PROXY STATEMENT/PROSPECTUS
Filed pursuant to Rule 424(b)(3)
SEC File No. 333-65266
PROSPECTUS
OF
HALLIBURTON COMPANY
PROXY STATEMENT
OF
MAGIC EARTH, INC.
This proxy statement/prospectus relates to the proposed merger of
Halliburton MS, Inc., a Delaware corporation and a wholly owned subsidiary of
Dresser Industries, Inc., a Delaware corporation with and into Magic Earth,
Inc., a Delaware corporation. An Agreement and Plan of Merger among
Halliburton Company, a Delaware corporation and the parent company of Dresser;
Dresser; Halliburton MS, Inc. and Magic Earth was entered into on April 29,
2001.
As a result of the merger:
(i) each common share, par value $.01 per share, of Magic Earth outstanding
immediately before the effective time of the merger, other than shares
of Magic Earth common stock held directly or indirectly by Magic Earth
and dissenting shares, will be converted into shares of common stock,
par value $2.50 per share, of Halliburton;
(ii) the number of shares of Halliburton common stock to be issued in the
aggregate for all of the issued and outstanding common stock of Magic
Earth will be determined by dividing one hundred million dollars
($100,000,000.00), which is the valuation for Magic Earth agreed to in
the merger agreement, by the average closing price of Halliburton
common stock for composite New York Stock Exchange regular trading as
of 4:00 p.m. New York time for each of the thirty (30) trading days
before the merger and then rounding this number up to the nearest
whole share. The day of the merger is the date the conditions to
complete the merger are satisfied and a certificate of merger is filed
with the Delaware Secretary of State. The numerator of one hundred
million dollars ($100,000,000.00) will be reduced, dollar for dollar,
but only if and then only to the extent that Magic Earth's net equity
decreases by more than four million dollars ($4,000,000.00) between
January 1, 2001 and the date of the closing balance sheet;
(iii) the aggregate number of shares of Halliburton common stock determined
in paragraph (ii) will be divided by the number of shares of Magic
Earth common stock that are issued and outstanding on the effective
date of the merger to determine the number of shares of Halliburton
common stock to be issued for each share of Magic Earth common stock;
and
(iv) Magic Earth will become a wholly owned subsidiary of Dresser.
If there is no adjustment to the merger consideration of $100,000,000.00
due to a decrease in Magic Earth's net equity of more than $4,000,000.00, you
will receive $919.96 worth of Halliburton common stock, based on the average
closing price of Halliburton common stock for composite New York Stock
Exchange regular trading as of 4:00 p.m. New York time for each of the thirty
(30) trading days before the merger, for each share of Magic Earth common
stock you own. If the merger consideration is reduced because the Magic Earth
net equity decreases by more than $4,000,000.00, the value of the Halliburton
common stock you will receive based on the formula described above will be
less than $919.96. Please see the table on page 20 for examples of the number
of shares you will receive assuming different average closing prices and
different amounts of merger consideration.
This proxy statement/prospectus is being furnished to holders of Magic
Earth common stock in connection with a request that they sign a consent in
lieu of special meeting of stockholders of Magic Earth dated November 20,
2001. The consent in lieu of special meeting if signed on behalf of
stockholders holding 60% of the common stock of Magic Earth will result in
approval of the merger agreement by the stockholders of Magic Earth. This
proxy statement/prospectus and the consent in lieu of special meeting are
being mailed to stockholders of Magic Earth on or about October 22, 2001.
Because the number of shares of Halliburton common stock to be exchanged
for shares of Magic Earth common stock will not be determined until after the
NYSE closes on the day before the merger, you will not know the number of
shares you will receive at the time you consent to the merger.
This proxy statement/prospectus also constitutes a prospectus of
Halliburton for 5,000,000 shares of Halliburton common stock that may be
issued pursuant to the merger agreement in exchange for currently outstanding
shares of Magic Earth common stock. The shares of Halliburton common stock
issued pursuant to the merger will be listed on the New York Stock Exchange,
or NYSE. Halliburton's common stock trades under the symbol "HAL".
On October 18, 2001, the closing price of Halliburton common stock as
reported on the NYSE Composite Tape was $23.05.
You should carefully consider the Risk Factors beginning on page 8 of this
proxy statement/prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accurateness of this proxy statement/prospectus. Any
representation to the contrary is a criminal offense.
The date of the proxy statement/prospectus is October 19, 2001.
This proxy statement/prospectus incorporates important business and
financial information about Halliburton that is not included in or delivered
with this document. This information is available without charge upon written
or oral request. You can request this information from Halliburton at
3600 Lincoln Plaza, 500 North Akard Street, Dallas, Texas 75201-3391,
Attention: Investor Relations, Tel: (214) 978-2600. If you would like to
request documents, please do so by November 13, 2001 to receive them before the
date of the consent in lieu of special meeting of Magic Earth stockholders.
TABLE OF CONTENTS
TABLE OF CONTENTS........................................................... i
CONSENT IN LIEU OF SPECIAL MEETING OF STOCKHOLDERS.......................... iv
QUESTIONS AND ANSWERS ABOUT THE MERGER...................................... vi
SUMMARY..................................................................... 1
The Companies.............................................................. 1
Magic Earth Consent in Lieu of Special Meeting............................. 2
The Merger Agreement....................................................... 2
The Recommendation of the Magic Earth Board................................ 2
Halliburton's Plans for Magic Earth........................................ 3
Agreements With Magic Earth Stockholders and Directors..................... 3
Regulatory Approval........................................................ 3
Tax Consequences........................................................... 3
Risk Factors............................................................... 3
Halliburton Common Stock................................................... 4
No Solicitation............................................................ 4
Appraisal Rights........................................................... 4
Shareholders' Agreement.................................................... 4
Securities Laws in General................................................. 4
SUMMARY SELECTED FINANCIAL DATA............................................. 5
Summary Selected Historical Financial Information of Halliburton........... 5
Summary Selected Historical Financial Information of Magic Earth........... 6
Summary Unaudited Pro Forma Combined Financial Information................. 6
Per Share Data............................................................. 7
RISK FACTORS................................................................ 8
Risks Relating to the Merger............................................... 8
The value of the consideration you will receive for your shares of Magic
Earth common stock can vary with changes in the net equity of Magic
Earth.................................................................... 8
The price of the Halliburton common stock you receive may fluctuate
significantly after the merger........................................... 8
The Magic Earth Board of Directors decided not to obtain a fairness
opinion from an independent financial advisor........................... 8
Risks Specific to Halliburton............................................. 8
Demand for Halliburton's services and products depends on oil and gas
industry activity and expenditure levels that are directly affected by
trends in oil and natural gas prices. A prolonged downturn in oil and
gas prices could have a material adverse effect on Halliburton's results
of operations and financial condition. ................................. 8
There are risks to Halliburton's acquisition strategy. If Halliburton is
unable to integrate and manage successfully businesses that it has
acquired and any businesses acquired in the future, its results of
operations and financial condition could be affected. .................. 9
A significant portion of Halliburton's revenue is derived from its non-
U.S. operations, which exposes it to risks inherent in doing business in
each of the more than 120 other countries in which it transacts
business. The occurrence of any of the risks set forth below could have
an adverse effect on its results of operations and financial
condition. ............................................................. 9
Halliburton's ability to compete outside of the United States may be
adversely affected by governmental regulations promulgated in numerous
countries in which it transacts business. If these regulations apply to
Halliburton, they may require it to engage in business practices that
may not be to its benefit. ............................................. 10
i
A sizable portion of Halliburton's consolidated revenues and consolidated
operating expenses are in foreign currencies. As a result, it is subject
to significant foreign exchange risks that could adversely affect its
operations, as well as limit Halliburton's ability to reinvest earnings
from operations in one country to fund the capital needs of its
operations in other countries. ......................................... 10
Halliburton's businesses are subject to a variety of environmental laws
and regulations including those covering hazardous materials. Any
failure on its part to comply with applicable environmental laws and
regulations could have an adverse effect on its financial condition. ... 10
Halliburton and/or its subsidiary Dresser are parties to insurance
litigation, insurance coverage litigation and asbestos claim litigation.
The asbestos claim litigation results from claims that products
manufactured by, or materials used in various construction and
renovation projects of, its subsidiaries contained asbestos, resulting
in injury to the plaintiffs. ........................................... 11
In the United States, environmental laws and regulations typically impose
strict liability. Strict liability means that in some situations
Halliburton could be exposed to liability for cleanup costs and other
damages as a result of its conduct that was lawful at the time it
occurred or conduct of prior operators or other third parties. ......... 11
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS................. 12
BACKGROUND TO AND REASONS FOR THE MERGER................................... 14
THE MAGIC EARTH BOARD'S REASONS FOR RECOMMENDING THE MERGER; RECOMMENDATION
OF THE MAGIC EARTH BOARD.................................................. 17
THE MERGER AGREEMENT....................................................... 18
General................................................................... 18
Exchange of Shares........................................................ 18
Fractional Shares......................................................... 21
Surrender of Shares Of Magic Earth Common Stock; Stock Transfer Books..... 21
No Dividends or Distributions............................................. 21
Lost Certificates......................................................... 21
No Termination Rights..................................................... 21
Appraisal Rights.......................................................... 21
Representations and Warranties............................................ 22
Covenants................................................................. 23
Access to Information..................................................... 24
No Solicitation........................................................... 24
Post Merger Matters....................................................... 25
Conditions to Closing..................................................... 25
Time of the Merger........................................................ 26
Direct Registration of Halliburton Common Stock........................... 26
Method of Selling Halliburton Common Stock................................ 26
AGREEMENTS WITH MAGIC EARTH STOCKHOLDERS AND DIRECTORS..................... 27
Magic Earth Stockholders.................................................. 27
Magic Earth Officers and Directors........................................ 27
FEDERAL TAX CONSEQUENCES OF THE MERGER..................................... 27
ACCOUNTING TREATMENT....................................................... 29
APPRAISAL RIGHTS........................................................... 29
SHAREHOLDERS' AGREEMENT.................................................... 30
REGULATORY APPROVAL........................................................ 31
MAGIC EARTH CONSENT IN LIEU OF SPECIAL MEETING............................. 31
INFORMATION REGARDING HALLIBURTON COMPANY.................................. 32
HALLIBURTON COMPANY SELECTED FINANCIAL DATA................................ 35
MARKET PRICE AND DIVIDEND INFORMATION...................................... 37
HALLIBURTON COMMON STOCK PERFORMANCE....................................... 38
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF MAGIC
EARTH..................................................................... 39
DESCRIPTION OF HALLIBURTON COMMON STOCK.................................... 40
COMPARATIVE RIGHTS OF STOCKHOLDERS......................................... 44
LEGAL MATTERS.............................................................. 49
EXPERTS.................................................................... 49
ii
WHERE YOU CAN FIND MORE INFORMATION......................................... 49
APPENDIX A.................................................................. A-1
AGREEMENT AND PLAN OF MERGER
APPENDIX B.................................................................. B-1
DELAWARE GENERAL CORPORATION LAW
iii
MAGIC EARTH, INC.
2000 West Sam Houston Parkway South, Suite 750
Houston, Texas 77042
CONSENT IN LIEU OF SPECIAL MEETING OF STOCKHOLDERS
DATED NOVEMBER 20, 2001
To the Stockholders of Magic Earth, Inc.:
A consent in lieu of special meeting of stockholders of Magic Earth, Inc., a
Delaware corporation, dated November 20, 2001 accompanies this letter. If you
sign the consent, you will approve an Agreement and Plan of Merger dated as of
April 29, 2001, among Halliburton Company, a Delaware corporation; Dresser
Industries, Inc., a Delaware corporation and a wholly owned subsidiary of
Halliburton; Halliburton MS, Inc., a Delaware corporation and a wholly owned
subsidiary of Dresser; and Magic Earth. Pursuant to the merger agreement,
Halliburton MS would be merged with and into Magic Earth. If the merger is
concluded:
(a) Magic Earth will be the corporation surviving the merger;
(b) each share of the common stock, par value $.01 per share, of Magic
Earth issued and outstanding immediately before the consummation of
the merger, other than shares of Magic Earth common stock held
directly or indirectly by Magic Earth and dissenting shares, will be
converted into shares of the common stock, par value $2.50 per share,
of Halliburton Company, the parent company of Dresser;
(c) the number of shares of Halliburton common stock to be issued in the
aggregate for all of the outstanding common stock of Magic Earth will
be determined by dividing one hundred million dollars
($100,000,000.00), which is the valuation for Magic Earth agreed to in
the merger agreement, by the average closing price of Halliburton
common stock for composite New York Stock Exchange regular trading as
of 4:00 p.m. New York time for each of the thirty (30) trading days
before the merger and then rounding this number up to the nearest
whole share. The day of the merger is the date the conditions to
complete the merger are satisfied and a certificate of merger is filed
with the Delaware Secretary of State. The numerator of one hundred
million dollars ($100,000,000.00) will be reduced, dollar for dollar,
but only if and then only to the extent that Magic Earth's net equity
decreases by more than four million dollars ($4,000,000.00) between
January 1, 2001 and the date of the closing balance sheet;
(d) the aggregate number of shares of Halliburton common stock determined
in paragraph (c) will be divided by the number of shares of Magic
Earth common stock that are issued and outstanding on the effective
date of the merger to determine the number of shares of Halliburton
common stock to be issued for each share of Magic Earth common stock,
all outstanding options and warrants to purchase shares of Magic Earth
common stock having been exercised or canceled; and
(e) Magic Earth will become a wholly owned subsidiary of Dresser.
In the materials accompanying this letter, you will find a proxy
statement/prospectus. The proxy statement/prospectus more fully describes the
proposed merger and includes information about Magic Earth and Halliburton.
Stockholders of Magic Earth are entitled to appraisal rights under the
Delaware General Corporation Law, or DGCL, as a result of the merger, but these
appraisal rights may be impacted by the Shareholders' Agreement dated January
31, 2001 entered into by all of the stockholders of Magic Earth. See "Appraisal
Rights" and "Shareholders' Agreement" in the proxy statement/prospectus. The
DGCL provisions on appraisal rights are attached as Appendix B.
iv
The Magic Earth Board of Directors has unanimously approved the merger
agreement and the related transactions and has determined that they are fair to
and in the best interest of Magic Earth. After careful consideration, your
Board of Directors unanimously recommends that stockholders vote for approval
of the merger agreement by signing the consent in lieu of special meeting.
All stockholders are being sent the consent in lieu of special meeting. The
consent is dated November 20, 2001. If stockholders holding 60% of the common
stock of Magic Earth sign the consent, the merger will be approved. The merger
will then be completed as soon as practicable after that date. If you approve
the merger, please sign, date and return the consent in lieu of special meeting
in the enclosed envelope.
By Order of the Board of Directors,
/s/ Yin L. Cheung
Yin L. Cheung
Secretary
Houston, Texas
October 19, 2001
v
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: Why are the companies proposing the merger?
A: The parties are proposing the merger to maximize their combined performance.
The intent is to take advantage of Magic Earth's strengths in developing volume
visual interpretation technology and leveraging the global strengths of
Landmark in integrated exploration and production software information systems
and professional services.
Q: Are any approvals necessary to complete the merger?
A: Yes. The merger has to be approved by the Magic Earth stockholders. A
consent in lieu of special meeting of Magic Earth stockholders dated November
20, 2001 is being sent to Magic Earth stockholders. Stockholders holding 60% of
the common stock of Magic Earth have to approve the merger for it to be
concluded. Stockholders holding 45.8% of the common stock of Magic Earth are
parties to the merger agreement and have agreed to approve the merger.
Q: All the stockholders of Magic Earth signed a Shareholders' Agreement dated
January 31, 2001. Does that agreement have any significance here?
A: Yes. The Magic Earth stockholders have contractually agreed with each other
to take specified actions regarding the common stock of Magic Earth they own.
The agreement restricts your ability to transfer the shares you own. To approve
the merger, the "transfer group" stockholders owning at least 60% of the common
stock of Magic Earth have to approve the merger. Should this occur, the merger
agreement provides that as a condition to close, the members of the transfer
group have to exercise their drag-along rights as provided in the Shareholders'
Agreement. This will require the other stockholders to transfer their shares
for the exchange consideration.
Q: What will I receive in the merger?
A: You will receive shares of Halliburton common stock for the shares of Magic
Earth common stock you own determined as follows:
. The number of shares of Halliburton common stock received in the
aggregate for all of the issued and outstanding common stock of Magic
Earth will be determined by dividing:
- $100,000,000.00, by
- the average closing price of Halliburton common stock for composite
New York Stock Exchange regular trading as of 4:00 p.m. New York time
for each of the thirty (30) trading days before the merger.
This number will then be rounded up to the nearest whole share.
The numerator of $100,000,000.00 will be reduced, dollar for dollar, but
only if and then only to the extent that Magic Earth's net equity
decreases by more than $4,000,000.00 between January 1, 2001 and the date
of the closing balance sheet; and
. The aggregate number of shares of Halliburton common stock determined as
described in the bullet immediately above, will be divided by the number
of shares of Magic Earth common stock that are issued and outstanding on
the effective date of the merger to determine the number of shares of
Halliburton common stock to be issued for each share of Magic Earth
common stock.
This calculation is illustrated below:
$100,000,000.00* /
30 day average trading closing price of Halliburton common stock before the
merger
=
Aggregate shares of Halliburton common stock to be issued /
Issued and outstanding shares of Magic Earth common stock on the merger
date
=
Number of shares of Halliburton common stock to be received for each share
of Magic Earth common stock
*Subject to adjustment as described above.
vi
Q: Will Halliburton issue fractional shares?
A: No. Halliburton will not issue fractional shares of common stock. Instead
of any fractional shares, Magic Earth stockholders will receive cash based on
the price of Halliburton common stock used in calculating the exchange ratio.
Q: Can the value of the consideration fluctuate before and after the merger?
A: Yes. The $100 million amount in the formula on the prior page will be
reduced for decreases in Magic Earth's net equity of more than $4,000,000.00
between January 1, 2001 and the date of the closing balance sheet. Also, the
market price of Halliburton common stock is subject to fluctuation. As a
result, the market value of the shares of Halliburton common stock that Magic
Earth stockholders will receive in the merger may increase or decrease
following the merger. Halliburton common stock is traded on the NYSE under the
symbol "HAL". On October 18, 2001, Halliburton's common stock closed at $23.05
per share. We urge you to obtain current market quotations for Halliburton
common stock.
Q: When will the merger be completed?
A: We are working to complete the merger as quickly as possible. We hope to
complete the merger within a couple of days of November 20, 2001, which is the
date of the consent in lieu of special meeting.
Q: Should Magic Earth stockholders send in their stock certificates now?
A: No. If the Magic Earth stockholders approve the merger, a transmittal
letter will be sent to you after the merger is concluded. The transmittal
letter will explain how to exchange your shares of Magic Earth common stock
for Halliburton common stock.
Q: How do I approve the merger?
A: To approve the merger, sign the consent in lieu of special meeting and
return it in the enclosed return envelope as soon as possible.
Q: Are there risks I should consider in deciding whether to vote for the
merger?
A: Yes. Halliburton has described under the heading "Risk Factors" beginning
on page 8 of this proxy statement/prospectus a number of risk factors that you
should carefully consider before voting.
Q: Will I recognize a gain or loss on the transaction?
A: Dresser believes that Magic Earth's stockholders should generally not
recognize gain or loss for United States federal income tax purposes upon
receipt of Halliburton common stock in the merger. However, Magic Earth
stockholders will recognize gain or loss with respect to any cash received
instead of fractional shares. You are urged to consult your tax advisor to
determine your particular tax consequences.
For a more complete description of tax consequences of the merger, see the
section entitled "Federal Tax Consequences of the Merger" on page 27 .
Q: Am I entitled to appraisal rights?
A: Holders of Magic Earth common stock are entitled to appraisal rights under
Delaware law. However, if the merger is approved by at least 60% of the shares
of Magic Earth common stock, the Magic Earth Shareholders' Agreement will
contractually obligate you to transfer your shares for the merger
consideration. If you have any questions about your rights, you should contact
your attorney. For a more complete description of your appraisal rights, see
the sections entitled "Appraisal Rights" on pages 4 and 29 and Appendix B. For
a more complete description of the Shareholders' Agreement, see the section
entitled "Shareholders' Agreement" on pages 4 and 30.
Q: Who can help answer my questions?
A: If you have any questions about the merger or if you need additional copies
of this proxy statement/prospectus, you should contact:
Magic Earth, Inc.
c/o Shook, Hardy & Bacon L.L.P.
Chase Tower
600 Travis, Suite 1600
Houston, Texas 77002
(713) 227-8008
Attn.: William P. Jensen
vii
SUMMARY
This Summary highlights selected information from this document and may not
contain all of the information that is important to you. To fully understand
the merger and for a more complete description of the legal terms of the
merger, you should carefully read this entire document and the documents which
are referenced in this document. Please read "Where You Can Find More
Information" on page 49. The merger agreement is attached as Appendix A to this
proxy statement/prospectus. You are encouraged to read the merger agreement.
The page references in parenthesis will direct you to a more complete
description of the topics presented in this summary.
The Companies
Halliburton Company (pages 32 through 38)
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
(214) 978-2600
General. Halliburton's predecessor was established in 1919. Halliburton
provides energy services and engineering and construction services for the
energy industry. Halliburton's revenues for the year ended December 31, 2000
were $11.9 billion. At September 24, 2001, its market capitalization was
approximately $9.1 billion. At June 30, 2001, Halliburton employed
approximately 88,000 people.
Description of Services and Products. Halliburton has two business segments:
. The Energy Services Group; and
. The Engineering and Construction Group.
The Energy Services Group segment provides a wide range of services,
products and integrated solutions to customers involved in oil and natural gas
exploration and production.
The Engineering and Construction Group provides a wide range of services to
energy and industrial customers and government entities worldwide.
Halliburton completed the sale of its Dresser Equipment Group on April 10,
2001. This former segment designed, manufactured and marketed highly engineered
products and systems for oil and gas producers, transporters, processors,
distributors and users throughout the world.
Magic Earth, Inc.
2000 West Sam Houston Parkway South
Suite 750
Houston, Texas 77042
(832) 200-4700
General. Magic Earth was formed as a Delaware limited liability company in
September 1999 and converted into a Delaware corporation in January 2001. Its
Research and Development offices are located in Houston and Austin, Texas, and
it has a wholly owned subsidiary, Magic Earth Ltd., located in London, England,
which markets products and services in Europe, Africa and the Middle East.
Magic Earth specializes in the development and marketing of volume visual
interpretation technology that enables users to analyze massive datasets in
real-time. Magic Earth's primary product, GeoProbe(R), is specifically designed
for the analysis of large datasets in the oil and gas industry. In addition to
the GeoProbe(R) software, Magic Earth offers a comprehensive set of products
and services aimed at improving clients' success in exploration and production
worldwide in the oil and gas industry.
Description of Services and Products. Magic Earth's products and services
include:
. GeoProbe(R) software--volume visual interpretation software for use in
the oil and gas industry;
. Visualization centers--an immersive environment designed for viewing and
interpreting 3-dimensional seismic data; and
. Consulting services--for oil and gas exploration and production projects
worldwide.
1
Magic Earth Consent in Lieu of Special Meeting (page 31)
Purpose. Accompanying this proxy statement/prospectus is a consent in lieu
of special meeting of the stockholders of Magic Earth. By signing the consent,
a stockholder of Magic Earth approves the merger agreement recommended by the
Magic Earth Board of Directors.
Date of the Consent in Lieu of Special Meeting. The consent is dated
November 20, 2001. The law requires that the proxy statement/prospectus be sent
to the stockholders of Magic Earth at least 20 business days before the
effective date of the consent.
Stockholders Entitled to Vote; Votes Required. All holders of record of
Magic Earth common stock will be sent the consent. As of October 19, 2001, the
date of this proxy statement/prospectus, there are 100,000 shares of Magic
Earth common stock issued and outstanding. Each share of Magic Earth common
stock entitles the holder to one vote on each matter submitted for stockholder
approval. See "Security Ownership by Certain Beneficial Owners and Management
of Magic Earth" for information regarding persons known by management of Magic
Earth to be the beneficial owners of more than 5% of the outstanding Magic
Earth common stock.
Approval of the merger agreement requires that consents be obtained from
stockholders owning at least 60% of the issued and outstanding shares of Magic
Earth common stock. Stockholders owning approximately 45.8% of the issued and
outstanding shares of Magic Earth common stock have signed the merger agreement
and agreed to approve the merger agreement.
The Merger Agreement (pages 18 through 27)
Halliburton, Dresser, Halliburton MS and Magic Earth have entered into a
merger agreement that provides for the merger of Magic Earth and Halliburton
MS, Dresser's wholly owned subsidiary. As a result of the merger, Magic Earth
will become Dresser's wholly owned subsidiary.
Each outstanding share of Magic Earth common stock will be canceled in the
merger. You will receive shares of Halliburton common stock for the Magic Earth
common stock you own. The aggregate merger consideration is $100 million. The
amount of consideration Magic Earth stockholders will receive in the merger
will decrease, but only if and then only to the extent that there is a decrease
of more than $4 million in the net equity of Magic Earth between January 1,
2001 and the date of the closing balance sheet.
For further information regarding the exchange ratio please see "The Merger
Agreement--Exchange of Shares."
The Recommendation of the Magic Earth Board (page 17)
The Magic Earth board of directors is of the opinion that the terms of the
merger are fair and reasonable to, and in the best interests of, Magic Earth.
The Magic Earth board of directors considered the following factors as the most
important to its opinion:
- the board's view that a business combination of Magic Earth and Landmark
Graphics Corporation will permit Magic Earth to develop its exploration
and production software information systems more rapidly;
- the likelihood of the merger being concluded;
- the terms of the merger; and
- the fact that the transaction offers Magic Earth stockholders increased
liquidity and an opportunity to hold an equity interest in the combined
businesses.
Accordingly, the Magic Earth Board unanimously recommends that the Magic
Earth stockholders approve the merger.
The Magic Earth Board did not obtain an independent fairness opinion nor did
it retain the advice of an independent financial advisor in its determination
that the terms of the merger are fair and reasonable. The Magic Earth Board
feels that its knowledge of the operations of Magic Earth and the business
environment in which it operates is sufficient to allow the Magic Earth Board
to accurately evaluate the fairness of the merger without the assistance of
such outside advisors which would reduce the value of the merger to the Magic
Earth stockholders through the imposition of service fees.
2
Halliburton's Plans for Magic Earth
If Dresser acquires all of the outstanding common stock of Magic Earth,
Halliburton plans to operate Magic Earth as a sister corporation of Landmark.
Landmark is a part of Halliburton's Energy Services Group. Landmark provides
integrated exploration and production software information systems and
professional services. The intent is to maximize the combined performance of
Magic Earth and Landmark by:
- retaining the strengths of Magic Earth; and
- leveraging the global strengths of Landmark in integrated exploration
and production software information systems and professional services.
Halliburton expects the acquisition of Magic Earth will aid Halliburton in
its desire to become the leader in the provision of integrated exploration and
production software information systems and professional services.
Agreements With Magic Earth Stockholders and Directors (page 27)
If you are a Magic Earth stockholder, you should be aware that some of the
directors and stockholders of Magic Earth may have interests in concluding the
merger that are different from yours and from their interests as Magic Earth
stockholders. You should keep this in mind in considering the recommendation of
the Magic Earth board of directors and in determining whether or not to vote
for the merger. These interests include the following:
Employment Agreements. As part of the merger agreement, Landmark Graphics
will enter into employment agreements with Michael Zeitlin and Yin Cheung.
These agreements provide for their employment by Magic Earth or one of its
affiliates after the merger is effective.
License Agreements. As part of the merger agreement, Magic Earth will enter
into software licenses with each of Messrs. Zeitlin and Cheung giving them
the right to use the software owned by Magic Earth in any industry other
than the oil and gas and the engineering and construction industries.
Regulatory Approval (page 31)
On May 16, 2001, Halliburton and Magic Earth each filed under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976 a premerger notification with
the Department of Justice and the Federal Trade Commission regarding the
merger. The statutory waiting period for the filing has expired.
Tax Consequences (pages 27 and 28)
Dresser believes that the issuance of Halliburton's common stock in exchange
for Magic Earth common stock under the merger agreement will not be taxable for
United States federal income tax purposes to Magic Earth stockholders, except
with respect to cash received in lieu of a fractional share. For information on
federal income taxation regarding the merger, see "Federal Tax Consequences of
the Merger".
The tax consequences of the merger for you may depend on the facts of your
own situation. You should consult your tax advisors for a full understanding of
the tax consequences of the merger for you.
Risk Factors (pages 8 through 11)
There are risk factors that you should consider in evaluating whether to
accept the merger. These risk factors include:
- that the aggregate merger consideration for Magic Earth will be reduced
if the net equity of Magic Earth decreases by more than $4 million
between January 1, 2001 and the date of the closing balance sheet;
- that the market value of shares of Halliburton's common stock, when
issued, may fluctuate significantly after the merger is completed;
- that Halliburton's business is heavily dependent upon the capital
budgets of its customers, including the major and independent oil and
gas companies and national oil companies, which are, in turn, heavily
dependent upon volatile oil and gas commodity prices;
3
- that one of Halliburton's business strategies is to acquire operations
and assets that are complementary to Halliburton's existing businesses
and that acquiring these operations and assets involves financial,
operational and legal risks;
- that Halliburton's operations in countries other than the United States
accounted for approximately 70% and 66% of Halliburton's consolidated
revenues during 1999 and 2000, respectively. These risks, include:
- the risks of expropriation, confiscatory taxation and nationalization,
- political and economic instability,
- armed conflict and civil disturbance,
- currency fluctuations, devaluations and conversion restrictions,
- adverse tax policies, and
- governmental activities that may limit or disrupt markets, restrict
payments or the movement of funds or result in the deprivation of
contract rights;
- significant foreign exchange risks arising from Halliburton's
international operations because a substantial portion of its
consolidated revenues (as well as the related consolidated operating
expenses) are in foreign currencies;
- the outcome of insurance litigation, insurance coverage litigation and
asbestos litigation with which Halliburton or Dresser are involved and
the perception of the investing public about the exposure and the effect
on Halliburton's stock price; and
- environmental risks entailed in Halliburton's well service operations
which routinely involve the handling of significant amounts of waste
materials, some of which are classified as hazardous substances.
Halliburton Common Stock
Halliburton's common stock that will be issued as a result of the merger
will be listed on the New York Stock Exchange, Inc., subject to official notice
of issuance. On April 27, 2001, the last full trading day prior to the public
announcement of the proposed merger, the last reported sale price of
Halliburton common stock on the NYSE Composite Tape was $42.11 per share.
No Solicitation (pages 24 and 25)
Magic Earth has agreed in the merger agreement that it will not encourage or
solicit bids competing with Halliburton's bid. However, the Magic Earth Board
will consider unsolicited bids if required to satisfy the Board's fiduciary
duty to Magic Earth's stockholders.
Appraisal Rights (pages 29 and 30)
Delaware law provides dissenting stockholders with appraisal rights. These
rights may be impacted by the Shareholders' Agreement.
Shareholders' Agreement (pages 30 and 31)
The stockholders of Magic Earth are all parties to a Shareholders' Agreement
dated January 31, 2001. The agreement affects approval of the merger and
appraisal rights available under Delaware law.
Securities Laws in General
The merger is subject to the Securities Act of 1933 (the "Securities Act")
and some of the antifraud provisions of the Exchange Act.
Halliburton has filed a registration statement (of which this proxy
statement/prospectus constitutes a part) relating to the offer, sale and
delivery of Halliburton's common stock issuable pursuant to the Securities Act
with the Securities and Exchange Commission. That registration statement has
become effective under the Securities Act. As a result, the shares of
Halliburton common stock that you receive will be freely transferable in the
United States.
4
SUMMARY SELECTED FINANCIAL DATA
Summary Selected Historical Financial Information of Halliburton
The following summary financial information should be read together with:
. Halliburton's historical financial statements and the related notes
contained in its annual report on Form 10-K for the year ended December
31, 2000 and its quarterly report on Form 10-Q for the quarter ended
June 30, 2001; and
. in the annual reports and other information that Halliburton has
previously filed with the Securities and Exchange Commission.
Please read "Where You Can Find More Information" on page 49. The extracts
from Halliburton's consolidated financial statements and other information
about Halliburton appearing in this document have been prepared in accordance
with generally accepted accounting principles.
(Unaudited)
Millions of dollars and Six Months
shares Years ended December 31 Ended June 30
except per share and number -------------------------------------------- --------------
of employees 1996 1997 1998 1999 2000 2000 2001
--------------------------- ------- ------- ------- ------- ------- ------ ------
Operating results
Net revenues
Energy Services Group..... $ 5,936 $ 7,830 $ 8,001 $ 5,921 $ 6,776 $3,038 $4,245
Engineering and
Construction Group....... 5,300 5,668 6,503 6,392 5,168 2,689 2,238
------- ------- ------- ------- ------- ------ ------
Total revenues.......... $11,236 $13,498 $14,504 $12,313 $11,944 $5,727 $6,483
======= ======= ======= ======= ======= ====== ======
Operating income
Energy Services Group..... $ 654 $ 983 $ 981 $ 250 $ 582 $ 162 $ 467
Engineering and
Construction Group....... 178 255 227 175 (42) 79 43
Special charges and
credits (1).............. (86) 11 (959) 47 -- -- --
General corporate......... (72) (71) (79) (71) (78) (34) (40)
------- ------- ------- ------- ------- ------ ------
Total operating income
(1).................... 674 1,178 170 401 462 207 470
Nonoperating income
(expense), net............ (70) (82) (115) (94) (127) (63) (75)
------- ------- ------- ------- ------- ------ ------
Income from continuing
operations before income
taxes and minority
interest.................. 604 1,096 55 307 335 144 395
Provision for income taxes
(2)....................... (158) (406) (155) (116) (129) (56) (159)
Minority interest in net
income of consolidated
subsidiaries.............. -- (30) (20) (17) (18) (9) (7)
------- ------- ------- ------- ------- ------ ------
Income (loss) from
continuing operations..... $ 446 $ 660 $ (120) $ 174 $ 188 $ 79 $ 229
======= ======= ======= ======= ======= ====== ======
Income (loss) from
discontinued operations... $ 112 $ 112 $ 105 $ 283 $ 313 $ 260 $ 261
======= ======= ======= ======= ======= ====== ======
Net income (loss).......... $ 558 $ 772 $ (15) $ 438 $ 501 $ 339 $ 491
======= ======= ======= ======= ======= ====== ======
Basic income (loss) per
common share
Continuing operations..... $ 1.04 $ 1.53 $ (0.27) $ 0.40 $ 0.42 $ 0.18 $ 0.54
Net income (loss)......... 1.30 1.79 (0.03) 1.00 1.13 0.77 1.15
Diluted income (loss) per
common share
Continuing operations..... 1.03 1.51 (0.27) 0.39 0.42 0.18 0.53
Net income (loss)......... 1.29 1.77 (0.03) 0.99 1.12 0.76 1.14
Cash dividends per share... 0.50 0.50 0.50 0.50 0.50 0.25 0.25
Return on average
shareholders' equity...... 15.25% 19.16% (0.35%) 10.49% 12.20% 7.63% 11.68%
5
(Unaudited)
Millions of dollars and Six Months
shares Years ended December 31 Ended June 30
except per share and ---------------------------------------------- ----------------
number of employees 1996 1997 1998 1999 2000 2000 2001
----------------------- ------- -------- -------- -------- ------- ------- -------
Financial position
Net working capital..... $ 1,501 $ 1,985 $ 2,129 $ 2,329 $ 1,742 $ 2,555 $ 2,503
Total assets............ 8,689 9,657 10,072 9,639 10,103 9,806 10,661
Property, plant and
equipment, net......... 2,047 2,282 2,442 2,390 2,410 2,353 2,483
Long-term debt
(including current
maturities)............ 957 1,303 1,426 1,364 1,057 1,061 1,046
Shareholders' equity.... 3,741 4,317 4,061 4,287 3,928 4,595 4,480
Total capitalization.... 4,828 5,647 5,990 6,590 6,555 6,529 6,243
Shareholders' equity per
share.................. 8.78 9.86 9.23 9.69 9.20 10.33 10.42
Average common shares
outstanding (basic).... 429 431 439 440 442 443 427
Average common shares
outstanding (diluted).. 432 436 439 443 446 447 430
Other financial data
Capital expenditures.... $ (612) $ (804) $ (841) $ (520) $ (578) $ (190) $ (344)
Long-term borrowings
(repayments), net...... 286 285 122 (59) (308) (305) (9)
Depreciation and
amortization expense... 405 465 500 511 503 249 258
Payroll and employee
benefits (3)........... (4,674) (5,479) (5,880) (5,647) (5,260) (2,584) (2,388)
Number of employees (3),
(4).................... 93,000 102,000 107,800 103,000 93,000 95,000 88,000
--------
(1) Operating income includes the following special charges and credits:
1999--$47 million: reversal of a portion of the 1998 special charges.
1998--$959 million: asset related charges ($491 million), personnel
reductions ($234 million), facility consolidations ($124 million), merger
transaction costs ($64 million), and other related costs ($46 million).
1997--$11 million: merger costs ($9 million), write-downs on impaired
assets and early retirement incentives ($10 million), losses from the sale
of assets ($12 million), and gain on extension of joint venture ($42
million).
1996--$86 million: merger costs ($13 million), restructuring, merger and
severance costs ($62 million), and write-off of acquired in-process
research and development costs ($11 million).
(2) Provision for income taxes in 1996 includes tax benefits of $44 million
due to the recognition of net operating loss carryforwards and the
settlement of various issues with the Internal Revenue Service.
(3) Employees of Dresser Equipment Group, which is accounted for as
discontinued operations, are included through December 2000. Employees of
Dresser Equipment Group are excluded from the June 30, 2001 information.
(4) Does not include employees of 50% or less owned affiliated companies.
Summary Selected Historical Financial Information of Magic Earth
Summary selected financial data is not presented for Magic Earth, because
the financial information is not material to Halliburton.
Summary Unaudited Pro Forma Combined Financial Information
Summary unaudited pro forma combined financial information giving effect to
Halliburton's proposed acquisition of Magic Earth is not presented because of
the immaterial effect of the combination on Halliburton's consolidated
financial statements.
6
Per Share Data
Set forth below are the income from continuing operations, cash dividends
and book value per common share data for Halliburton on an historical basis.
Magic Earth data is not presented as the amounts are not considered material to
Halliburton.
The information set forth below should be read in conjunction with the
respective audited and unaudited consolidated financial statements and related
notes of Halliburton.
Halliburton
Six months
Year ended ended
December 31, 2000 June 30, 2001
----------------- -------------
Historical Data per Common Share
Income from continuing operations:
Basic....................................... $0.42 $ 0.54
Diluted..................................... 0.42 0.53
Cash dividends................................ 0.50 0.25
Book value.................................... 9.20 10.42
7
RISK FACTORS
Risks Relating to the Merger
The value of the consideration you will receive for your shares of Magic
Earth common stock can vary with changes in the net equity of Magic Earth.
The number of shares you receive will change if the net equity of Magic
Earth decreases by more than $4 million between January 1, 2001 and the date
of the closing balance sheet. The date of the closing balance sheet is the
fifth day immediately before the date of the merger. The merger agreement
provides that the numerator of $100 million used to calculate the merger
consideration will be decreased dollar for dollar, but only if and then only
to the extent of any decrease in Magic Earth's net equity of more than $4
million.
The price of the Halliburton common stock you receive may fluctuate
significantly after the merger.
The market value of shares of Halliburton common stock may fluctuate
significantly after the merger due to:
. market perception of the industries in which Halliburton is engaged;
. changes in its business, operations or prospects; and
. general market and economic conditions.
The Magic Earth Board of Directors decided not to obtain a fairness opinion
from an independent financial advisor.
The aggregate consideration to be received by you and the other Magic Earth
stockholders upon approval of the merger in exchange for your shares of Magic
Earth common stock was determined by the Magic Earth Board to represent a fair
value for those Magic Earth shares. This determination was based solely upon
the collective knowledge and understanding of Magic Earth's directors
regarding the present and historical operations, financial condition and
market position of Magic Earth in relation to the competitive business
environment in which it operates. In making its determination, the Magic Earth
Board did not employ the services of an independent financial advisor, nor did
it seek any independent or outside counsel. There is no guarantee that had the
Magic Earth Board employed the services of an independent advisor that the
advisor would have made the same determination with regard to the fair value
of the consideration to be received. You should also be aware that some of the
directors of Magic Earth may have interests in concluding the merger that are
different from yours and from their interests as directors of Magic Earth. You
are encouraged to read "Agreements with Magic Earth Stockholders and
Directors" on page 27 of this proxy statement/prospectus for a more detailed
discussion of those interests.
Risks Specific to Halliburton
Demand for Halliburton's services and products depends on oil and gas
industry activity and expenditure levels that are directly affected by trends
in oil and natural gas prices. A prolonged downturn in oil and gas prices
could have a material adverse effect on Halliburton's results of operations
and financial condition.
Demand for Halliburton's products and services is particularly sensitive to
the level of development, production and exploration activity of, and the
corresponding capital spending by, oil and natural gas companies. Prices for
oil and gas are subject to large fluctuations in response to relatively minor
changes in the supply of and demand for oil and gas, market uncertainty and a
variety of other factors that are beyond Halliburton's control. Any prolonged
reduction in oil and natural gas prices will depress the level of exploration,
development and production activity. Lower levels of activity result in a
corresponding decline in the demand for Halliburton's oil and gas well
services and products that could have a material adverse effect on its
revenues and profitability. Factors affecting the prices of oil and natural
gas include:
. governmental regulations;
8
. global weather conditions;
. worldwide political, military and economic conditions, including the
ability of OPEC to set and maintain production levels and prices for oil
and gas;
. the level of production by non-OPEC countries;
. the policies of governments regarding the exploration for and production
and development of their oil and natural gas reserves; and
. the level of demand for oil and natural gas.
Historically, the markets for oil and gas have been volatile and are likely to
continue to be volatile in the future.
During 2000, the demand for Halliburton's Energy Services Group's oilfield
services and products recovered from lower levels in 1999 and late 1998. This
improvement continued through the first half of 2001. Consistent with past
history, the activity levels in the United States were the first to rebound
with increased demand for products and services and an improved pricing
environment. Internationally, Halliburton's business activity levels have not
increased as much as in North America, although customers who are focused on
oil projects are now starting to increase their global capital spending. The
turnaround in international rig activity continued in the first half of 2001,
with the average rig count at 737 rigs working compared to 602 in the fourth
quarter of 2000. Halliburton's customers have been reluctant to undertake new
engineering and construction projects resulting in a lower demand for those
products and services in 2000 and into 2001. More than one-half of the
Engineering and Construction Group's revenues come from customers in the oil
and gas industry and these factors impact its operations. Halliburton believes
that its customers will begin to award more engineering and construction
projects later this year. However, new contracts Halliburton acquires in the
third and fourth quarters of this year will not produce significant revenue or
operating income before next year.
There are risks to Halliburton's acquisition strategy. If Halliburton is
unable to integrate and manage successfully businesses that it has acquired and
any businesses acquired in the future, its results of operations and financial
condition could be affected.
One of Halliburton's business strategies is to acquire operations and assets
that are complementary to its existing businesses. Acquiring these operations
and assets involves financial, operational and legal risks, including:
. increased levels of goodwill subject to potential impairment;
. increased interest expense;
. increased financial leverage or decreased operating income;
. the difficulty of combining operations and personnel of the acquired
businesses with Halliburton's; and
. the difficulty of maintaining uniform standards, controls, procedures and
policies.
In addition, other potential buyers compete with Halliburton for
acquisitions of businesses. Competition could cause Halliburton to pay a higher
price for acquisitions than it otherwise might have to pay or reduce its
acquisition opportunities. Halliburton might be unsuccessful in identifying
attractive acquisition candidates, completing and financing additional
acquisitions on favorable terms or integrating the acquired businesses or
assets into its operations.
A significant portion of Halliburton's revenue is derived from its non-U.S.
operations, which exposes it to risks inherent in doing business in each of the
more than 100 other countries in which it transacts business. The occurrence of
any of the risks set forth below could have an adverse effect on its results of
operations and financial condition.
Halliburton's operations in more than 100 countries other than the United
States accounted for approximately 70% of its consolidated revenues during 1999
and 66% of its consolidated revenues during
9
2000. Operations in countries other than the United States are subject to
various risks peculiar to each country. With respect to any particular country,
these risks may include:
. expropriation and nationalization;
. political and economic instability;
. armed conflict and civil disturbance;
. currency fluctuations, devaluations and conversion restrictions;
. confiscatory taxation or other adverse tax policies;
. governmental activities that limit or disrupt markets, restrict payments
or the movement of funds; and
. governmental activities that may result in the deprivation of contract
rights.
Halliburton's ability to compete outside of the United States may be
adversely affected by governmental regulations promulgated in numerous
countries in which it transacts business. If these regulations apply to
Halliburton, they may require it to engage in business practices that may not
be to its benefit.
Those regulations frequently:
. encourage or mandate the hiring of local contractors; and
. require foreign contractors to employ citizens of, or purchase supplies
from, a particular jurisdiction.
In addition, Halliburton is subject to taxation in many jurisdictions, and
the final determination of its tax liabilities involves the interpretation of
the statutes and requirements of taxing authorities worldwide. Foreign income
tax returns of foreign subsidiaries, unconsolidated affiliates and related
entities are routinely examined by foreign tax authorities. These tax
examinations may result in assessments of additional taxes or penalties or
both.
A sizable portion of Halliburton's consolidated revenues and consolidated
operating expenses are in foreign currencies. As a result, it is subject to
significant foreign exchange risks that could adversely affect its operations,
as well as limit Halliburton's ability to reinvest earnings from operations in
one country to fund the capital needs of its operations in other countries.
Halliburton does business in countries that have non-traded, or "soft"
currencies that have restricted or limited trading markets. Halliburton may
accumulate cash in soft currencies which may significantly limit its ability to
convert its profits into U.S. dollars or repatriate the profits from those
countries.
Halliburton selectively uses hedging transactions to limit its exposure to
risks from doing business in foreign currencies. Halliburton has developed risk
management policies that establish guidelines for managing foreign exchange
risk. As part of these policies, Halliburton has designed a reporting process
to monitor the potential exposure on an ongoing basis. Halliburton uses this
process to determine the extent of its foreign currency exposure and to
determine whether it is practical or economical to execute financial hedges.
For those currencies that are not readily convertible, Halliburton's ability to
hedge exposure is limited because financial hedge instruments for those
currencies are nonexistent or limited. Halliburton's ability to hedge is also
limited because pricing of hedging instruments, where they exist, is often
volatile and not necessarily efficient. To the extent that Halliburton can
match the currency in which its operating revenues are denominated to that in
which its operating expenses in a country are denominated, Halliburton can
reduce its vulnerability to exchange rate fluctuations.
Halliburton's businesses are subject to a variety of environmental laws and
regulations including those covering hazardous materials. Any failure on its
part to comply with applicable environmental laws and regulations could have an
adverse effect on its financial condition.
Halliburton's well service operations routinely involve the handling of
significant amounts of waste materials, some of which are classified as
hazardous substances. Halliburton's operations and facilities are
10
subject to numerous environmental laws, rules and regulations of the United
States and other countries, including laws concerning:
. the containment and disposal of hazardous substances, oilfield waste and
other waste materials;
. the use of underground storage tanks; and
. the use of underground injection wells.
Laws protecting the environment are becoming stricter. Sanctions for failure
to comply with these laws, rules and regulations, many of which may be applied
retroactively, may include:
. administrative, civil and criminal penalties;
. revocation of permits; and
. corrective action orders.
Halliburton and/or its subsidiary Dresser are parties to insurance
litigation, insurance coverage litigation and asbestos claim litigation. The
asbestos claim litigation results from claims that products manufactured by, or
materials used in various construction and renovation projects of, its
subsidiaries contained asbestos, resulting in injury to the plaintiffs.
At June 30, 2001, there were about 145,000 open asbestos claims asserted
against Halliburton. These claims could have a material adverse effect on
Halliburton's financial condition if:
. the Highland's litigation is not resolved in Halliburton's favor;
. the litigation with Harbison-Walker, its affiliates and agents is not
resolved in Dresser's favor;
. the comprehensive insurance coverage litigation with Dresser's insurers
is not resolved in Dresser's favor;
. Halliburton's estimate of amounts it will recover from its insurance
carriers proves to be incorrect; or
. future litigation expense and settlement costs increase significantly
from Halliburton's historical experience.
Halliburton estimates its net liability for known open asbestos claims at
June 30, 2001 to be $124 million. More detailed information related to
Halliburton's insurance, indemnity and asbestos litigation is set forth in Note
9 to the financial statements in Halliburton's Form 10-K for the fiscal year
ended December 31, 2000 and in Note 7 to the quarterly financial statements in
Halliburton's Form 10-Q for the quarter ended June 30, 2001.
In the United States, environmental laws and regulations typically impose
strict liability. Strict liability means that in some situations Halliburton
could be exposed to liability for cleanup costs and other damages as a result
of its conduct that was lawful at the time it occurred or conduct of prior
operators or other third parties.
Cleanup costs, natural resource damages and other damages arising as a
result of environmental laws, and costs associated with changes in
environmental laws and regulations, could be substantial and could have a
material adverse effect on Halliburton's consolidated results of operations.
From time to time, claims have been made against Halliburton and its
subsidiaries under environmental laws. Changes in environmental regulations may
also negatively impact oil and natural gas exploration and production
companies, which in turn could have a material adverse effect on Halliburton.
11
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
In this document, Halliburton makes forward-looking statements that include
assumptions as to how Halliburton and Magic Earth may perform in the future.
You will find many of these statements in the following sections:
- "Risk Factors" beginning on page 8;
- "The Magic Earth Board's Reasons for Recommending the Merger;
Recommendation of the Magic Earth Board" on page 17; and
- "Information Regarding Halliburton Company" beginning on page 32.
Also, when Halliburton uses words like "may," "may not," "believes," "do not
believe," "expects," "do not expect," "do not anticipate" and similar
expressions, Halliburton is making forward-looking statements. These statements
should be viewed with caution.
The Private Securities Litigation Reform Act of 1995 provides safe harbor
provisions for forward-looking information. Forward-looking information is
based on projections and estimates, not historical information. Some statements
in this proxy statement/prospectus are forward-looking. Halliburton may also
provide oral or written forward-looking information in other materials it
releases to the public. Forward-looking information involves risks and
uncertainties. Forward-looking information Halliburton provides reflects its
best judgment based on current information. Halliburton's results of operations
can be affected by inaccurate assumptions Halliburton makes or by known or
unknown risks and uncertainties. In addition, other factors may affect the
accuracy of Halliburton's forward-looking information. As a result, no forward-
looking information can be guaranteed. Actual events and the results of
operations may vary materially.
While it is not possible to identify all factors, Halliburton continues to
face many risks and uncertainties that could cause actual results to differ
from its forward-looking statements including:
Geopolitical and legal.
- trade restrictions and economic embargoes imposed by the United States
and other countries;
- unsettled political conditions, war, civil unrest, currency controls and
governmental actions in the numerous countries in which Halliburton
operates;
- operations in countries with significant amounts of political risk,
including, for example, Algeria, Angola, Libya, Nigeria, and Russia;
- changes in foreign exchange rates;
- changes in governmental regulations in the numerous countries in which
Halliburton operates including, for example, regulations that:
- encourage or mandate hiring local contractors; and
- require foreign contractors to employ citizens of, or purchase
supplies from, a particular jurisdiction;
- litigation, including, for example, contract disputes, asbestos
litigation, insurance litigation and environmental litigation; and
- environmental laws, including, for example, those that require emission
performance standards for facilities;
12
Weather related.
- the effects of severe weather conditions, including, for example,
hurricanes and tornadoes, on operations and facilities; and
- the impact of prolonged severe or mild weather conditions on the demand
for and price of oil and natural gas;
Customers.
- the magnitude of governmental spending and outsourcing for military and
logistical support of the type that Halliburton provides;
- changes in capital spending by customers in the oil and gas industry for
exploration, development, production, processing, refining, and pipeline
delivery networks;
- changes in capital spending by governments for infrastructure projects
of the sort that Halliburton performs;
- consolidation of customers in the oil and gas industry; and
- claim negotiations with engineering and construction customers on cost
variances and change orders on major projects;
Industry.
- technological and structural changes in the industries that Halliburton
serves;
- sudden changes in energy prices that could undermine the fundamental
strength of the world economy or our customers;
- changes in the price of oil and natural gas, including:
- OPEC's ability to set and maintain production levels and prices for
oil;
- the level of oil production by non-OPEC countries;
- the policies of governments regarding exploration for and production
and development of their oil and natural gas reserves; and
- the level of demand for oil and natural gas;
- changes in the price or the availability of commodities that Halliburton
uses;
- risks that result from entering into fixed fee engineering, procurement
and construction projects of the types that Halliburton provides where
failure to meet schedules, cost estimates or performance targets could
result in non-reimbursable costs which cause the project not to meet
expected profit margins;
- risks that result from entering into complex business arrangements for
technically demanding projects where failure by one or more parties
could result in monetary penalties; and
- the risk inherent in the use of derivative instruments of the sort that
Halliburton uses which could cause a change in value of the derivative
instruments as a result of:
- adverse movements in foreign exchange rates, interest rates, or
commodity prices, or
- the value and time period of the derivative being different than the
exposures or cash flows being hedged;
13
Personnel and mergers/reorganizations/dispositions.
- increased competition in the hiring and retention of employees in
specific areas, including, for example, energy services operations,
accounting and finance;
- integration of acquired businesses into Halliburton, including:
- standardizing information systems or integrating data from multiple
systems;
- maintaining uniform standards, controls, procedures and policies; and
- combining operations and personnel of acquired businesses with
Halliburton's;
- effectively reorganizing operations and personnel within Halliburton;
- replacing discontinued lines of businesses with acquisitions that add
value and complement Halliburton's core businesses; and
- successful completion of planned dispositions.
In addition, future trends for pricing, margins, revenues and profitability
remain difficult to predict in the industries Halliburton serves.
You should consider carefully the forward-looking statements set forth in:
. "Management's Discussion and Analysis of Financial Condition and Results
of Operations", "Business" and "Legal Proceedings" in Halliburton's
annual report on Form 10-K for the fiscal year ended December 31, 2000;
and
. "Management's Discussion and Analysis of Financial Condition and Results
of Operations" in Halliburton's quarterly report on Form 10-Q for the
period ended June 30, 2001,
all of which sections are incorporated in this offer document by reference.
Please read "Where You Can Find More Information" on page 49.
BACKGROUND TO AND REASONS FOR THE MERGER
On July 12, 2000, Michael Zeitlin, Chairman and CEO of Magic Earth, and John
Gibson, President and Chief Executive Officer of Landmark Graphics Corporation,
an indirect wholly owned subsidiary of Halliburton, met in Houston. The meeting
continued discussions of a re-marketing agreement and included an offer by
Landmark to purchase Magic Earth for $50 million. Magic Earth expressed no
interest in being acquired and only desired a re-marketing agreement with
Landmark.
On July 27, 2000, Michael Zeitlin and John Gibson met in Houston to continue
discussions regarding a re-marketing agreement.
Michael Zeitlin called John Gibson on August 2, 2000, to further discuss a
re-marketing agreement. The conversation ended without any action being taken
by either party.
On September 6, 2000, Yin L. Cheung, Executive Vice President--Director of
Technology of Magic Earth, met with John Wilson, Vice President--Systems and
Marketing of Landmark, to discuss the possible re-marketing agreement.
On September 25, 2000, John Wilson and Millicent Chancellor, Chief Financial
Officer of Landmark, met with Michael Zeitlin, Yin L. Cheung and Miles Harper
with Gainer, Donnelly & Desroches, accountants for Magic Earth, at Magic
Earth's Houston office to discuss the financial structure of the possible re-
marketing agreement and the financial state of Magic Earth generally.
14
On September 26, 2000, John Gibson and Michael Zeitlin met in Houston to
continue discussing a possible re-marketing agreement and to continue a
dialogue about a possible collaboration between the two companies.
Between September 26, 2000 and February 3, 2001, there was some general
discussion between Landmark and Magic Earth, but no progress on the re-
marketing agreement.
On February 3, 2001, Michael Zeitlin called John Gibson to inform him that
Magic Earth had received an offer from a third party to enter into an exclusive
re-marketing agreement and purchase of Magic Earth equity and that Landmark had
until February 5, 2001 to respond if Landmark had any interest in finalizing a
re-marketing agreement or acquisition of Magic Earth.
On February 5, 2001, Michael Zeitlin met John Gibson and John Wilson, in
Houston. At the meeting Landmark indicated its interest in acquiring Magic
Earth. A purchase price of $100 million was discussed.
During a phone call on February 6, 2001, Michael Zeitlin and John Gibson
continued their discussion of the purchase price.
On February 16, 2001, Michael Zeitlin met with John Gibson, John Wilson and
Edgar Ortiz, Chairman of the Energy Services Group of Halliburton Energy
Services, Inc., an indirect wholly owned subsidiary of Halliburton. The meeting
educated Mr. Ortiz in the capabilities and the products of Magic Earth and
discussed the potential strategic fit of Magic Earth into Halliburton. The
meeting was held in Mr. Ortiz' office at Halliburton Energy Services in
Houston, Texas.
On February 18, 2001, Michael Zeitlin met with Steve Peacock of British
Petroleum, a director of Magic Earth. The dinner meeting reviewed the offer by
Halliburton to acquire 100% of Magic Earth's stock in a stock-for-stock swap
valued at $100 million. Mr. Zeitlin discussed the benefits of the merger to
British Petroleum, the continued independence of Magic Earth and the proposed
retention of key employees.
Between February 19, 2001 and February 27, 2001, Michael Zeitlin contacted
two board members of Magic Earth, Frank Ingriselli of Texaco, Inc., and Knut
Korsell of Silicon Graphics, Inc., via telephone to advise on the advantages of
a merger between Halliburton and Magic Earth and to seek informal consent to
proceed with negotiations regarding the merger.
On February 27, 2001, Michael Zeitlin met with John Gibson, John Wilson, and
Andrew Farley, Chief Counsel and Corporate Secretary of Landmark, to continue
discussing a possible transaction between Landmark and Magic Earth and to
finalize a letter of intent. Magic Earth and Halliburton executed a letter of
intent to negotiate a definitive agreement and executed a confidentiality
agreement. The letter of intent was signed on behalf of Magic Earth by Michael
Zeitlin and Yin L. Cheung. The confidentiality agreement was signed on behalf
of Magic Earth by Michael L. Zeitlin. The letter of intent and confidentiality
agreement were signed on behalf of Halliburton by Lester L. Coleman, Executive
Vice President and General Counsel. Michael Zeitlin and Yin L. Cheung also met
at Magic Earth's Houston offices with John Wilson and Millicent Chancellor to
discuss due diligence procedures for Dresser's review of the books and records
of Magic Earth.
Negotiations were conducted in February, March and April in Houston, Texas
for the acquisition of all of the outstanding stock of Magic Earth in exchange
for $100 million of Halliburton common stock.
On March 1, 2001, the Halliburton board of directors held a regularly
scheduled telephonic meeting and approved the proposed merger agreement.
On March 2, 2001, Michael Zeitlin met with John Gibson, John Wilson, Andrew
Farley, Peter Bernard, Executive Vice President Operations of Landmark, and
Mike Pfister, Chief Information Officer of Landmark, at a reception hosted by
Landmark at Landmark's offices in Houston to celebrate the signing of the
letter of
15
intent. The conversation included discussion of the strategic fit of Magic
Earth, the desire of Magic Earth's board that Magic Earth be the corporation
surviving the merger and the general business of Magic Earth.
On March 16, 2001, Michael Zeitlin met with John Gibson and John Wilson to
discuss who would be involved in managing the transition, due diligence and
other activities related to the acquisition. The meeting was held in Landmark's
Houston offices.
On March 18, 2001, John Gibson and his wife attended a dinner at the home of
Michael Zeitlin. Mr. Zeitlin's wife also attended the dinner. The dinner was
for the purpose of fostering a personal relationship between Michael Zeitlin
and John Gibson.
On March 23, 2001, Michael Zeitlin and representatives of Magic Earth met
with John Gibson and representatives of Halliburton and Dresser at the offices
of Shook, Hardy & Bacon, L.L.P., legal counsel to Magic Earth, in Houston. The
participants began to negotiate the terms and conditions of the proposed merger
agreement.
On April 7, 2001, Michael Zeitlin met with John Gibson at the Houston
offices of Shook, Hardy & Bacon to further negotiate terms of the proposed
merger agreement.
By consent in lieu of special meeting dated April 9, 2001 the boards of
directors of Dresser Industries, Inc. and Halliburton MS, Inc. both approved
the merger agreement.
On April 28, 2001, the Magic Earth board of directors met to discuss the
proposed agreement and plan of merger. Copies of the draft agreement as well as
executive summaries of the agreement had been made available to each of the
directors prior to the meeting for their review. Representatives of Shook,
Hardy & Bacon were invited to provide an overview of the material terms of the
proposed agreement and were available to answer questions. Michael Zeitlin
encouraged the board to approve the proposed agreement, highlighting the offer
price and the strategic advantages to Magic Earth and its stockholders. John
Gibson was also invited to join the meeting and presented his views regarding
the potential challenges and opportunities for Halliburton, Landmark and Magic
Earth should the transaction be approved. Mr. Gibson then left the meeting. The
board members then voted to approve the proposed merger agreement and to
recommend it the Magic Earth stockholders.
On April 29, 2001 Michael Zeitlin, Yin L. Cheung and John Gibson met at the
Houston offices of Shook, Hardy & Bacon to discuss and negotiate the final
terms of the merger agreement. Representatives of Halliburton, Dresser and
Landmark and partners of Shook, Hardy & Bacon also attended the meeting. The
merger agreement was signed that afternoon. Betty H. Cheung and Natalie Zeitlin
who signed the merger agreement in the capacity of consenting spouses also
attended portions of the meeting.
On April 30, 2001 Halliburton and Magic Earth issued a press release
entitled "Halliburton Announces Definitive Agreement to Acquire Magic Earth"
announcing the execution of the definitive merger agreement and that the
agreement calls for a stock-for-stock acquisition valued at $100 million.
On May 1, 2001 Halliburton and Magic Earth hosted a media event at the
Offshore Technology Conference held in Houston to brief the press on the
proposed acquisition of Magic Earth by Dresser. David J. Lesar, Chairman of the
Board, President and Chief Executive Officer of Halliburton, John Gibson and
Michael Zeitlin attended the briefing.
16
THE MAGIC EARTH BOARD'S REASONS FOR RECOMMENDING THE MERGER; RECOMMENDATION OF
THE MAGIC EARTH BOARD
The Magic Earth board of directors is of the opinion that the terms of the
merger are fair and reasonable to, and in the best interests of, Magic Earth.
Accordingly, the Magic Earth Board unanimously recommends that the Magic Earth
stockholders approve the merger. In making this determination, the Magic Earth
Board consulted with Magic Earth's management and considered a number of
factors, including the following:
- The belief of the Magic Earth Board that Magic Earth's and Landmark's
respective businesses are complementary and that a range of economic,
strategic and operational benefits could arise from placing them under
the same parent corporation. The Magic Earth Board also believes that
bringing together Magic Earth and Landmark as subsidiaries of
Halliburton would assist them in their aim of becoming the preferred
provider of integrated exploration and production software information
systems and professional services throughout the world.
- The likelihood of the merger being concluded.
- The terms of the merger.
- The Magic Earth Board's knowledge of the business, operations,
properties, assets, earnings and prospects of Magic Earth.
- Recent and historical trading prices for Halliburton common stock. The
Magic Earth Board recognizes that the merger should enable the Magic
Earth stockholders to obtain a security that provides a market for their
interests yet offers the opportunity of continuing their equity interest
in the combined enterprise. For information regarding the range of
prices of the Halliburton common stock, see "Market Price and Dividend
Information" and "Halliburton Company Stock Performance". The Magic
Earth Board also considered the absence of any trading market for the
Magic Earth shares.
In view of the variety of factors considered in connection with its
evaluation of the merger, the Magic Earth Board did not find it practicable to,
and did not, quantify or otherwise attempt to assign relative weights to
specific factors considered in its decision. Furthermore, the Magic Earth Board
did not articulate how each factor specifically supported its ultimate
decision.
The Magic Earth Board did not choose to obtain an independent fairness
opinion nor did it retain the advice of an independent financial advisor in its
determination that the terms of the merger are fair and reasonable. The Magic
Earth Board believes its collective knowledge and understanding of the
business, operations, properties, earnings and prospects of Magic Earth and the
competitive market in which it operates are sufficient to allow the Magic Earth
Board to accurately value Magic Earth and to evaluate the fairness of the
consideration to be received in the merger. Therefore, the Magic Earth Board
believes that the services of an outside financial advisor are not necessary
and would only serve to reduce the value of the merger to the Magic Earth
stockholders through the imposition of service fees. Specifically, the Magic
Earth Board is of the opinion, based on its evaluation of the factors
identified above, that the consideration offered by Halliburton in the merger
represents a significant return on investment to the Magic Earth stockholders,
which return accurately reflects the value of strategic and operational
benefits that Landmark is in a unique position to capitalize upon.
The Magic Earth Board did not request an opinion of tax counsel as to
whether the merger would be treated as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code. See "Federal Tax Consequences of
the Merger".
The Magic Earth Board unanimously recommends that Magic Earth stockholders
vote to approve the merger.
17
THE MERGER AGREEMENT
The following briefly summarizes the material provisions of the merger
agreement, a copy of which is attached as Appendix A to this proxy
statement/prospectus and is incorporated by reference into this summary. The
summary is not complete and is qualified in its entirety by reference to the
merger agreement. Magic Earth stockholders are urged to read the merger
agreement in its entirety for a more complete description of the terms and
conditions of the merger.
General
Following the approval of the merger and the merger agreement by the
stockholders of Magic Earth, and the satisfaction or waiver of the other
conditions to the merger, Halliburton MS, Dresser's wholly owned subsidiary,
will be merged with and into Magic Earth. Magic Earth will survive the merger
as Dresser's wholly owned subsidiary. If all conditions to the merger are
satisfied or waived, the merger will become effective at the time of the
filing by the surviving corporation of a certificate of merger with the
Secretary of State of the State of Delaware. The time of the filing is the
effective time of the merger.
Exchange of Shares
Each share of Magic Earth common stock held by Magic Earth will be canceled
and will cease to exist.
The number of shares of Halliburton common stock to be issued in the
aggregate for all of the outstanding common stock of Magic Earth will be
determined by dividing one hundred million dollars ($100,000,000.00), which is
the valuation for Magic Earth agreed to in the merger agreement, by the
average closing price of Halliburton common stock for composite New York Stock
Exchange regular trading as of 4:00 p.m. New York time for each of the thirty
(30) trading days before the merger. The day of the merger is the date the
conditions to complete the merger are satisfied and a certificate of merger is
filed with the Delaware Secretary of State. This number of shares will be
rounded up to the nearest whole share. The aggregate number of shares of
Halliburton common stock determined in the preceding sentences will be divided
by the number of shares of Magic Earth common stock that are issued and
outstanding on the effective date of the merger. The amount determined will be
the number of shares of Halliburton common stock to be issued for each share
of Magic Earth common stock. This calculation is illustrated below:
$100,000,000.00* /
30 day average trading
closing price of
Halliburton common
stock before the merger
=
Aggregate shares of
Halliburton common stock
to be issued /
Issued and outstanding shares
of Magic Earth common
stock on the merger date
=
Number of shares of
Halliburton common stock
to be received for
each share of Magic Earth
common stock
*Subject to adjustment as described below.
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The $100 million amount used as the numerator in the calculation above will
be reduced if the net equity of Magic Earth decreases by more than $4 million
between January 1, 2001 and the date of the closing balance sheet. The amount
of the reduction will be dollar for dollar for decreases in excess of, but not
including, the $4 million threshold. As an example, if the net equity of Magic
Earth decreased $7 million, the adjustment would be $3 million and $97 million
would be used instead of $100 million in the formula above in calculating the
number of shares of Halliburton common stock to be exchanged. The closing
balance sheet date is the fifth day immediately before the effective date of
the merger. The net equity of Magic Earth on January 1, 2001 was $22,568,189.
The net equity of Magic Earth on August 31, 2001 was $21,864,000.
The number of shares of Halliburton common stock comprising the aggregate
merger consideration will be adjusted to fully reflect the effect of any stock
split, reverse stock split, stock dividend, merger, reorganization,
recapitalization of or other similar change affecting Halliburton's common
stock before the effective time of the merger.
As of October 19, 2001, Magic Earth had 100,000 shares of common stock
outstanding. An additional 8,700 shares of unvested restricted stock that were
issued under the Magic Earth 2001 Stock Incentive Plan will vest at the time of
the merger as a result of the merger. Therefore, the number of shares of Magic
Earth that will be issued and outstanding at the effective time of the merger
is 108,700. Any outstanding stock options must be exercised before the merger
is concluded. Any Magic Earth stock options outstanding at the time of the
merger will be canceled.
On October 18, 2001, the closing price of Halliburton common stock was
$23.05. Using the formula above, and using the price of $23.05 for Halliburton
common stock, the number of shares of Halliburton common stock to be exchanged
for each of the 108,700 shares of Magic Earth stock would be:
$100,000,000.00 / $23.05 = 4,338,395 / 108,700 = 39.91 shares
This assumes that the $100 million consideration has not been reduced because
of a decline in excess of $4 million in the Magic Earth net equity between
January 1, 2001 and the date of the closing balance sheet.
As explained above, the $100 million consideration will be reduced to the
extent there is a decline in excess of $4 million in the Magic Earth net equity
between January 1, 2001 and the date of the closing balance sheet. If the net
equity declined $7 million between those dates, the merger consideration would
be reduced by $3 million and would be $97 million instead of $100 million. If
the net equity declined $10 million between those dates, the merger
consideration would be reduced by $6 million and would be $94 million instead
of $100 million.
19
The table below shows the number of shares of Halliburton common stock that
will be exchanged for each share of Magic Earth common stock assuming:
. a merger consideration of $100 million, $97 million and $94 million;
. that 108,700 shares of Magic Earth common stock are issued and
outstanding; and
. the following average Halliburton common stock closing prices.
Assumed average
Halliburton common
stock closing price.... $ 22.00 $ 23.00 $ 24.00 $ 25.00 $ 26.00 $ 27.00 $ 28.00 $ 29.00 $ 30.00
Number of shares of
Halliburton common
stock exchanged for all
of the outstanding
common stock of Magic
Earth assuming the
above average closing
price and a merger
consideration of:
$100 million.......... 4,545,455 4,347,827 4,166,667 4,000,000 3,846,154 3,703,704 3,571,429 3,448,276 3,333,334
97 million........... 4,409,091 4,217,392 4,041,667 3,880,000 3,730,770 3,592,593 3,464,286 3,344,828 3,233,334
94 million........... 4,272,728 4,086,957 3,916,667 3,760,000 3,615,385 3,481,482 3,357,143 3,241,380 3,133,334
Number of shares of
Halliburton common
stock exchanged for
each share of Magic
Earth common stock
assuming the above
average closing price
and a merger
consideration of:
$100 million.......... 41.82 40.00 38.33 36.80 35.38 34.07 32.86 31.72 30.67
97 million........... 40.56 38.80 37.18 35.69 34.32 33.05 31.87 30.77 29.75
94 million........... 39.31 37.60 36.03 34.59 33.26 32.03 30.88 29.82 28.83
Value of Halliburton
common stock received
for each share of Magic
Earth common stock
owned assuming the
above average closing
price and a merger
consideration of:
$100 million.......... $ 919.96 $ 919.96 $ 919.96 $ 919.96 $ 919.96 $ 919.96 $ 919.96 $ 919.96 $ 919.96
97 million........... $ 892.36 $ 892.36 $ 892.36 $ 892.36 $ 892.36 $ 892.36 $ 892.36 $ 892.36 $ 892.36
94 million........... $ 864.77 $ 864.77 $ 864.77 $ 864.77 $ 864.77 $ 864.77 $ 864.77 $ 864.77 $ 864.77
As the table illustrates, regardless of the average closing price used to
calculate the number of shares of Halliburton common stock you will receive,
the value represented by those shares calculated using the average closing
price remains the same for each dollar amount of merger consideration. That is
because the merger consideration in the form of Halliburton common stock will
be based on a specific dollar amount for all the outstanding shares of Magic
Earth common stock, of which there will be 108,700 shares at the time of the
merger. This means that you will receive:
. $919.96 worth of Halliburton common stock for each share of Magic Earth
common stock you own assuming a merger consideration of $100 million;
. $892.36 worth of Halliburton common stock for each share of Magic Earth
common stock you own assuming a merger consideration of $97 million; and
. $864.77 worth of Halliburton common stock for each share of Magic Earth
common stock you own assuming a merger consideration of $93 million.
Of course, the actual trading price of Halliburton common stock on the
effective date of the merger and on the later date when you receive shares of
Halliburton common stock will probably be lower or higher than the average
trading price used to calculate the number of shares you receive.
Some of the closing trading prices used in the exchange formula cannot be
determined until after the date of the consent in lieu of meeting of Magic
Earth stockholders. Therefore, the number of shares of Halliburton common stock
you will receive for your Magic Earth common stock cannot be determined until
after the NYSE
20
closes on the day before the merger. However, you can contact Miles Harper, a
director of Magic Earth to get an update of the closing prices of Halliburton
common stock through the date of your call. Mr. Harper can be contacted at 1-
800-890-4486. If requested, Mr. Harper will provide you with an example of the
number of shares to be issued on a per share basis based upon the closing price
of Halliburton common stock for the thirty (30) trading days before the day of
your call. The number of shares that will actually be issued for each share of
Magic Earth will vary from the example Mr. Harper provides. The actual number
of shares that you will receive will be based upon the closing price of
Halliburton common stock for the thirty trading days before the merger.
Fractional Shares
Halliburton will not issue any fractional shares of its common stock in the
merger. Instead, each holder of shares of Magic Earth common stock who would
otherwise have been entitled to receive a fraction of a share of Halliburton
common stock will be entitled to receive cash, rounded to the nearest whole
cent. The amount received will be equal to the fractional part of Halliburton's
common stock multiplied by the average closing price of its common stock for
composite New York Stock Exchange regular trading as of 4:00 p.m. New York time
for each of the thirty (30) trading days before the date of the merger
agreement.
Surrender of Shares Of Magic Earth Common Stock; Stock Transfer Books
After the merger is effected, Magic Earth will send a transmittal letter to
each Magic Earth stockholder. Dresser will deliver to those holders of
certificates who properly surrender their certificates in accordance with the
instructions in the transmittal letter, certificates representing shares of
Halliburton common stock and cash instead of any fractional shares. The
surrendered Magic Earth certificates will be canceled. Until surrendered, each
certificate representing Magic Earth common stock will be deemed, at and after
the effective time of the merger, to represent only the right to receive, upon
surrender, the merger consideration discussed above.
No Dividends or Distributions
No dividends or other distributions paid on Halliburton's common stock with
a record date after the effective time of the merger will be paid to any holder
of certificates representing Magic Earth common stock until the surrender of
their certificates. Following surrender of each certificate representing shares
of Magic Earth common stock, Halliburton will pay to the record holder of the
certificates the amount of all dividends and other distributions with a record
date after the effective time of the merger.
Lost Certificates
If any Magic Earth certificate has been lost, stolen or destroyed, the owner
of the certificate must provide an appropriate affidavit of that fact. Dresser
may require the owner of the lost, stolen or destroyed Magic Earth certificates
to deliver a bond as indemnity against any claim that may be made against
Dresser based on the Magic Earth certificates alleged to have been lost, stolen
or destroyed.
No Termination Rights
As explained in "Exchange of Shares" above, the valuation for all of the
outstanding common stock of Magic Earth is $100 million, paid in the form of
Halliburton common stock. There is no right of Magic Earth to terminate the
transaction and "walk away" from the transaction if the Halliburton common
stock falls below a specified price. Dresser is obligated to exchange $100
million, subject to adjustment as described in this proxy statement/prospectus
if the Magic Earth net equity decreases, of Halliburton common stock for the
Magic Earth common stock, regardless of what the price of Halliburton common
stock might be, in accordance with the exchange formula.
Appraisal Rights
Generally, holders of stock in a Delaware corporation can exercise appraisal
rights under Section 262 of the Delaware General Corporation Law and not have
their shares of stock converted into stock of the acquiror. Instead they would
have their shares converted into the right to receive the consideration
determined in
21
accordance with Section 262. However, Magic Earth stockholders are parties to
the Shareholders' Agreement that may impact the appraisal rights they would
otherwise have. You should consult an attorney if you have any questions about
appraisal rights or your rights and obligations under the Shareholders'
Agreement.
Representations and Warranties
The merger agreement contains various representations and warranties of each
of Halliburton and Magic Earth. The signatory stockholders join in the Magic
Earth representations and warranties. Dresser and Halliburton MS join in the
Halliburton representations and warranties.
Magic Earth has made representations and warranties regarding:
. its organization, authority to enter into the merger agreement and
qualification to do business;
. its capitalization;
. its ownership of other entities, including partnerships and joint
ventures;
. its books and records;
. the absence of violations, conflicts and defaults under laws and
regulations, its charter and bylaws and specific other agreements and
documents;
. approvals of governmental authorities;
. its financial information;
. the absence of undisclosed liabilities;
. the absence of specific changes, events and conditions;
. litigation;
. compliance with laws;
. material contracts;
. title to assets;
. intellectual property;
. employment matters;
. environmental matters;
. prepayments, hedges and calls;
. taxes;
. insurance;
. brokers;
. the condition of its equipment;
. royalties and other payments;
. preferential rights to purchase its assets;
. capital expenditure commitments;
. funds held for the benefit of third persons;
. bank accounts;
. accounts receivable;
. illegal payments;
22
. the sufficiency of permits and licenses held;
. its directors, officers and employees;
. the absence of territorial restrictions on its business;
. guarantees of its debt by others or others debt by it;
. non-purchased items used in its business;
. customers;
. business relationships with stockholders, officers and directors;
. former business relationships;
. the content of its business; and
. the absence of material misstatements or omissions in the
representations and warranties.
Halliburton has made representations and warranties regarding:
. its organization and authority to enter into the merger agreement;
. its charter and bylaws;
. its capitalization;
. the absence of violations, conflicts and defaults under laws and
regulations, its charter and bylaws and specific other agreements and
documents;
. approvals of governmental authorities;
. litigation;
. tax treatment resulting from the merger;
. operations of the merger subsidiary;
. SEC filings and financial statements;
. authorization and issuance of Halliburton common stock;
. absence of a material adverse effect with respect to its business; and
. brokers.
Covenants
Magic Earth has covenanted that from the date of the merger agreement until
the merger is completed:
. to operate in the ordinary course of business and in accordance with
past practice;
. to preserve substantially intact its business and its assets; and
. not to transfer rights to its software, other than as required by the
merger agreement.
Magic Earth has further covenanted that from the date of the merger
agreement until the merger is completed, that without the prior consent of
Dresser, it will not:
. amend its charter or bylaws;
. issue, sell, pledge or take any other action that would result in the
number of owners of its capital stock exceeding 25 persons;
. declare or pay a dividend;
. reclassify, combine, split or take other action that would result in a
change of its capital stock;
23
. - acquire or dispose of any assets, unless done in the ordinary course of
business or if the fair market value of the assets disposed of does not
exceed $75,000.00 in the aggregate;
- incur any indebtedness or otherwise become liable for a third person's
indebtedness, except that it can incur up to $3,250,000 for the lease or
purchase of SGI computer hardware;
- make loans or advances to third persons;
- commit to capital expenditures in excess of $75,000.00 other than items
previously budgeted in accordance with past practices;
- enter into any agreement that if performed would be prohibited by this
provision; or
- amend or terminate a material contract;
. - increase the compensation of employees or officers, except consistent
with past practice;
- enter into any employment or severance agreement with any director,
officer or employee; or
- adopt, enter into or amend an employee benefit plan, except as
contemplated by the merger agreement;
. take any material action with respect to accounting policies or
procedures except to the extent consistent with Magic Earth's past
accounting practices;
. pay, discharge or satisfy any material claim, except in accordance with
past practice; and
. enter into hedging transactions or change existing hedging transactions.
Halliburton, Dresser and Halliburton MS have each covenanted that from the
date of the merger agreement until the merger is completed that it will not:
. amend its charter or bylaws in a way that would affect the Halliburton
common stock or impede the merger agreement; and
. make any dividends, except in a manner consistent with past practice.
Access to Information
After the date of the merger agreement, Magic Earth has agreed, except as
prohibited by its contractual obligations to others, that it will allow
representatives of Dresser access to its books and records and its officers,
directors, employees, agents, accountants and counsel who have any knowledge
relating to its business. Magic Earth also agrees to provide additional
financial and operating data and other information regarding the assets,
properties and goodwill of Magic Earth as Dresser reasonably requests.
No Solicitation
Magic Earth and the signatory stockholders have agreed that until the merger
agreement is terminated in accordance with its terms, they will not:
. solicit, initiate or encourage any inquiries or proposals that may
result in a proposal or offer for a merger, consolidation, sale of
substantially all of its assets or capital stock or a similar
transaction involving Magic Earth, other than the merger agreement; or
. negotiate, agree to, enter into, accept or recommend that Magic Earth do
any of the preceding.
Magic Earth or the signatory stockholders are required to notify Halliburton of
any competing proposal. The signatory stockholders further agree, that except
as provided by the merger agreement, they will not take any action to dispose
of or encumber the shares they own. However, the Magic Earth board can
entertain a competing proposal if:
. after consultation with legal counsel, it determines that not to do so
would be a breach of the board's fiduciary duty; and
24
. it provides reasonable prior notice to Dresser identifying the person
making the competing proposal and disclosing the terms of the proposal.
Post Merger Matters
Once the merger is completed, Halliburton MS will cease to exist as a
corporation and Magic Earth, as the surviving corporation, will succeed to all
of the assets, rights and obligations of Halliburton MS. The certificate of
incorporation and bylaws of Magic Earth will be the certificate of
incorporation and bylaws of the surviving corporation until amended as provided
in those documents and pursuant to the Delaware General Corporation Law.
Conditions to Closing
Completion of the merger is subject to the following conditions:
. any waiting period under the Hart Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated under that
act has expired;
. no action of a governmental authority or court prohibits consummation of
the merger;
. no action is pending before a governmental authority seeking to restrain
or materially alter the transaction, which does or would be expected to
render it impossible or unlawful to complete the merger;
. the registration statement for the Halliburton shares to be issued as the
merger consideration has been declared effective by the SEC and the
registration statement has not been suspended nor have proceedings to
suspend it been initiated by the SEC;
. the merger agreement has been approved by holders of the requisite number
of shares of Magic Earth common stock;
. the parties have agreed on the closing balance sheet, which could effect
the merger consideration;
. each party's representations and warranties are true and correct as of
the closing date, each party's covenants have been complied with, and
each party has provided a certificate from its officers to that effect;
and
. each party has received documents from the other party in furtherance of
the merger agreement as it or its counsel reasonably requests.
In addition, Magic Earth's obligation to close the transaction is subject to
the following conditions:
. non-competing licenses have been entered into by the signatory
stockholders;
. the Halliburton common stock has been listed on the New York Stock
Exchange, subject to official notice of issuance; and
. Dresser has accepted each transmittal letter it has received.
Dresser's obligation to close the transaction is subject to the following
additional conditions:
. Dresser has received an opinion of counsel that the merger will be
treated for federal income tax purposes as a reorganization qualifying
under section 368(a) of the Internal Revenue Code;
. the security interests in Magic Earth's assets held by Texaco Development
Corporation, Texaco Inc. and Texaco Group Inc. have been released;
. all options, warrants, convertible securities or other rights,
agreements, or commitments of any character relating to the capital stock
of Magic Earth or obligating Magic Earth's stockholders or Magic Earth to
issue or sell any shares of capital stock of, or any interest in, Magic
Earth, have been exercised or canceled;
25
. licenses have been obtained from all of Magic Earth's employees assigning
all intellectual property and software developed by the employee;
. employment contacts have been entered into with the persons specified on
Annex C to the merger agreement; and
. competition agreements have been entered into with Messrs. Zeitlin and
Cheung.
An additional Dresser condition to close the transaction is that the Magic
Earth stockholders approving the merger exercise their drag-along rights and
compel the stockholders that have not voted to approve the merger to accept the
merger consideration for those stockholders' shares.
Time of the Merger
As described in this proxy statement/prospectus, the consent in lieu of
special meeting of stockholders of Magic Earth is dated November 20, 2001. If
stockholders of Magic Earth holding 60% of its common stock approve the merger,
Halliburton and Magic Earth will conclude the merger as soon as the other
closing conditions have been met. Those conditions are described above in
"Conditions to Closing." Both Halliburton and Magic Earth expect the merger
will be concluded within a couple of days of November 20, 2001.
Direct Registration of Halliburton Common Stock
In September and October 1998, Halliburton adopted and implemented a direct
registration (book entry) program with respect to record ownership of
Halliburton common stock. Direct registration is a service that allows shares
to be owned, reported and transferred electronically without having a physical
stock certificate issued. Persons who acquire shares of Halliburton common
stock will not receive a physical stock certificate (unless certificates are
requested). Ownership of the shares is recorded in the names of the owner
electronically on Halliburton's books and records. Direct registration is
intended to alleviate problems relating to stolen, misplaced or lost stock
certificates and to reduce the paperwork relating to the transfer of ownership
of Halliburton common stock. Under direct registration, the voting, dividend
and other rights and benefits of holders of Halliburton common stock remain the
same as with holders of certificates.
If:
. you have approved the merger;
. the merger is completed; and
. you have delivered a properly completed transmittal letter accompanied by
your Magic Earth common stock certificates,
Halliburton will issue the appropriate shares of Halliburton common stock to
you through direct registration rather than issuing a physical stock
certificate. However, you can specify that you want a certificate by checking
the appropriate box on the transmittal letter.
The requirements for transferring book entry shares are the same as for
shares represented by a physical stock certificate except that, with direct
registration, there is no certificate to surrender. Halliburton common stock
owned through the direct registration program can be sold and transferred
through a stockbroker or through Mellon Investor Services, LLC, the transfer
agent for the Halliburton common stock.
Method of Selling Halliburton Common Stock
To utilize the services of a stockbroker, a holder of Halliburton common
stock must first add the appropriate stockbroker information to the direct
registration account maintained by the transfer agent. After this is done, a
holder may by telephone transfer Halliburton common stock to the brokerage
account and then may sell or transfer the shares by giving instructions to the
broker.
Alternatively, shares of Halliburton common stock owned through direct
registration may be sold or transferred through the services of the transfer
agent. Sales will be made through the transfer agent when
26
practicable, but at least once each week. The transfer agent cannot accept
instructions to sell shares on a specific day or at a specific price. The price
per share will be the average price per share of all Halliburton common stock
sold during the period by the transfer agent for holders of book entry shares.
Former Magic Earth stockholders who become holders of Halliburton common
stock as a result of the merger will be able to sell all or a portion of their
Halliburton common stock through the auspices of the NYSE. The NYSE is the only
major stock exchange in the United States on which the Halliburton common stock
is listed.
AGREEMENTS WITH MAGIC EARTH STOCKHOLDERS AND DIRECTORS
Magic Earth Stockholders
In conjunction with the merger agreement, Halliburton or one of its
affiliates will enter into the following agreements with Michael J. Zeitlin and
Yin Cheung:
. executive employment agreement;
. software license agreement; and
. use, disclosure and competition agreement.
The executive employment agreement provides that Mr. Zeitlin will be
employed after the merger as Magic Earth's president and chief executive
officer and Mr. Cheung will be employed as Magic Earth's executive vice
president and director of technology. The software license agreement gives each
Messrs. Zeitlin and Cheung the right to use the software owned by Magic Earth
in any industry other than the oil and gas and the engineering and construction
industries:
. for a period of two years after termination of their employment on an
exclusive basis; and
. on a non-exclusive basis after the two year period.
The use, disclosure and competition agreement obligates Messrs. Zeitlin and
Cheung to not use or disclose the trade secrets and confidential proprietary
information of Landmark Graphics Corporation and Magic Earth.
Magic Earth Officers and Directors
After the merger, Halliburton has agreed to cause Magic Earth to indemnify
and hold harmless each present and former officer and director of Magic Earth
against losses arising out of matters existing or occurring at or before the
effective time of the merger to the fullest extent allowed by law. Halliburton
also agrees to cause Magic Earth to advance expenses as incurred for losses to
the fullest extent permitted under applicable law.
FEDERAL TAX CONSEQUENCES OF THE MERGER
The following is a summary of the material federal income tax consequences
of the merger to the holders of Magic Earth common stock. This summary is based
in part on the opinion of Vinson & Elkins L.L.P., counsel to Halliburton and
Dresser, described below to the effect that the merger will qualify as a
reorganization. This summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended, existing regulations under the Code and
current administrative rulings and court decisions, all of which are subject to
change. No attempt has been made to comment on all federal income tax
consequences of the merger that may be relevant to particular holders,
including holders that are subject to special tax rules like:
. dealers in securities;
. foreign persons;
. mutual funds;
27
. insurance companies;
. tax-exempt entities; and
. holders who do not hold their shares as capital assets.
Holders of Magic Earth common stock are advised and expected to consult their
own tax advisors regarding the federal income tax consequences of the merger in
light of their personal circumstances and the consequences under applicable
state, local and foreign tax laws.
Vinson & Elkins L.L.P. has provided to Dresser an opinion to the effect that
the merger will be treated for federal income tax purposes as a reorganization
qualifying under Section 368(a) of the Code. This opinion is based upon:
. the merger agreement;
. the facts set forth in the registration statement (including this proxy
statement/prospectus);
. written representations of officers of Dresser and Magic Earth;
. current provisions of the Code;
. existing regulations under the Code;
. current administrative rulings of the Internal Revenue Service;
. court decisions; and
. the assumption that the transaction contemplated by the merger agreement
will be carried out strictly in accordance with the terms of the merger
agreement.
This opinion is not binding on the IRS and no assurance can be given that the
IRS will not adopt a contrary position or that a court would not sustain a
contrary IRS position. The opinion of Vinson & Elkins L.L.P. to Dresser has
been filed as an exhibit to the registration statement. Except to the extent
that a holder makes arrangements with his or her own personal tax advisor, none
of the holders of Magic Earth common stock will receive or be provided with an
opinion regarding the federal income or other tax consequences of the merger to
the holders.
Assuming the merger is treated as a reorganization within the meaning of
Section 368(a) of the Code:
. no gain or loss will be recognized by a Magic Earth stockholder upon the
receipt of Halliburton common stock in exchange for Magic Earth common
stock except with respect to any cash received in lieu of a fractional
share of Halliburton common stock, and
. the aggregate tax basis of the shares of Halliburton common stock
received by a Magic Earth stockholder in the merger (including any
fractional share deemed received) will be the same as the aggregate tax
basis of the shares of Magic Earth common stock surrendered in exchange.
The holding period of the shares of Halliburton common stock received by a
Magic Earth stockholder in the merger (including any fractional share deemed
received) will include the holding period of the shares of Magic Earth common
stock surrendered in exchange, provided that the shares of Magic Earth common
stock are held as capital assets at the effective time.
A stockholder of Magic Earth who receives cash in lieu of a fractional share
of Halliburton common stock will recognize gain or loss equal to the
difference, if any, between the stockholder's tax basis in the fractional share
(as described above) and the amount of cash received. The gain or loss will be
capital gain or loss if the Magic Earth common stock is held by the stockholder
as a capital asset at the effective time. The tax rate applicable to the
capital gain or loss will depend on the holding period for the fractional share
(as described above) as of that time.
28
ACCOUNTING TREATMENT
The parties intend to account for the merger as a purchase for financial
reporting and accounting purposes, under generally accepted accounting
principles. After the completion of the merger, the results of operations of
Magic Earth will be included in the consolidated financial statements of
Halliburton. The purchase price will be allocated to Magic Earth's assets and
liabilities based on the fair values of the assets acquired and the liabilities
assumed. Any excess of the value of the shares of Halliburton common stock over
the fair value of the net assets of Magic Earth acquired will be recorded as
goodwill and will be periodically reviewed under generally accepted accounting
principles. These allocations will be made based upon an analysis that has not
yet been finalized. However, Halliburton's management does not expect the
impact of any subsequent changes to have a material impact on Halliburton's
results of operations.
APPRAISAL RIGHTS
If the merger is consummated, a holder of record of Magic Earth common stock
on the date of making a demand for appraisal, as described below, who:
. continues to hold those shares through the time of the merger;
. strictly complies with the procedures set forth under Section 262 of the
Delaware General Corporation Law; and
. has not voted in favor of the merger,
will be entitled to appraisal by the Delaware Court of Chancery under Section
262 of the Delaware General Corporation Law of the "fair value" of the shares.
This proxy statement/prospectus is being sent to all holders of record of Magic
Earth common stock and constitutes notice of the appraisal rights available to
those holders under Section 262. The statutory right of appraisal granted by
Section 262 requires strict compliance with the procedures set forth in Section
262. Failure to follow any of the procedures may result in a termination or
waiver of appraisal rights under Section 262.
The following is a summary of the principal provisions of Section 262. The
following summary is not a complete statement of Section 262, and is qualified
in its entirety by reference to Section 262, which is incorporated herein by
reference, together with any amendments to the statute that may be adopted
after the date of this proxy statement/prospectus. A copy of Section 262 is
attached as Appendix B to this proxy statement/prospectus.
A holder of Magic Earth common stock electing to exercise appraisal rights
under Section 262 must deliver a written demand for appraisal of his or her
shares before the vote on the merger. The written demand must identify the
holder of record and state the holder's intention to demand appraisal of the
shares. All demands should be delivered to Magic Earth, c/o Shook, Hardy &
Bacon L.L.P., Chase Tower, 600 Travis, Suite 1600, Houston, Texas 77002,
Attention: William P. Jensen, telephone: (713) 227-8008. Within 10 days after
the time of the merger, the surviving corporation is required to send notice of
the effectiveness of the merger to each holder who before the time of the
merger has fully complied with the requirements of Section 262.
Within 120 days after the time of the merger, the surviving corporation or
any holder who has complied with the requirements of Section 262 may file a
petition in the Delaware Court of Chancery demanding a determination of the
fair value of the shares of Magic Earth common stock held by all holders
seeking appraisal. Holders seeking to exercise appraisal rights should not
assume that the surviving corporation will file a petition with respect to the
appraisal of the fair value of their shares or that the surviving corporation
will initiate any negotiations with respect to the fair value of those shares.
The surviving corporation is under no obligation to and has no present
intention to take any action in this regard. Accordingly, holders who wish to
seek appraisal of their shares should initiate all necessary action with
respect to the perfection of their appraisal rights within the time periods and
in the manner prescribed in Section 262. Failure to file the petition on a
timely basis will cause the holder's appraisal rights to cease.
29
Any holder who has complied with subsections (a) and (d) of Section 262 is
entitled, upon written request, to receive from the surviving corporation:
. a statement setting forth the aggregate number of shares of Magic Earth
common stock not voted in favor of the merger with respect to which
demands for appraisal have been received by Magic Earth; and
. the number of holders of those shares.
The surviving corporation must mail the statement within 10 days after the
written request has been received by Magic Earth or within 10 days after
expiration of the time for delivery of demands for appraisal under subsection
(d) of Section 262, whichever is later.
If a petition for an appraisal is filed in a timely manner, the Delaware
Court of Chancery will determine at the hearing on the petition which holders
are entitled to appraisal rights and will appraise the shares of Magic Earth
common stock owned by those holders. The court will determine the fair value of
those shares, exclusive of any element of value arising from the accomplishment
or expectation of the merger, together with a fair rate of interest, to be
paid, if any, upon the amount determined to be the fair value.
The cost of the appraisal proceeding may be determined by the Court of
Chancery and assessed against the parties as the Court deems equitable in the
circumstances. Upon application of a holder seeking appraisal, the Court may
order that all or a portion of the expenses incurred by any holder in
connection with the appraisal proceeding be charged pro rata against the value
of all shares of Magic Earth common stock entitled to appraisal. These expenses
include, without limitation, reasonable attorney's fees and the fees and
expenses of experts.
Any holder that has demanded appraisal in compliance with Section 262 will
not, after the time of the merger, be entitled to vote the stock for any
purpose or receive payment of dividends or other distributions, if any, on the
Magic Earth common stock. However, the holder will be entitled to dividends or
distributions, if any, payable to holders of record at a date before the
merger.
A holder may withdraw a demand for appraisal and accept the Halliburton
common stock at any time within 60 days after the time of the merger, or after
that period with the written approval of the surviving corporation. If an
appraisal proceeding is properly instituted, the proceeding may not be
dismissed as to any holder without the approval of the Delaware Court of
Chancery, and the approval may be conditioned upon any terms the Court of
Chancery deems just. If, after the merger, a holder of Magic Earth common stock
who had demanded appraisal for the holder's shares fails to perfect, or loses
the right to appraisal, those shares will be treated under the merger agreement
as if they had been converted as of the time of the merger into Halliburton
common stock.
These provisions of the Delaware corporate law are complex. Any Magic Earth
common stockholder who is considering exercising appraisal rights should
consult an attorney.
SHAREHOLDERS' AGREEMENT
On January 31, 2001, all of the stockholders of Magic Earth entered into a
Shareholders' Agreement. The Shareholders' Agreement prohibits the stockholders
from, directly or indirectly, selling, transferring, assigning, hypothecating,
encumbering or otherwise disposing of all or any portion of their Magic Earth
shares, whether voluntarily, involuntarily or by operation of law, except in
accordance with the agreement. Pursuant to the tag-along rights and drag-along
rights in the Shareholders' Agreement, stockholders owning at least 60% of the
Magic Earth common stock (the "transfer group") can transfer their shares to a
third party, provided the other stockholders are offered the same terms for
their shares. The merger consideration under the merger agreement is the same
for each share of Magic Earth common stock. The transfer group has the option
to compel the other stockholders to transfer their shares for the same
consideration received by the transfer group. The merger agreement requires
that as a condition to conclude the merger, the transfer group, each
stockholder signing the
30
consent in lieu of special meeting of Magic Earth stockholders to approve the
merger in this instance, must compel the other stockholders to transfer their
shares for the merger consideration. Therefore, if the merger is approved by at
least 60% of the Magic Earth stockholders, you may be contractually bound by
the Shareholders' Agreement to accept the merger consideration. The
Shareholders' Agreement may impact the appraisal rights that you would
otherwise have under the Delaware General Corporation Law. You should consult
an attorney if you have concerns about the impact of the Shareholders'
Agreement on the appraisal rights provided by the Delaware General Corporation
Law.
REGULATORY APPROVAL
On May 16, 2001, Halliburton and Magic Earth each filed under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, a premerger notification with
the Department of Justice and the Federal Trade Commission regarding the
merger. The statutory waiting period for the filing has expired.
At any time before or after the effective time of the merger, the Department
of Justice, the Federal Trade Commission, state attorneys general, foreign
governmental authorities or private persons or entities could seek under the
antitrust or competition laws, among other things:
. to enjoin the merger, or
. to cause Halliburton to divest itself, in whole or in part, of Magic
Earth or of other businesses conducted by Halliburton or Magic Earth.
There can be no assurance that a challenge to the merger will not be made or
that, if a challenge is made, Halliburton and Magic Earth will prevail.
MAGIC EARTH CONSENT IN LIEU OF SPECIAL MEETING
Date
A consent in lieu of special meeting of stockholders of Magic Earth dated
November 20, 2001 accompanies this proxy statement/prospectus.
Purpose
If you sign the consent, you will approve the merger agreement. It is a
condition of the merger that the consent in lieu of special meeting be approved
by holders of the requisite number of Magic Earth common stock. An affirmative
vote of 60% of the Magic Earth stockholders is required to approve the merger.
The signatory stockholders who own an aggregate of 45,750 Magic Earth shares
that represent 45.8% of the outstanding common stock of Magic Earth have agreed
to approve the merger.
Procedure
All stockholders are being sent the consent in lieu of special meeting. The
consent is dated November 20, 2001. If stockholders holding 60% of the common
stock of Magic Earth sign the consent, the merger will be approved. The merger
will then be completed as soon as practicable after that date. If you approve
the merger, please sign, date and return the consent in lieu of special meeting
in the enclosed envelope.
Magic Earth stockholders may direct all questions concerning the consent in
lieu of special meeting to William P. Jensen, special outside counsel for Magic
Earth, at (713) 227-8008.
31
INFORMATION REGARDING HALLIBURTON COMPANY
General development of business
Halliburton Company's predecessor was established in 1919 and incorporated
under the laws of the State of Delaware in 1924. Halliburton Company provides a
variety of services, equipment, maintenance, and engineering and construction
to energy, industrial and governmental customers. Information related to
acquisitions and dispositions is set forth in Note 2 to the financial
statements in Halliburton's Form 10-K for the fiscal year ended December 31,
2000 and in Note 3 to the quarterly financial statements in Halliburton's Form
10-Q for the quarter ended June 30, 2001.
Financial information about business segments
Halliburton operates in two business segments:
- Energy Services Group; and
- Engineering and Construction Group.
See Note 4 to the financial statements in Halliburton's Form 10-K for the
fiscal year ended December 31, 2000 and Note 2 to the quarterly financial
statements in Halliburton's Form 10-Q for the quarter ended June 30, 2001 for
financial information about its business segments.
Description of services and products
The following is a summary that briefly describes Halliburton's services and
products for each business segment.
Energy Services Group
The Energy Services Group provides a wide range of discrete services and
products and integrated solutions to customers for the exploration,
development, and production of oil and gas. The customers for this segment are
major, national and independent oil and gas companies. This segment consists
of:
. Halliburton Energy Services provides oilfield services and products
including discrete products and services and integrated solutions for
oil and gas exploration, development and production throughout the
world. Products and services include pressure pumping equipment and
services, logging and perforating, drilling systems and services,
drilling fluids systems, drill bits, specialized completion and
production equipment and services, well control, integrated solutions,
and reservoir description,
. Landmark Graphics provides integrated exploration and production
software information systems and professional services to the petroleum
industry, and
. Other product service lines include surface/subsea operations and large
integrated engineering, procurement, and construction projects
containing both surface and sub-surface components. Surface/subsea
operations provide:
. construction, installation and servicing of subsea facilities;
. flexible pipe for offshore applications;
. pipeline services for offshore customers;
. pipecoating services; and
. feasibility, conceptual and front-end engineering and design, project
management, detailed engineering, maintenance, procurement,
construction site management, commissioning, startup and
debottlenecking of both onshore and offshore facilities.
Engineering and Construction Group
The Engineering and Construction Group provides engineering, procurement,
construction, project management, and facilities operation and maintenance for
oil and gas and other industrial and governmental
32
customers. The Engineering and Construction Group, operating as Kellogg Brown &
Root, includes the following five product lines:
. Onshore operations comprises engineering and construction activities,
including liquefied natural gas, ammonia, crude oil refineries, and
natural gas plants,
. Offshore operations includes specialty offshore deepwater engineering
and marine technology and worldwide fabrication capabilities,
. Government operations provides operations, maintenance and logistics
activities for government facilities and installations,
. Operations and maintenance provides services for private sector
customers, primarily industrial, hydrocarbon and commercial
applications, and
. Asia Pacific operations, based in Australia, provides civil engineering
and consulting services.
Markets and competition
Halliburton is one of the world's largest diversified energy services and
engineering and construction services companies. Halliburton's services and
products are sold in highly competitive markets throughout the world.
Competitive factors impacting sales of its services and products include:
price, service (including the ability to deliver services and products on an
"as needed, where needed" basis), product quality, warranty and technical
proficiency. While Halliburton provides a wide range of discrete services and
products, a number of customers have indicated a preference for integrated
services and solutions. In the case of the Energy Services Group, integrated
services and solutions relate to all phases of exploration, development and
production of oil and gas. In the case of the Engineering and Construction
Group, integrated services and solutions relate to all phases of design,
procurement, construction, project management and maintenance of a facility.
Demand for these types of integrated services and solutions is based primarily
upon quality of service, technical proficiency and value created.
Halliburton conducts business worldwide in over 100 countries. Since the
markets for its services and products are so large and cross so many geographic
lines, a meaningful estimate of the number of competitors cannot be made. The
industries Halliburton serves are highly competitive and it has many
substantial competitors. Generally, Halliburton's services and products are
marketed through its own servicing and sales organizations. A small percentage
of sales of the Energy Service Group's products is made through supply stores
and third-party representatives.
Operations in some countries may be adversely affected by unsettled
political conditions, expropriation or other governmental actions, and exchange
control and currency problems. Halliburton believes the geographic
diversification of its business activities reduces the risk that loss of
operations in any one country would be material to the conduct of its
operations taken as a whole. Information regarding Halliburton's exposures to
foreign currency fluctuations, risk concentration, and financial instruments
used to minimize risk is included in Note 17 to the financial statements in its
Form 10-K for the fiscal year ended December 31, 2000.
Customers and backlog
In 2000, 1999, and 1998, respectively, 84%, 83% and 87% of Halliburton's
revenues from continuing operations were derived from the sale of products and
services to the energy industry. The following schedule summarizes the backlog
from continuing operations of engineering and construction projects at December
31, 2000 and 1999:
Millions of dollars 2000 1999
------------------- ------ ------
Firm orders................................................ $7,652 $8,829
Government orders firm but not yet funded, letters of
intent and contracts awarded but not signed............... 1,751 316
------ ------
Total.................................................... $9,403 $9,145
====== ======
33
Halliburton estimates that 50% of the total backlog existing at December 31,
2000 will be completed during 2001. Halliburton's backlog excludes contracts
for recurring hardware and software maintenance and support services. Backlog
does not indicate what future operating results will be because backlog figures
are subject to substantial fluctuations. Arrangements included in backlog are
in many instances extremely complex, nonrepetitive in nature and may fluctuate
in contract value and timing. Many contracts do not provide for a fixed amount
of work to be performed and are subject to modification or termination by the
customer. The termination or modification of any one or more sizeable contracts
or the addition of other contracts may have a substantial and immediate effect
on backlog.
Raw materials
Raw materials essential to Halliburton's business are normally readily
available. Where Halliburton is dependent on a single supplier for materials
essential to its business, Halliburton is confident that it could make
satisfactory alternative arrangements in the event of an interruption in
supply.
Research, development and patents
Halliburton maintains an active research and development program. The
program improves existing products and processes, develops new products and
processes and improves engineering standards and practices that serve the
changing needs of Halliburton's customers. Information relating to
Halliburton's expenditures for research and development is included in Note 1
and Note 4 to the financial statements in Halliburton's Form 10-K for the
fiscal year ended December 31, 2000.
Halliburton owns a large number of patents and has pending a substantial
number of patent applications covering various products and processes.
Halliburton is also licensed under patents owned by others. Halliburton does
not consider a particular patent or group of patents to be material to its
business.
Seasonality
Weather and natural phenomena can temporarily affect the performance of
Halliburton's services. Winter months in the Northern Hemisphere tend to affect
operations negatively, but the widespread geographical locations of
Halliburton's operations serve to mitigate the seasonal nature of its business.
Employees
At December 31, 2000, Halliburton employed approximately 93,000 people
worldwide including about 9,000 related to discontinued operations. At December
31, 1999, Halliburton employed approximately 103,000 people worldwide including
about 15,000 related to discontinued operations. At June 30, 2001 after
disposition of the discontinued operations of Dresser Equipment Group in April
2001, Halliburton employed approximately 88,000 people worldwide.
Environmental regulation
Halliburton is subject to various environmental laws and regulations.
Compliance with these requirements has not substantially increased capital
expenditures, adversely affected Halliburton's competitive position or
materially affected its earnings. Halliburton does not anticipate any material
adverse effects in the foreseeable future as a result of existing environmental
laws and regulations. See Note 9 to the financial statements in Halliburton's
Form 10-K for the fiscal year ended December 31, 2000. See also Note 7 to the
quarterly financial statements in Halliburton's Form 10-Q for the quarter ended
June 30, 2001.
34
HALLIBURTON COMPANY SELECTED FINANCIAL DATA
(Unaudited)
Six Months
Ended
Millions of dollars and Years ended December 31 June 30
shares except per share ----------------------------------------------- ----------------
and number of employees 1996 1997 1998 1999 2000 2000 2001
--------------------------- ------- -------- -------- -------- ------- ------- -------
Operating results
Net revenues
Energy Services Group..... $ 5,936 $ 7,830 $ 8,001 $ 5,921 $ 6,776 $ 3,038 $ 4,245
Engineering and
Construction Group....... 5,300 5,668 6,503 6,392 5,168 2,689 2,238
------- -------- -------- -------- ------- ------- -------
Total revenues.......... $11,236 $ 13,498 $ 14,504 $ 12,313 $11,944 $ 5,727 $ 6,483
======= ======== ======== ======== ======= ======= =======
Operating income
Energy Services Group..... $ 654 $ 983 $ 981 $ 250 $ 582 $ 162 $ 467
Engineering and
Construction Group....... 178 255 227 175 (42) 79 43
Special charges and
credits(1)............... (86) 11 (959) 47 -- -- --
General corporate......... (72) (71) (79) (71) (78) (34) (40)
------- -------- -------- -------- ------- ------- -------
Total operating
income(1).............. 674 1,178 170 401 462 207 470
Nonoperating income
(expense), net............ (70) (82) (115) (94) (127) (63) (75)
------- -------- -------- -------- ------- ------- -------
Income from continuing
operations before income
taxes and minority
interest.................. 604 1,096 55 307 335 144 395
Provision for income
taxes(2).................. (158) (406) (155) (116) (129) (56) (159)
Minority interest in net
income of consolidated
subsidiaries.............. -- (30) (20) (17) (18) (9) (7)
------- -------- -------- -------- ------- ------- -------
Income (loss) from
continuing operations..... $ 446 $ 660 $ (120) $ 174 $ 188 $ 79 $ 229
======= ======== ======== ======== ======= ======= =======
Income (loss) from
discontinued operations... $ 112 $ 112 $ 105 $ 283 $ 313 $ 260 $ 261
======= ======== ======== ======== ======= ======= =======
Net income (loss).......... $ 558 $ 772 $ (15) $ 438 $ 501 $ 339 $ 491
======= ======== ======== ======== ======= ======= =======
Basic income (loss) per
common share
Continuing operations..... $ 1.04 $ 1.53 $ (0.27) $ 0.40 $ 0.42 $ 0.18 $ 0.54
Net income (loss)......... 1.30 1.79 (0.03) 1.00 1.13 0.77 1.15
Diluted income (loss) per
common share
Continuing operations..... 1.03 1.51 (0.27) 0.39 0.42 0.18 0.53
Net income (loss)......... 1.29 1.77 (0.03) 0.99 1.12 0.76 1.14
Cash dividends per share... 0.50 0.50 0.50 0.50 0.50 0.25 0.25
Return on average
shareholders' equity...... 15.25% 19.16% (0.35%) 10.49% 12.20% 7.63% 11.68%
Financial position
Net working capital........ $ 1,501 $ 1,985 $ 2,129 $ 2,329 $ 1,742 $ 2,555 $ 2,503
Total assets............... 8,689 9,657 10,072 9,639 10,103 9,806 10,661
Property, plant and
equipment, net............ 2,047 2,282 2,442 2,390 2,410 2,353 2,483
Long-term debt (including
current maturities)....... 957 1,303 1,426 1,364 1,057 1,061 1,046
Shareholders' equity....... 3,741 4,317 4,061 4,287 3,928 4,595 4,480
Total capitalization....... 4,828 5,647 5,990 6,590 6,555 6,529 6,243
Shareholders' equity per
share..................... 8.78 9.86 9.23 9.69 9.20 10.33 10.42
Average common shares
outstanding (basic)....... 429 431 439 440 442 443 427
Average common shares
outstanding (diluted)..... 432 436 439 443 446 447 430
Other financial data
Capital expenditures....... $ (612) $ (804) $ (841) $ (520) $ (578) $ (190) $ (344)
Long-term borrowings
(repayments), net......... 286 285 122 (59) (308) (305) (9)
Depreciation and
amortization expense...... 405 465 500 511 503 249 258
Payroll and employee
benefits(3)............... (4,674) (5,479) (5,880) (5,647) (5,260) (2,584) (2,388)
Number of
employees(3),(4).......... 93,000 102,000 107,800 103,000 93,000 95,000 88,000
--------
(1) Operating income includes the following special charges and credits:
1999--$47 million: reversal of a portion of the 1998 special charges.
35
HALLIBURTON COMPANY SELECTED FINANCIAL DATA
(continued from the previous page)
1998--$959 million: asset related charges ($491 million), personnel
reductions ($234 million), facility consolidations ($124 million), merger
transaction costs ($64 million), and other related costs ($46 million).
1997--$11 million: merger costs ($9 million), write-downs on impaired
assets and early retirement incentives ($10 million), losses from the sale
of assets ($12 million), and gain on extension of joint venture ($42
million).
1996--$86 million: merger costs ($13 million), restructuring, merger and
severance costs ($62 million), and write-off of acquired in-process
research and development costs ($11 million).
(2) Provision for income taxes in 1996 includes tax benefits of $44 million
due to the recognition of net operating loss carryforwards and the
settlement of various issues with the Internal Revenue Service.
(3) Employees of Dresser Equipment Group, which is accounted for as
discontinued operations, are included through December 2000. Employees of
Dresser Equipment Group are excluded from the June 30, 2001 information.
(4) Does not include employees of 50% or less owned affiliated companies.
36
MARKET PRICE AND DIVIDEND INFORMATION
Market Prices
Halliburton's common stock is traded on the NYSE under the symbol "HAL".
There is no market for the Magic Earth shares, there being only approximately
18 registered holders of Magic Earth shares. The following table sets forth,
for the periods indicated, the range of high and low per share sales prices for
Halliburton common stock as reported on the NYSE Composite Tape.
HALLIBURTON
-----------
High Low
----- -----
1999*
First Quarter..................................................... 41.88 28.13
Second Quarter.................................................... 48.38 35.00
Third Quarter..................................................... 51.75 38.57
Fourth Quarter.................................................... 44.50 32.31
2000*
First Quarter..................................................... 45.50 33.44
Second Quarter.................................................... 52.25 37.50
Third Quarter..................................................... 55.19 41.19
Fourth Quarter.................................................... 51.06 32.25
2001*
First Quarter..................................................... 45.91 34.81
Second Quarter.................................................... 49.25 32.20
Third Quarter..................................................... 36.79 19.35
Fourth Quarter**.................................................. 26.69 20.54
--------
* Calendar quarters. Halliburton's fiscal year ends on December 31.
** Through October 18, 2001.
On April 27, 2001, the last full trading day prior to the public
announcement of the proposed merger, the last reported sale price of
Halliburton common stock on the NYSE Composite Tape was $42.11 per share. On
October 18, 2001, the latest practicable trading day before the date of this
proxy statement/prospectus, the closing per share sales price of Halliburton
common stock, as reported on the NYSE Composite Tape, was $23.05.
Following the completion of the merger, Halliburton common stock will
continue to be traded on the NYSE.
Dividends
In each of the calendar quarters indicated in the table above, Halliburton
declared and paid a cash dividend of $0.125 per share of Halliburton common
stock. On July 19, 2001, Halliburton declared a cash dividend of $0.125 per
share of Halliburton common stock, payable on September 27, 2001 to
stockholders of record on September 6, 2001. If you receive Halliburton common
stock as a result of completion of the merger, the date of issuance of the
Halliburton common stock will occur after the record date for this dividend. As
a result, you will not be entitled to receive this dividend.
Halliburton's board of directors intends to continue to consider the payment
of quarterly dividends on the outstanding shares of Halliburton's common stock.
The declaration and payment of future dividends will depend upon, among other
things, Halliburton's future earnings, its general financial condition, the
success of its business activities, its capital requirements and general
business conditions.
During each of the years ended December 31, 1999 and 2000, the Magic Earth
board of directors did not declare or pay any dividends on its common stock.
37
If the merger is not completed, the Magic Earth board of directors has no
intention of paying cash dividends in the foreseeable future. Any declaration
and payment of dividends in the future will depend upon, among other things,
future earnings and capital requirements of Magic Earth, its general financial
condition, the success of its business activities and general business
conditions.
HALLIBURTON COMMON STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return on
Halliburton's common stock since the beginning of the year with the Standard &
Poor's 500 Stock Index and the Dow Jones U.S. Sector Energy Index. This
comparison assumes the investment of $100 on December 31, 2000 and the
reinvestment of all dividends. The stockholder return set forth on the chart
below is not necessarily indicative of future performance.
Total Stockholders' Return
For Year-to-Date 2001--Monthly Observations
Assumes Investment of $100 on December 31, 2000 and Reinvestment of Dividends
[CHART]
12/31/00 1/31/01 2/28/01 3/30/01 4/30/01 5/31/01 6/29/01 7/31/01 8/31/01 9/28/01
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Halliburton............. 100.00 113.60 109.85 101.72 119.63 129.43 98.89 97.21 77.67 62.83
S&P 500................. 100.00 103.50 93.98 87.96 94.74 95.21 92.83 91.81 85.93 78.89
Dow Jones U.S. Energy .. 100.00 97.40 98.86 89.37 99.29 102.96 92.36 93.10 87.23 80.60
As the graph shows, the price of Halliburton common stock, as well as the
stock market in general, has fluctuated during this period. There is no
assurance that the shares of Halliburton common stock you receive for your
shares of Magic Earth common stock will not decline after you receive them.
Based on the recent performance of the Halliburton common stock, and the stock
market in general, the price may fluctuate significantly.
38
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF MAGIC EARTH
The following table sets forth information with respect to persons or groups
who, to Magic Earth's knowledge, own or have the right to acquire more than
five percent of the common stock of Magic Earth, as of October 19, 2001.
Shares Beneficially
Owned as of
Name of Beneficial Owner May 31, 2001
------------------------ ---------------------
Number Percent
---------- ----------
Michael J. Zeitlin........................................ 25,402 25.4
Texaco Development Corporation............................ 25,000 25.0
Yin L. Cheung............................................. 20,348 20.3
Silicon Graphics Inc...................................... 10,000 10.0
BPA Investment Holding Company............................ 10,000 10.0
The following table sets forth, as of October 19, 2001, the number of shares
of common stock of Magic Earth owned beneficially by each director of Magic
Earth, each of the two most highly compensated executive officers of Magic
Earth and all directors and executive officers of Magic Earth as a group.
Shares Beneficially
Owned as of
Name of Beneficial Owner May 31, 2001
------------------------ ---------------------
Number Percent
---------- ----------
Michael J. Zeitlin........................................ 25,402 25.4
Yin L. Cheung(1).......................................... 20,348 20.3
Knut Korsell(2)........................................... 0 *
Steve Peacock(3).......................................... 0 *
Miles Harper(1)........................................... 0 *
Gregory M. Vesey(4)....................................... 0 *
All directors and executive officers as a group........... 45,750 45.8
--------
* less than one percent
(1) Nominee of Michael J. Zeitlin
(2) Nominee of Silicon Graphics, Inc.
(3) Nominee of BPA Investment Holding Company
(4) Nominee of Texaco Development Corporation
39
DESCRIPTION OF HALLIBURTON COMMON STOCK
General
The following is a general description of some of the provisions of the
restated certificate of incorporation and by-laws of Halliburton. The
description is qualified by reference to those documents, which are included as
exhibits to the registration statement.
Halliburton Common Stock
Halliburton is authorized to issue 600,000,000 shares of Halliburton common
stock, par value $2.50. As of September 24, 2001, there were 430,027,370 shares
of Halliburton common stock issued and outstanding and approximately 25,067
holders of record of Halliburton common stock. The holders of Halliburton
common stock are entitled to one vote for each share on all matters submitted
to a vote of stockholders. The holders of Halliburton common stock do not have
cumulative voting rights in the election of directors. Subject to the rights of
the holders of Halliburton preferred stock, the holders of Halliburton common
stock are entitled to receive ratably the dividends, if any, as may be declared
by the board of directors of Halliburton out of legally available funds. In the
event of liquidation, dissolution or winding up of Halliburton, the holders of
outstanding Halliburton preferred stock, if any, shall to the extent assets are
available, be paid amounts owed to them. Holders of Halliburton common stock
are then entitled to share ratably in all remaining assets of Halliburton. The
holders of Halliburton common stock have no preemptive, subscription,
redemptive or conversion rights. The outstanding shares are fully paid and
nonassessable. The rights, preferences and privileges of holders of Halliburton
common stock are subject to those of holders of Halliburton preferred stock.
Rights to Purchase Preferred Stock
Halliburton is a party to the restated rights agreement dated as of December
1, 1996. Under the restated rights agreement, one preferred share right has
been distributed as a dividend for each share of Halliburton common stock
outstanding or issued before the distribution date or termination of the
restated rights agreement. One right will accompany each share of Halliburton
common stock issued after completion of the merger. Each right entitles the
registered holder to purchase from Halliburton one two-hundredth of a share of
series A junior participating preferred stock, without par value ("Halliburton
series A preferred stock"), of Halliburton, at a price of $75.00 per one two-
hundredth of a share, subject to further adjustment. Until the occurrence of
the events described below, the rights are not exercisable, will be evidenced
by the certificates for Halliburton common stock and will not be transferable
apart from the Halliburton common stock.
Detachment of Rights; Exercise. The Rights are currently attached to all
certificates representing outstanding shares of Halliburton common stock and no
separate right certificates have been distributed. The rights will separate
from the Halliburton common stock and a distribution date will occur upon the
earlier of:
. ten business days following a public announcement that a person or group
of affiliated or associated persons (an "acquiring person") has acquired
beneficial ownership of 15% or more of the outstanding voting shares, as
defined in the restated rights agreement, of Halliburton; and
. the tenth business day following the commencement or announcement of an
intention to commence a tender offer or exchange offer, the consummation
of which would result in the beneficial ownership by a person or group of
15% or more of the outstanding voting shares.
The rights are not exercisable until the distribution date. As soon as
practicable following the distribution date, separate certificates evidencing
the rights will be mailed to holders of record of Halliburton common stock as
of the close of business on the distribution date and the separate right
certificates alone will then evidence the rights.
40
If a person or group were to acquire 15% or more of the voting shares of
Halliburton, each right then outstanding, other than rights beneficially owned
by the acquiring person which would become null and void, would become a right
to buy:
. that number of shares of Halliburton common stock; or
. under some circumstances, the equivalent number of one two-hundredths of
a share of Halliburton series A preferred stock,
that at the time of the acquisition would have a market value of two times the
purchase price of the right.
If:
. Halliburton is acquired in a merger or other business combination
transaction; or
. more than 50% of its consolidated assets or earning power were sold,
proper provision is required to be made so that each holder of a right will the
have the right to receive the number of shares of common stock of the acquiring
company which at the time of the transaction would have a market value of two
times the purchase price of the right. The shares would be acquired upon the
exercise of the right at the then current purchase price of the right.
Antidilution and Other Adjustments. The number of shares or fractions of a
share of Halliburton series A preferred stock or other securities or property
issuable upon exercise of the right, and the purchase price payable, are
subject to customary adjustments to prevent dilution. The number of outstanding
rights and the number of shares or fractions of a share of Halliburton series A
preferred stock issuable upon exercise of each right are also subject to
adjustment if before the distribution date there is:
. a stock split of the Halliburton common stock;
. a stock dividend on the Halliburton common stock payable in Halliburton
common stock; or
. subdivisions, consolidations or combinations of the Halliburton common
stock.
Exchange Option. At any time after the acquisition by a person or group of
affiliated or associated persons of beneficial ownership of 15% or more of the
outstanding voting shares of Halliburton and before the acquisition by a person
or group of 50% or more of the outstanding voting shares of Halliburton, the
Halliburton board of directors may redeem the rights. A redemption of rights
under those circumstances would require Halliburton to issue Halliburton common
stock in mandatory redemption of all or part of the outstanding rights, other
than rights owned by such person or group that would become null and void. The
stock issuance will be at an exchange ratio of one share of Halliburton common
stock, or one two-hundredth of a share of Halliburton series A preferred stock,
for each two shares of Halliburton common stock for which each right is then
exercisable. The redemption exchange rate is subject to adjustment upon the
occurrence of any of the events causing an adjustment in the number of
outstanding rights.
Redemption of Rights. At any time before the first public announcement that
a person or group has become the beneficial owner of 15% or more of the
outstanding voting shares, the Halliburton board of directors may redeem all
but not less than all the then outstanding rights at a redemption price of $.01
per right. The Halliburton board of directors, in its sole discretion, may
establish the time, basis and conditions of the redemption for the rights.
After redemption of the rights, the only right of the holders of rights will be
to receive the redemption price.
Expiration; Amendment of Rights. The rights will expire on December 15,
2005, unless earlier redeemed or exchanged. The terms of the rights may be
amended by the Halliburton board of directors without the consent of the
holders of the rights, including an amendment to extend the expiration date of
the rights. If a distribution date has not occurred, an amendment may extend
the period during which the rights may be redeemed. After the first public
announcement that a person or group has become the beneficial owner of 15%
41
or more of the outstanding voting shares, however, no amendment may materially
and adversely affect the interests of the holders of the rights.
The rights have anti-takeover effects. The rights will cause substantial
dilution to a person or group that attempts to acquire Halliburton without the
approval of the Halliburton board of directors. The rights should not, however,
interfere with any merger or other business combination that is approved by the
Halliburton board of directors.
This description of the rights is qualified by reference to the restated
rights agreement, a copy of which is filed as an exhibit to the registration
statement.
Halliburton Preferred Stock
General. Halliburton is authorized to issue 5,000,000 shares of preferred
stock, without par value, of which 3,000,000 shares have been designated as
Halliburton series A preferred stock. No shares of Halliburton preferred stock
were outstanding at October 19, 2001. The Halliburton Board of Directors has
authority, without stockholder approval, to issue shares of Halliburton
preferred stock in one or more series and to determine the number of shares,
designations, dividend rights, conversion rights, voting power, redemption
rights, liquidation preferences and other terms of the series. The issuance of
Halliburton preferred stock, while providing desired flexibility in connection
with possible acquisitions and other corporate purposes, could adversely affect
the voting power of holders of Halliburton common stock. The issuance of
Halliburton's preferred stock could also reduce the likelihood that holders of
Halliburton common stock will receive dividend payments and payments upon
liquidation. Issuance of Halliburton preferred stock could also have the effect
of delaying, deferring or preventing a change in control of Halliburton.
Halliburton has no present plans to issue any Halliburton preferred stock.
Halliburton Series A Preferred Stock. The terms of the Halliburton series A
preferred stock are designed so that the value of each one-hundredth of a share
purchasable upon exercise of a right will approximate the value of one share of
Halliburton common stock. The Halliburton series A preferred stock is
nonredeemable and will rank junior to all other series of Halliburton preferred
stock. Each whole share of Halliburton Series A Preferred Stock is entitled to
receive a cumulative quarterly preferential dividend in an amount per share
equal to the greater of:
. $1.00 in cash; or
. in the aggregate, 100 times the dividend declared on the Halliburton
common stock.
In the event of liquidation, the holders of the Halliburton series A
preferred stock are entitled to receive a preferential liquidation payment
equal to the greater of:
. $100.00 per share; or
. in the aggregate, 100 times the payment made on the Halliburton common
stock,
plus, in either case, the accrued and unpaid dividends and distributions.
In the event of any merger, consolidation or other transaction in which the
Halliburton common stock is exchanged for or changed into other stock or
securities, cash or property, each whole share of Halliburton series A
preferred stock is entitled to receive 100 times the amount received per share
of Halliburton common stock. Each whole share of Halliburton series A preferred
stock is entitled to 100 votes on all matters submitted to a vote of the
stockholders of Halliburton. Holders of Halliburton series A preferred stock
will generally vote together as one class with the holders of Halliburton
common stock and any other capital stock on all matters submitted to a vote of
stockholders of Halliburton.
42
Specific Provisions of Halliburton Charter and By-laws
The Halliburton certificate of incorporation contains provisions authorizing
the indemnification of persons who become parties to any threatened, pending or
completed action, suit or proceeding because the person is or was a director,
officer, employee or agent of Halliburton. This includes any individual who is
or was serving at the request of Halliburton as a director, officer, employee
or agent of another corporation or enterprise. These individuals are
indemnified against expenses and damages incurred in that litigation. The
Halliburton certificate of incorporation also contains provisions that, in
accordance with Delaware law, limit the liability of directors of Halliburton
for breach of fiduciary duty. Under these provisions, directors of Halliburton
may be liable for breach of fiduciary duty only:
. under Section 174 of the DGCL, relating to the payment of unlawful
dividends and unlawful purchases of stock of the corporation; or
. if, in addition to any and all other requirements for liability, any
director:
. shall have breached the duty of loyalty to Halliburton;
. in acting or failing to act, shall not have acted in good faith or
shall have acted in a manner involving intentional misconduct or a
knowing violation of law; or
. shall have derived an improper personal benefit.
The provisions of the Halliburton certificate of incorporation may be amended
or repealed by the vote of holders of a majority of the outstanding capital
stock of Halliburton entitled to vote.
Except in the case of nominations by or at the direction of the Halliburton
board of directors, written notice must be given of any nomination of a
director:
. with respect to an election to be held at an annual meeting of
stockholders, not later than ninety days before the first anniversary of
the immediately preceding annual meeting; and
. with respect to an election to be held at a special meeting of
stockholders, not later than the close of business on the tenth day
following the day of notice of the meeting.
Except in the case of a national emergency, all actions taken by the
Halliburton board of directors require the affirmative vote of a majority of
the directors present at a meeting at which a quorum is present. The
Halliburton by-laws provide that the number of directors on the Halliburton
board of directors may be increased or decreased with the approval of a
majority of the then authorized number of directors. Also, newly created
directorships resulting from any increase in the authorized number of directors
and any vacant directorships may be filled by the affirmative vote of a
majority of the directors then in office.
The Halliburton by-laws may be adopted, amended or rescinded by the vote of
a majority of the Halliburton board of directors or by the majority of the
outstanding shares of capital stock entitled to vote.
Transfer Agent and Registrar
The transfer agent and registrar for the Halliburton common stock is Mellon
Investor Services, LLC.
43
COMPARATIVE RIGHTS OF STOCKHOLDERS
General
Both Magic Earth and Halliburton are corporations incorporated under the
laws of the state of Delaware. As a result of the merger, Magic Earth
stockholders will become owners of Halliburton common stock. Magic Earth
stockholders are parties to a Shareholders' Agreement dated January 31, 2001,
that affects the rights of Magic Earth stockholders. The following is a summary
of material differences between the rights of Magic Earth stockholders and the
rights of Halliburton stockholders.
Voting Rights
Under Delaware law, each stockholder is entitled to one vote per share
unless the certificate of incorporation provides otherwise. In addition, the
certificate of incorporation may provide for cumulative voting at all elections
of directors of the corporation. Under the Halliburton by-laws, holders of
Halliburton common stock are entitled to one vote per share on all matters, and
cumulative voting is not permitted. The Halliburton by-laws provide that a
quorum consists of a majority of the outstanding shares of common stock
entitled to vote, present in person or represented by proxy. The Magic Earth
bylaws also specify that a majority of the outstanding shares of common stock
entitled to vote, present in person or represented by proxy, shall be a quorum.
The holders of Magic Earth common stock are entitled to one vote per share, and
cumulative voting is not permitted.
The Magic Earth Shareholders' Agreement provides that its board of directors
will consist of seven members. It further provides that the management
shareholder, Michael Zietlin, will appoint three directors and each of the
major shareholders, Texaco Development Corporation; Silicon Graphics, Inc.; and
BPA Investment Holding Company, will appoint one director. The stockholders
have agreed to vote their shares at stockholders meetings for the nominees of
the management shareholder and the major shareholders. There is no shareholders
agreement among the Halliburton stockholders.
Actions by Written Consent
Under Delaware law, unless the certificate of incorporation provides
otherwise, any action required or permitted to be taken at any meeting of
stockholders may instead be taken without a meeting, without prior notice or
without a vote if a written consent to the action is signed by the stockholders
representing the number of shares necessary to take the action at a meeting at
which all shares entitled to vote were present and voted. Neither the
Halliburton certificate of incorporation nor the Magic Earth certificate of
incorporation restricts action being taken by written consent in lieu of a
meeting.
Special Meeting of Stockholders
Under the Delaware law, a special meeting of stockholders may be called by
the board of directors, and by other person or persons as may be authorized to
do so by the certificate of incorporation or by-laws. The Halliburton by-laws
provide that a special meeting of common stockholders may be called by:
. the chairman of the board;
. the chief executive officer;
. the president, if a director;
. the Halliburton board of directors; or
. stockholders owning a majority of the outstanding Halliburton common
stock.
The Magic Earth bylaws provide that a special meeting of common stockholders
may be called by:
. the Magic Earth board of directors;
44
. the chairman of the board;
. the chief executive officer;
. the president; or
. stockholders owning not less than 20% of the outstanding Magic Earth
common stock.
Sources and Payment of Dividends
Delaware law permits the payment of dividends in cash, property or common
stock out of surplus or if there is no surplus, out of net profits for the
fiscal year in which the dividend is declared or the preceding fiscal year,
subject to any restrictions contained in the certificate of incorporation,
except that payment of dividends from net profits as described above is
prohibited when capital represented by common stock having a preference on
distribution of assets would be impaired by the payment. The Halliburton
certificate of incorporation and by-laws do not restrict the payment of
dividends. Neither do Magic Earth's certificate of incorporation and bylaws.
Rights of Purchase and Redemption
Under Delaware law, a corporation may purchase or redeem its own shares out
of surplus, provided, generally that no repurchase or redemption shall occur:
. when the capital is or would become impaired;
. at a price higher than the redemption price in the case of common stock
redeemable at the option of the corporation; or
. where, in the case of redemption, the redemption is not authorized by
other provisions of Delaware law or the certificate of incorporation.
Neither the Halliburton nor Magic Earth certificates of incorporation restrict
either corporation's rights to repurchase or redeem its shares.
On April 25, 2000 Halliburton's board of directors approved plans to
implement a share repurchase program for up to 44 million shares, or about 10%
of Halliburton's outstanding common stock. As of June 30, 2001 Halliburton had
repurchased over 20 million shares at a cost of $759 million. Halliburton may
periodically repurchase its common stock as it deems appropriate. Magic Earth
does not have a share repurchase program.
Rights of Appraisal
Under Delaware law, holders of common stock of a Delaware corporation who
follow prescribed statutory procedures are entitled to dissent from a merger or
consolidation of the corporation and instead demand payment of the fair value
of their shares. Unless the certificate of incorporation provides otherwise,
dissenters do not have rights of appraisal with respect to their shares in the
case of:
(a) a merger or consolidation, if the shares owned by the dissenters are:
. listed on a national securities exchange; or
. held by more than 2000 stockholders;
provided that, in such case, the stockholders shall be entitled to rights
of appraisal if the stockholders of the constituent corporation are
required to accept anything in exchange for their share other than:
. shares in the surviving corporation;
. shares of another corporation that are publicly listed or held by
more than 2000 stockholders;
45
. cash in lieu of fractional shares; or
. any combination of the above; or
(b) a merger in which the corporation in which they own shares is the
corporation that survive the merger if no vote of its stockholders is
required to approve the merger.
While Magic Earth is a Delaware corporation, its stockholders are parties to
a Shareholders' Agreement. The Shareholders' Agreement prohibits the
stockholders from, directly or indirectly, selling, transferring, assigning,
hypothecating, encumbering or otherwise disposing of all or any portion of
their Magic Earth shares, whether voluntarily, involuntarily or by operation of
law, except in accordance with the agreement. Pursuant to the tag-along rights
and drag-along rights in the Shareholders' Agreement, the transfer group
stockholders owning at least 60% of the Magic Earth common stock, can approve
the merger, provided the other stockholders are offered the same terms for
their shares. The merger consideration under the merger agreement is the same
for each share of Magic Earth common stock. The transfer group has the option
to compel the other stockholders to transfer their shares for the same
consideration received by the transfer group. The merger agreement requires
that as a condition to conclude the merger, that the transfer group must compel
the other stockholders to transfer their shares for the merger consideration.
If the merger is approved by at least 60% of the Magic Earth stockholders, you
will be contractually bound by the Shareholders' Agreement to accept the merger
consideration. The Shareholders' Agreement may impact the appraisal rights that
you would otherwise have under the Delaware General Corporation Law. You should
consult an attorney if you have any questions about appraisal rights or your
rights and obligations under the Shareholders' Agreement.
Pre-emptive Rights
Unless the certificate of incorporation expressly provides otherwise,
stockholders of a Delaware corporation do not have pre-emptive rights. Neither
the Halliburton nor the Magic Earth certificates of incorporation provide for
pre-emptive rights.
Amendment of Governing Instruments
Under Delaware law, the affirmative vote of a majority of the outstanding
stock entitled to vote and of the shares of each class entitled to vote on the
amendment as a class is required to amend the certificate of incorporation. In
addition, the affirmative vote of a majority of the shares of a class is
required with respect to amendments that would as to the class:
. increase or decrease the aggregate number of authorized shares;
. increase or decrease the par value of shares; or
. alter or change the powers, preferences, or special rights of shares so
as to affect them adversely.
Under the Halliburton certificate of incorporation, the corporation may
amend, alter, change or repeal any provision contained in the Halliburton
certificate of incorporation in the manner prescribed by statute, and all
rights and powers conferred upon stockholders are granted subject to this
power. Under Delaware law, the bylaws of a corporation may be amended or
repealed by stockholders entitled to vote, and the certificate of incorporation
may confer this power on the board of directors. That this power has been
conferred upon the directors does not divest the stockholders of their power to
amend or repeal bylaws. The Halliburton certificate of incorporation authorizes
the Halliburton board of directors to alter or repeal Halliburton's by-laws.
The Magic Earth certificate of incorporation provides that Magic Earth can
amend, alter, change or repeal any provision in the Magic Earth certificate of
incorporation in the manner prescribed by law. All rights and powers conferred
on stockholders, directors and officers are subject to this power reserved by
Magic Earth. The Magic Earth certificate of incorporation authorizes the Magic
Earth board of directors to make, alter, amend and repeal Magic Earth's bylaws.
46
Stockholders' Votes on Some Reorganizations
Delaware law requires a majority vote of the shares entitled to vote to
approve a merger between two Delaware corporations or between a Delaware
corporation and a corporation organized under the laws of another state.
Delaware law does not, however, unless otherwise provided in the certificate of
incorporation, require a vote of the stockholders of a constituent corporation
surviving the merger if:
. the merger agreement does not amend that corporation's certificate of
incorporation; and
. each share of that corporation's common stock outstanding immediately
before the effective date of the merger is identical to an outstanding or
treasury share of the surviving corporation after the merger.
Any sale, lease or exchange of all or substantially all of a corporation's
assets requires authorization by a majority vote of the outstanding common
stock entitled to vote.
The Shareholders' Agreement entered into by all of the Magic Earth
stockholders prohibits the stockholders from, directly or indirectly, selling,
transferring, assigning, hypothecating, encumbering or otherwise disposing of
all or any portion of their Magic Earth shares, whether voluntarily,
involuntarily or by operation of law, except in accordance with the agreement.
The permitted transfers include transfers at death, specific involuntary
transfers and tag-along and drag-along rights. The effect of these provisions
is that the merger requires the vote of holders of at least 60% of the Magic
Earth common stock.
Specific Provisions Relating to Share Acquisitions
Delaware law generally prevents a corporation from entering into some
business combinations, including mergers, consolidations and sales of assets,
with an interested common stockholder or its affiliates for a period of three
years after the common stockholder became an interested common stockholder. An
interested common stockholder is defined generally as any person or entity that
is the beneficial owner of a least 15% of a corporations' voting common stock.
This provision is subject to the following exceptions:
. the business combination or the transaction in which the person becomes
an interested common stockholder is timely approved by the board of
directors of the corporation before the person becoming an interested
common stockholder;
. the interested common stockholder acquired 85% of the corporation's
voting common stock in the same transaction in which it exceeded 15%; or
. the business combination is approved by the board of directors and by a
vote of 66 2/3% of the outstanding voting common stock not owned by the
interested common stockholder.
A corporation can provide in an amendment to its certificate of
incorporation or bylaws adopted by a majority of its outstanding shares that
this statute does not apply. If the stockholders adopted this amendment, it
would not become effective for 12 months following its adoption and would not
apply to persons who were already interested common stockholders at the time of
the amendment. Neither the Halliburton nor the Magic Earth certificates of
incorporation contain this type of provision.
Disclosure of Interests
There is no requirement under Delaware law relating to the disclosure of
interests of shares held by a corporation's stockholders.
Classification of the Board of Directors
Under Delaware law, the certificate of incorporation or initial bylaw or a
bylaw adopted by a vote of the stockholders may provide for the classification
of the board of directors with respect to the terms for which directors
severally hold office. The term "classified board" generally means the
specification of selected board
47
seats for a term of more than one year (but not more than three years), with
different classes of board seats coming up for election each year. Neither the
Halliburton nor the Magic Earth certificates of incorporation provide for
classification of their boards of directors.
Removal of Directors
Under Delaware law, any director or the entire board of directors generally
may be removed, with or without cause by a majority vote of the shares then
entitled to vote at an election of directors. A director of a corporation with
a classified board of directors may, however, be removed only for cause unless
the certificate of incorporation otherwise provides. Both the Halliburton
certificate of incorporation and the Magic Earth certificate of incorporation
are silent as to removal of directors. The Magic Earth Shareholders' Agreement
provides that if a director position appointed by the management shareholder or
a major shareholder becomes vacant, the nominating stockholder has the right to
select the replacement. Each Magic Earth stockholder has agreed to vote his
shares to remove any director who votes to fill a vacancy described in the
preceding sentence in contravention of the nominating stockholder's desires.
Liability of Directors
Delaware law permits a Delaware corporation to include in its certificate of
incorporation a provision that limits or eliminates a director's monetary
liability for some breaches of his fiduciary duty of care in a lawsuit by or on
behalf of the corporation or in an action by stockholders of the corporation.
The Halliburton certificate of incorporation contains this type of provision.
The Magic Earth certificate of incorporation states that to the fullest extent
permitted by the Delaware General Corporation Law, Magic Earth directors shall
not be liable to Magic Earth or its stockholders for monetary damages for
breach of fiduciary duty as a director.
Indemnification of Officers and Directors
Delaware law provides that a corporation may, and in specific circumstances
must indemnify its officers, directors, employees or agents for expenses,
judgments or settlements actually and reasonably incurred by them in connection
with suits and other legal proceedings. To avail themselves of this
indemnification these individuals must:
. have acted in good faith and in a manner they reasonably believed to be
in or not opposed to the best interests of the corporation; and
. with respect to any criminal action or proceedings, had no reasonable
cause to believe their conduct was unlawful.
Delaware corporations must indemnify the individuals in connection with
successful defenses of those actions. The Halliburton certificate of
incorporation and by-laws provide that directors and officers of Halliburton
and others will be entitled to indemnification as permitted by statute. The
Magic Earth certificate of incorporation provides that the corporation shall
indemnify all persons to the extent permitted by Section 145 of the DGCL.
Delaware law permits a corporation to advance expenses to directors and
officers, so long as, in the case of officers and directors, they provide an
undertaking to repay the amounts advanced if it is ultimately determined that
the officer or director was not entitled to be indemnified. The Halliburton
certificate of incorporation and the Magic Earth bylaws provide for advancing
expenses in the manner provided for in the Delaware law.
Stockholders and Class Action Suits
Under Delaware law, a common stockholder may institute a lawsuit on behalf
of the corporation. An individual stockholder also may commence a class action
suit on behalf of himself or herself and other
48
similarly situated stockholders where the requirements for maintaining a class
action under the procedural rules of the court in which the suit has been
brought have been met.
Although the above discussion sets forth information concerning the material
differences between the rights of Halliburton common stockholders and the
rights of Magic Earth stockholders, the above summary does not purport to be
complete and is qualified in its entirety by reference to the laws of Delaware,
the Halliburton certificate of incorporation and the Halliburton by-laws, and
the Magic Earth certificate of incorporation, the Magic Earth Shareholders'
Agreement and the Magic Earth bylaws.
LEGAL MATTERS
The validity of the Halliburton common stock to be issued pursuant to the
merger has been opined upon for Halliburton by John M. Allen, Assistant General
Counsel and Assistant Secretary of Halliburton, Dallas, Texas. Mr. Allen owns
4,500 shares of common stock and holds options to purchase an additional 8,600
shares of common stock. Some of the United States income tax consequences of
the merger have been opined upon for Dresser by Vinson & Elkins L.L.P.,
Houston, Texas.
EXPERTS
The annual consolidated financial statements of Halliburton incorporated in
this registration statement on Form S-4 have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report, and are
incorporated in this proxy statement/prospectus in reliance upon the authority
of that firm as experts in accounting and auditing in giving the report.
WHERE YOU CAN FIND MORE INFORMATION
Halliburton has filed with the United States Securities and Exchange
Commission a registration statement on Form S-4 regarding the offering of
Halliburton common stock to be issued in connection with the merger. This proxy
statement/prospectus constitutes a part of the registration statement and, in
accordance with the rules of the Commission, omits some of the information
contained in the registration statement. For that information, reference is
made to the registration statement and its exhibits.
Halliburton files annual, quarterly and current reports, proxy statements
and other information with the Commission. You may read and copy any reports,
statements or other information that Halliburton has filed at the Commission's
public reference rooms in Washington, D.C., New York, New York and Chicago,
Illinois. Please call the Commission at 1-800-SEC-0330 for further information
on the public reference rooms. Halliburton's public filings are also available
to the public from commercial document retrieval services and at the Internet
web site maintained by the Commission at "http://www.sec.gov." Reports, proxy
statements and other information concerning Halliburton also may be inspected
at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
The Commission allows Halliburton to "incorporate by reference" information
into this proxy statement/prospectus, which means that Halliburton can disclose
important information to you by referring you to another document filed
separately with the Commission. The information incorporated by reference is
deemed to be part of this proxy statement/prospectus, except for any
information superseded by information contained directly in the proxy
statement/prospectus. This proxy statement/prospectus incorporates by reference
the documents set forth below that Halliburton has previously filed with the
Commission. These documents contain important information about Halliburton and
its financial condition.
49
Halliburton Filings (File No. 1-3492) Period
------------------------------------- ------
Annual Report on Form 10-K Year Ended December 31, 2000
Quarterly Reports on Form 10-Q Quarters Ended March 31, 2001 and June 30,
2001
Proxy Statement Annual Meeting of Stockholders--2001
Current Reports on Forms 8-K and 8-K/A Filed on January 2, 2001; January 3, 2001;
February 2, 2001; February 2, 2001; February
20, 2001; March 6, 2001; March 13, 2001;
March 23, 2001; April 11, 2001; April 27,
2001; May 1, 2001; May 10, 2001; May 16,
2001; June 7, 2001; June 29, 2001;
July 12, 2001; July 20, 2001; July 27, 2001;
July 27, 2001 and October 19, 2001.
Halliburton incorporates by reference additional documents that Halliburton
may file with the Commission between the date of this proxy
statement/prospectus and the consummation of the merger. These include periodic
reports, including the annual reports on Form 10-K, quarterly reports on Form
10-Q and current reports on Form 8-K, as well as proxy statements. Any
statement contained in this proxy statement/prospectus or in any document
incorporated or deemed to be incorporated by reference in this proxy
statement/prospectus shall be deemed to be modified or superseded for purposes
of this proxy statement/prospectus to the extent that a statement contained in
this proxy statement/prospectus or in any subsequently filed document that also
is or is deemed to be incorporated by reference in this proxy
statement/prospectus, modifies or supersedes the statement. Any statement so
modified or superseded shall not be deemed to constitute a part of this proxy
statement/prospectus except as so modified or superseded.
Halliburton has supplied all information contained or incorporated by
reference in this proxy statement/prospectus relating to Halliburton, and Magic
Earth has supplied all information relating to Magic Earth.
You may obtain any of the documents through the Commission or the
Commission's Internet web site described above. Documents incorporated by
reference are available from Halliburton without charge, excluding all exhibits
unless specifically incorporated by reference as an exhibit in this proxy
statement/prospectus. Magic Earth stockholders may obtain documents
incorporated by reference in this proxy statement/prospectus by requesting them
in writing or by telephone from Halliburton at the following address:
HALLIBURTON COMPANY
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
Attention: Investor Relations
Tel: (214) 978-2600
If you would like to request documents, please do so by November 13, 2001 to
receive them before the date of the consent in lieu of special meeting of Magic
Earth stockholders. If you request any incorporated documents, Halliburton will
mail them to you by first-class mail, or other equally prompt means, within one
business day of receipt of your request.
You should rely only on the information contained or incorporated by
reference in this proxy statement/prospectus in determining whether or not to
approve the merger. Neither Halliburton nor Magic Earth has authorized anyone
to provide you with information that is different from that which is contained
in this proxy statement/prospectus. This proxy statement/prospectus is dated
October 19, 2001. You should not assume that the information contained in this
proxy statement/prospectus is accurate as of any date other than that date, and
neither the mailing of this proxy statement/prospectus to Magic Earth
stockholders nor the issuance of shares of Halliburton common stock upon
consummation of the merger shall create any implication to the contrary.
50
APPENDIX A
AGREEMENT AND PLAN OF MERGER
Among
HALLIBURTON COMPANY
DRESSER INDUSTRIES, INC.
HALLIBURTON MS, INC.
MAGIC EARTH, INC.
MICHAEL J. ZEITLIN
YIN L. CHEUNG
Dated as of April 29, 2001
TABLE OF CONTENTS
ARTICLE I. DEFINITIONS..................................................... A-1
1.01 Definitions........................................................ A-1
1.02 Rules of Construction.............................................. A-1
ARTICLE II. THE MERGER..................................................... A-1
2.01 The Merger......................................................... A-1
2.02 Effective Time; Closing............................................ A-2
2.03 Effect of the Merger............................................... A-2
2.04 Certificate of Incorporation; Bylaws............................... A-2
2.05 Directors and Officers............................................. A-2
ARTICLE III. TREATMENT OF COMPANY COMMON STOCK............................. A-2
3.01 Treatment of Company and Surviving Company Common Stock............ A-2
3.02 Cancellation of Treasury Shares.................................... A-3
3.03 Exchange Procedures................................................ A-3
3.04 Transfer Books..................................................... A-4
3.05 No Fractional Shares............................................... A-4
3.06 Lost, Stolen or Destroyed Certificates............................. A-4
3.07 Abandoned Property; Escheat........................................ A-4
3.08 Certain Adjustments................................................ A-4
3.09 Taking of Necessary Action; Further Action......................... A-4
3.10 Transfer of Ownership.............................................. A-4
3.11 Dissenting Stockholders............................................ A-5
ARTICLE IV. REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY........... A-5
4.01 Organization, Authority and Qualification of the Company........... A-5
4.02 Capital Stock of the Company; Ownership of the Shares.............. A-6
4.03 Organization....................................................... A-6
4.04 Corporate Books and Records........................................ A-6
4.05 No Conflict........................................................ A-6
4.06 Governmental Consents and Approvals................................ A-7
4.07 Financial Information, Books and Records........................... A-7
4.08 No Undisclosed Liabilities......................................... A-7
4.09 Absence of Certain Changes, Events and Conditions.................. A-7
4.10 Litigation......................................................... A-8
4.11 Compliance with Laws............................................... A-8
4.12 Material Contracts................................................. A-8
4.13 Title to Assets.................................................... A-9
4.14 Intellectual Property.............................................. A-10
4.15 Employee Matters................................................... A-12
4.16 Environmental Matters.............................................. A-13
4.17 Prepayments; Hedging; Calls........................................ A-13
4.18 Taxes.............................................................. A-13
4.19 Insurance.......................................................... A-14
4.20 Brokers............................................................ A-15
4.21 Condition of Equipment............................................. A-15
4.22 Royalties and other Payments....................................... A-15
4.23 Preferential Rights................................................ A-15
4.24 Current Commitments................................................ A-15
A-i
4.25 Funds.............................................................. A-15
4.26 Bank Accounts...................................................... A-15
4.27 Receivables........................................................ A-15
4.28 Certain Acts....................................................... A-15
4.29 Permits and Licenses............................................... A-16
4.30 Lists of Directors, Officers and Employees......................... A-16
4.31 Territorial Restrictions........................................... A-16
4.32 No Guarantees...................................................... A-16
4.33 Non-Purchased Items................................................ A-16
4.34 Customers.......................................................... A-16
4.35 Relationships...................................................... A-17
4.36 Former Relationships............................................... A-17
4.37 Content of the Company's Business.................................. A-17
4.38 Disclosure......................................................... A-17
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF HALLIBURTON, DRESSER, MERGER
SUB............................................................. A-17
5.01 Organization and Authority of Halliburton, Dresser and Merger Sub.. A-17
5.02 Certificate of Incorporation and Bylaws............................ A-18
5.03 Capitalization..................................................... A-18
5.04 No Conflict........................................................ A-18
5.05 Governmental Consents and Approvals................................ A-18
5.06 Litigation......................................................... A-18
5.07 Tax Treatment...................................................... A-18
5.08 Operations of Merger Sub........................................... A-18
5.09 SEC Filings; Financial Statements.................................. A-18
5.10 Authorization and Issuance of Halliburton Common Stock............. A-19
5.11 Absence of Halliburton Material Adverse Effect..................... A-19
5.12 Brokers............................................................ A-19
ARTICLE VI. ADDITIONAL AGREEMENTS.......................................... A-19
6.01 Conduct of Business Prior to the Closing........................... A-19
6.02 Access to Information.............................................. A-21
6.03 Confidentiality.................................................... A-21
6.04 Stockholder Approval............................................... A-21
6.05 Regulatory and Other Authorizations; Notices and Consents.......... A-21
6.06 Notice of Certain Matters.......................................... A-22
6.07 No Solicitation of Transactions.................................... A-22
6.08 Plan of Reorganization............................................. A-22
6.09 Non-Proprietary Information........................................ A-23
6.10 Transmittal Letter................................................. A-23
6.11 Registration and NYSE Listing...................................... A-23
6.12 Indemnification of Directors and Officers.......................... A-23
6.13 Non-Competing License.............................................. A-23
6.14 Tax Matters........................................................ A-23
ARTICLE VII. EMPLOYEE MATTERS.............................................. A-24
7.01 Compensation and Benefits; Service Recognition..................... A-24
7.02 Employee Stock Options............................................. A-25
7.03 License............................................................ A-25
7.04 Employment Contracts............................................... A-25
7.05 Competition Agreements............................................. A-25
A-ii
ARTICLE VIII. CONDITIONS TO CLOSING....................................... A-25
8.01 Conditions to the Obligations of Each Party....................... A-25
8.02 Conditions to the Obligations of the Company and the Signatory
Stockholders...................................................... A-26
8.03 Conditions to the Obligations of Halliburton, Dresser and Merger
Sub............................................................... A-26
ARTICLE IX. INDEMNIFICATION............................................... A-27
9.01 Indemnification of Halliburton.................................... A-27
9.02 Indemnification of the Signatory Stockholders..................... A-27
9.03 Notice and Defense of Third Party Claims.......................... A-28
9.04 Limitations....................................................... A-29
9.05 Exclusive Remedies; Additional Limitations........................ A-29
ARTICLE X. TERMINATION AND WAIVER......................................... A-30
10.01 Termination...................................................... A-30
10.02 Effect of Termination............................................ A-30
10.03 Waiver........................................................... A-30
ARTICLE XI. GENERAL PROVISIONS............................................ A-31
11.01 Survival of Representations, Warranties, Covenants and
Agreements....................................................... A-31
11.02 Expenses......................................................... A-31
11.03 Notices.......................................................... A-31
11.04 Public Announcements............................................. A-32
11.05 Headings......................................................... A-32
11.06 Severability..................................................... A-32
11.07 Entire Agreement................................................. A-32
11.08 Assignment; Third Party Beneficiaries............................ A-32
11.09 Amendment........................................................ A-32
11.10 Governing Law; Forum............................................. A-33
11.11 Counterparts..................................................... A-33
11.12 Waiver of Jury Trial............................................. A-33
ARTICLE XII. AGREEMENT AMONG STOCKHOLDER PARTIES.......................... A-33
12.01 Applicability.................................................... A-33
12.02 Rights of Spouses................................................ A-33
Annex A DEFINITIONS...................................................... A-36
Annex B WRITTEN CONSENT OF THE STOCKHOLDERS OF MAGIC EARTH, INC. ........ A-42
Annex C LIST OF EMPLOYEES TO EXECUTE EMPLOYMENT AGREEMENTS............... A-44
Attachment I.............................................................. A-45
Exhibit A CERTIFICATE OF MERGER.......................................... A-46
Exhibit A-6 SGI COMPUTER HARDWARE........................................ A-47
Exhibit B NON-COMPETING LICENSE AGREEMENT................................ A-48
Exhibit C LICENSE AGREEMENT.............................................. A-54
Exhibit D EMPLOYMENT AGREEMENT........................................... A-56
Exhibit E USE, DISCLOSURE AND COMPETITION AGREEMENT...................... A-64
Exhibit F HALLIBURTON COMPANY OFFICER'S CERTIFICATE...................... A-70
Exhibit G MAGIC EARTH OFFICER'S CERTIFICATE.............................. A-72
Exhibit H SIGNATORY STOCKHOLDER'S RELEASE................................ A-74
Exhibit I LETTER OF TRANSMITTAL.......................................... A-79
A-iii
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of April 29, 2001 (this
"Agreement"), is by and among Halliburton Company, a Delaware corporation
("Halliburton"), Dresser Industries, Inc., a Delaware corporation and a direct,
wholly owned subsidiary of Halliburton ("Dresser"), Halliburton MS, Inc., a
Delaware corporation and a direct, wholly owned subsidiary of Dresser ("Merger
Sub") Magic Earth, Inc., a Delaware corporation (the "Company"), and each of
the stockholders of the Company set forth on the signature pages of this
Agreement (the "Signatory Stockholders").
W I T N E S S E T H:
WHEREAS, Halliburton, Dresser and the Company believe that the merger of the
Merger Sub with and into the Company (the "Merger") in accordance with the
Delaware General Corporation Law (the "DGCL"), in the manner provided by, and
subject to the terms and conditions of, this Agreement, is advisable and in the
best interest of their respective stockholders;
WHEREAS, the Boards of Directors of Halliburton, Dresser, Merger Sub and the
Company have each approved the Merger, Halliburton as the sole stockholder of
Dresser has approved the Merger, Dresser as the sole stockholder of Merger Sub
has approved the Merger in each case upon the terms and subject to the
conditions set forth herein; and
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a tax-free reorganization within the meaning of section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"), and the parties
intend, by executing this Agreement, to adopt a plan of reorganization within
the meaning of section 368(a) of the Code;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the parties hereby agree as follows:
ARTICLE I
Definitions
1.01 Definitions. Certain capitalized and other terms used in this Agreement
are defined in Annex A hereto and are used herein with the meanings ascribed to
them therein.
1.02 Rules of Construction. Unless the context otherwise requires, as used
in this Agreement (a) a term has the meaning ascribed to it; (b) an accounting
term not otherwise defined has the meaning ascribed to it or, if not otherwise
defined, as such principal is consistently applied by the Company (c) "or" is
not exclusive; (d) "including" means "including, without limitation;" (e) words
in the singular include the plural; (f) words in the plural include the
singular; (g) words applicable to one gender shall be construed to apply to
each gender; (h) the terms "hereof," "herein," "hereby," "hereto," and
derivative or similar words refer to this entire Agreement; and (i) the terms
"Article" or "Section" shall refer to the specified Article or Section of this
Agreement.
ARTICLE II
The Merger
2.01 The Merger.
(a) Upon the terms of, and subject to the conditions set forth in, this
Agreement and in accordance with the DGCL, at the Effective Time, the Merger
Sub shall be merged with and into Company. As a result of the Merger, the
separate corporate existence of the Merger Sub shall cease and the Company
shall continue as the surviving corporation (sometimes referred to herein as
the "Surviving Corporation").
A-1
2.02 Effective Time; Closing. As soon as practicable after the satisfaction
or, if possible, waiver of the conditions set forth in Article VIII but in no
event later than the second Business Day following the satisfaction or, if
permissible, waiver of the conditions set forth in Article VIII, (such date
being the "Closing Date") the parties hereto shall cause the Merger to be
consummated by filing a Certificate of Merger, substantially in the form of
Exhibit A, (the "Certificate of Merger") with the Secretary of State of the
State of Delaware in such form as required by and executed in accordance with
the relevant provisions of the DGCL. Immediately prior to the filing of the
Certificate of Merger the closing (the "Closing") will be held at the offices
of Vinson & Elkins L.L.P., 1001 Fannin Street, Houston Texas 77002-6760 or such
other place as the parties may agree to confirm the satisfaction or waiver of
the conditions set forth in Article VIII. Immediately prior to the Closing,
Halliburton shall contribute Halliburton Common Stock, par value $2.50 per
share ("Halliburton Common Stock") to Dresser in an amount equal to the
Adjusted Merger Consideration. Subject to Section 3.03(b), immediately after
filing the Certificate of Merger, Dresser shall, subject to Section 3.05
hereof, with respect to each holder of Shares who has delivered to Dresser a
Properly Completed Transmittal Letter prior to the Closing Date, issue or cause
to be issued certificates ("Halliburton Certificates") for shares of
Halliburton Common Stock, issuable as Exchange Consideration to such holder
registered as provided in such Properly Completed Transmittal Letter.
2.03 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the DGCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time,
all the property, rights, privileges, powers and franchises of the Company and
Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities,
obligations and duties of each of the Company and Merger Sub shall become the
debts, liabilities, obligations, and duties of the Surviving Corporation.
2.04 Certificate of Incorporation; Bylaws.
At the Effective Time, the Certificate of Incorporation of the Surviving
Corporation shall be the Certificate of Incorporation of the Company as in
effect immediately prior to the Effective Time, and shall remain so until
thereafter amended as provided by Law and such Certificate of Incorporation. At
the Effective Time, the Bylaws of the Surviving Corporation, shall be the
Bylaws of the Company as in effect immediately prior to the Effective Time, and
shall remain so until thereafter amended as provided by Law, the Certificate of
Incorporation of the Surviving Corporation and such Bylaws.
2.05 Directors and Officers.
(a) The directors of the Surviving Corporation at the Effective Time shall
be the directors of the Company immediately prior to the Effective Time, each
to hold office in accordance with the Certificate of Incorporation and Bylaws
of the Surviving Corporation until their respective successors are duly elected
or appointed and qualified.
(b) The officers of the Surviving Corporation at the Effective Time shall be
the officers of the Company immediately prior to the Effective Time, each to
hold office in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation until their respective successors are duly elected or
appointed and qualified.
ARTICLE III
Treatment of Company Common Stock
3.01 Treatment of Company and Surviving Company Common Stock.
(a) Subject to Section 3.05, by virtue of the Merger and without any action
on the part of Halliburton, Dresser, Merger Sub, the Company or any of their
respective stockholders, at the Effective Time each share of common stock, par
value $.01 per share ("Company Common Stock"), of the Company issued and
outstanding
A-2
immediately prior to the Effective Time, other than those shares of Company
Common Stock to be cancelled pursuant to Section 3.02 and Dissenting Shares,
(the "Shares") shall forthwith cease to exist and shall be converted into the
number of validly issued, fully paid and nonassessable shares of Halliburton
Common Stock determined as set forth below in Sections 3.01(b), (c) and (d).
(b) The number of shares of Halliburton Common Stock to be issued in the
aggregate for one hundred percent (100%) of the Company Common Stock shall be
determined by dividing (y) one hundred million U.S. dollars (U.S.
$100,000,000.00), as adjusted pursuant to Section 3.01(c), by (z) the average
closing price of Halliburton Common Stock for composite New York Stock Exchange
regular trading as of 4:00 p.m. New York time for each of the thirty (30)
trading days prior to the Closing Date (the "Halliburton Share Value"), and
then rounding that number of shares up to the nearest whole share (the "Merger
Consideration").
(c) The numerator of U.S. $100,000,000.00 used in calculating the Merger
Consideration shall be reduced, dollar for dollar, to the extent that the net
equity reflected on the Closing Balance Sheet is less than an amount equal to
the net equity on the Reference Balance Sheet less U.S. $4,000,000.00. The
Merger Consideration as so adjusted shall be the adjusted merger consideration
(the "Adjusted Merger Consideration").
(d) The Adjusted Merger Consideration shall be divided by the number of
shares of Company Common Stock issued and outstanding on the Closing Date to
determine the number of shares of Halliburton Common Stock to be issued for
each of the Shares (the "Exchange Consideration").
(e) By virtue of the Merger and without any action on the part of
Halliburton, Dresser, Merger Sub, the Company or any of their respective
stockholders, at the Effective Time each share of common stock, par value $1.00
per share of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into one share of common stock, par value
$.01 per share, of the Surviving Corporation.
3.02 Cancellation of Treasury Shares. Each share of Company Common Stock
held in the Company treasury immediately prior to the Effective Time, by virtue
of the Merger and without any action on the part of the holder thereof, shall
cease to be outstanding, shall be cancelled and retired without payment of any
consideration therefor and shall cease to exist.
3.03 Exchange Procedures
(a) Promptly following the date of this Agreement, the Company shall mail,
or otherwise deliver, a Transmittal Letter to each registered holder of Shares.
Each such holder who delivers a Properly Completed Transmittal Letter to
Dresser prior to the Closing Date, shall be entitled to the payment of the
Exchange Consideration with respect to the Shares subject to such Properly
Completed Transmittal Letter on the Closing Date as provided in Section 2.02.
(b) After the Effective Time, upon the delivery by a holder of Shares to
Dresser of a Properly Completed Transmittal Letter, Dresser, subject to Section
3.05 hereof, shall issue or cause to be issued to such holder the Exchange
Consideration into which the Shares subject to such Properly Completed
Transmittal Letter shall have been converted in accordance with the provisions
of this Article III. No interest will be paid or will accrue on the cash
payable, if any, upon surrender of Company Certificates. Unless and until any
Company Certificate is so surrendered, no dividends or other distributions, if
any, payable to the holders of record of Shares, as of any date subsequent to
the Effective Time, shall be paid to the holder of the Company Certificate in
respect thereof. Upon the surrender of any Company Certificate, the record
holder of a Halliburton Certificate or Halliburton Certificates representing
shares of Halliburton Common Stock issued in exchange for the Company
Certificates, shall be entitled to receive, at the appropriate payment date,
the amount of dividends or other distributions in respect of shares of
Halliburton Common Stock having a record date after the Effective Time and a
payment date subsequent to the date of surrender. No interest shall be payable
in respect of the payment of dividends or distributions pursuant to the
immediately preceding sentence.
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(c) Dresser and the Surviving Corporation shall be entitled to deduct and
withhold from the Exchange Consideration, and from any dividends or other
distributions which the holder is entitled to receive pursuant to Section
3.03(b), such amounts that Dresser or the Surviving Corporation are required to
deduct or withhold therefrom under the Code or any applicable provision of
federal, state, local or foreign law.
3.04 Transfer Books. The Exchange Consideration issued upon the surrender of
Company Certificates in accordance with the terms hereof shall be deemed to
have been issued in full satisfaction of all rights pertaining to such
certificates and the Shares previously represented thereby, and there shall be
no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Company Common Stock that were
outstanding immediately prior to the Effective Time.
3.05 No Fractional Shares. No fraction of a share of Halliburton Common
Stock shall be issued, but in lieu thereof, each Stockholder who would
otherwise be entitled to a fraction of a share of Halliburton Common Stock
shall, upon surrender of Company Certificates to Halliburton, be paid an amount
in cash by Dresser (without interest) equal to the value of such fraction of a
share based upon the Halliburton Share Value.
3.06 Lost, Stolen or Destroyed Certificates. If any Company Certificates
have been lost, stolen or destroyed, Dresser shall deliver a Halliburton
Certificate or Halliburton Certificates in exchange for such lost, stolen or
destroyed Company Certificates representing the Exchange Consideration to which
such Stockholder is entitled only upon the making of an affidavit, which shall
include indemnities which are reasonably acceptable to Dresser, of that fact by
the holder thereof. Dresser may also require a bond to be posted in the same
manner as would be required by Halliburton's transfer agent upon the
replacement of lost, stolen or destroyed Halliburton Certificates.
3.07 Abandoned Property; Escheat. None of Halliburton, Dresser or the
Company shall be liable to any former holder of shares of Company Common Stock
for any shares or amounts properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
3.08 Certain Adjustments. If, in the period between the date of this
Agreement and the Effective Time, the outstanding shares of Halliburton Common
Stock shall be changed into a different number of shares or other securities by
reason of any stock split, reverse stock split, stock dividend (including any
dividend or distribution of securities convertible into Halliburton Common
Stock), merger, reorganization, recapitalization or other like change with
respect to Halliburton Common Stock, then the Halliburton Share Value and the
form of securities issuable in the Merger shall be appropriately adjusted to
provide to the holders of Shares the same economic effect as contemplated by
this Agreement prior to such event.
3.09 Taking of Necessary Action; Further Action. The parties hereto shall
take all commercially reasonable and lawful action as may be necessary or
appropriate in order to effectuate the Merger, and the transactions
contemplated hereby, as promptly as practicable. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, including without limitation
Intellectual Property, Software, Owned Software, Equipment, cash, bank
accounts, property, rights, privileges, powers and franchises of the Company
(collectively, the "Assets"), Halliburton, Dresser and the Surviving
Corporation, as applicable, shall direct their respective officers and
directors to take all lawful action in furtherance of the foregoing, and each
of the Signatory Stockholders hereby agrees to take all commercially reasonable
and lawful action not requiring expenditure in excess of $5,000.
3.10 Transfer of Ownership. In the event that any Halliburton Certificates
are to be issued in a name other than that in which the Company Certificates
surrendered in exchange therefor are registered, it shall be a condition of
such exchange that the certificate or certificates so surrendered shall be
properly endorsed or be otherwise in proper form for transfer and that the
Person requesting such exchange shall pay to Dresser any transfer or other
taxes required by reason of the issuance of certificates for such shares of
Halliburton Common Stock in a name other than that of the registered holder of
the Company Certificate surrendered, or shall establish to the satisfaction of
Dresser that such tax has been paid or is not applicable.
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3.11 Dissenting Stockholders. Notwithstanding anything in this Agreement to
the contrary, any issued and outstanding Company Common Stock held by a Person
(a "Dissenting Stockholder") who duly demands appraisal of his Company Common
Stock pursuant to the DGCL and complies with all the provisions of the DGCL
concerning the right of holders of Company Common Stock to demand appraisal of
their Company Common Stock in connection with the Merger ("Dissenting Shares")
shall not be converted as described in Section 3.01 but shall become the right
to receive such cash consideration as may be determined to be due to such
Dissenting Stockholder as provided in the DGCL. If, however, such Dissenting
Stockholder withdraws his demand for appraisal or fails to perfect or otherwise
loses his right of appraisal, in any case pursuant to the DGCL, each share of
Company Common Stock shall be deemed to be converted into the Exchange
Consideration, and such shares of Company Common Stock shall no longer be
deemed to be Dissenting Shares. The Company shall give Dresser (i) prompt
notice of any demands for appraisal of Shares received by the Company and (ii)
the opportunity to participate in and direct all negotiations and proceedings
with respect to any such demands. The Company shall not, without the prior
written consent of Dresser, voluntarily make any payment with respect to
settle, or offer to settle, any such demands.
ARTICLE IV
Representations and Warranties
Regarding the Company
The Company and the Signatory Stockholders hereby severally represent and
warrant to Dresser that the following provisions of this Article IV are true
and correct as of the date hereof and as of the Closing Date; provided,
however, that all representations and warranties made by the Signatory
Stockholders shall be made only to the extent of their Knowledge on the date
such representation or warranty is made.
4.01 Organization, Authority and Qualification of the Company.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all necessary
corporate power and authority to own, operate or lease the properties and
Assets now owned, operated or leased by it and to carry on its business as it
is currently conducted. The Company has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations hereunder
and to consummate the transactions contemplated hereby. The Company is duly
licensed or qualified as a foreign corporation to do business and is in good
standing in each jurisdiction in which the properties owned or leased by it or
the operation of its business makes such licensing or qualification necessary,
except for those jurisdictions in which the failure to be so licensed or
qualified could not reasonably be expected to have a Material Adverse Effect.
Schedule 4.01(a) of the Company's Disclosure Letter sets forth each state or
jurisdiction in which the Company is qualified or licensed to do business. True
and correct copies of the Certificate of Incorporation and Bylaws of the
Company, each as in effect on the date hereof, have been provided by the
Company to Dresser. Such Certificate of Incorporation and Bylaws are in full
force and effect. The Company is not in violation of any provision of its
Certificate of Incorporation or Bylaws. The execution and delivery of this
Agreement by the Company, the performance by the Company of its obligations
hereunder and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all requisite corporate action on the part
of the Company and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby (other than, with respect to the Merger, the
filing of the Certificate of Merger as contemplated by Section 2.02 and
providing notice of action by written consent in accordance with sections 228
and 262 of the DGCL.
(b) This Agreement has been duly executed and delivered by the Company, and
(assuming due authorization, execution and delivery by Halliburton, Dresser and
Merger Sub) this Agreement constitutes a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its
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terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws
effecting creditor's rights and remedies generally.
4.02 Capital Stock of the Company; Ownership of the Shares.
(a) The authorized capital stock of the Company is 1,000,000 shares
consisting of 1,000,000 shares of Common Stock, par value $.01 per share. As of
the date hereof, 100,000 shares of Common Stock are outstanding; all of which
are duly authorized, validly issued, fully paid and nonassessable. In addition,
10,000 shares are authorized for issuance as part of the Company's 2001 Stock
Option Plan. No shares of Company Common Stock are held in the treasury of the
Company. None of the outstanding shares of Company Common Stock were issued in
violation of, and, except as set forth in Schedule 4.02(b) of the Company's
Disclosure Letter, none are subject to, any preemptive rights, rights of first
refusal or other similar rights. Except as set forth in Schedule 4.02(a) of the
Company's Disclosure Letter, there are no options, warrants, convertible
securities or other rights, agreements, arrangements or commitments of any
character relating to the capital stock of the Company or obligating the
Company's stockholders or the Company to issue or sell any shares of capital
stock of, or any other interest in, the Company.
(b) Except as set forth in Schedule 4.02(b) of the Company's Disclosure
Letter, there are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
to provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any other Person. To the Knowledge of the
Company, Schedule 4.02(b) of the Company's Disclosure Letter sets forth all
voting trusts, stockholder agreements, proxies or other agreements in effect
with respect to the voting or transfer of any of the Company Common Stock,
except those contemplated or required by this Agreement.
(c) To Company's Knowledge, Schedule 4.02(c) of the Company's Disclosure
Letter sets forth a true and complete list (the "Stockholders' List") that
accurately reflects the name, address and, for non-corporate stockholders,
marital status of each stockholder of the Company and the number of shares of
Company Common Stock held of record by each stockholder as of the date of this
Agreement.
(d) To Company's Knowledge, Schedule 4.02(d) of the Company's Disclosure
Letter sets forth a true and complete list that accurately reflects the name,
address and, for non-corporate entities, marital status of each former
stockholder of the Company.
4.03 Organization.
(a) Except as set forth in Schedule 4.03 of the Company's Disclosure Letter,
there are no, and there have not been any, other corporations, partnerships,
joint ventures, associations or other entities in which the Company owns, or
has owned, of record or beneficially, any direct or indirect equity or other
interest, or any right (contingent or otherwise) to acquire the same. Except as
set forth in Schedule 4.03(a) of the Company's Disclosure Letter, there are no
partnerships or joint venture agreements or other business entities in which
the Company owns any equity interest; and (b) true and complete copies of the
organizational documents as in effect on the date hereof, of the Company have
been provided by the Company to Dresser.
4.04 Corporate Books and Records. In all material respects, the minute books
of the Company contain accurate records of all meetings and accurately reflect
all other actions taken by the stockholders, the Board of Director and all
committees of the Board of Directors of the Company. Complete and accurate
copies of all such minute books of the Company have been made available by the
Company to Dresser.
4.05 No Conflict. Except as set forth in Schedule 4.05 of the Company's
Disclosure Letter, the execution, delivery and performance of this Agreement by
the Company and the consummation of the transactions contemplated hereby do not
and will not (a) violate, conflict with or result in the breach of any
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provision of the certificate of incorporation or bylaws or similar
organizational documents of the Company, (b) conflict with or violate any Law
or Governmental Order applicable to the Company or by which any property or
Asset of it is bound, or (c) conflict with, result in any breach of or
constitute a default (or an event which, with the giving of notice or lapse of
time, or both, would become a default) under, require any consent under, or
give to others any rights of acceleration, termination, amendment or
cancellation of, or result in the creation of any Encumbrance on any Assets or
properties of the Company pursuant to any note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise or other
instrument or obligation to which the Company is a party or by which any of the
Company Common Stock or any property or Asset of the Company is bound or
affected.
4.06 Governmental Consents and Approvals. Except for the filing of the
Certificate of Merger as contemplated by Section 2.02, the HSR filing, SEC
approval and as set forth in Schedule 4.06 of the Company's Disclosure Letter,
the execution, delivery and performance of this Agreement by the Company and
the consummation of the transactions contemplated hereby do not and will not
require any consent, approval, authorization or other order of, action by,
filing with or notification to, any Governmental Authority.
4.07 Financial Information, Books and Records.
(a) True and complete copies of (i) the consolidated balance sheets of the
Company as of December 31, 2000, and the related consolidated statements of
operations of the Company for the calendar year then ended and (ii) the
consolidated balance sheet of the Company as of March 31, 2001, and the related
consolidated statements of operations together in each case with all related
notes and schedules thereto, accompanied by the reports thereon of the
Company's independent accountants (collectively referred to herein as the
"Financial Statements") have been provided by the Company to Dresser. The
Financial Statements (including the related notes and schedules thereto) (A)
were prepared in accordance with the books of account and other financial
records of the Company, as applicable and (B) present fairly the consolidated
financial condition of the Company for the periods covered thereby.
(b) The books of account and other financial records of the Company (i) are
in all material respects complete and correct, and do not contain or reflect
any material inaccuracies or discrepancies and (ii) have been maintained in
accordance with good business and accounting practices.
(c) The accounts receivable of the Company (i) have arisen in the ordinary
course of business for goods delivered or services rendered and (ii) are, to
the Knowledge of the Company, good and collectible (or have been collected),
subject to the reserves therefore established by the Company and set forth in
the Reference Balance Sheet.
(d) The Intellectual Property, Software, Owned Software and Equipment of the
Company as reflected on the respective balance sheets included in the Financial
Statements have been valued consistent with industry standards.
4.08 No Undisclosed Liabilities. There are no Liabilities of the Company
other than Liabilities (a) reflected on or reserved against in the Reference
Balance Sheet or the notes thereto, (b) incurred since the date of the
Reference Balance Sheet in the ordinary course of the business, consistent with
past practice, of the Company (none of which relates to contractual indemnity
obligations of the Company), (c) set forth in Schedule 4.08 of the Company's
Disclosure Letter and (d) for performance obligations under contracts which are
not in default.
4.09 Absence of Certain Changes, Events and Conditions. Except as set forth
in Schedule 4.09 of the Company's Disclosure Letter or with respect to actions
taken subsequent to the date hereof and not in violation of Section 6.01, since
the date of the Reference Balance Sheet, the business of the Company has been
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conducted in all material respects in the ordinary course, consistent with past
practice, and, since such date, there has not been (a) any event or change that
has had a Material Adverse Effect, (b) any material change by the Company in
its accounting methods, principles or practices, (c) any declaration, setting
aside or payment of any dividend or distribution in respect of the Company
Common Stock or any redemption, purchase or other acquisition of any of its
securities other than upon the exercise of any of the options set forth in
Schedule 4.02(a) of the Company's Disclosure Letter, (d) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option, stock purchase, phantom
stock or other employee benefit plan, except as permitted by Section 7.02, (e)
any increase in salaries or other benefits other than in the ordinary course of
business consistent with past practices, (f) any action by the Company to (i)
incur or suffer to exist any Indebtedness (other than that set forth in the
Reference Balance Sheet) in excess of $3,250,000.00 (which increase in
indebtedness shall be limited to money borrowed for the lease or purchase of
SGI computer hardware (hereinafter called "SGI Computer Hardware" as defined in
Annex A) or any renewals or extensions thereof except trade accounts payable
incurred in the ordinary course of business, (ii) enter into any agreement
requiring the maintenance of a specified net worth of the Company; (iii)
assume, guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other Person,
except for endorsement of checks for collection in the ordinary course of
business or; (iv) make any loans, advances (except in the ordinary course of
business) or capital contributions to, or investments in, any Person, (g) any
sale or other disposition of any material Properties, Assets or businesses of
the Company, (h) any acquisition, including by merger or consolidation, of any
material Properties, Assets or businesses or (i) any material casualty losses
affecting any portion of any of the Properties or other Assets or Operations of
the Company.
4.10 Litigation. Except as set forth in Schedule 4.10 of the Company's
Disclosure Letter, there is no Action pending or, to the Knowledge of the
Company, threatened against the Company, or any property or other Assets of the
Company. There are no outstanding Governmental Orders against the Company or
with respect to property or other Assets of the Company.
4.11 Compliance with Laws. Except as set forth in Schedule 4.11 of the
Company Disclosure Letter, (i) the Company has conducted and continues to
conduct its Operations and business, and the Properties and the other Assets
are in compliance, in all material respects, with all Laws (other than
Environmental Laws which are governed solely by Section 4.16) and Governmental
Orders applicable to the Company, the Properties or such other Assets; and (ii)
the Company holds all permits from Governmental Authorities necessary to the
ownership of the Properties and all Operations in connection therewith.
4.12 Material Contracts.
(a) Schedule 4.12(a) of the Company's Disclosure Letter lists each of the
following contracts and agreements (whether oral or written) of the Company in
effect as of the date of this Agreement (collectively, the "Material
Contracts"):
(i) any agreement or commitment for capital expenditures or the
acquisition or construction of fixed Assets in excess of $10,000 for any
single project (it being represented and warranted that the amount under
all undisclosed agreements and commitments for capital expenditures or the
acquisition or construction of fixed Assets does not exceed $50,000 in the
aggregate for all projects);
(ii) any agreement for, or that contemplates, the sale of any material
Asset (other than sales in the ordinary course of business) after December
31, 2000;
(iii) any lease of property providing for payments under such lease at
an annual rate in excess of $10,000;
(iv) any agreement for the future acquisition of Assets that requires
aggregate future payments in excess of $10,000;
(v) any agreement relating to a Hedging Transaction;
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(vi) any document relating to Indebtedness of the Company;
(vii) all material contracts and agreements with any Governmental
Authority to which the Company is a party;
(viii) all non-competition agreements or other contracts and agreements
that limit or purport to limit the ability of the Company to compete in any
line of business or with any Person or in any geographic area or during any
period of time;
(ix) all contracts and agreements between or among the Company on the
one hand and any stockholder or any Affiliate of a stockholder (other than
the Company) on the other hand;
(x) all contracts or agreements (whether current, terminated or expired)
establishing any agency relationship, joint venture or partnership;
(xi) all employment, severance and similar agreements;
(xii) all collective bargaining agreements with labor unions covering
any employees of the Company;
(xiii) all bonus, profit sharing, stock option, stock purchase, stock
appreciation, phantom stock, incentive compensation, deferred compensation,
severance, retention, change in control or other plan or arrangement for
the benefit of current or former directors, officers or employees;
(xiv) all contracts, agreements and arrangements with independent
contractors or consultants (or similar arrangements) to which the Company
is a party other than contracts, agreements or arrangements that are
cancelable without penalty or further payment with less than 30 days'
notice;
(xv) any brokerage or finder's agreement;
(xvi) all other contracts, agreements and arrangements not entered into
in the ordinary course of business, consistent with past practice, of the
Company or the absence of which would reasonably be expected to have a
Material Adverse Effect;
(xvii) any contract, agreement or arrangement under which the Company is
obligated to make future expenditures in excess of $10,000 per year;
(xviii) any contract or agreement generating revenue;
(xix) any binding commitment, contract or agreement for development or
delivery of software, specific functionality or services; and
(xx) any binding commitment, contract or ,agreement for royalties,
future payments or work that would result in future royalties, payments,
benefits or exchange of services.
(b) Dresser has been provided a correct and complete copy of each Material
Contract. With respect to each Material Contract: (i) such Material Contract
is legal, valid, binding, enforceable, and in full force and effect; (ii) the
Company is not, and to the Company's Knowledge no other party to a Material
Contract is, in material breach or default thereof, and no event has occurred
with respect to the Company or, to the Company's Knowledge, with respect to
any other party thereto, which with notice or lapse of time would constitute a
material breach or default or would permit termination, modification, or
acceleration, under such Material Contract; (iii) to the Company's Knowledge,
no party has repudiated any provision of such Material Contract, and (iv) such
Material Contract has not been amended except as set forth in Schedule 4.12(a)
of the Company's Disclosure Letter.
4.13 Title to Assets.
(a) Except as to those matters set forth in Schedule 4.13(a) of the
Company's Disclosure Letter, the Company has good and clear title to all
Software, Owned Software, Intellectual Property and Equipment, free and clear
of Encumbrances.
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(b) Schedule 4.13(b) of the Company's Disclosure Letter sets forth a brief
description of each parcel of real property in which the Company holds an
interest (the "Real Property"). With respect to Real Property, "Defensible
Title" shall, subject to the Permitted Encumbrances, mean title that affords
the holder thereof the right of quiet enjoyment of all such real property that
is material to the Company, whether leased or fee, for the term of any
applicable agreement relating thereto and that grants the rights purported to
be granted thereby and all rights necessary thereunder for the current
Operations of the Company without material interference by any other Person.
4.14 Intellectual Property.
(a) Patents, Inventions, Trade Names, Trademarks, Service Marks, Copyrights
and Mask Work Registrations. Schedule 4.14(a) of the Company's Disclosure
Letter sets forth a list and description of all (both foreign and domestic) of
the following: (i) unexpired patents currently being maintained or which do not
require maintenance, (ii) pending patent applications, (iii) inventions for
which written disclosures have been furnished to the Company, but for which
patent applications have not been filed, (iv) trade names, (v) trademarks,
service marks, trade dress, and corporate names, common law and registered,
(vi) trademark registration applications, (vii) service mark registration
applications, (viii) copyright registrations, (ix) copyright registration
applications, (x) mask work registrations, and (xi) mask work registration
applications (collectively, "Intellectual Property"), which are owned by the
Company or are presently used or held for use by the Company. As used herein,
Intellectual Property shall not include Software (as hereinafter defined). The
Company has exercised reasonable care to protect its Intellectual Property
against wrongful use or disclosure. Except as set forth in Schedule 4.14(a) of
the Company's Disclosure Letter, the employees, consultants and contractors of
the Company who either alone or in concert with others, developed, invented,
discovered, derived, programmed or designed any software or trade secrets
embodied in or used in connection with the Intellectual Property have entered
into written agreements to protect the confidentiality of such trade secrets
and the Intellectual Property and to assign to the Company all proprietary
rights in such trade secrets and Intellectual Property. Except as otherwise
specified in Schedule 4.14(a) of the Company's Disclosure Letter, the Company
is the sole owner of, or has the exclusive right to use, all such Intellectual
Property in the United States subject to the licenses set forth in Schedule
4.14(c) of the Company's Disclosure Letter. Except as set forth in Schedule
4.14(g) of the Company's Disclosure Letter, none of such Intellectual Property
is the subject of any claim or challenge asserted by a third party, including
without limitation any opposition or interference proceeding in any foreign or
domestic patent office, copyright office, or trademark or service mark
registration office, nor is there any reasonable basis upon which a claim or
challenge could be made.
(b) Software. For the purpose of this Agreement, "Software" shall mean a
computer program or any part of such computer program (excluding accounting,
finance, word processing, spread sheet or other administrative software),
whether in source code, object code or in any other form, whether recorded on
tape or on any other media, all modifications, enhancements or corrections made
to such program, and all documentation relating to such program, including any
flow charts, designs, instructions, job control procedures and manuals relating
to such program in printed or machine readable form. Schedule 4.14(b) of the
Company's Disclosure Letter sets forth a true and correct list of the Software
owned by the Company (the "Owned Software"). Company has exercised reasonable
care to protect its Software and Owned Software against wrongful use or
disclosure; except as set forth on Schedule 4.14(b) of the Company's Disclosure
Letter, the employees, consultants and contractors of the Company who either
alone or in concert with others, developed, invented, discovered, derived,
programmed or designed any software or trade secrets embodied in or used in
connection with the Software or the Owned Software have entered into written
agreements to protect the confidentiality of such trade secrets, Software and
the Owned Software and to assign to the Company all proprietary rights in such
trade secrets, the Software and the Owned Software. Except as set forth on
Schedule 4.14(b) of the Company's Disclosure Letter, the Company owns all
right, title and interest in and to the Owned Software, free and clear of any
liens, royalties, charges, or mortgages, subject to the terms and conditions of
the licenses for the Owned Software granted in the ordinary course of the
Company's business. Except as set forth on Schedule 4.14(b) of the Company's
Disclosure Letter, the Company has not disclosed the information
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contained in the Owned Software to others so as to materially adversely affect
the ability of Dresser or the Company to protect such information by means of
copyright or trade secret protection. To the Knowledge of the Company, each
item of Owned Software listed on Schedule 4.14(b) of the Company's Disclosure
Letter is virus-free, meets or exceeds the functionality and specifications as
set forth in the published user documentation (Annex A to Schedule 4.14(b) of
the Company's Disclosure letter), contains no known errors or bugs which could
corrupt data or cause Owned Software not to meet the functionality or
specifications set forth in such user documentation and contains no undisclosed
time control mechanisms. Except as set forth on Schedule 4.14(b) of the
Company's Disclosure Letter the use or operation of the Owned Software does not
require access to or the use of any other software (excluding operating system
software).
(c) Licenses. Set forth in Schedule 4.14(c) of the Company's Disclosure
Letter is a list and description of all unexpired licenses of any of the
Intellectual Property, Software, trade secrets, know-how technology or other
proprietary rights (i) granted to the Company for use by the Company, or (ii)
owned by the Company and granted to others. Except as set forth in Schedule
4.14(c) of the Company's Disclosure Letter, none of such licenses is or will on
the Closing Date be subject to termination or cancellation or change which
shall have a material adverse effect on terms or provisions of such license as
a consequence of this Agreement or consummation of the transactions provided
for herein. Except as set forth in Schedule 4.14(c) of the Company's Disclosure
Letter, the Company has not granted any person or entity the right to
sublicense or generally distribute, as may be applicable, the Intellectual
Property or the Owned Software.
(d) No Infringement by Third Parties. Except as set forth in Schedule
4.14(d) of the Company's Disclosure Letter, to the Company's Knowledge, no
Person or governmental entity is infringing or has misappropriated any
Intellectual Property or Software which is owned by or licensed to the Company
or is presently used or held for use by the Company.
(e) Registration and Maintenance Fees. The Company has paid all maintenance,
renewal, or similar fees required by the applicable governmental agencies to
maintain the trademark, copyright, mask work, and patent registrations and
applications identified in Schedule 4.14(a) of the Company's Disclosure Letter,
except as set forth in Schedule 4.14(e) of the Company's Disclosure Letter.
Except as set forth in Schedule 4.14(e) of the Company's Disclosure Letter, the
Company has filed responses to all actions from applicable governmental
agencies that have become due relating to patent, trademark, and service mark
applications, both foreign and domestic, and has paid all costs and charges,
and taken all acts relating to such actions, including without limitation,
attorney's fees necessary to maintain such patent, trademark registration,
service mark registration, copyright registration, or mask work registration in
force.
(f) Documentation and Security of Software. Except as set forth in Schedule
4.14(f) of the Company's Disclosure Letter: (i) the documentation for all Owned
Software and other Software that is under development by the Company includes
the source code and system documentation, which shall not include any Dark
Place; (ii) such documentation also includes any program (including compilers),
"workbenches," tools and higher level (or "proprietary") language used for the
development, maintenance and implementation of such Software and (iii) the
Company has taken commercially reasonable steps to maintain such Software and
Owned Software as confidential, trade secret or copyrighted material of the
Company. To the Knowledge of the Company there is no breach of any
confidentiality agreement in favor of the Company relating to such Software and
Owned Software either by its present or former employees or by third parties.
Except pursuant to the licenses described in Schedule 4.14(c) of the Company's
Disclosure Letter, the Company has not conveyed or granted any rights to such
Software and Owned Software, nor is it obligated to grant or convey any rights
to license, market, incorporate in other Software and Owned Software, sell any
such Software and Owned Software to, or otherwise permit its use by, third
parties, and no third party has unauthorized access to such Software and Owned
Software. Except as set forth in Schedule 4.14(f) of the Company's Disclosure
Letter, all licensees of such Software and Owned Software are in compliance
with the terms and conditions of the applicable license agreements.
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(g) Patent, Trademark, Service Mark, Copyright, Mask Work, and Software
Infringement and Indemnification. Except as set forth in Schedule 4.14(g) of
the Company's Disclosure Letter, the Company has not given or granted any
indemnification for, and, to the Company's Knowledge, there are no pending or
threatened claims or demands against the Company for, patent, trademark, trade
name, service mark, copyright, or mask work registration, trade secrets and
know-how, technology or other proprietary rights (including without limitation,
Software) infringement in connection with the Company or which challenge the
validity, enforceability, use or ownership of the Intellectual Property,
Software or the Owned Software; and to Company's Knowledge, the present conduct
of the Company does not infringe and is not subject to any claim of
infringement of any patent, trademark, trade name, service mark, copyright, or
mask work registration, trade secrets and know-how, technology or other
proprietary right, including Software; and the Company is not subject to any
outstanding order, decree or judgment regarding the Intellectual Property,
Software or the Owned Software.
(h) History of Intellectual Property, Software and Owned Software. Schedule
4.14(h) of the Company's Disclosure Letter sets forth, in all material
respects, a true and accurate history of the transfer to the Company of
Intellectual Property, Software, and Owned Software.
4.15 Employee Matters.
(a) With respect to each incentive compensation, deferred compensation,
equity based, severance, employment, change of control or employee benefit
plan, program, arrangement and contract (including, without limitation, any
"employee benefit plan," as defined in section 3(3) of ERISA), maintained or
contributed to by the Company or with respect to which the Company may have any
liability, whether or not such plan, program, arrangement or contract has been
terminated prior to the date of this Agreement, (the "Plans"), the Company has
provided to Dresser a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS for each Plan for which such report is
required, (ii) a complete copy of each Plan, (iii) each trust agreement or
other funding arrangement relating to each Plan, (iv) the most recent summary
plan description for each Plan for which a summary plan description is
required, and (v) the most recent determination letter, if any, issued by the
IRS with respect to any Plan qualified under section 401(a) of the Code. None
of the Plans are subject to Title IV of ERISA, and to the Company's knowledge
the Company has no actual or contingent liability under ERISA or the Code with
respect to any Plan.
(b) Except as set forth in Schedule 4.15(b) of the Company's Disclosure
Letter, with respect to the Plans, no event has occurred or is about to occur
and, to the Knowledge of the Company, there exists no condition or set of
circumstances in connection with which the Company could be subject to any
liability on account of a violation of the terms of such Plans, ERISA, the Code
or any other applicable Law. To the Knowledge of the Company, each of the Plans
has been operated and administered in accordance with applicable Laws and
administrative or governmental rules and regulations, including, but not
limited to, ERISA and the Code and all contributions required to have been made
on or prior to the Closing Date by the terms of such Plans or applicable Law
have been made. To the Knowledge of the Company, each Plan intended to be
"qualified" within the meaning of section 401(a) of the Code is so qualified.
No Plan is a multi-employer plan or a multiple employer plan.
(c) There is no labor dispute, strike or work stoppage against the Company,
ongoing, pending or overtly threatened, which may interfere with the respective
business activities of the Company. Except as set forth in Schedule 4.15(c) of
the Company's Disclosure Letter, to the Knowledge of the Company, neither the
Company, nor its representatives or employees, has committed any unfair labor
practices in connection with the operation of the respective businesses of the
Company, and there is no charge or complaint against the Company by the
National Labor Relations Board or any comparable state agency pending or
overtly threatened.
(d) The Company is not a party to any collective bargaining agreement. To
the Knowledge of the Company, no collective bargaining agent has been certified
as a representative of any of the employees of the
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Company and no union organizational campaign is currently pending with respect
to any of the employees of the Company.
(e) The Company has provided to Dresser (i) copies of all employment
agreements with officers and employees of the Company; (ii) copies of all
severance agreements, programs and policies of the Company with or relating to
its directors, officers and employees; and (iii) copies of all plans,
programs, agreements and other arrangements of the Company with or relating to
its directors, officers and employees which contain change of control
provisions.
(f) Except as set forth in Schedule 4.15(f) of the Company's Disclosure
Letter, each Plan may be unilaterally terminated by the Company, as
applicable, at any time without liability other than for benefits accrued as
of the date of such termination.
(g) No Plan provides retiree medical or retiree life insurance benefits to
former employees of the Company.
4.16 Environmental Matters. Except as set forth in Schedule 4.16 of the
Company's Disclosure Letter:
(a) the Company is, to its Knowledge, in compliance with all applicable
Environmental Laws and there are no conditions existing on or resulting from
Operations or use of the Properties or other Assets by the Company that may
give rise to any on-site or off-site obligation under any applicable
Environmental Laws;
(b) the Company has not received notice from any person or entity relating
to any alleged noncompliance with applicable Environmental Laws and there are
no existing, pending or, to the Company's Knowledge, threatened actions,
suits, investigations, inquiries or proceedings by or before any Governmental
Authority relating to any Environmental Laws with respect to the Company or
any of its Properties, other Assets or Operations;
(c) all notices, permits, registrations or similar authorizations, if any,
required to be obtained or filed in connection with the operation of the
Properties or other Assets by the Company, including the generation,
treatment, storage or disposal of Hazardous Materials into the environment,
have been duly obtained or filed and are currently in full force and effect;
(d) there has been no release or threatened release of any Hazardous
Materials into the environment in violation of any applicable Environmental
Laws by the Company in connection with any of its Properties, other Assets or
Operations; and
(e) the Company has made available to Dresser copies of all internal and
external environmental reports, audits, studies and correspondence relating to
significant environmental matters in the possession of the Company.
4.17 Prepayments; Hedging; Calls. Except as set forth in Schedule 4.17 of
the Company's Disclosure Letter, the Company is not bound by any futures,
hedge, swap, collar, put, call, floor, cap, option or other contracts that are
intended to benefit from, relate to or reduce or eliminate the risk of
fluctuations in the price of commodities, including Hydrocarbons, interest
rates, currencies or securities (each, a "Hedging Transaction").
4.18 Taxes. Except as set forth in Schedule 4.18(a) of the Company's
Disclosure Letter:
(a) (i) all tax returns that were required to be filed by or with respect
to the Company ("Tax Returns") have been duly and timely filed, (ii) all
material items of income, gain, loss, deduction and credit or other items
("Tax Items") required to be included in each of the Tax Returns have been so
included and all such Tax Items and any other information provided in each of
the Tax Returns were true, correct and complete in all material respects and
all Taxes required to be paid by the Company for the periods covered by such
Tax Returns have been paid, (iii) all Taxes owed by the Company that are or
have become due have been timely paid in full,
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(iv) all Tax withholding and deposit requirements imposed on or with respect to
any of the Company have been satisfied in full in all respects, and (v) there
are no Encumbrances (other than Permitted Encumbrances) on any of the Assets of
the Company that arose in connection with any failure (or alleged failure) to
pay any Tax;
(b) Schedule 4.18(b) of the Company's Disclosure Letter lists all federal,
state, local and foreign income Tax Returns filed with respect to the Company
for its taxable years ending prior to the date hereof, indicates those Tax
Returns that have been audited, indicates those Tax Returns that are currently
the subject of audit, and indicates those Tax Returns whose audits have been
closed;
(c) there is no written claim against the Company for any delinquent Taxes,
and no assessment, deficiency or adjustment has been asserted, proposed, or
threatened in writing with respect to any of the Tax Returns of or with respect
to the Company, which has not been paid or resolved;
(d) other than with respect to Tax Returns for the period ending December
31, 2000, there is not in force any extension of time with respect to the due
date for the filing of any of the Tax Returns of or with respect to the Company
or any waiver or agreement for any extension of time for the assessment or
payment of any Tax of or with respect to the Company;
(e) the total amounts set up as liabilities for current Taxes in the
Financial Statements are sufficient to cover the payment of all Taxes, whether
or not assessed or disputed, which are, or are hereafter found to be, or to
have been, due (i) by or with respect to the Company up to and through the
periods ending on the dates thereof and (ii) by or with respect to any
Operations, activities, transactions, actions or property of the Company up to
and through the periods ending on the dates thereof;
(f) there are no Tax allocation or sharing agreements affecting the Company;
(g) the Company will not be required to include (i) any amount in income for
any taxable period beginning after December 31, 2000 as a result of a change in
accounting method for any taxable period ending on or before the Closing Date
or pursuant to any agreement with any Tax authority with respect to any such
taxable period or (ii) in any period ending after the Closing Date any income
that accrued in a period prior to the Closing Date, but was not recognized in
any period prior to the Closing Date as a result of the installment method of
accounting, the completed contract method of accounting, the long-term contract
method of accounting or the cash method of accounting;
(h) the Company has not consented to have the provisions of section
341(f)(2) of the Code apply with respect to a sale of its stock;
(i) the Company has not made any payments, is not obligated to make any
payments, and is not party to any agreement that under certain circumstances
could obligate it to make any payments that would not be deductible under
section 280G of the Code; and
(j) the Company (i) has not been a member of an affiliated group filing a
consolidated federal income tax return (other than a group the common parent of
which was the Company) and (ii) has no liability for the Taxes of any Person
(other than any of the Company) under Treasury Regulation section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
4.19 Insurance. The Company has all insurance policies that it believes are
required in connection with the operation of the business of the Company as
currently conducted. The Company has made available to Dresser true and correct
copies of each of the insurance policies relating to the Company that are
currently in effect. With respect to each such insurance policy, none of the
Company, or, to the Knowledge of the Company, any other party to the policy is
in material breach or default thereunder (including with respect to the payment
of premiums or the giving of notice) and, to the Knowledge of the Company,
there has been no occurrence or event which, with notice or the lapse of time
or both, would constitute such a material breach or default or would permit
termination, modification or acceleration under the policy.
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4.20 Brokers. Except as set forth in Schedule 4.20 of the Company's
Disclosure Letter, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement, based upon arrangements made by or
on behalf of the Company or any of the Stockholders.
4.21 Condition of Equipment. To the Knowledge of the Company, the Equipment
owned or leased by the Company (a) is in the aggregate in a condition that is
adequate for normal Operations in accordance with standard industry practice
and (b) complies in all material respects with the requirements of all
applicable contracts and (c) complies in all material respects with all
applicable Laws.
4.22 Royalties and other Payments. Except as set forth on Schedule 4.22 of
the Company's Disclosure Letter, all royalties, compensatory royalties and
other payments due with respect to the Software, Owned Software and
Intellectual Property have been properly and correctly paid.
4.23 Preferential Rights. Except as set forth on Schedule 4.23 of the
Company's Disclosure Letter, there are no preferential purchase or similar
rights affecting the Assets that would be applicable to the transactions
contemplated hereby.
4.24 Current Commitments. Schedule 4.24 of the Company's Disclosure Letter
sets forth as of the date hereof all authorizations for expenditures in excess
of $10,000 and all scheduled capital expenditures in excess of $10,000 that
have been proposed by any authorized Person on or after December 31, 2000 or
for which the activities relating thereto shall not have been completed by
December 31, 2000.
4.25 Funds. Schedule 4.25 of the Company's Disclosure Letter sets forth all
funds held by the Company for the account of any third Person.
4.26 Bank Accounts. Schedule 4.26 of the Company's Disclosure Letter sets
forth the names and locations of all institutions at which the Company
maintains accounts or lock boxes of any nature, the account or box number and
the names of all Persons authorized to draw thereon or make withdrawals
therefrom.
4.27 Receivables. Except as set forth on Schedule 4.27 of the Company's
Disclosure Letter, all receivables of the Company (including accounts
receivable, work in process receivables and advances) that are reflected in the
Reference Balance Sheet, and all such receivables which have arisen since the
date thereof, shall have arisen only from bona fide transactions in the
ordinary course of business of the Company.
4.28 Certain Acts.
(a) The Company has not unlawfully given, paid, offered to give or pay,
promised to give or pay or authorized the gift or payment of any money or
anything of value to any foreign official (as defined in section 30A(f) of the
Securities Exchange Act of 1934, as amended), any foreign political party or
official thereof, any candidate for foreign political office or any other
person (while knowing or having reason to know that all or a portion of such
money or thing of value would be offered, promised or given, directly or
indirectly, to any such foreign official, political party, party official or
candidate) for the purpose of (i) influencing any act or decision of such
foreign official, political party, party official, or candidate in his or its
official capacity, including a decision to fail to perform his or its official
functions, or (ii) inducing such foreign official, political party, party
official, or candidate to use his or its influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in order to assist the Company in obtaining or
retaining business for or with, or directing business to, any person or entity,
or in order to assist the Company in obtaining any consents or approvals or
accomplishing any other task necessary in order to consummate the transactions
contemplated by this Agreement.
(b) The Company has not violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended.
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(c) The Company has not consummated any transaction, made any payment,
entered into any agreement or arrangement or taken any other action in
violation of section 1128B(b) of the Social Security Act, as amended.
(d) The Company has not made any other unlawful payment, except for any such
matter that could not reasonably be expected to have a Material Adverse Effect
on the Company.
(e) Schedule 4.28(e) of the Company's Disclosure Letter sets forth a list of
all export sales and licenses issued to entities outside of the U.S. Schedule
4.28(e) of the Company's Disclosure Letter sets forth a list of the export
sales and licenses that, to the Company's Knowledge, have been reexported from
the country of sale or license.
4.29 Permits and Licenses. Except as set forth in Schedule 4.29 of the
Company's Disclosure Letter, the Company owns or holds all material franchises,
licenses, permits, consents, certificates, orders, approvals and authorizations
of governmental authorities ("Governmental Licenses and Permits") necessary to
conduct its business as presently conducted and all Governmental Licenses and
Permits of the Company are in full force and effect and subject to no
suspension, revocation, cancellation or adverse modification. To the knowledge
of the Signatory Shareholders, no event has occurred which permits or, with the
passage of time or the giving of notice or the taking of action by a third
party, would permit revocation, amendment or termination of any Governmental
License and Permit.
4.30 Lists of Directors, Officers and Employees.
(a) Schedule 4.30(a) of the Company's Disclosure Letter contains a complete
and accurate list for the Company, of each individual who currently serves as a
director or officer of the Company, together with the position or positions so
held.
(b) Schedule 4.30(b) of the Company's Disclosure Letter contains a complete
and accurate list of all employees of the Company as of the date hereof,
showing each such employee's social security number, employee number, hire date
and job title. The Company has provided Dresser with a true and correct copy of
a schedule containing the annual salary rate, date of last salary increase, and
the amount of such increase of each employee. The Company has not made any
representations to the Directors, officers or employees of the Company to the
effect that the Company, Dresser or Dresser's Affiliates will grant salary
increases or bonuses other than in the ordinary course of business.
4.31 Territorial Restrictions. Except as discussed in Schedule 4.12(a) of
the Company's Disclosure Letter, the Company is not restricted by any agreement
or contract, whether written or oral, with third parties from carrying on its
business anywhere in the world.
4.32 No Guaranties. Except as set forth in Schedule 4.32 of the Company's
Disclosure Letter, none of the debts, liabilities or obligations of the Company
is guaranteed by or is subject to a similar contingent obligation of any other
Person, nor has the Company guaranteed or become subject to a similar
contingent obligation in respect of the debts, liabilities or obligations of
any Person other than the Company.
4.33 Non-Purchased Items. Except as set forth in Schedule 4.33 of the
Company's Disclosure Letter, no items of intangible or tangible personal
property, including but not limited to software, intellectual property,
equipment or supplies, the replacement of which by the Company would involve
the expenditure of $25,000.00 or more, has been furnished to the Company
without charge or under circumstances in which the party furnishing such item
of personal property, equipment or supplies can determine or limit such items
availability to or use by the Company. As to any item listed on Schedule 4.33
of the Company's Disclosure Letter, there is also included thereon, an
appraisal of the replacement cost of such item and the materiality, if any, of
the item to the business of the Company.
4.34 Customers. Except as set forth in Schedule 4.34 of the Company's
Disclosure Letter, no customer or group of customers which individually or in
the aggregate accounted for 5% or more of the aggregate
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revenues of the Company for the year ended December 31, 2000, has terminated or
threatened to terminate its relationship with the Company.
4.35 Relationships. Except as set forth in Schedule 4.35 of the Company's
Disclosure Letter, no member of a stockholder's immediate family or Person in
such stockholder's household, officer or director of the Company or any Person
that is directly or indirectly controlled by member of a stockholder's
immediate family or person in such stockholder's household, or an officer or
director of the Company has, or in the last three years has had, any interest
in any property used in the Company's business or is a party to any contract
with the Company or has any claim or right against the Company.
4.36 Former Relationships. Schedule 4.36 of the Company's Disclosure Letter
contains a list of former relationships with terminated agents or other similar
representatives.
4.37 Content of the Company's Business. Except as set forth in Schedule 4.37
of the Company's Disclosure Letter, the Company's business does not include the
acquisition or processing of seismic data or the operation of a seismic data
processing service bureau.
4.38 Disclosure. To the extent any representation or warranty is made in
this Agreement or any written statement or certificate furnished to Dresser no
such representation or warranty contained in this Agreement nor any written
statement or certificate furnished to Dresser or its representatives in
connection herewith or pursuant hereto knowingly contains any untrue statement
of a material fact, or knowingly omits to state any material fact required, in
light of the circumstances in which it was made, to make the statement herein
or therein contained not misleading.
ARTICLE V
Representations and Warranties of
Halliburton, Dresser, Merger Sub
Halliburton, Dresser and Merger Sub hereby jointly and severally represent
and warrant to the Company and the Signatory Stockholders as follows:
5.01 Organization and Authority of Halliburton, Dresser and Merger Sub. Each
of Halliburton, Dresser and Merger Sub is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, and has
all necessary power and authority to own, operate or lease the properties and
assets now owned, operated or leased by it and to carry on its business as it
is currently conducted. Halliburton, Dresser, and Merger Sub have all necessary
corporate power and authority to enter into this Agreement and to carry out
their obligations hereunder and to consummate the transactions contemplated.
The execution and delivery of this Agreement by each of Halliburton, Dresser
and Merger Sub, the performance by each of Halliburton, Dresser and Merger Sub
of its obligations hereunder and the consummation by each of Halliburton,
Dresser and Merger Sub of the transactions contemplated hereby, have been duly
authorized by all requisite corporate action as appropriate on the part of each
of Halliburton, Dresser and Merger Sub and no other corporate proceedings on
the part of Halliburton, Dresser and Merger Sub are necessary to authorize this
Agreement or the consummation of the transactions contemplated hereby (other
than, with respect to the Merger, the filing of the Certificate of Merger as
contemplated by Section 2.02). This Agreement has been duly executed and
delivered by each of Halliburton, Dresser and Merger Sub and (assuming due
authorization, execution and delivery by the Company and the Signatory
Stockholders) this Agreement constitutes a legal, valid and binding obligation
of each of Halliburton, Dresser and Merger Sub enforceable against each in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws effecting creditor's rights and remedies generally.
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5.02 Certificate of Incorporation and Bylaws. Halliburton has heretofore
made available to the Company complete and correct copies of the Certificates
of Incorporation and the Bylaws, each as amended to the date hereof, of
Halliburton, Dresser and Merger Sub. Such Certificates of Incorporation and
Bylaws are in full force and effect. Halliburton, Dresser and Merger Sub are
not in violation of any provision of their Certificate of Incorporation or
Bylaws.
5.03 Capitalization. The authorized capital stock of Halliburton consists of
(i) 600,000,000 shares of Halliburton Common Stock par value $2.50 per share of
which as of the close of business on March 19, 2001, 429,030,141 shares were
issued and outstanding and (ii) 5,000,000 shares of preferred stock, without
par value, of which none is issued but of which 3,000,000 shares have been
designated as Series A Junior Participating Preferred Stock.
5.04 No Conflict. Assuming compliance with the notification requirements of
the HSR Act, if any, and the making and obtaining of all filings,
notifications, consents, approvals, authorizations and other actions referred
to in Section 5.05, the execution, delivery and performance of this Agreement
as the case may be, by each of Halliburton, Dresser and Merger Sub do not and
will not (a) violate, conflict with or result in the breach of any provision of
the certificate of incorporation or bylaws of Halliburton, Dresser or Merger
(b) conflict with or violate any Law or Governmental Order applicable to
Halliburton, Dresser or Merger Sub or by which any property or asset of any of
them is bound or (c) conflict with, result in any breach of or constitute a
default (or an event which, with the giving of notice or lapse or time, or
both, would become a default) under, require any consent under, or give to
others any rights of acceleration, termination, amendment or cancellation of,
or result in the creation of any Encumbrance on any of the assets or properties
of Halliburton, Dresser or Merger Sub pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license, permit, franchise or
other instrument or obligation to which Halliburton, Dresser or Merger Sub
respectively, is a party or by which any of such assets or properties are bound
or affected.
5.05 Governmental Consents and Approvals. The execution, delivery and
performance of this Agreement by each of Halliburton, Dresser and Merger Sub
and the consummation of the transactions contemplated hereby do not and will
not require any consent, approval, authorization or other order of, action by,
filing with, or notification to, any Governmental Authority, except those
related to the filing under the HSR Act, the SEC approval and the filing of the
Certificate of Merger as contemplated by Section 2.02.
5.06 Litigation. Except as disclosed in Halliburton's report on Form 10-K
filed March 27, 2001 to the Knowledge of Halliburton there is no material
Action pending or threatened against Halliburton, Dresser or Merger Sub or any
properties or assets of Halliburton, Dresser or Merger Sub.
5.07 Tax Treatment. Halliburton Dresser and Merger Sub have not taken or
failed to take any action which would prevent the Merger from constituting a
tax-free reorganization within the meaning of section 368(a) of the Code.
5.08 Operations of Merger Sub. Merger Sub is a direct, wholly owned
subsidiary of Dresser and has not engaged in any business activities (or
conducted any operations) of any kind, entered into any agreement or
arrangement with any Person or entity, or incurred, directly or indirectly, any
material liabilities or obligations, in each case except in connection with its
incorporation, the negotiation of this Agreement, the Merger and the
transactions contemplated hereby.
5.09 SEC Filings; Financial Statements.
(a) Halliburton has filed all forms, reports and documents required to be
filed by it with the SEC since March 27, 2001 through the date of this
Agreement (collectively, the "Halliburton SEC Reports"). As of the respective
dates they were filed, Halliburton SEC Reports were prepared in all material
respects in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be.
(b) The audited consolidated financial statements and unaudited financial
statements of Halliburton included in Halliburton SEC Reports have been
prepared in accordance with GAAP applied on a consistent
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basis, comply as to form in all material respects with the applicable
accounting rules and regulations promulgated by the SEC and fairly present the
financial position of Halliburton and its consolidated subsidiaries as of the
dates thereof and the results of their operations and cash flows for the
periods then ended (subject, in the case of any unaudited interim financial
statements, to normal audit adjustments and the omission of footnotes).
(c) Neither Halliburton nor any subsidiary of Halliburton has any
Liabilities of a nature or character required to be disclosed in a Halliburton
SEC Report or included in the financial statements of Halliburton included in
Halliburton SEC Reports, except for liabilities and obligations (i) disclosed
in any Halliburton SEC Report filed since March 27, 2001 and prior to the date
of this Agreement or (ii) incurred since March 27, 2001 in the ordinary course
of business consistent with past practice.
5.10 Authorization and Issuance of Halliburton Common Stock. The
authorization, issuance, sale and delivery of Halliburton Common Stock pursuant
to this Agreement have been duly authorized by all requisite corporate action
on the part of Halliburton and Dresser, and when issued, sold and delivered in
accordance with this Agreement, Halliburton Common Stock will be validly issued
and outstanding, fully paid and nonassessable with no personal liability
attaching to the ownership thereof, free of any Encumbrances created by
Halliburton, Dresser or Merger Sub (other than pursuant to applicable
securities laws) and not subject to preemptive or similar rights created by
statute, Halliburton's Certificate of Incorporation or Bylaws or any agreement
to which Halliburton is a party or by which Halliburton is bound.
5.11 Absence of Halliburton Material Adverse Effect. Since the filing of
Halliburton's report on Form 10-K on March 27, 2001 there has not been any
event or change that has had a Halliburton Material Adverse Effect.
5.12 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the other transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Halliburton, Dresser or Merger Sub.
ARTICLE VI
Additional Agreements
6.01 Conduct of Business Prior to the Closing.
(a) The Company covenants and agrees that, between the date of this
Agreement and the time of the Closing, except as set forth in Schedule 6.01(a)
of the Company's Disclosure Letter or as expressly contemplated by any other
provision of this Agreement, unless Dresser shall otherwise consent in writing
(which consent, except with respect to Section 6.01(a)(iii), shall not be
unreasonably withheld or delayed).
(i) the businesses of the Company shall be conducted only in, and the
Company shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice;
(ii) the Company shall use its commercially reasonable efforts to
preserve substantially intact its business organization, to preserve the
Assets, including but not limited to Software, Owned Software, Intellectual
Property, Equipment, cash, bank accounts, property rights, privileges,
powers and franchises, to keep available the services of the current
employees of the Company and to preserve the current relationships of the
Company with customers, contract holders and other Persons with whom the
Company has significant business relations and;
(iii) the Company shall not sell, transfer or disclose the source code
for Software or Owned Software to any Person other than as required under
this Agreement. Dresser's consent to any request by the Company under this
Section 6.01(a)(iii) to sell, transfer or disclose source code may be
withheld for any reason whatsoever.
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(b) By way of amplification and not limitation, except as expressly
contemplated by this Agreement, as reflected in Schedule 6.01(a) of the
Company's Disclosure Letter or as required by Law or Governmental Order, the
Company shall not, between the date of this Agreement and the Closing, directly
or indirectly do, or propose to do, any of the following, without the prior
written consent of Dresser (which consent shall not be unreasonably withheld or
delayed):
(i) amend or otherwise change its Certificate of Incorporation or Bylaws
or equivalent organizational documents;
(ii) issue, sell, pledge, dispose of, grant, encumber or authorize the
issuance, sale, pledge, disposition, grant or encumbrance of any shares of
capital stock such that the shares of common stock are owned by more than
25 persons or other interests of the Company of any class, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock or other interest, or any other ownership
interest (including any phantom interest) of the Company, other than the
issuance of Company Common Stock upon the exercise of options set forth in
Schedule 4.02(a) of the Company's Disclosure Letter;
(iii) declare, set aside, make or pay any dividend or other distribution
payable in cash, stock, property or otherwise, with respect to any of its
capital stock or other interests;
(iv) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock or
other interests;
(v) (A) acquire or dispose of (including, without limitation, by merger,
consolidation or acquisition or disposition of stock or Assets) any
interest in any corporation, partnership, other business organization or
any division thereof or any Assets, other than sales of de minimus Assets
in the ordinary course of business, consistent with past practice, and any
other acquisitions or dispositions of Assets with a fair market value which
is not, in the aggregate, in excess of $75,000; (B) incur any Indebtedness,
guarantee or endorse, or otherwise as an accommodation become responsible
for, any obligation of any Person (other than the Company), except for
Indebtedness incurred of up to $3,250,000.00 (which increase shall be
limited to money borrowed for the lease or purchase of SGI Computer
Hardware; (C) make any loans or advances to any Person other than the
Company; (D) agree or commit to make or make capital expenditures in excess
of $75,000 other than pursuant to previously budgeted projects in the
ordinary course of business consistent with past practice; or (E) enter
into or amend any contract, agreement, commitment or arrangement that, if
fully performed, would be prohibited by this subsection (v) or otherwise
agree to take any action that would be prohibited by this subsection (v) or
(F) amend or terminate any Material Contract;
(vi) increase the compensation payable or to become payable to its
officers or employees other than in the ordinary course of business and
consistent with past practice, grant any severance or termination pay to,
or enter into any employment or severance agreement with, any director,
officer or other employee of the Company, or establish, adopt, enter into
or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer
or employee, except as contemplated by Article VII or as required by
applicable law;
(vii) take any material action with respect to accounting policies or
procedures except to the extent consistent with the Company's past
accounting practices;
(viii) pay, discharge or satisfy any material claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities reflected or reserved against in the Reference Balance Sheet or
subsequently incurred in the ordinary course of business and consistent
with past practice or in accordance with the provisions of this Section
6.01; or
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(ix) enter into any new Hedging Transaction or modify, amend, terminate
or offset any existing Hedging Transaction.
(c) Except as expressly contemplated by this Agreement or as required by Law
or Governmental Order, Halliburton, Dresser and Merger Sub shall, between the
date of this Agreement and the Closing, not directly or indirectly, do, or
propose to do, any of the following, without the prior written consent of the
Company (which consent shall not be unreasonably withheld or delayed):
(i) amend or otherwise change its Certificate of Incorporation or By-
laws in a manner that would alter the terms of Halliburton Common Stock or
materially impede the transactions contemplated by this Agreement; or
(ii) with respect to Halliburton, declare, set aside, make or pay any
dividend or other distribution payable in cash, stock, property or
otherwise, with respect to any of its capital stock, except in the ordinary
course of business in a manner consistent with past practice.
6.02 Access to Information. Subject to Section 6.03, except as required
pursuant to any confidentiality agreement or similar agreement or arrangement
to which the Company is a party or pursuant to applicable Law, from the date
hereof until the Closing (or the earlier termination of this Agreement pursuant
to Section 10.01), upon reasonable notice, the Company shall, and shall cause
each of the Company's officers, directors, employees, agents, representatives,
accountants and counsel to: (a) afford the officers, employees and authorized
agents, accountants, counsel and representatives (collectively,
"Representatives") of Dresser and its Affiliates reasonable access, during
normal business hours, to the offices, properties, other facilities and books
and records of the Company and to those officers, directors, employees, agents,
accountants and counsel of the Company who have any knowledge relating to the
Company, or the business and (b) furnish to the Representatives such additional
financial and operating data and other information regarding the Assets,
properties and goodwill of the Company as Dresser and its Affiliates may from
time to time reasonably request.
6.03 Confidentiality. The parties shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
under, and neither the execution nor any subsequent termination of this
Agreement shall in any way modify, amend or terminate any of the provisions of,
the Confidentiality Agreement dated as of February 27, 2001 between the Company
and Halliburton; provided however, that if Closing occurs, such Confidentiality
Agreement shall terminate at Closing.
6.04 Stockholder Approval. At the time of or prior to the execution and
delivery of this Agreement by the parties hereto, the Board of Directors of the
Company shall recommend to the stockholders of the Company the approval and
adoption of this Agreement and the Merger. By their execution and delivery of
this Agreement, each of the Signatory Stockholders hereby approves and adopts
the resolutions set forth on Annex B to this Agreement and each agrees to
exercise any drag along rights of the Signatory Stockholders pursuant to the
Stockholders' Agreement. Neither the Board of Directors of the Company nor any
of the Signatory Stockholders shall amend, alter or repeal any of the foregoing
actions.
6.05 Regulatory and Other Authorizations; Notices and Consents. Upon the
terms and subject to the conditions hereof, each of the parties hereto shall
(a) use all commercially reasonable efforts to take, or cause to be taken, all
appropriate action and do, or cause to be done, all things reasonably
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the Merger and the other transactions contemplated by this
Agreement, (b) use all commercially reasonable efforts to obtain from
Governmental Authorities or other third parties any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained
or made by Halliburton, Dresser, Merger Sub or the Company or any of their
subsidiaries in connection with the authorization, execution and delivery of
this Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement and (c) make all necessary filings, and
thereafter make any other required submissions with respect to this Agreement,
the Merger and the other transactions contemplated by this Agreement required
under the HSR Act, the Securities Act, the Exchange Act and any other
applicable Law. The parties hereto shall cooperate with each other in
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connection with the making of all such filings. Nothing contained in this
Section 6.05 shall be construed to require Halliburton, Dresser, Merger Sub or
the Company to divest any asset or assets in order to achieve clearance under
the HSR Act.
6.06 Notice of Certain Matters. Dresser shall give prompt notice to the
Company, and the Company shall give prompt notice to Dresser, of (a) the
occurrence, or nonoccurrence, of any event the occurrence or nonoccurrence of
which would be likely to cause or result in (i) any representation or warranty
made by any Person contained in this Agreement to be untrue or inaccurate or
(ii) any covenant, condition or agreement of such Person contained in this
Agreement not to be complied with or satisfied, and (b) any failure of
Halliburton, Dresser, Merger Sub or the Company, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder.
6.07 No Solicitation of Transactions. The Company and each of the Signatory
Stockholders agrees that, for the period from the date hereof until the date of
termination of this Agreement in accordance with the provisions of Section
10.01 hereof, none of them will, directly or indirectly, through any director,
Representative or otherwise, (a) solicit, initiate or encourage any inquiries
or proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, share exchange, business
combination, sale of all or a significant portion of the Assets of the Company
taken as a whole, sale of capital stock of the Company (including, without
limitation, by way of a tender offer) or similar transactions involving the
Company, other than the transactions contemplated by this Agreement (any of the
foregoing inquiries or proposals being referred to in this Agreement as an
"Acquisition Proposal"), or (b) agree to, enter into, accept, approve or
recommend any Acquisition Proposal, or enter into or conduct any negotiations
in respect thereof. The Company or the appropriate Signatory Stockholder shall
notify Halliburton of any Acquisition Proposal or any request for information
in connection with an Acquisition Proposal or for access to the properties,
books or records of the Company by any person or entity that informs the
Company or any of the Signatory Stockholders that it is considering making, or
has made, an Acquisition Proposal. Such notice shall be made orally and in
writing and shall indicate in reasonable detail the identity of the offeror and
the terms and conditions of such proposal, inquiry or contact. The Company and
the Stockholders agree that they shall immediately terminate all discussions
and negotiations with other parties regarding any Acquisition Proposal. Except
as expressly contemplated by this Agreement, each of the Stockholders agrees
that, for the period from the date hereof until the date of termination of this
Agreement in accordance with the provisions of Section 10.01 hereof, such
Signatory Stockholder will not sell, assign, transfer, exchange, mortgage,
pledge, grant a security interest in or otherwise dispose or encumber any of
the Shares or any right, power or privilege attendant thereto. Notwithstanding
the foregoing, nothing contained in this Section 6.07 shall prohibit the Board
of Directors of the Company from, following the receipt of an unsolicited,
written, bona fide Acquisition Proposal (an "Unsolicited Offer"), furnishing
information to, or entering into discussions or negotiations with, the person
or entity that makes such Unsolicited Offer, if and only to the extent that,
(i) the Board of Directors of the Company, after consultation with its legal
counsel, determines in good faith that the failure to take such action would
result in a breach by the Company's Board of Directors of its fiduciary
obligations under applicable law; and (ii) the Company provides reasonable
prior notice to Dresser to the effect that it is taking such action, which
notice shall (to the extent consistent with the fiduciary obligations of the
Board of Directors of the Company under applicable law) include the identity of
the Person making such Unsolicited Offer, and the material terms and conditions
of any such Unsolicited Offer.
6.08 Plan of Reorganization.
(a) This Agreement is intended to constitute a "plan of reorganization"
within the meaning of section 1.368-2(g) of the income tax regulations
promulgated under the Code. From and after the date of this Agreement and until
the Effective Time, each party hereto shall use all commercially reasonable
efforts to cause the Merger to qualify, and no party hereto will knowingly take
any action, cause any action to be taken, fail to take any action or cause any
action to fail to be taken which action or failure to act could prevent the
Merger from qualifying as a reorganization under the provisions of section
368(a) of the Code. Following the Effective Time, the Surviving Corporation,
Dresser, Halliburton and any of their Affiliates shall not knowingly
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take any action, cause any action to be taken, fail to take any action or cause
any action to fail to be taken, which action or failure to act could cause the
Merger to fail to qualify as a reorganization under section 368(a) of the Code.
(b) As of the date hereof, the Company does not know of any reason (i) why
it would not be able to deliver to Dresser's counsel, Vinson & Elkins L.L.P.,
at the date of the legal opinion referred to below, a certificate substantially
in compliance with IRS published advance ruling guidelines, with customary
exceptions and modifications thereto, to enable Vinson & Elkins L.L.P. to
deliver the legal opinion contemplated by Section 8.03(b), and the Company
hereby agrees to deliver such certificate to Vinson & Elkins L.L.P. effective
as of the date of such opinion or (ii) why Vinson & Elkins L.L.P. would not be
able to deliver the opinion required by Section 8.03(b).
(c) As of the date hereof, Dresser does not know of any reason (i) why it
would not be able to deliver to Vinson & Elkins L.L.P., at the date of the
legal opinion referred to below, a certificate substantially in compliance with
IRS published advance ruling guidelines, with customary exceptions and
modifications thereto, to enable Vinson & Elkins L.L.P. to deliver the legal
opinion contemplated by Section 8.03(b), and Dresser hereby agrees to deliver
such certificate to Vinson & Elkins L.L.P. effective as of the date of such
opinion or (ii) why Vinson & Elkins L.L.P. would not be able to deliver the
opinion required by Section 8.03(b).
6.09 Non-Proprietary Information. The Company acknowledges that Dresser and
its Affiliates have not inspected or examined any non-proprietary licensed data
in the Company's possession, (the "Non-Proprietary Information"). To the extent
requested by Dresser in writing prior to the Closing, the Company covenants to
return all Non-Proprietary Information to the owners, licensors or vendors
thereof prior to the Closing.
6.10 Transmittal Letter. Each of the Signatory Stockholders hereby agrees to
deliver one Properly Completed Transmittal Letter with respect to all Shares
beneficially owned by such Signatory Stockholder to Dresser prior to the
Effective Date.
6.11 Registration and NYSE Listing. Halliburton shall cause Halliburton
Common Stock issuable pursuant to this Agreement to be registered with the SEC
and duly authorized for listing on the NYSE prior to the Effective Time,
subject to official notice of issuance.
6.12 Indemnification of Directors and Officers. From and after the Effective
Time, the Surviving Corporation, Halliburton and Dresser shall cause the
Surviving Corporation to indemnify and hold harmless each present and former
director and officer of the Company, against any Losses incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of matters existing or
occurring at or prior to the Effective Time, whether asserted or claimed prior
to, at or after the Effective Time to the fullest extent that the Company was
permitted to indemnify such Person under applicable Law and its certificate of
incorporation or bylaws or other similar organizational documents in effect on
the date hereof and the Surviving Corporation, Halliburton and Dresser shall
cause the Surviving Corporation to also advance expenses as incurred to the
fullest extent permitted under applicable Law. The provisions of this Section
6.12 are intended to be for the benefit of, and shall be enforceable by, each
of the present and former directors and officers of the Company, their heirs
and their representatives and shall survive the Effective Time.
6.13 Non-competing License. The Company shall grant to the Signatory
Stockholders an exclusive, irrevocable, royalty-free, perpetual license for the
use of the owned Software, substantially in the form of Exhibit B.
6.14 Tax Matters. The following provisions shall govern the allocation of
responsibility as between Halliburton and the Signatory Stockholders for
certain Tax matters following the Closing Date:
(a) Halliburton shall prepare or cause to be prepared and file or cause
to be filed all Tax Returns for the Company and its subsidiaries for all
periods ending on or prior to the Closing Date which are filed after the
Closing Date. Halliburton shall permit the Signatory Stockholders to review
and comment on
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each such filing and shall make such revisions to such Tax Returns as are
reasonably requested by the Signatory Stockholders.
(b) Halliburton shall prepare or cause to be prepared and file or cause
to be filed any Tax Returns of the Company and its subsidiaries for Tax
periods which begin before the Closing Date and end after the Closing Date.
Halliburton shall permit the Signatory Stockholders to review and comment
on each such filing and shall make such revisions to such Tax Returns as
are reasonably requested by the Signatory Stockholders. For purposes of
this Section, in the case of any Taxes that are imposed on a periodic basis
and are payable for a Taxable period that includes (but does not end on)
the Closing Date, the portion of such Tax which relates to the portion of
such Taxable period ending on the Closing Date shall be deemed equal to
amount which would be payable if the relevant Taxable period ended on the
Closing Date. Any credits relating to a Taxable period that begins before
and ends after the Closing Date shall be taken into account as though the
relevant Taxable period ended on the Closing Date. All determinations
necessary to give effect to the foregoing allocations shall be made in a
manner consistent with prior practice of the Company and its subsidiaries.
(c) (i) Halliburton, the Company and the Signatory Stockholders
shall cooperate fully, as and to the extent reasonably requested by the
other party, in connection with the filing of Tax Returns pursuant to
this Section and any audit, litigation or other proceeding with respect
to Taxes. Such cooperation shall include the retention and (upon the
other party's request) the provision of records and information which
are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient
basis to provide additional information and explanation of any material
provided hereunder. The Company and its subsidiaries and the Signatory
Stockholders agree (A) to retain all books and records with respect to
Tax matters pertinent to the Company and its subsidiaries relating to
any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified
by Halliburton or the Signatory Stockholders, any extensions thereof)
of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (B) to give the
other party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other party so
requests, the Company and its subsidiaries or the Signatory
Stockholders, as the case may be, shall allow the other party to take
possession of such books and records.
(ii) Halliburton or the Signatory Stockholders further agree, upon
request, to use their best efforts to obtain any certificate or other
document from any governmental authority or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
(d) All transfer, documentary, sales, use, stamp, registration and other
such Taxes, and all conveyance fees, recording charges and other fees and
charges (including any penalties and interest) incurred in connection with
the consummation of the transactions contemplated by this Agreement shall
be borne by Halliburton.
ARTICLE VII
Employee Matters
7.01 Compensation and Benefits; Service Recognition.
(a) Service Credit. To the extent service is relevant for purposes of
eligibility, participation or vesting (but not the accrual of benefits other
than paid time off under any employee benefit plan, program policy or
arrangement established or maintained by Halliburton, the Surviving Corporation
or any of their Affiliates for the benefit of employees of Halliburton, the
Surviving Corporation or any of their Affiliates (the "Halliburton Plans")) the
employees of the Surviving Corporation shall be credited for their service as
of the Effective Time with the Company or any predecessor entity. All employees
of the Surviving Corporation shall be eligible to
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participate in the Halliburton Plans to the same extent as the employees of
Halliburton and its Affiliates. Halliburton shall, or shall cause its
Affiliates or the Surviving Corporation, cause each Halliburton Plan to (i)
waive any preexisting condition or waiting period limitation that would
otherwise be applicable to an employee of the Surviving Corporation or his or
her spouse or dependents, and (ii) give credit for any deductible or co-payment
amounts paid under a Company Plan by any employee of the Surviving Corporation
(or his or her spouse of dependents) in respect of the plan year in which the
Closing occurs to the extent that such individuals participate in a Halliburton
Plan following the Closing for which deductibles or copayments are required.
(b) Plan Continuation. Except as otherwise specifically set forth in this
Agreement nothing contained herein shall be construed as requiring Halliburton,
the Surviving Corporation, or any of their Affiliates to continue any specific
benefit plan or to continue the employment of any specific person.
7.02 Employee Stock Options. Prior to the Closing Date, the committee
administering the Company Stock Option Plan shall take all action necessary to
effectuate the acceleration of all options outstanding under the Company Stock
Option Plan so that such options may be exercised in full; provided that such
options shall only be exercisable prior to the Closing Date and, if any of such
options are not exercised prior to the Closing Date, such unexercised options
and all rights of the option holders thereunder shall terminate at the Closing
Date.
7.03 License. The Company shall obtain a fully paid, perpetual, irrevocable,
exclusive license, substantially in the form of Exhibit C, to Dresser or, at
Dresser's option, one of its Affiliates, executed by each of its employees for
all Intellectual Property, Software and Owned Software that may have been
developed by such employees.
7.04 Employment Contracts. Dresser or one of its Affiliates shall enter into
employment contracts, substantially in the form of Exhibit D with the employees
of the Company listed on Annex C.
7.05 Competition Agreements. The Signatory Stockholders, officers, directors
and key employees of the Company listed on Annex C shall have entered into a
non-compete agreement substantially in the form of Exhibit E.
ARTICLE VIII
Conditions to Closing
8.01 Conditions to the Obligations of Each Party. The obligations of the
Company, the Signatory Stockholders, Halliburton, Dresser, and Merger Sub to
consummate the Merger are subject to the satisfaction or waiver (where
permissible), at or prior to the Closing, of each of the following conditions:
(a) any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated,
(b) no Governmental Authority or court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any Law or
Governmental Order which is then in effect making the consummation of the
Merger illegal or otherwise prohibiting the consummation of the Merger;
(c) no Action shall have been commenced by or before any Governmental
Authority against the Company, Halliburton, Dresser or Merger Sub seeking
to restrain or materially and adversely alter the transactions contemplated
by this Agreement which do, or would reasonably be expected to, render it
impossible or unlawful to consummate such transactions;
(d) a registration statement (the "Registration Statement") affecting
the Halliburton Common Stock issuable pursuant to this Agreement shall have
been declared effective by the SEC. No stop order suspending the
effectiveness of the Registration Statement shall have been issued by the
SEC and no proceedings for that purpose shall have been initiated by the
SEC;
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(e) the Agreement and Plan of Merger shall have been approved and
adopted by the requisite vote of the stockholders of the Company as
required by the DGCL; and
(f) the parties shall have agreed on the Closing Balance Sheet and the
amount of adjustment, if any, to be made to the Merger Consideration
pursuant to Section 3.01(c).
8.02 Conditions to the Obligations of the Company and the Signatory
Stockholders. The obligations of the Company and the Signatory Stockholders to
consummate the Merger shall be subject to the satisfaction or waiver (where
permissible) by the Company and the Signatory Stockholders at or prior to the
Closing, of each of the following conditions:
(a) Representations, Warranties and Covenants. (i) The representations
and warranties of Halliburton, Dresser and Merger Sub contained in this
Agreement shall be true and correct as of the Closing Date, with the same
force and effect as if made on the Closing Date, other than such
representations and warranties as are made as of another date, which shall
be true and correct as of such date, except to the extent that the failures
to be so true and correct would not, individually or in the aggregate with
other such failures, have a Halliburton Material Adverse Effect or impair
the ability of Halliburton, Dresser and Merger Sub to perform their
obligations under this Agreement; (ii) the covenants and agreements
contained in this Agreement to be complied with by Halliburton, Dresser and
Merger Sub on or before the Closing shall have been complied with in all
material respects; and (iii) the Company shall have received a certificate
from Halliburton, Dresser and Merger Sub, substantially in the form of
Exhibit F, to such effect signed by a duly authorized officer thereof;
(b) Non-competing License. The non-competing license described in
Section 6.13 shall have been executed in a form reasonably acceptable to
the Signatory Stockholders.
(c) New York Stock Exchange Listing. Halliburton Common Stock issuable
pursuant to this Agreement shall have been duly authorized for listing on
the NYSE, subject to official notice of issuance,
(d) Acceptance of Letters of Transmittal. Dresser shall have determined
that each Transmittal Letter it has received prior to the Closing Date is a
Properly Completed Transmittal Letter (it being understood that this
paragraph (d) is not intended to in any way modify Dresser's right in its
reasonable discretion to determine whether any such Transmittal Letter is a
Properly Completed Transmittal Letter); and
(e) Other Closing Documents. The Company and the Stockholders shall have
received such other certificates, instruments and documents in furtherance
of the transactions contemplated by this Agreement as the Company or its
counsel may reasonably request.
8.03 Conditions to the Obligations of Halliburton, Dresser and Merger
Sub. The obligations of Halliburton, Dresser and Merger Sub to consummate the
Merger shall be subject to the satisfaction or waiver (where permissible), at
or prior to the Closing, of each of the following conditions:
(a) Representations, Warranties and Covenants. (i) The representations
and warranties of the Company and the Signatory Stockholders contained in
this Agreement shall be true and correct as of the Closing Date, with the
same force and effect as if made on the Closing Date, other than such
representations and warranties as are made as of another date, which shall
be true and correct as of such date, except to the extent that the failures
to be so true and correct would not, individually or in the aggregate with
other such failures, have a Material Adverse Effect or impair the ability
of the Company to perform its obligations under this Agreement; (ii) the
covenants and agreements contained in this Agreement to be complied with by
the Company and the Signatory Stockholders on or before the Closing shall
have been complied with in all material respects; and (iii) Dresser shall
have received a certificate from the Company, substantially in the form of
Exhibit G to such effect signed by a duly authorized officer thereof;
(b) Reorganization Opinion. Dresser shall have received from Vinson &
Elkins L.L.P. a written opinion, reasonably satisfactory to Dresser and
dated as of the Closing Date, addressed to Dresser that the Merger will be
treated for federal income tax purposes as a reorganization qualifying
under section 368(a) of the Code;
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(c) Liens. The security interests held by Texaco Development
Corporation, Texaco Inc. and Texaco Group Inc. under the Master Agreement
dated December 17, 1999, the Assignment Agreement dated December 17, 1999,
the Security Agreement and Conditional Assignment dated December 17, 1999,
the Security Agreement and Conditional Assignment (Patent) dated December
17, 1999, the Security Agreement and Conditional Assignment (Trademark)
dated December 17, 1999, and the Security Agreement and Conditional
Assignment (copyright) dated December 17, 1999 shall be released.
(d) Exercise or Cancellation of Options. All securities described in
Schedule 4.02(a) of the Company's Disclosure Letter that are an exception
to the representation and warranty set forth in the last sentence of
Section 4.02(a) shall have been fully exercised or cancelled;
(e) Licenses. The licenses described in Section 7.03 shall have been
executed in a form reasonably acceptable to Dresser;
(f) Employment Contracts. The employment contracts described in Section
7.04 shall have been executed in a form reasonably acceptable to Dresser;
(g) Competition Agreements. The competition agreements described in
Section 7.05 shall have been executed in a form reasonably acceptable to
Dresser;
(h) Other Closing Documents. Halliburton, Dresser and Merger Sub shall
have received such other certificates, instruments and documents in
furtherance of the transactions contemplated by this Agreement as
Halliburton, Dresser and Merger Sub or their counsel may reasonably
request; and
(i) Company Stockholder Approval and Exercise of Drag-Along Rights. If
more than sixty percent (60)% but less than one hundred percent (100%) of
the Company's stockholders entitled to vote on the Merger vote to approve
the Merger, those Company stockholders voting to approve the Merger shall
exercise their drag-along rights pursuant to Section 3.10B of the
Shareholders' Agreement.
ARTICLE IX
Indemnification
9.01 Indemnification of Halliburton. Each Signatory Stockholder agrees,
subject to the other terms and conditions of this Agreement (including the
limitations contained in Section 9.04) to defend, indemnify and hold harmless,
Halliburton, Dresser, Merger Sub and each of their subsidiaries, Affiliates,
officers, directors, employees, agents and their successors and assigns
including, from and after Closing, Halliburton, Dresser and Merger Sub
(Halliburton and all such other Persons are collectively referred to as the
"Halliburton Indemnified Persons"), from and against each and every Loss paid,
imposed on or incurred by any of Halliburton Indemnified Persons relating to,
resulting from or arising out of and without duplication (a) any breach of any
representation, warranty, covenant or agreement made by such Signatory
Stockholders in this Agreement as of the date hereof or as of the Closing Date
and (b) to the extent not included in the adjustments to determine the Adjusted
Merger Consideration, Liabilities that, if known as of the Closing, would have
been included in the adjustments to determine the Adjusted Merger
Consideration. A Halliburton Indemnified Person shall give prompt written
notice to the Company and each relevant Signatory Stockholder of any matter
which such Halliburton Indemnified Person has determined has given or could
give rise to a right of indemnification hereunder, supported by reasonable
documentation setting forth the nature of the circumstances entitling the
Halliburton Indemnified Person to indemnity hereunder (including references to
the provisions hereof upon which the Halliburton Indemnified Person is relying
in making such claim); provided that, the failure to give such notice promptly
shall not constitute a waiver of Halliburton Indemnified Person's right to
indemnification except to the extent set forth in Section 9.04(a) or that the
Company and the Signatory Stockholders are materially prejudiced by such delay
or failure to give notice.
9.02 Indemnification of the Signatory Stockholders. Halliburton, Dresser and
Merger Sub agree, subject to the other terms and conditions of this Agreement,
to defend, indemnify and hold harmless the Signatory
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Stockholders (the "Company Indemnified Persons") from and against, and shall
reimburse the Company Indemnified Persons for, each and every Loss paid,
imposed on or incurred by the Company Indemnified Persons, directly or
indirectly, relating to, resulting from or arising out of any breach of any
representation, warranty, covenant or agreement made by Halliburton, Dresser or
Merger Sub in this Agreement as of the date hereof or as of the Closing Date. A
Company Indemnified Person shall give Dresser prompt written notice of any
matter which such Person has determined has given or could give rise to a right
of indemnification hereunder, supported by reasonable documentation setting
forth the nature of the circumstances entitling the Company Indemnified Person
to indemnity hereunder (including references to the provisions hereof upon
which the Company Indemnified Person is relying in making such claim); provided
that the failure to give such notice promptly shall not constitute a waiver of
any Company Indemnified Person's right to indemnification except to the extent
set forth in Section 9.04(a) or that Dresser is materially prejudiced by such
delay or failure to give notice.
9.03 Notice and Defense of Third Party Claims.
(a) If any claim or proceeding (a "Third Party Claim") shall be brought or
asserted under this Article IX against an indemnified Person (each, an
"Indemnified Person") in respect of which indemnity may be sought under this
Article IX from an indemnifying Person or any successor thereto (each, an
"Indemnifying Person"), the Indemnified Person shall give prompt written notice
(which shall be within ten Business Days of receipt by the Indemnified Person
of notice of such Third Party Claim) of such Third Party Claim to the
Indemnifying Person in accordance with Section 9.01 or 9.02, as applicable;
provided that any delay or failure so to notify the Indemnifying Person shall
relieve the Indemnifying Person of its obligations hereunder only to the
extent, if at all, that it is materially prejudiced by reason of such delay or
failure.
(b) The Indemnified Person may, subject to the Indemnifying Person's rights
to assume the defense thereof during the time period described below, defend
against the matter in any manner it reasonably may deem appropriate. If the
Indemnifying Person notifies the Indemnified Person prior to completion of pre-
trial discovery that the Indemnifying Person is assuming the defense of such
matter, (a) the Indemnifying Person shall defend the Indemnified Person against
the matter with counsel of its choice reasonably satisfactory to the
Indemnified Person, and (b) the Indemnified Person may retain separate co-
counsel at its sole cost and expense (except that the Indemnifying Person shall
be responsible for the fees and expenses of such separate co-counsel if (i) the
Indemnified Person shall determine in good faith that an actual or potential
conflict of interest makes representation by the same counsel or the counsel
selected by the Indemnifying Person inappropriate or (ii) both (A) the
Indemnifying Person has not admitted in a writing delivered to the Indemnified
Person that such Third Party Claim is a proper matter for indemnification
pursuant to this Article IX and (B) it is ultimately determined that such Third
Party Claim is a proper matter for indemnification pursuant to this Article
IX). Assumption of the defense of any matter by the Indemnifying Person shall
not prejudice the right of the Indemnifying Person to claim at a later date
that such Third Party Claim is not a proper matter for indemnification pursuant
to this Article IX.
(c) Should the Indemnifying Person fail to give notice to the Indemnified
Person as provided herein or in the event the Indemnifying Person declines to
undertake the defense of any Third Party Claim, action or proceeding when first
notified thereof, the Indemnified Person shall keep the Indemnifying Person
advised of material developments. If the Indemnifying Person exercises the
right to undertake any such defense against any Third Party Claim, the
Indemnified Person shall cooperate with the Indemnifying Person in such defense
and make available to the Indemnifying Person all witnesses, pertinent records,
materials and information in the Indemnified Person's possession or reasonably
available to the Indemnified Person or under the Indemnified Person's control
relating thereto as is reasonably requested by the Indemnifying Person.
(d) Anything in this Article IX to the contrary notwithstanding, (i) the
Indemnifying Person shall not, without the Indemnified Person's prior written
consent (which consent shall not be unreasonably withheld), settle or
compromise any Third Party Claim or consent to the entry of any judgment with
respect to any Third Party Claim which does not include a provision whereby the
plaintiff or claimant in the matter releases the
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Indemnified Person from all liability with respect thereto and (ii) in no event
will the Indemnified Person settle or compromise any Third Party Claim or
consent to the entry of any judgment or otherwise admit any liability with
respect to, or enter into any settlement with respect to, the Third Party Claim
without the prior written consent of the Indemnifying Person (which consent
shall not be unreasonably withheld).
9.04 Limitations.
(a) None of an Indemnified Person, a Halliburton Indemnified Person or a
Company Indemnified Person shall be entitled to indemnification with respect to
the breach of any representation, warranty, covenant or agreement under this
Article IX beyond the survival period, except for claims for which notice of a
claim for indemnity (which notice alleges with reasonable specificity the facts
and circumstances of such claim) shall have been given within the survival
period set forth in Section 11.01;
(b) Notwithstanding anything herein to the contrary, (i) in no event shall
the aggregate Liability of Halliburton, Dresser and Merger Sub under this
Article IX exceed the Adjusted Merger Consideration and (ii) Halliburton,
Dresser and Merger Sub shall not have any further obligations under this
Article IX at the time when Dresser has paid indemnification hereunder in
amounts equal in the aggregate to the Adjusted Merger Consideration; and
(c) Notwithstanding anything herein to the contrary, in no event shall the
aggregate Liability of the Signatory Stockholders under this Article IX exceed
the sum of Twenty-Five Million Dollars ($25,000,000) (the "Loss Ceiling"). In
addition, the Signatory Stockholders shall not be obligated to indemnify any of
the Halliburton Indemnified Persons until the cumulative aggregate Loss
actually incurred by such Halliburton Indemnified Persons for which such
Halliburton Indemnified Persons are eligible to seek indemnification pursuant
to Section 9.01 exceeds the sum of Five Million Dollars ($5,000,000).
Notwithstanding anything to the contrary contained in this Agreement, no
individual Signatory Stockholder shall have any further obligations under this
Article IX at the time when such Signatory Stockholder has paid indemnification
hereunder in an amount equal to the lesser of (i) the Loss Ceiling or (ii) one-
half ( 1/2) of the product of (y) the Halliburton Share Value and (z) the
number of shares of Halliburton Stock owned by such Signatory Shareholder.
9.05 Exclusive Remedies; Additional Limitations.
(a) Halliburton, Dresser, Merger Sub, the Company and the Signatory
Stockholders acknowledge and agree that following the Closing, the
indemnification provisions of this Article IX shall be the sole and exclusive
remedy of each party for any breach by another party of the representations and
warranties in this Agreement and for any failure by another party to perform
and comply with any covenants and agreements that, by their terms, were to have
been performed or complied with by such party prior to the Closing.
(b) Except as set forth in this Agreement, the parties hereto are not making
any representation, warranty, covenant or agreement with respect to the matters
contained herein. Notwithstanding anything to the contrary contained in this
Agreement, no breach of any representation, warranty, covenant or agreement
contained herein shall give rise to any right on the part of any party hereto,
after the consummation of the transactions contemplated by this Agreement, to
rescind this Agreement or any of the transactions contemplated hereby.
(c) Notwithstanding anything to the contrary contained in this Agreement, no
party hereto shall have any liability under any provision of this Agreement for
any consequential or punitive damages.
(d) Notwithstanding anything to the contrary contained in this Agreement,
Halliburton, Dresser and Merger Sub shall not be entitled to indemnity
hereunder if and to the extent that there is a specific reserve for such matter
reflected on the Closing Balance Sheet with respect thereto.
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ARTICLE X
Termination and Waiver
10.01 Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by Dresser upon five Business Days notice following a material
breach of any representation, warranty, covenant or agreement on the part
of the Company or any Signatory Stockholder set forth in this Agreement, or
if any representation or warranty of the Company or any Signatory
Stockholder shall have become untrue, in either case such that the
conditions set forth in Sections 8.01 and 8.03 would not be satisfied;
provided, however, that, if such breach is curable by the Company or such
Signatory Stockholder, as appropriate, through the exercise of commercially
reasonable efforts and for so long as the Company or such Signatory
Stockholder, as appropriate, continues to exercise such commercially
reasonable efforts after written notice thereof from Dresser to the Company
or such Signatory Stockholder, Dresser may not terminate this Agreement
under this Section 10.01(a);
(b) by the Company upon five Business Days notice following a material
breach of any representation, warranty, covenant or agreement on the part
of Halliburton, Dresser or Merger Sub set forth in this Agreement, or if
any representation or warranty of Halliburton, Dresser or Merger Sub shall
have become untrue, in either case such that the conditions set forth in
Sections 8.01 and 8.02 would not be satisfied; provided, however, that, if
such breach is curable by Halliburton, Dresser or Merger Sub through the
exercise of its commercially reasonable efforts and Halliburton, Dresser or
Merger Sub continues to exercise such commercially reasonable efforts after
written notice thereof from the Company to Dresser, the Company may not
terminate this Agreement under this Section 10.01(b).
(c) by either the Company or Dresser if the Closing shall not have
occurred by December 31, 2001; provided, however, that the right to
terminate this Agreement under this Section 10.01(c) shall not be available
to any party whose failure to fulfill any obligation under this Agreement
shall have been the cause of, or shall have resulted in, the failure of the
Closing to occur on or prior to such date;
(d) by either Dresser or the Company in the event that any Governmental
Authority shall have issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and nonappealable; or
(e) by the mutual written consent of the Company and Dresser.
10.02 Effect of Termination. In the event of termination of this Agreement
as provided in Section 10.01, this Agreement shall forthwith become void and
there shall be no liability on the part of either party hereto except (a) as
set forth in Sections 6.03 and 11.02 and (b) that nothing herein shall relieve
either party from liability for any willful breach of this Agreement.
10.03 Waiver. Dresser may (a) extend the time for the performance of any of
the obligations or other acts of any other party other than Halliburton,
Dresser or Merger Sub, (b) waive any inaccuracies in the representations and
warranties of any other party other than Halliburton, Dresser or Merger Sub
contained herein or in any document delivered by such other party pursuant
hereto or (c) waive compliance with any of the agreements or conditions of any
other party other than Halliburton, Dresser or Merger Sub contained herein.
Prior to the Effective Time, the Company may (a) extend the time for the
performance of any obligations or other acts of Halliburton, Dresser or Merger
Sub, (b) waive any inaccuracies in the representations and warranties of
Halliburton, Dresser or Merger Sub contained herein or delivered pursuant
hereto or (c) waive compliance with any of the agreements or conditions of
Halliburton, Dresser or Merger Sub contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Any waiver of any term or condition shall not be
construed as a waiver of any subsequent breach or a subsequent waiver of the
same term or condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights hereunder shall
not constitute a waiver of any of such rights.
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ARTICLE XI
General Provisions
11.01 Survival of Representations, Warranties, Covenants and Agreements. The
representations, warranties, covenants and agreements set forth in this
Agreement or in any certificate delivered pursuant hereto shall survive the
Effective Time for a period of one year following the Closing Date, except that
the provisions of Articles III, IX, XI and XII and Sections 6.03, 6.12, 7.01
and 10.03 shall survive the Effective Time indefinitely or for such shorter
period as may be specifically provided for therein.
11.02 Expenses. Subject to the adjustments to the Merger Consideration to
determine the Adjusted Merger Consideration as provided herein, all costs and
expenses, including fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing occurs. The parties hereto agree that all
fees of Shook, Hardy & Bacon L.L.P. relating to services provided to the
Company by Shook, Hardy & Bacon L.L.P. prior to the Closing shall be paid in
full in immediately available funds by the Company on the Closing Date.
11.03 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, facsimile or by registered
or certified United States mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this Section
11.03):
(a) if to the Company or the Surviving Corporation:
Magic Earth, Inc.
2000 West Sam Houston Parkway South, Suite 750
Houston, Texas 77042
Attn: Michael J. Zeitlin
Facsimile: 832.200.4798
with a copy to:
Shook, Hardy & Bacon L.L.P.
Chase Tower
600 Travis, Suite 1600
Houston, Texas 77002
Attn: Mont P. Hoyt, Esq.
Facsimile: 713.227.9508
After the Closing, with a copy to:
Dresser Industries, Inc.
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
Attn: Vice President and Secretary
Facsimile: 214.978.2658
(b) if to Halliburton, Dresser or Merger Sub:
Dresser Industries, Inc.
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
Attn.: Vice President and Secretary
Facsimile: 214.978.2783
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with a copy to:
Halliburton Company
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
Attn.: Executive Vice President and General Counsel
Facsimile: 214.978.2658
(c) if to any Signatory Stockholder:
Yin L. Cheung
5906 Bayberry Way
Sugar Land, Texas 77479
Michael J. Zeitlin
12506 Old Oaks
Houston, Texas 77024
11.04 Public Announcements. Except as otherwise required by law, no party to
this Agreement shall make, or cause to be made, any press release or public
announcement in respect of this Agreement or the transactions contemplated
hereby, or otherwise communicate with any news media without the prior consent
of the other party, and the parties shall cooperate as to the timing and
contents of any such press release or public announcement.
11.05 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.06 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the fullest extent possible.
11.07 Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
11.08 Assignment; Third Party Beneficiaries. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by
operation of law or otherwise without the prior written consent of the parties
hereto, which consent may be granted or withheld in the sole discretion of the
parties. Subject to the preceding sentence, this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Notwithstanding anything contained in this Agreement to
the contrary, except for the provisions of Articles III, VII, IX and XII and
Section 6.12 (collectively, the "Third Party Provisions"), nothing in this
Agreement, express or implied, is intended to confer on any Person other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement. The
Third Party Provisions may be enforced by the beneficiaries thereof.
11.09 Amendment. This Agreement (except for Article XII) may not be amended
or modified except (a) by an instrument in writing signed by each of, or on
behalf of each of, Halliburton, Dresser, Merger Sub, the Company, and the
Signatory Stockholders.
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11.10 Governing Law; Forum. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed in that state and without regard to
any applicable conflicts of law. Any action or proceeding arising out of or
relating to this Agreement may be heard and determined in any state or federal
court located in Harris County, Texas. In connection with the foregoing, each
of the parties to this Agreement irrevocably (a) consents to submit itself to
the personal jurisdiction of the state and federal courts of competent
jurisdiction located in Harris County, Texas, and (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request
for leave from any such court, and (c) hereby consents to service of process
pursuant to the notice provisions set forth in Section 11.03.
11.11 Counterparts. This Agreement may be executed and delivered (including
by facsimile transmission) in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed and
delivered shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
11.12 Waiver of Jury Trial. Each of the parties hereto irrevocably and
unconditionally waives all right to trial by jury in any action, proceeding or
counterclaim (whether based in contract, tort or otherwise) arising out of or
relating to this Agreement or the actions of the parties hereto in the
negotiation, administration, performance and enforcement thereof.
ARTICLE XII
Agreement Among Stockholder Parties
12.01 Applicability. The Signatory Stockholders agree as among themselves as
set forth in this Article XII.
12.02 Rights of Spouses.
(a) This Agreement does not in any way alter or affect the status of the
Company Common Stock as community property or separate property under the laws
of any state or under any binding agreements as to such status. In the event
any shares of the Company Common Stock constitute or are claimed to constitute
community property, or are subject to or are claimed to be subject to an
equitable lien or charge in favor of the marital community of any Signatory
Stockholder and his or her spouse ("Spouse"), then such Spouse agrees not to
assert any claim or to take any other action based on such community interest
or lien or charge which would frustrate the purposes sought to be achieved by
this Agreement, and instead such Spouse shall be bound by this Agreement and
cooperate with the ends herein sought to be achieved in every respect. To the
extent any Spouse has a property interest in the Company Common Stock, such
Spouse, through execution and delivery of this Agreement, does hereby grant,
sell, convey and assign to Dresser, effective at the Closing, all of such
Spouse's property interest in such shares of the Company Common Stock.
(b) Each Spouse hereby invests the Signatory Stockholder to whom the Spouse
is married (and such Signatory Stockholder's legal representative) with a
durable power of attorney coupled with an interest to make changes, additions,
or amendments to this Agreement (including, without limitation, termination of
this Agreement) and the power to execute assignments which would convey the
Spouse's community interest, if any, in the Stock, without the necessity of
notifying or obtaining such Spouse's consent or signature, with such durable
power of attorney to survive the Spouse's disability or incapacity. Each Spouse
hereby authorizes the Signatory Stockholder to whom the Spouse is married to
execute on the Spouse's behalf the Signatory Stockholder's Release in the form
of Exhibit H.
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IN WITNESS WHEREOF, the Company, Halliburton, Dresser, Merger Sub and the
Signatory Stockholders have caused this Agreement to be executed as of the date
first written above.
Halliburton:
HALLIBURTON COMPANY
/s/ Lester L. Coleman
By: _________________________________
Name: _______________________________
Title: ______________________________
Company:
MAGIC EARTH, INC.
/s/ Michael Zeitlin
By: _________________________________
Name: _______________________________
Title: ______________________________
Dresser:
DRESSER INDUSTRIES, INC.
/s/ Lester L. Coleman
By: _________________________________
Name: _______________________________
Title: ______________________________
Merger Sub:
HALLIBURTON MS. INC.
/s/ Lester L. Coleman
By: _________________________________
Name: _______________________________
Title: ______________________________
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IN WITNESS WHEREOF, the Company, Halliburton, Dresser, Merger Sub and the
Signatory Stockholders have caused this Agreement to be executed as of the date
first written above.
SIGNATORY STOCKHOLDERS AND CONSENTING SPOUSES:
/s/ Yin L. Cheung /s/ Betty H. Cheung
By: _________________________________ By: _________________________________
Name: Yin L. Cheung
Name: (Spouse)
/s/ Michael Zeitlin /s/ Natalie Zeitlin
By: _________________________________ By: _________________________________
Name: Michael J. Zeitlin Name: (Spouse)
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ANNEX A
Definitions
Certain Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"Acquisition Proposal" has the meaning specified in Section 6.07.
"Action" means any claim or any action, suit, arbitration, inquiry,
proceeding or investigation by or before any Governmental Authority or
otherwise.
"Adjusted Merger Consideration" has the meaning specified in Section
3.01(c).
"Affiliate" means, with respect to any specified Person, any other Person
that directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified Person and, if
such specified Person is a natural person, the immediate family members of such
specified Person.
"Assets" shall have the meaning specified in Section 3.09.
"Business Day" means any day that is not a Saturday, a Sunday or other day
on which banks are required or authorized by law to be closed in Houston,
Texas.
"Certificate of Merger" has the meaning specified in Section 2.02.
"Closing" has the meaning specified in Section 2.02.
"Closing Balance Sheet" means the consolidated balance sheet of the Company
as of the close of business for the stub period ending on the 5th day
immediately preceding the Closing Date.
"Closing Date" has the meaning specified in Section 2.02.
"Code" has the meaning specified in the recitals to this Agreement.
"Company" has the meaning specified in the preamble to this Agreement.
"Company Certificates" means certificates representing the Shares
immediately prior to the Effective Time.
"Company Common Stock" has the meaning specified in Section 3.01(a).
"Company Indemnified Persons" has the meaning specified in Section 9.02.
"Company Stock Option Plan" means the Magic Earth, Inc. 2001 Stock Incentive
Plan
"Company's Disclosure Letter" means the Disclosure Letter, delivered as of
the Closing Date by the Company.
"Control" (including the terms "controlled by" and "under common control
with"), with respect to the relationship between or among two or more Persons,
means the possession, directly or indirectly, or as trustee or executor, of the
power to direct or cause the direction of the affairs or management of a
Person, whether through the ownership of voting securities, as trustee or
executor, as general partner or manager, by contract or otherwise, including,
without limitation, the ownership, directly or indirectly, of securities having
the power to elect a majority of the board of directors or similar body
governing the affairs of such Person.
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"Dark Place" means any substantial portion of the source code which is
substantially undocumented.
"Defensible Title" has the meanings specified in Section 4.13(c).
"DGCL" has the meaning specified in the recitals to this Agreement.
"Dissenting Shares" has the meaning specified in Section 3.11.
"Dissenting Stockholder" has the meaning specified in Section 3.11.
"Dresser" has the meaning specified in the preamble to this Agreement.
"Easements" means all easements, rights-of-way, licenses, permits,
servitudes and similar rights and interests in any way appertaining, belonging,
affixed, incidental or applicable to, or used in connection with, the ownership
of the Equipment, Real Property or the Operations of the Company.
"Effective Time" means the date and time of filing the Certificate of Merger
with the Secretary of State of the State of Delaware with respect to the Merger
(or such later time as may be agreed in writing by each of the parties hereto
and specified in the Certificate of Merger).
"Encumbrance" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge,
encumbrance, adverse claim, preferential arrangement or restriction of any
kind, including any restriction on the use, voting, transfer, receipt of income
or other exercise of any attributes of ownership.
"Environmental Laws" means any Law in effect on the date of this Agreement
or on the Closing Date relating to pollution or protection of the environment,
health, safety or natural resources, or otherwise arising from the use,
handling, transportation, storage, disposal, release or discharge of Hazardous
Materials.
"Equipment" means all equipment, fixtures, physical facilities, inventory,
spare parts, supplies, tools, and other tangible personal property owned or
leased by the Company and other personal property of any kind on or associated
with the Operations of the Company, including communications systems and
equipment, which are located on or used in connection with the Operations of
the Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Exchange Consideration" has the meaning specified in Section 3.01(d).
"Financial Statements" has the meaning specified in Section 4.07(a).
"Governmental Authority" means any United States federal, state, local or
any foreign government, governmental, regulatory or administrative authority,
agency or commission or any court, tribunal, or judicial or arbitral body.
"Governmental Licenses and Permits" has the meaning specified in Section
4.33.
"Governmental Order" means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
"Halliburton" has the meaning specified in the preamble to this Agreement.
"Halliburton Certificates" has the meaning specified in Section 2.02.
A-37
"Halliburton Indemnified Persons" has the meaning specified in Section 9.01.
"Halliburton Material Adverse Effect" means any change in or effect on
Halliburton or any of its subsidiaries that, individually or in the aggregate
with any other changes in or effects on Halliburton or any of its subsidiaries,
is materially adverse to the financial condition, business or results of
operations of Halliburton and its subsidiaries, taken as a whole; provided,
however, that "Halliburton Material Adverse Effect" shall not be deemed to
include any changes or effects arising out of events or conditions generally
affecting oil and gas exploration and production companies or oil and gas
service companies including, without limitation, changes in the price of
Hydrocarbons.
"Halliburton SEC Reports" has the meaning specified in Section 5.09(a).
"Halliburton Share Value" has the meaning specified in Section 3.01(b).
"Hazardous Materials" means (a) petroleum, petroleum hydrocarbons, crude oil
and petroleum products and any by-products, fractions, derivatives or breakdown
products thereof, any oil or gas exploration or production waste, and any
natural gas, synthetic gas and any mixtures thereof, (b) any radioactive
materials, asbestos-containing materials and polychlorinated biphenyls, and (c)
any other chemicals, materials or substances defined or regulated as toxic or
hazardous or as pollutants, contaminants or waste under any applicable
Environmental Law.
"Hedging Transaction" has the meaning specified in Section 4.17.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"Hydrocarbons" means crude oil, natural gas, casinghead gas, condensate,
sulphur, natural gas liquids, plant products and other liquid or gaseous
hydrocarbons produced in association therewith, including, without limitation,
coalbed methane and gas.
"Indebtedness" means, with respect to any Person, (a) all indebtedness of
such Person, whether or not contingent, for borrowed money, (b) all obligations
of such Person for the deferred purchase price of property or services (other
than trade payables), (c) all obligations of such Person evidenced by notes,
bonds, debentures, repurchase and reverse repurchase agreements or other
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement, in the event of default, are limited to
repossession or sale of such property), (e) all obligations of such Person as
lessee under leases that have been recorded as capital leases, (f) all
obligations, contingent or otherwise, of such Person under acceptance, letter
of credit or similar facilities, (g) all obligations of others guaranteed by
such Person and (h) all surety, performance and maintenance bonds in an amount
in excess of $50,000.
"Indemnified Person" has the meaning specified in Section 9.03(a).
"Indemnifying Person" has the meaning specified in Section 9.03(a).
"Intellectual Property" has the meaning specified in Section 4.14(a).
"IRS" means the Internal Revenue Service of the United States.
"Knowledge," with respect to:
(a) the Company, means that which is actually known by any of the Persons
set forth on Attachment I hereto or any of the directors of the
Company.
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(b) Dresser, means that which is actually known by any of the officers and
directors of Dresser.
(c) Halliburton, means that which is actually known by any of the officers
or directors of Halliburton.
(d) Merger Sub, means that which is actually known by any of the officers
or directors of Merger Sub.
(e) a Signatory Stockholder, means that which is actually known by such
Signatory Stockholder.
"Law" means any federal, state, local or foreign law, statute, ordinance,
regulation, rule, code, decree, other requirement or rule of law.
"Liabilities" means any and all debts, liabilities and obligations, whether
accrued or fixed, absolute or contingent, matured or unmatured, determined or
determinable, including, without limitation, those arising under any Law,
Action or Governmental Order, and those arising under any contract or
agreement.
"Loss" means any and all Liabilities, losses, damages, claims, costs and
expenses, interest, awards, judgments and penalties (including, without
limitation, reasonable attorneys' fees and expenses) actually suffered or
incurred by a Person, decreased by any Tax benefit enjoyed by such Person in
connection with such Loss.
"Loss Ceiling" has the meaning specified in Section 9.04(c).
"Material Adverse Effect" means any change in or effect on the Company
that, individually or in the aggregate with any other changes in or effects on
the Company, is materially adverse to the financial condition, business or
results of Operations of the Company, taken as a whole; provided, however,
that "Material Adverse Effect" shall not be deemed to include any changes or
effects arising out of events or conditions generally affecting oil and gas
exploration and production companies or oil and gas service companies
(including changes in the price of Hydrocarbons).
"Material Contracts" has the meaning specified in Section 4.12(a).
"Merger" has the meaning specified in the recitals to this Agreement.
"Merger Consideration" means the consideration into which the Shares are
converted pursuant to Section 3.01(b) (including any cash in lieu of
fractional shares), together with any dividends or other distributions to
which the holder of such Shares is entitled pursuant to Section 3.03. If this
term is used as an amount (for example, in Sections 3.03(b) and , 10.04(b),
shares of Halliburton Common Stock shall be deemed to have a value equal to
Halliburton Share Value.
"Merger Sub" has the meaning specified in the preamble to this Agreement.
"Non-Proprietary Information" has the meaning specified in Section 6.09.
"NYSE" means The New York Stock Exchange.
"Operations" means the development of exploration and production
information systems and services for use in the oil and gas industry.
"Owned Software" has the meaning specified in Section 4.14(b).
"Permitted Encumbrances" means: (a) liens for Taxes, assessments and
governmental charges or levies not yet due and payable or, if due, which are
being challenged by appropriate proceedings and with respect to which adequate
reserves have been established and are being maintained in the Company's
financial statements; (b) materialmen's, mechanics', carriers', workmen's and
repairmen's liens and other similar liens arising in the ordinary course and
with respect to which the underlying obligation is not delinquent or is being
contested in good faith; and (c) pledges or deposits to secure obligations
under workers' compensation laws or similar legislation or to secure public or
statutory obligations.
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"Person" means any individual, partnership, corporation, limited liability
company, trust, incorporated or unincorporated organization or other legal
entity of any kind.
"Plans" has the meaning specified in Section 4.15(a).
"Properly Completed Transmittal Letter" means a Transmittal Letter properly
completed, signed and submitted to the Company and accompanied by (i) Company
Certificates to be surrendered therewith, (ii) an affidavit of lost stock
certificate with respect thereto as provided by and in compliance with Section
3.06 and the Transmittal Letter or (iii) a properly completed notice of net
exercise with respect to options to acquire Company Common Stock together with
all underlying original option agreements. Dresser shall determine in its
reasonable discretion whether a Transmittal Letter has been properly completed,
signed and submitted and to disregard immaterial defects in a Transmittal
Letter. The decision of Dresser in these matters shall be conclusive and
binding.
"Property" or "Properties" mean the leaseholds and Real Property.
"Real Property" has the meaning specified in Section 4.13(c).
"Reference Balance Sheet" means the consolidated balance sheet of the
Company, dated as of December 31, 2000, included in the Financial Statements.
"Registration Statement" has the meaning specified in Section 8.01(d).
"Representatives" has the meaning specified in Section 6.02.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Severance Plan" means the Severance Pay Plan and Summary Plan Description
and the form of Severance Agreement provided for thereunder.
"SGI Computer Hardware" means any of the equipment identified in Exhibit A-
6.
"Shareholders' Agreement" means that certain Shareholders' Agreement, dated
January 31, 2001 by and among the parties on the Stockholders' List.
"Shares" has the meaning specified in Section 3.01(a).
"Signatory Stockholders" has the meaning specified in the preamble to this
Agreement.
"Software" has the meaning specified in Section 4.14(b).
"Source Code" has the meaning specified in Section 4.14(i).
"Spouse" has the meaning specified in Section 12.02(a).
"Stockholders' List" has the meaning specified in Section 4.02(c).
"Surviving Corporation" has the meaning specified in Section 2.01(a).
"Tax" or "Taxes" means any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any Governmental Authority, including, without limitation:
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, capital stock,
A-40
payroll, employment, social security, workers' compensation, unemployment
compensation or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added, or gains taxes; license,
registration and documentation fees; and customs duties, tariffs, and similar
charges.
"Tax Items" has the meaning specified in Section 4.18(a).
"Tax Returns" has the meaning specified in Section 4.18(a).
"Third party Claim" has the meaning specified in Section 9.03(a).
"Third Party Provisions" has the meaning specified in Section 11.08.
"Transmittal Letter" means the letter of transmittal in the form of Exhibit
I to this Agreement.
"Unsolicited Offer" has the meaning specified in Section 6.07
A-41
ANNEX B
WRITTEN CONSENT
IN LIEU OF
SPECIAL MEETING
OF THE STOCKHOLDERS
OF
MAGIC EARTH, INC.
, 2001
The undersigned, being a majority of the stockholders of Magic Earth, Inc.,
a Delaware corporation (the "Corporation") and acting pursuant to Section 228
of the General Corporation Law of the State of Delaware, hereby consent to and
adopt the following resolutions:
WHEREAS, the Board of Directors has determined that it is fair to and in
the best interests of the Corporation and its stockholders to enter into an
Agreement and Plan of Merger (the "Agreement") with Halliburton Company, a
Delaware corporation ("Halliburton"), Dresser Industries, Inc., a Delaware
corporation and a direct, wholly-owned subsidiary of Halliburton
("Dresser"), and Halliburton MS, Inc., a Delaware corporation and a direct,
wholly owned subsidiary of Dresser ("Merger Sub"), whereby the Merger Sub
will merge with and into the Corporation and the Corporation will survive
as a wholly-owned subsidiary of Dresser (the "Merger"); and
WHEREAS, the Board of Directors has approved the form and terms of the
Agreement, a copy of which is delivered herewith.
NOW, THEREFORE, BE IT RESOLVED that the stockholders signing below do
hereby approve the Merger and the Agreement as submitted by the Board of
Directors and hereby authorize the Chairman of the Board and the President
of the Corporation to execute and file all documents and instruments in the
name of the Corporation and to execute and file any certificate or other
document required to effectuate the Merger and to consummate the Merger in
accordance with the Agreement.
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IN WITNESS WHEREOF, the undersigned stockholders have executed this Written
Consent, effective as of the day and year first above written.
_____________________________________ _____________________________________
Michael J. Zeitlin Texaco Development Corporation
_____________________________________ _____________________________________
Yin L. Cheung Silicon Graphics, Inc.
_____________________________________ _____________________________________
BPA Investment Holding Company Mitsubishi International Corporation
_____________________________________ _____________________________________
Mark W. Acosta David P. Roman
_____________________________________ _____________________________________
Daniel G. Siegle Tatum M. Sheffield
_____________________________________ _____________________________________
Barton A. Payne Douglas E. Meyer
_____________________________________ _____________________________________
Elizabeth A. Lorenzetti Harvey Christopher J. Chuter
_____________________________________ _____________________________________
Charles Sembroski Andrew S. McClanahan
_____________________________________ _____________________________________
Pamela J. Griffin Jack A. Lees
A-43
ANNEX C
LIST OF EMPLOYEES TO EXECUTE EMPLOYMENT AGREEMENTS
Michael J. Zeitlin
Yin Cheung
Mark W. Acosta
Elizabeth A. Lorenzetti
Charles Sembroski
A-44
Attachment I
Michael J. Zeitlin
Yin Cheung
A-45
EXHIBIT A
CERTIFICATE OF MERGER
OF
HALLIBURTON MS, INC.
WITH AND INTO
MAGIC EARTH, INC.
(Under Section 251 of the General
Corporation Law of the State of Delaware)
HALLIBURTON MS, INC. AND MAGIC EARTH, INC. HEREBY CERTIFY THAT:
1. The name and state of incorporation of each of the constituent
corporations are:
(A) Halliburton MS, Inc., a Delaware corporation ("Merger Sub") and
(B) Magic Earth, Inc., a Delaware corporation (the "Company").
2. An Agreement and plan of Merger (the "Merger Agreement") dated as of the
. day of April, 2001 by and among Halliburton Company, Dresser Industries,
Inc. Halliburton MS, Inc. and Magic Earth, Inc., each of them a Delaware
corporation, has been approved by Halliburton Company as the sole stockholder
of Dresser Industries, Inc., Dresser Industries, Inc. as the sole stockholder
of Halliburton MS, Inc. and the stockholders of Magic Earth, Inc. The Merger
Agreement has been approved, adopted, certified and acknowledged by Halliburton
MS, Inc. and Magic Earth, Inc. being each of the constituent corporations
thereto, in accordance with provisions of Section 251 of the General
Corporation Law of the State of Delaware.
3. The name of the surviving corporation is Magic Earth, Inc. a Delaware
corporation (the "Surviving Corporation").
4. The Certificate of Incorporation of Magic Earth, Inc. as in effect
immediately prior to the effective time of the merger, shall be the Certificate
of Incorporation of the Surviving Corporation.
5. An executed copy of the Merger Agreement is on file at the office of the
Surviving Corporation at 2000 West Sam Houston Parkway South, Suite 750,
Houston, Texas 77042.
6. A copy of the Merger Agreement will be furnished by the Surviving
Corporation, on request and without cost, to any stockholder of the Company or
the Merger Sub.
IN WITNESS WHEREOF, Halliburton MS, Inc. and Magic Earth, Inc. have each
caused this Certificate to be signed by a duly authorized officer thereof, as
of the . day of . , 2001.
Halliburton MS, Inc.
By: _________________________________
Name:
Title:
Magic Earth, Inc.
By: _________________________________
Name:
Title:
A-46
EXHIBIT A-6
SGI COMPUTER HARDWARE
1. SGI Onyx 3800 Infinity Reality 3 Graphics System with 16 CPU's, 32 GB RAM,
3 x IR3 Graphics Pipes
2. SGI TP 9400 Fibrechannel RAID Subsystem
3. SGI STK 9714 Tape Library Subsystem
4. SGI Onyx 3800 Infinity Reality 3 Graphics System with 32 CPU's, 64 GB RAM,
3 x IR3 Graphics Pipes
5. SGI TP 9400 Fibrechannel RAID Subsystem
6. SGI STK 9714 Tape Library Subsystem
A-47
EXHIBIT B
License Agreement
THIS LICENSE AGREEMENT (this "Agreement") is made and entered into this
day of , 2001, by and between MAGIC EARTH, INC. (hereinafter "Licensor"),
a Delaware corporation, having an address for purposes of this Agreement at
2000 West Sam Houston Parkway South, Suite 750, Houston, Texas 77042 and
(hereinafter "Licensee"), an individual having an address for purposes of this
Agreement at .
W I T N E S S E T H:
Whereas, Licensor is the licensor of all copyrights and all other
intellectual property rights pertaining to the "Owned Software" (defined
below); and
Whereas, Licensor and Licensee, along with others have entered into that
certain Agreement and Plan of Merger dated April , 2001 (the "Merger
Agreement"); and
Whereas, as a condition to close the Merger Agreement, Licensor has agreed
to grant to Licensee an irrevocable, royalty-free, perpetual, exclusive license
to use the Owned Software, subject to the terms and conditions set forth in
this Agreement (the "License"); and
Whereas, pursuant to the terms of the License as set forth herein, Licensor
wishes to (1) provide to Licensee copies of the Owned Software; (2) grant
Licensee the right to modify the Owned Software for purposes of (A) developing
Software for productive personal and/or internal uses (defined below in more
specific detail as "Production Software"), and (B) developing Software for
integration in Products to be offered to End-Users (defined below in more
specific detail as "Product Software"); and (3) grant Licensee the right to
copy and use the Production Software for productive personal and/or internal
uses, and the right to copy and distribute the Product Software to End-Users;
and
Whereas, pursuant to the terms of the License as set forth herein, Licensee
wishes (1) to develop the Production Software and Product Software; and (2) to
market the Product Software, as integrated in Products.
Now, Therefore, in consideration of the premises and the mutual agreements
and covenants set forth herein and in the Merger Agreement and for such other
valuable consideration, the receipt and sufficiency of which is hereby
recognized, the parties do hereby agree as follows:
1. Definitions
When used in this Agreement, the definitions set forth in this Article shall
apply to the respective capitalized terms:
1.1 "Closing Date"--This term shall have the same meaning herein as
prescribed to it in the Merger Agreement.
1.2 "Derivative Work"--A work that is based upon the Owned Software,
such as a revision, modification, translation (including compilation or
recapitulation by computer), abridgment, condensation, expansion, or any
other form in which the Owned Software may be recast, transformed, or
adapted, and that, if prepared without authorization by the Licensor of the
Owned Software, would constitute a copyright infringement.
1.3 "Effective Date"--The date upon which Licensee"s employment is
terminated under that Executive Employment Agreement entered into by and
between Landmark and Licensee, dated . . , 2001; provided, however, such
date shall be no sooner than two (2) years from the Closing Date in the
event
A-48
Licensee's employment is terminated for Cause by Employer or without Good
Reason by Employee as defined in the executive Employment Agreement.
1.4 "End-Users"--Any purchaser or potential purchaser of Product(s).
End-Users shall not include any person or entity conducting business or
otherwise engaged in any industry outside the License Territory.
1.5 "End-User Copy"--A copy of the Product Software contained in the
Products which may be used by End-Users.
1.6 "Exclusive License Period"--This term shall have the meaning
prescribed to it in Section 5 of this Agreement.
1.7 "License Territory"--Any worldwide industry except for the oil and
gas and the engineering and construction industries.
1.8 "Merger Agreement"--This term shall have the meaning prescribed to
it in the Recitals to this Agreement.
1.9 "New Work"--A work that is based upon the Owned Software, such as a
revision, modification, translation (including compilation or
recapitulation by computer), abridgment, condensation, expansion, or any
other form in which the Owned Software may be recast, transformed, or
adapted, and that, if prepared without authorization by the Licensor of the
Owned Software, would not constitute a copyright infringement.
1.10 "Owned Software"--This term shall have the same meaning herein as
prescribed to it in the Merger Agreement but updated to include all
Software to which Licensor has obtained an ownership interest between the
Closing Date and the Effective Date.
1.11 "Product(s)"--Computer program(s) in object code form developed,
tested, and verified by Licensee and all related documentation containing
Product Software which Licensee decides to market to End-Users.
1.12 "Product Software"--Software developed by Licensee specifically for
the purpose of integrating it into Product(s).
1.13 "Production Software"--Software developed by Licensee specifically
for productive personal and/or internal uses.
1.14 "Software"--This term shall have the same meaning herein as
prescribed to it in the Merger Agreement.
2. Licensor's Obligations
Licensor shall deliver to Licensee two (2) complete copies of the Owned
Software within ten (10) business days following the Effective Date of this
Agreement.
3. Licensee's Obligations
Licensee hereby assumes all responsibility for: (1) Licensee's use of the
Owned Software and the results obtained therefrom; and (2) any failure of
Licensee to protect Licensor's rights in accordance with Section 7 of this
Agreement.
4. Grant and Acceptance of License
Licensor hereby agrees to grant to Licensee on the Effective Date, and
Licensee hereby agrees to accept from Licensor, an irrevocable, royalty-free,
perpetual, exclusive license:
A-49
(a) to use, copy, test and evaluate the Owned Software and to prepare
Derivative Work and/or New Work therefrom for purposes of developing
Production Software and Product Software;
(b) to copy, merge, or incorporate Product Software into other computer
programs in connection with the design, development, and manufacture of
Products;
(c) to display, sell, license, or otherwise transfer or distribute copies
of Product Software to End-Users for use in and as part of Product(s);
(d) to make and use copies of Product Software for purposes of marketing,
training and demonstrations related to Product(s);
(e) to copy and use the Production Software for productive personal and/or
internal uses
(f) to make backup copies of the Owned Software and the Production Software
as needed; and
(g) to authorize End-Users, to produce one backup copy of the Product
Software licensed to such End-Users.
5. Exclusive License Period.
The rights granted under the License shall be exclusive to Licensee for a
period two (2) years extending from the Effective Date of this Agreement (the
"Exclusive License Period"). After the expiration of the Exclusive License
Period, the License shall become non-exclusive.
6. License Territory.
The License and all rights granted thereunder shall be limited to the
License Territory.
7. Protection.
7.1 Owned Software. Licensee agrees that the Owned Software contains
confidential information of Licensor, and embodies trade secrets developed by
Licensor at substantial cost and expense. Licensee shall hold the Owned
Software and any Derivative Work which it may develop in confidence for
Licensor. Licensee shall employ reasonable secrecy precautions, at least as
protective as the precautions it uses to protect its own proprietary computer
programs, to protect the Owned Software and any Derivative Work from
unauthorized copying, use, or disclosure. Licensee shall allow access to the
Owned Software only to employees and contractors of Licensee who are performing
services for Licensee related to the purposes of this Agreement, who have a
need to know the information contained in the Owned Software, and upon whom
Licensee has imposed a legal duty to protect the Owned Software from
unauthorized copying, use, or disclosure. Licensee shall allow access to
Derivative Work only to authorized employees, contractors or End-Users upon
whom Licensee has imposed a legal duty to protect such Derivative Work from
unauthorized copying, use, or disclosure. Licensee agrees to use its best
efforts to prevent, prosecute, and enjoin any actual or threatened unauthorized
copying, use, or disclosure of the Owned Software and or any Derivative Work.
7.2 Contracts. Licensee shall use its best efforts to prevent, prosecute,
and enjoin any unauthorized copying, distribution, reverse engineering, and
reverse compiling of the Production Software or Product Software, through
appropriate restrictive contracts with its employees, consultants, End-Users
and other third parties, and shall pursue appropriate actions to enforce such
protection provisions. Notwithstanding the previous sentence, Licensee shall
have no obligation to protect any Production Software or Product Software to
the extent that such Production Software or Product Software is New Work and
does not substantially reveal or allow the reverse engineering of the Owned
Software.
A-50
8. Warranties and Limitation of Liability.
Licensor makes no warranty that all errors have been or can be eliminated
from the Owned Software, and Licensor shall not be liable or responsible for
losses of any kind resulting from the use of the Owned Software by Licensee for
developmental or productive use or in Products, including any liability for
business expense; machine downtime; or damages caused to Licensee or End-Users
by any attendant or consequent deficiency, defect, error, or malfunction.
LICENSOR DISCLAIMS ANY AND ALL WARRANTIES WITH RESPECT TO OWNED SOFTWARE,
WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF
FITNESS FOR ANY PARTICULAR PURPOSE OR MERCHANTABILITY. In no event shall
Licensor be liable to Licensee for any lost profits or other incidental or
consequential damages relating to the subject matter of this Agreement.
9. Marking Of Products.
All Owned Software, Derivative Work and Products containing Owned Software
or Derivative Work shall be marked with Licensor's copyright and other
proprietary notices. However, Licensee may mark with its own copyright notice
and register New Work prepared by Licensee, provided that the Owned Software is
identified in any such registration as pre-existing work of Licensor. The
parties agree to cooperate in all copyright registrations and to provide to
each other information and documents required for such registration.
10. Indemnification.
Infringement. Licensor shall have no obligation under this Agreement with
respect to any claim of infringement of patent, copyright, trade secret, or
similar proprietary right based upon the Owned Software supplied hereunder or
with respect to Licensee's modification of the Owned Software or its
combination, operation, or use with programs whether or not supplied by
Licensor.
11. Miscellaneous.
11.1 No Assertion of Rights by Licensee in Owned Software. It is expressly
understood and agreed that, as between Licensor and Licensee, all right, title,
and interest in and to the Owned Software (both as independent works and as
underlying work serving as a basis for any Derivative Work thereto) and any
other material furnished to Licensee under this Agreement vest solely and
exclusively in Licensor, and Licensee shall neither derive nor assert any title
or interest in or to such items except for the rights and license granted to
Licensee under this Agreement.
11.2 No Assertion of Rights by Licensor in New Work. It is expressly
understood and agreed that, as between Licensor and Licensee, all right, title,
and interest in and to any New Work vest solely and exclusively in Licensee,
and Licensor shall neither derive nor assert any title or interest in or to
such New Work, provided, however, Licensor shall be provided with a royalty-
free copy of any New or Derivative Work developed within two (2) years of the
Effective Date for use in the oil and gas industry and the engineering and
construction industry, subject to the terms and conditions in Sections 7, 8, 9
and 10 of this Agreement with respect to Licensor's use of any copy of the New
or Derivative Work.
11.3 Independent Contractor Status. Licensee is an independent contractor
under this Agreement, and nothing herein shall be construed to create any
partnership, joint venture, or agency relationship between the parties hereto.
Licensee is granted no authority under this Agreement to enter into agreements
of any kind on behalf of Licensor, or to bind or obligate Licensor in any
manner to any third party.
11.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, facsimile or by registered
or certified United States
A-51
mail (postage prepaid, return receipt requested) to the respective parties at
the following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 11.03):
(a) if to the Licensor:
Magic Earth, Inc.
2000 West Sam Houston Parkway South, Suite 750
Houston, Texas 77042
Attn: Michael J. Zeitlin
Facsimile: 832.200.4798
with a copy to:
Shook, Hardy & Bacon L.L.P.
Chase Tower
600 Travis, Suite 1600
Houston, Texas 77002
Attn: Mont P. Hoyt, Esq.
Facsimile: 713.227.9508
After the Closing, with a copy to:
Dresser Industries, Inc.
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
Attn: Vice President and Secretary
Facsimile: 214.978.2658
(b) if to any Signatory Stockholder:
________________
________________
________________
11.5 Governing Law. All questions concerning the validity, operation,
interpretation, and construction of this Agreement shall be governed by and
determined in accordance with the laws of the State of Texas.
11.6 No Waiver. Neither party shall, by mere lapse of time, without giving
notice or taking other action hereunder, be deemed to have waived any breach by
the other party of any of the provisions of this Agreement. Further, the waiver
by either party of a particular breach of this Agreement by the other shall
neither be construed as nor constitute a continuing waiver of such breach or of
other breaches of the same or any other provision of this Agreement.
11.7 Assignment. Licensee may, without the prior consent of Licensor, assign
his rights and obligations under this Agreement to any person or entity which
at the time of such assignment is not conducting business or otherwise engaged
in any industry outside the License Territory.
11.8 Force Majeure. Neither party shall be in default if failure to perform
any obligation hereunder is caused solely by supervening conditions beyond that
party's reasonable control, including, but not limited to, acts of God, civil
commotion, strikes, labor disputes, and governmental demands or requirements.
11.9 Scope of Agreement, Amendment. The parties hereto acknowledge that each
has read this Agreement, understands it, and agrees to be bound by its terms.
The parties further agree that this Agreement is
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the complete and exclusive statement of the Agreement between the parties and
supersedes all proposals (oral or written), understandings, representations,
conditions, warranties, covenants, and all other communications between the
parties relating to the Owned Software. This Agreement may be amended only by a
subsequent writing that specifically refers to this Agreement and that is
signed by both parties, and no other act, document, usage, or custom shall be
deemed to amend this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as
of the above first mentioned date.
LICENSOR
LICENSEE
Magic Earth, Inc.
By: _________________________________ _____________________________________
Name: _______________________________ _____________________________________
Title:_______________________________
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EXHIBIT C
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement"), made and entered into as of the
. day of . , 2001, by and between . , a Delaware corporation (the
"Licensee"), and . , a natural person residing in . (hereinafter
"Licensor");
WITNESSETH:
WHEREAS, Licensor desires to license (other than as expressly excepted
below) to Licensee all of Licensor's right, title, and interest in and to all
of the business and properties, tangible and intangible, that Licensor owns,
possesses, or controls and has placed in use, or otherwise contributed, in
furtherance of the business carried on by Magic Earth, Inc. (the "Assets"),
specifically the computer programming that has the purpose and effect of
providing visualization and processing of data necessary to display a 3D
seismic cube and a transparent probe to track geologic features, including all
associated intellectual property rights (the "Software"), and Licensee desires
to accept such assignment;
AND WHEREAS, the parties hereto wish to make certain other agreements;
NOW THEREFORE, for ten dollars ($10.00) and other good and valuable
consideration, the receipt of which is hereby mutually acknowledged, the
parties hereto, intending to be legally bound, hereby agree as follows:
Section 1. License, Transfer, Grant and Assignment
1.1 Conveyance of Rights. Licensor hereby licenses, transfers, grants,
conveys, assigns, and relinquishes exclusively to Licensee all of Licensor's
right, title, and interest in and to the Assets, in perpetuity (or for the
longest period of time otherwise permitted by law), including the following
business and properties.
1.1.1 All right, title, interest, and benefit (including to make, use,
or sell under patent law; to copy, adapt, distribute, display, and perform
under copyright law; and to use and disclose under trade secret law) of
Licensor in and to all United States and foreign patents and patent
applications, patent license rights, patentable inventions, trade secrets,
trademarks, service marks, trade names (including, in the case of
trademarks, service marks and trade names, all goodwill appertaining
thereto), copyrights, technology licenses, know-how, confidential
information, shop rights, and all other intellectual property rights owned
or claimed by Licensor embodied in the Assets.
1.1.2 All right, title, interest, and benefit of Licensor and all powers
and privileges of Licensor, in, to, and under all technical data, drawings,
prototypes, engineering files, system documentation, flow charts, and
design specifications acquired or developed by Licensor in connection with
the development of the programming, inventions, processes, and apparati
entailed by the Assets.
1.2 Further Assurances. Licensor shall execute and deliver, from time to
time after the date hereof upon the request of Licensee, such further
conveyance instruments, and take such further actions, as may be necessary or
desirable to evidence more fully the transfer of ownership of all the Assets to
Licensee, or the original ownership of all the Assets on the part of Magic
Earth, Inc., to the fullest extent possible. Licensor therefore agrees to:
1.2.1 Execute, acknowledge, and deliver any affidavits or documents of
license, assignment and conveyance regarding the Assets;
1.2.2 Provide testimony in connection with any proceeding affecting the
right, title, interest, or benefit of Licensee and to the Assets;
1.2.3 Perform any other acts deemed necessary to carry out the intent of
this Agreement.
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1.3 Acknowledgment of Rights. In furtherance of this Agreement, Licensor
hereby acknowledges that, from this date forward, Licensee has succeeded to all
of Licensor's right, title, and standing to:
1.3.1 receive all rights and benefits pertaining to the Assets;
1.3.2 institute and prosecute all suits and proceedings and take all
actions that Licensor, in its sole discretion, may deem necessary or proper
to collect, assert, or enforce any claim, right, or title of any kind in
and to any and all of the Assets;
1.3.3 defend and compromise any and all such actions, suits, or
proceedings relating to such transferred and assigned rights, title,
interest, and benefits, and do all other such acts and things in relation
thereto as Licensee, in its sole discretion, deems advisable.
1.4 Return of Materials. Licensor shall immediately surrender to Licensee
all materials and work product in Licensor's possession or within Licensor's
control (including all copies thereof) relating in any way to the Assets.
1.5 Power of Attorney. To effectuate the terms of this Section 1, Licensor
hereby names and irrevocably constitutes and appoints Licensee, with the full
power of substitution therein, as Licensor's true and lawful attorney-in-fact
to exercise the rights licensed, assigned and conveyed hereby.
Section 2. Representation and Warranties
2.1 Licensor represents and warrants that no consents of any other parties
are necessary or appropriate under any agreements concerning any of the Assets
in order for the transfer and assignment of any of the Assets under this
Agreement to be legally effective.
2.2 Licensor represents and warrants that, to the best of Licensor's
knowledge, upon consummation of this Agreement, Licensee shall have good and
marketable title to the Assets, free and clear of any and all liens, mortgages,
encumbrances, pledges, security interests, or charges of any nature whatsoever.
Section 3. Miscellaneous
3.1 This Agreement shall inure to the benefit of, and be binding upon, the
parties hereto together with their respective legal representatives,
successors, and assigns.
3.2 This Agreement shall be governed by, and construed in accordance with
the law of the State of Texas, without regard to principles of conflicts of
law.
3.3 This Agreement and the Agreement and Plan of Merger dated as of . . ,
2001 merge and supersede all prior and contemporaneous agreements, assurances,
representations, and communications between or among the parties hereto
concerning the matters set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
LICENSOR: ___________________________
Name:
LICENSEE: ___________________________
By: _________________________________
Date: _______________________________
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EXHIBIT D
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), is entered into by and between
Landmark Graphics Corp., having a principal place of business at ,
Houston, Texas ("Employer") and , having a principal residence at
("Employee"), to be effective on the day of , 2001 (the
"Effective Date").
W I T N E S S E T H:
Whereas, Employee is currently employed by Landmark Graphics Corp., a
wholly-owned subsidiary of Dresser Industries, Inc., a wholly-owned subsidiary
of Halliburton Company; and
Whereas, Employer desires to employ Employee after the Effective Date
pursuant to the terms and conditions and for the consideration set forth in
this Agreement, and Employee is desirous of being hired by 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 the date
of termination of Employee's employment pursuant to the provisions of Article 3
(the "Term"), subject to the terms and conditions of this Agreement.
1.2 Beginning as of the Effective Date, Employee shall be employed as
. 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 positions, and such other services as may be reasonably
requested from time to time.
1.3 Employee shall at all times comply with and be subject to such policies
and procedures as Halliburton Company ("Halliburton") or Employer may establish
from time to time, including, without limitation, the Halliburton Company Code
of Business Conduct (the "Code of Business Conduct").
1.4 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. Employee may not engage, directly or indirectly, in
any other business or activity that interferes with Employee's performance of
Employee's duties hereunder, or is contrary to the interest of Halliburton or
any of its affiliated subsidiaries and divisions, including Employer
(collectively, the "Halliburton Entities" or, individually, a "Halliburton
Entity"). The foregoing notwithstanding, the parties recognize and agree that
Employee may (a) engage in personal investments and other business activities
which do not conflict with the business and affairs of the Halliburton Entities
or interfere with Employee's performance of his duties hereunder, (b) purchase
securities in any corporation whose securities are regularly traded provided
that such purchase shall not result in his collectively owning beneficially at
any time five percent or more of the equity securities of any corporation
engaged in a business competitive to that of Employer, (c) participate in
conferences, prepare or publish papers or books or teach so long as the
Employer's designee approves of such activities prior to Employee's engaging in
them and (d) participate in charitable community affairs. Prior to commencing
any activity described in clause (c) above, Employee shall inform the
Employer's designee in writing (including e-mail) of any such activity.
Employee may not serve on the board of directors of any entity other than a
Halliburton Entity during the Term without prior approval in accordance with
Halliburton's policies and procedures regarding such service. Employee shall be
permitted to retain any compensation received for approved service on any
unaffiliated corporation's board of directors.
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1.5 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
Employer and the other Halliburton Entities and to do no act which would,
directly or indirectly, injure any such entity's business, interests, or
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
Halliburton Entity, involves a possible conflict of interest. In keeping with
Employee's fiduciary duty to Employer, Employee agrees that Employee shall not
knowingly become involved in a conflict of interest with Employer or the
Halliburton Entities, or upon discovery thereof, allow such a conflict to
continue. Moreover, Employee shall not engage in any activity which might
involve a possible conflict of interest without first obtaining approval in
accordance with Halliburton's policies and procedures.
1.6 Nothing contained herein shall be construed to preclude the transfer of
Employee's employment to another Halliburton Entity ("Subsequent Employer") as
of, or at any time after, the Effective Date and no such transfer shall be
deemed to be a termination of employment for purposes of Article 3 hereof;
provided, however, that, effective with such transfer, all of Employer's
obligations hereunder shall be assumed by and be binding upon, and all of
Employer's rights hereunder shall be assigned to, such Subsequent Employer and
the defined term "Employer" as used herein shall thereafter be deemed amended
to mean such Subsequent Employer. Except as otherwise provided above, all of
the terms and conditions of this Agreement, including without limitation,
Employee's rights and obligations, shall remain in full force and effect
following such transfer of employment.
Article 2: Compensation and Benefits:
2.1 Employee's base salary during the Term shall be not less than per
annum which shall be paid in accordance with the Employer's standard payroll
practice for its similarly situated employees. Employee's base salary may be
increased from time to time with the approval of the Compensation Committee of
Halliburton's Board of Directors (the "Compensation Committee") or its
delegate, as applicable. Such increased base salary shall become the minimum
base salary under this Agreement and may not be decreased thereafter without
the written consent of Employee. Any Guaranteed Payments shall not constitute a
distribution right or a distribution or allocation of profits. A "Guaranteed
Payment" shall mean a payment of compensation including, for example, salaries
and bonuses, which are determined without regard to income pursuant to Section
707(c) of the Internal Revenue Code.
2.2 During the Term, Employee shall participate in the Halliburton Annual
Performance Pay Plan, or any successor annual incentive plan approved by the
Compensation Committee; provided, however, that all determinations relating to
Employee's participation, including, without limitation, those relating to the
performance goals applicable to Employee and Employee's level of participation
and payout opportunity, shall be made in the sole discretion of the person or
committee to whom such authority has been granted pursuant to such plan's
terms.
2.3 Employer shall grant to Employee under the Halliburton Company 1993
Stock and Long-Term Incentive Plan (the "1993 Plan") shares of Halliburton
common stock subject to restrictions.
2.4 During the Term, Employer shall pay or reimburse Employee for all
actual, reasonable and customary expenses incurred by Employee in the course of
his employment; including, but not limited to, travel, entertainment,
subscriptions and dues associated with Employee's membership in professional,
business and civic organizations; provided that such expenses are incurred and
accounted for in accordance with Employer's applicable policies and procedures.
2.5 While employed by Employer, Employee shall be allowed to participate, on
the same basis generally as other similarly situated 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 or Halliburton to all or substantially all of Employer's
similarly situated employees. Such benefits, plans, and programs may include,
without limitation, medical, health, and dental care, life
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insurance, disability protection, and qualified and non-qualified retirement
plans. Except as specifically provided herein, nothing in this Agreement is to
be construed or interpreted to increase or alter in any way the rights,
participation, coverage, or benefits under such benefit plans or programs
provided to similarly situated employees pursuant to the terms and conditions
of such benefit plans and programs. While employed by Employer, Employee shall
be eligible to receive awards under the 1993 Plan or any successor stock-
related plan adopted by Halliburton's Board of Directors; provided, however,
that the foregoing shall not be construed as a guarantee with respect to the
type, amount or frequency of such awards, if any, such decisions being solely
within the discretion of the Compensation Committee or its delegate, as
applicable.
2.6 Neither Halliburton nor Employer shall by reason of this Article 2 be
obligated to institute, maintain, or refrain from changing, amending or
discontinuing, any incentive compensation, employee benefit or stock or stock
option program or plan, so long as such actions are applicable to covered
employees generally.
2.7 Employer may withhold from any compensation, benefits, or amounts
payable to Employee under this Agreement all federal, state, city, or other
taxes as may be required pursuant to any law or governmental regulation or
ruling.
2.8 The parties acknowledge that if Employer changes its principal place of
business outside of Houston, Texas, Employee may be required to change his
principal residence to perform hereunder. Employer shall pay all the costs and
reasonable expenses of Employee and his family connected with such relocation
in accordance with Employer's applicable policies and procedures.
2.9 Employee shall have at least of paid vacation during each calendar
year of employment.
2.10 Employee shall be authorized to travel in business class, or its
equivalent, in accordance with Employer's applicable policies and procedures.
Article 3: Termination of Employment 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 (as defined
below), or (iii) at any time by Employer upon notice to Employee, or by
Employee upon thirty (30) days' notice to Employer, for any or no reason.
3.2 If Employee's employment is terminated by reason of any of the following
circumstances, Employee shall not be entitled to receive the benefits set forth
in Article 3.3 hereof:
(i) Death.
(ii) Permanent Disability. "Permanent Disability" shall mean Employee's
physical or mental incapacity to perform his or her usual duties with such
condition likely to remain continuously and permanently as determined by
the Compensation Committee.
(iii) Voluntary Termination. "Voluntary Termination" shall mean a
termination of employment in the sole discretion and at the election of
Employee for other than Good Reason. "Good Reason" shall mean a termination
of employment by Employee because of (a) a material breach by Employer of
any material provision of this Agreement which remains uncorrected for
thirty (30) days following notice of such breach by Employee to Employer,
provided such termination occurs within sixty (60) days after the
expiration of the notice period; (b) a material reduction in Employee's
rank or responsibility with Employer as defined in Article 1.2; (c) a
transfer of Employee's employment to a Subsequent Employer as defined in
Article 1.6; (d) a Change of Control in Employer (as defined below); (e)
action taken by Halliburton or Employer as described in Article 2.6 which
may have a material adverse effect on Employee, (f) any change in the
principal place of business of Employer outside Houston, Texas, which
requires the relocation of Employee, or (g) a change in the President of
Magic Earth, Inc. and Landmark Graphics Corp. A "Change of Control" means:
(a) the sale by the Employer of all or substantially all of its assets to
any "Person" (as such term in used in Sections 13(d) and 14(d) of the
Securities and Exchange Act of 1934), the consolidation of the Employer
with any Person, or the merger of the Employer
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with any Person, or (b) the sale or transfer by one or more of the
Employer's shareholders, in one or more transactions, related or unrelated
to one or more Persons under circumstances whereby any Person and its
"Affiliates" (as such term is hereinafter defined) shall own as a result of
such sale or transfer and thereafter, at least one-half of the outstanding
shares of the Employer. Nothing contained in the definition of Change of
Control shall limit or restrict the right of Employee from participating in
any discussions or voting on any matter referred to in said definition. An
"Affiliate" shall mean any person that directly or indirectly through one
or more intermediaries, controls or is controlled by, or under common
control with, any other person.
(iv) Termination for Cause. Termination of Employee's employment by
Employer for Cause. "Cause" shall mean any of the following: (a) Employee's
gross negligence or willful misconduct in the performance of the duties and
services required of Employee pursuant to this Agreement, (b) Employee's
final conviction of a felony, (c) a material violation of the Code of
Business Conduct or (d) Employee's material breach of any material
provision of this Agreement which remains uncorrected for thirty (30) days
following notice of such breach to Employee by Employer, provided such
termination occurs within sixty (60) days after the expiration of the
notice period. Determination as to whether or not Cause exists for
termination of Employee's employment will be made by the Compensation
Committee or its delegate.
In the event Employee's employment is terminated under any of the foregoing
circumstances, 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 Article 3.2. Employee, or his or her estate in the case of Employee's
Death or Permanent Disability, 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 payable under
Employer's or Halliburton's plans for years prior to the year of Employee's
termination of employment, but shall not be entitled to any bonus or incentive
compensation for the year in which he or she terminates employment or any other
payments or benefits by or on behalf of Employer except for those which may be
payable pursuant to the terms of Employer's or Halliburton's employee benefit
plans (as referenced in Article 3.4), stock, stock option or incentive plan(s),
or the applicable agreements underlying such plans. Such amounts shall be paid
to Employee in accordance with the terms of such employee benefit plan(s).
3.3 If Employee's employment is terminated by Employee for Good Reason or by
Employer for any reason other than as set forth in Article 3.2 above Employee
shall be entitled to each of the following:
(i) To the extent not otherwise specifically provided in any underlying
restricted stock agreements, all shares of Halliburton common stock
previously granted to Employee under the 1993 Plan, and any similar plan
adopted by Halliburton in the future, which at the date of termination of
employment are subject to restrictions (the "Restricted Shares") will be
treated in a manner consistent with Halliburton's past practices for
treatment of Restricted Shares held by employees whose employment was
involuntarily terminated by a Halliburton Entity for reasons other than
Cause, which, in most instances, have been to forfeit the Restricted Shares
and pay to such employee a lump sum cash payment equal to the value of the
Restricted Shares (based on the closing price of Halliburton common stock
on the New York Stock Exchange on the date of termination of employment);
although in some cases, Halliburton has, in lieu of, or in combination
with, the foregoing and in its discretion, caused the forfeiture
restrictions with respect to all or a portion of the Restricted Shares to
lapse and provided for the retention of such shares by such employee.
(ii) Subject to the provisions of Article 3.4, Employer shall pay to
Employee a severance benefit consisting of a single lump sum cash payment
equal to two years' of Employee's base salary as in effect at the date of
Employee's termination of employment. Such severance benefit shall be paid
no later than sixty (60) days following Employee's termination of
employment.
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(iii) Employee shall be entitled to any individual bonuses or individual
incentive compensation not yet paid but payable under Employer or
Halliburton's plans for years prior to the year of Employee's termination
of employment. Such amounts shall be paid to Employee in a single lump sum
cash payment no later than sixty (60) days following Employee's termination
of employment.
(iv) Employee shall be entitled to any individual bonuses or individual
incentive compensation under Employer or Halliburton's plans for the year
of Employee's termination of employment determined as if Employee had
remained employed by the Employer for the entire year. Such amounts shall
be paid to Employee at the time that such amounts are paid to similarly
situated employees except that no portion of such amounts shall be deferred
to future years.
(v) Employee shall be entitled to thirty (30) days' written notice of
termination by Employer for any reason other than as set forth in Article
3.2.
3.4 The severance benefit paid to Employee pursuant to Article 3.3 shall be
in consideration of Employee's continuing obligations hereunder after such
termination, including, without limitation, Employee's obligations under
Article 4. Further, as a condition to the receipt of such severance benefit,
Employer, in its sole discretion, may require Employee to first execute a
release, in the form established by Employer, releasing Employer and all other
Halliburton Entities, and their officers, directors, employees, and agents,
from any and all claims and from any and all causes of action of any kind or
character, including, but not limited to, all claims and causes of action
arising out of Employee's employment with Employer and any other Halliburton
Entities or the termination of such employment. The performance of Employer's
obligations under Article 3.3 and the receipt of the severance benefit provided
thereunder by Employee shall constitute full settlement of all such claims and
causes of action. Employee shall not be under any duty or obligation to seek or
accept other employment following a termination of employment pursuant to which
a severance benefit payment under Article 3.3 is owing and the amounts due
Employee pursuant to Article 3.3 shall not be reduced or suspended if Employee
accepts subsequent employment or earns any amounts as a self-employed
individual. Employee's rights under Article 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 agrees that all disputes relating to Employee's termination of
employment, including, without limitation, any dispute as to "Cause" or
"Voluntary Termination" and any claims or demands against Employer or
Halliburton based upon Employee's employment for any monies other than those
specified in Article 3.3, shall be resolved through the Halliburton Dispute
Resolution Plan as provided in Article 5.6 hereof. Nothing contained in this
Article 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 or Halliburton except that Employee shall not be entitled to any
severance benefits pursuant to any severance plan or program of the Employer or
Halliburton other than as expressly provided herein.
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 Article 4.
Employer's sole and exclusive rights and remedy against Employee and the
Employee's sole and exclusive liability to Employer under this Agreement in
contract, tort or otherwise, shall be limited to the Employee's termination for
Cause pursuant to Article 3.2(iii); provided, however, Employer is not limited
to such termination in the event that Employee commits a violation of law or a
material breach of any material provision of Article 4 that is not corrected in
accordance with the terms of Article 3.2(iii). Notwithstanding any contrary
provision in this Agreement, neither the Employer nor Employee shall be liable
for indirect, consequential, special or punitive damages or lost profits,
regardless of whether the possibility of such damage or loss was disclosed or
reasonably foreseen.
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
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others, during Employee's employment by Employer or any of its affiliates
(whether during business hours or otherwise and whether on Employer's premises
or otherwise) which relate to the business, products or services of Employer or
its affiliates (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 the sole and exclusive property of Employer or its affiliates, as the
case may be. The business, products or services of Employer are defined as, and
limited to, the business of Landmark Graphics Corp. and Magic Earth Inc.
4.2 Employee acknowledges that the business of Employer and its affiliates
is 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 techniques, as well
as 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.
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.
4.4 For purposes of this Article 4, "affiliates" shall mean entities in
which Employer or Halliburton has a 20% or more direct or indirect equity
interest.
Article 5: Miscellaneous:
5.1 Except as otherwise provided in Article 4.4 hereof, for purposes of this
Agreement, the term "affiliates" means an entity who directly, or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with Halliburton. "Control" means the ownership, directly or
indirectly, of fifty percent (50%) or more of the voting securities or voting
interest of such entity.
5.2 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 Employee, Halliburton 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 or Halliburton: Landmark Graphics Corp.
15150 Memorial Drive
Houston, Texas 77079-4304
Attn:
If to Employee, to his last known principal residence.
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5.3 This Agreement shall be governed by and construed and enforced, in all
respects, in accordance with the law of the State of Texas, without regard to
principles of conflicts of law, unless preempted by federal law, in which case
federal law shall govern; provided, however, that the Halliburton Dispute
Resolution Plan and the Federal Arbitration Act shall govern in all respects
with regard to the resolution of disputes hereunder.
5.4 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.
5.5 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.
5.6 It is the mutual intention of the parties to have any dispute concerning
this Agreement resolved out of court. Accordingly, the parties agree that any
such dispute shall, as the sole and exclusive remedy, be submitted for
resolution through the Halliburton Dispute Resolution Plan; provided, however,
that the Employer, on its own behalf and on behalf of any of the Halliburton
Entities, shall be entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any breach or the continuation of
any breach of the provisions of Article 4. The parties agree that the
resolution of any such dispute through the Halliburton Dispute Resolution Plan
shall be final and binding.
5.7 This Agreement shall be binding upon and inure to the benefit of
Employer, to the extent herein provided, Halliburton 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 or Halliburton 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.
5.8 This Agreement replaces and supercedes any previous agreements and
discussions pertaining to the subject matter covered herein. This Agreement,
and the Use, Disclosure and Competition Agreement dated , constitute the
entire agreement of the parties with regard to the terms of Employee's
employment, termination of employment and severance benefits, and contains all
of the covenants, promises, representations, warranties, and agreements between
the parties with respect to such matters. To the extent there are any conflicts
between the terms of this Agreement and the terms of the Use, Disclosure and
Competition Agreement, the terms of the Use, Disclosure and Competition
Agreement shall control. 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 the foregoing matters 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 Compensation Committee or its delegate, as appropriate.
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In Witness Whereof, Employer and Employee have duly executed this Agreement
in multiple originals to be effective on the Effective Date.
Employer: Landmark Graphics
Corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
Employee:
_____________________________________
_____________________________________
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EXHIBIT E
Use, Disclosure and Competition Agreement
This Use, Disclosure and Competition Agreement, dated as of . . , 2001
(this "Agreement" is by and between Landmark Graphics Corporation, a Delaware
corporation ("Landmark") and , a natural person, residing at the address
shown below, (the "Seller") who is also referred to herein as a stockholder
("Stockholder") of Magic Earth, Inc. ("Magic Earth").
Whereas, the Seller is a Stockholder of Magic Earth, and
Whereas, Magic Earth has agreed to be acquired by Dresser Industries, Inc.
("Dresser"), a wholly-owned subsidiary of Halliburton Company ("Halliburton"),
and
Whereas, Seller, as a Stockholder of Magic Earth, has approved the merger
pursuant to the Agreement and Plan of Merger (the "Merger Agreement") by and
between the Stockholder, Magic Earth, Dresser, Halliburton MS, Inc. and
Halliburton dated as of , 2001, and
Whereas, pursuant to the Merger Agreement, Seller, as a Stockholder of Magic
Earth, has agreed to exchange Seller"s interest in capital stock of Magic Earth
for shares in Halliburton.
Now Therefore, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the parties hereby agree as follows:
ARTICLE I
Definitions
1.01 Definitions. Certain capitalized and other terms used in this Agreement
are defined in Annex A hereto and are used herein with the meanings ascribed to
them therein.
1.02 Rules of Construction. Unless the context otherwise requires, as used
in this Agreement (a) a term has the meaning ascribed to it; (b) an accounting
term not otherwise defined has the meaning ascribed to it in accordance with
GAAP; (c) "or" is not exclusive; (d) "including" means "including, without
limitation;" (e) words in the singular include the plural; (f) words in the
plural include the singular; (g) words applicable to one gender shall be
construed to apply to each gender; (h) the terms "hereof," "herein," "hereby,"
"hereto," and derivative or similar words refer to this entire Agreement; and
(i) the terms "Article" or "Section" shall refer to the specified Article or
Section of this Agreement.
ARTICLE II
Ancillary to Merger Agreement
Ancillary to Merger Agreement. The parties to this Agreement recognize that
it is ancillary to the Merger Agreement and further that execution of this
Agreement is a condition to the obligations of Halliburton and Dresser to close
the Merger Agreement.
ARTICLE III
Agreement Not To Use Or Disclose
3.01 Merger Consideration Paid For Seller's Agreement To Not Use Or
Disclose. The parties hereby recognize and agree that the merger consideration
paid by Dresser in connection with the merger of Halliburton MS, Inc. with and
into Magic Earth was paid, in part, in exchange for Seller's agreement not to
use or disclose
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Landmark and Magic Earth trade secrets and confidential proprietary information
(the "Prohibited Information") according to the terms and conditions herein.
3.02 Seller's Agreement To Not Use Or Disclose. Except as otherwise provided
in the Employment Agreement attached hereto as Exhibit "A" (the "Employment
Agreement"), Seller hereby agrees that, for the Term of the Employment
Agreement and four (4) years after the termination thereof, Seller will not
disclose any of the Prohibited Information to any person who is not an
affiliate of Landmark with a business need to know such Prohibited Information,
and will not use any of the Prohibited Information for the benefit of any
person other than Landmark or Magic Earth, including the Seller; provided
however, that Seller may use such Prohibited Information through another person
for the benefit of such person if such person has agreed to be bound by
confidentiality restrictions imposed upon such other person by Landmark or
Magic Earth. The Seller's obligations to not use or disclose any of the
Prohibited Information do not apply to any portion of the Prohibited
Information that (a) is in the public domain through no act or omission of the
Seller, (b) becomes available to the Seller a non-confidential basis from
another source, provided such source is not known to be bound by a
confidentiality agreement or otherwise prohibited from transmitting the
Prohibited Information, or (c) became known to the Seller on a non-confidential
basis after execution of this Agreement or was independently developed after
the execution of this Agreement without an obligation of confidentiality to
Landmark or Magic Earth.
3.03 Legal Process Seeking Disclosure. Notwithstanding the terms of Article
3.02, 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, arbitration, dispute resolution or other legal proceeding in which
Seller's legal rights and obligations under this Agreement are at issue. If
Seller or Seller's representative is legally compelled to use or disclose any
of the Prohibited Information Seller will, to the extent that it is legal to do
so, promptly notify Landmark so that it may seek a protective order or other
appropriate remedy and/or waive compliance with provisions of this Agreement.
Otherwise Seller, if so compelled or its representative if so compelled, will
furnish only that portion of the Prohibited Information which Seller is legally
required to produce. Seller will use its best efforts to obtain reliable
assurance that the Prohibited Information will be treated confidentially.
ARTICLE IV
Competition
4.01 Competition. Provided Seller's employment is terminated by Landmark for
Cause or by Seller without Good Reason pursuant to the Employment Agreement,
Seller hereby agrees Seller will not, directly or indirectly, work for, consult
with or otherwise aid any competitor of Landmark in a position or relationship
that markets or uses a product that competes with any Prohibited Information
(known to Seller) in the domestic oil and gas industry for a period of eighteen
(18) months from the termination of Seller's employment by Landmark; provided
however, that Seller receives Seller's base salary as defined in Article 2.1 of
the Seller's Employment Agreement during the eighteen (18) month period of non-
compete and may use such Prohibited Information through another person for the
benefit of such person if such person has agreed to be bound by confidentiality
restrictions imposed upon such other person by Magic Earth or Landmark. The
Seller recognizes and agrees that the business of Landmark and Magic Earth are
global and that the global restrictions herein are reasonable.
4.02 Employment. Nothing contained in Section 4.01 shall be construed so as
to prohibit Seller from, directly or indirectly, accepting employment with,
consulting with or otherwise aiding a competitor of Magic Earth or Landmark so
long as such employment does not result in a violation of Sections 3.02 or
4.01.
4.03 Use of License. Nothing contained in Section 3.02 and 4.01 shall be
construed so as to prohibit Seller from doing any act or transacting any
business that is allowed under the License Agreement.
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ARTICLE V
General Provisions
5.01 Expenses. All costs and expenses, including fees and disbursements of
counsel, financial advisors, accountants or other representatives incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the person incurring such costs and expenses.
5.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, facsimile or by registered
or certified United States mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this Section
5.02):
(a) if to Magic Earth:
Magic Earth, Inc.
2000 West Sam Houston Parkway South, Suite 750
Houston, Texas 77042
Attn: Chief Executive Officer
with a copy to:
Shook, Hardy & Bacon L.L.P.
Chase Tower
600 Travis, Suite 1600
Houston, Texas 77002
Attn: William P. Jensen
(b) if to Landmark:
Landmark Graphics Corporation
15150 Memorial Drive
Houston, Texas 77079-4304
Attn.: Vice President and Secretary
Facsimile: 281.560.1383
with a copy to:
Halliburton Company
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
Attn.: Executive Vice President and General Counsel
Facsimile: 214.978.2658
if to Seller at the address or facsimile number shown on the signature page
below.
5.03 Communication. Either party may communicate with any person without the
prior consent of the other party to inform them of the provisions of this
Agreement.
5.04 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
5.05 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination
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that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the fullest
extent possible.
5.06 Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
5.07 Amendment. This Agreement may not be amended or modified except (a) by
an instrument in writing signed by each of, or on behalf of each of Landmark
and the Seller.
5.08 Governing Law; Forum. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Texas applicable to
contracts executed in and to be performed in that state and without regard to
any applicable conflicts of law. It is the mutual intention of the parties to
have any dispute concerning this Agreement resolved out of court. Accordingly,
the parties agree that any such dispute shall, as the sole and exclusive
remedy, be submitted for resolution through the Halliburton Dispute Resolution
Plan; provided, however, that Landmark, on its own behalf and on behalf of
Halliburton, shall be entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any breach or the continuation of
any breach of the provisions herein. The parties agree that the resolution of
any such dispute through the Halliburton Dispute Resolution Plan shall be final
and binding. In connection with the foregoing, each of the parties to this
Agreement irrevocably (a) consents to submit itself to the personal
jurisdiction of the state and federal courts of competent jurisdiction located
in Harris County, Texas and (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, and (c) hereby consent to service of process pursuant to the notice
provisions set forth in Section 5.02.
5.09 Counterparts. This Agreement may be executed and delivered (including
by facsimile transmission) in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed and
delivered shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Seller and Stockholder:
By: _________________________________
Name: _______________________________
Address: ____________________________
_____________________________
Facsimile: __________________________
Landmark Graphics Corporation
By: _________________________________
Name: _______________________________
Title: ______________________________
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ANNEX "A"
"Agreement"........... --has the meaning specified in the preamble to this
Agreement.
"Magic Earth"......... --has the meaning specified in the preamble of this
Agreement.
"Dresser"............. --has the meaning specified in the recitals of this
Agreement.
"Halliburton"......... --has the meaning specified in the recitals of this
Agreement.
"Landmark"............ --has the meaning specified in the preamble of this
Agreement.
"License Agreement"... --has the meaning specified in Section 3.02 of this
Agreement.
"Merger Agreement".... --has the meaning specified in the recitals of this
Agreement.
"Prohibited --has the meaning specified in Section 3.01 of this
Information"............. Agreement.
"Seller".............. --has the meaning specified in the preamble of this
Agreement.
"Stockholder"......... --has the meaning specified in the preamble of this
Agreement.
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EXHIBIT F
OFFICER'S CERTIFICATE
OF
HALLIBURTON COMPANY,
DRESSER INDUSTRIES, INC.
AND
HALLIBURTON MS, INC.
The undersigned, [name], [title] of Halliburton Company, a Delaware
corporation ("Halliburton"), [name], [title] of Dresser Industries, Inc., a
Delaware corporation ("Dresser") and [name], [title] of Halliburton MS, Inc., a
Delaware corporation ("Merger Sub") pursuant to Section 8.02(a) of that certain
Agreement and Plan of Merger, dated as of the . day of April, 2001, by and
among Halliburton, Dresser, Merger Sub and Magic Earth, Inc., a Delaware
corporation (the "Agreement"), hereby certifies as follows. Capitalized terms
used herein and not otherwise defined shall have the same meaning as given to
them in the Agreement.
1. No court or Governmental Authority has commenced any Action or enacted,
issued, promulgated, enforced or entered any law, regulation or order (whether
temporary, preliminary or permanent) which is in effect and which has the
effect of restraining or materially and adversely altering the transactions
contemplated by the Agreement or which would reasonably be expected to make the
Merger illegal or otherwise prohibiting consummation of the Merger.
2. The applicable waiting period under the HSR Act has expired.
3. Each of the representations and warranties of Halliburton, Dresser and
Merger Sub contained in the Agreement are true and correct as of the date of
the Agreement and as of the Effective Time as though made again on and as of
the Effective Time except as is qualified as to materiality or date in the
Agreement.
4. Halliburton, Dresser and Merger Sub have performed, caused to be
performed or complied in all material respects with all agreements and
covenants required by the Agreement to be performed, caused to be performed or
complied with by Halliburton, Dresser and Merger Sub on or prior to the
Effective Time.
5. Dresser has received the opinion of Vinson & Elkins LLP that the Merger
and the Subsequent Merger will be treated for federal income tax purposes as a
reorganization qualifying under section 368(a) of the Code.
6. The Halliburton Common Stock has been duly authorized for listing on the
NYSE, subject to official notice of issuance.
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IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
the . day of . , 2001.
Halliburton Company
By: _________________________________
Name: .
Title: .
Dresser Industries, Inc.
By: _________________________________
Name: .
Title: .
Halliburton MS, Inc.
By: _________________________________
Name: .
Title: .
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EXHIBIT G
OFFICER'S CERTIFICATE
OF
MAGIC EARTH, INC.
The undersigned, [name], [title] of Magic Earth, Inc., a Delaware
corporation (the "Company"), pursuant to Section 8.03(a) of that certain
Agreement and Plan of Merger, dated as of the . day of March, 2001, by and
among Halliburton Company, Dresser Industries, Inc., Halliburton MS, Inc. and
Magic Earth, Inc. (the "Agreement"), hereby certifies as follows. Capitalized
terms used herein and not otherwise defined shall have the same meaning as
given to them in the Agreement.
1. No court or Governmental Authority has commenced any Action or enacted,
issued, promulgated, enforced or entered any law, regulation or order (whether
temporary, preliminary or permanent) which is in effect and which has the
effect of restraining or materially and adversely altering the transactions
contemplated by the Agreement or which would reasonably be expected to make the
Merger illegal or otherwise prohibiting consummation of the Merger.
2. The applicable waiting period under the HSR Act has expired.
3. Each of the representations and warranties of the Company contained in
the Agreement are true and correct as of the date of the Agreement and as of
the Effective Time as though made again on and as of the Effective Time except
as is qualified as to materiality or date in the Agreement.
4. The Company has performed, caused to be performed or complied in all
material respects with all agreements and covenants required by the Agreement
to be performed, caused to be performed or complied with by the Company on or
prior to the Effective Time.
5. The Agreement has been approved and adopted by the requisite vote of the
stockholders of the Company as required by the DGCL.
6. The parties to the Agreement have agreed on the Closing Balance Sheet
[and adjustments, if any, to the Merger consideration] as provided under the
Agreement.
7. All securities required to be exercised or cancelled pursuant to Section
4.01(a) of the Agreement have been exercised or cancelled.
8. The licenses described in Section 8.03 (e) of the Agreement have been
executed.
9. The employment contracts described in Section 8.03 (f) of the Agreement
have been executed.
10. The competition agreements described in Section 8.03 (g) of the
Agreement have been executed.
11. The Company shareholder approval and exercise of drag-along rights
described in Section 8.03(i) have taken place and the required vote approving
the Merger has been obtained.
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IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the
. day of . , 2001.
Magic Earth, Inc.
By: _________________________________
Name: .
Title: .
A-73
EXHIBIT H
Signatory Stockholder's Release
This Signatory Stockholder"s Release, dated as of . . , 2001 (this
"Agreement" is by and between Magic Earth, Inc, a Delaware corporation ("Magic
Earth") and [Michael J. Zeitlin] [Yin L. Cheung], a natural person, residing at
the address shown below, (the "Seller") who is also referred to herein as a
stockholder ("Stockholder") of Magic Earth, Inc. ("Magic Earth").
WHEREAS, the Seller is a Stockholder of Magic Earth, and
WHEREAS, Magic Earth has agreed to be acquired by Dresser Industries, Inc.
("Dresser"), a wholly-owned subsidiary of Halliburton Company ("Halliburton"),
and
WHEREAS, Seller, as a Stockholder of Magic Earth, has approved the merger
pursuant to the Agreement and Plan of Merger (the "Merger Agreement") by and
between the Stockholder, Magic Earth, Dresser, Halliburton MS, Inc. and
Halliburton dated as of April . , 2001,
WHEREAS, pursuant to the Merger Agreement, Seller, as a Stockholder of Magic
Earth, has agreed to exchange Seller's interest in capital stock of Magic Earth
for shares in Halliburton; and
WHEREAS, as a condition of the Merger Agreement Seller has agreed to execute
a release of claims against Magic Earth;
NOW THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the parties hereby agree as follows:
ARTICLE I.
Definitions
1.01 Definitions. Certain capitalized and other terms used in this Agreement
are defined in Annex A hereto and are used herein with the meanings ascribed to
them therein.
1.02 Rules of Construction. Unless the context otherwise requires, as used
in this Agreement (a) a term has the meaning ascribed to it; (b) an accounting
term not otherwise defined has the meaning ascribed to it in accordance with
its consistent application by Magic Earth; (c) "or" is not exclusive; (d)
"including" means "including, without limitation;" (e) words in the singular
include the plural; (f) words in the plural include the singular; (g) words
applicable to one gender shall be construed to apply to each gender; (h) the
terms "hereof," "herein," "hereby," "hereto," and derivative or similar words
refer to this entire Agreement; and (i) the terms "Article" or "Section" shall
refer to the specified Article or Section of this Agreement.
ARTICLE II.
Ancillary to Merger Agreement
Ancillary to Merger Agreement. The parties to this Agreement recognize that
it is ancillary to the Merger Agreement and further that execution of this
Agreement is a condition to the obligations of Halliburton and Dresser to close
the Merger Agreement and that if the Merger Agreement is terminated prior to
its consummation, then this Agreement shall also be terminated.
A-74
ARTICLE III
AGREEMENT TO RELEASE CLAIMS
Merger Consideration Paid For Seller's Agreement To Release Claims. The
parties hereby recognize and agree that the merger consideration paid by
Dresser in connection with the merger of Halliburton MS, Inc. with and into
Magic Earth was paid, in part, in exchange for Seller's execution of this
Agreement.
3.01 Release.
(a) Seller hereby agrees to forever waive, release and discharge and to not
assert, any and all rights Seller may have pursuant to any applicable Law or
otherwise to make a claim against or otherwise demand or receive payment from
(i) Magic Earth arising out of, or with respect to, any act or omission of
Magic Earth occurring prior to the Closing Date or (ii) any officer, director,
employee or agent of Magic Earth arising out of, or with respect to, any act or
omission of any such Person in such Person's role as an officer, director,
employee or agent of Magic Earth, occurring prior to the Closing Date.
(b) Seller does hereby forever waive, release and discharge Magic Earth,
Magic Earth Ltd., a wholly-owned subsidiary of Magic Earth, and the Halliburton
Indemnified Persons from any and all Losses incurred by Seller prior to the
Closing Date, which relate to, or arise out of, any dealings, relationships or
transactions by and between Seller and Magic Earth, Magic Earth Ltd., or the
Halliburton Indemnified Persons, other than liability relating to an obligation
to pay wages and/or benefits accrued prior to the Closing Date.
(c) Seller understands and agrees that pursuant to this Section 3.01, Seller
is expressly waiving all claims with respect to Losses incurred by Seller prior
to the Closing Date, which relate to, or arise out of, any dealings,
relationships or transactions by and between Seller and Magic Earth, Magic
Earth Ltd., or the Halliburton Indemnified Persons (other than those expressly
reserved as set forth in this Section 3.01), even those Seller may not know or
suspect to exist, which if known may have materially affected the decision to
enter into this Agreement, and Seller waives any rights under applicable Law
that provide to the contrary.
(d) Nothing contained in this Section 3.01 shall be, or shall be deemed to
be, a release of Halliburton, Dresser, Halliburton MS, or the Surviving
Corporation from any liability arising under the Merger Agreement, this
Agreement or any other agreement contemplated hereby or thereby.
ARTICLE IV
General Provisions
4.01 Expenses. All costs and expenses, including fees and disbursements of
counsel, financial advisors, accountants or other representatives incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the person incurring such costs and expenses.
4.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and
shall be deemed to have been duly given or made upon receipt) by delivery in
person, by courier service, by cable, by telecopy, facsimile or by registered
or certified United States mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such other address for
a party as shall be specified in a notice given in accordance with this Section
4.02):
(a) if to Magic Earth:
Magic Earth, Inc.
2000 West Sam Houston Parkway South, Suite 750
Houston, Texas 77042
Attn: .
A-75
with a copy to:
Landmark Graphics Corporation
15150 Memorial Drive
Houston, Texas 77079-4304
Attn.: Vice President and Secretary
Facsimile: 281.560.1383
with a copy to:
Halliburton Company
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
Attn.: Executive Vice President and General Counsel
Facsimile: 214.978.2658
(b) if to Seller at the address or facsimile number shown on the signature
page below.
4.03 Communication. Either party may communicate with any person without the
prior consent of the other party to inform them of the provisions of this
Agreement.
4.04 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
4.05 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby are consummated as originally
contemplated to the fullest extent possible.
4.06 Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
4.07 Amendment. This Agreement may not be amended or modified except (a) by
an instrument in writing signed by each of, or on behalf of each of Magic Earth
and the Seller.
4.08 Governing Law; Forum. It is the mutual intention of the parties to have
any dispute concerning this Agreement resolved out of court. Accordingly, the
parties agree that any such dispute shall, as the sole and exclusive remedy, be
submitted for resolution through the Halliburton Dispute Resolution Plan;
provided, however, that Magic Earth, on its own behalf and on behalf of any of
the Halliburton Entities, shall be entitled to seek a restraining order or
injunction in any court of competent jurisdiction to prevent any breach or the
continuation of any breach of the provisions of this Agreement and Seller
hereby consents that such restraining order or injunction may be granted
without the necessity of Magic Earth posting any bond. The parties agree that
the resolution of any such dispute through such Plan shall be final and
binding.
4.09 Counterparts. This Agreement may be executed and delivered (including
by facsimile transmission) in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed and
delivered shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Seller and Stockholder:
By: _________________________________
Name: _____________________________
Address: __________________________
___________________________________
Facsimile: ________________________
Magic Earth, Inc.
By: _________________________________
Name: _____________________________
Title: ____________________________
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ANNEX "A"
"Agreement"--has the meaning specified in the preamble to this Agreement.
"Closing Date"--has the same meaning herein as ascribed to it in the Merger
Agreement.
"Magic Earth"--has the meaning specified in the preamble of this Agreement.
"Dresser"--has the meaning specified in the recitals of this Agreement.
"Halliburton"--has the meaning specified in the recitals of this Agreement.
"Halliburton Indemnified Persons"--has the same meaning herein as ascribed
to it in the Merger Agreement.
"Law"--has the same meaning herein as ascribed to it in the Merger
Agreement.
"Loss"--has the same meaning herein as ascribed to it in the Merger
Agreement.
"Magic Earth"--has the meaning specified in the preamble of this Agreement.
"Merger Agreement"--has the meaning specified in the recitals of this
Agreement.
"Seller"--has the meaning specified in the preamble of this Agreement.
"Stockholder"--has the meaning specified in the preamble of this Agreement.
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EXHIBIT I
PLEASE READ THE INSTRUCTIONS ATTACHED TO THIS FORM BEFORE YOU FILL OUT THIS
FORM
RETURN THIS
LETTER OF TRANSMITTAL
AND ANY MAGIC EARTH, INC. STOCK CERTIFICATES YOU HAVE IN YOUR POSSESSION
TO
[MELLON INVESTOR SERVICES LLC]
TELEPHONE:.........
AS FOLLOWS:
By Mail: By Hand: By Overnight Delivery:
Post Office Box... 120 Broadway, 13TH Floor 85 Challenger Road Mail
South Hackensack, NJ New York, NY 10271 Drop-Reorg.
07606-1947 Attn: Reorganization Ridgefield Park, NJ
Dept. 07660
Attn: Reorganization
Dept.
DESCRIPTION OF SHARES SURRENDERED
PLEASE FILL IN
ATTACH SEPARATE LISTS AS NEEDED
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Name(s) and address(es) of
registered holder(s)
If we've made a mistake in your
name or address, please pencil list certificates
in the correct information surrendered number of shares
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Total number of shares:
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I/we have full, unrestricted authority to exchange the attached stock
certificate(s). Please register the new shares and send the statement for such
shares to the name(s) and address(es) shown above.
[_]Please check this box if any of your stock certificates have been LOST,
STOLEN, DESTROYED or DAMAGED and return this form in the enclosed envelope.
(see instruction 8.)
SPECIAL REGISTRATION SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS (See Instructions (See Instructions 4 and 6)
3, 5 and 6)
Complete ONLY if your address
Fill in the following informa- is different than the address
tion ONLY if you want the new shown above.
shares to be registered in a
different name from the one(s)
on the stock certificate(s) you Name: ___________________________
are sending in. (please print)
Register shares to: Address: ________________________
Name: ___________________________ _________________________________
(include zip code)
Address: ________________________
_________________________________
(include zip code)
YOU MUST SIGN BELOW SIGNATURE GUARANTEE
(FOR USE BY ELIGIBLE
Must be signed by the regis- INSTITUTIONS ONLY)
tered holder(s) EXACTLY as
name(s) appear(s) on stock cer- Unless the shares are tendered
tificate(s) or by person(s) au- by the registered holder(s) of
thorized to become registered Common stock, or for the account
holder(s) by certificate(s) and of an "Eligible Institution",
documents transmitted herewith. the signature(s) of the regis-
If signature is by an officer on tered holder(s) must be guaran-
behalf of a corporation or by teed by an Eligible Institution.
trustee, executor, administra- (See instruction 6)
tor, guardian, attorney-in-fact,
or other person acting in a
fiduciary or representative ca- _________________________________
pacity, please set forth the ti- Authorized Signature
tle. (See instructions 2, 3, 4,
5 and 6.) _________________________________
Name of Firm Issuing Guarantee
_________________________________
_________________________________
_________________________________ Address of Firm--Please Print
(Signature(s) of Owner(s))
_________________________________
(title, if any)
______________ ______________
Date Phone No.
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PAYER'S NAME: MELLON INVESTOR SERVICES LLC
Part 1--PLEASE PROVIDE YOUR Part 2--Social
TIN IN THE BOX AT RIGHT AND Security number OR
SUBSTITUTE CERTIFY BY SIGNING AND DATING Employer
BELOW Identification
Number
Form W-9 -----------------
(If awaiting TIN
Department of the write
Treasury "Applied For")
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Internal Revenue Part 3--For payees exempt from backup withholding,
Service see the enclosed Guidelines for Certification of
TIN on Substitute Form W-9 and complete as
instructed therein.
CERTIFICATION--Under penalties of perju-
ry, I certify that:
(1) The number shown on this form is my correct TIN
(or I am waiting for a number to be issued to
me).
Payer's Request for (2) I am not subject to backup withholding either
Taxpayer because I have not been notified by the
Identification Number Internal Revenue Service (IRS) that I am
(TIN) subject to backup withholding as a result of
failure to report all interest or dividends, or
the IRS has notified me that I am no longer
subject to backup withholding.
(3) For corporate entities only: I certify that the
stockholder has full legal capacity and
authority to enter into this transmittal letter
and that this transmittal letter has been duly
executed and delivered by such stockholder.
Further, the execution and delivery of this
transmittal letter does not and will not
violate, conflict with or result in a breach of
any agreement, contract or other instrument to
which such stockholder is a party.
CERTIFICATION INSTRUCTIONS--You must cross out Item
(2) above if you have been notified by the IRS that
you are subject to backup withholding because of
under-reporting interest or dividends on your tax
return. However, if after being notified by the IRS
that you were subject to backup withholding, you
received another notification from the IRS that you
are no longer subject to backup withholding, do not
cross out Item(2).
(Also, see instructions in the enclosed Guide-
lines.)
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Signature: ________________ Date: ________________
(See Instruction 9)
IF YOU WANT A STOCK CERTIFICATE ISSUED.
[_]Your new Halliburton Company shares will be issued in direct registration
form and a statement reflecting these shares will be sent to you instead of
a stock certificate. However, if you would prefer to receive a stock
certificate representing these shares please check this box.
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INSTRUCTIONS FOR EXCHANGING YOUR MAGIC EARTH, INC. CERTIFICATES
(Read Carefully)
Pursuant to the merger of a subsidiary of Dresser Industries, Inc.
("Dresser"), with and into Magic Earth, Inc. ("Magic Earth"), each share of
Magic Earth common stock was converted into . shares of Halliburton Company
("Halliburton") common stock. You must send in your Magic Earth stock
certificates to be exchanged for shares in Halliburton. We will credit your
Halliburton shares to a "book entry account" (see enclosed description) in your
name (or that of someone else if you prefer). You will NOT receive a stock
certificate unless you specifically request one and check the box at the bottom
of the form.
1. How to Send in Your Stock Certificate(s).
. Send or deliver your Magic Earth stock certificate(s) along with this
form, properly completed, to Mellon Investor Services LLC at one of the
addresses on the front of this form. Do not send them to Halliburton or
Dresser.
. It's up to you how you choose to send us your certificate(s). You bear
the risk of loss if we don't receive them.
. We've enclosed a return envelope in case you want to mail them. If you
do, we'd strongly recommend you use registered mail with return receipt
requested, properly insured.
2. New Shares Registered to Same Name(s).
. If you want your new shares registered to the same name as your old
certificate(s):
X just fill in the form and sign exactly as your name appears on the
certificate(s) you're sending in.
X remember, DO NOT sign the certificate(s) but DO sign this form.
. If the certificate(s) is registered to more than one person, all of them
have to sign this form exactly as the names appear on the certificate(s).
. If you have more than one certificate, and the names on them are
different, you need to send us a completed copy of this form for each
certificate or group of certificates registered in a different name,
signed by the person(s) to whom they are registered (unless that person
is signing the certificate(s) over to you) (see Instruction 5).
. If you are a trustee, executor, administrator, guardian, corporate
officer, or someone else who is acting in a "fiduciary" capacity (that
is, acting on behalf of someone else) and your name is not mentioned on
the certificate(s), you must send us proper evidence of your authority to
exchange the certificate(s).
3. New Shares Registered in Different Name.
. If you want your new shares registered in a name(s) different from the
one on the old certificate(s), you have to fill in the section marked
"Special Registration Instructions."
. You also have to get your signature guaranteed (see Instruction 6).
4. Special Instructions When you Want a Certificate Issued and Sent to a
Different Address.
. If you choose to have a certificate issued and you want it sent to a
different address from the address shown on this form, fill out the
section entitled "Special Delivery Instructions."
. You also have to get your signature guaranteed (see Instruction 6).
5. Endorsements and Stock Powers.
. The certificate(s) must be endorsed or accompanied by a signed "stock
power(s)," if:
X the old certificate(s) is registered to someone other than the
person signing this form; or
X you want the new shares registered to someone other than the person
signing this form.
. Your bank or broker can provide you with stock powers or you can call
Mellon at . .
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. The stock powers or endorsement must be in the name of the registered
owner(s) as it appears on the certificate(s) you are submitting.
. You also have to get your signature on the stock power(s) guaranteed (see
Instruction 6).
6. Signature Guarantees.
. You need to get your signature guaranteed by an "Eligible Institution"
if:
X you want the new shares registered in someone else's name;
X you want a certificate issued and sent to an address other than the
one shown on this form; or
X you are submitting a stock power(s) along with the certificate(s)
(see Instruction 5).
. Your bank or broker can help you get a signature guarantee.
. You don't need to get your signature guaranteed if you are an "Eligible
Institution" and the shares are in your name. An "Eligible Institution"
is a bank, broker, dealer, credit union, savings association or other
entity which is a member in good standing of the Securities Transfer
Agent's Medallion Program.
7. Dividends.
. Until you send in your stock certificates with a properly completed form,
any dividends declared on Halliburton shares will not be paid to you.
. Once you send in your stock certificates with a properly completed form,
we will send you a check for any cash dividends that were declared and
payable on Halliburton shares after the Effective Date of the Merger but
prior to the time you send your shares in.
8. Lost or Damaged Certificate(s).
. If any of your Magic Earth stock certificates have been LOST, STOLEN,
DESTROYED or DAMAGED, then check the box on the other side and return
this form in the enclosed envelope. PLEASE GO AHEAD AND SEND IN ANY
CERTIFICATES YOU HAVE IN YOUR POSSESSION.
. Mellon will contact you and tell you what to do next with respect to the
lost or damaged certificates.
9. Substitute Form W-9.
. This is required under the federal tax laws. Substitute Form W-9 must be
completed by each person submitting this form.
. Write "Applied For" in the space for the Taxpayer Identification Number
(TIN) in Part 2 of the Substitute Form W-9 if you have applied to the
Internal Revenue Service for a TIN but haven't received it yet, or if you
haven't applied but intend to do so in the near future.
. If you don't provide this information, or if we don't receive a TIN for
you, we have to withhold 31% of any cash we pay you.
. Please read the enclosed Guidelines if you have questions.
A-83
APPENDIX B
DELAWARE GENERAL CORPORATION LAW
SEC. 262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to Section
228 of this title shall be entitled to an appraisal by the Court of Chancery of
the fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and
the words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions of a
share, solely of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section 251 (other than a merger effected pursuant to
Section 251(g) of this title), Section 252, Section 254, Section 257, Section
258, Section 263 or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
Sections 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsection (b) or (c) hereof that appraisal rights
are available for any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholder's shares shall deliver
to the corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of such stockholder's shares. A proxy or vote against
the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the effective date of such
merger or consolidation, the surviving or resulting corporation shall
notify each stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or consented to the
merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to Section 228
or Section 253 of this title, each constituent corporation, either before
the effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the
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facts stated therein. For purposes of determining the stockholders entitled
to receive either notice, each constituent corporation may fix, in advance,
a record date that shall be not more than 10 days prior to the date the
notice is given, provided, that if the notice is given on or after the
effective date of the merger or consolidation, the record date shall be
such effective date. If no record date is fixed and the notice is given
prior to the effective date, the record date shall be the close of business
on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholder's written request for such a statement is received
by the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
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stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted such stockholder's certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the approval
of the Court, and such approval may be conditioned upon such terms as the Court
deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
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