member of the ESG
      Group to recognize additional income directly as a result of the reduction
      of
      the amount of a KBR Group Relief Tax Attribute, then KBR shall pay to
      Halliburton, no later than 90 days following the date of the Final
      Determination, the amount of additional Tax incurred by Halliburton or any
      member of the ESG Group that is directly attributable to the loss of the KBR
      Group Relief Tax Attribute. In the event a Final Determination causes
      Halliburton or any member of the ESG Group to recognize less income directly
      as
      a result of an increase in the amount of the Additional KBR Group Relief, then
      Halliburton shall pay to KBR, no later than 90 days following the date of the
      Final Determination, the amount of the reduction in Tax realized by Halliburton
      or any member of the ESG Group that is directly attributable to the use of
      the
      Additional KBR Group Relief. 

     

    (2)
      In
      the event a Final Determination causes KBR or any member of the KBR Group to
      recognize additional income directly as a result of the reduction of the amount
      of an ESG Group Relief Tax Attribute, then Halliburton shall pay to KBR, no
      later than 90 days following the date of the Final Determination, the amount
      of
      additional Tax incurred by KBR or any member of the KBR Group that is directly
      attributable to the loss of the ESG Group Relief Tax Attribute. In the event
      a
      Final Determination causes KBR or any member of the KBR Group to recognize
      less
      income directly as a result of an increase in the amount of the Additional
      ESG
      Group Relief, then KBR shall pay to Halliburton, no later than 90 days following
      the date of the Final Determination, the amount of the reduction in Tax realized
      by KBR or any member of the KBR Group that is directly attributable to the
      use
      of the Additional ESG Group Relief. 

     

    (ii)
      Group Relief Payment. 

     

    (1)
      No
      later than 90 days following the filing of any U.K. Tax Return, for the
      accounting period in which a Group Relief is surrendered by KBR or any member
      of
      the KBR Group to Halliburton or any member of the ESG Group, Halliburton shall
      pay to KBR an amount equal to the product of: (x) the aggregate amount of
      Group Relief that was surrendered to Halliburton or any member of the ESG Group
      multiplied by (y) the highest U.K. Corporation Tax rate applicable to
      corporations at the time the Group Relief was surrendered by the member of
      the
      KBR Group. 

     

    (2)
      No
      later than 90 days following the filing of any U.K. Tax Return for the
      accounting period in which a Group Relief is surrendered by Halliburton or
      any
      member of the ESG Group to KBR or any member of the KBR Group, KBR shall pay
      to
      Halliburton an amount equal to the product of: (x) the aggregate amount of
      Group Relief that was surrendered to KBR or any member of the KBR Group
      multiplied by (y) the highest U.K. Corporation Tax rate applicable to
      corporations at the time the Group Relief was surrendered by Halliburton or
      any
      member of the ESG Group. 

     

    (iii)
      Notional Asset Transfer and Indemnification. 

     

    (1)
      No
      later than 90 days following the filing of any U.K. Tax Return for the
      accounting period in which a capital asset was notionally transferred under
      Section 171A in order to enable Halliburton or any member of the ESG Group
      to utilize a capital loss of any member of the KBR Group, Halliburton shall
      pay
      to KBR an amount equal to the product of: (x) the aggregate amount of the
      capital gain transferred, multiplied by (y) the highest U.K. Corporation
      tax rate applicable to corporations at the time the asset was notionally
      transferred. 

     

    (2)
      No
      later than 90 days following the filing of any U.K. Tax Return for the
      accounting period in which a capital asset was notionally transferred under
      Section 171A in order to enable KBR or any member of the KBR Group to
      utilize a capital loss of any member of the ESG Group, KBR shall pay to
      Halliburton an amount equal to the product of: (x) the aggregate amount of
      the capital gain transferred, multiplied by (y) the highest U.K.
      Corporation tax rate applicable to corporations at the time the asset was
      notionally transferred. 

     

    (3)
      In
      the event that either KBR or any member of the KBR Group is required to pay
      Tax
      (whether currently or as a result of a Final Determination) as a result of
      a
      notional capital asset transfer described in Section 5.12(c)(iii)(1)
      hereof, Halliburton shall pay to KBR the amount of such Tax within 90 days
      following the filing of the U.K. Tax Return for the accounting period in which
      such Tax is owed or within 90 days following a Final Determination with respect
      to such Tax, as the case may be. 

     

    (4)
      In
      the event that either Halliburton or any member of the ESG Group is required
      to
      pay Tax (whether currently or as a result of a Final Determination) as a result
      of a notional capital asset transfer described in Section 5.12(c)(iii)(2)
      hereof, KBR shall pay to Halliburton the amount of such Tax within 90 days
      following the filing of the U.K. Tax Return for the accounting period in which
      such Tax is owed or within 90 days following a Final Determination with respect
      to such Tax, as the case may be. 

     

    (5)
      Notwithstanding anything to the contrary in this Agreement, the parties agree
      that no payment or indemnification shall be required from Halliburton, KBR
      or
      any Affiliate thereof with respect to any notional transfer of capital asset
      under Section 171A relating to the sale of European Marine Contractors,
      Ltd. 

     

    (iv)
      The
      consequences of any utilization of a KBR or KBR Group member U.K. Tax Attribute
      by Halliburton or any member of the ESG Group, and any utilization of a
      Halliburton or ESG Group U.K. Tax Attribute by KBR or any member of the KBR
      Group, that is not attributable to Group Relief or notional capital asset
      transfer under Section 171A shall be determined in a manner consistent with
      the principles of this Section 5.12(c). 

     

    (v)
      The
      provisions of Section 3.14, this Section 5.12(c), Section 6.01(a)
      and Section 6.05 are intended to be the exclusive governing provisions with
      respect to indemnification and compensation rights and obligations among the
      parties relating to U.K. Group Relief and notional capital asset transfers
      under
      Section 171A. 

     

    (d)
      Refunds.
      Each
      Party shall be entitled to retain or be paid all refunds of Tax received,
      whether in the form of payment, credit or otherwise, from any Tax Authority
      with
      respect to any Tax for which such Party is responsible under this Article V.
      

     

    (e)
      Allocation
      of Taxable Items.
      Halliburton shall determine the amounts of income, gain, loss, deduction, and
      credit of the KBR Group for the Pre-Deconsolidation Period that are properly
      includible in the Consolidated Return for the taxable year which includes the
      Deconsolidation Date. For all relevant purposes of this Agreement, the members
      of the KBR Group and each KBR Combined Group shall cease to be members of the
      Consolidated Group as of the end of the Deconsolidation Date, and the KBR Group
      shall cause the book of account of the KBR Group to be closed for accounting
      and
      Tax purposes as of the end of the Deconsolidation Date in accordance with
      Halliburton’s direction. In determining consolidated taxable income for the
      taxable period that ends on the Deconsolidation Date, the income and other
      items
      of the KBR Group shall be determined in good faith by Halliburton in accordance
      with Treasury Regulations §§ 1.1502-76(b)(1), 1.1502-76(b)(2)(i) and
      1.1502-76(b)(2)(iv) and no election shall be made under § 1.1502-76(b)(2)(ii)(D)
      to ratably allocate items. However, an allocation shall be made in good faith
      by
      Halliburton under Treasury Regulations § 1.1502- 76(b)(2)(iii) if such
      allocation is determined by Halliburton in good faith to be necessary to
      appropriately allocate items in the event the Deconsolidation Date occurs on
      any
      date other than the last day of any month. 

     

    (f)
      Foreign
      Tax Credit True-Up.
      With
      respect to the Deconsolidation Year, no later than ninety (90) days
      following the filing of a Consolidated Return, an amended Consolidated Return
      or
      a final settlement with the U.S. Internal Revenue Service, Halliburton shall
      determine the aggregate amount of the “Foreign Tax Credit Adjustment.” The
      Foreign Tax Credit Adjustment shall be equal to (x) the aggregate amount of
      foreign Taxes paid or accrued by members of the KBR Group and allowable as
      foreign tax credits for United States federal income tax purposes for the period
      commencing January 1, 2001, and ending on the Deconsolidation Date (the
“KBR Foreign Taxes”), minus (y) the sum of (i) the aggregate amount
      during such period of KBR Foreign Taxes used to reduce (either as a deduction
      or
      credit) the KBR Group’s Federal Income Tax Liability pursuant to
      Section 3.04 and Section 5.04 hereof, (ii) the aggregate amount
      during such period of credit that the KBR Group received with respect to KBR
      Foreign Taxes pursuant to Section 3.09 and Section 5.09 hereof, and
      (iii) the aggregate amount during such period of KBR Foreign Taxes
      allocated to the KBR Group upon Deconsolidation pursuant to Treasury Regulations
      § 1.1502-79(d). If such Foreign Tax Credit Adjustment is a positive amount,
      Halliburton shall pay such amount to the KBR Group. The payment in the preceding
      sentence shall be due within ninety (90) days following the earlier of
      (a) the filing of the federal income Tax Return on which Halliburton
      realizes a benefit for the KBR Foreign Taxes or (b) the filing of the
      federal income Tax Return on which KBR could have utilized the foreign tax
      credits, were KBR in possession of such foreign tax credits. For purposes of
      this agreement, a benefit for KBR Foreign Taxes is considered to be realized
      by
      Halliburton only when all available Halliburton/ESG Group foreign tax credits
      (except ESG Group foreign tax credits carried back) have been utilized. If
      the
      amount determined pursuant to this Section 5.12(f) is a negative amount,
      the KBR Group shall pay such amount to Halliburton. If such negative amount
      is
      the result of a foreign tax credit carried forward pursuant to Treasury
      Regulations § 1.1502-79(d), such payment shall be due no sooner than ninety
      (90) days following the filing of the federal income Tax Return on which
      the KBR Group realizes the benefit associated with the foreign tax credit
      carryforward. 

     

    (g)
      KBR
      Group Tax Losses.
      Notwithstanding anything to the contrary in this Agreement, with respect to
      tax
      years beginning on or after the Effective Date and ending prior to or on the
      Deconsolidation Date, no later than ninety (90) days following the filing
      of a Consolidated Return, an amended Consolidated Return or a final settlement
      with the IRS, Halliburton shall determine the aggregate amount of the “Loss
      Adjustment.” The Loss Adjustment shall be an amount equal to: (x) the
      aggregate amount of Tax Attributes of the KBR Group reflected on the
      Consolidated Return that are net operating losses or net capital losses for
      the
      period commencing on the Effective Date through the Deconsolidation Date (the
      “KBR Losses”) multiplied by thirty-five percent (35%); minus (y) the sum
      of: (i) the aggregate amount during such period of reduction of the KBR
      Group’s U.S. federal income tax liability pursuant to Section 3.04 and
      Section 5.04 hereof resulting from the KBR Losses, (ii) the aggregate
      amount during such period of credit that the KBR Group received with respect
      to
      the KBR Losses pursuant to Section 3.09 and Section 5.09 hereof, and
      (iii) the aggregate amount during such period of KBR Losses allocated to
      the KBR Group upon Deconsolidation pursuant to Treasury Regulations §§ 1.1502-21
      and 1.1502-22(b) multiplied by thirty-five percent (35%). If the Loss Adjustment
      pursuant to the preceding sentence is a positive amount, Halliburton shall
      pay
      to KBR an amount equal to the Loss Adjustment when Halliburton realizes a tax
      benefit from using the KBR Losses. Such payment shall be reduced by an amount
      equal to the tax benefit that Halliburton otherwise would have realized by
      the
      use of a Tax Attribute of a member of the ESG Group (a “Displaced ESG Tax
      Attribute”) that would have been used if the KBR Losses had not been included in
      the Consolidated Return or final settlement with the IRS. When a Displaced
      ESG
      Tax Attribute is used, Halliburton shall then pay KBR an amount equal to the
      tax
      benefit realized from the use of the Displaced ESG Tax Attribute by Halliburton.
      For purposes of this Section 5.12(g), Displaced ESG Tax Attributes shall be
      considered used and Halliburton shall be treated as recognizing a tax benefit
      from such use (i) when they are applied to a Consolidated Return of the
      Halliburton Affiliated Group or ESG Group to reduce the consolidated tax
      liability of the Halliburton Affiliated Group or ESG Group; or (ii) when
      they are allocated to a member of the Halliburton Affiliated Group or ESG Group
      that is no longer consolidated with the Halliburton Affiliated Group or ESG
      Group. Payments required under this Section 5.12(g) shall be made within 90
      days of filing a Consolidated Return where Halliburton has realized the tax
      benefit from using KBR Losses or a Displaced ESG Tax Attribute. 

     

    Section
      5.13 Tax
      Attributes of KBR Not Carried Back.
      With
      respect to any Tax Attributes incurred by the KBR Group in a
      Post-Deconsolidation Period, KBR shall not, and shall cause each member of
      the
      KBR Group to not, elect to carry back Tax Attributes to a Pre-Deconsolidation
      Period. In the event the applicable Tax law requires a Tax Attribute of the
      KBR
      Group arising in a Post-Deconsolidation Period to be carried back to a
      Pre-Deconsolidation Period Tax Return of Halliburton or other member of the
      Halliburton Group (such Tax Attribute being a “Required Tax Attribute
      Carryback”), KBR shall notify Halliburton of such Required Tax Attribute
      Carryback sixty (60) days prior to the date such Tax Return must be filed
      and KBR shall timely provide Halliburton with all information reasonably
      necessary to properly account for such Required Tax Attribute Carryback on
      such
      Tax Return. If a Required Tax Attribute Carryback that is reported on a Tax
      Return filed by Halliburton or other member of the Halliburton Group produces
      an
      actual Tax savings to Halliburton or other member of the Halliburton Group,
      Halliburton shall pay KBR an amount equal to such savings within sixty
      (60) days following the filing of such Tax Return. 

     

    ARTICLE
      VI. 

     

    TAX
      DISPUTE INDEMNITY; CONTROL OF PROCEEDINGS; COOPERATION AND

    EXCHANGE
      OF INFORMATION 

     

    Section
      6.01 Tax
      Dispute Indemnity and Control of Proceedings.
      

     

    (a)
      Whenever a Party becomes aware of the existence of an issue which relates to
      any
      Tax liability of the other Party (a “Disputed Tax Issue” of such other Party),
      and the rights or responsibilities under this Agreement of such Party may be
      affected by the resolution of such Disputed Tax Issue, such Party (a “Disputed
      Tax Issue Indemnitee”) shall promptly notify the other Party (the “Disputed Tax
      Issue Indemnitor”) of the Disputed Tax Issue. The Disputed Tax Issue Indemnitor
      has the right to defend, handle, settle or contest at its cost any Disputed
      Tax
      Issue; provided, however, that Halliburton shall have the right (but not the
      obligation) to defend, handle, settle or contest at KBR’s cost any Disputed Tax
      Issue related to a Disqualifying Action or Potential Disqualifying Action.
      

     

    (b)
      Except as provided in this Article VI, Halliburton shall have full
      responsibility and discretion in handling, settling or contesting any Tax
      Controversy involving a Tax Return for which it has filing responsibility under
      this Agreement. KBR shall have full responsibility and discretion in handling,
      settling or contesting any Tax Controversy involving a Tax Return for which
      it
      has filing responsibility under this Agreement. Except as otherwise provided
      in
      Section 5.12(a)(i) hereof and in this Article VI, any costs incurred in
      handling, settling or contesting any Tax Controversy shall be borne by the
      Party
      having full responsibility and discretion thereof. 

     

    (c)
      In
      the event that (x) a statutory notice of deficiency (or foreign, state or
      local law equivalent) is received by Halliburton from the IRS or any other
      Tax
      Authority, (y) such notice is with respect to a Tax Return for which
      Halliburton has filing responsibility under this Agreement and (z) such
      notice relates in whole or in part to Restructuring Taxes for which KBR could
      be
      liable to Halliburton pursuant to Section 5.12(a) hereof (a “KBR
      Restructuring Issue”) then 

     

    (i)
      Halliburton, upon receiving a written request from KBR to file a petition with
      the United States Tax Court (or equivalent foreign, state or local court)
      seeking a redetermination of such deficiency, which shall be given no later
      than
      a date reasonably necessary to permit preparation and timely filing of such
      petition, shall timely file such petition; provided, however, that,
      notwithstanding such request, Halliburton, with the prior written consent of
      KBR, shall have the option to pay the amount of the deficiency, in which case
      KBR shall either itself pay or loan to Halliburton no later than three
      (3) business days before Halliburton pays such deficiency, without
      interest, and, until a Final Determination of the KBR Restructuring Issue
      results, one hundred (100) percent of the amount of the portion of the
      deficiency relating to the KBR Restructuring Issue, and to file a claim for
      the
      refund thereof, and, if the claim is denied, to bring an action in a court
      of
      competent jurisdiction seeking the refund of Tax paid with respect to such
      deficiency; or 

     

    (ii)
      If
      (1) KBR does not request Halliburton to file a petition in the United
      States Tax Court (or equivalent foreign, state or local court) for
      redetermination of the deficiency pursuant to Section 6.01(c)(i) hereof,
      (2) Halliburton does not, on its own initiative, timely file such a
      petition, and (3) KBR requests that Halliburton file a claim for refund,
      then KBR shall either pay the deficiency or request in writing that Halliburton
      pay such deficiency, in which case KBR shall loan to Halliburton no later than
      three (3) business days before Halliburton pays such deficiency, without
      interest, and, until a Final Determination of the KBR Restructuring Issue
      results, one hundred (100) percent of the amount of the portion of the
      deficiency relating to the KBR Restructuring Issue, which loan Halliburton
      shall
      use to pay such deficiency, and Halliburton shall file a claim for refund
      thereof and, if the claim is denied, bring an action in a court of competent
      jurisdiction seeking such refund. 

     

    (iii)
      In
      the event that a judgment of the United States Tax Court or other court of
      competent jurisdiction results in an adverse determination with respect to
      the
      KBR Restructuring Issue, and Halliburton notifies KBR that it does not intend
      to
      appeal such KBR Restructuring Issue, then KBR shall have the right to cause
      Halliburton to appeal from such adverse determination at KBR’s expense.

     

    (iv)
      KBR
      and its representatives, at KBR’s expense, shall be entitled to participate in
      (1) all conferences, meetings, or proceedings with any Tax Authority, the
      subject matter of which is or includes the KBR Restructuring Issue and
      (2) all appearances before any court, the subject matter of which includes
      the KBR Restructuring Issue. 

     

    (d)
      The
      right to participate referred to in Section 6.01(c)(iv) hereof shall
      include, with respect to the KBR Restructuring Issue, the right to participate
      in the preparation and submission of documentation, protests, memoranda of
      fact
      and law and briefs; the conduct of oral arguments or presentations; the
      selection of witnesses; and the negotiation of stipulations of fact.

     

    (e)
      Notwithstanding Sections 6.01(c)(iv) and (d) hereof, unless and until the
      notice provided in Section 6.01(c)(iii) above is given, Halliburton shall
      control the litigation of the KBR Restructuring Issue and have the authority
      to
      settle in a reasonable manner and in good faith any such issue. 

     

    Section
      6.02 Cooperation
      and Exchange of Information.
      

     

    (a)
      Each
      Party shall cooperate fully at such time and to the extent reasonably requested
      by the other Party in connection with the preparation and filing of any Tax
      Return or claim for refund, or the conduct of any audit, dispute, proceeding,
      suit or action concerning any issues or other matters considered in this
      Agreement. Such cooperation shall include, without limitation, the following:
      (i) forwarding promptly copies of appropriate notices and forms or other
      communications received from any Tax Authority (including any IRS revenue
      agent’s report or similar report, notice of proposed adjustment, or notice of
      deficiency) or sent to any Tax Authority or any other administrative, judicial
      or other governmental authority that relate to a Disputed Tax Issue;
      (ii) the retention and provision on demand of Tax Returns, books, records
      (including those concerning ownership and Tax basis of property which either
      Party may possess), documentation or other information relating to the Tax
      Returns, including accompanying schedules, related workpapers, and documents
      relating to rulings or other determinations by Taxing Authorities, until the
      expiration of the applicable statute of limitations (giving effect to any
      extension, waiver or mitigation thereof) subject to the provisions of
      Section 6.02(e) hereof; (iii) the provision of additional information,
      including an explanation of material provided under clause (i) of
      Section 6.02(a) hereof, to the extent such information is necessary or
      reasonably helpful in connection with the foregoing; (iv) the execution of
      any document that may be necessary or reasonably helpful in connection with
      the
      filing of a Tax Return by Halliburton or KBR or of their respective
      subsidiaries, or in connection with any audit, dispute, proceeding, suit or
      action; and (v) such Party’s commercially reasonable efforts to obtain any
      documentation from a governmental authority or a third party that may be
      necessary or reasonably helpful in connection with any of the foregoing.

     

    (b)
      Both
      Parties shall use reasonable efforts to keep each other advised as to the status
      of Tax audits or Tax Controversies involving a Disputed Tax Issue and cooperate
      in a defense with respect to a Disputed Tax Issue in any Tax Controversy.

     

    (c)
      Each
      Party shall make its employees and facilities available on a reasonable and
      mutually convenient basis in connection with any of the foregoing matters.
      

     

    (d)
      If
      either Party fails to provide any information requested pursuant to
      Section 6.02 hereof within a reasonable period, as determined in good faith
      by the Party requesting the information, then the requesting Party shall have
      the right to engage a public accounting firm to gather such information,
      provided that thirty (30) days prior written notice is given to the
      unresponsive Party. If the unresponsive Party fails to provide the requested
      information within thirty (30) days of receipt of such notice, then such
      unresponsive Party shall permit the requesting Party’s public accounting firm
      full access to all appropriate records or other information as reasonably
      necessary to comply with the requirements of Section 6.02 hereof and shall
      reimburse the requesting Party or pay directly all costs connected with the
      requesting Party’s engagement of the public accounting firm. 

     

    (e)
      Upon
      the expiration of any statute of limitations, the documentation of Halliburton
      or KBR or any of their respective subsidiaries, including, without limitation,
      books, records, Tax Returns and all supporting schedules and information
      relating thereto, shall not be destroyed or disposed of unless (i) the
      Party proposing such destruction or disposal provides sixty (60) days prior
      written notice to the other Party describing in reasonable detail the
      documentation to be destroyed or disposed of and (ii) the recipient of such
      notice agrees in writing to such destruction or disposal. If the recipient
      of
      such notice objects, then the Party proposing the destruction or disposal shall
      promptly deliver such materials to the objecting Party at the expense of the
      objecting Party. 

     

    Section
      6.03 Reliance
      on Exchanged Information.
      If
      either Party supplies information to the other Party upon such Party’s request,
      and an officer of the requesting Party intends to sign a statement or other
      document under penalties of perjury in reliance upon the accuracy of such
      information, then a duly authorized officer of the Party supplying such
      information shall certify, to the best of such Party’s knowledge, the accuracy
      and completeness of the information so supplied. 

     

    Section
      6.04 Payment
      of Tax and Indemnity.
      Except
      as provided in Section 7.03 of this Agreement, Halliburton shall timely pay
      (or shall cause to be timely paid) all Taxes of the Consolidated Group, of
      any
      Combined Group which includes a member of the ESG Group and of any entity or
      person that is not a member of the KBR Group and shall indemnify and hold
      harmless KBR for all liability for Taxes of any member of the Consolidated
      Group, of any Combined Group which includes a member of the ESG Group or of
      any
      other person or entity that is not a member of the KBR Group assessed against
      any member of the KBR Group pursuant to Treasury Regulations § 1.1502-6 or any
      analogous or similar law. 

     

    Section
      6.05 Prior
      Tax Years.
      For all
      taxable periods beginning before the Effective Date of this Article VI (January
      1, 2001), the Parties hereby agree that: 

     

    (a)
      KBR
      shall have full responsibility and discretion in handling, settling or
      contesting any Tax Controversy involving a Tax Return that includes Tax Items
      of
      a member of the KBR Group and does not include Tax Items of a member of the
      ESG
      Group; 

     

    (b)
      Halliburton shall have full responsibility and discretion in handling, settling
      or contesting any Tax Controversy involving a Tax Return that includes Tax
      Items
      of a member of the ESG Group and does not include Tax Items of a member of
      the
      KBR Group; 

     

    (c)
      Halliburton shall have full responsibility and discretion in handling, settling
      or contesting any Tax Controversy involving any Tax Return not described in
      Section 6.05(a) or (b); 

     

    (d)
      with
      respect to any Consolidated Return or Combined Return described in this
      Section 6.05 that includes activities of members of the ESG Group and the
      KBR Group, KBR shall pay to Halliburton, within ninety (90) days of a Final
      Determination of any Tax, any liability for such Tax attributable to a member
      of
      the KBR Group, as reasonably determined by Halliburton; 

     

    (e)
      with
      respect to any Consolidated Return or Combined Return described in this
      Section 6.05 that includes activities of members of the ESG Group and the
      KBR Group, Halliburton shall pay to KBR, within ninety (90) days of a Final
      Determination of any Tax, any refund due with respect to such Final
      Determination attributable to a member of the KBR Group, as reasonably
      determined by Halliburton; 

     

    (f)
      any
      costs incurred in handling, settling or contesting any Tax Controversy described
      in Section 6.05(a) shall be borne by KBR, any costs incurred in handling,
      settling or contesting any Tax Controversy described in Section 6.05(b)
      shall be borne by Halliburton and any costs incurred in handling, settling
      or
      contesting any Tax Controversy described in Section 6.05(c) shall be borne
      by the Party who would bear such costs if Section 6.01(a) applied;

     

    (g)
      for
      the purposes of this Section 6.05, Halliburton Produtos Ltda. shall be
      considered a member of the KBR Group until the date it is transferred to Kellogg
      Energy Services, Inc.; and 

     

    (h)
      except to the extent otherwise provided in this Section 6.05, the
      provisions of Article VI shall apply to the taxable periods described in this
      Section 6.05. For the avoidance of doubt, notwithstanding anything to the
      contrary in this Section 6.05, the provisions of Section 6.01(a) shall
      apply to any Disputed Tax Issue relating to any taxable period beginning before
      the Effective Date of this Article VI. 

     

    ARTICLE
      VII. 

     

    WARRANTIES
      AND REPRESENTATIONS; INDEMNITY 

     

    Section
      7.01 Warranties
      and Representations Relating to Actions of Halliburton and KBR.
      Each of
      Halliburton and KBR warrants and represents to the other that: 

     

    (a)
      it is
      a corporation duly organized, validly existing and in good standing under the
      laws of the State of Delaware and has all requisite corporate power to own,
      lease and operate its properties, to carry on its business as presently
      conducted and to carry out the transactions contemplated by this Agreement;
      

     

    (b)
      it
      has duly and validly taken all corporate action necessary to authorize the
      execution, delivery and performance of this Agreement and the consummation
      of
      the transactions contemplated hereby; 

     

    (c)
      this
      Agreement has been duly executed and delivered by it and constitutes its legal,
      valid and binding obligation enforceable in accordance with its terms subject,
      as to the enforcement of remedies, to (i) applicable bankruptcy,
      reorganization, insolvency, moratorium or other similar laws affecting the
      enforcement or creditors’ rights generally from time to time in effect and
      (ii) to general principles of equity, whether enforcement is sought in a
      proceeding at law or in equity; and 

     

    (d)
      the
      execution and delivery of this Agreement, the consummation of the transactions
      contemplated hereby, or the compliance with any of the provisions of this
      Agreement will not (i) conflict with or result in a breach of any provision
      of its certificate of incorporation or by-laws, (ii) breach, violate or
      result in a default under any of the terms of any agreement or other instrument
      or obligation to which it is a party or by which it or any of its properties
      or
      assets may be bound, or (iii) violate any order, writ, injunction, decree,
      statute, rule or regulation applicable to it or affecting any of its properties
      or assets. 

     

    Section
      7.02 Warranties
      and Representations Relating to the Distribution.
      

     

    (a)
      In
      General.
      Each of
      the Parties represents that, as of the date of this Agreement, it knows of
      no
      fact (after due inquiry) that may cause the Tax treatment of the Distribution
      to
      be other than a distribution of KBR stock with respect to which no gain or
      loss
      is recognized by Halliburton, KBR or their respective stockholders pursuant
      to
      Section 355 and related provisions of the Code and relevant Treasury
      regulations promulgated thereunder (such distribution a “Tax Free Spinoff”).

     

    (b)
      No
      Contrary Plan.
      Each of
      the Parties represents that it has no plan or intent to take any action which
      is
      inconsistent with the treatment of the Distribution as a Tax Free Spinoff.
      

     

    Section
      7.03 Covenants
      Relating to the Tax Treatment of the Distribution.
      

     

    (a)
      In
      General.
      The
      Parties intend the Distribution to qualify as a Tax Free Spinoff. 

     

    (i)
      During the Restricted Period, KBR shall not permit or take any action within
      its
      control (including entering into any agreement, understanding or arrangement
      or
      any negotiations with respect to any transactions or series of transactions)
      that, or fail to take any action within its control the failure of which, would
      cause the Distribution to fail to qualify as a Tax Free Spinoff (any such action
      or failure to act, a “Disqualifying Action”). 

     

    (ii)
      For
      the avoidance of doubt, and without limitation, Disqualifying Actions include
      (1) KBR causing or permitting to be caused a change in its Control or
      (2) KBR ceasing the active conduct of a trade or business within the
      meaning of Section 355(b) of the Code to the extent the existence of such
      trade or business was necessary to a conclusion reached by the IRS in the
      Private Letter Ruling or a conclusion reached by Tax Counsel in the Tax Opinion,
      unless Halliburton consents in writing to such action, unless expressly required
      or permitted pursuant to the Master Separation Agreement or Master Separation
      and Distribution Agreement (as applicable), or unless, for actions after the
      Distribution Date, KBR first obtains, and permits Halliburton to review, either
      a supplemental ruling from the IRS or an opinion from a nationally recognized
      law firm reasonably acceptable to Halliburton, in either case, to the effect
      that such action or non-action referred to in this Section 7.03(a)(ii) will
      not affect the qualification of the Distribution as a Tax Free Spinoff.

     

    (iii)
      During the Restricted Period, except for transactions contemplated by the Master
      Separation Agreement or Master Separation and Distribution Agreement (as
      applicable), KBR shall not take any action within its control, taken alone
      or
      together with any other action (including entering into any agreement,
      understanding or arrangement or any negotiations with respect to any
      transactions or series of transactions), that, or fail to take any action within
      its control the failure of which, would result in a more than immaterial
      possibility that the Distribution would be treated as part of a plan pursuant
      to
      which one or more persons acquire directly or indirectly KBR stock representing
      a “50-percent or greater interest” within the meaning of Section 355(e)(4)
      of the Code (any such action or failure to act, a “Potential Disqualifying
      Action”), unless, prior to the taking of the Potential Disqualifying Action, KBR
      delivers to Halliburton either a private letter ruling from the IRS reasonably
      acceptable to Halliburton (a “Subsequent Ruling”) or an opinion from a
      nationally recognized law firm reasonably acceptable to Halliburton (a
“Subsequent Opinion”), in either case, to the effect that the Potential
      Disqualifying Action would not cause the Distribution to cease to qualify as
      a
      Tax Free Spinoff. 

     

    (iv)
      For
      the avoidance of doubt, and without limitation, each of the following
      constitutes a Potential Disqualifying Action pursuant to
      Section 7.03(a)(iii) hereof: 

     

    (1)
      The
      merger or consolidation of KBR with or into any other corporation; 

     

    (2)
      The
      liquidation or partial liquidation of KBR (within the meaning of such terms
      as
      defined in Section 346 and Section 302, respectively, of the Code);

     

    (3)
      The
      sale or transfer of all or substantially all of KBR’s assets (within the meaning
      of Rev. Proc. 77-37, 1977-2 C.B. 568) in a single transaction or series of
      related transactions; 

     

    (4)
      The
      redemption or other repurchase of any of KBR’s capital stock (other than in
      connection with future employee benefit plans or pursuant to a future market
      purchase program involving five (5) percent or less of its publicly traded
      stock); or 

     

    (5)
      The
      change in KBR’s equity structure (including stock issuances, pursuant to the
      exercise of options, the vesting of restricted stock units or otherwise, option
      grants, the adoption of, or authorization of shares under a stock option plan,
      grants of restricted stock or stock units, capital contributions or
      acquisition); provided, however, that stock issuances pursuant to and awards
      under the KBR, Inc. 2006 Stock and Incentive Plan or the Transitional Stock
      Adjustment Plan related to conversions of awards made with respect to
      Halliburton stock shall not be considered a change in KBR’s equity structure for
      purposes of this Section 7.03(a)(iv)(5); 

     

    unless
      such action is expressly required or permitted pursuant to the Master Separation
      Agreement or Master Separation and Distribution Agreement (as applicable) or
      unless KBR first delivers to Halliburton a Subsequent Ruling or a Subsequent
      Opinion, both reasonably acceptable to Halliburton, in either case, to the
      effect that the action would not cause the Distribution to cease to qualify
      as a
      Tax Free Spinoff. 

     

    (b)
      Notice
      of Events That Could Affect the Tax Treatment of the Distribution and Right
      to
      Enjoin.
      

     

    (i)
      Subject to Section 7.03(b)(iii) hereof, until the first day after the
      second anniversary of the Distribution, KBR shall give Halliburton at least
      thirty (30) days prior written notice of KBR’s intention to effect any
      transaction with respect to KBR’s capital structure, whether through issuance,
      redemption or otherwise if and to the extent there is more than an immaterial
      possibility that such transaction would constitute a Disqualifying Action.
      Each
      such notice shall set forth the necessary terms and conditions of the proposed
      transaction, including, as applicable, the nature of any related action proposed
      to be taken, the approximate number of shares proposed to be issued, redeemed
      or
      transferred (directly or indirectly, in accordance with the provisions of
      Section 355(e) of the Code), all with sufficient particularity to enable
      Halliburton to review and comment on the effect of such transaction with respect
      to Section 355(e) of the Code. Because the damages that may result to
      Halliburton will be difficult to quantify, in the event Halliburton obtains
      an
      opinion from a nationally recognized law firm that the proposed transaction
      described in this Section 7.03(b)(i) would more likely than not constitute
      a Disqualifying Action, Halliburton shall have the right to enjoin KBR from
      entering into such transaction, and upon ten (10) business days prior
      written notice from Halliburton of its desire to enjoin such transaction, KBR
      shall not enter into such transaction; provided, however, that Halliburton
      will
      not waive its right to recover damages for breach of this Agreement if KBR
      is
      not enjoined from engaging in the proposed transaction. 

     

    (ii)
      If
      KBR receives a Subsequent Opinion or Subsequent Ruling, KBR shall notify
      Halliburton and (if Halliburton is not otherwise provided a copy) provide
      Halliburton promptly with a copy of such Subsequent Opinion or Subsequent
      Ruling, but in any event with ten (10) business days after the receipt of
      the Subsequent Opinion or Subsequent Ruling. 

     

    (iii)
      Notice shall not be required under Section 7.03(b)(i) hereof with respect
      to the grant and/or exercise of any stock option, stock, stock-based
      compensation or other employment related arrangements arising in the ordinary
      course of business that have customary terms and conditions consistent with
      past
      practice (a “Compensatory Transaction”) if the Compensatory Transaction
      satisfies the requirements of Treasury Regulations § 1.355-7(d)(8), or, if in
      the case of options, if (A) the exercise price is equal to or greater than
      the fair market value of the stock subject to the option on the date of grant
      or
      issuance and (B) such option does not have a readily ascertainable fair
      market value within the meaning of Treasury Regulations § 1.83-7. 

     

    (iv)
      Each
      Party shall furnish the other with a copy of any document of information that
      reasonably could be expected to affect treatment of the Distribution as a Tax
      Free Spinoff. 

     

    (v)
      All
      information provided by any Party to the other Party pursuant to this
      Section 7.03(b) shall be kept confidential pursuant to the terms and
      conditions of Section 8.12 hereof. 

     

    (c)
      Cooperation
      Relating to the Tax Treatment of the Distribution.
      

     

    (i)
      Each
      Party shall cooperate with the other and shall take such actions reasonably
      requested by such other Party in connection with obtaining either a Subsequent
      Ruling or Subsequent Opinion. Such cooperation shall include providing any
      information, representations and/or covenants reasonably requested by the
      requesting Party to enable such Party to obtain, or maintain the validity of,
      either a Subsequent Ruling or Subsequent Opinion. From and after any date on
      which a Party makes any representation or covenant to counsel for the purpose
      of
      obtaining a Subsequent Opinion or to the IRS for the purpose of obtaining a
      Subsequent Ruling and until the first day after the second anniversary (or
      such
      later date as may be agreed upon at the time such representations and/or
      covenants are made) of the date of such Subsequent Ruling or Subsequent Opinion,
      the party making such representation or covenant shall take no action that
      would
      have caused such representation to be untrue or covenant to be breached unless
      Halliburton determines, in its reasonable discretion, which discretion shall
      be
      exercised in good faith solely to ensure that the Distribution constitutes
      a Tax
      Free Spinoff, that such action would not cause the Distribution to fail to
      qualify as a Tax Free Spinoff. 

     

    (ii)
      KBR
      shall not file any request for a Subsequent Ruling with respect to the treatment
      of the Distribution as a Tax Free Spinoff without the prior written consent
      of
      Halliburton, which consent shall not be unreasonably withheld or delayed, if
      a
      favorable Subsequent Ruling would be reasonably likely to have an adverse effect
      on Halliburton. 

     

    (d)
      Each
      Party agrees that it will not take any position on a Tax Return that is
      inconsistent with the treatment of the Distribution as a Tax Free Spinoff.
      

     

    (e)
      Each
      Party agrees (i) not to take any action reasonably expected to result in an
      increased Tax liability to the other Party under this Agreement and (ii) to
      take any action reasonably requested by the other Party that would reasonably
      be
      expected to result in a Tax benefit or avoid a Tax detriment to such other
      Party; provided, in either such case, that the taking or refraining to take
      such
      action does not result in any additional cost not fully compensated for by
      the
      other Party or any other adverse effect to such Party. The Parties hereby
      acknowledge that the preceding sentence is not intended to limit, and therefore
      shall not apply to, the rights of the parties with respect to matters otherwise
      covered by this Agreement. 

     

    (f)
      For
      the avoidance of doubt, notwithstanding anything in this Agreement to the
      contrary (including, but not limited to, Section 7.14), KBR will be
      responsible for any Taxes of a member of the Halliburton Group arising from
      the
      change of Control of KBR even if (i) Halliburton or KBR, (ii) one or
      more officers or directors acting on behalf of Halliburton or KBR, or
      (iii) another person or persons with the implicit or explicit permission of
      one or more officers or directors of Halliburton or KBR held discussions with
      third parties for the sale of the stock of KBR prior to the Distribution.

     

    (g)
      For
      the avoidance of doubt, KBR will not be responsible for any Taxes of a member
      of
      the Halliburton Group arising from the change of Control of Halliburton.

     

    Section
      7.04 Spinoff
      Indemnification.
      

     

    (a)
      In
      General.
      Notwithstanding anything herein to the contrary, the provisions of this Article
      VII shall govern all matters among the Parties hereto related to an Indemnified
      Liability (as defined in Section 7.05 below) and an Indemnity Amount (as
      defined in Section 7.07 below). 

     

    (b)
      Indemnification
      Obligation.
      If
      either Party breaches any warranty, representation or covenant set forth in
      Sections 7.02, 7.03, 7.13 or 7.14 of this Agreement and the Distribution shall
      fail to qualify as a Tax Free Spinoff as a result of such breach, then such
      Party (the “Indemnifying Party”) shall indemnify and hold harmless the other
      Party against any and all federal, state, local and foreign Taxes, interest,
      penalties and additions to Tax imposed upon or incurred by Halliburton, the
      Halliburton Group, KBR or the KBR Group, as the case may be (each such party
      an
“Indemnified Party”), as a result of the failure of the Distribution to qualify
      as a Tax Free Spinoff, to the extent provided herein. 

     

    Section
      7.05 Indemnified
      Liability -Spinoff.
      For
      purposes of this Agreement, the term “Indemnified Liability” means any liability
      imposed upon or incurred by (1) Halliburton or any member of the
      Halliburton Group, for which Halliburton or any other member of the Halliburton
      Group is indemnified and held harmless under Section 7.04(b), or
      (2) KBR or any member of the KBR Group, for which KBR or any other member
      of the KBR Group is indemnified and held harmless under Section 7.04(b).

     

    Section
      7.06 Amount
      of Indemnified Liability for Income Taxes - Spinoff.
      The
      amount of an Indemnified Liability for a federal, state, local or foreign Tax
      incurred by an Indemnified Party based on or determined with reference to income
      shall be deemed to be the amount of Tax computed by multiplying (i) the Tax
      Authority’s highest effective Tax rate applicable to the Indemnified Party for
      the character of the Tax Item subject to Tax as a result of the failure of
      the
      Distribution to qualify as a Tax Free Spinoff for the taxable period in which
      the Distribution occurs, times (ii) the gain or income of the Indemnified
      Party which is subject to Tax in the Tax Authority’s jurisdiction as a result of
      such failure, and (iii) in the case of a state, times the percentage
      representing the extent to which such gain or income is apportioned or allocated
      to such state; provided, however, that in the case of a state Tax determined
      as
      a percentage of Federal income Tax liability, the amount of Indemnified
      Liability shall be deemed to be the amount of Tax computed by multiplying
      (x) that state’s highest effective rate applicable to the Indemnified Party
      for the character of the Tax Item subject to Tax as a result of the failure
      of
      the Distribution to qualify as a Tax Free Spinoff for the taxable period in
      which the Distribution occurs, times (y) the gain or income of the
      Indemnified Party which is subject to federal income Tax as a result of such
      failure, times (z) the percentage representing the extent to which the gain
      or income required to be recognized on the Distribution is apportioned to such
      state. 

     

    Section
      7.07 Indemnity
      Amount - Spinoff.
      With
      respect to any Indemnified Liability, the amount which the Indemnifying Party
      shall pay to the Indemnified Party as indemnification (the “Indemnity Amount”)
      shall be the sum of (i) the amount of the Indemnified Liability, as
      determined under Section 7.06, (ii) any penalties and interest imposed
      with respect to the Indemnified Liability and (iii) an amount such that
      when the sum of the amounts set forth in clauses (i), (ii) and this clause
      (iii) of this Section 7.07 are reduced by all Taxes imposed as a
      result of the receipt of such sum, (taking into account any related current
      credits or deductions available to the Indemnified Party or any of its
      Affiliates under any law or Tax Authority) the reduced amount is equal to the
      sum of the amounts set forth in clauses (i) and (ii) of this
      Section 7.07. 

     

    Section
      7.08 Additional
      Indemnity Remedy - Spinoff.
      Each of
      the Parties recognizes that any failure by it to comply with its obligations
      under this Article VII may result in additional Taxes which could cause
      irreparable harm to Halliburton, its shareholders, the Halliburton Group, and/or
      KBR and the KBR Group, and that such entities may be inadequately compensated
      by
      monetary damages for such failure. Accordingly, if (A) (i) a Party
      shall fail to comply with any obligation under this Article VII which would
      be
      reasonably foreseeable to result in any additional Taxes and (ii) such
      Party shall fail to provide the other Party with an opinion from a nationally
      recognized law firm, such opinion, upon timely review being approved by the
      other Party (which approval shall not be unreasonably withheld), that the
      failure to comply with such obligation will not result in any increase in Taxes
      of Halliburton, its shareholders, any member of the Halliburton Group, on the
      one hand, or KBR or any member of the KBR Group, on the other hand, as the
      case
      may be, or if (B) it is probable in the written legal opinion of a
      nationally recognized law firm that the failure by such Party to comply with
      any
      such obligation under this Article VII will result in an Indemnified Liability
      under this Agreement and the Indemnifying Party fails to provide Adequate
      Assurances to the Indemnified Party of its ability to pay the Indemnity Amount
      under this Agreement, then Halliburton or KBR, as the case may be, shall be
      entitled to injunctive relief in the manner described in Section 8.03
      hereof, in addition to all other remedies. 

     

    Section
      7.09 Calculation
      of Indemnity Payments.
      Except
      as otherwise provided under this Agreement, to the extent that the Indemnifying
      Party has an indemnification or payment obligation to the Indemnified Party
      pursuant to this Agreement, the Indemnified Party shall provide the Indemnifying
      Party with its calculation of the amount of such obligation. The documentation
      of such calculation shall provide sufficient detail to permit the Indemnifying
      Party to reasonably understand the calculation. All indemnification payments
      shall be made to the Indemnified Party or to the appropriate Tax Authority
      as
      specified by the Indemnified Party within the time prescribed for payment in
      this Agreement, or if no period is prescribed, within thirty (30) days
      after delivery by the Indemnified Party to the Indemnifying Party of written
      notice of an indemnification obligation, or if the Tax liability giving rise
      to
      an Indemnified Liability is contested pursuant to Section 6.01(c) of this
      Agreement, within thirty (30) days of a Final Determination with respect to
      such Indemnified Liability. Any disputes with respect to indemnification
      payments shall be resolved in accordance with Section 8.11 below.

     

    Section
      7.10 Prompt
      Performance.
      All
      actions required to be taken by any Party under this Agreement shall be
      performed within the time prescribed for performance in this Agreement, or
      if no
      period is prescribed, such actions shall be performed promptly. 

     

    Section
      7.11 Interest.
      Payments pursuant to this Agreement that are not made within the period
      prescribed in Section 7.09 shall bear interest (compounded daily) from and
      including the date immediately following the last date of such period through
      and including the date of payment at a rate equal to the Federal short-term
      rate
      or rates established pursuant to Section 6621 of the Code for the period
      during which such payment is due but unpaid. 

     

    Section
      7.12 Tax
      Records.
      The
      Parties to this Agreement hereby agree to retain and provide on proper demand
      by
      any Tax Authority (subject to any applicable privileges) the books, records,
      documentation and other information relating to any Tax Return until the later
      of (a) the expiration of the applicable statute of limitations (giving
      effect to any extension, waiver or mitigation thereof), (b) the date
      specified in an applicable records retention agreement entered into with the
      IRS, (c) a Final Determination made with respect to such Tax Return and
      (d) the final resolution of any claim made under this Agreement for which
      such information is relevant. Notwithstanding the prior sentence, no Party
      may
      destroy any such records without the approval of all other Parties to this
      Agreement as described in section 6.02 hereof. 

     

    Section
      7.13 KBR
      Representations and Covenants.
      KBR
      hereby represents, warrants and covenants that: 

     

    (a)
      KBR
      will review the information and representations made in the Ruling Documents
      and
      in the Tax Opinion Documents that will be submitted to the IRS, and, KBR
      covenants that all of such information or representations that relate to KBR
      or
      any member of the KBR Group, or the business or operations of each, will be
      true, correct and complete to KBR’s knowledge and will identify to Halliburton
      any information or representations that are incorrect or incomplete.

     

    (b)
      KBR
      will not, and will cause each member of the KBR Group not to, take any action,
      or fail or omit to take any action, that would cause any of the information
      or
      representations made in the Ruling Documents and in the Tax Opinion Documents
      that relate to KBR or any member of the KBR Group or the business or operations
      of each, to be untrue, regardless of whether such information or representations
      are included in the Private Letter Ruling (or any supplemental ruling) or in
      the
      Tax Opinion (or any Subsequent Opinion). 

     

    Section
      7.14 Halliburton
      Representations and Covenants.
      Halliburton hereby represents, warrants, and covenants that: 

     

    (a)
      Halliburton will review the information and representations made in the Ruling
      Documents and in the Tax Opinion Documents that will be submitted to the IRS,
      and Halliburton covenants that all of such information or representations that
      relate to Halliburton or any member of the Halliburton Group, or the business
      or
      operations of each, will be true, correct and complete to Halliburton’s
      knowledge and will identify to KBR any information or representations that
      are
      incorrect or incomplete. 

     

    (b)
      Halliburton will not, and will cause each member of the Halliburton Group not
      to, take any action, or fail or omit to take any action, that would cause any
      of
      the information or representations made in the Ruling Documents and in the
      Tax
      Opinion Documents that relate to Halliburton or any member of the Halliburton
      Group, or the business or operations of each, to be untrue, regardless of
      whether such information or representations are included in the Private Letter
      Ruling (or any supplemental ruling) or in the Tax Opinion (or any Subsequent
      Opinion). 

     

    Section
      7.15 Continuing
      Covenants.
      Each
      Party agrees (1) not to take any action reasonably expected to result in a
      new or changed Tax Item that is detrimental to the other Party and (2) to
      take any action reasonably requested by the other Party that would reasonably
      be
      expected to result in a new or changed Tax Item that produces a benefit or
      avoids a detriment to such other Party; provided that such action does not
      result in any additional cost not fully compensated for by the requesting Party.
      The Parties hereby acknowledge that the preceding sentence is not intended
      to
      limit, and therefore shall not apply to, the rights of the Parties with respect
      to matters otherwise covered by this Agreement. 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
      VIII. 

     

    MISCELLANEOUS
      PROVISIONS 

     

    Section
      8.01 Notice.
      Any
      notice, demand, claim, or other communication required or permitted to be given
      under this Agreement (a “Notice”) shall be in writing and may be personally
      serviced, provided a receipt is obtained therefor, or may be sent by certified
      mail, return receipt requested, postage prepaid, or may be sent by telecopier,
      with acknowledgment of receipt requested, to the either of the Parties at the
      following addresses (or at such other address as one Party may specify by notice
      to the other Party): 

     

    
      	 	 
	
              Halliburton at:

            	
              Halliburton
                Company

              1401
                McKinney, Suite 2400

              Houston,
                Texas 77010-4035

              Telecopier
                Number: (713) 839-4816

              Attn:
                Director of Taxes

               

            
	
               

            	 
	
              KBR at:

            	
              KBR,
                Inc.

              4100
                Clinton Drive, P.O. Box 3

              Houston,
                Texas 77001-0003

              Telecopier
                Number: (713) 753-3868

              Attn:
                Director of Taxes

               

            
	 	 
	
              KBR Holdings at:

            	
              KBR
                Holdings LLC

              4100
                Clinton Drive, P.O. Box 3

              Houston,
                Texas 77001-0003

              Telecopier
                Number: (713) 753-3868

              Attn:
                Director of Taxes

               

            

    

     

    A
      Notice
      which is delivered personally shall be deemed given as of the date specified
      on
      the written receipt therefor. A Notice mailed as provided herein shall be deemed
      given on the third business day following the date so mailed. A Notice delivered
      by telecopier shall be deemed given upon the date it is transmitted.
      Notification of a change of address may be given by either Party to the other
      in
      the manner provided in Section 8.01 hereof for providing a Notice.

     

    Section
      8.02 Required
      Payments.
      Unless
      otherwise provided in this Agreement, any payment of Tax required shall be
      due
      within thirty (30) days of a Final Determination of the amount of such Tax.

     

    Section
      8.03 Injunctions.
      The
      Parties acknowledge that irreparable damage would occur in the event that any
      of
      the provisions of this Agreement were not performed in accordance with its
      specific terms or were otherwise breached. The Parties hereto shall be entitled
      to an injunction or injunctions to prevent breaches of the provisions of this
      Agreement and to enforce specifically the terms and provisions of this Agreement
      and to enforce specifically the terms and provisions hereof in any court having
      jurisdiction, such remedy being in addition to any other remedy to which they
      may be entitled at law or in equity. 

     

    Section
      8.04 Further
      Assurances.
      Subject
      to the provisions hereof, the Parties hereto shall make, execute, acknowledge
      and deliver such other instruments and documents, and take all such other
      actions, as may be reasonably required in order to effectuate the purposes
      of
      this Agreement and to consummate the transactions contemplated hereby. Subject
      to the provisions hereof, each of the Parties shall, in connection with entering
      into this Agreement, perform its obligations hereunder and take any and all
      actions relating hereto, comply with all applicable laws, regulations, orders,
      and decrees, obtain all required consents and approvals and make all required
      filings with any governmental agency, other regulatory or administrative agency,
      commission or similar authority and promptly provide the other Party with all
      such information as such Party may reasonably request in order to be able to
      comply with the provisions of this sentence. 

     

    Section
      8.05 Parties
      in Interest.
      Except
      as herein otherwise specifically provided, nothing in this Agreement expressed
      or implied is intended to confer any right or benefit upon any person, firm
      or
      corporation other than the Parties and their respective successors and permitted
      assigns. 

     

    Section
      8.06 Setoff.
      All
      payments to be made under this Agreement shall be made without setoff,
      counterclaim or withholding, all of which are expressly waived. 

     

    Section
      8.07 Change
      of Law.
      If, due
      to any change in applicable law or regulations or the interpretation thereof
      by
      any court of law or other governing body having jurisdiction subsequent to
      the
      date of this Agreement, performance of any provision of this Agreement or any
      transaction contemplated thereby shall become impracticable or impossible,
      the
      Parties hereto shall use their best efforts to find and employ an alternative
      means to achieve the same or substantially the same result as that contemplated
      by such provision. 

     

    Section
      8.08 Termination
      and Survival.
      Notwithstanding anything in this Agreement to the contrary, this Agreement
      shall
      remain in effect and its provisions shall survive for the full period of all
      applicable statutes of limitation (giving effect to any extension, waiver or
      mitigation thereof) or until otherwise agreed to in writing by Halliburton
      and
      KBR, or their successors. 

     

    Section
      8.09 Amendments; No Waivers. 

     

    (a)
      Any
      provision of this Agreement may be amended or waived if, and only if, such
      amendment or waiver is in writing and signed, in the case of an amendment,
      by
      Halliburton and KBR, or in the case of a waiver, by the Party against whom
      the
      waiver is to be effective. 

     

    (b)
      No
      failure or delay by any Party in exercising any right, power or privilege
      hereunder shall operate as a waiver thereof nor shall any single or partial
      exercise thereof preclude any other or further exercise thereof or the exercise
      of any other right, power or privilege. 

     

    Section
      8.10 Governing
      Law and Interpretation.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Delaware applicable to agreements made and to be performed in the
      State
      of Delaware. 

     

    Section
      8.11 Resolution
      of Certain Disputes.
      Any
      disagreement between the Parties with respect to any matter that is the subject
      of this Agreement, including, without limitation, any disagreement with respect
      to any calculation or other determinations by Halliburton hereunder, which
      is
      not resolved by mutual agreement of the Parties, shall be resolved by a
      nationally recognized independent accounting firm chosen by and mutually
      acceptable to the Parties hereto (an “Accounting Referee”). Such Accounting
      Referee shall be chosen by the Parties within fifteen (15) business days
      from the date on which one Party serves written notice on the other Party
      requesting the appointment of an Accounting Referee, provided that such notice
      specifically describes the calculations to be considered and resolved by the
      Accounting Referee. In the event the Parties cannot agree on the selection
      of an
      Accounting Referee, then the Accounting Referee shall be any office or branch
      of
      the public accounting firm of Deloitte & Touche. The Accounting Referee
      shall resolve any such disagreements as specified in the notice within thirty
      (30) days of appointment; provided, however, that no Party shall be
      required to deliver any document or take any other action pursuant to this
      Section 8.11 if it determines that such action would result in the waiver
      of any legal privilege or any detriment to its business. Any resolution of
      an
      issue submitted to the Accounting Referee shall be final and binding on the
      Parties hereto without further recourse. The Parties shall share the costs
      and
      fees of the Accounting Referee equally. 

     

    Section
      8.12 Confidentiality.
      Except
      to the extent required to protect a Party’s interests in a Tax Controversy, each
      Party shall hold and shall cause its consultants and advisors to hold in strict
      confidence, unless compelled to disclose by judicial or administrative process
      or, in the opinion of its counsel, by other requirements of law, all information
      (other than any such information relating solely to the business or affairs
      of
      such Party) concerning the other Party or its representatives pursuant to this
      Agreement (except to the extent that such information can be shown to have
      been
      (i) previously known by the Party to which it was furnished, (ii) in
      the public domain through no fault of such Party, or (iii) later lawfully
      acquired from other sources by the Party to which it was furnished), and each
      Party shall not release or disclose such information to any other person, except
      its auditors, attorneys, financial advisors, bankers and other consultants
      and
      advisors who shall be advised of the provisions of this Agreement. Each Party
      shall be deemed to have satisfied its obligation to hold confidential
      information concerning or supplied by the other Party if it exercises the same
      care as it takes to preserve confidentiality for its own similar information.
      

     

    Section
      8.13 Costs,
      Expenses and Attorneys’ Fees.
      Except
      as expressly set forth in this Agreement, each Party shall bear its own costs
      and expenses incurred pursuant to this Agreement. In the event either Party
      to
      this Agreement brings an action or proceeding for the breach or enforcement
      of
      this Agreement, the prevailing party in such action, proceeding, or appeal,
      whether or not such action, proceeding or appeal proceeds to final judgment,
      shall be entitled to recover as an element of its costs, and not as damages,
      such reasonable attorneys’ fees as may be awarded in the action, proceeding or
      appeal in addition to whatever other relief the prevailing party may be
      entitled. For purposes of Section 8.13 hereof, the “prevailing party” shall
      be the Party who is entitled to recover its costs; a Party not entitled to
      recover its costs shall not recover attorneys’ fees. No sum for attorneys’ fees
      shall be counted in calculating the amount of the judgment for purposes of
      determining whether a Party is entitled to recover its costs or attorneys’ fees.

     

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

     

    Section
      8.15 Severability.
      The
      Parties hereby agree that, if any provision of this Agreement should be
      adjudicated to be invalid or unenforceable, such provision shall be deemed
      deleted herefrom with respect, and only with respect, to the operation of such
      provision in the particular jurisdiction in which such adjudication was made,
      and only to the extent of the invalidity, and any such invalidity or
      unenforceability in a particular jurisdiction shall not invalidate or render
      unenforceable such provision in any other jurisdiction. All other remaining
      provisions of this Agreement shall remain in full force and effect for the
      particular jurisdiction and all other jurisdictions. 

     

    Section
      8.16 Entire
      Agreement; Termination of Prior Agreements. 

     

    (a)
      This
      Agreement contains the entire agreement between the Parties with respect to
      the
      subject matter hereof and supersedes all other agreements, whether or not
      written, in respect of any Tax between or among any member or members of the
      Halliburton Group, on the one hand, and any member or members of the KBR Group,
      on the other hand. All such other agreements, including, but not limited to,
      that certain Tax Sharing Agreement by and among Halliburton Company and its
      Affiliated Companies and KBR, Inc. and its Affiliated Companies, dated
      October 2, 2006, and that certain Tax Sharing Agreement by and among
      Halliburton Company and its Affiliated Companies and KBR, Inc. and its
      Affiliated Companies, dated October 31, 2006, are hereby canceled and any
      rights or obligations existing thereunder are hereby fully and finally settled
      without any payment by any party thereto; provided, however, that (i) that
      certain letter agreement regarding Tax indemnification for periods ending prior
      to January 1, 2001, attached as Exhibit C to this Agreement, shall be
      cancelled as of the date of this Agreement and any rights or obligations
      existing thereunder are hereby fully and finally settled without any payment
      by
      any party thereto and (ii) that certain Amendment to the Amended and
      Restated Tax Sharing and Allocation Agreement, attached as Exhibit D to this
      Agreement, shall remain in effect. 

     

    (b)
      Without limiting the foregoing, the Parties acknowledge and agree that in the
      event of any conflict or inconsistency between the provisions of this Agreement
      and the provisions of the Master Separation Agreement or the Master Separation
      and Distribution Agreement (as applicable), the provisions of this Agreement
      shall take precedence and to such extent shall be deemed to supersede such
      conflicting provisions under the Master Separation Agreement or the Master
      Separation and Distribution Agreement (as applicable). 

     

    Section
      8.17 Assignment.
      This
      Agreement is being entered into by Halliburton and KBR on behalf of themselves
      and each member of the Halliburton Group and KBR Group, respectively. This
      Agreement shall constitute a direct obligation of each such member and shall
      be
      deemed to have been readopted and affirmed on behalf of any corporation which
      becomes a member of the Halliburton Group or KBR Group in the future.
      Halliburton and KBR hereby guarantee the performance of all actions, agreements
      and obligations provided for under this Agreement of each member of the
      Halliburton Group and KBR Group, respectively. Halliburton and KBR shall, upon
      the written request of the other, cause any of their respective group members
      to
      formally execute this Agreement. This Agreement shall be binding upon, and
      shall
      inure to the benefit of, the successors, assigns and persons controlling any
      of
      the corporations bound hereby for so long as such successors, assigns or
      controlling persons are members of the Halliburton Group or the KBR Group or
      their successors and assigns. 

     

    Section
      8.18 Fair
      Meaning.
      This
      Agreement shall be construed in accordance with its fair meaning and shall
      not
      be construed strictly against the drafter. 

     

    Section
      8.19 Commencement.
      This
      Agreement shall commence on the date of execution indicated below. 

     

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

     

    Section
      8.21 Construction.
      In this
      Agreement, unless the context otherwise requires the terms “herein,” “hereof,”
and “hereunder” refer to this Agreement. 

     

    Section
      8.22 Termination.
      This
      Agreement may be terminated at any time prior to the date of the IPO, without
      the approval of KBR, by and in the sole discretion of the Halliburton Board
      of
      Directors. In the event of such termination, no Party shall have any liability
      to the other Party from or for the terminated Agreement, except that expenses
      incurred in connection with the preparation of this Agreement shall be paid
      as
      provided in Section 8.13 hereof; provided that any agreement that remained
      in force prior to the Deconsolidation Date, as described in Section 8.16
      hereof, shall remain in force upon a termination of this Agreement pursuant
      to
      this Section 8.22. 

     

    SPACE
      INTENTIONALLY LEFT BLANK 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    IN
      WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement
      as of 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

            
	 
	
              KBR
                Holdings LLC

            
	 	 
	
              By:

            	
              /s/
                Andrew D. Farley

            
	
              Name:

            	
              Andrew
                D. Farley

            
	
              Title:

            	
              Senior
                VP and General Counsel

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