As filed with the Securities and Exchange Commission on April 13, 2007
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
KBR, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of incorporation or organization)
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20-4536774
(I.R.S. Employer Identification Number)
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601 Jefferson Street
Suite 3400
Houston, Texas
(Address of principal executive offices)
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77002
(Zip code)
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KBR, Inc. Transitional Stock Adjustment Plan
KBR Dresser Deferred Compensation Plan
(Full title of the plans)
Andrew D. Farley
Senior Vice President, General Counsel and Secretary
601 Jefferson Street
Suite 3400
Houston, Texas 77002
(713) 753-3011
(Name and address, including zip code, and telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
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Title of
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Proposed maximum
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Proposed maximum
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Amount of
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securities to be
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Amount to be
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offering price per
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aggregate offering
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Registration
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registered
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registered
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share
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price
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Fee
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Common Stock,
par value $0.001
per share
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2,982,972 (1)(2)
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$
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20.965
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(3)
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$
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62,538,008
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$
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1,920
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(3)
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(1)
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Pursuant to Rule 416 under the Securities Act of 1933, this Registration Statement also
covers an indeterminate number of additional shares as may become issuable under the plans
pursuant to the anti-dilution provisions thereof.
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(2)
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The shares of KBR, Inc. common stock being registered hereby include (a) 2,901,202 shares to
be offered under the KBR, Inc. Transitional Stock Adjustment Plan and (b) 81,770 shares to be
offered under the KBR Dresser Deferred Compensation Plan.
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(3)
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Estimated pursuant to Rule 457(c) and Rule 457(h) solely for the purpose of computing the
registration fee and based upon the average of the high and low sales price of the common
stock reported on the New York Stock Exchange on April 10, 2007.
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TABLE OF CONTENTS
Introductory Statement
KBR, Inc. is filing this Registration Statement on Form S-8 relating to its common stock, par
value $0.001 per share, issuable pursuant to the terms of the KBR, Inc. Transitional Stock
Adjustment Plan and the KBR Dresser Deferred Compensation Plan.
Part I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Note: The document(s) containing the plan information required by Item 1 of Form S-8 and the
statement of availability of registrant information and any other information required by Item 2 of
Form S-8 will be sent or given to participants as specified by Rule 428 under the Securities Act of
1933, as amended (the “Securities Act”). In accordance with Rule 428 and the requirements of Part
I of Form S-8, such documents are not being filed with the Securities and Exchange Commission (the
“SEC”) either as part of this Registration Statement or as prospectuses or prospectus supplements
pursuant to Rule 424 under the Securities Act. KBR, Inc. (the “Company”) shall maintain a file of
such documents in accordance with the provisions of Rule 428. Upon request, the Company shall
furnish to the SEC or its staff a copy or copies of all of the documents included in such file.
1
Part II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
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3. Incorporation of Documents by Reference.
This Registration Statement incorporates by reference the following documents which have been
filed by the Company with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) (File No. 001-33146):
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1.
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The Company’s Annual Report on Form 10-K for the year ended December 31, 2006;
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2.
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The Company’s Current Reports on Form 8-K as filed with the SEC on March 2,
2007, March 20, 2007 and April 6, 2007; and
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3.
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The description of the Company’s common stock, par value $0.001 per share
(“Common Stock”), contained in the Company’s Registration Statement on Form 8-A as
filed with the SEC on November 9, 2006, as such description may be amended from time to
time.
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All documents filed by the Company with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Registration Statement and prior to the filing
of a post-effective amendment to this Registration Statement which indicates that all securities
offered by this Registration Statement have been sold, or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement
and to be a part of this Registration Statement from the date of filing such documents.
Any statement contained in this Registration Statement, in any amendment to this Registration
Statement or in a document incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that such statement is
modified or superseded by a statement contained in any subsequently filed supplement to this
Registration Statement or in any document that also is incorporated by reference herein. Any
statement so modified or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
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4. Description of Securities.
Not applicable.
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5. Interests of Named Experts and Counsel
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Not applicable.
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6. Indemnification of Directors and Officers.
Delaware law permits a corporation to adopt a provision in its certificate of incorporation
eliminating or limiting the personal liability of a director, but not an officer in his or her
capacity as such, to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except that such provision shall not eliminate or limit the liability
of a director for (1) any breach of the director’s duty of loyalty to the corporation or its
stockholders, (2) acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) liability under section 174 of the Delaware General Corporation Law
(the “DGCL”) for unlawful payment of dividends or stock purchases or redemptions or (4) any
transaction from which the director derived an improper personal benefit. Our certificate of
incorporation provides that, to the fullest extent of Delaware law, none of our directors will be
liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director.
Under Delaware law, a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any type of proceeding, other than an action by or in the right of
the corporation, because he or she
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is or was a director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of another corporation or
other entity, against expenses, including attorneys’ fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such proceeding if: (1) he or she
acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation and (2) with respect to any criminal proceeding, he or she had no
reasonable cause to believe that his or her conduct was unlawful. The termination of any proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that a person did not act in good faith and in a manner
which he or she reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal proceeding, had reasonable cause to believe that his
or her conduct was unlawful. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or suit brought by or
in the right of the corporation because he or she is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or other entity, against expenses, including attorneys’
fees, actually and reasonably incurred in connection with such action or suit if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification will be made if the person is found
liable to the corporation unless, in such a case, the court determines the person is nonetheless
entitled to indemnification for such expenses. A corporation must also indemnify a present or
former director or officer who has been successful on the merits or otherwise in defense of any
proceeding, or in defense of any claim, issue or matter therein, against expenses, including
attorneys’ fees, actually and reasonably incurred by him or her. Expenses, including attorneys’
fees, incurred by a director, officer, employee or agent, in defending civil or criminal
proceedings may be paid by the corporation in advance of the final disposition of such proceedings
upon, in the case of a current director or officer, receipt of an undertaking by or on behalf of
such director or officer to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the corporation. The Delaware law regarding indemnification
and the advancement of expenses is not exclusive of any other rights a person may be entitled to
under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.
Section 174 of the DGCL provides, among other things, that a director, who willfully or
negligently approves of an unlawful payment of dividends or an unlawful stock purchase or
redemption, may be held liable for such actions. A director who was either absent when the unlawful
actions were approved or dissented at the time, may avoid liability by causing his or her dissent
to such actions to be entered in the books containing the minutes of the meetings of the board of
directors at the time such action occurred or immediately after such absent director receives
notice of the unlawful acts.
Our bylaws generally provide for mandatory indemnification of directors and officers to the
fullest extent permitted by law. We also entered into indemnification agreements with our directors
in the form filed as an exhibit to our Registration Statement on Form S-1, as amended (Registration
No. 333-133302), that generally provide for mandatory indemnification to the fullest extent
permitted by law.
Delaware law also provides that a corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or agent of another
corporation or other entity, against any liability asserted against and incurred by such person,
whether or not the corporation would have the power to indemnify such person against such
liability. We maintain, at our expense, insurance policies that insure our officers and directors,
subject to customary exclusions and deductions, against specified liabilities that may be incurred
in those capacities.
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7. Exemption from Registration Claimed
Not applicable.
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I
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8. Exhibits
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Exhibit
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Number
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Description
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4.1*
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Amended and Restated Certificate of Incorporation of the Company (incorporated by reference
to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, as amended (Registration
No. 333-133302) (the “Form S-1”))
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4.2*
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Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the
Form S-1)
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4.3*
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Form of specimen common stock certificate (incorporated by reference to Exhibit 4.1 to the
Form S-1)
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4.4*
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KBR, Inc. Transitional Stock Adjustment Plan (incorporated by reference to Exhibit 10.23 to
the Company’s Form 10-K for the year ended December 31, 2006)
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4.5
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KBR Dresser Deferred Compensation Plan
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5.1
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Opinion of Baker Botts L.L.P.
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23.1
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Consent of KPMG LLP — Houston, Texas
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23.2
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Consent of KPMG — Adelaide, South Australia
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23.3
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Consent of Baker Botts L.L.P. (included in exhibit 5.1)
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24.1
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Power of Attorney (included on the signature page of this Registration Statement)
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*
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Incorporated by reference as indicated.
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I
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9. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date
of this Registration Statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the information set
forth in this Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus filed with
the Securities and Exchange Commission pursuant to Rule 424(b) of the Securities Act of 1933
if, in the aggregate, the changes in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the “Calculation of Registration Fee”
table in the effective Registration Statement; and
(iii) To include any material information with respect to the plan of distribution not
previously disclosed in this Registration Statement or any material change to such
information in this Registration Statement;
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Provided, however
, that the undertakings set forth in paragraphs (a)(1)(i) and (a)(1)(ii)
above do not apply if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the Securities and
Exchange Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in this Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy as expressed in
the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is against public policy
as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such
issue.
5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it
has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and
has duly caused this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Houston, State of Texas, on April 13, 2007.
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KBR, INC.
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By:
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/s/ William P. Utt
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William P. Utt
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President and Chief Executive Officer
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes
and appoints Andrew D. Farley and Deidre L. Shearer, and each of them, as his true and lawful
attorneys-in-fact and agents, with full power of substitution and resubstitution, for the
undersigned and in his name place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this registration statement, any registration
statement for the same offering filed pursuant to Rule 462(b) under the Securities Act of 1933 and
any and all amendments (including post-effective amendments) thereto, and to file the same, with
all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in connection therewith, as
fully to all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration Statement has been
signed by the following persons in the capacities indicated on April 13, 2007.
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Signature
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Title
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/s/ William P. Utt
William P. Utt
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President, Chief Executive Officer and Director
(Principal Executive Officer and Director)
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/s/ Cedric W. Burgher
Cedric W. Burgher
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Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
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/s/ John W. Gann, Jr.
John W. Gann, Jr.
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Vice President and Chief Accounting Officer
(Principal Accounting Officer)
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/s/ Loren K. Carroll
Loren K. Carroll
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Director
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/s/ Jeffrey E. Curtiss
Jeffrey E. Curtiss
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Director
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/s/ John R. Huff
John R. Huff
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Director
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/s/ Richard J. Slater
Richard J. Slater
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Director
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6
EXHIBIT INDEX
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Exhibit
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Number
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Description
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4.1*
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Amended and Restated Certificate of Incorporation of the Company (incorporated by reference
to Exhibit 3.1 to the Company’s Registration Statement on Form S-1, as amended (Registration
No. 333-133302) (the “Form S-1”))
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4.2*
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Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the
Form S-1)
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4.3*
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Form of specimen common stock certificate (incorporated by reference to Exhibit 4.1 to the
Form S-1)
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4.4*
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KBR, Inc. Transitional Stock Adjustment Plan (incorporated by reference to Exhibit 10.23 to
the Company’s Form 10-K for the year ended December 31, 2006)
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4.5
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KBR Dresser Deferred Compensation Plan
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5.1
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Opinion of Baker Botts L.L.P.
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23.1
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Consent of KPMG LLP — Houston, Texas
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23.2
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Consent of KPMG — Adelaide, South Australia
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23.3
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Consent of Baker Botts L.L.P. (included in exhibit 5.1)
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24.1
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Power of Attorney (included on the signature page of this Registration Statement)
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*
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Incorporated by reference as indicated.
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7
Exhibit 4.5
KBR DRESSER
DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS
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I.
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PURPOSE OF PLAN
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1
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II.
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DEFINITIONS AND CONSTRUCTION
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1
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2.1
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Definitions
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1
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2.2
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Number and Gender
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3
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2.3
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Headings
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3
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2.4
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Effect Upon Other Plans
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3
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III.
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ADMINISTRATION
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3
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3.1
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Administration by the Committee; Right to Delegate; Indemnity
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3
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3.2
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Required Vote; Meetings
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4
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3.3
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Powers and Duties
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4
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3.4
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Unit Price
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4
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3.5
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Expenses
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5
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IV.
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UNIT STOCK BENEFITS AND CASH BENEFITS
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5
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4.1
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Dividend Equivalents on Unit Stock Benefits
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5
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4.2
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Interest on Cash Benefit
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5
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4.3
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Corporate Changes
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5
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4.4
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Unilateral Termination
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5
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V.
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BENEFITS
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5
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5.1
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Valuation
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5
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5.2
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Conversion From Unit Stock Benefit to Cash Benefit
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6
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5.3
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Medium of Payment
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6
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5.4
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Election of Options
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6
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5.5
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Payment of Dividend Equivalents and Interest
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7
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5.6
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Death or Disability
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7
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5.7
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To Whom Payments are Made
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7
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5.8
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Forfeiture
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7
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VI.
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MISCELLANEOUS
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7
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6.1
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Elections
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7
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6.2
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Reserves
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7
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6.3
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Withholding
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8
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6.4
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Plan Not to Constitute Contract of Employment
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8
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6.5
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Nontransferability and Nonassignability
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8
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6.6
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Amendment, Suspension or Termination
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8
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6.7
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Reliance Upon Information
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8
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6.8
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Governing Law
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9
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i
KBR DRESSER
DEFERRED COMPENSATION PLAN
WHEREAS
, Dresser Industries, Inc. established the Dresser Industries, Inc. Deferred
Compensation Plan, hereinafter referred to as the “Plan,” effective August 19, 1965, for the
benefit of certain of its employees;
WHEREAS
, deferrals under the Plan have ceased and no new Participant may join the Plan;
WHEREAS
, Halliburton Company and Dresser Industries, Inc. merged effective September 29, 1998;
WHEREAS
, Halliburton Company determined that it would be appropriate and desirable for
Halliburton to separate the business and assets of KBR, Inc. (the “Company”) and its subsidiaries,
from the business and assets of Halliburton and its other subsidiaries through an initial public
offering of the common stock of the Company; and
WHEREAS
, the Company desires to assume all liabilities and continue the benefits for its
employees who are participants under the Plan;
WHEREAS
, the Company desires to continue the Plan, intending thereby to provide an
uninterrupted and continuing program of benefits for its employees who are also Plan participants;
NOW THEREFORE
, the Plan is hereby restated in its entirety as follows with no interruption in
time, effective as of the Effective Date:
I. PURPOSE OF PLAN
The purposes of this Plan are to (i) provide greater incentive for employees to attain and
maintain the highest standards of performance; (ii) retain employees of outstanding competence;
(iii) further the identity of interests of such employees with those of the Company’s stockholders
generally; and (iv) reward such employees for outstanding performance.
II. DEFINITIONS AND CONSTRUCTION
2.1
Definitions
. Where the following words and phrases are used in this Plan, they shall have the respective
meanings set forth below, unless the context clearly, indicates to the contrary:
(a) “Benefits” means the net, unforfeited amounts, including Interest and Dividend Equivalents
to be paid to a Participant (or the estate or beneficiary of a Participant) under the Plan.
(b) “Benefit Payment Option” means one of the schedules specifying the timing of the payment
of a Participant’s Benefit under the Plan as set forth in Section 5.4 of the Plan.
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(c) “Board” means the Board of Directors of the Company
(d) “Cash Benefit” means the amount credited in a dollar “amount under the Plan on behalf of a
Participant as a result of such Participant’s Deferred Compensation and any Interest credited
thereon.
(e) “Committee” means the administrative committee appointed by the Compensation Committee to
administer the Plan.
(f) “Compensation Committee” means the Compensation Committee of the Board.
(g) “Company” means KBR, Inc. and its wholly-owned subsidiaries.
(h) “Crediting Date” means the January 15 next following the end of the Fiscal Year for which
the credit is awarded or, if such January 15 is not a business day, the next business day.
(i) “Deconsolidation Date” means the date upon which an event reduces the amount of Company
stock owned directly or indirectly by Halliburton Company to be less than the amount required for
Halliburton Company to control the Company within the meaning of Section 1504(a)(2) of the Internal
Revenue Code.
(j) “Deferred Compensation” means amounts deferred under the terms of the Plan prior to the
Effective Date.
(k) “Disability” means such an absence of physical or mental powers in a Participant so as to
render him incapable of competently performing his duties for the Company.
(l) “Dividend Equivalent” means, with respect to a particular Unit Stock Benefit, the sum of
(i) the total amount of cash dividends that would have been payable during the preceding calendar
year on the shares of Unit Stock under such Unit Stock Benefit had such shares been outstanding
during the preceding calendar year and (ii) any Dividend Equivalent with respect to such Unit Stock
Benefit carried forward from the preceding Crediting Date in accordance with the terms of Section
4.1.
(m) “Effective Date” means the Deconsolidation Date. The original effective date of the
Dresser Industries, Inc. Deferred Compensation Plan was August 1, 1965.
(n) “Fiscal Year” means the fiscal year of the Company.
(o) “Interest” means simple interest credited on a Participant’s Cash Benefit as of each
Crediting Date. The rate of Interest shall be based on the annual savings account rate
of a major bank as designated from time to time by the Committee as of the December 31 next
preceding the applicable Crediting Date.
(p) “Participant” means an individual who is contingently entitled to Benefits under the Plan.
Participation in the Plan is available only to an individual who was a Participant
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in the Plan on
the Effective Date. No other individuals shall be eligible to become Participants in the Plan.
(q) “Plan” means the KBR Dresser Deferred Compensation Plan, which is based on the terms of,
and is a continuation of, the Dresser Industries, Inc. Deferred Compensation Plan as adopted by the
board of directors of Dresser Industries, Inc. on August 1, 1965 and as amended and restated by
Halliburton Company. The applicable terms of that plan have been herein preserved and continued
for employees of the Company and its subsidiaries.
(r) “Unit Price” means, with respect to a Crediting Date, 75% of the average of the daily
closing prices of Unit Stock on the New York Stock Exchange for the calendar month immediately
prior to such Crediting Date, or such higher percentage of such average as may be determined by the
Compensation Committee from time to time, in accordance with the terms of Section 3.4; provided
however, that with respect to Unit Stock Benefits on behalf of a Participant who has terminated
employment with the Company, 100% shall be substituted, for the foregoing percentage with respect
to each Crediting Date after the Crediting Date following such Participant’s termination of
employment.
(s) “Unit Stock” means shares of common stock of the Company.
(t) “Unit Stock Benefit” means the number of shares of Unit Stock credited on behalf of a
Participant as a result of such Participants’ Deferred Compensation, and any Dividend Equivalents
credited-thereon.
2.2
Number and Gender
. Wherever appropriate herein, words used in the singular shall be considered to include the
plural, and words used in the plural shall be considered to include the singular. The masculine
gender, where appearing in this Plan, shall be deemed to include the feminine gender.
2.3
Headings
. The headings of Articles, Sections, and Paragraphs herein are included solely for convenience.
If there is any conflict between such headings and the text of this Plan, the text shall control.
All references to Articles, Sections, and Paragraphs are to this Plan unless otherwise indicated.
2.4
Effect Upon Other Plans
. Except to the extent provided herein, nothing in this Plan shall be construed to affect the
provisions of any other plan maintained by the Company.
III. ADMINISTRATION
3.1
Administration by the Committee; Right to Delegate; Indemnity
. This Plan shall be administered by the Committee. The Committee may appoint committees,
individuals, or any other agents as it deems advisable and may delegate to any of such appointees
any or all of the powers and duties of the Committee hereunder. In the event the Committee
delegates any or all of its powers and duties under the foregoing sentence, the Committee may
specify the manner in which such powers and duties shall be performed. The Company shall indemnify
and hold harmless each member of the Committee against any and all expenses and liabilities arising
out of his or her administrative functions or fiduciary responsibilities, including any expenses
and liabilities that are caused by or result from an act or omission constituting the negligence of
3
such member in the performance of such functions or responsibilities, but excluding expenses and
liabilities that are caused by or result from such member’s own gross negligence
or willful
misconduct. Expenses against which such member shall be indemnified hereunder shall include,
without limitation, the amounts of any settlement or judgment, costs, counsel fees, and related
charges reasonably incurred in connection with a claim asserted or a proceeding brought or
settlement thereof.
3.2
Required Vote; Meetings
. The Committee shall adopt such rules and procedures for the conduct of its business and for the
administration of the Plan as it deems advisable and shall have authority to take any and all
action necessary to implement such rules and procedures. A Committee member who is a Participant
may vote and take actions on all Committee matters, including, without limitation, matters that may
directly affect such Committee member and matters that may affect such Committee member in a manner
differently from or inconsistently with other Participants. All actions taken by the Committee
must be approved by an affirmative vote of a majority of all Committee members. The Committee may
take any action without a meeting upon written consent signed by all of the Committee members.
Committee members may participate in a meeting by means of conference telephone or similar
communications equipment through which all participating persons can instantly communicate with
each other.
3.3
Powers and Duties
. The Committee shall supervise the administration and enforcement of this Plan according to the
terms and provisions hereof and shall have the sole discretionary authority and all of the powers
necessary to accomplish such duties. Without limiting the generality of the foregoing, the
Committee shall have all of the powers and duties specified for it under the Plan, including,
without limitation, the power, right, or authority: (a) from time to time to establish rules and
procedures for the administration of the Plan which are not inconsistent with the provisions of the
Plan, and any such rules and procedures shall be effective as if included in the Plan, (b) to
construe in its discretion all terms, provisions, conditions, and limitations of the Plan, (c) to
correct any defect or to supply any omission or to reconcile any inconsistency that may appear in
the Plan in such manner and to such extent as the Committee shall deem appropriate, (d) to make a
determination in its discretion as to the right of any person to a payment and the amount of such
payment and to prescribe procedures to be followed by distributees in obtaining such
payment, and (e) to make all other determinations necessary or advisable for the administration of
the Plan. All decisions, determinations, and actions made or taken by the Committee and its
delegates with respect to the Plan and any Benefits under the Plan shall be final, including, and
conclusive upon all persons and shall not be subject to appeal. The Committee and its delegates
shall, in their sole discretion exercised in good faith (which for purposes of this Section 3.3,
shall mean the application of reasonable business judgment), make such decisions or determinations
and take such actions, and all such decisions, determinations, and actions by the Committee and its
delegates shall be final, binding, and conclusive upon all persons and shall not be subject to
appeal. If a Participant disagrees with any decision, determination, or action made or taken by
the Committee or its delegates, then the dispute will be limited to whether the Committee satisfied
their duty to make such decision or determination or take such action in good faith.
3.4
Unit Price
. From time to time, the Compensation Committee may substitute any percentage in excess of 75% for
such figure in determining the Unit Price as set forth in the definition of Unit Price herein;
provided however, that any such determination must be made
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prior to the end of the Fiscal Year
immediately preceding the Crediting Date to which such Unit Price shall apply.
3.5
Expenses
. All expenses of the administration of the Plan shall be borne by the Company or its affiliate
that employs the Participant.
IV. UNIT STOCK BENEFITS AND CASH BENEFITS
4.1
Dividend Equivalents on Unit Stock Benefits
. On or before each Crediting Date, there shall be ascertained (a) the balance of each Unit Stock
Benefit and (b) the Dividend Equivalent attributable to such Unit Stock Benefit for the preceding
calendar year. As of each Crediting Date, each Unit Stock Benefit shall be credited with a whole
number of shares of Unit Stock that is equal to (x) the Dividend Equivalent determined under the
foregoing sentence, divided by (y) the applicable Unit Price; provided however, any fractional
shares shall be disregarded and the amount of any remaining Dividend Equivalent attributable to
such fractional shares shall be carried forward and added to the Dividend Equivalent calculated
with respect to the next succeeding Crediting Date.
4.2
Interest on Cash Benefit
. As of each Crediting Date, the balance of each Participant’s Cash Benefit shall be credited with
Interest.
4.3
Corporate Changes
. If the Company at any time increases or decreases proportionately to all holders of shares of
its common stock then outstanding, whether by stock dividend, stock split, consolidation of shares,
or in any other manner the number of all of its outstanding shares of such common stock held by
such holders, then all Unit Stock Benefits theretofore credited and unforfeited shall be
correspondingly increased or decreased with respect to the number of shares of such common stock
represented thereby. In the event of a merger or consolidation of the Company with or into another
corporation or the sale of substantially all of the assets of the Company, the Compensation
Committee shall make an appropriate equitable adjustment to all Unit Stock Benefits.
4.4
Unilateral Termination
. Notwithstanding any other provision of the Plan to the contrary, in the event a Participant’s
employment with the Company is terminated by unilateral decision of such Participant, no Dividend
Equivalents or Interest shall be credited to any Unit Stock Benefits or Cash Benefit on behalf of
such Participant in respect of dividends paid or Interest attributable to the period of time after
such Participant’s termination of employment.
V. BENEFITS
5.1
Valuation
. When it is necessary under the Plan to determine the value on any date of shares of Unit Stock,
the value shall be the product of the number of shares of Unit Stock to be valued and the average
of the daily closing prices of a share of the Unit Stock on the New York Stock Exchange during the
preceding calendar month. The value of a Participant’s Benefits on any date shall be the sum of
(a) the dollar amount of such Participant’s Cash Benefit and (b) the dollar value, as determined
above, of any Benefits held in shares of Unit Stock on behalf of such Participant under the Plan.
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5.2
Conversion From Unit Stock Benefit to Cash Benefit
. Prior to the Effective Date, each Participant had the opportunity to elect the manner in which
his Unit Stock Benefit will be invested and paid following his termination of employment, either
(a) continuing an all Unit Stock Benefit, (b) converting to an all Cash Benefit, or (c) continuing
a specified percentage as a Unit Stock Benefit with the remainder converting to a Cash Benefit. A
Participant who did not make such an election prior to the Effective Date shall be deemed to have
elected to have 50% of his Unit Stock Benefit converted to a Cash Benefit following his termination
of employment. Such election may be changed by a Participant prior to his termination of
employment with the Company by written notice thereof filed with the Committee; provided however,
that such change can only increase the percentage to be continued as a Unit Stock Benefit, but
cannot decrease such percentage. If a Participant has an election in effect to convert all or a
percentage of his Unit Stock Benefit to a Cash Benefit, such conversion shall occur on the
Crediting Date next following the Participant’s termination of employment with the Company based on
the applicable Unit Price for such Crediting Date. Such conversion shall occur after the crediting
of Dividend Equivalents for such Crediting Date pursuant to Section 4.1. If less than all of a
Participant’s Unit Stock Benefit is to be converted to a Cash Benefit, the number of whole shares
of Unit Stock to be converted shall be determined by multiplying the total shares of Unit Stock
credited to the Participant as of the applicable Crediting Date by the percentage to be converted
to a Cash Benefit with any fraction of a share of Unit Stock resulting from such calculation to
remain as a Unit Stock Benefit.
5.3
Medium of Payment
. All Cash Benefits under the Plan shall be paid in cash. All Unit Stock Benefits under the Plan
shall be paid in Unit Stock.
5.4
Election of Options
. A Participant’s Benefits shall be paid under one or more of the Benefit Payment Options herein
as timely elected by a Participant; provided, however, that in the absence of a valid election, a
Participant’s benefits shall be paid under Option A. Payment of a Participant’s Benefits, or a
portion thereof, credited through the first Crediting Date following the calendar year of a
Participant’s termination of employment with the Company, shall commence as of the first Crediting
Date following the calendar year of the Participant’s termination of employment and shall be paid
in equal annual installments over a period of time determined in accordance with one of the
following Benefit Payment Options:
Option A
. Ten years, or
Option B
. Five years, or
Option C
. Fifteen years, or
Option D
. Twenty years
as elected by such Participant. A Participant’s payment election hereunder may be made or revoked
at any time or times prior to the termination of the Participant’s employment with the Company by
written notice thereof filed with the Committee. The preceding notwithstanding, if, as of any
Crediting Date following a Participant’s termination of employment with the Company, the value of
such Participant’s Benefits is $50,000 or less; the Committee, in its discretion, may
6
direct that
such Benefits be paid in full as soon as administratively feasible on or after such Crediting Date.
5.5
Payment of Dividend Equivalents and Interest
. At the time of each annual installment payment pursuant to each of the Benefit Options, Interest
and Dividend Equivalents shall be paid with respect to each Participant’s unpaid and unforfeited
Unit Stock Benefits and Cash Benefits under the Plan since the previous Crediting Date. The amount
of such payments shall be calculated using the methodology set forth in Section 4.1 and Section
4.2.
5.6
Death or Disability
. In the event of a Participant’s death or Disability, the Committee may, in its sole discretion
and upon proof of the financial necessity of the person or persons to whom such Participant’s
Benefits are payable, vary the number and amount of installments to be paid with respect to such
Benefits.
5.7
To Whom Payments are Made
. Payments of a Participant’s Benefits shall be made to the Participant if living. Unless
otherwise requested in writing by Participant in the event of a Participant’s death, payments will
be made to the beneficiary designated by the Participant for the purpose of receiving life
insurance benefits under the Company’s group life insurance plan. In the event no beneficiary is
designated by the Participant either in writing or for the purpose of receiving such life insurance
benefits, or if the designated beneficiary does not survive the Participant, such Participant’s
Benefits will be paid to his personal representatives or to the person appointed by will to receive
said benefits. This provision does not affect the timing or amount of payments to be made
hereunder, but only affects to whom payments are to be made.
5.8
Forfeiture
. Notwithstanding any other provision herein to the contrary, in the event a Participant takes or
allows some action or omission resulting in damage or competitive injury to the Company then,
unless such action or omission shall have been taken or allowed in good faith and without
reasonable cause to believe that it was improper or illegal, the Compensation Committee may
terminate all subsequent crediting of Interest and Dividend Equivalents to the Participant, and, in
addition, the Compensation Committee may terminate and forfeit all or any part of such
Participant’s Benefits hereunder, or suspend payment of such Benefits, as it may deem appropriate
in its sole discretion and such termination, forfeiture, and/or suspension shall be binding and not
subject to appeal.
VI. MISCELLANEOUS
6.1
Elections
. The Committee shall have the right to refuse to accept any election made hereunder by a
Participant but such refusal shall be made not later than thirty (30) days after the last date
prescribed hereunder for making such election. If for any reason the Committee deems it advisable,
it may require any election hereunder to be made at a time earlier than that otherwise fixed in the
Plan.
6.2
Reserves
. The Company shall be under no obligation to reserve, segregate or earmark any cash, stock, or
other property for the payment of any Benefits under this Plan. No Participant shall have any
right whatsoever in any cash, stock or other property which may be set aside under the Plan.
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6.3
Withholding
. During the time a Participant’s employed with the Company, the Company shall deduct from such
Participant’s wages any amounts required to be withheld by the Company with respect to the accrual
of a Participant’s benefits hereunder. Further, there shall be deducted from each payment of
Participant’s Benefits under the Plan any taxes required to be withheld by the Company in respect
of such payment. The Company shall have the right to reduce any payment to be made in cash or
other property by the amount of such cash or property sufficient to provide the amount of said
taxes. In lieu of a deduction, the Committee may permit the Participant to pay or reimburse the
Company for said taxes.
6.4
Plan Not to Constitute Contract of Employment
. Neither the adoption of the Plan nor its operation shall in any way affect the right of the
Company to dismiss or discharge a Participant at any time, nor give an employee a right to
participate in any incentive compensation, plan of the Company.
6.5
Nontransferability and Nonassignability
. Except as hereinafter provided, no rights under the Plan shall be assignable or transferable, or
subject to encumbrances, pledge, or charge of any nature, except that a Participant may designate a
beneficiary to receive such Participant’s Benefits upon Participant’s death as otherwise provided
herein. Plan provisions to the contrary notwithstanding, (a) the Committee shall comply with the
terms and provisions of an order that satisfies the requirements for a “qualified domestic
relations order” as such term is defined in section 206(d)(3)(B) of the Employee Retirement Income
Security Act of 1974, as amended, including an order that requires distributions to an alternate
payee prior to a Participant’s “earliest retirement age” as such term is defined in section
206(d)(3)(E)(ii) of such Act, and (b) no Benefits shall be payable until and unless any and all
amounts representing debts or other obligations owed to the Company by the Participant with respect
to whom such amount would otherwise be payable shall have been fully paid.
6.6
Amendment, Suspension or Termination
. The Compensation Committee may amend, suspend or terminate the Plan in whole or in part, except
that no amendment, suspension or termination shall reduce any Benefits credited to a Participant
prior to the date of such amendment, suspension, or termination, or Benefits to be credited in the
future based on amounts previously credited to a Participant, provided, that any amendment to or
change in the Plan adopted by the Compensation Committee which will significantly increase Benefits
under the Plan or substantially alter the general principles of the Plan shall not become effective
unless ratified by the affirmative votes of the holders of a majority of the voting shares of the
Company at an annual or a special meeting of the shareholders called for such purpose.
6.7
Reliance Upon Information
. The Committee and its delegates may rely upon any information supplied to them by an officer of
the Company, the Company’s legal counselor, or by the Company’s independent public accountants in
connection with the administration of the Plan, and shall not be liable for any decision or action
in reliance thereon. No Participant, or any person claiming through him shall have any right or
interest in the Plan or any Benefits hereunder unless and until all the terms, conditions, a
provisions of the Plan that affect such Participant or such other person shall have been complied
with as specified herein. The Participant shall complete such forms and furnish such information
as the Committee may require in the administration of the Plan.
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6.8
Governing Law
. The place of administration of the Plan shall be conclusively deemed to be within the State of
Delaware; and the validity, construction, interpretation and effect of the Plan and all rights of
any
and all persons having or claiming any interest therein shall be governed by the laws of the State
of Delaware.
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KBR, INC.
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By
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/s/ William P. Utt
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William P. Utt
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President and Chief Executive
Officer
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