Participation in Annual Performance Pay Plan. Beginning on the Effective Date and for the remainder of the Term, Employee shall participate in the Halliburton Annual Performance Pay Plan (the “Performance Plan”), or, any successor annual incentive plan approved by the Compensation Committee; provided, however, that all determinations relating to Employee’s participation, including, without limitation, those relating to the performance goals applicable to Employee and Employee’s level of participation and payout opportunity, shall be made in the sole discretion of the person or committee to whom such authority has been granted pursuant to such plan’s terms. For the 2006 plan year, Employee will be afforded a reward opportunity of (a) not less than sixty-five percent (65%) of his base salary if the plan level performance objectives are achieved or (b) not less than one hundred and thirty percent (130%) of his base salary if the challenge level performance objectives are achieved, in accordance with the terms and conditions of the Performance Plan. Employee’s reward under the Performance Plan, if any, shall be prorated based upon that portion of the plan year during which he was an active participant. Notwithstanding the foregoing, Employee’s participation in the Performance Plan shall terminate as of the date on which the compensation committee of KBR Holdings LLC or a direct or indirect parent of KBR Holdings LLC adopts an annual performance pay plan that is substantially similar to the Performance Plan.
