FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _____ to _____
Commission File Number 1-3492
HALLIBURTON COMPANY
(a Delaware Corporation)
73-0271280
3600 Lincoln Plaza
500 N. Akard
Dallas, Texas 75201
Telephone Number - Area Code (214) 978-2600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, par value $2.50 per share:
Outstanding at October 31, 1995 114,387,423
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at September 30, 1995 2
and December 31, 1994
Condensed Consolidated Statements of Income for the three and
nine months ended September 30, 1995 and 1994 3
Condensed Consolidated Statements of Cash Flows for the 4
nine months ended September 30, 1995 and 1994
Notes to Condensed Consolidated Financial Statements 5 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 11
PART II. OTHER INFORMATION
Item 6. Listing of Exhibits and Reports on Form 8-K 12 - 13
Signatures 14
Exhibits: By-laws of the Company, as amended through September 14, 1995
to be effective October 1, 1995 15 - 32
Employment agreement 33 - 59
Computation of earnings per common share for the three and
nine months ended September 30, 1995 and 1994 60
Financial data schedule for the quarter ended September 30,
1995 (included only in the copy of this report filed
electronically with the Commission). 61
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
HALLIBURTON COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 December 31
1995 1994
------------ ------------
Millions of dollars and shares
ASSETS
Cash and equivalents $ 70.8 $ 375.3
Receivables:
Notes and accounts receivable 1,124.3 1,101.8
Unbilled work on uncompleted contracts 223.3 173.4
Refundable Federal income taxes - 13.4
------------ ------------
Total receivables 1,347.6 1,288.6
Inventories 277.4 268.9
Assets held for sale - 26.3
Deferred income taxes 94.3 64.7
Other current assets 103.9 95.2
------------ ------------
Total current assets 1,894.0 2,119.0
Property, plant and equipment,
less accumulated depreciation of $2,254.2 and $2,334.9 1,074.5 1,074.8
Equity in and advances to related companies 123.8 94.6
Deferred income taxes 26.9 55.8
Net assets of discontinued operations 264.3 295.8
Other assets 374.7 374.6
------------ ------------
Total assets $ 3,758.2 $ 4,014.6
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term notes payable $ 24.0 $ 30.7
Current maturities of long-term debt 20.7 20.1
Accounts payable 319.1 251.4
Accrued employee compensation and benefits 110.2 159.4
Advance billings on uncompleted contracts 229.7 163.3
Other current liabilities 298.7 235.6
------------ ------------
Total current liabilities 1,002.4 860.5
Long-term debt 231.5 623.0
Reserve for employee compensation and benefits 265.5 242.3
Deferred credits and other liabilities 290.2 346.6
------------ ------------
Total liabilities 1,789.6 2,072.4
------------ ------------
Commitments and contingencies
Shareholders' equity:
Common stock, par value $2.50 per share -
authorized 200.0 shares, issued 119.1 shares 297.6 297.7
Paid-in capital in excess of par value 201.2 201.7
Cumulative translation adjustment (26.5) (23.1)
Retained earnings 1,653.0 1,629.7
------------ ------------
2,125.3 2,106.0
Less 4.8 and 5.0 shares of treasury stock, at cost 156.7 163.8
------------ ------------
Total shareholders' equity 1,968.6 1,942.2
------------ ------------
Total liabilities and shareholders' equity $ 3,758.2 $ 4,014.6
============ ============
See notes to condensed consolidated financial statements.
HALLIBURTON COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Nine Months
Ended September 30 Ended September 30
--------------------------- ----------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
Millions of dollars except per share data
Revenues
Energy services $ 683.0 $ 642.8 $ 1,881.6 $ 1,847.4
Engineering and construction services 806.8 704.8 2,279.7 2,185.1
----------- ----------- ----------- -----------
Total revenues $ 1,489.8 $ 1,347.6 $ 4,161.3 $ 4,032.5
Operating income
Energy services $ 88.2 $ 81.9 $ 211.5 $ 95.2
Engineering and construction services 31.2 20.2 80.2 45.8
General corporate expenses (8.3) (5.5) (21.9) (17.6)
----------- ----------- ----------- -----------
Total operating income 111.1 96.6 269.8 123.4
Interest expense (15.0) (12.6) (40.1) (33.6)
Interest income 10.0 2.7 24.2 8.4
Foreign currency (losses) gains (2.5) (1.7) 0.6 (15.2)
Other nonoperating income, net 0.3 (0.8) 0.5 0.4
----------- ----------- ----------- -----------
Income from continuing operations before
income taxes and minority interest 103.9 84.2 255.0 83.4
Provision for income taxes (34.9) (35.0) (92.1) (33.3)
Minority interest in net income (loss) of subsidiaries (0.2) 0.3 (1.0) -
----------- ----------- ----------- -----------
Income from continuing operations 68.8 49.5 161.9 50.1
Income (loss) from discontinued operations, net of
income taxes (67.7) 2.2 (65.5) 0.2
----------- ----------- ----------- -----------
Net income $ 1.1 $ 51.7 $ 96.4 $ 50.3
=========== =========== =========== ===========
Average number of common and common share
equivalents outstanding 114.6 114.2 114.4 114.2
Income (loss) per share
Continuing operations $ 0.60 $ 0.43 $ 1.41 $ 0.44
Discontinued operations (0.59) 0.02 (0.57) -
----------- ----------- ----------- -----------
Net income $ 0.01 $ 0.45 $ 0.84 $ 0.44
=========== =========== =========== ===========
Cash dividends paid per share 0.25 0.25 0.75 0.75
See notes to condensed consolidated financial statements.
HALLIBURTON COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months
Ended September 30
-------------------------------
1995 1994
------------ ------------
Millions of dollars
Cash flows from operating activities:
Net income $ 96.4 $ 50.3
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 182.7 194.1
Provision for deferred income taxes 7.7 46.4
Net (income) loss from discontinued operations 65.5 (0.2)
Other non-cash items (22.8) 12.7
Other changes, net of non-cash items:
Receivables (38.5) 106.1
Inventories (8.2) 45.1
Accounts payable 27.9 (76.8)
Other working capital, net 72.6 180.3
Other, net (30.3) (274.0)
------------ ------------
Total cash flows from operating activities 353.0 284.0
------------ ------------
Cash flows from investing activities:
Capital expenditures (186.8) (153.3)
Sales of property, plant and equipment 25.6 40.2
Sales of subsidiary companies 11.9 185.1
Other investing activities (8.8) (6.4)
------------ ------------
Total cash flows from investing activities (158.1) 65.6
------------ ------------
Cash flows from financing activities:
Payments on long-term borrowings (405.9) (68.3)
Borrowings (repayments) of short-term debt (7.5) (73.7)
Payments of dividends to shareholders (85.7) (85.6)
Other financing activities 1.0 (0.5)
------------ ------------
Total cash flows from financing activities (498.1) (228.1)
------------ ------------
Effect of exchange rate changes on cash (1.3) (3.2)
------------ ------------
Increase (decrease) in cash and equivalents (304.5) 118.3
Cash and equivalents at beginning of year 375.3 7.5
------------ ------------
Cash and equivalents at end of period $ 70.8 $ 125.8
============ ============
Cash payments (refunds) during the period for:
Interest $ 26.6 $ 25.8
Income taxes 21.5 (38.2)
See notes to condensed consolidated financial statements.
HALLIBURTON COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Management Representation
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements include all adjustments necessary to present
fairly the Company's financial position as of September 30, 1995, and the
results of its operations for the three and nine months ended September 30, 1995
and 1994 and its cash flows for the nine months then ended. The results of
operations for the three and nine months ended September 30, 1995 and 1994 may
not be indicative of results for the full year. In connection with the
discontinuance of the Company's insurance segment, the Company has adopted a
classified balance sheet format. Certain prior year amounts have been
reclassified to conform with the current year presentation.
Note 2. Inventories
Consolidated inventories consisted of the following:
September 30 December 31
1995 1994
----------- -----------
Millions of dollars
Sales items $ 96.6 $ 97.2
Supplies and parts 128.0 128.8
Work in process 34.1 23.9
Raw materials 18.7 19.0
----------- -----------
Total $ 277.4 $ 268.9
=========== ===========
About one-half of all sales items (including related work in process and
raw materials) are valued using the last-in, first-out (LIFO) method. If the
average cost method had been in use for inventories on the LIFO basis, total
inventories would have been about $19.7 million and $21.9 million higher than
reported at September 30, 1995, and December 31, 1994, respectively.
Note 3. General and Administrative Expenses
General and administrative expenses were $33.8 million and $42.1 million
for the three months ended September 30, 1995 and 1994, respectively. General
and administrative expenses were $112.7 million and $142.6 million for the nine
months ended September 30, 1995 and 1994, respectively.
Note 4. Income Per Share
Income per share amounts are based upon the average number of common and
common share equivalents outstanding. Common share equivalents included in the
computation represent shares issuable upon assumed exercise of stock options
which have a dilutive effect.
Note 5. Related Companies
The Company conducts some of its operations through various joint venture
and other partnership forms which are accounted for using the equity method.
European Marine Contractors, Limited, (EMC) which is 50% owned by the Company
and part of Engineering and Construction Services, specializes in engineering,
procurement and construction of marine pipelines. Summarized operating results
for 100% of the operations of EMC are as follows:
Three Months Nine Months
Ended September 30 Ended September 30
-------------------------- ---------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
Millions of dollars
Revenues $ 119.9 $ 131.5 $ 295.2 $ 321.1
=========== =========== =========== ===========
Operating income $ 33.4 $ 43.9 $ 87.3 $ 104.0
=========== =========== =========== ===========
Net income $ 21.7 $ 31.6 $ 56.7 $ 69.1
=========== =========== =========== ===========
Included in the Company's revenues for the three and nine months ended
September 30, 1995 are equity in income of related companies of $18.0 million
and $42.8 million, respectively. The amounts included in revenues for the three
and nine months ended September 30, 1994 are $26.5 million and $66.0 million,
respectively.
Note 6. Discontinued Operations
On October 11, 1995, the Company announced its intent to spin-off its
property and casualty insurance subsidiary, Highlands Insurance Group, Inc.
(HIGI), in a tax-free distribution to holders of Halliburton Company common
stock. Each common shareholder of the Company will receive one share of common
stock of HIGI for every ten shares of Halliburton Company common stock. The
record and distribution dates for the spin-off will be set later in 1995 when
the necessary regulatory reviews and approvals have been obtained.
After the spin-off transaction, HIGI will issue $60.0 million of
convertible subordinated debentures due December 31, 2005 with detachable Series
A and B Common Stock Purchase Warrants to Insurance Partners, L.P. and Insurance
Partners Offshore (Bermuda), L.P. (IP). .
Over the past three years, the Company has reviewed various divestiture
alternatives of HIGI in order to allow HIGI to pursue its strategies independent
of the core business segments of the Company. The spin-off of HIGI will
accomplish both objectives and allow the Company to exit the insurance services
business and focus on its core business segments of energy services and
engineering and construction services.
The following summarizes the results of operations of the discontinued
operations:
Three Months Nine Months
Ended September 30 Ended September 30
---------------------------- ----------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
Millions of dollars
Revenues $ 65.7 $ 74.8 $ 203.5 $ 218.7
============ ============ ============ ============
Income (loss) before income taxes $ (130.1) $ 1.5 $ (126.3) $ 0.4
Benefit (provision) for income taxes 69.1 0.7 67.5 (0.2)
Loss on disposition (7.6) - (7.6) -
Benefit for income taxes 0.9 - 0.9 -
------------ ------------ ------------ ------------
Net income (loss) from
discontinued operations $ (67.7) $ 2.2 $ (65.5) $ 0.2
============ ============ ============ ============
In the third quarter of 1995, HIGI conducted an extensive review of its
loss and loss adjustment expense reserves to assess HIGI's reserve position in
light of actions taken by other major property and casualty insurers to increase
loss and loss adjustment expense reserves, particularly with regard to
environmental and asbestos claims. As a result of such review, HIGI increased
its reserves for loss and loss adjustment expenses and certain legal matters and
the Company also recognized the estimated expenses related to the spin-off
transaction and additional compensation costs and other regulatory and legal
provisions directly associated with discontinuing the insurance services
business segment as follows:
Income (loss)
before income Net income
taxes (loss)
-------------- -------------
Millions of dollars
Additional claim loss reserves for environmental
and asbestos exposure and other exposures $ (117.0) $ (76.4)
Realization of deferred income tax valuation allowance - 25.9
Provisions for legal matters (8.0) (5.2)
Expenses related to the spin-off transaction (7.6) (6.7)
Other insurance services expenses (7.4) (4.8)
-------------- -------------
Total charges $ (140.0) $ (67.2)
============== =============
The review of the insurance policies and reinsurance agreements was based
upon a recent actuarial study and HIGI management's best estimates using facts
and trends currently known, taking into consideration the current legislative
and legal environment. Developed case law and adequate claim history do not
exist for such claims. Estimates of the liability
are reviewed and updated
continually. Due to the significant uncertainties related to these type of
claims, past claim experience may not be representative of future claim
experience.
The Company also realized a valuation allowance for deferred tax assets
primarily related to HIGI's insurance claim loss reserves. The Company had
provided a valuation allowance for all temporary differences related to HIGI
based upon its intent announced in 1992 that it was pursuing the sale of HIGI. A
taxable transaction would have made it more likely than not that the related
benefit or future deductibility would not be realized. The spin-off transaction
will be tax-free and allows HIGI to retain its tax basis and the value of its
deferred tax asset.
The convertible subordinated debentures to be issued to IP will be
convertible into common stock of HIGI after one year from issuance at the option
of IP. HIGI can redeem the debentures at any time on or after December 31, 2002.
The number of conversion shares will be determined prior to the spin-off
transaction. Based upon shares of Halliburton outstanding on October 18, 1995,
IP would receive approximately 3.7 million shares of HIGI, or approximately 24%
ownership interest in HIGI, if all of the debentures are converted into common
stock of HIGI at a conversion price of $16.18 per share. Interest on the
debentures is payable semi-annually in cash at 10% per annum.
The detachable Series A Common Stock Purchase Warrants (Series A Warrants)
enable IP to purchase HIGI common stock at an exercise price of $14.71 per
share, equal to an additional ownership interest of approximately 20% after
giving effect to the assumed conversion of the debentures and the exercise of
the Series A Warrants. If all of the Series A Warrants were exercised, IP would
receive approximately 3.8 million shares of HIGI. The exercise price and the
number of shares of HIGI common stock into which the Series A Warrants are
exercisable will be subject to adjustment in certain circumstances. These
warrants expire on December 31, 2005.
The detachable Series B Common Stock Purchase Warrants (Series B Warrants)
enable IP to purchase shares of HIGI common stock at an exercise price of
$14.71, equal to an additional ownership interest of 5% after giving effect to
the assumed conversion of the debentures and the exercise of the Series A and B
Warrants. The Series B Warrants become exercisable by IP in the event that the
average closing market price of HIGI common stock exceeds 1.61 times the
exercise price for any 30 consecutive trading days prior to December 31, 2000
but after December 31, 1998. If all of the Series B Warrants were exercised, IP
would receive approximately 1.0 million additional shares of HIGI. The exercise
price and the number of shares of HIGI common stock into which the Series A
Warrants are exercisable will be subject to adjustment in certain circumstances.
The detachable Series B Warrants expire on December 31, 2005.
If the debentures are converted into common stock of HIGI and the Series A
and B Warrants are utilized by IP to purchase common stock of HIGI, IP will own
approximately 43% of HIGI.
The net assets and liabilities of HIGI relating to the spin-off transaction
have been segregated on the consolidated balance sheets from their historic
classifications to separately identify them as discontinued operations. Such
amounts are summarized as follows:
September 30 December 31
1995 1994
------------ ------------
ASSETS
Cash and equivalents $ 50.7 $ 52.8
Investments 642.6 630.2
Premiums receivable 214.9 207.9
Receivables from reinsurers 654.8 561.5
Receivables from affiliates 50.5 26.6
Deferred income taxes 30.4 -
Other assets 65.4 60.4
------------ ------------
Total assets $ 1,709.3 $ 1,539.4
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 42.1 $ 15.9
Loss and loss adjustment expense reserves 1,320.2 1,149.2
Unearned premiums 53.7 51.2
Other liabilities 29.0 27.3
------------ ------------
Total liabilities 1,445.0 1,243.6
Shareholders' equity 264.3 295.8
------------ ------------
Total liabilities and shareholders' equity $ 1,709.3 $ 1,539.4
============ ============
Note 7. Long-term debt
During the first nine months of 1995, the Company redeemed the entire
outstanding principal amount of zero coupon convertible subordinated debentures
of $390.7 million and $15.0 million of its 4% notes. The Company redeemed $43.8
million of its 4% notes and $23.8 million principal amount of its 10.2%
debentures in the first nine months of 1994.
Note 8. Commitments and Contingencies
The Company is involved as a potentially responsible party (PRP) in
remedial activities to clean up various "Superfund" sites under applicable
Federal law which imposes joint and several liability, if the harm is
indivisible, on certain persons without regard to fault, the legality of the
original disposal, or ownership of the site. Although it is very difficult to
quantify the potential impact of compliance with environmental protection laws,
management of the Company believes that any liability of the Company with
respect to all but two of such sites will not have a material adverse effect on
the results of operations of the Company. With respect to a site in Jasper
County, Missouri (Jasper County Superfund Site), and a site in Nitro, West
Virginia (Fike/Artel Chemical Superfund Site), sufficient information has not
been developed to permit management to make such a determination and management
believes the process of determining the nature and extent of remediation at each
site and the total costs thereof will be lengthy.
Brown & Root, Inc. (Brown & Root), a subsidiary of the Company, has been
named as a PRP with respect to the Jasper County Superfund Site by the
Environmental Protection Agency (EPA). The Jasper County Superfund Site includes
areas of mining activity that occurred from the 1800's through the mid 1950's in
the Southwestern portion of Missouri. The site contains lead and zinc mine
tailings produced from mining activity. Brown & Root is one of nine
participating PRPs which have agreed to perform a Remedial
Investigation/Feasibility Study (RI/FS), which is not expected to be completed
until the third quarter of 1996. Although the entire Jasper County Superfund
Site comprises 237 square miles as listed on the National Priorities List, in
the RI/FS scope of work, the EPA has only identified seven areas, or subsites,
within this area that need to be studied and then possibly remediated by the
PRPs. Additionally, the Administrative Order on Consent for the RI/FS only
requires Brown & Root to perform RI/FS work at one of the subsites within the
site, the Neck/Alba subsite, which only comprises 3.95 square miles. Brown &
Root's share of the cost of such a study is not expected to be material. Brown &
Root cannot determine the extent of its liability, if any, for remediation costs
on any reasonably practicable basis.
The Company is one of 32 companies that have been designated as PRPs at
the Fike/Artel Chemical Superfund Site. The six "Operable Units" previously
established by the EPA in connection with remediation activities for the site
have been consolidated into four Operable Units and a Cooperative Sewage
Treatment facility ("CST"). On October 6, 1995, all but five of the PRPs signed
a settlement "in principle" with the EPA and the Department of Defense which
settled allocation percentages for each PRP for each operable unit and the CST.
A consent decree among all the PRPs, which will reconcile all of the issues, is
expected to be negotiated and executed by the end of the first quarter of 1996.
Based upon the settled allocation percentages and the most recent available
estimates, the Company's estimate of its share of remediation costs for this
site range in the aggregate from approximately $2.5 million to $4.9 million. All
of the PRPs appear to be financially capable of paying their portion of
remediation costs. Although the liability estimates associated with this site
could possibly change due to expanded or more expensive clean-up methodologies
elected and could significantly impact the results of operations of some future
reporting period, management believes, based on current knowledge, that its
share of costs at this site is unlikely to have a material adverse impact on the
Company's consolidated financial condition.
The Company and its subsidiaries are parties to various other legal
proceedings. Although the ultimate disposition of such proceedings is not
presently determinable, in the opinion of the Company any liability that might
ensue would not be material in relation to the consolidated financial position
of the Company.
Note 9. Acquisitions and Dispositions
The Company sold its natural gas compression business unit in November
1994 for $205 million in cash. The sale resulted in a pretax gain of $102
million, or 56 cents per share after tax in 1994. The business unit sold owns
and operates a large natural gas compressor rental fleet in the United States
and Canada. The compressors are used to assist in the production,
transportation, and storage of natural gas.
In January 1994, the Company sold substantially all of the assets of its
geophysical services and products business to Western Atlas International, Inc.
for $190.0 million in cash and notes subject to certain adjustments. The notes
of $90.0 million were sold for cash in the first quarter of 1994. In addition,
the Company issued $73.8 million in notes to Western Atlas to cover some of the
costs of reducing certain geophysical operations, including the cost of
personnel reductions, leases of geophysical marine vessels and closing of
duplicate facilities. The Company's notes to Western Atlas are payable over two
years at a rate of interest of 4%. An initial installment of $33.8 million was
made in February 1994, and quarterly installments of $5 million have been made
thereafter.
The Company is in the process of obtaining regulatory approvals to sell
certain remaining assets and settle certain liabilities of the geophysical
business. The Company does not believe it will incur any material loss from the
disposition or liquidation of these remaining assets or settlement of the
remaining liabilities.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
BUSINESS ENVIRONMENT
The Company (often through foreign subsidiaries) operates in over 100
countries, including several upon which the United States government has imposed
varying degrees of restrictions on trade and commerce. These countries include
Iran and Libya. The Company believes the embargo on U.S. trade with Iran will
not have a material effect on current results of operations or financial
condition of the Company, although it will limit the Company from competing for
future business in Iran. If additional restrictions were to be established for
these or other countries, such restrictions might impair the ability of the
Company to obtain the benefit of its assets in such countries and the ability to
collect amounts owed to the Company by their government and private entities.
The Company cannot predict whether more stringent restrictions will be adopted
or, if adopted, the impact they might have on its results of operations.
RESULTS OF OPERATIONS
Third Quarter of 1995 Compared with the Third Quarter of 1994
Revenues
Consolidated revenues increased 11% to $1,489.8 million in the third
quarter of 1995 compared with $1,347.6 million in the same quarter of the prior
year. Approximately 50% of the Company's consolidated revenues were derived from
international activities in the third quarter of 1995 compared to 46% in the
third quarter of 1994. Consolidated international revenues increased 20% in the
third quarter of 1995 over the third quarter of 1994. Consolidated United States
revenues increased by 3% in the third quarter of 1995 compared to the third
quarter of 1994.
Energy Services revenues increased by 6% compared with a 3% decline in
drilling activity as measured by the worldwide rotary rig count for the same
quarter of the prior year. Excluding businesses included in 1994 results but
subsequently sold, revenues for the third quarter increased 9% . International
revenues increased by 18%, reflecting growth in well stimulation, cementing,
logging and drilling services in the Latin America, Europe/Africa and Asia
Pacific markets. The increase in international revenues was partially offset by
an 8% decline in United States revenues. Excluding the revenues of businesses
sold in 1994, United States revenues declined by 2%. The United States rig count
declined 4% from the same quarter of the prior year.
Engineering and Construction Services revenues increased 14% to $806.8
million compared with $704.8 million in the same quarter of the prior year due
primarily to higher activity levels in subsea construction and fabrication in
the North Sea, highway construction in the United States, military logistical
support services and communication facility construction in Asia Pacific.
Operating income
Consolidated operating income increased 15% to $111.1 million in the third
quarter of 1995 compared with $96.6 million in the same quarter of the prior
year. Approximately 71% of the Company's consolidated operating income was
derived from international activities in the third quarter of 1995 compared to
33% in the third quarter of 1994. Consolidated international operating margins
were 11% in the third quarter of 1995 compared to 5% in the third quarter of
1994.
Energy Services operating income increased 8% to $88.2 million in the
third quarter of 1995 compared with $81.9 million in the same quarter of the
prior year. The operating margin for the third quarter of 1995 was 12.9%
compared to a prior year operating margin of 12.8%. The increased operating
income is primarily related to growth in activities in Latin America,
Europe/Africa and Asia Pacific, and reductions in indirect costs.
Engineering and Construction Services operating income and operating
margins increased 54% to $31.2 million and 3.9%, respectively, compared with
results in the same quarter of the prior year of $20.2 million and 2.9%,
respectively. The increase in operating income is primarily related to improved
performance in marine construction activities in Latin America and subsea
construction and fabrication activities in the North Sea.
Nonoperating items
Interest expense increased to $15.0 million in the third quarter of 1995
compared to $12.6 million in the same quarter of the prior year due primarily to
$4.6 million in debt issue costs related to the redemption of the zero coupon
convertible subordinated debentures.
Interest income increased in 1995 primarily due to higher levels of
invested cash and $3.1 million relating to an excise tax recoverable and other
matters.
Net income
Net income from continuing operations in the third quarter of 1995
increased 39% to $68.8 million, or 60 cents per share, compared with $49.5
million, or 43 cents per share, in the same quarter of the prior year.
First Nine Months of 1995 Compared with the First Nine Months of 1994
Revenues
Consolidated revenues for the first nine months of 1995 were $4,161.3
million , a 3% increase, compared to $4,032.6 million in the first nine months
of 1994. Approximately 51% of the Company's consolidated revenues were derived
from international activities in the first nine months of 1995 compared to 44%
in the first nine months of 1994. Consolidated international revenues increased
22% in the first nine months of 1995 over the first nine months of 1994.
Energy Services revenues increased by 2% to $1,881.6 million compared to
$1,847.4 million in the first nine months of 1994. Excluding revenues from
businesses sold subsequent to the first nine months of 1994, Energy Services
revenues increased 5% between the two periods primarily due to increases in
Latin America, Europe/Africa and Asia Pacific, partially offset by a decline in
North America.
Engineering and Construction Services revenues increased by 4% to $2,279.7
million in the first nine months of 1995 compared to $2,185.2 million in the
first nine months of 1994 due primarily to higher marine construction activities
in Latin America, Middle East and Europe/Africa and higher logistical support
activities with the United Nations and NATO.
Operating income
Consolidated operating income was $269.8 million in the first nine months
of 1995 compared with $123.4 million in the first nine months of 1994. Excluding
severance costs included in 1994 results, consolidated operating income
increased by 63% in the first nine months of 1995 compared to $166.0 million in
the first nine months of 1994. Approximately 67% of the Company's consolidated
operating income was derived from international activities in the first nine
months of 1995 compared to 27% in the first nine months of 1994. Consolidated
international operating margins were 8% in the first nine months of 1995
compared to 2% in the first nine months of 1994.
Energy Services operating income during the nine months of 1995 and 1994
was $211.5 million and $95.2 million, respectively. Excluding severance costs,
operating income in the first nine months of 1995 increased 53% compared to the
1994 period of $137.8 million. Operating income increased in all regions.
Operating margins during the 1995 and 1994 periods were 11.2% and 7.5%,
respectively. 1995 margins were benefited by growth in Latin America,
Europe/Africa and Asia Pacific and lower indirect costs. Lower margins in 1994
were due primarily to decreased activities in the North Sea, Middle East and
Asia Pacific, market disturbances in Nigeria and Yemen, unsettled economic,
political and business conditions in the CIS and pricing pressures in North
America.
Engineering and Construction Services operating income in the first nine
months of 1995 and 1994 was $80.2 million and $45.8 million, respectively. 1995
operating income increases are primarily due to improved performance in marine
construction activities in Latin America, Middle East and Europe/Africa and
petrochemical engineering and construction activities in the Middle East.
Operating income in 1994 included a $5.0 million gain on the sale of an
environmental remediation subsidiary.
Nonoperating items
Interest expense increased from $33.6 million in 1994 to $40.1 million in
1995 due primarily to $4.6 million in debt issue costs related to the redemption
of the zero coupon convertible subordinated debentures and the reversal of an
accrual during the first quarter of 1994 for interest payable on income tax
settlements.
Interest income increased from $8.4 million in 1994 to $24.2 million in
1995 primarily due to higher levels of invested cash and $3.1 million relating
to an excise tax recoverable and other matters.
The Company had foreign currency gains of $600 thousand during the first
nine months of 1995 compared with losses of $15.2 million during the same period
in 1994. Gains in 1995 relate primarily to a first quarter gain from the
devaluation of the Nigerian Naira offset by losses in other currencies,
particularly the Mexican peso. Losses in 1994 relate primarily to Brazil and
Venezuela.
The effective income tax rate for the Company declined to 36% in 1995 from
39% in 1994. The decline in the effective income tax rate primarily represents
improved international earnings and a resulting reduction in losses unable to be
utilized.
Net income
Net income from continuing operations for the first nine months of 1995
increased by 223% to $161.9 million, or $1.41 per share, compared to $50.1
million, or 44 cents per share, during the same period in 1994. Excluding
severance costs in 1994, net income was $77.8 million, or 68 cents per share.
LIQUIDITY AND CAPITAL RESOURCES
The Company ended the third quarter of 1995 with cash and equivalents of
$70.8 million, a decrease of $304.5 million from the end of 1994.
Operating activities
Cash flows from operations increased by 24% in 1995 to $353.0 million
compared to $284.0 million for the first nine months of 1994. The increase in
net income for the 1995 period was partially offset by higher receivables due to
increased activity levels and increased advances to Engineering and Construction
joint ventures.
Investing activities
Cash flows from investing activities used $158.1 million during the first
nine months of 1995 compared to $65.6 million in cash provided during the same
period of 1994. Capital expenditures increased in 1995 by 22% over 1994 mostly
representing investments in new technologies such as logging while drilling and
multi-lateral completions. The 1994 cash flows reflect the proceeds from the
sale of geophysical services and two small subsidiaries.
Financing activities
Cash flows used for financing activities were $498.1 million in the first
nine months of 1995 compared to $228.1 million in the first nine months of 1994.
The increase in outflows is due to higher payments of long-term indebtedness.
The Company redeemed the entire outstanding principal amount of zero coupon
convertible subordinated debentures during the third quarter of 1995 of $390.7
million with available cash resources (see Note 7 of notes to the condensed
consolidated financial statements). In 1994 the Company redeemed the remaining
10.2% debentures and made a $43.8 million installment on the note issued by the
Company to the buyer of geophysical services.
The Company has the ability to borrow additional short-term and long-term
funds if necessary.
DISCONTINUED OPERATIONS
The Company announced in October 1995 that it will distribute the
Company's property and casualty insurance subsidiary, Highlands Group Insurance,
Inc., to its shareholders in a tax-free spin-off by as early as the end of 1995.
The operations of the Insurance Services Group have been classified as
discontinued operations. Additionally, during the third quarter the Company
increased its reserves for claim losses and related expenses and provisions for
certain legal matters. These provisions, together with certain other provisions
associated with the Company's complete exit from the insurance industry resulted
in a $67.2 million third quarter charge against earnings. The increase in the
claim loss reserves, which was required primarily for areas such as
environmental and asbestos claims, was based upon a recent actuarial study and
management's current best estimate. Estimates of this liability are reviewed and
updated continually. See Note 6 of notes to the condensed consolidated financial
statements for further information.
ENVIRONMENTAL MATTERS
The Company is involved as a potentially responsible party in remedial
activities to clean up various "Superfund" sites under applicable Federal law
which imposes joint and several liability, if the harm is indivisible, on
certain persons without regard to fault, the legality of the original disposal,
or ownership of the site. Although it is very difficult to quantify the
potential impact of compliance with environmental protection laws, management of
the Company believes that any liability of the Company with respect to all but
two of such sites will not have a material adverse effect on the results of
operations of the Company. See Note 8 to the financial statements for additional
information on these two sites.
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3) By-laws of the Company, as amended through September 14, 1995 to be
effective October 1, 1995
(10) Employment agreement
(11) Statement regarding computation of earnings per share.
(27) Financial data schedule for the quarter ended September 30, 1995
(included only in the copy of this report filed electronically
with the Commission).
(b) Reports on Form 8-K
During the third quarter of 1995:
A Current Report was filed on Form 8-K dated July 14, 1995, reporting on
Item 5. Other Events, regarding a press release dated July 14, 1995,
announcing agreements to settle export investigation.
A Current Report was filed on Form 8-K dated July 17, 1995, reporting on
Item 5. Other Events, regarding a press release dated July 14, 1995,
announcing the signing of an agreement to provide engineering and
construction services on a new ethylene plant in Kuwait.
A Current Report was filed on Form 8-K dated July 20, 1995, reporting on
Item 5. Other Events, regarding a press release dated July 20, 1995,
announcing the declaration of the third quarter dividend, the calling of
zero coupon convertible subordinated debentures and that David J. Lesar
was named executive vice president and chief financial officer.
A Current Report was filed on Form 8-K dated July 25, 1995, reporting on
Item 5. Other Events, regarding a press release dated July 20, 1995,
announcing second quarter results.
A Current Report was filed on Form 8-K dated July 31, 1995, reporting on
Item 5. Other Events, regarding the final settlement of export case
pleadings.
A Current Report was filed on Form 8-K dated August 11, 1995, reporting on
Item 5. Other Events, regarding a press release dated August 10, 1995,
announcing that Dick Cheney had been named Chief Executive Officer.
A Current Report was filed on Form 8-K dated August 23, 1995, reporting on
Item 5. Other Events, regarding a press release dated August 22, 1995
announcing the retirement of Vice Chairman W. Bernard (Ber) Pieper.
(b) Reports on Form 8-K (cont'd)
During the fourth quarter of 1995 to the date hereof:
A Current Report was filed on Form 8-K dated October 12, 1995, reporting
on Item 5. Other Events, regarding a press release dated October 11, 1995,
announcing the spin-off of the Company's Insurance Unit.
A Current Report was filed on Form 8-K dated October 27, 1995, reporting
on Item 5. Other Events, regarding a press release dated October 24, 1995,
announcing third quarter results.
A Current Report was filed on Form 8-K dated November 8, 1995, reporting
on Item 5. Other Events, regarding a press release dated November 8, 1995,
announcing a fourth quarter dividend.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HALLIBURTON COMPANY
(Registrant)
Date November 13, 1995 By /s/ Thomas H. Cruikshank
-------------------------- ----------------------------
Thomas H. Cruikshank
Chairman of the Board
Date November 13, 1995 By /s/ David J. Lesar
-------------------------- ----------------------------
David J. Lesar
Executive Vice President
Chief Financial Officer
Date November 13, 1995 By /s/ Scott R. Willis
-------------------------- ----------------------------
Scott R. Willis
Controller
Principal Accounting Officer
HALLIBURTON COMPANY
BY-LAWS
AS AMENDED
EFFECTIVE OCTOBER 1, 1995
Offices
1. The principal office shall be in the City of Wilmington, County of New
Castle, State of Delaware, and the name of the agent in charge thereof shall be
The Corporation Trust Company of America, and the Corporation shall also have
offices in the Cities of Dallas and Houston, State of Texas, in the City of
Duncan, State of Oklahoma, and at such other places as the Board of Directors
may, from time to time, appoint.
Seal
2. The corporate seal shall have inscribed thereon around the margin the
words "Halliburton Company" and "Delaware" and across the center thereof the
words "Corporate Seal".
Stockholders' Meetings
3. All meetings of the stockholders for the election of Directors shall be
held in the City of Dallas, State of Texas, at such place as may be fixed from
time to time by the Board of Directors or at such other place either within or
without the State of Delaware as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting. Meetings of
stockholders for any other purpose may be held at such time and place within or
without the State of Delaware, as shall be stated in the notice of the meeting.
4. Annual meetings of the stockholders shall be held on the third Tuesday
in the month of May each year if not a legal holiday, and if a legal holiday,
then on the next succeeding business day, at 9:00 a.m., or at such other date
and time as shall be designated, from time to time, by the Board of Directors
1
and stated in the notice of meeting, at which time they shall elect by a
plurality vote a Board of Directors, in the manner provided for in the
Certificate of Incorporation, and transact such other business as may be brought
before the meeting.
5. At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board,
otherwise properly brought before the meeting by or at the direction of the
Board, or otherwise properly brought before the meeting by a stockholder. In
addition to any other applicable requirements, for business to be properly
brought before an annual meeting by a stockholder, the stockholder must have
given timely notice thereof in writing to the Secretary. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the Corporation, not less than fifty (50) days
nor more than seventy-five (75) days prior to the meeting; provided, however,
that in the event that less than sixty-five (65) days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be so received not later than the close of
business on the fifteenth day following the day on which such notice of the date
of the annual meeting was mailed or such public disclosure was made. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and record
address of the stockholder proposing such business, (iii) the class and number
of shares of the Corporation which are beneficially owned by the stockholder,
and (iv) any material interest of the stockholder in such business.
2
Notwithstanding anything in the By-laws to the contrary, no business shall
be conducted at the annual meeting except in accordance with the procedures set
forth in this Section 5; provided, however, that nothing in this Section 5 shall
be deemed to preclude discussion by any stockholder of any business properly
brought before the annual meeting in accordance with said procedure.
The Chairman of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 5, and if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting shall not be transacted.
6. Only persons who are nominated in accordance with the following
procedures shall be eligible for election as Directors. Nominations of persons
for election to the Board of Directors of the Corporation may be made at a
meeting of stockholders by or at the direction of the Board of Directors by any
nominating committee or person appointed by the Board or by any stockholder of
the Corporation entitled to vote for the election of Directors at the meeting
who complies with the notice procedures set forth in this Section 6. Such
nominations, other than those made by or at the direction of the Board, shall be
made pursuant to timely notice in writing to the Secretary. To be timely, a
stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than fifty (50) days nor
more than seventy-five (75) days prior to the meeting; provided, however, that
in the event that less than sixty-five (65) days' notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be so received not later than the close of
business on the fifteenth day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made. Such stockholder's
notice to the Secretary shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a Director, (i)
3
the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and number of
shares of capital stock of the Corporation which are beneficially owned by the
person, and (iv) any other information relating to the person that is required
to be disclosed in solicitations for proxies for election of Directors pursuant
to Rule 14a under the Securities Exchange Act of 1934 as amended; and (b) as to
the stockholder giving the notice (i) the name and record address of stockholder
and (ii) the class and number of shares of capital stock of the Corporation
which are beneficially owned by the stockholder. The Corporation may require any
proposed nominee to furnish such other information as may reasonably be required
by the Corporation to determine the eligibility of such proposed nominee to
serve as Director of the Corporation. No person shall be eligible for election
as a Director of the Corporation unless nominated in accordance with the
procedures set forth herein.
The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
7. The holders of a majority of the voting stock issued and outstanding,
present in person, or represented by proxy shall constitute a quorum at all
meetings of the stockholders for the transaction of business.
8. At each meeting, every stockholder shall be entitled to vote in person
or by proxy and shall have one (1) vote for each share of voting stock
registered in his name on the stock books except as provided in Section 13
hereof.
4
9. Written notices of the annual meeting shall be mailed not less than ten
(10) nor more than sixty (60) days before the date of the meeting to each
stockholder entitled to vote at such meeting directed to his address as it
appears on the records of the Corporation.
10. A complete list of the stockholders entitled to vote at each meeting of
the stockholders, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder shall be prepared and shall be open to the examination of any
stockholder, for any purpose germane to the meeting during ordinary business
hours, for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of meeting, or, if not so specified, at the place where
the meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected by
any stockholder who is present.
11. Special meetings of the stockholders may be called by the Chairman of
the Board (if any), by the President, by the Board of Directors, or by
stockholders owning a majority in the amount of the entire stock of the
Corporation with voting privileges issued and outstanding.
12. Written notice of a special meeting of stockholders shall be mailed not
less than ten (10) nor more than fifty (50) days before the date of the meeting
to each stockholder entitled to vote at such meeting directed to his address as
it appears on the records of the Corporation.
13. Cumulative voting shall not be allowed. Each stockholder shall be
entitled, at all elections of Directors of the Corporation, to as many votes as
shall equal the number of shares of stock held and owned by him and entitled to
vote at such meeting under Article NINTH of the Certificate of Incorporation, as
amended, for as many Directors as there are to be elected, unless such right to
5
vote in such manner is limited or denied by other provisions of the Certificate
of Incorporation.
Vacancies caused by the death or resignation of any Director and newly
created directorships resulting from any increase in the authorized number of
Directors may be filled by a vote of at least a majority of the Directors then
in office, though less than a quorum, and the Directors so chosen shall hold
office until the next annual meeting of the stockholders.
Directors
14. The property and business of the Corporation shall be managed by its
Board of Directors. The number of Directors which shall constitute the whole
Board shall not be less than eight (8) nor more than twenty (20). Within the
limits above specified, the number of Directors shall be determined by
resolution of the Board of Directors or by the stockholders at the annual
meeting. Each Director shall be elected to serve for the term of one (1) year
and until his successor shall be elected and shall qualify.
15. The Directors shall hold their meetings in Dallas, Texas, and at such
other places as they may designate, and may keep the books of the Corporation
outside of Delaware, in the City of Duncan, Oklahoma, in the City of Dallas,
Texas, or at such other places as they may, from time to time, determine.
16. In addition to the powers and authorities by these By-laws expressly
conferred upon them, the Board may exercise all such powers of the Corporation
and do all such lawful acts and things as are permitted by the Certificate of
Incorporation and not by statute required to be exercised or done by the
stockholders.
17. Each member of the Board shall be paid such fee as the Board of
Directors may, from time to time, by resolution determine.
6
Meetings of the Board
18. Immediately after each annual stockholders' meeting, the newly elected
Board shall meet and for the ensuing year elect such officers with such titles
and duties as may be necessary to enable the Corporation to sign instruments and
stock certificates which comply with Sections 103(a)(2) and 158 of Chapter 1,
General Corporation Laws of the State of Delaware, and may elect such other
officers as may be specified in these By-laws or as may be determined by the
Board and shall attend to such other business as may come before the Board.
19. Regular meetings of the Board may be held without notice at such time
and place as shall be determined by the Board.
20. At all meetings of the Board, a majority of Directors shall be
necessary to constitute a quorum.
21. Special meetings of the Board may be called by the Chairman of the
Board (if any) or the President upon one (1) day's notice to each Director
either personally or in the manner permitted by Section 34 hereof. Special
meetings shall be called by the Chairman of the Board (if any), the President or
Secretary in like manner and on like notice on the written request of two (2)
Directors.
Officers
22. The officers of the Corporation shall be a President, one or more Vice
Presidents (any one or more of whom may be designated Executive Vice President
or Senior Vice President), a Secretary, a Treasurer, a Controller, one or more
Assistant Secretaries and, if the Board of Directors so elects, a Chairman of
the Board. Such officers shall be elected or appointed by the Board of
Directors. All officers as between themselves and the Corporation, shall have
such authority and perform such duties in the management of the Corporation as
7
may be provided in these By-laws, or, to the extent not provided, as may be
prescribed by the Board of Directors or by the President acting under authority
delegated to him by the Board.
23. The Chairman of the Board (if any) and the President shall be members
of the Board. The other officers need not be members of the Board. Any two (2)
or more offices may be held by the same person.
24. The Board may elect or appoint such other officers and agents as it may
deem necessary, who shall have such authority and shall perform such duties as
shall be prescribed by the Board.
25. The officers of the Corporation shall hold office for one (1) year from
date of their election and until their successors are chosen and qualify. Any
officer elected or appointed by the Board may be removed at any time by the
affirmative vote of a majority of the whole Board.
Vacancies
26. If any office of the Corporation is vacant for any reason, the Board of
Directors may choose a successor, who shall hold office for the unexpired term,
or the powers or duties of any such office may be delegated as the Board may
determine.
Duties of Officers May Be Delegated
27. In case of the absence, inability or refusal to act of any officer, the
Board may delegate the powers or duties of such officer to any other officer,
for the time being.
8
Certificate of Stock
28. The Board of Directors may make such rules and regulations as it may
deem expedient for the issuance, transfer and registration of certificates for
shares of stock of the Corporation, including the appointment of transfer agents
and registrars.
Such certificates shall be numbered and entered on the books of the
Corporation as they are issued, and shall set forth the holder's name and number
of shares and shall be impressed with the corporate seal or bear a facsimile
thereof, and shall be signed by the Chairman of the Board (if any), the
President or any Vice President and the Secretary or Assistant Secretary of the
Corporation and countersigned by an independent transfer agent and registered by
an independent registrar. Any or all of the signatures may be facsimiles unless
the regulations of the New York Stock Exchange then in effect shall require to
the contrary. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall cease to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
Transfer of Stock
29. Transfer of stock shall be made on the books of the Corporation only
upon written order of the person named in the certificate or his attorney,
lawfully constituted in writing and upon surrender of such certificate.
30. In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
9
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board may fix, in advance, a record date, which shall not be more
than sixty (60) nor less than ten (10) days before the date of such meeting, nor
more than sixty (60) days prior to any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board may fix a new record date for the adjourned meeting.
31. All checks, unless otherwise directed by the Board, shall be signed by
the Treasurer or Assistant Treasurer and countersigned by the Chairman of the
Board (if any), President, any Vice President or the Controller. The Treasurer
or Assistant Treasurer, Chairman of the Board (if any), President, any Vice
President, the Controller, or any one of them, may appoint such officers or
employees of the Corporation as the one or ones so making the appointment shall
deem advisable to audit and approve Corporation vouchers and checks and to sign
such checks with an approved mechanical check-signer. Any officer or employee so
designated to audit, approve or sign checks shall execute a bond to the
Corporation in such amount as the Directors, from time to time, may designate,
and with sureties satisfactory to the Directors. All notes, debentures and
bonds, unless otherwise directed by the Board, or unless otherwise required by
law, shall be signed by the Treasurer or Assistant Treasurer and countersigned
by the Chairman of the Board (if any), President or any Vice President.
Dividends
32. Dividends upon the capital stock, when earned, may be declared by the
Board at any regular or special meeting.
10
33. Before payment of any dividend, there shall be set aside out of the
surplus or net profits of the Corporation such sum or sums as the Directors,
from time to time, think proper as a reserve fund to meet contingencies, or for
such other purposes as the Directors shall think conducive to the interest of
the Corporation.
34. Whenever, under the provisions of these By-laws, notice is required to
be given it shall not be construed to mean personal notice, but such notice may
be given in writing by mail, addressed to such stockholder, officer or Director,
at such address as appears on the records of the Corporation, with postage
thereon prepaid, and such notice shall be deemed to be given at the time when
the same shall be deposited in the United States mail. Notice may also be given
by prepaid telegram, telex or facsimile transmission, which notice shall be
deemed to have been given when sent or transmitted.
35. Any stockholder, Director or officer may waive any notice required to
be given under these By-laws.
36. These By-laws may be altered or repealed at any regular meeting of the
stockholders, or at any special meeting of the stockholders at which a quorum is
present or represented, provided notice of the proposed alteration or repeal be
contained in the notice of such special meeting, by the affirmative vote of the
majority of the stockholders entitled to vote at such meeting and present or
represented thereat, or by the affirmative vote of the majority of the Board of
Directors at any regular meeting of the Board, or at any special meeting of the
Board, if notice of the proposed alteration or repeal be contained in the notice
of such special meeting; provided, however, that no change in these By-laws
setting the time or place of the meeting for the election of Directors shall be
made within sixty (60) days next before the day on which such meeting is to be
held, and that in case of any change in such time or place, notice thereof shall
11
be given to each stockholder in person or by letter mailed to his last known
post office address at least twenty (20) days before the meeting is held.
Provisions for National Emergencies
37. During periods of emergency resulting from an attack on the United
States or on a locality in which the Corporation conducts its business or
customarily holds meetings of its Board of Directors or its stockholders, or
during any nuclear or atomic disaster, or during the existence of any
catastrophe, or other similar emergency condition, the following provisions
shall apply notwithstanding any different provisions elsewhere contained in
these By-laws:
(a) Whenever, during such emergency and as a result thereof, a quorum
of the Board of Directors or a standing committee thereof cannot readily be
convened for action, a meeting of such Board or committee thereof may be called
by any officer or Director by a notice of the time and place given only to such
of the Directors as it may be feasible to reach at the time and by such means as
may be feasible at the time, including publications or radio. The Director or
Directors in attendance at the meeting shall constitute a quorum; provided,
however, that the officers or other persons present who have been designated on
a list approved by the Board before the emergency, all in such order of priority
and subject to such conditions and for such period of time as may be provided in
the resolution approving such list, or in the absence of such a resolution, the
officers of the Corporation who are present, in order of rank, and within the
same rank in order of seniority, shall to the extent required to provide a
quorum be deemed Directors for such meeting.
12
(b) The Board, either before or during any such emergency, may
provide, and from time to time modify, lines of succession in the event that
during such emergency any or all officers or agents of the Corporation shall for
any reason be rendered incapable of discharging their duties.
(c) The Board either before or during any such emergency, may,
effective in the emergency, change the head office or designate several
alternative head offices or regional offices, or authorize the officers so to
do.
(d) No officer, Director or employee acting in accordance with this
article shall be liable except for willful misconduct.
(e) To the extent not inconsistent with this article, all other
articles of these By-laws shall remain in effect during any emergency described
in this article and upon its termination the provisions of this article covering
the duration of such emergency shall cease to be operative.
Divisions and Divisional Officers
Groups and Group Officers
38. (a) Divisions of the Corporation may be formed, and existing divisions
dissolved, by resolution of the Board of Directors of the Corporation or through
designation in writing by the President.
The President of the Corporation, or his delegate, shall supervise the
management and operations of its divisions and shall have the authority to
appoint the officers thereof and the power to remove them and to fill any
vacancies.
13
To the extent not inconsistent with these By-laws or a resolution of the
Board of Directors of the Corporation, the officers of each division shall
perform such duties and have such authority with respect to the business and
affairs of that division as may be granted, from time to time, by the President
of the Corporation, or his delegate. With respect to the affairs of such
division and in the regular course of business of such division, officers of
each division may sign contracts and other documents in the name of the
division, where so authorized; provided, however, that in no case and under no
circumstances shall an officer of one division have authority to bind any other
division of the Corporation, nor to bind the Corporation, except as to the
normal and usual business and affairs of the division of which he is an officer.
A divisional officer, unless specifically elected to one of the designated
offices of the Corporation, shall not be construed as an officer of the
Corporation.
(b) To facilitate the attainment of certain goals and objectives by
various divisions and subsidiaries of the Corporation engaged in common pursuits
or in activities within the same or similar areas of business activity, a group
or groups of such subsidiaries and divisions may be formed by resolution of the
Board of Directors of the Corporation or through designation in writing by the
President of the Corporation, or his delegate.
The activities of any such group shall be administered and coordinated by
the officers of the group and, if desired by the President of the Corporation,
or his delegate, by an operating committee. In such event, the number of members
of such operating committee shall be determined by the President of the
Corporation, or his delegate, who shall appoint the members thereof and have the
power to remove them and substitute other members. The duties of any such
operating committee shall be to aid in the administration and coordination of
14
group activities and to consult with and advise the officers of the group in
achieving goals and objectives of such group.
Officers of a group established pursuant to the provisions hereof may
include a chairman, a president, one or more vice presidents, a treasurer, a
secretary and such other officers as may facilitate operations of the group. The
President, or his delegate, shall have the authority to appoint the officers of
a group and the power to remove them and to fill any vacancies. To the extent
not inconsistent with these By-laws or a resolution of the Board of Directors of
the Corporation, the officers of each group shall have such duties and authority
with respect to the activities and affairs of the group as may be granted, from
time to time, by the President of the Corporation, or his delegate.
Contracts may not be entered into in the name of any group, but any officer
of the group, where so authorized, may execute contracts and other documents in
the name of the Corporation on behalf of the members of the group or any
division of the Corporation that is a member of the group; provided, however,
that in no case shall an officer of the group have authority to bind the
Corporation except as to the normal and usual business and affairs of the group
of which he or she is an officer; and provided further that a group officer may
not execute contracts for any subsidiary who is a member of the group unless (i)
he or she executes the same under a duly authorized power of attorney or (ii) he
or she is also an officer of such subsidiary and executes the contract in such
capacity.
Indemnification
39. (a) Each person who was or is made a party or is threatened to be made
a party to or is involved in any action, suit or proceeding, whether civil,
15
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she is or was or has agreed to become a director
or officer of the Corporation or is or was serving or has agreed to serve at the
request of the Corporation as a director or officer of another corporation or of
a partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director or officer or in any other
capacity while serving or having agreed to serve as a director or officer shall
be indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended, (but, in the case of any such amendment, only to the
extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment) against all expense, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to
be paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person who
has ceased to serve in the capacity which initially entitled such person to
indemnity hereunder and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Section 39 shall be a contract
right and shall include the right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that, if the Delaware General Corporation Law requires, the
payment of such expenses incurred by a director or officer in his or her
16
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise.
(b) If a claim under Paragraph (a) of this Section 39 is not paid in
full by the Corporation within ninety days after a written claim has been
received by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such defense shall be
on the Corporation. Neither the failure of the Corporation (including its Board
of Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
17
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
(c) The right to indemnification and the advancement and payment of
expenses conferred in this Section 39 shall not be exclusive of any other right
which any person may have or hereafter acquire under any law (common or
statutory), provision of the Certificate of Incorporation of the Corporation,
By-law, agreement, vote of stockholders or disinterested directors or otherwise.
(d) The Corporation may maintain insurance, at its expense, to protect
itself and any person who is or was serving as a director or officer of the
Corporation or is or was serving at the request of the Corporation as a director
or officer of another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
(e) If this Section 39 or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify and hold harmless each director or officer of the
Corporation as to costs, charges and expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement with respect to any action, suit
or proceeding, whether civil, criminal, administrative or investigative to the
full extent permitted by any applicable portion of this Section 39 that shall
not have been invalidated and to the full extent permitted by applicable law.
Revised September 14, 1995,
to be effective as of October 1, 1995
18
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement ("Agreement"), including the
attached Exhibits "A", "B" and "C", is entered into by and between Halliburton
Company, a Delaware corporation having offices at 3600 Lincoln Plaza, 500 N.
Akard Street, Dallas, Texas 75201-3391 ("Employer"), and Richard B. Cheney, an
individual currently residing at 2920 White Pine Lane, Jackson, Wyoming 83001
("Employee"), to be effective on the later of the date of execution of this
Agreement by the parties hereto or the date of approval of this Agreement by the
Board of Directors of Employer pursuant to the provisions of Section 6.2 (the
"Effective Date").
WITNESSETH:
WHEREAS, Employer is desirous of employing Employee pursuant to the
terms and conditions and for the consideration set forth in this Agreement, and
Employee is desirous of entering the employ of Employer pursuant to such terms
and conditions and for such consideration.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and obligations contained herein, Employer and Employee agree as
follows:
ARTICLE 1: EMPLOYMENT AND DUTIES:
1.1. Employer agrees to employ Employee, and Employee agrees to be
employed by Employer, beginning as of the Effective Date and continuing until
September 30, 2003 (the "Term"), subject to the terms and conditions of this
Agreement.
1.2. Beginning October 1, 1995, Employee shall be employed as Chief
Executive Officer and President of Employer. Employee agrees to serve in the
assigned position and to perform diligently and to the best of Employee's
abilities the duties and services appertaining to such position as determined by
Employer, as well as such additional or different duties and services
appropriate to such position which Employee from time to time may be reasonably
directed to perform by Employer. As of the Effective Date, Employee shall be
elected as a member of Employer's Board of Directors and, upon the retirement of
the incumbent Chairman of the Employer's Board of Directors, shall be elected to
serve as the Chairman of the Employer's Board of Directors. Employee shall at
all times comply with and be subject to such policies and procedures as Employer
may establish from time to time.
1.3. Employee shall, during the period of Employee's employment by
Employer, devote Employee's full business time, energy, and best efforts to the
business and affairs of Employer; provided, however, that it is agreed that
Employee's employment shall be on an asneeded basis between the Effective Date
and October 1, 1995 in order to enable Employee to wind up certain business
matters and to relocate his residence, and further provided that Employee shall
- Page 1 -
be permitted to complete any speaking engagements for which he is contractually
committed on the Effective Date. Subject to the provisos to the immediately
preceding sentence, Employee may not engage, directly or indirectly, in any
other business, investment, or activity that interferes with Employee's
performance of Employee's duties hereunder, is contrary to the interests of
Employer, or requires any significant portion of Employee's business time. The
foregoing notwithstanding, the parties recognize and agree that Employee may
engage in passive personal investments and other business activities which do
not conflict with the business and affairs of the Employer or interfere with
Employee's performance of his duties hereunder. In that regard, Employee may
serve on the board of directors of up to three corporations of his choice, so
long as service on any such board simultaneously with his service on Employer's
Board of Directors does not constitute a violation of federal statutory
provisions, or related rules and regulations, pertaining to interlocking
directorships and the meeting times of such boards of directors do not conflict
with the meeting times of Employer's Board of Directors. Except as provided in
the preceding sentence, Employee may not serve on the board of directors of any
entity other than the Employer during the Term without the approval of the Audit
Committee of the Employer's Board of Directors in accordance with the Employer's
policies and procedures regarding such service, which approval will not be
unreasonably withheld. Employee shall be permitted to retain any compensation
received for such speaking engagements and service on other corporations' boards
of directors.
1.4. Employee acknowledges and agrees that Employee owes a fiduciary
duty of loyalty, fidelity and allegiance to act at all times in the best
interests of the Employer and to do no act which would intentionally injure
Employer's business, its interests, or its reputation. It is agreed that any
direct or indirect interest in, connection with, or benefit from any outside
activities, particularly commercial activities, which interest might in any way
adversely affect Employer, or any of its affiliates, involves a possible
conflict of interest. In keeping with Employee's fiduciary duties to Employer,
Employee agrees that Employee shall not knowingly become involved in a conflict
of interest with Employer, or its affiliates, or upon discovery thereof, allow
such a conflict to continue. Moreover, Employee agrees that Employee shall
disclose to the Audit Committee of the Employer's Board of Directors any facts
which might involve a possible conflict of interest.
1.5 Effective as of the Effective Date, Employer and Employee shall
enter into an Indemnification Agreement containing the terms and conditions set
forth in Exhibit A attached to, and forming a part of, this Agreement.
1.6 Employee represents that he is not aware of any pre-existing health
problems which have not been disclosed to Employer.
ARTICLE 2: COMPENSATION AND BENEFITS:
2.1. For the period between the Effective Date and December 31, 1995,
Employee's base salary shall be $250,000.00 which shall be paid in accordance
- Page 2 -
with Employer's standard payroll practice for its executives commencing with the
payroll period beginning October 1, 1995. Thereafter, Employee's base salary
during the Term shall be not less than $1,000,000.00 per annum which shall be
paid in accordance with the Employer's standard payroll practice for its
executives.
2.2. Employee shall be entitled to a bonus of $150,000.00 for the period
between the Effective Date and December 31, 1995 provided he remains employed by
the Employer during the entirety of such period. Such bonus shall be payable in
a single lump sum payment as soon as practicable following December 31, 1995.
Beginning in 1996 and for the remainder of the Term, Employee shall participate
in Employer's Annual Reward Plan or such similar incentive arrangement as may be
mutually agreeable to Employee and Employer.
2.3. As of the Effective Date, the Employer shall grant to Employee
under the Halliburton Company 1993 Stock and Long-Term Incentive Plan a
nonqualified stock option to purchase up to 200,000 shares of the Employer's
common stock. The form and other terms and conditions of such option (other than
the exercise price, which shall be the closing price of Employer's common stock
on the New York Stock Exchange on the Effective Date) are set forth in Exhibit B
attached to, and forming a part of, this Agreement.
2.4. As of October 1, 1995, the Employer shall grant to Employee under
the Halliburton Company 1993 Stock and Long-Term Incentive Plan 100,000 shares
of the Employer's common stock subject to the restrictions and other terms and
conditions set forth in Exhibit C attached to, and forming a part of, this
Agreement.
2.5. At all times during the Term while Employee is employed by Employer
hereunder, Employee will be designated as a participant in the Halliburton
Company Senior Executives' Deferred Compensation Plan. For 1995, Employee will
receive an allocation of $125,000 to his Deferred Compensation Account under
such plan provided he remains employed with the Employer as of December 31, 1995
and thereafter during the Term will receive an allocation of at least
$500,000.00 to his Deferred Compensation Account thereunder at the end of each
full calendar year included in such Term provided he was employed by the
Employer throughout the calendar year for which such allocation is to be made.
2.6. The Employer will pay or reimburse Employee for all reasonable
expenses incurred by Employee in the course of moving his principal residence,
family and goods from Jackson, Wyoming to Dallas, Texas, including trips to and
from Dallas, Texas to locate a new residence, packing, unpacking, storage,
cartage and housing expenses of Employee and his family in Dallas, Texas for a
period of up to four months from October 1, 1995 and prior to Employee's
purchase of a new principal residence.
2.7. From and after the Effective Date, Employer shall pay, or reimburse
Employee, for all ordinary, reasonable and necessary expenses which Employee
incurs in performing his duties under this Agreement including, but not limited
to, travel, entertainment, professional dues and subscriptions, and all dues,
fees and expenses associated with membership in various professional, business
- Page 3 -
and civic associations and societies of which Employee's participation is in the
best interest of Employer. Employer will reimburse Employee for reasonable legal
expenses in connection with the negotiation of this Agreement.
2.8. During the Term and while Employee is employed by Employer, and in
addition to any group term life insurance otherwise generally provided to
executive employees of Employer, Employer will purchase and maintain at its
expense term life insurance on the life of Employee in the face amount of
$2,500,000 payable to the beneficiary or beneficiaries designated by Employee;
provided, however, that Employer's obligation to purchase and maintain such
insurance shall be contingent upon Employee's insurability at no more than 150%
of standard risk costs from a high quality insurance carrier (excluding special
risk carriers).
2.9. While employed by Employer, Employee shall be allowed to
participate, on the same basis generally as other employees of Employer, in all
general employee benefit plans and programs, including improvements or
modifications of the same, which on the effective date or thereafter are made
available by Employer to all or substantially all of Employer's executive
employees. Such benefits, plans, and programs may include, without limitation,
medical, health, and dental care, life insurance, disability protection, and
qualified retirement plans. Except as specifically provided herein, nothing in
this Agreement is to be construed or interpreted to provide greater rights,
participation, coverage, or benefits under such benefit plans or programs than
provided to executive employees pursuant to the terms and conditions of such
benefit plans and programs.
2.10. Employer shall not by reason of this Article 2 be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing, any
incentive compensation or employee benefit program or plan, so long as such
actions are similarly applicable to covered employees generally.
2.11. Employer may withhold from any compensation, benefits, or amounts
payable under this Agreement all federal, state, city, or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
ARTICLE 3: TERMINATION PRIOR TO EXPIRATION OF TERM AND
EFFECTS OF SUCH TERMINATION:
3.1. Employee's employment with Employer shall be terminated (i) upon
the death of Employee, (ii) upon Employee's permanent disability (permanent
disability being defined as Employee's physical or mental incapacity to perform
his usual duties as an employee with such condition likely to remain
continuously and permanently); provided, however, that in such event, Employee's
employment shall be continued hereunder for a period of not less than one year
from the date of such disability, but not beyond the end of the Term, with
Employee's base salary during such period to be reduced by any Employer-financed
disability benefits, or (iii) subject to the provisions of clause (ii), at any
- Page 4 -
time during the Term by Employer upon notice to Employee or by Employee upon 60
days' notice to Employer for any or no reason.
3.2. If Employee's employment is terminated by reason of a "Voluntary
Termination" (as hereinafter defined), the death of Employee, permanent
disability of Employee (as defined in Section 3.1) or by the Employer for
"Cause" (as hereinafter defined), all future compensation to which Employee is
otherwise entitled and all future benefits for which Employee is eligible shall
cease and terminate as of the date of termination, except as specifically
provided in this Section 3.2. Employee, or his estate in the case of Employee's
death, shall be entitled to pro rata base salary through the date of such
termination and shall be entitled to any individual bonuses or individual
incentive compensation not yet paid but due under Employer's plans but shall not
be entitled to any other payments by or on behalf of Employer except for those
which may be payable pursuant to the terms of Employer's employee benefit plans
(as hereinafter defined). For purposes of this Section 3.2, a "Voluntary
Termination" of the employment relationship by Employee prior to expiration of
the Term shall be a termination of employment in the sole discretion of and at
the election of Employee, other than (i) a termination of Employee's employment
because of a material breach by Employer of any material provision of this
Agreement which remains uncorrected for thirty (30) days following written
notice of such breach by Employee to Employer or (ii) a termination of
Employee's employment within six (6) months of a material reduction in
Employees' rank or responsibility with Employer. For purposes of this Section
3.2, the term "Cause" shall mean any of (i) Employee's gross negligence or
willful misconduct in the performance of the duties and services required of
Employee pursuant to this Agreement; (ii) Employee's final conviction of a
felony; or (iii) Employee's material breach of any material provision of this
Agreement which remains uncorrected for thirty (30) days following written
notice to Employee by Employer of such breach.
3.3. If Employee's employment is terminated for any reason other than as
described in Section 3.2 above during the Term, Employer shall pay to Employee a
severance benefit consisting of a single lump sum cash payment equal to the
value of any shares of Employer's common stock (based upon the closing price of
Employer's common stock on the New York Stock Exchange on the date of
termination of employment) which were granted to Employee pursuant to Section
2.4 and which are forfeited as a result of Employee's termination of employment
plus the lesser of (i) 150% of the base salary (referenced with respect to the
rate of such base salary as in effect at the date of Employee's termination of
employment) that Employee would have received between the date of such
termination of employment and the end of the Term or (ii) $3,000,000. Such
severance benefit shall be paid no later than sixty (60) days following
Employee's termination of employment. The severance benefit paid pursuant to
this Section 3.3 to Employee shall be in consideration of Employee's continuing
obligations hereunder after such termination (including, without limitation,
Employee's non-competition obligations). Employee shall not be under any duty or
obligation to seek or accept other employment following a termination of
employment pursuant to which severance benefit payments under this Section 3.3
are owing and the amounts due Employee pursuant to this Section 3.3 shall not be
reduced or suspended if Employee accepts subsequent employment or earns any
- Page 5 -
amounts as a self-employed individual. Employee's rights under this Section 3.3
are Employee's sole and exclusive rights against the Employer or its affiliates
and the Employer's sole and exclusive liability to Employee under this
Agreement, in contract, tort or otherwise, for the termination of his employment
relationship with Employer. Employee covenants not to sue or lodge any claim,
demand or cause of action against Employer based upon Employee's termination of
employment for any monies other than those specified in this Section 3.3. If
Employee breaches this covenant, Employer shall be entitled to recover from
Employee all sums expended by Employer (including costs and attorneys' fees), in
connection with such suit, claim, demand or cause of action. Nothing contained
in this Section 3.3 shall be construed to be a waiver by Employee of any
benefits accrued for or due Employee under any employee benefit plan (as such
term is defined in the Employees' Retirement Income Security Act of 1974, as
amended) maintained by Employer.
3.4. It is expressly acknowledged and agreed that the decision as to
whether "Cause" exists for termination of the employment relationship by the
Employer and whether and as of what date Employee has become permanently
disabled is delegated to the Board of Directors of Employer for determination.
If Employee disagrees with the decision reached by Employer, the dispute will be
limited to whether the Board of Directors of Employer reached this decision in
good faith.
3.5. Termination of the employment relationship does not terminate those
obligations imposed by this Agreement which are continuing obligations,
including, without limitation, Employee's obligations under Articles 4 and 5.
ARTICLE 4: OWNERSHIP AND PROTECTION OF INTELLECTUAL
PROPERTY AND CONFIDENTIAL INFORMATION:
4.1. All information, ideas, concepts, improvements, discoveries, and
inventions, whether patentable or not, which are conceived, made, developed or
acquired by Employee, individually or in conjunction with others, during
Employee's employment by Employer (whether during business hours or otherwise
and whether on Employer's premises or otherwise) which relate to Employer's
business, products or services (including, without limitation, all such
information relating to corporate opportunities, research, financial and sales
data, pricing and trading terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customer's organizations or within the
organization of acquisition prospects, or marketing and merchandising
techniques, prospective names, and marks), and all writings or materials of any
type embodying any of such items, shall be disclosed to Employer and are and
shall be the sole and exclusive property of Employer.
4.2. Employee acknowledges that the businesses of Employer and its
affiliates are highly competitive and that their strategies, methods, books,
records, and documents, their technical information concerning their products,
equipment, services, and processes, procurement procedures and pricing
- Page 6 -
techniques, the names of and other information (such as credit and financial
data) concerning their customers and business affiliates, all comprise
confidential business information and trade secrets which are valuable, special,
and unique assets which Employer, or its affiliates use in their business to
obtain a competitive advantage over their competitors. Employee further
acknowledges that protection of such confidential business information and trade
secrets against unauthorized disclosure and use is of critical importance to
Employer, and its affiliates in maintaining their competitive position. Employee
hereby agrees that Employee will not, at any time during or after his employment
by Employer, make any unauthorized disclosure of any confidential business
information or trade secrets of Employer, or its affiliates, or make any use
thereof, except in the carrying out of his employment responsibilities
hereunder. The above notwithstanding, a disclosure shall not be unauthorized if
(i) it is required by law or by a court of competent jurisdiction or (ii) it is
in connection with any judicial or other legal proceeding in which Employee's
legal rights and obligations as an employee or under this Agreement are at
issue; provided, however, that Employee shall, to the extent practicable and
lawful in any such events, give prior notice to Employer of his intent to
disclose any such confidential business information in such context so as to
allow Employer an opportunity (which Employee will not oppose) to obtain such
protective orders or similar relief with respect thereto as it may deem
appropriate.
4.3. All written materials, records, and other documents made by, or
coming into the possession of, Employee during the period of Employee's
employment by Employer which contain or disclose confidential business
information or trade secrets of Employer, or its affiliates shall be and remain
the property of Employer, or its affiliates, as the case may be. Upon
termination of Employee's employment by Employer, for any reason, Employee
promptly shall deliver the same, and all copies thereof, to Employer.
ARTICLE 5: POST-EMPLOYMENT AND NON-COMPETITION OBLIGATIONS:
5.1. As part of the consideration for the compensation and benefits to
be paid to Employee hereunder, and as an additional incentive for Employer to
enter into this Agreement, Employer and Employee agree to the non-competition
provisions of this Article 5. Employee agrees that during the period of
Employee's non-competition obligations hereunder, Employee will not, directly or
indirectly for Employee or for others, in any geographic area or market where
Employer or any of their affiliated companies are conducting any business (other
than de minimis business operations) as of the date of termination of the
employment relationship or have during the previous twelve months conducted any
business (other than de minimis business operations):
(i) engage in any business directly competitive with any business
(other than de minimis business operations) conducted by
Employer or any of Employer's affiliates;
- Page 7 -
(ii) render advice or services to, or otherwise assist, any other
person, association, or entity who is engaged, directly or
indirectly, in any business directly competitive with any
business (other than de minimis business operations) conducted
by Employer or any of Employer's affiliates; or
(iii) induce any employee of Employer or any of its affiliates (other
than Employee's personal secretary or administrative assistant)
to terminate his employment with Employer, or itsaffiliates, or
hire or assist in the hiring of any such induced employee by any
person, association, or entity not affiliated with Employer.
These non-competition obligations shall extend until two years after termination
of the employment relationship between Employer and Employee. The above
notwithstanding, nothing in this Section 5.1 shall prohibit Employee from
engaging in or being employed by any entity that engages in the provision of
management consulting or other consulting services to third parties, even where
such entity on occasion renders advice or services to, or otherwise assists, any
other person, association, or entity who is engaged, directly or indirectly, in
any business directly competitive with any business conducted by Employer or any
of Employer's affiliates, so long as Employee does not personally, directly or
indirectly (A) participate in rendering such advice, services or assistance to
any such competing person, association or entity, (B) provide any information or
other assistance to any other person employed by Employee or by any such
consulting entity for use, directly or indirectly, in rendering such assistance
to any competing person, association or entity or (C) engage in any conduct
which would be violative of the provisions of Article 4 hereof.
5.2. Employee understands that the foregoing restrictions may limit his
ability to engage in certain businesses anywhere in the world during the period
provided for above, but acknowledges that Employee will receive sufficiently
high remuneration and other benefits under this Agreement to justify such
restriction. Employee acknowledges that money damages would not be sufficient
remedy for any breach of this Article 5 by Employee, and agrees that Employer,
on its own behalf or on behalf of any of its affiliates, shall be entitled to
specific performance and injunctive relief as remedies for such breach or any
threatened breach. Such remedies shall not be deemed the exclusive remedies for
a breach of this Article 5, but shall be in addition to all remedies available
at law or in equity to Employer, including, without limitation, the recovery of
damages from Employee and his agents involved in such breach.
5.3. It is expressly understood and agreed that Employer and Employee
consider the restrictions contained in this Article 5 to be reasonable and
necessary to protect the proprietary information and/or goodwill of Employer and
its affiliates. Nevertheless, if any of the aforesaid restrictions are found by
a court having jurisdiction to be unreasonable, or overly broad as to geographic
area or time, or otherwise unenforceable, the parties intend for the
restrictions therein set forth to be modified by such courts so as to be
reasonable and enforceable and, as so modified by the court, to be fully
enforced.
- Page 8 -
ARTICLE 6: MISCELLANEOUS:
6.1. For purposes of this Agreement, (i) the terms "affiliates" or
"affiliated" means an entity who directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with
Employer or in which Employer has a 50% or more equity interest, and (ii) any
action or omission permitted to be taken or omitted by Employer hereunder shall
only be taken or omitted by Employer upon the express authority of the Board of
Directors of Employer or of any Committee of the Board to which authority over
such matters may have been delegated.
6.2 Although executed and delivered by the parties hereto, this
Agreement shall not become effective until such time as the Board of Directors
of Employer has expressly approved this Agreement. Employer agrees to notify
Employee promptly of the date of such approval.
6.3. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when received by or tendered to Employee or Employer, as
applicable, by pre-paid courier or by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:
If to Employer, to Halliburton Company at its corporate headquarters
to the attention of the General Counsel of Halliburton Company.
If to Employee, to his last known personal residence.
6.4. This Agreement shall be governed in all respects by the laws of the
State of Texas, excluding any conflict-of-law rule or principle that might refer
to the laws of another State or country.
6.5. No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or
provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
6.6. It is a desire and intent of the parties that the terms,
provisions, covenants, and remedies contained in this Agreement shall be
enforceable to the fullest extent permitted by law. If any such term, provision,
covenant, or remedy of this Agreement or the application thereof to any person,
association, or entity or circumstances shall, to any extent, be construed to be
invalid or unenforceable in whole or in part, then such term, provision,
covenant, or remedy shall be construed in a manner so as to permit its
enforceability under the applicable law to the fullest extent permitted by law.
In any case, the remaining provisions of this Agreement or the application
thereof to any person, association, or entity or circumstances other than those
to which they have been held invalid or unenforceable, shall remain in full
force and effect.
- Page 9 -
6.7. This Agreement shall be binding upon and inure to the benefit of
Employer and any other person, association, or entity which may hereafter
acquire or succeed to all or substantially all of the business or assets of
Employer by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. Employee's rights and obligations under this
Agreement are personal and such rights, benefits, and obligations of Employee
shall not be voluntarily or involuntarily assigned, alienated, or transferred,
whether by operation of law or otherwise, without the prior written consent of
Employer, other than in the case of death or incompetence of Employee.
6.8. This Agreement replaces and merges any previous agreements and
discussions pertaining to the subject matter covered herein. This Agreement
constitutes the entire agreement of the parties with regard to such subject
matter, and contains all of the covenants, promises, representations,
warranties, and agreements between the parties with respect such subject matter.
Each party to this Agreement acknowledges that no representation, inducement,
promise, or agreement, oral or written, has been made by either party with
respect to such subject matter, which is not embodied herein, and that no
agreement, statement, or promise relating to the employment of Employee by
Employer that is not contained in this Agreement shall be valid or binding. Any
modification of this Agreement will be effective only if it is in writing and
signed by each party whose rights hereunder are affected thereby, provided that
any such modification must be authorized or approved by the Board of Directors
of Employer.
IN WITNESS WHEREOF, Employer and Employee have duly executed this
Agreement at Dallas, Texas in multiple originals to be effective on the date
first stated above.
HALLIBURTON COMPANY
By:
Thomas H. Cruikshank
Chairman of the Board and
Chief Executive Officer
EMPLOYEE
Name: Richard B. Cheney
Date: August 10, 1995
- Page 10 -
Exhibit A To
Executive Employment Agreement
By and Between Richard B. Cheney and
Halliburton Company
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made this 10th day of August, 1995 by and between
Halliburton Company, a Delaware corporation, (the "Company") and Richard B.
Cheney (the "Indemnitee").
RECITALS
A. The Indemnitee has been requested to serve, or is presently serving,
as a Director and/or an officer of the Company. The Company desires the
Indemnitee to serve or to continue to serve in such capacity. The Company
believes that the Indemnitee's undertaking or continued undertaking of such
responsibilities is important to the Company and that the protection afforded by
this Agreement will enhance the Indemnitee's ability to discharge such
responsibilities under existing circumstances. The Indemnitee is willing,
subject to certain conditions including without limitation the execution and
performance of this Agreement by the Company and the Company's agreement to
provide the Indemnitee at all times the broadest and most favorable (to
Indemnitee) indemnification permitted by applicable law (whether by legislative
action or judicial decision), to serve or to continue to serve in that capacity.
B. In addition to the indemnification to which the Indemnitee is
entitled under the Composite Certificate of Incorporation of the Company (the
"Certificate") or the By-laws, as amended, of the Company (the "By-laws"), the
Company has purchased and currently maintains insurance protecting its officers
and directors and certain other persons (including the Indemnitee) against
certain losses arising out of actual or threatened actions, suits or proceedings
to which such persons may be made or threatened to be made parties ("D&O
Insurance").
NOW, THEREFORE, for and in consideration of the premises, the mutual
promises hereinafter set forth, the reliance of the Indemnitee hereon in
continuing to serve the Company in his present capacity and in undertaking to
serve the Company in any additional capacity or capacities, the Company and the
Indemnitee agree as follows:
1. Indemnification - General. The Company shall indemnify and advance
Expenses (as hereinafter defined) to Indemnitee to the fullest extent, and only
to the extent, permitted by applicable law in effect on the date hereof and to
such greater extent as applicable law may thereafter from time to time permit.
The rights of Indemnitee provided under the preceding sentence shall include,
but shall not be limited to, the rights set forth in the other Sections of this
Agreement.
Although there can be no assurance as to the continuation or renewal of
the D&O Insurance or that any such D&O Insurance will provide coverage for
losses to which the Indemnitee may be exposed, the Company will use commercially
reasonable efforts, taking into consideration availability of D&O Insurance in
the marketplace, to continue D&O Insurance in effect at current levels for the
duration of Indemnitee's service and for six (6) years thereafter.
2. Proceedings Other than Proceedings by or in the Right of the
Company. Indemnitee shall be entitled to the indemnification rights provided in
this Section 2 if, by reason of his Corporate Status (as hereinafter defined),
he is, or is threatened to be made, a party to, or otherwise incurs Expenses in
connection with, any threatened, pending or completed Proceeding (as hereinafter
defined), other than a Proceeding by or in the right of the Company. Pursuant to
this Section 2, Indemnitee shall be indemnified against Expenses, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by him or on his behalf in connection with such Proceeding or any claim, issue
or matter therein, if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Company, and,
with respect to any criminal Proceeding, had no reasonable cause to believe his
conduct was unlawful.
3. Proceedings by or in the Right of the Company. Indemnitee shall be
entitled to the indemnification rights provided in this Section 3, if, by reason
of his Corporate Status, he is, or is threatened to be made, a party to, or
otherwise incurs Expenses in connection with, any threatened, pending or
completed Proceeding brought by or in the right of the Company to procure a
judgment in its favor. Pursuant to this Section 3, Indemnitee shall be
indemnified against Expenses actually and reasonably incurred by him or on his
behalf in connection with such Proceeding if he acted in good faith and in a
manner he reasonably believed to be in, or not opposed to, the best interests of
the Company. Notwithstanding the foregoing, no indemnification against such
Expenses shall be made in respect of any claim, issue or matter in such
Proceeding as to which Indemnitee shall have been adjudged to be liable to the
Company if applicable law prohibits such indemnification; provided, however,
that, if applicable law so permits, indemnification against Expenses shall
nevertheless be made by the Company despite such adjudication of liability, if
and only to the extent that the Court of Chancery of the State of Delaware, or
the court in which such Proceeding shall have been brought or is pending, shall
determine.
4. Indemnification for Expenses of a Party Who is Wholly or Partly
Successful. Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith. If Indemnitee is not wholly successful in
such Proceeding but is successful on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such Proceeding, the Company
shall indemnify Indemnitee against all Expenses actually and reasonably incurred
by him or on his behalf in connection with each successfully resolved claim,
issue or matter. For the purposes of this Section 4 and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
2
5. Contribution. In the event that the indemnity contained in Sections
2, 3 or 4 of this Agreement is unavailable or insufficient to hold Indemnitee
harmless in a Proceeding described therein, then in accordance with the
non-exclusivity provisions of the Delaware General Corporation Law and the
Certificate and By-laws, and separate from and in addition to, the indemnity
provided elsewhere herein, the Company shall contribute to Expenses, judgments,
penalties, fines and amounts paid in settlement actually and reasonably incurred
by or on behalf of Indemnitee in connection with such Proceeding or any claim,
issue or matter therein, in such proportion as appropriately reflects the
relative benefits received by, and fault of, the Company on the one hand and
Indemnitee on the other in the acts, transactions or matters to which the
Proceeding relates and other equitable considerations.
6. Procedure for Determination of Entitlement to Indemnification.
(a) To obtain indemnification under this Agreement, Indemnitee
shall submit to the Company a written request, including such
documentation and information as is reasonably available to Indemnitee
and is reasonably necessary to determine whether and to what extent
Indemnitee is entitled to indemnification. The determination of
Indemnitee's entitlement to indemnification shall be made not later
than 90 days after receipt by the Company of the written request for
indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board of
Directors in writing that Indemnitee has requested indemnification.
(b) Indemnitee's entitlement to indemnification under any of
Sections 2, 3, 4 and 5 of this Agreement shall be determined in the
specific case: (i) by the Board of Directors by a majority vote of a
quorum of the Board consisting of Disinterested Directors (as
hereinafter defined); (ii) by Independent Counsel (as hereinafter
defined), in a written opinion if a quorum of the Board of Directors
consisting of Disinterested Directors is not obtainable or, even if
obtainable, such quorum of Disinterested Directors so directs; or (iii)
by the stockholders of the Company. If, with regard to Section 5 of
this Agreement, such a determination is not permitted by law or if a
quorum of Disinterested Directors so directs, such determination shall
be made by the Chancery Court of the State of Delaware or the court in
which the Proceeding giving rise to the claim for indemnification is
brought.
(c) In the event that the determination of entitlement to
indemnification is to be made by Independent Counsel pursuant to
Section 6(b) of this Agreement, the Independent Counsel shall be
selected as provided in this Section 6(c). The Independent Counsel
shall be selected by the Board of Directors, and the Company shall give
written notice to Indemnitee advising him of the identity of the
Independent Counsel so selected. Indemnitee may, within 7 days after
receipt of such written notice of selection shall have been given,
deliver to the Company a written objection to such selection. Such
objection may be asserted only on the ground that the Independent
Counsel so selected does not meet the requirements of "Independent
3
Counsel" as defined in Section 13 of this Agreement, and the objection
shall set forth with particularity the factual basis of such assertion.
If such written objection is made, the Independent Counsel so selected
shall be disqualified from acting as such. If, within 20 days after
submission by Indemnitee of a written request for indemnification
pursuant to Section 6(a) of this Agreement, no Independent Counsel
shall have been selected, or if selected shall have been objected to,
in accordance with this Section 6(c), either the Company or Indemnitee
may petition the Court of Chancery of the State of Delaware for the
appointment as Independent Counsel of a person selected by such court
or by such other person as such court shall designate, and the person
so appointed shall act as Independent Counsel under Section 6(b) of
this Agreement, and the Company shall pay all reasonable fees and
expenses incident to the procedures of this Section 6(c), regardless of
the manner in which such Independent Counsel was selected or appointed.
7. Advancement of Expenses. The Company shall advance all reasonable
Expenses incurred by or on behalf of Indemnitee in connection with any
Proceeding within 20 days after the receipt by the Company of a statement or
statements from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such Proceeding. Indemnitee
shall, and hereby undertakes to, repay any Expenses advanced if it shall
ultimately be determined that Indemnitee is not entitled to be indemnified
against such Expenses.
8. Presumptions and Effect of Certain Proceedings. The termination of
any proceeding described in any of Sections 2, 3 or 4 of this Agreement, or of
any claim, issue or matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not
(except as otherwise expressly provided in this Agreement) of itself adversely
affect the right of Indemnitee to indemnification or create a presumption that
Indemnitee did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Company or, with
respect to any criminal Proceeding, that Indemnitee had reasonable cause to
believe that his conduct was unlawful.
9. Term of Agreement. All agreements and obligations of the Company
contained herein shall commence as of the time the Indemnitee commenced to serve
as a director, officer, employee or agent of the Company (or commenced to serve
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise) and shall continue for so long as Indemnitee shall so serve or
shall be, or could become, subject to any possible Proceeding in respect of
which Indemnitee is granted rights of indemnification or advancement of Expenses
hereunder.
10. Notification and Defense of Claim. Promptly after receipt by
Indemnitee of notice of the commencement of any Proceeding, Indemnitee will, if
a claim in respect thereof is to be made against the Company under this
Agreement, notify the Company of the commencement thereof; but the omission to
notify the Company will not relieve it from any liability which it may have to
Indemnitee otherwise than under this Agreement. With respect to any such
Proceeding as to which Indemnitee notifies the Company of the commencement
thereof:
4
(a) The Company will be entitled to participate therein at its
own expense.
(b) Except as otherwise provided below, to the extent that it
may wish, the Company jointly with any other indemnifying party
similarly notified will be entitled to assume the defense thereof, with
counsel satisfactory to Indemnitee. After notice from the Company to
Indemnitee of its election so to assume the defense thereof, the
Company will not be liable to Indemnitee under this Agreement for any
legal or other Expenses subsequently incurred by Indemnitee in
connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. Indemnitee shall have the
right to employ its counsel in such Proceeding but the fees and
Expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof shall be at the expense of Indemnitee
unless (i) the employment of counsel by Indemnitee has been authorized
by the Company, or (ii) Indemnitee shall have reasonably concluded that
there may be a conflict of interest between the Company and Indemnitee
in the conduct of the defense of such Proceeding, or (iii) the Company
shall not in fact have employed counsel to assume the defense of such
Proceeding, in each of which cases the fees and Expenses of counsel
shall be at the expense of the Company. The Company shall not be
entitled to assume the defense of any Proceeding brought by or on
behalf of the Company or as to which Indemnitee shall have made the
conclusion provided for in (ii) above.
(c) The Company shall not be liable to indemnify Indemnitee
under this Agreement for any amounts paid in settlement of any
Proceeding or claim effected without its written consent. The Company
shall not settle any Proceeding or claim in any manner which would
impose any penalty or limitation on Indemnitee without Indemnitee's
written consent. Neither the Company nor Indemnitee will unreasonably
withhold their consent to any proposed settlement.
11. Enforcement.
(a) The Company expressly confirms and agrees that it has
entered into this Agreement and assumed the obligations imposed on it
hereby in order to induce Indemnitee to serve or continue to serve as a
director and/or officer of the Company, and acknowledges that
Indemnitee is relying upon this Agreement in serving or continuing to
serve in such capacity.
(b) In the event Indemnitee is required to bring any action to
enforce rights or to collect moneys due under this Agreement and is
successful in such action, the Company shall reimburse Indemnitee for
all of Indemnitee's reasonable fees and Expenses in bringing and
pursuing such action.
12. Non-Exclusivity of Rights. The rights of indemnification and to
receive advancement of Expenses as provided by this Agreement shall not be
5
deemed exclusive of any other rights to which Indemnitee may at any time be
entitled under applicable law, the Certificate, the By-laws, any agreement, a
vote of stockholders or a resolution of directors, or otherwise.
13. Definitions. For purposes of this Agreement:
(a) "Corporate Status" describes the status of a person who is
or was a director, officer, employee, agent or fiduciary of the Company
or of any other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise which such person is or was
serving at the request of the Company.
(b) "Disinterested Director" means a director of the Company who
is not and was not at any time a party to the Proceeding in respect of
which indemnification is sought by Indemnitee.
(c) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness
fees, travel expenses, duplicating costs, printing and binding costs,
telephone charges, postage, delivery service fees, and all other
disbursements or Expenses of the types customarily incurred in
connection with prosecuting, defending, preparing to prosecute or
defend or investigating a Proceeding.
(d) "Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither
presently is, nor in the past five years has been, retained to
represent: (i) the Company or Indemnitee in any matter material to
either such party or (ii) any other party to the Proceeding giving rise
to a claim for indemnification hereunder. Notwithstanding the
foregoing, the term "Independent Counsel" shall not include any person
who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either
the Company or Indemnitee in an action to determine Indemnitee's rights
under this Agreement.
(e) "Proceeding" includes any action, suit, arbitration,
alternate dispute resolution mechanism, investigation, administrative
hearing or any other proceeding whether civil, criminal, administrative
or investigative.
14. Severability. Each of the provisions of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision hereof shall be held to be invalid or unenforceable for any reason,
such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions hereof.
15. Governing Law; Binding Effect; Amendment and Termination.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, EXCLUDING ANY
6
CONFLICT-OF-LAW RULE OR PRINCIPLE THAT MIGHT REFER TO THE
LAWS OF ANOTHER STATE OR COUNTRY.
(b) This Agreement shall be binding upon Indemnitee and upon the
Company, its successors and assigns, and shall inure to the benefit of
Indemnitee, his heirs, personal representatives and assigns and to the
benefit of the Company, its successors and assigns.
(c) No amendment, modification, termination or cancellation of
this Agreement shall be effective unless in writing by the parties.
The parties have executed this Agreement as of the day and year first
above written.
HALLIBURTON COMPANY
By: /s/ Thomas H. Cruikshank
-----------------------------
Thomas H. Cruikshank
Chairman of the Board and
Chief Executive Officer
/s/ Richard B. Cheney
------------------------------
Richard B. Cheney
Indemnitee
7
Exhibit B to
Executive Employment Agreement
By and Between Richard B. Cheney and
Halliburton Company
NONSTATUTORY STOCK OPTION AGREEMENT
AGREEMENT made as of the 10th day of August, 1995, between HALLIBURTON
COMPANY, a Delaware corporation (the "Company"), and Richard B. Cheney
("Employee").
To carry out the purposes of the HALLIBURTON COMPANY 1993 STOCK AND
LONG-TERM INCENTIVE PLAN (the "Plan"), by affording Employee the opportunity to
purchase shares of common stock, par value $2.50 per share, of the Company
("Stock"), and in consideration of the mutual agreements and other matters set
forth herein and in the Plan, the Company and Employee hereby agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to Employee
the right and option ("Option") to purchase all or any part of an aggregate of
200,000 shares of Stock, on the terms and conditions set forth herein and in the
Plan, which Plan is incorporated herein by reference as a part of this
Agreement. This Option shall not be treated as an incentive stock option within
the meaning of section 422(b) of the Internal Revenue Code of 1986, as amended
(the "Code").
2. Purchase Price. The purchase price of Stock purchased pursuant to
the exercise of this Option shall be $_______ per share, which has been
determined to be not less than the fair market value of the Stock at the date of
grant of this Option. For all purposes of this Agreement, fair market value of
Stock shall be determined in accordance with the provisions of the Plan.
3. Exercise of Option. Subject to the earlier expiration of this Option
as herein provided, this Option may be exercised, by written notice to the
Company at its principal executive office addressed to the attention of its Vice
President and Secretary, at any time and from time to time after the date of
grant hereof, but, except as otherwise provided below, this Option shall not be
exercisable for more than a percentage of the aggregate number of shares offered
by this Option determined by the number of full years from the date of grant
hereof to the date of such exercise, in accordance with the following schedule:
Percentage of Shares
Number of Full Years That May be Purchased
Less than 1 year 0%
1 year 33 1/3%
2 years 67%
3 years 100%
This Option is not transferable by Employee otherwise than by will or
the laws of descent and distribution, and may be exercised only by Employee
during Employee's lifetime. This Option may be exercised only while Employee
remains an employee of the Company, subject to the following exceptions:
(a) If Employee's employment with the Company terminates by
reason of disability (disability being defined as being physically or
mentally incapable of performing the Employee's usual duties as an
Employee with such condition likely to remain continuously and
permanently, as determined by the Committee administering the Plan (the
"Committee")), this Option may be exercised in full by Employee (or
Employee's estate or the person who acquires this Option by will or the
laws of descent and distribution or otherwise by reason of the death of
Employee) at any time during the period ending on the Expiration Date.
(b) If Employee dies while in the employ of the Company,
Employee's estate, or the person who acquires this Option by will or
the laws of descent and distribution or otherwise by reason of the
death of Employee, may exercise this Option in full at any time during
the period ending on the Expiration Date.
(c) If Employee's employment with the Company terminates by
reason of retirement at or after age 62 or earlier retirement with
consent of the Committee, this Option may be exercised in full by
Employee at any time during the period ending on the Expiration Date
(as defined below). If Employee dies after such retirement, this Option
may be exercised in full by Employee's estate (or the person who
acquires this Option by will or the laws of descent and distribution or
otherwise by reason of the death of the Employee) during the period
ending on the Expiration Date.
(d) If Employee's employment with the Company is terminated by
the Company other than for "Cause" or Employee terminates his
employment with the Company (i) because of a material breach by the
Company of any material provision of any employment agreement between
the Company and Employee which remains uncorrected for 30 days
following written notice of such breach by Employee to the Company or
(ii) within six months of a material reduction in Employee's rank or
responsibilities with the Company, this Option may be exercised in full
by Employee at any time during the period ending on the Expiration Date
or by Employee's estate (or the person who acquires this Option by will
or the laws of descent and distribution or otherwise by reason of the
death of the Employee) during the period ending on the Expiration Date
if Employee dies during such period. For purposes of this Agreement,
the term "Cause" shall mean any of (i) Employee's gross negligence or
willful misconduct in the performance of the duties and services
required of Employee pursuant to this Agreement, (ii) Employee's final
conviction of a felony; or (iii) Employee's material breach of any
material provision of this Agreement which remains uncorrected for 30
days following written notice to Employee by the Company of such
breach.
-2-
(e) If Employee's employment with the Company terminates for any
reason other than those set forth in subparagraphs (a) through (d)
above, this Option may be exercised by Employee at any time during the
period of 30 days following such termination, or by Employee's estate
(or the person who acquires this Option by will or the laws of descent
and distribution or otherwise by reason of the death of the Employee)
during a period of six months following Employee's death if Employee
dies during such 30-day period, but in each case only as to the number
of shares Employee was entitled to purchase hereunder upon exercise of
this Option as of the date Employee's employment so terminates.
This Option shall not be exercisable in any event prior to the
expiration of six months from the date of grant hereof or after the expiration
of ten years from the date of grant hereof (the "Expiration Date")
notwithstanding anything hereinabove contained. The purchase price of shares as
to which this Option is exercised shall be paid in full at the time of exercise
(a) in cash (including check, bank draft or money order payable to the order of
the Company), (b) by delivering to the Company shares of Stock having a fair
market value equal to the purchase price, or (c) by a combination of cash or
Stock. Payment may also be made, in the discretion of the Committee or its
delegate, as appropriate, by delivery (including by facsimile transmission) to
the Company of an executed irrevocable option exercise form, coupled with
irrevocable instructions to a broker-dealer designated by the Company to
simultaneously sell a sufficient number of the shares as to which the option is
exercised and deliver directly to the Company that portion of the sales proceeds
representing the exercise price. No fraction of a share of Stock shall be issued
by the Company upon exercise of an Option or accepted by the Company in payment
of the purchase price thereof; rather, Employee shall provide a cash payment for
such amount as is necessary to effect the issuance and acceptance of only whole
shares of Stock. Unless and until a certificate or certificates representing
such shares shall have been issued by the Company to Employee, Employee (or the
person permitted to exercise this Option in the event of Employee's death) shall
not be or have any of the rights or privileges of a shareholder of the Company
with respect to shares acquirable upon an exercise of this Option.
4. Withholding of Tax. To the extent that the exercise of this Option
or the disposition of shares of Stock acquired by exercise of this Option
results in compensation income to Employee for federal or state income tax
purposes, Employee shall deliver to the Company at the time of such exercise or
disposition such amount of money or shares of Stock as the Company may require
to meet its withholding obligation under applicable tax laws or regulations,
and, if Employee fails to do so, the Company is authorized to withhold from any
cash or Stock remuneration then or thereafter payable to Employee any tax
required to be withheld by reason of such resulting compensation income. Upon an
exercise of this Option, the Company is further authorized in its discretion to
satisfy any such withholding requirement out of any cash or shares of Stock
distributable to Employee upon such exercise.
-3-
5. Status of Stock. Notwithstanding any other provision of this
Agreement, in the absence of an effective registration statement for issuance
under the Securities Act of 1933, as amended (the "Act"), of the shares of Stock
acquirable upon exercise of this Option, or an available exemption from
registration under the Act, issuance of shares of Stock acquirable upon exercise
of this Option will be delayed until registration of such shares is effective or
an exemption from registration under the Act is available. The Company intends
to use its best efforts to ensure that no such delay will occur. In the event
exemption from registration under the Act is available upon an exercise of this
Option, Employee (or the person permitted to exercise this Option in the event
of Employee's death or incapacity), if requested by the Company to do so, will
execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require to assure compliance with applicable
securities laws.
Employee agrees that the shares of Stock which Employee may acquire by
exercising this Option will not be sold or otherwise disposed of in any manner
which would constitute a violation of any applicable securities laws, whether
federal or state. Employee also agrees (i) that the certificates representing
the shares of Stock purchased under this Option may bear such legend or legends
as the Company deems appropriate in order to assure compliance with applicable
securities laws, (ii) that the Company may refuse to register the transfer of
the shares of Stock purchased under this Option on the stock transfer records of
the Company if such proposed transfer would in the opinion of counsel
satisfactory to the Company constitute a violation of any applicable securities
law and (iii) that the Company may give related instructions to its transfer
agent, if any, to stop registration of the transfer of the shares of Stock
purchased under this Option.
If Employee desires to sell any shares of Stock acquired pursuant to
the provisions of this Agreement and if such shares may not be sold on the open
market without registration pursuant to applicable securities laws, then the
Company shall, within five days after notice from Employee indicating his
intention to sell such shares and the number of shares to be sold, purchase for
cash such shares at a price per share based on the closing sales price for
shares of Stock traded on the New York Stock Exchange on the date of receipt by
the Company of said notice.
6. Employment Relationship. For purposes of this Agreement, Employee
shall be considered to be in the employment of the Company as long as Employee
remains an employee of either the Company, a parent or subsidiary corporation
(as defined in section 424 of the Code) of the Company, or a corporation or a
parent or subsidiary of such corporation assuming or substituting a new option
for this Option. Any question as to whether and when there has been a
termination of such employment, and the cause of such termination, shall be
determined by the Committee or its delegate, as appropriate, and such
determination shall be final.
7. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of any successors to the Company and all persons lawfully claiming
under Employee.
8. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas, excluding any conflict-of-law
rule or principle that might refer to the laws of another State or country.
-4-
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunto duly authorized, and Employee has executed
this Agreement, all as of the day and year first above written.
HALLIBURTON COMPANY
By:--------------------------
Thomas H. Cruikshank
Chairman of the Board and
Chief Executive Officer
--------------------------
Richard B. Cheney
Employee
-5-
Attachment to Nonstatutory Stock Option Agreement
Please furnish the following information for shareholder records:
- ------------------------------- -----------------------------
(Given name and initial must be used Social Security Number
for stock registry) (if applicable)
- ------------------------------- -----------------------------
Birth Date
Month/Day/Year
- ------------------------------- -----------------------------
Name of Employer
- ------------------------------- -----------------------------
Address (Zip Code) Day phone number
United States Citizen: Yes x No___
PROMPTLY NOTIFY THE VICE PRESIDENT AND SECRETARY
OF HALLIBURTON COMPANY
3600 LINCOLN PLAZA, DALLAS, TEXAS 75201
OF ANY CHANGE IN ADDRESS.
-6-
Exhibit C to
Executive Employment Agreement
By and Between Richard B. Cheney and
Halliburton Company
RESTRICTED STOCK AGREEMENT
AGREEMENT made as of the 1st day of October, 1995, between HALLIBURTON
COMPANY, a Delaware corporation (the "Company"), and Richard B. Cheney
("Employee").
1. Award.
(a) Shares. Pursuant to the Halliburton Company 1993 Stock and
Long-Term Incentive Plan (the "Plan"), 100,000 shares (the "Restricted Shares")
of the Company's common stock, par value $2.50 per share ("Stock"), shall be
issued as hereinafter provided in Employee's name subject to certain
restrictions thereon.
(b) Issuance of Restricted Shares. The Restricted Shares shall
be issued upon acceptance hereof by Employee and upon satisfaction of the
conditions of this Agreement.
(c) Plan Incorporated. Employee acknowledges receipt of a copy
of the Plan, and agrees that this award of Restricted Shares shall be subject to
all of the terms and conditions set forth in the Plan, including future
amendments thereto, if any, pursuant to the terms thereof, which Plan is
incorporated herein by reference as a part of this Agreement.
2. Restricted Shares. Employee hereby accepts the Restricted Shares
when issued and agrees with respect thereto as follows:
(a) Forfeiture Restrictions. The Restricted Shares may not be
sold, assigned, pledged, exchanged, hypothecated or otherwise transferred,
encumbered or disposed of to the extent then subject to the Forfeiture
Restrictions (as hereinafter defined), and in the event of termination of
Employee's employment with the Company for a reason other than those set forth
in the first sentence of subparagraph (c) of this Paragraph 2, Employee shall,
for no consideration, forfeit to the Company all Restricted Shares to the extent
then subject to the Forfeiture Restrictions. The prohibition against transfer
and the obligation to forfeit and surrender Restricted Shares to the Company
upon termination of employment are herein referred to as "Forfeiture
Restrictions." The Forfeiture Restrictions shall be binding upon and enforceable
against any transferee of Restricted Shares.
(b) Lapse of Forfeiture Restrictions. The Forfeiture
Restrictions shall lapse as to the Restricted Shares in accordance with the
following schedule provided that Employee has been continuously employed by the
Company from the date of this Agreement through the lapse date:
Percentage of Total
Number of Restricted Shares
as to Which Forfeiture
Lapse Date Restrictions Lapse
First Anniversary of the
date of this Agreement 12.5%
Second Anniversary of the
date of this Agreement 12.5%
Third Anniversary of the
date of this Agreement 12.5%
Fourth Anniversary of the
date of this Agreement 12.5%
Fifth Anniversary of the
date of this Agreement 12.5%
Sixth Anniversary of the
date of this Agreement 12.5%
Seventh Anniversary of the
date of this Agreement 12.5%
Eighth Anniversary of the
date of this Agreement 12.5%
(c) Notwithstanding the provisions of subparagraph (b) of
Paragraph 2, the Forfeiture Restrictions shall lapse as to all of the Restricted
Shares on the earlier of (i) the occurrence of a Corporate Change (as such term
is defined in the Plan), or (ii) the date Employee's employment with the Company
is terminated by reason of death, disability (disability being defined as being
physically or mentally incapable of performing Employee's usual duties as an
employee, with such condition likely to remain continuously and permanently, as
determined by the Committee which administers the Plan (the "Committee")),
2
retirement on or after age sixty-two or retirement prior to age sixty-two with
consent of the Committee, or (iii) involuntary termination by the Company other
than for Cause or (iv) Employee's termination of his employment with the Company
(y) because of a material breach by the Company of any material provision of any
employment agreement between the Company and Employee which remains uncorrected
for thirty (30) days following written notice of such breach by Employee to the
Company or (z) within six (6) months of a material reduction in Employee's rank
or responsibilities with the Company. For purposes of this Agreement, the term
"Cause" shall mean any of (i) Employee's gross negligence or willful misconduct
in the performance of the duties and services required of Employee pursuant to
this Agreement, (ii) Employee's final conviction of a felony; or (iii)
Employee's material breach of any material provision of this Agreement which
remains uncorrected for thirty (30) days following written notice to Employee by
the Company of such breach.
(d) Certificates. A certificate evidencing the Restricted Shares
shall be issued by the Company in Employee's name, or at the option of the
Company, in the name of a nominee of the Company, pursuant to which Employee
shall have voting rights and shall be entitled to receive all dividends unless
and until the Restricted Shares are forfeited pursuant to the provisions of this
Agreement. The certificate shall bear a legend evidencing the nature of the
Restricted Shares, and the Company may cause the certificate to be delivered
upon issuance to the Secretary of the Company or to such other depository as may
be designated by the Company as a depository for safekeeping until the
forfeiture occurs or the Forfeiture Restrictions lapse pursuant to the terms of
the Plan and this award. Upon request of the Committee or its delegate, Employee
shall deliver to the Company a stock power, endorsed in blank, relating to the
Restricted Shares then subject to the Forfeiture Restrictions. Upon the lapse of
the Forfeiture Restrictions without forfeiture, the Company shall cause a new
certificate or certificates to be issued without legend in the name of Employee
for the shares upon which Forfeiture Restrictions lapsed. Notwithstanding any
other provisions of this Agreement, the issuance or delivery of any shares of
Stock (whether subject to restrictions or unrestricted) may be postponed for
such period as may be required to comply with applicable requirements of any
national securities exchange or any requirements under any law or regulation
applicable to the issuance or delivery of such shares. The Company shall not be
obligated to issue or deliver any shares of Stock if the issuance or delivery
thereof shall constitute a violation of any provision of any law or of any
regulation of any governmental authority or any national securities exchange.
3. Withholding of Tax. To the extent that the receipt of the Restricted
Shares or the lapse of any Forfeiture Restrictions results in income to Employee
for federal or state income tax purposes, Employee shall deliver to the Company
at the time of such receipt or lapse, as the case may be, such amount of money
or shares of unrestricted Stock as the Company may require to meet its
3
withholding obligation under applicable tax laws or regulations, and, if
Employee fails to do so, the Company is authorized to withhold from any cash or
Stock remuneration then or thereafter payable to Employee any tax required to be
withheld by reason of such resulting compensation income.
4. Status of Stock. Employee agrees that the Restricted Shares will not
be sold or otherwise disposed of in any manner which would constitute a
violation of any applicable federal or state securities laws. Employee also
agrees (i) that the certificates representing the Restricted Shares may bear
such legend or legends as the Company deems appropriate in order to assure
compliance with applicable securities laws, (ii) that the Company may refuse to
register the transfer of the Restricted Shares on the stock transfer records of
the Company if such proposed transfer would be in the opinion of counsel
satisfactory to the Company constitute a violation of any applicable securities
law and (iii) that the Company may give related instructions to its transfer
agent, if any, to stop registration of the transfer of the Restricted Shares. If
Employee desires to sell any shares of Common Stock acquired pursuant to the
provisions of this Agreement upon which restrictions have theretofore lapsed and
if such shares may not be sold on the open market without registration pursuant
to applicable securities laws, then the Company shall, within five (5) days
after notice from the Employee indicating his intention to sell such shares and
the number of shares to be sold, purchase for cash such shares at a price per
share based on the closing sales price for shares of Common Stock traded on the
New York Stock Exchange on the date of receipt by the Company of said notice.
5. Employment Relationship. For purposes of this Agreement, Employee
shall be considered to be in the employment of the Company as long as Employee
remains an employee of either the Company, any successor corporation or a parent
or subsidiary corporation (as defined in section 424 of the Code) of the Company
or any successor corporation. Any question as to whether and when there has been
a termination of such employment, and the cause of such termination, shall be
determined by the Committee, and its determination shall be final.
6. Committee's Powers. No provision contained in this Agreement shall
in any way terminate, modify or alter, or be construed or interpreted as
terminating, modifying or altering any of the powers, rights or authority vested
in the Committee or, to the extent delegated, in its delegate pursuant to the
terms of the Plan or resolutions adopted in furtherance of the Plan, including,
without limitation, the right to make certain determinations and elections with
respect to the Restricted Shares.
7. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of any successors to the Company and all persons lawfully claiming
under Employee.
4
8. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas, excluding any conflict-of-law
rule or principle that might refer to the laws of another State or country.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by an officer thereunto duly authorized, and Employee has executed this
Agreement, all as of the date first above written.
HALLIBURTON COMPANY
By:------------------------------
Thomas H. Cruikshank
Chairman of the Board and
Chief Executive Officer
------------------------------
Richard. B. Cheney
Employee
5
Please Check Appropriate Item (One of the boxes must be checked):
--- I do not desire the alternative tax treatment provided for
--- in the Internal Revenue Code Section 83(b).
---* I do desire the alternative tax treatment provided for in
--- Internal Revenue Code Section 83(b) and desire that forms
for such purpose be forwarded to me.
* I acknowledge that the Company has suggested that before this block is
checked that I check with a tax consultant of my choice.
Please furnish the following information for shareholder records:
- ---------------------------- ------------------------
(Given name and initial must be used Social Security Number
for stock registry) (if applicable)
- ---------------------------- ------------------------
Birth Date
Month/Day/Year
- ---------------------------- ------------------------
Name of Employer
- ---------------------------- ------------------------
Address (Zip Code) Day phone number
United States Citizen: Yes No___
PROMPTLY NOTIFY THIS OFFICE OF ANY CHANGE IN ADDRESS.
6
HALLIBURTON COMPANY
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE
The calculation below for earnings per share of the $2.50 par value Common
Stock of the Company on a primary and fully diluted basis for the three and
nine months ended September 30, 1995 and 1994, is submitted in accordance with
Regulation S-K item 601 (b) (11).
Three Months Nine Months
Ended September 30 Ended September 30
---------------------------- ----------------------------
1995 1994 1995 1994
----------- ----------- ------------ -----------
Millions of dollars except per share data Primary:
Primary:
Net income (loss) $ 1.1 $ 51.7 $ 96.4 $ 50.3
Average number of common and common share
equivalents outstanding 114.6 114.2 114.4 114.2
Primary net income (loss) per share $ 0.01 $ 0.45 $ 0.84 $ 0.44
Fully Diluted:
Net income (loss) $ 1.1 $ 51.7 $ 96.4 $ 50.3
Add after-tax interest expense applicable to
Zero Coupon Convertible Subordinated
Debentures due 2006 2.3 3.3 9.2 9.6
----------- ----------- ------------ -----------
Adjusted net income (loss) $ 3.4 $ 55.0 $ 105.6 $ 59.9
Adjusted average number of shares outstanding 118.0 119.1 119.0 119.1
Fully diluted earnings (loss) per share $ 0.03 $ 0.46 $ 0.89 $ 0.50
The foregoing computations do not reflect any significant potentially dilutive
effect the Company's Preferred Stock Purchase Rights Plan could have in the
event such Rights become exercisable and any shares of either Series A Junior
Participating Preferred Stock or Common Stock of the Company are issued upon
the exercise of such Rights.
5
1,000,000
9-MOS
DEC-31-1995
JUN-30-1995
SEP-30-1995
71
0
1386
38
277
1894
3329
2254
3758
1002
232
298
0
0
1671
3758
0
4161
0
3779
112
0
40
255
92
162
(66)
0
0
96
0.84
0
