<PAGE>
Filed pursuant to Rule 424(B)(3)
SEC File No. 333-11231
LANDMARK GRAPHICS CORPORATION
15150 MEMORIAL DRIVE
HOUSTON, TEXAS 77079-4304
(713) 560-1000
Dear Stockholder:
A Special Meeting of Stockholders (the "Special Meeting") of Landmark
Graphics Corporation ("Landmark") will be held at the offices of Landmark
located at 15150 Memorial Drive, Houston, Texas, on October 4, 1996 at 10:00
a.m. local time.
At the Special Meeting you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Merger dated as of June
30, 1996 (the "Merger Agreement") providing for the merger (the "Merger") of
Landmark with a wholly owned subsidiary ("Merger Sub") of Halliburton Company
("Halliburton"), pursuant to which (a) each share of Landmark Common Stock
outstanding immediately prior to the consummation of the Merger will be
converted into 0.574 of a share of Halliburton Common Stock (the "Exchange
Ratio"), (b) all outstanding options to purchase shares of Landmark Common
Stock will be assumed by the corporation surviving the Merger and converted
(based upon the Exchange Ratio) into options to purchase shares of Halliburton
Common Stock and (c) Landmark will become a wholly owned subsidiary of
Halliburton. In the materials accompanying this letter, you will find a Notice
of Special Meeting of Stockholders, a Proxy Statement/Prospectus relating to
the actions to be taken by Landmark stockholders at the Special Meeting and a
proxy card. The Proxy Statement/Prospectus more fully describes the proposed
Merger and includes information about Landmark and Halliburton.
Morgan Stanley & Co. Incorporated, the investment banking firm retained by
the Board of Directors of Landmark to act as its financial advisor in
connection with the Merger, has rendered its opinion that, as of the date of
the accompanying Proxy Statement/Prospectus and based on certain matters
stated therein, the Exchange Ratio was fair from a financial point of view to
the holders of shares of Landmark Common Stock.
THE BOARD OF DIRECTORS OF LANDMARK HAS UNANIMOUSLY APPROVED THE MERGER AND
THE TRANSACTIONS RELATED THERETO AND HAS DETERMINED THAT THEY ARE FAIR TO AND
IN THE BEST INTERESTS OF LANDMARK AND ITS STOCKHOLDERS. AFTER CAREFUL
CONSIDERATION, YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE SPECIAL MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, HOWEVER, PLEASE
COMPLETE, SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE. IF YOU
ATTEND THE SPECIAL MEETING, YOU MAY VOTE IN PERSON IF YOU WISH, EVEN THOUGH
YOU HAVE PREVIOUSLY RETURNED YOUR PROXY. IT IS IMPORTANT THAT YOUR SHARES BE
REPRESENTED AND VOTED AT THE SPECIAL MEETING.
Sincerely,
/s/ Robert P. Peebler
Robert P. Peebler
President, Chief Executive Officer
and Director
<PAGE>
LANDMARK GRAPHICS CORPORATION
15150 MEMORIAL DRIVE
HOUSTON, TEXAS 77079-4304
(713) 560-1000
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 4, 1996
To the Stockholders of Landmark Graphics Corporation:
A Special Meeting of Stockholders (the "Special Meeting") of Landmark
Graphics Corporation, a Delaware corporation ("Landmark"), will be held on
Friday, October 4, 1996 at 10:00 a.m., local time, at the offices of Landmark
located at 15150 Memorial Drive, Houston, Texas, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger dated as of June 30, 1996 (the "Merger
Agreement"), among Halliburton Company, a Delaware corporation
("Halliburton"), Halliburton Acq. Company, a Delaware corporation and a
wholly owned subsidiary of Halliburton ("Merger Sub"), and Landmark.
Pursuant to the Merger Agreement, Landmark would be merged with and into
Merger Sub (the "Merger") and, among other things, each share of common
stock, par value $.05 per share, of Landmark ("Landmark Common Stock")
outstanding at the effective time of the Merger would be converted into
0.574 of a share of common stock, par value $2.50 per share, of
Halliburton, all as more fully set forth in the accompanying Proxy
Statement/Prospectus and in the Merger Agreement, a copy of which is
included as Appendix A thereto; and
2. To transact such other business as may properly come before the
Special Meeting or any adjournment(s) thereof.
The Board of Directors of Landmark has fixed the close of business on August
29, 1996 as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Special Meeting and any adjournment(s) thereof.
Only holders of record of shares of Landmark Common Stock at the close of
business on the record date are entitled to notice of, and to vote at, the
Special Meeting. A complete list of such stockholders will be available for
examination at the offices of Landmark in Houston, Texas during normal
business hours by any Landmark stockholder, for any purpose germane to the
Special Meeting, for a period of ten days prior to the meeting. Stockholders
of Landmark are not entitled to any appraisal or dissenter's rights under the
Delaware General Corporation Law in respect of the Merger.
Your vote is important. The affirmative vote of the holders of a majority of
the outstanding shares of Landmark Common Stock is required for approval and
adoption of the Merger Agreement. Even if you plan to attend the Special
Meeting in person, we request that you sign and return the enclosed proxy or
voting instruction card and thus ensure that your shares will be represented
at the Special Meeting if you are unable to attend. If you do attend the
Special Meeting and wish to vote in person, you may withdraw your proxy and
vote in person.
By Order of the Board of Directors
Patti L. Massaro
LOGO Corporate Secretary
Houston, Texas
September 4, 1996
<PAGE>
HALLIBURTON COMPANY
LANDMARK GRAPHICS CORPORATION
PROXY STATEMENT/PROSPECTUS
This Proxy Statement/Prospectus relates to the proposed merger of Landmark
Graphics Corporation, a Delaware corporation ("Landmark"), with and into
Halliburton Acq. Company, a Delaware corporation ("Merger Sub") and a wholly
owned subsidiary of Halliburton Company, a Delaware corporation
("Halliburton"), pursuant to the Agreement and Plan of Merger dated as of June
30, 1996 among Halliburton, Merger Sub and Landmark (the "Merger Agreement").
The merger contemplated by the Merger Agreement is referred to herein as the
"Merger."
As a result of the Merger, (i) each share of common stock, par value $.05
per share, of Landmark ("Landmark Common Stock") outstanding immediately prior
to the effective time of the Merger (the "Effective Time"), other than
Landmark Common Stock held directly or indirectly by Halliburton or Landmark,
will be converted into 0.574 of a share of common stock, par value $2.50 per
share, of Halliburton ("Halliburton Common Stock") and (ii) Landmark will
become a wholly owned subsidiary of Halliburton.
This Proxy Statement/Prospectus is being furnished to holders of Landmark
Common Stock in connection with the solicitation of proxies by the Board of
Directors of Landmark for use at the special meeting of stockholders of
Landmark to be held on October 4, 1996 (the "Special Meeting"). At the Special
Meeting, holders of Landmark Common Stock will be asked to approve and adopt
the Merger Agreement. This Proxy Statement/Prospectus and the accompanying
form of proxy are first being mailed to stockholders of Landmark on or about
September 4, 1996. It is anticipated that the Merger will be effected as soon
as practicable following the Special Meeting.
This Proxy Statement/Prospectus also constitutes a prospectus of Halliburton
with respect to up to 11,005,051 shares of Halliburton Common Stock to be
issued pursuant to the Merger Agreement in exchange for currently outstanding
shares of Landmark Common Stock and additional shares of Landmark Common Stock
that may become outstanding prior to the Merger upon the exercise of options
to purchase Landmark Common Stock outstanding on the date of the Merger
Agreement ("Landmark Options"). The shares of Halliburton Common Stock issued
pursuant to the Merger have been approved for listing on the New York Stock
Exchange (the "NYSE"), subject to official notice of issuance.
On August 27, 1996, the closing prices of Halliburton Common Stock and
Landmark Common Stock, as reported on the NYSE Composite Tape and The Nasdaq
National Market (the "Nasdaq"), respectively, were $53 7/8 and $30 5/8.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is September 4, 1996.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN OR INCORPORATED BY REFERENCE INTO
THIS PROXY STATEMENT/PROSPECTUS IN CONNECTION WITH THE SOLICITATION OF PROXIES
OR THE OFFERING OF SECURITIES MADE HEREBY AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY HALLIBURTON OR LANDMARK. NEITHER THE DELIVERY OF THIS PROXY
STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES OFFERED HEREBY
SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF HALLIBURTON OR LANDMARK SINCE THE DATE HEREOF OR THAT
THE INFORMATION SET FORTH OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE. THIS PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, ANY
SECURITIES, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION IN WHICH, OR
TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF AN
OFFER OR PROXY SOLICITATION.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES CERTAIN DOCUMENTS BY REFERENCE
THAT ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. HALLIBURTON AND LANDMARK
EACH UNDERTAKE TO PROVIDE COPIES OF SUCH DOCUMENTS (OTHER THAN EXHIBITS TO
SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE), WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO
WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL
REQUEST TO, IN THE CASE OF DOCUMENTS RELATING TO HALLIBURTON, GUY T. MARCUS,
VICE PRESIDENT-INVESTOR RELATIONS, HALLIBURTON COMPANY, 3600 LINCOLN PLAZA,
500 NORTH AKARD STREET, DALLAS, TEXAS, 75201-3391 (TELEPHONE (214) 978-2600),
AND, IN THE CASE OF DOCUMENTS RELATING TO LANDMARK, PATTI L. MASSARO, GENERAL
COUNSEL AND CORPORATE SECRETARY, LANDMARK GRAPHICS CORPORATION, 15150 MEMORIAL
DRIVE, HOUSTON, TEXAS, 77079-4304 (TELEPHONE (713) 560-1000). IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, SUCH REQUESTS SHOULD BE RECEIVED BY
SEPTEMBER 20, 1996.
AVAILABLE INFORMATION
Halliburton and Landmark are subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy statements and
other information filed by Halliburton and Landmark can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices at Seven World Trade Center, 13th Floor, New York, New York 10048 and
CitiCorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621-
2511. Copies of such material can be obtained by mail from the Public
Reference Section of the Commission at 450 West Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such reports, proxy statements
and other information may also be obtained from the web site that the
Commission maintains at http://www.sec.gov. In addition, reports, proxy
statements and other information concerning (i) Halliburton may be inspected
at the offices of the NYSE, 20 Broad Street, New York, New York 10005 and (ii)
Landmark may be inspected at the offices of the Nasdaq, Reports Section, 1735
K Street, N.W., Washington, D.C. 20006.
Reports, proxy statements and other information concerning Halliburton and
Landmark may also be obtained electronically through a variety of databases,
including, among others, the Commission's Electronic Data Gathering and
Retrieval ("EDGAR") program, Knight-Ridder Information Inc., Federal
Filing/Dow Jones and Lexis/Nexis.
Halliburton has filed with the Commission a Registration Statement on Form
S-4 (together with all amendments, supplements and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Halliburton Common Stock to be issued
pursuant to the Merger Agreement. The information contained herein with
respect to Halliburton and its affiliates, including Merger Sub, has been
provided by Halliburton, and the information contained herein with respect to
Landmark and its affiliates has been provided by Landmark. This Proxy
Statement/Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with
2
<PAGE>
the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement. Any statements
contained herein concerning the provisions of any document filed as an exhibit
to the Registration Statement or otherwise filed with the Commission are not
necessarily complete, and in each instance reference is made to the copy of
such document so filed. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed with the Commission pursuant
to the Exchange Act, are incorporated herein by reference:
1. For Halliburton (Exchange Act Registration No. 1-3492), its:
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1995;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
1996 and June 30, 1996;
(c) Current Reports on Form 8-K dated January 23, 1996, February 15,
1996, March 25, 1996, April 8, 1996, April 22, 1996, May 6, 1996,
May 21, 1996, June 4, 1996, June 20, 1996, July 1, 1996, July 18,
1996, July 23, 1996, July 31, 1996 and August 20, 1996;
(d) Registration Statement on Form 10 dated August 26, 1948, as
amended by Form 8 dated July 7, 1988; and
(e) Registration Statement on Form 8-A dated May 20, 1986, as amended
by Form 8 dated February 23, 1990, as amended by Form 8-A/A dated
January 16, 1996.
2. For Landmark (Exchange Act Registration No. 0-17195), its:
(a) Annual Report on Form 10-K for the fiscal year ended June 30,
1996;
(b) Current Reports on Form 8-K dated June 30, 1996 and August 15,
1996;
(c) Registration Statement on Form 8-A dated September 23, 1988; and
(d) Registration Statement on Form 8-A dated September 5, 1995.
All documents filed by Halliburton or Landmark pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Proxy
Statement/Prospectus and prior to the date of the Special Meeting shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Proxy Statement/Prospectus
to the extent that a statement contained herein or in any other subsequently
filed document that also is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement/Prospectus.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION..................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................... 3
SUMMARY................................................................... 5
The Companies............................................................ 5
The Special Meeting...................................................... 5
Reasons for the Merger................................................... 6
Recommendation of the Board of Directors of Landmark..................... 8
Opinion of Financial Advisor............................................. 8
The Merger and the Merger Agreement...................................... 9
Stock Option............................................................. 12
Voting Agreement......................................................... 12
Certain Federal Income Tax Consequences.................................. 12
Anticipated Accounting Treatment......................................... 13
No Appraisal Rights...................................................... 13
Exchange of Landmark Common Stock Certificates........................... 13
Interests of Certain Persons in the Merger............................... 13
Comparative Rights of Landmark and Halliburton Stockholders.............. 14
Market Price and Dividend Data........................................... 15
Halliburton Selected Historical Consolidated Financial Information....... 16
Landmark Selected Historical Consolidated Financial Information.......... 17
Selected Unaudited Pro Forma Combined Financial Information.............. 18
Comparative Per Share Data............................................... 19
THE COMPANIES............................................................. 20
Halliburton.............................................................. 20
Merger Sub............................................................... 21
Landmark................................................................. 21
THE SPECIAL MEETING....................................................... 22
Date, Time and Place..................................................... 22
Purposes of the Special Meeting.......................................... 22
Record Date and Outstanding Shares....................................... 22
Voting and Revocation of Proxies......................................... 22
Vote Required............................................................ 22
Solicitation of Proxies.................................................. 23
Other Matters............................................................ 23
THE MERGER................................................................ 23
General Description of the Merger........................................ 23
Background of the Merger................................................. 24
Certain Information Provided............................................. 27
Halliburton's Reasons for the Merger..................................... 28
Landmark's Reasons for the Merger; Recommendation of the Board of
Directors of Landmark.................................................... 29
Opinion of Financial Advisor............................................. 31
Interests of Certain Persons in the Merger............................... 35
Certain Federal Income Tax Consequences.................................. 38
Accounting Treatment..................................................... 39
Governmental and Regulatory Approvals.................................... 39
Restrictions on Resales by Affiliates.................................... 40
Rights of Dissenting Stockholders........................................ 40
CERTAIN TERMS OF THE MERGER AGREEMENT..................................... 40
Effective Time of the Merger............................................. 40
Manner and Basis of Converting Shares.................................... 40
Landmark Options......................................................... 41
Conditions to the Merger................................................. 42
Representations and Warranties........................................... 43
Certain Covenants; Conduct of Business Prior to the Merger............... 43
No Solicitation.......................................................... 45
Certain Post-Merger Matters.............................................. 45
Termination or Amendment of the Merger Agreement......................... 45
Expenses and Termination Fee.............................................. 47
Indemnification.......................................................... 48
STOCK OPTION AGREEMENT.................................................... 48
VOTING AGREEMENT.......................................................... 50
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION.............. 50
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS........................... 56
Halliburton.............................................................. 56
Landmark................................................................. 56
DESCRIPTION OF HALLIBURTON CAPITAL STOCK.................................. 58
General.................................................................. 58
Halliburton Common Stock................................................. 58
Rights to Purchase Preferred Stock....................................... 58
Halliburton Preferred Stock.............................................. 60
Certain Provisions of Halliburton Charter and Bylaws..................... 60
Transfer Agent and Registrar............................................. 61
COMPARATIVE RIGHTS OF HALLIBURTON AND LANDMARK STOCKHOLDERS............... 61
Number, Classification and Removal of Directors.......................... 61
Voting Rights............................................................ 62
Power to Call Special Meetings........................................... 62
Stockholder Vote Required for Certain Transactions....................... 62
Action by Written Consent................................................ 62
Amendments of Bylaws..................................................... 62
INDEPENDENT ACCOUNTANTS................................................... 62
LEGAL MATTERS............................................................. 63
EXPERTS................................................................... 63
STOCKHOLDER PROPOSALS..................................................... 63
Appendices:
A--Agreement and Plan of Merger
B--Stock Option Agreement
C--Voting Agreement
D--Opinion of Morgan Stanley & Co.
Incorporated
</TABLE>
4
<PAGE>
SUMMARY
The following is a summary of certain information contained elsewhere in this
Proxy Statement/Prospectus. Reference is made to, and this summary is qualified
in its entirety by, the more detailed information contained in or incorporated
by reference into this Proxy Statement/Prospectus and the Appendices hereto.
Stockholders are urged to read carefully this Proxy Statement/Prospectus and
the Appendices hereto in their entirety. As used in this Proxy
Statement/Prospectus, unless otherwise required by the context, the term
"Halliburton" means Halliburton Company and its consolidated subsidiaries and
the term "Landmark" means Landmark Graphics Corporation and its consolidated
subsidiaries. Capitalized terms used herein without definition are, unless
otherwise indicated, defined in the Merger Agreement and used herein with such
meanings.
THE COMPANIES
HALLIBURTON AND MERGER SUB. Halliburton is one of the world's largest
diversified energy services and engineering and construction services
companies. Such services include those related to the exploration, development
and production of oil and natural gas, in the case of energy services, and the
design, procurement, construction, project management and maintenance of
industrial facilities, in the case of engineering and construction services.
Halliburton conducts business worldwide in more than 100 countries. Merger Sub
is a wholly owned subsidiary of Halliburton incorporated on June 28, 1996 in
the State of Delaware solely for the purpose of effecting the Merger. The
principal executive offices of Halliburton are located at 3600 Lincoln Plaza,
500 North Akard Street, Dallas, Texas, 75201-3391, and its telephone number at
such offices is (214) 978-2600.
LANDMARK. Landmark offers an extensive line of integrated software
applications to the oil and gas exploration, development and production
industry for seismic processing, three dimensional ("3D") and two dimensional
("2D") seismic interpretation, geologic and petrophysical interpretation,
including reservoir analysis, mapping and modeling of geophysical information,
well log and production analysis, drilling and production engineering and data
management. In addition to designing, producing and marketing software
products, Landmark is a value-added reseller of workstations and other hardware
and provides a range of services related to its products, including software
and systems support and training, systems configuration and network design and
data loading and management. Landmark's principal executive offices are located
at 15150 Memorial Drive, Houston, Texas 77079-4304, and its telephone number is
(713) 560-1000.
THE SPECIAL MEETING
DATE, TIME AND PLACE
The Special Meeting will be held on Friday, October 4, 1996, at the offices
of Landmark located at 15150 Memorial Drive, Houston, Texas, commencing at
10:00 a.m. local time.
PURPOSES
The purposes of the Special Meeting are (i) to consider and vote upon a
proposal to approve and adopt the Merger Agreement and (ii) to transact such
other business as may properly come before the Special Meeting.
RECORD DATE; SHARES ENTITLED TO VOTE
The Board of Directors of Landmark has fixed the close of business on August
29, 1996 as the record date (the "Record Date") for the determination of
stockholders entitled to notice of, and to vote at, the Special Meeting and any
adjournment thereof. Only holders of record of shares of Landmark Common Stock
at the close
5
<PAGE>
of business on the Record Date are entitled to notice of and to vote at the
Special Meeting. On such date, there were 17,662,816 shares of Landmark Common
Stock outstanding, each of which will be entitled to one vote on each matter to
be acted upon at the Special Meeting.
QUORUM; VOTE REQUIRED
The presence, in person or by proxy, at the Special Meeting of the holders of
a majority of the shares of Landmark Common Stock outstanding and entitled to
vote at the Special Meeting is necessary to constitute a quorum at the meeting.
The affirmative vote of the holders of a majority of the issued and outstanding
shares of Landmark Common Stock as of the Record Date is required under the
General Corporation Law of the State of Delaware (the "DGCL") to approve and
adopt the Merger Agreement. In determining whether the Merger Agreement has
received the requisite number of affirmative votes, abstentions and broker non-
votes will have the same effect as a vote against the Merger Agreement.
SECURITY OWNERSHIP OF LANDMARK MANAGEMENT
At the Record Date for the Special Meeting, the directors and executive
officers of Landmark owned approximately 11.5% of the outstanding shares of
Landmark Common Stock entitled to vote at such meeting. S. Rutt Bridges, a
director and executive officer of Landmark, and Barbara Ann Bridges, his wife,
have entered into a Voting Agreement with Halliburton dated June 30, 1996 (the
"Voting Agreement") whereby they have agreed to vote all shares of Landmark
Common Stock owned by them in favor of the Merger Agreement. At the Record
Date, an aggregate of 1,971,263 shares of Landmark Common Stock (representing
approximately 11.2% of the outstanding and 22.3% of the affirmative votes
required to approve and adopt the Merger Agreement) were subject to the Voting
Agreement. See "Voting Agreement." In addition, each of the other directors and
executive officers of Landmark, who together own beneficially an aggregate of
65,910 shares of Landmark Common Stock (representing approximately .3% of the
outstanding Landmark Common Stock on the Record Date and .7% of the affirmative
votes required to approve and adopt the Merger Agreement), has advised Landmark
that he or she plans to vote or to direct the vote of all such shares of
Landmark Common Stock in favor of the Merger Agreement.
REASONS FOR THE MERGER
HALLIBURTON
The Board of Directors of Halliburton believes that the Merger will represent
a significant step in achieving an important Halliburton objective: to offer to
its customers a complete array of oil field services. The Board of Directors of
Halliburton also believes that the Merger will make Halliburton a world leader
in providing oil and natural gas exploration, development and production
software applications and information systems.
Management of Halliburton expects that the Merger will allow Halliburton to
achieve significant synergies through the integration of the software
applications and information systems of Landmark with the existing oil field
services and products of Halliburton. These synergies are expected to occur
principally as a result of the enhancement of Halliburton's ability to offer
integrated solutions to the oil and natural gas exploration, development and
production customers of Halliburton Energy Services Division ("HES"). The Board
of Directors of Halliburton believes that the ability to manage information
concerning oil and natural gas reservoirs and all other aspects of exploration,
development and production of oil and natural gas is essential to Halliburton's
long term competitive position.
The Board of Directors of Halliburton determined that the Merger is in the
best interests of Halliburton and its stockholders. In reaching its
determination, the Board of Directors considered a number of factors, including
without limitation the matters discussed above and the following: (i) the
judgment, advice and analyses of management of Halliburton, including its
favorable recommendation of the Merger; (ii) the financial condition and
results of operations of Halliburton and Landmark on an historical basis and a
pro forma combined enterprise basis for both historical and certain future
periods; (iii) the synergies and operating efficiencies that are expected to be
achieved as a result of the Merger; (iv) the strategic benefits of the Merger
to Halliburton, including the
6
<PAGE>
advancement of its objective to provide a complete array of oil field services
to its customers; (v) the terms of the Merger Agreement and related agreements,
including price and structure, which were considered by both management and the
Board of Directors of Halliburton to provide an equitable basis for the Merger;
(vi) the adverse competitive effect on Halliburton if a competitor should
acquire Landmark; (vii) the historical market prices and trading information
with respect to the Halliburton Common Stock and the Landmark Common Stock;
(viii) the ability to effect the Merger on both a tax-free basis and as a
pooling of interests for financial accounting purposes; and (ix) the
significantly enhanced position of the combined enterprise both in the market
for oil and natural gas exploration, development and production software
applications and in the oil field service industry.
In evaluating the Merger, the Board of Directors of Halliburton considered
that the Merger would have certain dilutive effects on the pro forma income per
share of the combined companies as reflected in the pro forma income (loss) per
share from continuing operations for the years ended December 31, 1994 and 1995
and the six months ended June 30, 1996. The Board of Directors of Halliburton
also considered that Landmark has grown rapidly through a number of relatively
recent acquisitions and that these acquired businesses may not have been fully
integrated into Landmark's existing management, operating and other systems.
The Board of Directors also evaluated the risks, inherent in any transaction
such as the Merger, that currently unanticipated difficulties could arise in
integrating the operations of two large corporations and that the synergies
expected from combining the operations of Landmark with those of Halliburton
may not be realized or, if realized, may not be realized within the period
expected.
In analyzing the proposed Merger, the Board of Directors of Halliburton did
not view any single factor as determinative and did not quantify or assign
weight to any of the factors. Rather, the Board of Directors of Halliburton
made its determination based on the total mix of information available to it.
LANDMARK
The Board of Directors of Landmark has determined that the Merger is fair to
and in the best interests of the stockholders of Landmark. In making such
determination, the Board of Directors of Landmark considered, among other
things, the following factors: (i) the relationship between the consideration
to be received by the holders of Landmark Common Stock pursuant to the Merger
and the trading history of shares of Landmark Common Stock, including the fact
that the implied value, as of June 30, 1996, of the consideration to be
received by holders of shares of Landmark Common Stock (i.e., $31.86 per share
of Landmark Common Stock, based on the Exchange Ratio (as defined below) and
the closing price of $55.50 per share of Halliburton Common Stock on June 28,
1996, the last trading day preceding Landmark's announcement of the Merger)
represented a 65.5% premium over the closing price of $19.25 per share of
Landmark Common Stock on June 28, 1996; (ii) the terms and conditions of the
Merger Agreement; (iii) its familiarity with the business, assets, earnings,
properties, results of operations, financial condition and prospects of
Landmark and Halliburton and the nature of the industry in which Landmark and
Halliburton operate; (iv) the perception of the Board of Directors of Landmark
that Halliburton is a well managed, financially strong company with extensive
experience in the oil field services industry; (v) the perception of the Board
of Directors of Landmark that a combination of Landmark with Halliburton would
create a financially strong company, capable of providing customers worldwide
with integrated solutions that include Halliburton's acknowledged expertise in
a wide array of oil field services and Landmark's core competencies in seismic
interpretation and modeling, well log production analyses, drilling and
production engineering and data management; (vi) the perception of the Board of
Directors of Landmark, based on discussions with Halliburton's management, that
Halliburton has the ability to assist Landmark in achieving its strategic
objectives, including positioning Landmark for growth in an increasingly
competitive environment; (vii) the belief of the Board of Directors of Landmark
that the Merger Agreement, including the Stock Option Agreement (as defined
below) and the transactions contemplated thereby, represents the best
determinable value for the Landmark stockholders; (viii) the presentation and
favorable recommendation of the management of Landmark regarding the Merger;
and (ix) the opinion of Morgan Stanley & Co. Incorporated ("Morgan Stanley")
dated June 30, 1996 to the effect that, as of such date and based on certain
matters stated therein, the Exchange Ratio was fair, from a financial point of
view, to holders of shares of Landmark Common Stock.
7
<PAGE>
The Board of Directors of Landmark also considered the following negative
factors: (i) the risks that the benefits, including the synergies, sought to be
achieved in the Merger would not be realized, thereby adversely affecting the
results of operations of the combined companies; and (ii) the possibility that
the Merger might not be consummated and the potential adverse effects of such a
result on (a) the market price for Landmark Common Stock and (b) Landmark's
relationships with key management personnel, its work force generally, its
customers and others. In the view of the Board of Directors of Landmark, these
considerations were not sufficient, either individually or collectively, to
outweigh the advantages of the proposed combination in the manner in which it
was proposed. With respect to the possibility that the Merger might foreclose
other options that could be viewed as preferable, the Board of Directors of
Landmark took into consideration the fact that, under the terms of the Merger
Agreement, unsolicited bona fide proposals could be considered by the Board of
Directors of Landmark at any time, subject to certain limitations that were
acceptable to the Board of Directors of Landmark. See "Certain Terms of the
Merger Agreement--No Solicitation."
In view of the wide variety of factors considered in connection with the
evaluation of the Merger, the Board of Directors of Landmark did not find it
practicable to assign relative weights to the specific factors considered in
reaching its determination.
For further information, see "The Merger--Halliburton's Reasons for the
Merger" and "--Landmark's Reasons for the Merger; Recommendation of the Board
of Directors of Landmark."
RECOMMENDATION OF THE BOARD OF DIRECTORS OF LANDMARK
THE BOARD OF DIRECTORS OF LANDMARK HAS UNANIMOUSLY DETERMINED THAT THE MERGER
IS FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF LANDMARK AND
RECOMMENDS THAT THE STOCKHOLDERS OF LANDMARK APPROVE AND ADOPT THE MERGER
AGREEMENT. See "The Merger--Background of the Merger" and "--Landmark's Reasons
for the Merger; Recommendation of the Board of Directors of Landmark." In
considering the recommendation of the Board of Directors of Landmark with
respect to the Merger, Landmark stockholders should be aware that certain
officers and directors of Landmark have certain interests respecting the
Merger, apart from their interests as stockholders of Landmark. See "The
Merger--Interests of Certain Persons in the Merger."
OPINION OF FINANCIAL ADVISOR
Morgan Stanley was retained by Landmark to act as its financial advisor in
connection with the Merger and related matters based on Morgan Stanley's
experience and expertise. At the meeting of the Board of Directors of Landmark
held on June 30, 1996, Morgan Stanley rendered to the Board of Directors of
Landmark an oral opinion, subsequently rendered in writing as of June 30, 1996
and again as of September 4, 1996, to the effect that, as of such dates and
based on certain matters stated therein, the Exchange Ratio (as defined below)
pursuant to the Merger Agreement was fair from a financial point of view to the
holders of shares of Landmark Common Stock. The full text of the Morgan Stanley
opinion dated as of September 4, 1996, which is substantially equivalent to its
opinion dated June 30, 1996 and sets forth the assumptions made, matters
considered and limitations on the review undertaken, is attached as Appendix D
to this Proxy Statement/Prospectus and is incorporated herein by reference.
Holders of Landmark Common Stock should read this Morgan Stanley opinion
carefully in its entirety. Each Morgan Stanley opinion is directed to the Board
of Directors of Landmark and addresses the fairness of the Exchange Ratio from
a financial point of view to the holders of shares of Landmark Common Stock; it
does not address any other aspect of the Merger nor does it constitute a
recommendation to any holder of Landmark Common Stock as to how to vote at the
Special Meeting. The summary of the Morgan Stanley opinion set forth in this
Proxy Statement/Prospectus is qualified in its entirety by reference to the
full text of such opinion. See "The Merger-- Opinion of Financial Advisor." For
information regarding the fees to be paid to Morgan Stanley for its services as
financial advisor to Landmark, see "The Merger--Opinion of Financial Advisor--
Financial Advisor Fees."
8
<PAGE>
THE MERGER AND THE MERGER AGREEMENT
TERMS OF THE MERGER
At the Effective Time, Landmark will be merged with and into Merger Sub, with
Merger Sub being the surviving corporation and continuing as a wholly owned
subsidiary of Halliburton (the "Surviving Corporation"). Also at the Effective
Time, Merger Sub, as the Surviving Corporation, will change its corporate name
to "Landmark Graphics Corporation." In the Merger, each share of Landmark
Common Stock outstanding at the Effective Time (other than shares held directly
or indirectly by Halliburton or Landmark) will be converted into 0.574 of a
share of Halliburton Common Stock (the "Exchange Ratio").
Based on the number of shares of Halliburton Common Stock and Landmark Common
Stock outstanding as of the Record Date, 10,138,456 shares of Halliburton
Common Stock will be issuable pursuant to the Merger Agreement (assuming no
exercise after the Record Date and prior to the Effective Time of Landmark
Options), representing approximately 8.1% of the total Halliburton Common Stock
to be outstanding after such issuance. In addition, Halliburton will be
required to reserve for issuance an aggregate of 1,779,817 shares of
Halliburton Common Stock that may be issued upon the exercise of Landmark
Options assumed by the Surviving Corporation at the Effective Time (assuming no
exercise thereof after the Record Date and prior to the Effective Time). See
"Certain Terms of the Merger Agreement--Landmark Options."
EFFECTIVE TIME OF THE MERGER
The Merger will become effective upon the filing of a certificate of merger
with the Secretary of State of the State of Delaware which will be the
Effective Time, unless the certificate of merger specifies a later Effective
Time. Assuming all conditions to the Merger contained in the Merger Agreement
are satisfied or, if permissible, waived prior thereto, it is anticipated that
the Effective Time of the Merger will occur as soon as practicable following
the Special Meeting.
CERTAIN CONDITIONS TO THE CONSUMMATION OF THE MERGER
The respective obligations of Halliburton and Landmark to consummate the
Merger are subject to the satisfaction of certain conditions, including the
following: (i) approval and adoption of the Merger Agreement by the
stockholders of Landmark; (ii) the absence of any law, regulation or order
making the Merger illegal or otherwise prohibiting consummation of the Merger;
(iii) Halliburton and Landmark having been advised in writing by Arthur
Andersen LLP that such firm knows of no reason why the Merger should not be
treated for financial accounting purposes as a "pooling of interests;" and (iv)
the accuracy as of the date of the Merger Agreement and as of the Effective
Time in all material respects of the representations and warranties of each
party and compliance in all material respects with all agreements and covenants
by each party to be performed prior to the Effective Time.
Among the covenants to be performed by Landmark prior to the closing under
the Merger Agreement is the obligation of Landmark to divest itself of any
ownership interest in the software application called "Stratworks" through the
sale thereof to a person or entity unaffiliated with Landmark or Halliburton on
terms reasonably satisfactory to Halliburton. For information as to the status
of Landmark's performance of this covenant, see "Certain Terms of the Merger
Agreement--Certain Covenants; Conduct of Business Prior to the Merger."
The Merger Agreement also contains a covenant that Landmark will use all
reasonable efforts to obtain the agreement of each of the executive officers of
Landmark who are parties to certain Change in Control Agreements to amend those
agreements to acknowledge that the Merger will constitute a "Change in Control"
thereunder, that no payments under such agreements will be required solely
because of such "Change in Control" and in certain other respects. For
information regarding the disposition of these Change in Control Agreements,
see "--Interests of Certain Persons in the Merger."
9
<PAGE>
Halliburton and Landmark anticipate that all of the conditions to the
consummation of the Merger (other than obtaining the required approval of the
stockholders of Landmark) will be satisfied prior to or at the time of the
Special Meeting. Either Halliburton or Landmark may extend the time for
performance of any of the obligations of the other party or, in certain
instances, may waive compliance with those obligations at its discretion. See
"Certain Terms of the Merger Agreement--Conditions to the Merger."
GOVERNMENTAL APPROVALS
On July 26, 1996, Halliburton and Landmark each filed a notification and
report form, together with requests for early termination of the waiting
period, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice in respect of the Merger. On
August 14, 1996, Halliburton and Landmark were notified that their request for
early termination of the applicable waiting period had been granted. Neither
Halliburton nor Landmark is aware of any other governmental or regulatory
approval required for consummation of the Merger, except compliance with
applicable securities laws.
NO SOLICITATION
The Merger Agreement provides that Landmark (i) will not initiate, solicit or
knowingly encourage (including by way of furnishing nonpublic information or
assistance) or take any other action knowingly to facilitate any inquiries or
the making of any proposal that constitutes, or may reasonably be expected to
lead to, any Competing Transaction (as defined below), or enter into
discussions or negotiations with any person in furtherance of such inquiries or
to obtain a Competing Transaction, or agree to, or endorse, a Competing
Transaction, (ii) will not authorize or permit any of its directors, officers,
employees or representatives to take any such action and (iii), to the extent
permitted by contracts existing at the date of the Merger Agreement, will
promptly notify Halliburton of any such inquiries and proposals received by
Landmark or any of its directors, officers, employees or representatives;
provided, however, that the Board of Directors of Landmark may furnish
information or enter into discussions or negotiations with respect to an
unsolicited bona fide proposal in writing to acquire Landmark pursuant to a
merger, consolidation, share exchange, business combination or other similar
transaction or to acquire a substantial portion of the assets of Landmark or
any of its Significant Subsidiaries, if, and only to the extent that, (x) the
Board of Directors of Landmark, after considering the advice of outside legal
counsel, determines in good faith that such action is required for the Board of
Directors of Landmark to comply with its fiduciary duties to stockholders
imposed by law and (y) prior to taking any such action, Landmark shall have
provided written notice to Halliburton to the effect that it proposes to take
such action. A "Competing Transaction" means any merger, consolidation, share
exchange, business combination or similar transaction involving Landmark or any
of its Subsidiaries or the acquisition in any manner, directly or indirectly,
of a Material equity interest in any voting securities of, or a substantial
portion of the assets of, Landmark or any of its Significant Subsidiaries,
other than the transactions contemplated by the Merger Agreement. See "Certain
Terms of the Merger Agreement--No Solicitation."
TERMINATION OF THE MERGER AGREEMENT
BY EITHER PARTY. The Merger Agreement may be terminated at any time prior to
the Effective Time (i) by mutual consent of Halliburton and Landmark or (ii) by
either party if (a) the Merger has not been consummated before December 31,
1996 (or February 28, 1997, if the Merger shall not have been consummated as a
result of either party having failed by December 31, 1996 to receive all
required regulatory approvals or consents with respect to the Merger), (b)
consummation of the Merger shall have been prohibited by order of a court or
governmental authority or (c) the required approval of the stockholders of
Landmark is not received at the Special Meeting.
BY HALLIBURTON. Halliburton may terminate the Merger Agreement (i) upon a
breach of any covenant or agreement on the part of Landmark set forth in the
Merger Agreement or if any representation or warranty of Landmark shall have
become untrue, in either case such that Halliburton's conditions to
consummation of the
10
<PAGE>
Merger would not be satisfied, (ii) if the Board of Directors of Landmark
withdraws, modifies or changes, or resolves to withdraw, modify or change, its
recommendation of the Merger Agreement or the Merger in a manner adverse to
Halliburton or recommends to the stockholders of Landmark any Competing
Transaction, or resolves to do so, (iii) if a tender or exchange offer for 50%
or more of the outstanding Landmark Common Stock is commenced and the Board of
Directors of Landmark, within ten business days thereafter, either fails to
recommend against acceptance of such tender or exchange offer by its
stockholders or takes no position with respect thereto or (iv) if any person
(other than Halliburton or its affiliates) or Group (as defined in the Merger
Agreement) acquires beneficial ownership of, or the right to acquire beneficial
ownership of, 50% or more of the then outstanding Landmark Common Stock.
BY LANDMARK. Landmark may terminate the Merger Agreement (i) upon a breach of
any covenant or agreement on the part of Halliburton set forth in the Merger
Agreement or if any representation or warranty of Halliburton shall have become
untrue, in either case such that Landmark's conditions to consummation of the
Merger would not be satisfied or (ii) if Landmark accepts a bona fide proposal
made by a third person to acquire Landmark pursuant to a tender or exchange
offer for all of the outstanding capital stock of Landmark, a merger, a sale of
all or substantially all of Landmark's assets or otherwise on terms that the
Board of Directors of Landmark determines in its good faith judgment to be more
favorable to the Landmark stockholders than the Merger, and for which
financing, to the extent required, is then committed or which, in the good
faith judgment of the Board of Directors of Landmark, is reasonably capable of
being obtained by such third person (a "Superior Proposal") and Landmark pays
Halliburton $18 million and pays the expenses for which it is responsible
pursuant to the Merger Agreement.
See "Certain Terms of the Merger Agreement--Termination or Amendment of the
Merger Agreement."
TERMINATION FEE
Upon termination of the Merger Agreement under certain specific
circumstances, Landmark will be required to pay to Halliburton a termination
fee of $18 million. For a description of such circumstances, see "Certain Terms
of the Merger Agreement--Termination or Amendment of the Merger Agreement."
Moreover, some of those events will also cause the Option (as defined below) to
become exercisable. For information regarding these events, see "Stock Option
Agreement."
CONDUCT OF BUSINESS PRIOR TO THE MERGER
Prior to the Effective Time, Halliburton and Landmark have agreed to operate
their respective businesses in the usual and ordinary course and to preserve
and maintain their respective business organizations. Landmark also has agreed
to certain restrictions on its activities prior to the Effective Time,
including certain restrictions with respect to (i) increasing or changing
employee compensation, (ii) paying dividends or other distributions with
respect to its capital stock, (iii) acquiring its own capital stock, (iv)
amending or changing its capital structure, (v) effecting business
combinations, sales of its assets or businesses or acquisitions of assets or
businesses and (vi) incurring obligations for borrowed money. In addition,
Halliburton has agreed to certain restrictions on its activities prior to the
Effective Time, including certain restrictions with respect to (i) paying
dividends or other distributions with respect to its capital stock, (ii)
acquiring its own capital stock, (iii) amending or changing its capital
structure, (iv) effecting certain business combinations, sales of its assets or
businesses or acquisitions of assets or businesses and (v) incurring
obligations for borrowed money. See "Certain Terms of the Merger Agreement--
Certain Covenants; Conduct of Business Prior to the Merger."
ASSUMPTION OF LANDMARK OPTIONS
As of the Effective Time, each Landmark Option that remains unexercised in
whole or in part will be assumed by the Surviving Corporation and will become
an option to purchase, in lieu of the shares of Landmark Common Stock
previously subject thereto, that number of shares of Halliburton Common Stock
equal to the product of the number of shares of Landmark Common Stock subject
to the Landmark Option multiplied by the
11
<PAGE>
Exchange Ratio. The exercise price per share of Halliburton Common Stock
subject to each option so assumed will be equal to the previous exercise price
per share under the Landmark Option divided by the Exchange Ratio. Assuming
that no shares of Landmark Common Stock are issued subsequent to the Record
Date and prior to the Effective Time upon exercise of any Landmark Options,
Halliburton will be required to reserve for issuance an aggregate of 1,779,817
shares of Halliburton Common Stock for such purpose. See "Certain Terms of the
Merger Agreement--Landmark Options."
INDEMNIFICATION
The Merger Agreement also provides that, for a period of six years after the
Effective Time, (i) indemnification provisions of the Surviving Corporation's
charter and bylaws (which provisions will be substantially equivalent to the
current provisions in Landmark's Restated Certificate of Incorporation, as
amended (the "Landmark Charter"), and Bylaws, as amended (the "Landmark
Bylaws"), will not be amended in a manner that would reduce or limit the rights
of indemnity thereunder of present or former directors and officers of Landmark
or reduce or limit the ability of the Surviving Corporation to indemnify such
persons or hinder or delay the exercise of such rights by such persons and (ii)
Halliburton will, subject to certain limitations, cause to be maintained in
effect Landmark's current directors' and officers' liability insurance, or
policies that are substantially equivalent thereto. See "Certain Terms of the
Merger Agreement--Indemnification."
STOCK OPTION
Halliburton and Landmark have entered into a Stock Option Agreement (the
"Stock Option Agreement") in connection with, and as an inducement for, the
execution and delivery of the Merger Agreement by Halliburton and Merger Sub.
Under the Stock Option Agreement, Landmark has granted to Halliburton an
irrevocable option to purchase, out of the authorized but unissued shares of
Landmark Common Stock, a number of shares equal to up to 15% of the shares of
Landmark Common Stock outstanding as of June 30, 1996 (as adjusted as set forth
in the Stock Option Agreement) for an exercise price of $31.857 per share,
which option is exercisable only after the occurrence of certain specific
events. These events, in general, involve (i) a proposal (together with certain
actions or the failure to take certain actions by Landmark) by a person other
than Halliburton and its affiliates to acquire Landmark, any of its Significant
Subsidiaries or 15% or more of Landmark's consolidated assets or 15% or more of
its securities, (ii) the actual (or, in certain circumstances, proposed)
acquisition by such a person of 25% or more of the outstanding Landmark Common
Stock, (iii) the withdrawal or modification of the favorable recommendation of
the Merger by the Landmark Board of Directors or (iv) the failure of the
Landmark stockholders to approve the Merger Agreement at the Special Meeting
following public disclosure by a person other than Halliburton and its
affiliates of an intention to engage in any transaction described in clause (i)
or (ii). See "Certain Terms of the Merger Agreement--Termination or Amendment
of the Merger Agreement" and "Stock Option Agreement."
VOTING AGREEMENT
Pursuant to the Voting Agreement, S. Rutt Bridges, a director and executive
officer of Landmark, and Barbara Ann Bridges, his wife, have agreed to vote all
shares of Landmark Common Stock owned by them in favor of the Merger Agreement.
At the Record Date, an aggregate of 1,971,263 shares of Landmark Common Stock
(representing approximately 11.2% of the outstanding Landmark Common Stock on
the Record Date) were subject to the Voting Agreement. See "Voting Agreement."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Merger is intended to qualify as a reorganization under Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and should,
therefore, constitute a non-taxable transaction (for purposes of federal income
taxation) for holders of Landmark Common Stock, except to the extent of cash
received, if any,
12
<PAGE>
in lieu of fractional shares of Halliburton Common Stock. For a discussion of
these and other federal income tax considerations in connection with the
Merger, see "The Merger--Certain Federal Income Tax Consequences." HOLDERS OF
LANDMARK COMMON STOCK ARE ADVISED AND EXPECTED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER IN LIGHT
OF THE PERSONAL CIRCUMSTANCES OF SUCH HOLDERS AND THE CONSEQUENCES UNDER STATE,
LOCAL AND FOREIGN TAX LAWS.
ANTICIPATED ACCOUNTING TREATMENT
The Merger is expected to be accounted for as a "pooling of interests" for
financial accounting purposes. See "The Merger--Accounting Treatment." Receipt
of written advice from Arthur Andersen LLP that such firm knows of no reason
why the Merger should not be treated for financial accounting purposes as a
"pooling of interests" is a condition to the obligations of both Halliburton
and Landmark to consummate the Merger.
NO APPRAISAL RIGHTS
Under Delaware law, neither Halliburton's nor Landmark's stockholders will be
entitled to any appraisal or dissenter's rights in connection with the Merger.
See "The Merger--Rights of Dissenting Stockholders."
EXCHANGE OF LANDMARK COMMON STOCK CERTIFICATES
Promptly after consummation of the Merger, Halliburton will cause a letter of
transmittal and instructions to be mailed to each holder of record of Landmark
Common Stock immediately before the Effective Time for use in exchanging
certificates formerly representing shares of Landmark Common Stock for
certificates representing shares of Halliburton Common Stock and cash in lieu
of any fractional shares. CERTIFICATES SHOULD NOT BE SURRENDERED BY THE HOLDERS
OF LANDMARK COMMON STOCK UNTIL THEY HAVE RECEIVED THE LETTER OF TRANSMITTAL
FROM HALLIBURTON. For more detailed information in this regard, see "Certain
Terms of the Merger Agreement--Manner and Basis of Converting Shares."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Each of the executive officers of Landmark is a party to a Change in Control
Agreement with Landmark that existed prior to the initiation of discussions
that led to the execution and delivery of the Merger Agreement. Pursuant to the
Change in Control Agreements, any Landmark Options held by such executive
officers that were not fully vested prior to the Effective Time will become
fully vested at the Effective Time. In addition, such executive officers would,
pursuant to such agreements, become entitled to certain benefits as a result of
the Merger and to certain payments upon a termination of their employment after
consummation of the Merger in certain circumstances. The rights to these
benefits and payments have been terminated or otherwise modified pursuant to
the agreements described below. For further information regarding such Change
in Control Agreements, see"The Merger--Interests of Certain Persons in the
Merger."
Robert P. Peebler, President and Chief Executive Officer of Landmark, has
entered into an Executive Employment Agreement (the "Peebler Employment
Agreement") with both Landmark and Halliburton that will become effective only
if the Merger is consummated. The Peebler Employment Agreement, the term of
which is the period from the Effective Time until December 31, 1999, provides
that Mr. Peebler will be employed as the Chief Executive Officer of the
Surviving Corporation. For his services in such capacity, Mr. Peebler will be
paid a base annual salary of not less than $400,000, will receive an annual
deferred compensation allocation of not less than $100,000 and will be granted
at the outset a nonqualified option to purchase 20,000 shares of Halliburton
Common Stock. Under the Peebler Employment Agreement, Mr. Peebler will be
entitled to be paid a lump sum of $800,000 if his employment is terminated
during the term of such agreement under certain circumstances. The Peebler
Employment Agreement further provides that, at the time the agreement becomes
effective, Mr. Peebler's rights under his Change in Control Agreement with
Landmark will be terminated, except
13
<PAGE>
that all outstanding Landmark Options held by Mr. Peebler that were not fully
vested prior to the Effective Time will become fully vested at the Effective
Time pursuant to the terms of Mr. Peebler's Change in Control Agreement. By
virtue of the Merger, all such outstanding Landmark Options will be converted
into options to purchase Halliburton Common Stock. For further information
regarding the Peebler Employment Agreement, see "The Merger--Interests of
Certain Persons in the Merger--Employment Agreements."
In addition, five other executive officers of Landmark have entered into
Executive Employment Agreements (the "Employment Agreements") with both
Landmark and Halliburton that will become effective only if the Merger is
consummated and will have terms from the Effective Time until December 31,
1999. Each of the Employment Agreements provides for the payment of an annual
base salary, the grant of a nonqualified stock option to purchase a specified
number of shares of Halliburton Common Stock and the grant of a certain number
of restricted shares of Halliburton Common Stock. The annual base salaries for
such officers under the Employment Agreements will range from $110,000 to
$300,000, the number of shares of Halliburton Common Stock subject to options
thereunder will range from 12,000 to 17,000 and the number of restricted shares
of Halliburton Common Stock to be granted thereunder will range from 1,000 to
5,000. Under each of the Employment Agreements, the executive officer party
thereto will be entitled to a lump sum payment equal to two times such
executive officer's annual base salary if his or her employment is terminated
during the term of such agreement under certain circumstances. Each of the
Employment Agreements further provides that, at the time the agreement becomes
effective, the executive officer's rights under his or her Change in Control
Agreement with Landmark will be terminated, except that all outstanding
Landmark Options held by the executive officer that were not fully vested prior
to the Effective Time will become fully vested at the Effective Time pursuant
to the terms of the Change in Control Agreement. For further information
regarding the Employment Agreements, see "The Merger--Interests of Certain
Persons in the Merger--Employment Agreements."
Landmark has also entered into employment agreements with William H. Seippel,
Vice President, Finance and Chief Financial Officer, and James A. Downing II,
Vice President, that will become effective only if the Merger is consummated,
and will have terms from the Effective Time until termination of the Pooling
Period (as defined under the caption "The Merger--Restrictions on Resales by
Affiliates"), unless earlier terminated by the employee party thereto. During
the terms of such agreements, Messrs. Seippel and Downing will be entitled to
compensation of $3,958.33 and $4,166.67, respectively, on a semi-monthly basis,
in arrears and to continue to receive certain employee benefits. After the
Effective Time, Messrs. Seippel and Downing will cease to be officers of
Landmark. Pursuant to such agreements, Mr. Seippel has agreed to a lump sum
payment of $405,064 in settlement of all of his rights under his Change in
Control Agreement and Mr. Downing has agreed to a lump sum payment of $373,751
in settlement of all of his rights to cash compensation under his Change in
Control Agreement. Mr. Downing will continue to be entitled to certain employee
benefits under his Change in Control Agreement after termination of his
employment agreement. These payments will be made at the time that the
employment of Messrs. Seippel and Downing terminates.
For information regarding the assumption of Landmark Options held by
directors and officers of Landmark and indemnification of such persons
following the Merger, see "--Assumption of Landmark Options" and "--
Indemnification."
COMPARATIVE RIGHTS OF LANDMARK AND HALLIBURTON STOCKHOLDERS
Rights of stockholders of Landmark are currently governed by the DGCL and the
Landmark Charter and Bylaws. Upon consummation of the Merger, Landmark
stockholders will become stockholders of Halliburton, and their rights as
stockholders of Halliburton will be governed by the DGCL, the Composite
Certificate of Incorporation of Halliburton (the "Halliburton Charter") and the
By-Laws, as amended, of Halliburton (the "Halliburton Bylaws"). There are
various differences between the rights of Landmark stockholders and the rights
of Halliburton stockholders. See "Comparative Rights of Halliburton and
Landmark Stockholders" and "Description of Halliburton Capital Stock."
14
<PAGE>
MARKET PRICE AND DIVIDEND DATA
MARKET PRICES. Halliburton Common Stock is traded on the NYSE under the
symbol "HAL" and Landmark Common Stock is included in the Nasdaq under the
symbol "LMRK." The following table sets forth, for the periods indicated, the
range of high and low per share sales prices for Halliburton Common Stock and
Landmark Common Stock as reported on the NYSE Composite Tape and the Nasdaq,
respectively, and pro forma equivalent sales prices for Landmark Common Stock.
<TABLE>
<CAPTION>
LANDMARK
HALLIBURTON LANDMARK PRO FORMA(1)
------------- ------------- -------------
HIGH LOW HIGH LOW HIGH LOW
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
1994(2):
First Quarter........................ $34.25 $28.75 $30.00 $18.25 $19.66 $16.50
Second Quarter....................... 35.25 27.88 35.25 23.75 20.23 16.00
Third Quarter ....................... 35.13 28.75 33.25 19.25 20.16 16.50
Fourth Quarter....................... 37.25 31.13 23.75 16.00 21.38 17.87
1995(2):
First Quarter........................ 39.13 32.88 22.50 17.73 22.46 18.87
Second Quarter....................... 39.63 35.25 27.00 18.25 22.74 20.23
Third Quarter........................ 42.25 34.75 28.50 25.25 25.97 19.95
Fourth Quarter....................... 50.88 37.75 25.25 18.25 29.20 21.67
1996(2):
First Quarter........................ 59.25 44.75 26.00 16.13 34.01 25.69
Second Quarter....................... 59.38 49.50 20.25 16.25 34.08 28.41
Third Quarter (through August 27).... 57.63 51.50 32.50 28.33 33.08 29.56
</TABLE>
- --------
(1) Determined by multiplying the applicable sales price for Halliburton Common
Stock by the Exchange Ratio.
(2) Calendar quarters. Halliburton's fiscal year ends on December 31, and
Landmark's fiscal year ends on June 30.
On June 28, 1996, the last trading day prior to the date of the joint
announcement by Halliburton and Landmark that they had entered into the Merger
Agreement, the closing per share sales prices of Halliburton Common Stock and
Landmark Common Stock, as reported on the NYSE Composite Tape and the Nasdaq,
were $55.50 and $19.25, respectively. See the cover page of this Proxy
Statement/Prospectus for recent closing prices of Halliburton Common Stock and
Landmark Common Stock.
Following the Merger, Halliburton Common Stock will continue to be traded on
the NYSE, Landmark Common Stock will cease to be traded on the Nasdaq and there
will be no further market for the Landmark Common Stock.
DIVIDENDS. No cash dividends were declared or paid on Landmark Common Stock
during any of the calendar quarters indicated in the table above.
In each of the calendar quarters indicated in the table above, other than the
third quarter of 1996, Halliburton declared and paid a cash dividend of $0.25
per share of Halliburton Common Stock for the immediately preceding calendar
quarter. On July 18, 1996, the Board of Directors of Halliburton declared a
cash dividend of $0.25 per share of Halliburton Common Stock payable September
25, 1996 to stockholders of record at the close of business on September 4,
1996.
The Board of Directors of Halliburton intends to continue to consider the
payment of quarterly dividends on the outstanding shares of Halliburton Common
Stock. The declaration and payment of future dividends, however, will be at the
discretion of the Board of Directors of Halliburton and will depend upon, among
other things, future earnings of Halliburton, its general financial condition,
the success of its business activities, its capital requirements and general
business conditions.
15
<PAGE>
HALLIBURTON SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following selected historical financial information for each of the years
ended December 31, 1991 through 1995 have been derived from Halliburton's
Consolidated Financial Statements, which have been audited by Arthur Andersen
LLP, independent public accountants. The selected consolidated financial data
as of June 30, 1996 and for the six months ended June 30, 1995 and 1996 have
been derived from the unaudited consolidated financial statements of
Halliburton, have been prepared on the same basis as the other financial
statements of Halliburton and, in the opinion of Halliburton, reflect and
include all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of the financial position and results of
operations of Halliburton for such periods. The information set forth below is
qualified by reference to and should be read in conjunction with the
consolidated financial statements and related notes included in Halliburton's
Annual Report on Form 10-K for the year ended December 31, 1995 and its
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, incorporated
by reference in this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------------ ------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME
STATEMENT DATA:
Revenues:
Energy services....... $2,939.0 $2,726.3 $2,953.4 $2,514.0 $2,623.4 $1,198.6 $1,384.8
Engineering and
construction
services............. 3,728.0 3,563.7 3,140.7 2,996.2 3,075.3 1,472.9 2,053.4
-------- -------- -------- -------- -------- -------- --------
Total revenues...... $6,667.0 $6,290.0 $6,094.1 $5,510.2 $5,698.7 $2,671.5 $3,438.2
Operating income (loss):
Energy services....... $ 35.2 $ (64.1) $ (148.4) $ 191.8 $ 313.7 $ 123.3 $ 159.4
Engineering and
construction
services............. 73.1 (12.5) 78.9 67.2 103.0 49.0 48.7
General corporate..... (21.8) (21.0) (22.0) (22.9) (33.5) (13.6) (17.2)
-------- -------- -------- -------- -------- -------- --------
Total operating
income (loss)...... $ 86.5 $ (97.6) $ (91.5) $ 236.1 $ 383.2 $ 158.7 $ 190.9
-------- -------- -------- -------- -------- -------- --------
Income (loss) from
continuing operations.. $ 10.5 $ (133.7) $ (140.5) $ 172.3 $ 233.8 $ 93.1 $ 118.6
-------- -------- -------- -------- -------- -------- --------
Income (loss) per share
from continuing
operations............. $ .10 $ (1.24) $ (1.25) $ 1.51 $ 2.04 $ .81 $ 1.03
Cash dividends per
share.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ .50 $ .50
Average common shares
outstanding............ 106.9 107.1 112.5 114.2 114.5 114.4 115.5
CONSOLIDATED BALANCE
SHEET DATA:
Net working capital..... $1,246.5 $1,109.0 $1,116.5 $1,267.7 $ 893.8 $1,282.9 $ 888.9
Total assets............ 4,384.5 4,089.5 4,139.6 4,005.4 3,646.6 4,106.9 3,878.0
Property, plant and
equipment, net......... 1,186.9 1,194.3 1,149.5 1,074.8 1,111.2 1,071.7 1,124.7
Long-term debt.......... 653.2 656.7 623.9 643.1 205.2 644.1 200.1
Shareholders' equity.... 2,164.6 1,907.3 1,887.7 1,942.2 1,749.8 2,003.2 1,830.9
Total capitalization.... 2,828.6 2,564.7 2,603.6 2,616.0 1,959.8 2,674.1 2,080.4
Shareholders' equity per
share.................. 20.24 17.80 16.55 17.02 15.28 17.51 15.85
</TABLE>
16
<PAGE>
LANDMARK SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
The following selected historical financial information for each of the years
ended June 30, 1992 through 1996 have been derived from Landmark's Consolidated
Financial Statements, which have been audited by Price Waterhouse LLP,
independent public accountants, with respect to 1994 through 1996, and other
accountants, with respect to 1992 and 1993. The information set forth below,
with respect to the fiscal years ended June 30, 1994, 1995, and 1996, is
qualified by reference to and should be read in conjunction with the
consolidated financial statements and related notes included in Landmark's
Annual Report on Form 10-K for the year ended June 30, 1996, incorporated by
reference into this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
------------------------------------
1992 1993 1994 1995 1996
------ ------ ------- ------ ------
(IN
MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED INCOME STATEMENT DATA:
Revenues................................. $ 96.8 $113.0 $ 143.3 $171.2 $187.3
Operating income (loss).................. (7.6) 9.2 6.6 15.4 4.0
Income (loss) from continuing
operations.............................. (5.7) 7.1 5.8 13.5 5.3
Income (loss) per share from continuing
operations.............................. (.42) .51 .36 .77 .30
Cash dividends per share................. -- -- -- -- --
Average common shares outstanding........ 13.6 13.9 16.4 17.5 17.8
CONSOLIDATED BALANCE SHEET DATA:
Working capital.......................... $ 47.2 $ 52.0 $ 106.6 $ 97.5 $ 79.3
Total assets............................. 99.1 106.0 189.2 211.2 231.1
Property, plant and equipment, net....... 20.5 21.1 40.9 47.5 47.5
Long-term debt........................... 1.5 1.1 13.2 12.0 3.0
Shareholders' equity..................... 73.5 80.8 142.6 158.9 165.4
Total capitalization..................... 75.0 81.9 155.8 170.9 168.4
Stockholders' equity per share........... 5.40 5.81 8.70 9.08 9.29
</TABLE>
17
<PAGE>
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following selected unaudited pro forma combined financial information has
been derived from and should be read in conjunction with the unaudited pro
forma condensed combined financial information and notes thereto included
elsewhere in this Proxy Statement/Prospectus. The following unaudited selected
pro forma combined financial information is based on adjustments to the
historical consolidated balance sheets and related consolidated statements of
income of Halliburton and Landmark to give effect to the Merger using the
pooling of interests method of accounting for business combinations. The
following selected unaudited pro forma combined financial information may not
necessarily reflect the financial condition or results of operations of
Halliburton that would have actually resulted had the Merger occurred as of the
date and for the periods indicated or reflect the future earnings of
Halliburton.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------- ------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
COMBINED INCOME STATEMENT
DATA:
Revenues:
Energy services........... $3,084.0 $2,664.9 $2,807.6 $1,292.8 $1,482.1
Engineering and
construction services.... 3,140.7 2,996.2 3,075.3 1,472.9 2,053.4
-------- -------- -------- -------- --------
Total revenues.......... $6,224.7 $5,661.1 $5,882.9 $2,765.7 $3,535.5
Operating income (loss):
Energy services........... $ (134.3) $ 195.5 $ 331.4 $ 133.5 $ 155.8
Engineering and
construction services.... 78.9 67.2 103.0 49.0 48.7
General corporate......... (22.0) (22.9) (33.5) (13.6) (17.2)
-------- -------- -------- -------- --------
Total operating income
(loss)................. $ (77.4) $ 239.8 $ 400.9 $ 168.9 $ 187.3
Income (loss) from
continuing operations...... $ (127.9) $ 175.4 $ 249.2 $ 101.8 $ 117.3
Income (loss) per share from
continuing operations...... $ (1.06) $ 1.41 $ 2.00 $ .82 $ .93
Cash dividends per share.... $ 1.00 $ 1.00 $ 1.00 $ .50 $ .50
Average common shares out-
standing................... 121.0 124.2 124.7 124.4 125.5
COMBINED BALANCE SHEET DATA:
Net working capital......... $ 968.2
Total assets................ 4,109.1
Property, plant and equip-
ment, net.................. 1,172.2
Long-term debt.............. 203.1
Shareholders' equity........ 1,996.3
Total capitalization........ 2,248.8
Shareholders' equity per
share...................... 15.91
</TABLE>
18
<PAGE>
COMPARATIVE PER SHARE DATA
Set forth below are the income from continuing operations, cash dividends and
book value per common share data for Halliburton and Landmark on a historical
basis, a pro forma basis for Halliburton and an equivalent pro forma basis for
Landmark. The Halliburton pro forma data was derived by combining historical
consolidated financial information of Halliburton and Landmark using the
pooling of interests method of accounting for business combinations, all on the
basis described under "Unaudited Pro Forma Condensed Combined Financial
Information." The equivalent pro forma data for Landmark was calculated by
multiplying the Halliburton pro forma per common share data by the Exchange
Ratio. While Halliburton paid dividends of $0.25 per share of Halliburton
Common Stock during each calendar quarter of each period presented, Landmark
paid no dividends during such periods.
The information set forth below should be read in conjunction with the
respective audited and unaudited consolidated financial statements and related
notes of Halliburton and Landmark incorporated by reference into this Proxy
Statement/Prospectus and the unaudited pro forma condensed financial
information and notes thereto included elsewhere in this Proxy
Statement/Prospectus. The unaudited pro forma data set forth below may not be
indicative of the actual financial condition or results of operations that
would have resulted had the Merger occurred as of the date assumed for purposes
of determining such data or of the results for any future period.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER SIX MONTHS
31, ENDED JUNE 30,
--------------------- --------------
1993 1994 1995 1996
------ ------ ------ --------------
<S> <C> <C> <C> <C>
HALLIBURTON HISTORICAL PER COMMON SHARE
DATA:
Income (loss) from continuing opera-
tions................................. $(1.25) $ 1.51 $ 2.04 $ 1.03
Cash dividends......................... 1.00 1.00 1.00 .50
Book value............................. 16.55 17.02 15.28 15.85
HALLIBURTON PRO FORMA PER COMMON SHARE
DATA:
Income (loss) from continuing opera-
tions................................. $(1.06) $ 1.41 $ 2.00 $ .93
Cash dividends......................... 1.00 1.00 1.00 .50
Book value............................. 15.40 15.91
LANDMARK PRO FORMA PER EQUIVALENT SHARE
DATA:
Income (loss) from continuing
operations............................ $ (.61) $ .81 $ 1.15 $ .53
Cash dividends......................... .57 .57 .57 .29
Book value............................. 8.84 9.13
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED JUNE
30,
-----------------
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
LANDMARK HISTORICAL PER COMMON SHARE DATA:
Income from continuing operations.......................... $ .36 $ .77 $ .30
Cash dividends............................................. -- -- --
Book value................................................. 8.70 9.08 9.29
</TABLE>
19
<PAGE>
THE COMPANIES
HALLIBURTON
Halliburton, which was established in 1919 and incorporated in Delaware in
1924, is, together with its subsidiaries, one of the world's largest
diversified energy services and engineering and construction services
companies.
DESCRIPTION OF SERVICES AND PRODUCTS. The following summary briefly
describes Halliburton's services and products for each business segment.
HES offers a wide range of services and products to provide integrated
solutions to customers in the exploration, development and production of oil
and natural gas. HES operates worldwide serving major oil and gas companies,
independent operators and national oil and gas companies. The services and
products provided by HES include cementing, casing equipment and water control
services; completion and production products; directional drilling systems,
measurement while drilling, logging while drilling and mud logging services;
open and cased hole logging and perforating services and logging and
perforating products; well testing, reservoir description and evaluation
services, tubing conveyed well completion systems and reservoir engineering
services; stimulation services, sand control services and coiled tubing
services; and wellhead pressure control equipment and well control, hydraulic
workover and downhole video services.
Engineering and Construction Services ("Brown & Root") provides services for
both land and marine activities. Included are technical and economic
feasibility studies, site evaluation, licensing, conceptual design, process
design, detailed engineering, procurement, project and construction management
services; construction of and start-up assistance for electric utility plants,
chemical and petrochemical plants, refineries, pulp and paper mills, metal
processing plants, highways and bridges; construction, fabrication and
installation of subsea pipelines, offshore platforms, production platform
facilities, marine engineering and other marine related projects; contract
operations and maintenance services for both industry and government;
engineering and environmental consulting and waste management services for
industry, utilities and government; and remedial engineering and construction
services for hazardous waste sites.
MARKETS AND COMPETITION. Halliburton's services and products are sold in
highly competitive markets throughout the world. Competition in both services
and products is based upon a combination of price, service (including the
ability to deliver services and products on an "as needed/where needed"
basis), product quality, warranty and technical proficiency. Some of HES' and
Brown & Root's customers have indicated a preference for integrated services
and solutions. These integrated solutions, in the case of HES, relate to all
phases of exploration, development and production of oil and gas, and, in the
case of Brown & Root, relate to all phases of design, procurement,
construction, project management and maintenance of a facility. Demand for
these types of integrated solutions is based primarily upon quality of
service, technical proficiency and overall price.
Halliburton conducts business worldwide in over 100 countries. Since the
market for Halliburton's services and products is so large and crosses many
geographic lines, a meaningful estimate of the number of competitors cannot be
made. The markets are, however, highly competitive with many substantial
companies operating in each market. Generally, Halliburton's services and
products are marketed through its own servicing and sales organizations.
Operations in some countries may be 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 its 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 11 to the financial statements contained in
Halliburton's Annual Report on Form 10-K for the year ended December 31, 1995,
incorporated by reference into this Proxy Statement/Prospectus.
20
<PAGE>
PROPOSED HOLDING COMPANY REORGANIZATION. The management of Halliburton is
currently considering the implementation of a reorganization plan (the
"Reorganization Plan") that would result in Halliburton becoming an indirect
wholly owned subsidiary of a newly created holding company incorporated in
Delaware ("Holding Company"). The first stage of the Reorganization Plan would
be effected by the merger of an indirect wholly owned subsidiary of Holding
Company with and into Halliburton, with Halliburton being the surviving
corporation of such merger (the "Halliburton Merger"). Pursuant to the
Halliburton Merger, each share of outstanding Halliburton Common Stock would
be converted into one share of common stock of Holding Company and Halliburton
would become a wholly owned subsidiary of Holding Company. Following the
Halliburton Merger, the name of Holding Company will be changed to Halliburton
Company. The approval by the stockholders of Halliburton will not be required
in connection with the Halliburton Merger. After the consummation of the
Halliburton Merger, the final stage of the Reorganization Plan will be
effected by Halliburton distributing all of the outstanding common stock of
certain of its principal subsidiaries to its new parent corporation, which
will be a direct wholly owned subsidiary of Holding Company.
Management of Halliburton believes that implementation of the Reorganization
Plan will provide a number of benefits to Halliburton, including a reduction
in state franchise and income taxes, creation of an organizational structure
that is better aligned with Halliburton's business segments, clarification of
the role of the ultimate parent company as the provider of consolidated
management, financing and other services, the ability to address corporate
governance matters at more appropriate levels of the organizational structure,
improvement in corporate planning and financing flexibility and a reduction in
the exposure of certain subsidiaries to liabilities of businesses not owned
and operated by such subsidiaries.
The Halliburton Merger is intended to qualify as a tax-free reorganization
under Section 368(a)(1)(B) of the Code. Halliburton has requested a ruling
from the Internal Revenue Service that effectuation of the Reorganization Plan
will not have an adverse effect on the qualification of the Landmark Merger as
a tax-free reorganization under Section 368(a) of the Code. Although
Halliburton's present intention is to effect the Reorganization Plan prior to
December 31, 1996, it will not proceed with the Plan unless it receives a
ruling from the Internal Revenue Service that the Reorganization Plan will not
have such an adverse effect. See "The Merger--Certain Federal Income Tax
Consequences."
MERGER SUB
Merger Sub is a wholly-owned subsidiary of Halliburton incorporated on June
28, 1996 in the State of Delaware solely for the purpose of effecting the
Merger.
LANDMARK
Landmark, together with its subsidiaries, designs, markets and supports
sophisticated computer-aided exploration ("CAEX") and computer-aided reservoir
management ("CARM") software and systems. In more than 70 countries,
geologists, geophysicists, petrophysicists and engineers use Landmark products
in exploration for and production of oil and gas. Landmark's applications
software transforms vast quantities of seismic, well log and other data into
detailed computer models of the subsurface. These models reveal critical
information about subsurface formations.
Landmark offers an extensive line of integrated software applications for
seismic processing, 3D and 2D seismic interpretation, geologic and
petrophysical interpretation, mapping and modeling, well log and production
analysis, drilling and production engineering and data management. Through its
service consulting business, Landmark provides software training, on-site
support and assistance in designing computer networks and integrating
applications and data. In addition to providing software products, Landmark is
a value-added reseller of workstations and other hardware and provides a range
of services, including software and systems support and training, systems
configuration and network design and data loading and management.
In 1984, Landmark introduced the first commercially available
microprocessor-based interactive CAEX system for interpretation of 3D seismic
data and has continued to be a leader in the industry with a series of
innovations in 3D seismic technology. Landmark remains committed to providing
CAEX tools which exploit the
21
<PAGE>
full value of 3D visualization, interpretation and analysis, enabling oil and
gas companies to maximize the value of their investments in 3D seismic data.
As a result of ongoing product development and a series of acquisitions,
Landmark's core products now consist of its seismic interpretation
applications, seismic processing applications, geologic interpretation and
mapping applications, 3D reservoir modeling applications, production
engineering applications and technical mapping and data analysis applications.
In addition, Landmark also offers its "Openworks" software integration and
data management platform, which offers an open systems computing environment
for the concurrent visualization, interpretation, analysis and management of
different types of data for exploration and production in a standardized
environment.
Landmark does not develop or manufacture computer hardware. It does,
however, configure standard commercially available workstations and related
hardware with Landmark's software applications in response to customer
requirements.
THE SPECIAL MEETING
DATE, TIME AND PLACE
The Special Meeting of stockholders of Landmark will be held on Friday,
October 4, 1996, at the offices of Landmark located at 15150 Memorial Drive,
Houston, Texas commencing at 10:00 a.m. local time.
PURPOSES OF THE SPECIAL MEETING
The purposes of the Special Meeting are to consider and vote upon (i) a
proposal to approve and adopt the Merger Agreement and (ii) such other matters
as may properly be brought before the Special Meeting.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of Landmark Common Stock at the close of business on
the Record Date (August 29, 1996) are entitled to notice of, and to vote at,
the Special Meeting. On the Record Date, there were 290 holders of record of
the 17,662,816 shares of Landmark Common Stock then issued and outstanding.
Each share of Landmark Common Stock entitles the holder thereof to one vote on
each matter submitted for stockholder approval. See "Security Ownership by
Certain Beneficial Owners" for information regarding persons known to the
management of Landmark to be the beneficial owners of more than 5% of the
outstanding Landmark Common Stock.
VOTING AND REVOCATION OF PROXIES
All properly executed proxies that are not revoked will be voted at the
Special Meeting in accordance with the instructions contained therein. If a
holder of Landmark Common Stock executes and returns a proxy and does not
specify otherwise, the shares represented by such proxy will be voted "for"
approval and adoption of the Merger Agreement in accordance with the
recommendation of the Board of Directors of Landmark. A stockholder of
Landmark who has executed and returned a proxy may revoke it at any time
before it is voted at the Special Meeting by (i) executing and returning a
proxy bearing a later date, (ii) filing written notice of such revocation with
the Secretary of Landmark, stating that the proxy is revoked or (iii)
attending the Special Meeting and voting in person.
VOTE REQUIRED
The presence at the Special Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of Landmark Common Stock entitled to
vote thereat will constitute a quorum for the transaction of business, and
approval and adoption of the Merger Agreement requires the affirmative vote of
a majority of the issued and outstanding Landmark Common Stock entitled to
vote thereon. In determining whether the Merger
22
<PAGE>
Agreement has received the requisite number of affirmative votes, abstentions
and broker non-votes will have the same effect as a vote against the Merger
Agreement.
S. Rutt Bridges, a director and executive officer of Landmark, and Barbara
Ann Bridges, his wife, have agreed pursuant to the Voting Agreement to vote all
shares of Landmark Common Stock owned by them in favor of the Merger Agreement.
As of the Record Date, 1,971,263 shares of Landmark Common Stock (approximately
11.2% of the outstanding shares of Landmark Common Stock and 22.3% of the
affirmative votes required to approve and adopt the Merger Agreement) were
subject to the Voting Agreement. The signatories to the Voting Agreement have
also agreed to vote such shares against any business combination proposal or
other matter that may interfere or be inconsistent with the Merger or the
Merger Agreement (including, without limitation, a Competing Transaction). The
obligations of the signatories to the Voting Agreement are not subject to the
continued support of the Board of Directors of Landmark in recommending
approval and adoption of the Merger Agreement (although the Voting Agreement
would terminate upon a termination of the Merger Agreement). See "Voting
Agreement."
In addition, directors and officers of Landmark other than Mr. Bridges own
beneficially an aggregate of 65,910 shares of Landmark Common Stock that were
issued and outstanding on the Record Date (representing approximately .3% of
the outstanding Landmark Common Stock on the Record Date and .7% of the
affirmative votes required to approve and adopt the Merger Agreement). Each of
such directors and officers has advised Landmark that he or she intends to vote
or direct the vote of all such shares of Landmark Common Stock in favor of the
Merger Agreement at the Special Meeting.
SOLICITATION OF PROXIES
In addition to solicitation by mail, the directors, officers, employees and
agents of Landmark may solicit proxies from the Landmark stockholders by
personal interview, telephone, telegram or otherwise. Landmark will bear the
costs of the solicitation of proxies from its stockholders, except that
Halliburton and Landmark will each pay one-half of the cost of printing, filing
and mailing this Proxy Statement/Prospectus, Commission and other regulatory
filing fees incurred in connection with this Proxy Statement/Prospectus and the
solicitation fee of Georgeson & Company described below. Arrangements also will
be made with brokerage firms and other custodians, nominees and fiduciaries who
hold of record voting securities of Landmark for the forwarding of solicitation
materials to the beneficial owners thereof. Landmark will reimburse such
brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket
expenses incurred by them in connection therewith. Landmark has engaged the
services of Georgeson & Co. to distribute proxy solicitation materials to
brokers, banks and other nominees and to assist in the solicitation of proxies
from Landmark stockholders for a fee of $10,000 plus payment of certain
transaction costs and additional out-of-pocket expenses.
OTHER MATTERS
At the date of this Proxy Statement/Prospectus, the Board of Directors of
Landmark does not know of any business to be presented at the Special Meeting
other than as set forth in the notice accompanying this Proxy
Statement/Prospectus. If any other matters should properly come before the
Special Meeting, it is intended that the shares represented by proxies will be
voted with respect to such matters in accordance with the judgment of the
persons voting such proxies.
THE MERGER
GENERAL DESCRIPTION OF THE MERGER
The Merger Agreement provides that, at the Effective Time, Landmark will be
merged with and into Merger Sub with Merger Sub becoming the Surviving
Corporation and changing its corporate name to "Landmark Graphics Corporation."
Also at the Effective Time, each outstanding share of Landmark Common Stock
(other than shares of Landmark Common Stock held in the treasury of Landmark or
owned by Halliburton or by any
23
<PAGE>
direct or indirect wholly owned subsidiary of Halliburton or of Landmark, all
of which will be canceled) will be converted into 0.574 shares of Halliburton
Common Stock. Any resulting fractional shares will be settled in cash in the
manner described under "Certain Terms of the Merger Agreement--Manner and
Basis of Converting Shares."
Based on the number of shares of Halliburton Common Stock and Landmark
Common Stock outstanding as of the Record Date, 10,138,456 shares of
Halliburton Common Stock will be issuable pursuant to the Merger Agreement
(assuming no exercise subsequent to the Record Date and prior to the Effective
Time of the Landmark Options), representing approximately 8.1% of the total
Halliburton Common Stock to be outstanding after such issuance.
BACKGROUND OF THE MERGER
On April 30, 1996, Landmark received an unsolicited proposal from a company
engaged in the oil field services industry ("Bidder No. 1") to acquire
Landmark in a stock-for-stock merger. The closing sales price for the Landmark
Common Stock on April 29, 1996 was $19.50. The conversion ratio set forth in
the proposal from Bidder No. 1 indicated an implied value to Landmark's
stockholders of $23.62 per share of Landmark Common Stock based on the closing
sales price for the common stock of Bidder No. 1 on April 29, 1996.
Representatives of Landmark advised Bidder No. 1 that its proposal would be
presented to the Landmark Board of Directors for its consideration at a
meeting scheduled to be held on May 18, 1996. Prior to that meeting, on May
13, 1996, Bidder No. 1 amended its proposal to indicate that it would consider
increasing the conversion ratio in the proposed merger to provide an implied
value to Landmark's stockholders of up to $26.34 per share of Landmark Common
Stock (based on the closing sales price per share of common stock of Bidder
No. 1 on May 10, 1996), subject to being given the opportunity to conduct an
investigation of Landmark's business, operations and financial position.
On May 15, 1996, Landmark engaged Morgan Stanley to assist Landmark in the
evaluation of the proposal from Bidder No. 1 and the alternatives available to
Landmark, including remaining independent and combining with other strategic
partners.
The Board of Directors of Landmark met on May 18, 1996 with its financial
and legal advisors and received a report from management regarding the
proposal from Bidder No. 1. During the course of the meeting, the Board of
Directors instructed Morgan Stanley to undertake an analysis of the proposal
from Bidder No. 1 and authorized management of Landmark to exchange
information with Bidder No. 1 if Bidder No. 1 would execute and deliver a
mutual confidentiality agreement satisfactory to Landmark management.
Independently, Halliburton initiated discussions on May 22, 1996 with
Electronic Data Systems, Inc. ("EDS") and on May 30, 1996 with Landmark
regarding the formation of an alliance to develop a worldwide distributed data
management capability that would integrate all information associated with the
life of an oil or gas field. These discussions did not contemplate the
acquisition of Landmark by Halliburton.
Pursuant to the authority granted by the Board of Directors of Landmark,
Landmark executed and delivered a mutual confidentiality agreement with Bidder
No. 1 on May 24, 1996 and began to exchange information with Bidder No. 1
regarding the business, operations and financial position of the two
companies.
On June 2, 1996, representatives of Landmark and Bidder No. 1 met in
Amsterdam to discuss the status of Bidder No. 1's proposal.
On June 10, 1996, the Board of Directors of Landmark, together with its
financial and legal advisors, met to discuss the proposal submitted by Bidder
No. 1. At that meeting, the Board of Directors of Landmark authorized Morgan
Stanley and management to make inquiries of selected companies considered to
be the most likely to have an interest in acquiring Landmark and with whom a
combination was not likely to pose any significant legal or regulatory
obstacles. This authority was granted for the purpose of assisting the Board
of
24
<PAGE>
Directors of Landmark in determining the level of interest of selected
strategic acquirors in an acquisition of Landmark and not as a result of a
decision of the Board of Directors of Landmark to sell Landmark. During the
next several days, Morgan Stanley and management of the Company contacted a
total of six companies (including Halliburton) in this regard.
On June 13, 1996, various officers of Landmark and representatives of Morgan
Stanley met with officers and representatives of Bidder No. 1 to discuss
matters relating to the mutual confidentiality agreement, the scheduling of a
proposed presentation by the management of Landmark to Bidder No. 1 and other
related matters. On that day also, Robert P. Peebler, the Chief Executive
Officer of Landmark, informed an Executive Vice President of HES that another
company had made a proposal to acquire Landmark. Mr. Peebler indicated to the
latter that no decision had been made to sell Landmark but inquired as to
whether Halliburton would be interested in acquiring Landmark if the
opportunity were presented. The Executive Vice President of HES stated that he
would pass on the inquiry to senior management of Halliburton.
On the following day, two Executive Vice Presidents of Halliburton met with
two officers of HES to explore the implications of Landmark's acquisition
inquiry on the joint venture alliance discussions among Halliburton, Landmark
and EDS. Following the meeting, the four Halliburton representatives met with
two officers of EDS to discuss whether EDS would be interested in joining
Halliburton in making a bid for Landmark. EDS declined but indicated a
continuing interest in an arrangement with Halliburton to provide exploration
and production data management services to the oil and gas industry.
Additional discussions were held on June 14, 1996 between representatives of
Halliburton, Landmark and Morgan Stanley in which Landmark and Morgan Stanley
were advised that Halliburton was willing to explore the possibility of
acquiring Landmark and an initial meeting of representatives of all three of
these entities was scheduled for the next day. Halliburton apprised its
financial advisor, Dillon, Read & Co. Inc. ("Dillon Read"), of developments
regarding Landmark.
On Saturday, June 15, 1996, representatives of Halliburton met with
representatives of Landmark and Morgan Stanley at the Houston office of Morgan
Stanley to discuss the business prospects of Landmark, the views of management
of Landmark concerning the exploration and production software and data
management business generally, the desire of the Board of Directors of
Landmark to seek alternative proposals from other companies and the timing of
a possible Halliburton acquisition of Landmark. Morgan Stanley advised the
Halliburton representatives that the Board of Directors of Landmark had made
no decision to sell Landmark but that Morgan Stanley had been authorized to
conduct discussions with several companies concurrently in order to determine
levels of interest.
On Monday, June 17, 1996, Mr. Peebler and a representative of Morgan Stanley
met with Richard B. Cheney, the Chairman of the Board, President, and Chief
Executive Officer of Halliburton, and other members of senior management of
Halliburton at the executive offices of Halliburton in Dallas. The discussions
centered on the nature of Landmark's business and its potential integration
with the oil field technology strategies of Halliburton.
Further discussions were held the following day, June 18, 1996, in a Dallas
hotel among representatives of Halliburton, Dillon Read, Landmark and Morgan
Stanley. The discussion consisted almost entirely of a description by
Landmark's representatives of Landmark's current business, its business
strategy and their views of issues and trends affecting their industry,
competitors and customers. At the conclusion of the meeting, Halliburton
advised Landmark that Halliburton would proceed as quickly as reasonably
possible to conduct a due diligence investigation of Landmark for purposes of
formulating an acquisition proposal. After the meeting, Halliburton and
Landmark executed and delivered a Mutual Confidentiality Agreement dated June
18, 1996.
On June 19, 1996, Halliburton and Dillon Read representatives commenced a
due diligence investigation of Landmark at the Houston office of Morgan
Stanley.
25
<PAGE>
In the morning of Thursday, June 20, 1996, the Board of Directors of
Landmark met to evaluate the discussions between Landmark, on one hand, and
each of Bidder No. 1 and Halliburton, on the other. Later that same day,
Landmark representatives met with representatives of a company engaged in
oilfield services that had expressed an interest to Morgan Stanley in
acquiring Landmark ("Bidder No. 2") and management of Landmark made a
presentation to Bidder No. 1 regarding the business and prospects of Landmark.
On Friday, June 21, 1996, Landmark and Bidder No. 2 executed and delivered a
Mutual Confidentiality Agreement. Also on that day, Halliburton continued its
due diligence investigation of Landmark at the offices of both Morgan Stanley
and Landmark's outside counsel. This investigation continued throughout the
following weekend and most of the following week.
On Monday, June 24, 1996, Bidder No. 1 submitted a revised proposal to
Landmark in which the conversion ratio was increased to provide an implied
value to Landmark's stockholders of $29.50 per share of Landmark Common Stock
based on the closing price per share of common stock of Bidder No. 1 on June
21, 1996. During that day, Halliburton management prepared, with the advice of
Dillon Read, a proposal for submission to Landmark if authorized by the Board
of Directors of Halliburton. Also on that day, representatives of Landmark
made a presentation to Bidder No. 2 regarding Landmark's current business, its
business strategy and their views of issues and trends affecting their
industry competitors and customers.
On Tuesday, June 25, 1996, Halliburton management, with representatives of
Dillon Read in attendance, made a presentation to the Board of Directors of
Halliburton, pursuant to a telephonic board meeting, regarding a proposal to
acquire Landmark in a subsidiary merger through the issuance of Halliburton
Common Stock in conversion of outstanding Landmark Common Stock. After
consideration of management's presentation, the Board of Directors of
Halliburton authorized the proposal subject to a maximum exchange ratio of a
fraction of a share of Halliburton Common Stock having a market value of no
more than $30 for each share of Landmark Common Stock. Following the meeting
of the Board of Directors of Halliburton, Mr. Cheney called Mr. Peebler and
told him that Halliburton was prepared to make a proposal to acquire Landmark
and suggested that the parties meet to discuss it the next day. Mr. Peebler
agreed.
Halliburton and Landmark and their financial and legal advisors met the
following day (Wednesday, June 26, 1996) at the Houston office of Morgan
Stanley to discuss Halliburton's proposal. These discussions focused on the
structure and price of the transaction. During the course of the day, the
initial areas of disagreement were reduced to two: (i) Halliburton would not
offer more than $30 in Halliburton Common Stock and (ii) negotiators for
Landmark would not recommend the transaction in the form presented by
Halliburton for less than $31 in such stock. In addition, Halliburton's
request that Landmark enter into a stock option agreement was resisted by
Landmark. In a late night telephone conference, negotiators for Halliburton
agreed to discuss a price of $31 with Mr. Cheney and the Board of Directors of
Halliburton and the parties agreed that their counsel would further discuss
the stock option agreement. Halliburton provided drafts of the Merger
Agreement, the Stock Option Agreement and the Voting Agreement to Landmark for
their consideration. Landmark submitted the terms of the draft Voting
Agreement to S. Rutt Bridges and Barbara Ann Bridges for their consideration.
In telephone conferences during the course of Thursday, June 27, 1996,
negotiators for Halliburton and Landmark agreed to present to their respective
Boards of Directors a proposal providing for the acquisition of Landmark by
Halliburton for an exchange ratio of 0.574 of one share of Halliburton Common
Stock for each share of Landmark Common Stock (representing a price of $31 per
share of Landmark Common Stock based on the closing price of Halliburton
Common Stock on June 25, 1996 of $54.00). In light of the improved Exchange
Ratio, such proposal also contemplated the grant of a stock option by Landmark
to Halliburton. Thereafter, representatives of Halliburton and Landmark and
their financial and legal advisors initiated discussions regarding the terms
and provisions of a merger agreement and a stock option agreement, and
representatives of Halliburton and the proposed parties to a voting agreement
initiated discussions regarding the terms and provisions of such agreement.
These discussions continued through Friday and Saturday and were completed on
Sunday, June 30, 1996. Also, on June 27, 1996, the Board of Directors of
Landmark met to discuss the status of discussions with each of Halliburton,
Bidder No. 1 and Bidder No. 2.
26
<PAGE>
On Friday, June 28, 1996, Bidder No. 2 advised Mr. Peebler that such company
would not present a proposal for consideration by Landmark regarding the
acquisition of Landmark and representatives of Landmark conducted due
diligence discussions with representatives of Halliburton. Thereafter, the
Board of Directors of Landmark met to consider the status of discussions and
negotiations between representatives of Landmark with those of Bidder No.1,
Bidder No. 2 and Halliburton.
Also on Friday, the Board of Directors of Halliburton again met by
conference telephone, with a representative of Dillon Read in attendance, to
consider a report by management of Halliburton regarding the status of
negotiations with Landmark and a recommendation by management that the Board
of Directors of Halliburton approve the acquisition of Landmark at an exchange
ratio of 0.574 of one share of Halliburton Common Stock for each share of
Landmark Common Stock and in accordance with the structure previously
recommended. After consideration of management's report and recommendation,
the Board of Directors of Halliburton approved the proposed transaction as
being in the best interests of Halliburton and its stockholders subject to
negotiation of a merger and related agreements on terms acceptable to
management.
On the afternoon of Saturday, June 29, 1996, representatives of Landmark and
Bidder No. 1 commenced discussions regarding the terms and conditions of the
proposal submitted by Bidder No. 1. Later that evening, Morgan Stanley advised
Bidder No. 1 that Landmark was nearing a decision on its future and offered
Bidder No. 1 an opportunity to present a final proposal. Late that night,
Bidder No. 1 again revised its proposal to provide an implied value to
Landmark's stockholders of $29.24 per share of Landmark Common Stock based on
the closing price per share of common stock of Bidder No. 1 on June 28, 1996.
On Sunday, June 30, 1996, at a meeting of the Board of Directors of
Landmark, Landmark's financial and legal advisors presented to the Board of
Directors of Landmark their analyses of the proposals presented by Bidder No.
1 and Halliburton. At the meeting, Morgan Stanley advised the Board of
Directors of Landmark that, as of that date and based on certain matters
discussed, the Exchange Ratio was fair from a financial point of view to the
holders of shares of Landmark Common Stock. (For additional information
regarding the opinion of Morgan Stanley, see "The Merger--Opinion of Financial
Advisor.") Following such presentations, the Board of Directors of Landmark
concluded that the proposal presented by Halliburton was in the best interests
of the stockholders of Landmark and unanimously approved the Merger Agreement,
the Stock Option Agreement and the Employment Agreement. For more detailed
discussions of the Merger Agreement and the Stock Option Agreement, see
"Certain Terms of the Merger Agreement" and "Stock Option Agreement." For a
more detailed discussion of the Employment Agreement, see "The Merger--
Interests of Certain Persons in the Merger--Employment Agreement."
The Merger Agreement and related documents were executed and delivered by
the parties thereto during the evening of June 30, 1996.
CERTAIN INFORMATION PROVIDED
In connection with the discussions between Halliburton and Landmark
described above, Landmark provided to Halliburton certain confidential,
internally generated financial projections with respect to Landmark's
operating results and cash flows for the year ended June 30, 1996 and its five
year plan for the period ending June 30, 2001. Such financial forecasts were
developed for internal use only, were not prepared with the intent that they
would be publicly distributed, were based on numerous assumptions (many of
which are beyond the control of Landmark) and are not necessarily indicative
of future results. Such financial projections assumed a compound average
annual growth in earnings before interest and taxes of 43%, gross margins
varying between 59% and 62% and operating income as a percentage of revenue
increasing during the period from 10% to 25%. Landmark does not intend, by
disclosing information regarding these Landmark financial projections, that
such disclosure shall constitute a current projection of revenues or operating
income for such periods.
In connection with the discussions between Halliburton and Landmark
regarding the Merger Agreement, Halliburton provided to Landmark certain
financial forecasts and comparisons for the year ending December 31,
27
<PAGE>
1996 and its 1996 capital budget. These forecasts were prepared by Halliburton
for internal use only, were last revised in January 1996, were not prepared
with the intent that they would be publicly distributed, were based on
numerous assumptions (many of which are beyond the control of Halliburton) and
are not necessarily indicative of future results. These financial forecasts
were prepared by management of Halliburton based on assumptions of an increase
in total revenues for fiscal year 1996 of approximately 20% and an increase in
operating income of approximately 18% as compared with fiscal year 1995.
(Halliburton does not intend, by disclosing information regarding this
Halliburton financial forecast, that such disclosure shall constitute a
current projection of revenues and operating income for the year ending
December 31, 1996.) In connection with Landmark's investigation of the
business, operations and prospects of Halliburton prior to executing and
delivering the Merger Agreement, representatives of Morgan Stanley interviewed
several officers of Halliburton and its units regarding the general business
prospects of Halliburton and, in that regard, obtained, for years subsequent
to 1996, general estimates of consolidated revenues, operating income, capital
expenditures and other financial matters. Halliburton does not prepare long
range financial projections and, accordingly, such estimates were not the
result of a structured and organized production of financial projections.
Morgan Stanley used this information to prepare a projection of Halliburton's
financial results through the year 2000 for purposes of their discounted cash
flow analysis of both Halliburton and Landmark. See "--Opinion of Financial
Advisor."
HALLIBURTON'S REASONS FOR THE MERGER
Landmark is engaged in the business of designing, creating and marketing an
extensive line of integrated software applications to the oil and gas
exploration, development and production industry for seismic processing, 3D
and 2D seismic interpretations, geologic and petrophysical interpretation,
including reservoir analysis, mapping and modeling of geophysical information,
well log and production analysis, drilling and production engineering and data
management. Halliburton, on the other hand, provides through HES a wide range
of services and products to provide integrated solutions to customers in the
exploration, development and production of oil and natural gas. While HES
offers to its customers services that include many interpretive and analytical
functions similar to those embraced by the Landmark software applications, HES
does not generally design or create such applications. As a consequence, the
Board of Directors of Halliburton believes that the Merger would represent a
significant step in achieving an important Halliburton objective: to offer to
its customers a complete array of oil field services. The Board of Directors
of Halliburton also believes that the Merger will make Halliburton a world
leader in providing oil and natural gas exploration, development and
production software applications and information systems.
Management of Halliburton expects that the Merger will allow Halliburton to
achieve significant synergies through the integration of the software
applications and information systems of Landmark with the existing oil field
services and products of Halliburton. These synergies are expected to occur
principally as a result of the enhancement of Halliburton's ability to offer
integrated solutions to the oil and natural gas exploration, development and
production customers of HES. A number of the larger oil and natural gas
projects instituted by its customers now require Halliburton to provide data
management services to its customers in connection with the performance of its
more traditional oil field services. The Merger will strongly enhance
Halliburton's ability to provide such services. Management of Halliburton also
believes that it will be able to integrate HES' existing oil field software
applications with the larger array of software applications of Landmark. The
Board of Directors of Halliburton believes that the ability to manage
information concerning oil and natural gas reservoirs and all other aspects of
exploration, development and production of oil and natural gas is essential to
Halliburton's long term competitive position.
The Board of Directors of Halliburton has determined that the Merger is in
the best interests of Halliburton and its stockholders. In reaching its
determination, the Board of Directors of Halliburton considered a number of
factors, including without limitation the matters discussed above and the
following:
(i)
the judgment, advice and analyses of management of Halliburton,
including its favorable recommendation of the Merger;
28
<PAGE>
(ii) the financial condition and results of operations of Halliburton
and Landmark on an historical basis and on a pro forma combined
enterprise basis for both historical and certain future periods;
(iii) the synergies and operating efficiencies that are expected to be
achieved as a result of the Merger;
(iv) the strategic benefits of the Merger to Halliburton, including the
advancement of its objective to provide a complete array of oil
field services to its customers;
(v) the terms of the Merger Agreement and related agreements, including
price and structure, which were considered by both management and
the Board of Directors of Halliburton to provide an equitable basis
for the Merger;
(vi) the adverse competitive effect on Halliburton if a competitor
should acquire Landmark;
(vii) the historical market prices and trading information with respect
to the Halliburton Common Stock and the Landmark Common Stock;
(viii) the ability to effect the Merger on both a tax-free basis and as a
pooling of interests for financial accounting purposes; and
(ix) the significantly enhanced position of the combined enterprise both
in the market for oil and natural gas exploration, development and
production software applications and in the oil field service
industry.
In evaluating the Merger, the Board of Directors of Halliburton considered
that the Merger would have certain dilutive effects on the pro forma income
per share of the combined companies as reflected in the pro forma income
(loss) per share from continuing operations for the years ended December 31,
1994 and 1995 and the six months ended June 30, 1996. The Board of Directors
of Halliburton also considered that Landmark has grown rapidly through a
number of relatively recent acquisitions and that these acquired businesses
may not have been fully integrated into Landmark's existing management,
operational and other systems. The Board of Directors of Halliburton also
evaluated the risks, inherent in any transaction such as the Merger, that
currently unanticipated difficulties could arise in integrating the operations
of two large corporations and that the synergies expected from combining the
operations of Landmark with those of Halliburton may not be realized or, if
realized, may not be realized within the period expected.
In analyzing the proposed Merger, the Board of Directors of Halliburton
evaluated the factors and considerations described above and consulted with
its financial and legal advisors and with Halliburton management. The Board of
Directors of Halliburton did not view any single factor as determinative and
did not quantify or assign weight to any of the factors. Rather, the Board of
Directors of Halliburton made its determination based on the total mix of
information available to it.
LANDMARK'S REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS OF
LANDMARK
The Board of Directors of Landmark has determined that the Merger is fair to
and in the best interests of the stockholders of Landmark. In making such
determination, the Board of Directors of Landmark considered, among other
things, the following factors:
(i) the relationship between the consideration to be received by the
holders of Landmark Common Stock pursuant to the Merger and the
trading history of shares of Landmark Common Stock, including the
fact that the implied value, as of June 30, 1996, of the
consideration to be received by holders of shares of Landmark
Common Stock (i.e., $31.86 per share of Landmark Common Stock,
based on the Exchange Ratio and the closing price of $55.50 per
share of Halliburton Common Stock on June 28, 1996, the last
trading day preceding Landmark's announcement of the Merger)
represented a 65.5% premium over the closing price of $19.25 per
share of Landmark Common Stock on June 28, 1996;
29
<PAGE>
(ii) the terms and conditions of the Merger Agreement;
(iii) the familiarity with the business, assets, earnings, properties,
results of operations, financial condition and prospects of
Landmark and Halliburton and the nature of the industry in which
Landmark and Halliburton operate;
(iv) the perception of the Board of Directors of Landmark that
Halliburton is a well managed, financially strong company with
extensive experience in the oil field services industry;
(v) the perception of the Board of Directors of Landmark that a
combination of Landmark with Halliburton would create a financially
strong company, capable of providing customers worldwide with
integrated solutions that include Halliburton's acknowledged
expertise in a broad array of oil field services and Landmark's
core competencies in seismic interpretations and modeling, well log
and production analysis, drilling and production engineering and
data management;
(vi) the perception of the Board of Directors of Landmark, based on
discussions with Halliburton's management, that Halliburton has the
ability to assist Landmark in achieving its strategic objectives,
including positioning Landmark for growth in an increasingly
competitive environment;
(vii) the belief of the Board of Directors of Landmark that the Merger
Agreement, including the Stock Option Agreement, and the
transactions contemplated thereby represents the best determinable
value for the Landmark stockholders;
(viii) the presentation and favorable recommendation of the management of
Landmark regarding the Merger; and
(ix) the opinion of Morgan Stanley dated June 30, 1996, to the effect
that as of such date, and based on certain matters stated therein,
the Exchange Ratio was fair from a financial point of view to
holders of shares of Landmark Common Stock.
The Board of Directors of Landmark also considered the following negative
factors: (i) the risks that the benefits, including the synergies, sought to
be achieved in the Merger would not be realized, thereby adversely affecting
the results of operations of the combined companies; and (ii) the possibility
that the Merger might not be consummated and the potential adverse effects of
such a result on (a) the market price for Landmark Common Stock and (b)
Landmark's relationship with key management personnel, its workforce
generally, its customers and others. In the view of the Board of Directors of
Landmark, these considerations were not sufficient, either individually or
collectively, to outweigh the advantages of the proposed combination in the
manner in which it was proposed.
With respect to the possibility that the Merger might foreclose other
options that could be viewed as preferable, the Board of Directors of Landmark
took into consideration that the terms of the Merger Agreement are such that
unsolicited bona fide proposals could be considered by the Board of Directors
of Landmark at any time, subject to certain limitations that were acceptable
to the Board of Directors of Landmark. See "Certain Terms of the Merger
Agreement--No Solicitation."
In evaluating the fairness of the Merger to the stockholders of Landmark,
the Board of Directors of Landmark considered the interests of the
stockholders of Landmark as a whole and gave no special consideration to any
individual or group of stockholders. In view of the wide variety of factors
considered in connection with the evaluation of the Merger, the Board of
Directors of Landmark did not find it practicable to assign relative weights
to the specific factors considered in reaching its determination.
THE BOARD OF DIRECTORS OF LANDMARK HAS UNANIMOUSLY DETERMINED THAT THE
MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF LANDMARK
AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT.
30
<PAGE>
OPINION OF FINANCIAL ADVISOR
Morgan Stanley was retained by Landmark to act as its financial advisor in
connection with the Merger and related matters based upon Morgan Stanley's
experience and expertise. At the June 30, 1996 meeting of the Board of
Directors of Landmark, Morgan Stanley rendered to the Board of Directors of
Landmark an oral opinion, subsequently rendered in writing as of June 30, 1996
and as of September 4, 1996, to the effect that, as of such dates and based on
certain matters stated therein, the Exchange Ratio pursuant to the Merger
Agreement was fair from a financial point of view to the holders of shares of
Landmark Common Stock.
THE FULL TEXT OF MORGAN STANLEY'S OPINION DATED AS OF SEPTEMBER 4, 1996,
WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON
THE REVIEW UNDERTAKEN, IS ATTACHED AS APPENDIX D TO THIS PROXY
STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS OF
LANDMARK COMMON STOCK SHOULD READ THE MORGAN STANLEY OPINION DATED SEPTEMBER
4, 1996 CAREFULLY IN ITS ENTIRETY. THE MORGAN STANLEY OPINION IS DIRECTED TO
THE BOARD OF DIRECTORS OF LANDMARK AND THE FAIRNESS OF THE EXCHANGE RATIO FROM
A FINANCIAL POINT OF VIEW TO THE HOLDERS OF SHARES OF LANDMARK COMMON STOCK,
AND IT DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER NOR DOES IT CONSTITUTE
A RECOMMENDATION TO ANY HOLDER OF LANDMARK COMMON STOCK AS TO HOW TO VOTE AT
THE SPECIAL MEETING. THE SUMMARY OF THE MORGAN STANLEY OPINION DATED SEPTEMBER
4, 1996 SET FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In arriving at its opinion, Morgan Stanley (i) analyzed certain publicly
available financial statements and other information of Landmark; (ii)
analyzed certain publicly available financial statements and other information
of Halliburton; (iii) analyzed certain internal financial statements and other
financial and operating data concerning Landmark prepared by the management of
Landmark; (iv) analyzed certain internal financial statements and other
financial and operating data concerning Halliburton prepared by the management
of Halliburton; (v) analyzed certain financial projections prepared by the
management of Landmark; (vi) analyzed certain financial projections prepared
by the management of Halliburton; (vii) discussed the past and current
operations and financial condition and the prospects of Landmark with senior
executives of Landmark; (viii) discussed the past and current operations and
financial condition and the prospects of Halliburton with senior executives of
Halliburton and analyzed the pro forma impact of the Merger on Halliburton's
earnings per share, consolidated capitalization and financial ratios; (ix)
reviewed the reported prices and trading activity for Landmark Common Stock;
(x) reviewed the reported prices and trading activity for the Halliburton
Common Stock; (xi) compared the financial performance of Landmark and the
prices, trading activity and trading multiples of Landmark Common Stock with
that of certain other comparable publicly traded companies and their
securities; (xii) compared the financial performance of Halliburton and the
prices, trading activity and trading multiples of the Halliburton Common Stock
with that of certain other comparable publicly traded companies and their
securities; (xiii) reviewed the financial terms, to the extent publicly
available, of certain comparable acquisition transactions; (xiv) participated
in discussions and negotiations among representatives of Landmark, Halliburton
and certain other parties and their financial and legal advisors; (xv)
reviewed the Merger Agreement and certain related documents; and (xvi)
performed such other analyses as it deemed appropriate.
In rendering its opinion, Morgan Stanley assumed and relied upon, without
independent verification, the accuracy and completeness of the information
reviewed by Morgan Stanley for purposes of its opinion. With respect to
financial projections, Morgan Stanley assumed that they had been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the future financial performance of Landmark and Halliburton,
respectively. Morgan Stanley did not make an independent valuation or
appraisal of the assets or liabilities of Landmark or Halliburton, nor was
Morgan Stanley furnished with any such appraisals. Morgan Stanley assumed that
the Merger will be accounted for as a "pooling of interests" business
combination in accordance with United States generally accepted accounting
principles and will qualify as a "reorganization" within the meaning of
Section 368(a) of the Code. Morgan Stanley also assumed that the Merger will
be consummated in accordance with the terms set forth in the Merger Agreement.
Each Morgan Stanley opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to Morgan
Stanley as of, the date thereof.
31
<PAGE>
The following is a brief summary of certain analyses performed by Morgan
Stanley and reviewed with the Board of Directors of Landmark in connection
with the preparation of the Morgan Stanley opinion dated June 30, 1996 and
with its oral presentation to the Board of Directors of Landmark on June 30,
1996.
LANDMARK COMMON STOCK PERFORMANCE. Morgan Stanley's analysis of the
performance of Landmark Common Stock consisted of an historical analysis of
closing prices and trading volumes from September 28, 1988, the time of
Landmark's initial public offering, to June 28, 1996. During this period,
based on closing prices on the Nasdaq, Landmark Common Stock achieved a high
of $35.25 and a low of $7.38. Landmark Common Stock closed at a price of
$19.25 on June 28, 1996 (the "Market Price"), the last trading day preceding
Landmark's announcement of the Merger. Morgan Stanley observed that an implied
proposal price of $31.86 ("Implied Price") based upon the Exchange Ratio and
Halliburton's closing price of $55.50 on June 28, 1996 represented a 65.5%
premium to the Market Price.
COMPARABLE COMPANY ANALYSIS. Comparable company analysis examines a
company's trading performance relative to a group of publicly traded peers.
Morgan Stanley analyzed the trading performance of Landmark and two groups of
companies in the seismic and software sectors (the "Landmark Comparable
Companies"). Companies in the seismic group include: Western Atlas, Inc.,
Schlumberger, Ltd., Digicon, Inc., Petroleum Geo-Services A/S and Seitel, Inc.
("Landmark Seismic Comparable Companies"). Companies in the software group
include: Cambridge Technology Partners, Inc., Aspen Technology, Inc., Cadence
Design Systems, Inc., Policy Management Systems Corp., Autodesk, Inc.,
Viewlogic Systems, Inc., Mentor Graphics Corp. and Broadway & Seymour, Inc.
("Landmark Software Comparable Companies"). Morgan Stanley also analyzed the
trading performance of Halliburton and a group of companies in the oil
services sector (the "Halliburton Comparable Companies"). Companies in the
Halliburton Comparable Companies group are: Baker Hughes, Inc., Dresser
Industries, Inc., Schlumberger Ltd. and Western Atlas, Inc. The Landmark
Comparable Companies and the Halliburton Comparable Companies (collectively,
the "Comparable Companies") were selected based on general business, operating
and financial characteristics representative of companies in industries in
which Landmark and Halliburton operate, respectively. Historical financial
information used in connection with the ratios provided below with respect to
the Comparable Companies is as of the most recent financial statements
publicly available for each company. Market information used in calculating
the ratios below was as of June 28, 1996. Earnings per share ("EPS") estimates
for Landmark, Halliburton and the Comparable Companies were estimates provided
by Institutional Brokers Estimate System ("IBES").
Morgan Stanley analyzed the relative performance and value for Landmark and
Halliburton by comparing certain market trading statistics for Landmark and
Halliburton with the Landmark Comparable Companies and the Halliburton
Comparable Companies, respectively. Among the market trading information
considered in the valuation analysis were the ratios of market price to EPS
estimates for calendar years 1996 and 1997. The ratio of market price to EPS
estimate for Landmark for calendar year 1996 was 19.5x and for Halliburton was
22.6x. The median ratios of market price to EPS estimates for calendar year
1996 for the Landmark Seismic Comparable Companies, Landmark Software
Comparable Companies and the Halliburton Comparable Companies were 25.4x,
17.9x and 25.8x, respectively. The ratio of market price to EPS estimate for
Landmark for calendar year 1997 was 15.9x and for Halliburton was 19.8x. The
median ratios of market price to EPS estimates for calendar year 1997 for the
Landmark Seismic Comparable Companies, Landmark Software Comparable Companies
and the Halliburton Comparable Companies were 17.0x, 14.8x and 21.7x,
respectively. Morgan Stanley observed that the Implied Price implied a ratio
to EPS estimated for calendar year 1996 of 32.3x, and for calendar year 1997
of 26.3x, in each case for Landmark.
No company utilized in the comparable companies analysis as a comparison is
identical to Landmark or Halliburton. In evaluating the Comparable Companies,
Morgan Stanley made judgments and assumptions with regard to industry
performance, general business, economic, market and financial conditions and
other matters, many of which are beyond the control of Landmark or
Halliburton, such as the impact of competition on the business of Landmark or
Halliburton and the industry generally, industry growth and the absence of any
adverse material change in the financial condition and prospects of Landmark
or Halliburton or the industry or in the
32
<PAGE>
financial markets in general. Mathematical analysis (such as determining the
average or median) is not in itself a meaningful method of using comparable
company data.
COMPARABLE TRANSACTION ANALYSIS. Morgan Stanley performed an analysis of
precedent transactions ("Comparable Transactions") involving certain software
("Software Comparable Transactions") and seismic ("Seismic Comparable
Transactions") companies which, in Morgan Stanley's judgment, were deemed to
be comparable to the Merger for purposes of this analysis. Multiples of the
equity value of such transactions to the acquiree's twelve months forward
fiscal year EPS, and premium to market price one month prior to announcement
of a transaction were analyzed for each comparable merger and acquisition
transaction. EPS estimates for Landmark and the Comparable Transactions were
estimates provided by IBES. The Software Comparable Transactions comparison
included the following transactions (acquiree/acquiror), which were announced
during the period from 1990 through 1996; Continuum, Inc./Computer Sciences
Corp.; Integrated Silicon Systems/AcrSys, Inc.; Trinzic Corp./Platinum
Technology, Inc.; Alias Research, Inc./Silicon Graphics, Inc.; Wavefront
Technologies, Inc./Silicon Graphics, Inc.; Knowledgeware, Inc./Sterling
Software, Inc.; SoftImage, Inc./Microsoft Corp.; and Index Technology
Corp./Sage Software, Inc. The Seismic Comparable Transactions comparison
included the following transactions (acquiree/acquiror) which were announced
in 1996 and 1994 respectively; Veritas Energy Services, Inc./Digicon, Inc.;
and Advance Geophysical Corp./Landmark Graphics Corporation. For the Software
Comparable Transactions and the Seismic Comparable Transactions the analysis
showed that the equity values of such transactions represented a median
multiple of 25.1x and 8.8x twelve months forward fiscal year EPS,
respectively; and 53.8% and 13.3% premium to the price of the acquiree's stock
one month prior to announcement of a transaction, respectively. Morgan Stanley
observed that the Implied Price implied a multiple of 29.0x Landmark's twelve
months forward fiscal EPS, and a 69.9% premium to the price of Landmark's
Common Stock one month prior to announcement of the Merger.
No transaction utilized in the comparable transaction analysis is identical
to the Merger. In evaluating the precedent transactions, Morgan Stanley made
judgments and assumptions with regard to industry performance, general
business, economic, market and financial conditions and other matters, many of
which are beyond the control of Landmark, such as the impact of competition on
the business of Landmark and the industry generally, industry growth and the
absence of any adverse material change in the financial condition and
prospects of Landmark or the industry or in the financial markets in general.
Mathematical analysis (such as determining the average or median) is not in
itself a meaningful method of using comparable transaction data.
DISCOUNTED CASH FLOW ANALYSIS. Morgan Stanley performed a discounted cash
flow analysis to estimate the present value of the stand-alone unlevered free
cash flows that Landmark and Halliburton are expected to generate if Landmark
and Halliburton perform in accordance with the scenarios based upon certain
financial forecasts. Morgan Stanley analyzed two sets of financial forecasts
for each company, a management case ("Management Case") and an analyst case
("Analyst Case"). The Management Case for each company was based upon certain
discussions with management of each of Landmark and Halliburton as well as
upon certain financial forecasts prepared by the respective managements of
each of Landmark and Halliburton. In the case of Halliburton, the financial
forecasts provided by Halliburton were limited as described under "--Certain
Information Provided." The Analyst Case was prepared using an interpolation of
IBES earnings estimates. Unlevered free cash flows of each company were
calculated as net income plus depreciation and amortization plus deferred
taxes plus minority interest plus other noncash expenses plus after-tax net
interest expense less capital expenditures less investment in working capital.
Morgan Stanley calculated terminal values for Halliburton by applying a range
of perpetual growth rates ("Perpetual Growth Rate Methodology") to the
unlevered free cash flows in fiscal 2000 from 5.0% to 6.0% for the Analyst
Case and 6.0% to 7.0% for the Management Case, representing estimated ranges
of long-term growth rates of unlevered free cash flows. Morgan Stanley
calculated terminal values for Landmark by applying a range of multiples of
unlevered net income ("Terminal Net Income Multiple Methodology") to the
unlevered net income in fiscal 2000 from 16.0x to 20.0x for the Analyst Case
and from 18.0x to 22.0x for the Management Case, representing estimated
trading ranges of long-term unlevered net income multiples. Unlevered net
income was calculated as net income plus after-tax net interest expense. The
unlevered free cash flows streams and terminal values were then discounted to
their
33
<PAGE>
present values using a range of discounts rates from 14.0% to 16.0% for
Landmark and 12.0% to 13.0% for Halliburton. The discount rate ranges were
selected based upon a weighted average cost of capital analysis for each of
Landmark and Halliburton. Based on this analysis, Morgan Stanley calculated
per share equity values of Landmark ranging from $47 to $59 for the Management
Case and $20 to $25 for the Analyst Case on a fully diluted share basis. The
per share equity values calculated for Halliburton ranged from $47 to $66
based on the Management Case and $48 to $63 based on the Analyst Case on a
fully diluted share basis.
HISTORICAL MARKET PRICE RATIO ANALYSIS. Morgan Stanley analyzed the
historical ratios between the market prices for Landmark Common Stock and
Halliburton Common Stock over several time periods. For each time period
selected, the average ratio was calculated. The time periods selected for
analysis included the following: last three years, last twelve months, last
sixty days, last thirty days, and closing price on June 28, 1996. The average
ratio for each aforementioned period was 0.6185, 0.4884, 0.3391, 0.3544 and
0.3469, respectively. Morgan Stanley observed that the Exchange Ratio of
0.5740 is higher than the average historical ratios between Landmark Common
Stock and Halliburton Common Stock for the time periods selected during the
last twelve months ended June 28, 1996.
PRO FORMA ANALYSIS OF THE MERGER. Morgan Stanley analyzed the pro forma
impact of the Merger on Halliburton's earnings per share for the fiscal years
ended 1996 through 2000. Such analysis was based on earnings estimates
provided by IBES for Landmark and Halliburton for the fiscal years ended 1996
and 1997, which were assumed to grow at the expected five year EPS growth rate
provided by IBES for the remaining years through 2000. Morgan Stanley observed
that, if the Merger were treated as a pooling of interests for accounting
purposes and if no synergies were assumed, the issuance of Halliburton Common
Stock in the Merger would have a dilutive effect on pro forma earnings per
share to Halliburton of approximately 3.0% in fiscal year 1996 and 2.7% in
fiscal year 1997.
In connection with the Morgan Stanley opinion dated as of September 4, 1996,
Morgan Stanley confirmed the appropriateness of its reliance on the analyses
used to render its June 30, 1996 opinion by performing procedures to update
certain of such analyses and by reviewing the assumptions upon which such
analyses were based and the factors considered in connection therewith.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. In
arriving at its opinion, Morgan Stanley considered the results of all of its
analyses as a whole and did not attribute any particular weight to any
particular analysis or factor considered by it. Furthermore, selecting any
portion of Morgan Stanley's analyses, without considering all analyses, would
create an incomplete view of the process underlying the Morgan Stanley
opinion. In addition, Morgan Stanley may have deemed various assumptions more
or less probable than other assumptions, so that the ranges of valuations
resulting for any particular analysis described above should not be taken to
be Morgan Stanley's view of the actual value of Landmark or Halliburton.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Landmark or
Halliburton. The analyses performed by Morgan Stanley are not necessarily
indicative of actual values, which may be significantly more or less favorable
than suggested by such analyses. Such analyses were prepared solely as a part
of Morgan Stanley's analysis of the fairness of the Exchange Ratio from a
financial point of view to the holders of shares of Landmark Common Stock and
were provided to the Board of Directors of Landmark in connection with the
delivery of the Morgan Stanley opinion. The analyses do not purport to be
appraisals or to reflect the prices at which Landmark or Halliburton might
actually be sold. Because such estimates are inherently subject to
uncertainty, neither Landmark, Halliburton or Morgan Stanley nor any other
person assumes responsibility for their accuracy. In addition, as described
above, the Morgan Stanley opinion, including Morgan Stanley's presentation to
the Board of Directors of Landmark, was one of many factors taken into
consideration by the Board of Directors of Landmark in making its
determination to approve the Merger.
34
<PAGE>
The Board of Directors of Landmark retained Morgan Stanley based upon its
experience and expertise. Morgan Stanley is an internationally recognized
investment banking and financial advisory firm. Morgan Stanley, as part of its
investment banking business, is continuously engaged in the valuation of
businesses and securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted securities, private placements and valuations for
corporate and other purposes. Morgan Stanley is a full-service securities firm
engaged in securities trading and brokerage activities, as well as providing
investment banking and financial advisory services. In the ordinary course of
its trading and brokerage activities, Morgan Stanley or its affiliates may at
any time hold long or short positions, and may trade or otherwise effect
transactions, for its own account or the accounts of customers, in securities
of Landmark or Halliburton. As of August 26, 1996, Morgan Stanley and its
affiliates owned approximately 10,000 shares of Landmark Common Stock. In the
past, Morgan Stanley and its affiliates have provided financial advisory
services to Landmark and Halliburton and have received customary fees for the
rendering of these services.
FINANCIAL ADVISOR FEES. Pursuant to a letter agreement dated as of June 12,
1996, Landmark has agreed to pay Morgan Stanley (i) an advisory fee estimated
to be between $150,000 and $400,000 in the event the Merger is not
consummated, (ii) a fee of $500,000 which is currently payable and, (iii) if
the Merger is consummated, a total fee equal to approximately $5.2 million
(against which any previously paid fees would be credited). In addition to the
foregoing compensation, Landmark has agreed to reimburse Morgan Stanley for
its expenses, including reasonable fees and expenses of its counsel, and to
indemnify Morgan Stanley for liabilities and expenses arising out of the
engagement and the transactions in connection therewith, including liabilities
under federal securities laws.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors of Landmark with
respect to the Merger, Landmark's stockholders should be aware that certain
members of the Board of Directors and officers of Landmark have certain
interests respecting the Merger separate from their interests as holders of
Landmark Common Stock, including those referred to below. In addition, Morgan
Stanley, Landmark's financial advisor, will receive additional compensation if
the Merger is effected. See "--Opinion of Financial Advisor--Financial Advisor
Fees."
EMPLOYMENT AGREEMENTS. In October 1995, Landmark and eight individuals who
are now executive officers of Landmark entered into Change in Control
Agreements. The Change in Control Agreements with Mr. Peebler and the five
executive officers who are parties to the Employment Agreements will terminate
at the Effective Time. In addition, pursuant to the employment agreements
described below, Messrs. Seippel and Downing have agreed to a lump sum payment
in settlement of certain of their rights under their Change in Control
Agreements. Following a change in control of Landmark (which as defined in the
Change in Control Agreements will occur as a consequence of the Merger) the
officers party thereto would be entitled, among other things, to (i) continued
employment for a minimum of two years with cash compensation at the highest
rate paid during the three years preceding the Effective Time and (ii) a lump
sum severance payment equal to the discounted present value of the cash
compensation from Landmark (at the highest rate paid during the term of the
agreements) for the remaining term of the Change in Control Agreements (a
maximum of two years) upon a termination of employment without cause or
resignation following a material limitation of the individual's duties and
power or in certain other circumstances. In addition to such severance
compensation, pursuant to the Change in Control Agreements, the unvested
Landmark Options held by the officers party thereto (which by virtue of the
Merger will be converted into options to purchase Halliburton Common Stock)
will become fully vested at the Effective Time. See "--Stock Options" for
information about holdings of unvested Landmark Options.
Robert P. Peebler, the President and Chief Executive Officer of Landmark,
has entered into the Peebler Employment Agreement with both Landmark and
Halliburton. The Peebler Employment Agreement will become effective only upon
consummation of the Merger. From and after the Effective Time until December
31, 1999 (the "Term"), the Peebler Employment Agreement provides that Mr.
Peebler will be employed as the Chief Executive Officer and President of the
Surviving Corporation. For his services in such capacity, Mr. Peebler will be
paid a base salary of not less than $400,000 per annum, will receive an annual
deferred compensation
35
<PAGE>
allocation of not less than $100,000 and will be granted at the outset a
nonqualified option to purchase 20,000 shares of Halliburton Common Stock. Mr.
Peebler will also be entitled to participate during the Term in the
Halliburton Energy Services CVA Performance Pay Plan. Under the Peebler
Employment Agreement, Mr. Peebler will be entitled to be paid a lump sum of
$800,000 if his employment is terminated during the Term for any reason other
than by his death or permanent disability, by the employer for "cause" (as
defined therein) or by him in a "Voluntary Termination" (as defined therein).
The latter term excludes any termination by Mr. Peebler (i) because of a
material breach of the Peebler Employment Agreement by the employer or (ii)
within six months following a reduction in rank, a material reduction in
responsibility or a required relocation outside of Houston, Texas. The Peebler
Employment Agreement contains a noncompetition covenant by Mr. Peebler
commencing on termination of such agreement and continuing for two years
thereafter.
In addition, five other executive officers of Landmark have entered into
Employment Agreements with both Landmark and Halliburton that will become
effective only if the Merger is consummated, and will have terms from the
Effective Time until December 31, 1999. Each of the Employment Agreements
provides for the payment of an annual base salary of not less than a certain
amount, the grant of a nonqualified stock option to purchase a certain number
of shares of Halliburton Common Stock and the grant of a certain number of
restricted shares of Halliburton Common Stock. Under each of the Employment
Agreements, the executive officer party thereto will be entitled to a lump sum
payment equal to two times such officer's minimum base salary if his or her
employment is terminated during the Term for any reason other than by death or
permanent disability, by the employer for "cause" or by the officer in a
"Voluntary Termination." Each of the Employment Agreements also provides that
the officer's employment will not be terminated by the employer prior to six
months after the Effective Time, except for "cause." In addition, each of the
Employment Agreements contains a noncompetition covenant by the executive
officer party thereto commencing on termination of such agreement and
continuing for one year thereafter. The following table sets forth the name
and title of each of the Landmark executive officers who is a party to an
Employment Agreement and certain information with respect to such Employment
Agreement.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF NUMBER OF RESTRICTED
MINIMUM HALLIBURTON COMMON SHARES OF HALLIBURTON
NAME AND TITLE BASE SALARY STOCK UNDERLYING OPTION COMMON STOCK
-------------- ----------- ----------------------- ---------------------
<S> <C> <C> <C>
Daniel L. Casaccia...... $160,000 12,000 2,500
Vice President-Human
Resources
John W. Gibson.......... 210,000 17,000 4,000
Executive Vice
President-Integrated
Products Group
Henry P. Holland........ 300,000 17,000 5,000
Vice President-
Integrated Solutions
Group
Patti L. Massaro........ 110,000 12,000 1,000
General Counsel and
Secretary
Denese D. VanDyne....... 150,000 12,000 2,000
Vice President-
Corporate Marketing and
Communications
</TABLE>
Mr. Peebler and each of the other Landmark executive officers who is a party
to an Employment Agreement will continue to be entitled to all of his or her
rights under outstanding Landmark Options held by such officer prior to the
Effective Time, which by virtue of the Merger will be converted into options
to purchase Halliburton Common Stock. The Peebler Employment Agreement and
each of the Employment Agreements provides that, at the Effective Time, the
Change in Control Agreement to which Landmark and such officer are parties
will be terminated, except that all outstanding Landmark Options held by such
officer that were not fully vested prior to the Effective Time will become
fully vested at the Effective Time pursuant to such officer's Change in
Control Agreement.
Landmark has also entered into employment agreements with William H.
Seippel, Vice President, Finance and Chief Financial Officer, and James A.
Downing II, Vice President, that will become effective only if the Merger is
consummated, and will have terms from the Effective Time until termination of
the Pooling Period (as
36
<PAGE>
defined under "The Merger--Restrictions on Resales by Affiliates"), unless
earlier terminated by the employee party thereto. During the terms of such
agreements, Messrs. Seippel and Downing will be entitled to compensation of
$3,958.33 and $4,166.67, respectively, on a semi-monthly basis, in arrears and
to continue to receive certain employee benefits. After the Effective Time,
Messrs. Seippel and Downing will cease to be officers of Landmark. Pursuant to
such agreements, Mr. Seippel has agreed to a lump sum payment of $405,064 in
settlement of all of his rights under his Change in Control Agreement and Mr.
Downing has agreed to a lump sum payment of $373,751 in settlement of all of
his rights to cash compensation under his Change in Control Agreement. Mr.
Downing will continue to be entitled to certain employee benefits under his
Change in Control Agreement after termination of his employment agreement.
These payments will be made at the time that the employment of Messrs. Seipel
and Downing terminates.
STOCK OPTIONS. The Merger Agreement provides that at the Effective Time,
automatically and without any action on the part of the holder thereof, each
Landmark Option will be assumed by the Surviving Corporation and will become
an option to purchase Halliburton Common Stock. The number of shares of
Halliburton Common Stock subject thereto will be obtained by multiplying the
number of shares of Landmark Common Stock previously subject thereto by the
Exchange Ratio, and the exercise price per share of Halliburton Common Stock
will be obtained by dividing the exercise price per share of Landmark Common
Stock stated therein by the Exchange Ratio. Otherwise, the terms and
conditions of such Landmark Options will remain the same.
The following table sets forth the names of those directors and executive
officers of Landmark who hold Landmark Options, the number of shares of
Landmark Common Stock subject to such Landmark Options, the weighted average
exercise price thereunder, the number of shares of Landmark Common Stock
subject thereto that are currently unvested, the number of such shares that
will vest upon the occurrence of the Merger by virtue of the terms of the
Landmark Option, the plan pursuant to which it was issued or contractual
arrangements between Landmark and the holder of Landmark Options, the number
of shares of Halliburton Common Stock to which the Landmark Options will apply
at the Effective Time and the weighted average exercise price per share of
Halliburton Common Stock.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES OF SHARES OF NUMBER OF
WEIGHTED UNVESTED LANDMARK SHARES OF WEIGHTED
NAME OF DIRECTOR* LANDMARK AVERAGE LANDMARK COMMON HALLIBURTON AVERAGE
OR COMMON EXERCISE COMMON STOCK TO COMMON EXERCISE
EXECUTIVE OFFICER STOCK PRICE(1) STOCK VEST(2) STOCK PRICE
----------------- -------- -------- --------- --------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Charles L.
Blackburn*....... 25,000 $17.175 3,750 -- 12,198 $29.143
Daniel L.
Casaccia......... 94,750 17.125 23,000 23,000 54,387 29.834
James A. Downing
II*.............. 98,000 15.913 18,500 18,500 56,252 27.723
John W. Gibson.... 125,000 20.680 97,500 97,500 71,750 36.028
Henry P. Holland.. 125,000 20.700 93,750 93,750 71,750 36.063
Lucio L. Lanza*... 35,000 16.482 3,750 -- 17,938 28.040
Theodore Levitt*.. 20,000 19.750 6,250 -- 7,893 34.408
Patti L. Massaro.. 10,000 19.719 7,500 7,500 5,740 34.354
Robert P.
Peebler*......... 430,000 18.820 165,000 165,000 246,820 32.787
William H.
Seippel.......... 128,200 17.345 48,750 48,750 73,587 30.218
Sam K. Smith*..... 45,000 17.931 3,750 -- 23,678 30.956
Denese D.
VanDyne.......... 46,000 22.125 34,500 34,500 26,404 38.545
All Directors and
Executive
Officers as a
Group (12
persons)......... 1,181,950 18.650 506,000 488,500 668,397 32.340
</TABLE>
- --------
(1) The ranges of exercise prices applicable to Landmark Options held by James
A. Downing II, Daniel L. Casaccia, Patti L. Massaro, William H. Seippel,
Charles L. Blackburn, Lucio L. Lanza, Robert P. Peebler, Sam K. Smith,
John W. Gibson, Henry P. Holland, Theodore Levitt and Denise D. Van Dyne
are $26.500 to $5.370, $26.500 to $10.250, $26.500 to $19.250, $22.125 to
$15.250, $26.500 to $10.125, $19.750 to $15.500, $25.750 to $12.000,
$26.500 to $10.250, $25.750 to $12.000, $22.000 to $10.250, $25.750 to
$12.000, $26.500 to $17.500, $26.500 to $19.250, $19.750 to $19.750 and
$26.500 to $20.750, respectively.
37
<PAGE>
(2) Pursuant to the Landmark Graphics Corporation 1994 Flexible Incentive
Plan, all unvested Landmark Options granted thereunder will vest in full
at the Effective Time of the Merger. In addition, under the terms of
certain Change in Control Agreements, all Landmark Options held by
individuals who are parties to those Change in Control Agreements that are
not vested at the Effective Time will become fully vested.
INDEMNIFICATION. The Merger Agreement provides that, for a period of six
years after the Effective Time, the indemnification provisions of the charter
and bylaws of the Surviving Corporation (which provisions will be
substantially equivalent to the current provisions in the Landmark Charter and
Bylaws) will not be amended in a manner that would reduce or limit the rights
of indemnity thereunder of present or former directors and officers of
Landmark, reduce or limit the ability of the Surviving Corporation to
indemnify such persons or hinder or delay the exercise of such rights by such
persons. In addition, the Merger Agreement requires Halliburton, subject to
certain limitations, to cause to be maintained in effect for a period of six
years after the Effective Time the current Landmark directors' and officers'
liability insurance or policies that are substantially equivalent thereto. See
"Certain Terms of the Merger Agreement--Indemnification."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material federal income tax
consequences of the Merger to the holders of Landmark Common Stock and is
based upon current provisions of the Code, existing regulations thereunder 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 such as dealers in
securities, foreign persons, mutual funds, insurance companies, tax-exempt
entities and holders who do not hold their shares as capital assets. Holders
of Landmark 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 state, local and
foreign tax laws.
Halliburton has received from its counsel, Vinson & Elkins L.L.P., an
opinion to the effect that the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code,
that Halliburton, Merger Sub and Landmark each will be a party to the
reorganization within the meaning of Section 368(b) of the Code and that
Halliburton, Merger Sub and Landmark will not recognize any gain or loss as a
result of the Merger. Landmark has received from its counsel, Winstead
Sechrest & Minick P.C., an opinion to the effect that the Merger will be
treated for federal income tax purposes as a reorganization within the meaning
of Section 368(a) of the Code, that Halliburton, Merger Sub and Landmark each
will be a party to the reorganization within the meaning of Section 368(b) of
the Code, and that stockholders of Landmark will not recognize any gain or
loss upon the receipt of Halliburton Common Stock for their Landmark Common
Stock, other than with respect to cash received in lieu of fractional shares
of Halliburton Common Stock. Such opinions are subject to certain assumptions
and based on certain representations of Halliburton, Merger Sub and Landmark.
Stockholders of Landmark should be aware that such opinions are not binding on
the IRS and no assurance can be given that the IRS will not adopt a contrary
position or that a contrary IRS position would not be sustained by a court.
Assuming the Merger qualifies as a reorganization under Section 368(a) of
the Code, the following federal income tax consequences will occur:
(a) no gain or loss will be recognized by Halliburton, Merger Sub or
Landmark in connection with the Merger;
(b) no gain or loss will be recognized by a holder of Landmark Common
Stock upon the exchange of all of such holder's shares of Landmark
Common Stock solely for shares of Halliburton Common Stock in the
Merger;
38
<PAGE>
(c) the aggregate basis of the shares of Halliburton Common Stock
received by a Landmark stockholder in the Merger (including any
fractional share deemed received) will be the same as the aggregate
basis of the shares of Landmark Common Stock surrendered in exchange
therefor;
(d) the holding period of the shares of Halliburton Common Stock received
by a Landmark stockholder in the Merger (including any fractional
share deemed received) will include the holding period of the shares
of Landmark Common Stock surrendered in exchange therefor, provided
that such shares of Landmark Common Stock are held as capital assets
at the Effective Time; and
(e) a stockholder of Landmark who receives cash in lieu of a fractional
share will recognize gain or loss equal to the difference, if any,
between such stockholder's basis in the fractional share (as
described in paragraph (c) above) and the amount of cash received.
Such gain or loss will be eligible for long-term capital gain or loss
treatment if the Landmark Common Stock is held by such stockholder as
a capital asset at the Effective Time, and the holding period for the
fractional share (as described in paragraph (d) above) is more than
one year.
ACCOUNTING TREATMENT
The Merger is expected to be accounted for using the "pooling of interests"
method of accounting for business combinations pursuant to Opinion No. 16 of
the Accounting Principles Board. The pooling of interests method of accounting
assumes that the combining companies have been merged from inception, and the
historical consolidated financial statements for periods prior to consummation
of the Merger are restated as though the companies had been combined from
inception. See the "Unaudited Pro Forma Condensed Combined Financial
Information."
Halliburton has been preliminarily advised by its independent public
accountants, Arthur Andersen LLP, that the Merger should be treated as a
pooling of interests in accordance with generally accepted accounting
principles. Consummation of the Merger is conditioned upon the written
confirmation of such advice. Also, such advice contemplates that each person
who may be deemed an affiliate of Landmark or Halliburton will enter into an
agreement with Halliburton not to sell or otherwise transfer any shares of
Landmark Common Stock or Halliburton Common Stock, as the case may be, within
30 days prior to the Effective Time or any Halliburton Common Stock thereafter
prior to the publication of financial results that include at least 30 days of
post-Merger combined operations of Halliburton and Landmark. Forms of such
agreements ("Affiliate's Agreements") are attached as Annexes B and C to the
Merger Agreement, a copy of which is itself attached to this Proxy
Statement/Prospectus as Appendix A. In accordance with the provisions of the
Merger Agreement, Halliburton and Landmark have heretofore obtained executed
Affiliate's Agreements from all persons known to the managements of
Halliburton or Landmark to be affiliates of such corporations, respectively.
GOVERNMENTAL AND REGULATORY APPROVALS
Under the provisions of the HSR Act, the Merger may not be consummated until
such time as the specified waiting period requirements of the HSR Act have
been satisfied. Halliburton and Landmark filed notification reports, together
with requests for early termination of the waiting period, with the Department
of Justice and the FTC under the HSR Act on July 26, 1996. On August 14, 1996,
Halliburton and Landmark were notified that their request for early
termination of the waiting period had been granted.
At any time before or after the Effective Time, the Department of Justice,
the FTC or a private person or entity could seek under the antitrust laws,
among other things, to enjoin the Merger or to cause Halliburton to divest
itself, in whole or in part, of Landmark or of other businesses conducted by
Halliburton. There can be no assurance that a challenge to the Merger will not
be made or that, if such a challenge is made, Halliburton and Landmark will
prevail.
Halliburton and Landmark are aware of no other governmental or regulatory
approvals required for consummation of the Merger, except compliance with
applicable federal and state securities laws.
39
<PAGE>
RESTRICTIONS ON RESALES BY AFFILIATES
The shares of Halliburton Common Stock to be received by Landmark
stockholders in connection with the Merger have been registered under the
Securities Act and, except as set forth in this paragraph, may be traded
without restriction. The shares of Halliburton Common Stock to be issued in
connection with the Merger and received by persons who are deemed to be
"affiliates" (as that term is defined in Rule 144 under the Securities Act) of
Landmark prior to the Merger may be resold by them only in transactions
permitted by the resale provisions of Rule 145 under the Securities Act (or,
in case any such person should become an affiliate of Halliburton, Rule 144
under the Securities Act) or as otherwise permitted under the Securities Act.
Under guidelines published by the Commission, the sale or other disposition of
Halliburton Common Stock or Landmark Common Stock by an affiliate of either
Halliburton or Landmark, as the case may be, within 30 days prior to the
Effective Time or the sale or other disposition of Halliburton Common Stock
thereafter prior to the publication of financial results that include at least
30 days of post-Merger combined operations of Halliburton and Landmark (the
"Pooling Period") could preclude pooling of interests accounting treatment of
the Merger. Accordingly, the Merger Agreement provides that each of Landmark
and Halliburton will use all reasonable efforts to cause each of its
affiliates to execute an Affiliate's Agreement to the effect that such persons
will not sell, transfer or otherwise dispose of any shares of Landmark Common
Stock or Halliburton Common Stock, as the case may be, during the Pooling
Period (subject to certain exceptions for transactions that would not have an
adverse impact on the availability of pooling of interest accounting
treatment) and, with respect to affiliates of Landmark, that such persons will
not sell, transfer or otherwise dispose of Halliburton Common Stock at any
time in violation of the Securities Act or the rules and regulations
promulgated thereunder, including Rule 145. As indicated under "--Accounting
Treatment," Halliburton and Landmark have heretofore obtained executed
Affiliate's Agreements from all persons known to the managements of
Halliburton or Landmark to be affiliates of such corporations, respectively.
RIGHTS OF DISSENTING STOCKHOLDERS
Under Delaware law, holders of Landmark Common Stock will not be entitled to
any appraisal or dissenter's rights in connection with the Merger.
CERTAIN TERMS OF THE MERGER AGREEMENT
The following description does not purport to be complete and is qualified
in its entirety by reference to the Merger Agreement, a copy of which is
attached as Appendix A to this Proxy Statement/Prospectus and is incorporated
herein by reference.
EFFECTIVE TIME OF THE MERGER
The Merger Agreement provides that, as soon as practicable following the
satisfaction or waiver of the conditions to effecting the Merger or at such
other time as the parties to the Merger Agreement may agree, the parties shall
cause the Merger to be consummated by filing a 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. It is
anticipated that, if the Merger Agreement is approved and adopted at the
Special Meeting and all other conditions to the Merger have then been
satisfied or waived, the Effective Time will occur on the date of the Special
Meeting or as soon thereafter as practicable.
MANNER AND BASIS OF CONVERTING SHARES
At the Effective Time, each outstanding share of Landmark Common Stock,
other than shares of Landmark Common Stock held in the treasury of Landmark or
owned by Halliburton or any direct or indirect wholly-owned subsidiary of
either Halliburton or Landmark, which shares will be canceled at the Effective
Time, will be converted into 0.574 of a share of Halliburton Common Stock.
Notwithstanding the foregoing, if between the date of the Merger Agreement and
the Effective Time the outstanding shares of Halliburton Common Stock or
Landmark Common Stock shall have been changed into a different number of
shares or a different class, by reason of any stock dividend, any subdivision,
combination or exchange of shares or any reclassification or
40
<PAGE>
recapitalization, the Exchange Ratio will be correspondingly adjusted to
reflect such stock dividend, subdivision, combination or exchange of shares or
any reclassification or recapitalization.
As soon as practicable following the Effective Time, Halliburton will cause
ChaseMellon Shareholder Services, L.L.C., which has been selected by
Halliburton to act as exchange agent pursuant to the Merger Agreement (the
"Exchange Agent"), to mail to each record holder of Landmark Common Stock
immediately prior to the Effective Time, information advising such holder of
the consummation of the Merger and a letter of transmittal for use in
exchanging Landmark Common Stock certificates for Halliburton Common Stock
certificates and cash in lieu of fractional shares. Letters of transmittal
also will be available following the Effective Time at the offices of the
Exchange Agent at 2323 Bryan Street, Suite 2300, Dallas, Texas 75201, and
holders of certificates that previously evidenced Landmark Common Stock may,
at their option after the Effective Time, surrender such certificates for
certificates evidencing Halliburton Common Stock at the offices of the
Exchange Agent in person. After the Effective Time, there will be no further
registration of transfers on the stock transfer books of Landmark of shares of
Landmark Common Stock that were outstanding immediately prior to the Effective
Time. SHARE CERTIFICATES SHOULD NOT BE SURRENDERED FOR EXCHANGE BY
STOCKHOLDERS OF LANDMARK PRIOR TO THE EFFECTIVE TIME.
No fractional shares of Halliburton Common Stock will be issued in the
Merger. Each stockholder of Landmark otherwise entitled to a fractional share
will receive, in lieu of such fractional share, an amount in cash, without
interest thereon, determined as follows: Pursuant to instructions from
Halliburton, the Exchange Agent will determine the number of fractional shares
allocable to all holders of Landmark Common Stock pursuant to the Merger
Agreement, will aggregate all such fractional shares into whole shares, will
sell such whole shares of Halliburton Common Stock in the open market at then
prevailing prices on behalf of the holders who would otherwise be entitled
thereto and will distribute to each holder, at the time of surrender of such
holder's Landmark Common Stock certificates, such holder's ratable share of
such proceeds, after withholding federal income taxes and any applicable
transfer taxes. All brokers' fees and commissions and fees of the Exchange
Agent incurred in connection with such sale will be paid by Halliburton.
Subsequent to the Effective Time and until so surrendered and exchanged,
each certificate previously evidencing Landmark Common Stock will be deemed,
for all purposes other then the payment of dividends and other distributions,
to evidence whole shares of Halliburton Common Stock and the right to receive
cash in lieu of fractional shares of Halliburton Common Stock. Unless and
until any such certificates that previously evidenced Landmark Common Stock
are so surrendered and exchanged, no dividends or other distributions payable
to the holders of record of Halliburton Common Stock as of any time on or
after the Effective Time will be paid to the holders of such certificates
previously evidencing Landmark Common Stock; provided, however, that, upon any
such surrender and exchange of such certificates, there will be paid to the
record holders of the certificates issued and exchanged therefor (i) the
amount, without interest thereon, of dividends and other distributions, if
any, with a record date on or after the Effective Time theretofore paid with
respect to such whole shares of Halliburton Common Stock and (ii) at the
appropriate payment date, the amount of dividends or other distributions, if
any, with a record date on or after the Effective Time but prior to surrender
and a payment date occurring after surrender, payable with respect to such
whole shares of Halliburton Common Stock.
LANDMARK OPTIONS
The Merger Agreement provides that at the Effective Time, automatically and
without any action on the part of the holder thereof, each Landmark Option
will be assumed by the Surviving Corporation and will become an option to
purchase Halliburton Common Stock. The number of shares of Halliburton Common
Stock subject thereto will be obtained by multiplying the number of shares of
Landmark Common Stock previously subject thereto (without regard to any
vesting schedule) by the Exchange Ratio, and the exercise price per share of
Halliburton Common Stock will be obtained by dividing the exercise price per
share of Landmark Common Stock stated therein by the Exchange Ratio.
Otherwise, the terms and conditions of such Landmark Options will remain the
same.
41
<PAGE>
Based on the Landmark Options outstanding at the Record Date and assuming
none of such Landmark Options is exercised prior to the Effective Time,
Halliburton will be required at the Effective Time to reserve an aggregate of
1,779,817 shares of Halliburton Common Stock for issuance upon exercise of
Landmark Options assumed by the Surviving Corporation pursuant to the Merger.
The assumption by the Surviving Corporation of the Landmark Options pursuant
to the Merger Agreement will not affect the vesting schedule of any such
Options. One of the six executory Landmark stock option plans being so assumed
by its terms, however, provides that upon effectuation of the Merger all
unvested options will immediately vest in full. That plan, the Landmark
Graphics Corporation 1994 Flexible Incentive Plan, provides that, in the event
of a "Change in Control" as defined therein, the options granted with respect
thereto will become fully vested and immediately exercisable. As a result,
Landmark Options relating to an aggregate of 436,650 shares of Landmark Common
Stock (equivalent to 250,637 shares of Halliburton Common Stock) that were
unvested will, at the Effective Time, become fully vested and immediately
exercisable. Of such shares, 338,000 shares of Landmark Common Stock
(equivalent to 194,012 shares of Halliburton Common Stock) are subject to
stock options held by Landmark directors and officers. For information as to
the individual holdings of Landmark Stock Options by directors and executive
officers of Landmark, see "The Merger--Interests of Certain Persons in the
Merger--Stock Options." In addition, the Change in Control Agreements also
provide for the acceleration of Landmark Options granted to parties to such
Change in Control Agreements.
For information regarding the effect of the Change in Control Agreements on
options held by those executive officers of Landmark who are parties to the
Change in Control Agreements, see "The Merger--Interests of Certain Persons in
the Merger--Stock Options."
CONDITIONS TO THE MERGER
The respective obligations of Halliburton and Landmark to consummate the
Merger are subject to the satisfaction of the following conditions, any or all
of which may be waived in writing by Landmark and Halliburton, in whole or in
part, to the extent permitted by applicable law; (i) the Registration
Statement shall have been declared effective by the Commission under the
Securities Act, no stop order suspending the effectiveness of the Registration
Statement shall have been issued by the Commission and no proceedings for that
purpose shall have been initiated by the Commission; (ii) the Merger Agreement
shall have been approved and adopted by the requisite vote of the stockholders
of Landmark; (iii) no Court or Governmental Authority shall have 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 making the Merger illegal or otherwise prohibiting consummation of
the Merger; and (iv) Halliburton and Landmark shall have been advised in
writing by Arthur Andersen LLP on the date on which the Effective Time occurs
that such firm knows of no reason why the Merger should not be treated for
financial accounting purposes as a pooling of interests in accordance with
generally accepted accounting principles and the rules, regulations and
interpretations of the Commission.
The obligation of Halliburton to effect the Merger is also subject to the
satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived in writing by Halliburton, in whole or in
part, to the extent permitted by applicable law: (i) each of the
representations and warranties of Landmark contained in the Merger Agreement
shall be true and correct in all material respects as of the date of the
Merger Agreement and as of the Effective Time as though made again as of the
Effective Time; and (ii) Landmark shall have performed or complied in all
material respects with all agreements and covenants required by the Merger
Agreement to be performed or complied with by it on or prior to the Effective
Time.
The obligation of Landmark to effect the Merger is also subject to the
satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived in writing by Landmark, in whole or in part,
to the extent permitted by applicable law: (i) each of the representations and
warranties of Halliburton and
42
<PAGE>
Merger Sub contained in the Merger Agreement shall be true and correct in all
material respects as of the date of the Merger Agreement and as of the
Effective Time as though made again as of the Effective Time;(ii) Halliburton
and Merger Sub shall have performed or complied in all material respects with
all agreements and covenants required by the Merger Agreement to be performed
or complied with by them on or prior to the Effective Time; and (iii) the
shares of Halliburton Common Stock to be issued pursuant to the Merger shall
have been approved for listing, subject to official notice of issuance, on the
NYSE.
There can be no assurance that all of the conditions to the Merger will be
satisfied.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of each
of Landmark and Halliburton relating to, among other things, (i) its
organization and similar corporate matters, (ii) its capitalization, (iii) the
authorization, execution, delivery, performance and enforceability of the
Merger Agreement and the Stock Option Agreement and the absence of conflicts,
violations and defaults under its charter and bylaws and certain other
agreements and documents, (iv) the documents and reports filed by it with
Commission and the accuracy of the information contained therein, (v) the
absence of certain changes and events, (vi) the title to its assets and
properties, (vii) its material contracts and agreements, (viii) the material
permits and orders from Governmental Authorities required to conduct its
business, (ix) its litigation and compliance with laws, (x) its employee
benefit plans, (xi) its taxes, (xii) certain environmental matters, (xiii)
certain matters relating to pooling of interests accounting and taxes, (xiv)
its brokers or investment bankers involved in the transaction and (xv) certain
business practices. In addition, the Merger Agreement contains representations
and warranties by Landmark relating to (i) reports filed by it with
Governmental Authorities in addition to the Commission, (ii) its intellectual
property, (iii) its insurance policies and (iv) the receipt of an opinion from
its investment banker with respect to the Exchange Ratio. The representations
and warranties of Landmark and Halliburton also extend in many respects to
their respective subsidiaries and, in the case of Halliburton, Merger Sub
joins in the representations and warranties. The representations and
warranties expire at the Effective Time.
CERTAIN COVENANTS; CONDUCT OF BUSINESS PRIOR TO THE MERGER
BUSINESS MAINTENANCE. Each of Landmark and Halliburton has agreed that,
prior to the Effective Time, unless expressly contemplated by the Merger
Agreement or otherwise consented to in writing by the other, it will and will
cause its subsidiaries (i) to operate its business in the usual and ordinary
course consistent with past practices; (ii) to use all reasonable efforts to
preserve substantially intact its business organization, to maintain its
material rights and franchises, to retain the services of its respective key
employees and to maintain its relationships with its respective customers and
suppliers; (iii) to maintain and keep its properties and assets in as good
repair and condition as at present, ordinary wear and tear excepted, and to
maintain supplies and inventories in quantities consistent with its customary
business practice; and (iv) to use all reasonable efforts to keep in full
force and effect insurance and bonds comparable in amount and scope of
coverage to that as of June 30, 1996.
NEGATIVE COVENANTS. Landmark has agreed that, prior to the Effective Time,
subject to certain exceptions and unless expressly contemplated by the Merger
Agreement or otherwise consented to in writing by Halliburton, it will not do,
and will not permit any of its subsidiaries to do, any of the following;
(i)(a) increase the compensation payable to or to become payable to any
director or executive officer; (b) grant any severance or termination pay to,
or enter into or amend in any material respect any employment or severance
agreement with, any director, officer or employee; (c) establish, adopt or
enter into any employee benefit plan; or (d) amend, or take any other actions
with respect to, any employee benefit plans of such party; (ii) declare or pay
any dividend on, or make any other distribution in respect of, outstanding
shares of capital stock; (iii)(a) redeem, purchase or acquire, or offer to
purchase or acquire, any outstanding shares of capital stock of, or other
equity interests in, or any outstanding options, warrants or rights of any
kind to acquire any shares of capital stock of, or other equity interest in,
Landmark or any of its subsidiaries; (b) effect any reorganization or
recapitalization; or (c) split, combine or reclassify any of the capital
stock, or other equity interest of, or issue or authorize or propose the
43
<PAGE>
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of capital stock, or such equity interests, of Landmark or any of
its subsidiaries; (iv)(a) except as contemplated by the Stock Option
Agreement, offer, sell, issue or grant, or authorize the offering, sale,
issuance or grant, of any shares of capital stock of, or other equity
interests in, any securities convertible into or exchangeable for any shares
of capital stock of, or other equity interest in, or any options, warrants or
rights of any kind to acquire any shares of capital stock of, or other equity
interest in, Landmark or any of its subsidiaries; (b) amend or otherwise
modify the terms of any such rights, warrants or options the effect of which
shall be to make such terms more favorable to the holders thereof; (c) take
any action to accelerate the vesting of Landmark Options; or (d) to grant any
lien with respect to any shares of capital stock of, or other equity interest
in, any subsidiary of Landmark; (v) acquire or agree to acquire any business
or other entity, or otherwise acquire or agree to acquire any assets of any
other person; (vi) sell or otherwise dispose of, or grant any lien with
respect to, any of its material assets or any material assets of any of its
subsidiaries; (vii) adopt certain amendments to its charter or bylaws; (viii)
change any of its significant accounting policies or take certain actions with
respect to taxes; (ix) incur any obligation for borrowed money or purchase
money indebtedness; (x) release any third party from its obligations under any
existing standstill provision relating to a Competing Transaction or otherwise
under a confidentiality or similar agreement; (xi) enter into certain material
contracts; or (xii) agree in writing or otherwise to do any of the foregoing.
Halliburton has agreed that, prior to the Effective Time, subject to certain
exceptions and unless expressly contemplated by the Merger Agreement or
otherwise consented to in writing by Landmark, it will not do, and will not
permit any of its subsidiaries to do, any of the following: (i) declare or pay
any dividend on, or make any other distribution in respect of, outstanding
shares of capital stock, other than, in the case of the parent company,
regular quarterly dividends payable to holders of Halliburton Common Stock in
the amounts per share and at the approximate times paid during calender year
1995; (ii)(a) redeem, purchase or acquire, or offer to purchase or acquire,
any outstanding shares of capital stock of, or other equity interests in, or
any outstanding options, warrants or rights of any kind to acquire any shares
of capital stock of, or other equity interests in, Halliburton or any of its
subsidiaries; or (b) effect any reorganization or recapitalization; (iii)
offer, sell, issue or grant, or authorize the offering, sale, issuance or
grant, of any shares of capital stock of, or other equity interest in, any
securities convertible into or exchangeable for any shares of capital stock
of, or other equity interest in, or any options, warrants or rights of any
kind to acquire any shares of capital stock of, or other equity interest in,
Halliburton or any of its subsidiaries; (iv) acquire or agree to acquire any
business or other entity or otherwise acquire or agree to acquire any assets
of any other person; (v) sell or otherwise dispose of, or grant any lien with
respect to, any of its material assets or any material assets of any of its
subsidiaries; (vi) adopt certain amendments to its charter or bylaws; (vii)
incur material obligations for borrowed money or purchase money indebtedness;
or (viii) agree in writing or otherwise to do any of the foregoing.
ACCESS TO BUSINESS OF OTHER PARTY. During the pendency of the Merger
Agreement, Halliburton and Landmark each has agreed to afford, and to cause
its subsidiaries to afford, to the other party and its representatives
reasonable access at reasonable times to the officers, employees, agents,
properties, offices and other facilities of such party and its subsidiaries
and to such party's and such party's subsidiaries' books and records. Each of
them also has agreed to furnish, and to cause its subsidiaries to furnish, to
the other party and its representatives such information concerning the
business, properties, contracts, records and personnel of such party and its
subsidiaries as may be reasonably requested. If the Merger Agreement is
terminated in accordance with its terms, a party that has received information
pursuant to the Merger Agreement is obligated to return or destroy such
information within ten days after a request therefor by the other party. All
information furnished by either party pursuant to the Merger Agreement is
subject to a confidentiality agreement executed and delivered by Halliburton
and Landmark prior to negotiation of the Merger Agreement.
STRATWORKS COVENANT. Landmark has agreed, pursuant to the Merger Agreement,
that, prior to the Closing Date, it will divest itself of ownership of the
software application "Stratworks" through the sale thereof to a person
unaffiliated with either Landmark or Halliburton on terms reasonably
satisfactory to Halliburton. Without conceding the applicability or validity
of a noncompetition covenant included in an agreement under which Halliburton
sold certain software to a third party, Halliburton requested inclusion of the
Stratworks covenant in the Merger Agreement to ensure that, by consummating
the Merger, Halliburton would not violate the terms of
44
<PAGE>
the noncompetition covenant. Landmark is currently negotiating with a third
party for the sale of Stratworks to such party and expects that it will take
place simultaneously with the Effective Time.
COVENANT REGARDING CHANGE IN CONTROL AGREEMENTS. Landmark has agreed that,
prior to the Effective Time, Landmark will agree, and will use all reasonable
efforts to cause each person who is a party to one of the Change in Control
Agreements to agree, in writing that (i) Merger Sub will be substituted for
Landmark as the successor to Landmark, except that, for purposes of each such
Change in Control Agreement, a "Change in Control" (as defined therein) will
be deemed to have occurred as a result of the Merger, (ii) no payments will be
required pursuant to such Change in Control Agreements solely as a result of
the Merger and (iii) the section of the Change in Control Agreements requiring
payment to be made thereunder will be amended as provided in the Merger
Agreement. For information regarding the Change in Control Agreements, see
"The Merger--Interests of Certain Persons in the Merger."
NO SOLICITATION
As an inducement to Halliburton to enter into the Merger Agreement, Landmark
has agreed not to initiate, solicit or knowingly encourage (including by way
of furnishing nonpublic information or assistance), or take any other action
knowingly to facilitate, any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any Competing
Transaction, or enter into discussions or negotiate with any person or entity
in furtherance of such inquiries or to obtain a Competing Transaction, or
agree to or endorse any Competing Transaction, or authorize or permit any of
the officers, directors or employees of Landmark or any of its subsidiaries or
any investment banker, financial advisor, attorney, accountant or other
representative retained by Landmark or any of Landmark's subsidiaries to take
any such action, and, to the extent permitted by contracts existing at the
date of the Merger Agreement, Landmark will promptly notify Halliburton of any
such inquiries and proposals received by Landmark or any of its subsidiaries
or by any such officer, director, employee, investment banker, financial
advisor, attorney, accountant or other representative relating to any of such
matters; provided, however, that the Board of Directors of Landmark may (i)
furnish information to, or enter into discussions or negotiations with, any
person or entity in connection with an unsolicited bona fide proposal in
writing by such person or entity relating to a merger, consolidation, share
exchange, business combination or other similar transaction or to acquire a
substantial portion of the assets of Landmark or any of its Significant
Subsidiaries (as defined in the Merger Agreement), if, and only to the extent
that, (a) the Board of Directors of Landmark, after considering the advice of
outside legal counsel, determines in good faith that such action is required
for such Board of Directors of Landmark to comply with its fiduciary duties to
stockholders imposed by law, and (b) prior to furnishing such information to,
or entering into discussions or negotiations with, such person or entity,
Landmark provides written notice to Halliburton to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or entity or (ii) comply with Rule 14e-2 promulgated under the
Exchange Act with regard to a Competing Transaction.
CERTAIN POST-MERGER MATTERS
Once the Merger is consummated, Landmark will cease to exist as a
corporation, and Merger Sub, as the Surviving Corporation, will succeed to all
of the assets, rights and obligations of Landmark.
Pursuant to the Merger Agreement, the charter and the bylaws of Merger Sub,
as in effect immediately prior to the Effective Time, will be the charter and
bylaws of the Surviving Corporation until amended as provided therein and
pursuant to the DGCL, except that from and after the Effective Time, Article I
of the charter of Merger Sub will be amended to provide that its corporate
name will be "Landmark Graphics Corporation."
TERMINATION OR AMENDMENT OF THE MERGER AGREEMENT
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the Merger Agreement by the
stockholders of Landmark: (i) by mutual consent of Halliburton and Landmark;
(ii) by Halliburton, upon a breach of any covenant or agreement on the part of
Landmark set forth in the Merger Agreement or if any representation or
warranty of Landmark shall have become untrue, in either
45
<PAGE>
case such that Halliburton's conditions to effecting the Merger would not be
satisfied, subject to a cure period under certain circumstances (a
"Terminating Landmark Breach"); (iii) by Landmark, upon a breach of any
material covenant or agreement on the part of Halliburton or Merger Sub set
forth in the Merger Agreement or if any representation or warranty of
Halliburton or Merger Sub shall have become untrue, in either case such that
Landmark's conditions to effecting the Merger would not be satisfied, subject
to a cure period under certain circumstances; (iv) by either Halliburton or
Landmark, if there shall be any Order which is final and nonappealable
preventing the consummation of the Merger, subject to a limited exception; (v)
by either Halliburton or Landmark, if the Merger shall not have been
consummated before December 31, 1996; provided, however, that the Merger
Agreement may be extended by written notice given by either Halliburton or
Landmark to a date not later than February 28, 1997 if the Merger shall not
have been consummated as a direct result of Landmark, Halliburton or Merger
Sub having failed by December 31, 1996 to receive all required regulatory
approvals or consents with respect to the Merger or as the result of the
entering of an Order; (vi) by either Halliburton or Landmark, if the Merger
Agreement shall fail to receive the requisite vote for approval and adoption
by the stockholders of Landmark at the Special Meeting; (vii) by Halliburton,
if (a) the Board of Directors of Landmark withdraws, modifies or changes its
recommendation of the Merger Agreement or the Merger in a manner materially
adverse to Halliburton or Merger Sub or shall have resolved to do any of the
foregoing; (b) a tender offer or exchange offer for 50% or more of the
outstanding shares of capital stock of Landmark is commenced, and the Board of
Directors of Landmark, within ten business days after such tender offer or
exchange offer is so commenced, either fails to recommend against acceptance
of such tender or exchange offer by the Landmark stockholders or takes no
position with respect to the acceptance of such tender or exchange offer by
the Landmark stockholders; or (c) any person shall have acquired beneficial
ownership or the right to acquire beneficial ownership of, or any "group" (as
such term is defined under Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder) shall have been formed that beneficially
owns, or has the right to acquire beneficial ownership of, 50% or more of the
then outstanding shares of capital stock of Landmark; or (viii) by Landmark,
if Landmark accepts a Superior Proposal (as defined in the Merger Agreement)
and makes the payment required pursuant to, and pays the expenses for which
Landmark is responsible under, the Merger Agreement. As defined in the Merger
Agreement, the term "Superior Proposal" means a bona fide proposal made by a
third person or entity to acquire Landmark pursuant to a tender or exchange
offer for all of the outstanding capital stock of Landmark, a merger, a sale
of all or substantially all of Landmark's assets or otherwise on terms that
the Board of Directors of Landmark determines in its good faith judgment to be
more favorable to the stockholders of Landmark than the Merger (based on the
written opinion, with only customary qualifications, of Landmark's independent
financial advisor that the value of the consideration to Landmark's
stockholders provided for in such proposal exceeds the value of the
consideration to Landmark's stockholders provided for in the Merger) and for
which financing, to the extent required, is then committed or which, in the
good faith judgment of the Board of Directors of Landmark (based on the
written advice of Landmark's independent financial advisor) is reasonably
capable of being obtained by such third person or entity.
Subject to limited exceptions, including the survival of Landmark's
agreement to pay a termination fee to Halliburton under certain circumstances,
as discussed below, in the event of the termination of the Merger Agreement,
the Merger Agreement shall become void, there shall be no liability on the
part of Halliburton, Merger Sub or Landmark (or any of their respective
officers and directors) to the other, and all rights and obligations of the
parties thereto shall cease, except that no party will be relieved from its
obligations with respect to any breach of the Merger Agreement.
The Merger Agreement may be amended by the parties thereto by action taken
by or on behalf of their respective Boards of Directors at any time prior to
the Effective Time; provided, however, that, after approval of the Merger by
the stockholders of Landmark, no amendment may be made that would reduce the
amount or change the type of consideration into which each share of Landmark
Common Stock will be converted pursuant to the Merger Agreement upon
consummation of the Merger. Any such amendment to the Merger Agreement must be
set forth in a writing signed by Halliburton, Merger Sub, and Landmark. At any
time prior to the Effective Time, any party to the Merger Agreement may (i)
extend the time for the performance of any of the obligations or other acts of
the other party thereto, (ii) waive any inaccuracies in the representations
and
46
<PAGE>
warranties of the other party contained therein or in any document delivered
pursuant thereto and (iii), to the extent permitted by law, waive compliance
by the other party with any of the agreements or conditions contained therein.
Any such extension or waiver shall be valid only if set forth in a writing
signed by the party or parties to be bound thereby.
EXPENSES AND TERMINATION FEE
All expenses incurred by Halliburton, Merger Sub and Landmark will be borne
by the party incurring such expenses; provided, however, that the allocable
share of Halliburton and Merger Sub, as a group, and Landmark for all expenses
related to printing, filing and mailing this Proxy Statement/Prospectus and
all Commission and other regulatory filing fees incurred in connection with
the Registration Statement or this Proxy Statement/Prospectus shall be one-
half each; and provided, further, that Halliburton may, at its option, pay any
expenses of Landmark that are solely and directly related to the Merger.
The Merger Agreement provides that Landmark will pay to Halliburton a
termination fee equal to $18 million if: (i) the Merger Agreement is
terminated by either Halliburton or Landmark because the Merger Agreement
fails to receive the requisite vote for approval and adoption by the
stockholders of Landmark at the Special Meeting, and, prior to the time of
such meeting, Landmark shall have furnished information to, or entered into
discussions or negotiations with, any person or entity with respect to a
Competing Transaction involving Landmark or any of its subsidiaries and the
Board of Directors of Landmark shall not have reaffirmed its favorable
recommendation to the stockholders of Landmark with respect to the
transactions contemplated by the Merger Agreement by the time of the Special
Meeting; (ii) the Merger Agreement is terminated by Halliburton because the
Board of Directors of Landmark withdraws, modifies or changes its
recommendation of the Merger Agreement or the Merger in a manner materially
adverse to Halliburton or Merger Sub (or resolves to do so); (iii) the Merger
Agreement is terminated by Halliburton because a tender or exchange offer for
50% or more of the capital stock of Landmark is commenced, and the Board of
Directors of Landmark, within ten business days after such tender offer or
exchange offer is so commenced, either fails to recommend against acceptance
of such tender or exchange offer by the Landmark stockholders or takes no
position with respect to the acceptance of such tender or exchange offer by
the Landmark stockholders; (iv) the Merger Agreement is terminated by Landmark
because Landmark has accepted a Superior Proposal; (v) within 12 months after
the date of termination of the Merger Agreement, any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder), other than Halliburton, its subsidiaries or
affiliates, shall have acquired beneficial ownership, by tender offer,
exchange offer or otherwise, of 50% or more of the outstanding shares of
Landmark Common Stock and (a) the value of the consideration per share
received by the Landmark stockholders in such transaction shall have been
higher on a per share basis than the consideration payable to the Landmark
stockholders under the Merger Agreement on a per share basis, or (b) such
transaction shall be on more favorable terms to the Landmark stockholders than
the Merger; or (vi) if (a) the Merger Agreement is terminated by Halliburton
because of a Terminating Landmark Breach and such termination is the result of
an intentional or willful breach by Landmark of any agreement, covenant,
representation or warranty contained in the Merger Agreement, and (b) either
(1) within 12 months after such termination of the Merger Agreement Landmark
shall have entered into a definitive agreement providing for a Business
Combination with any person or "group" (as defined above), other than
Halliburton, its subsidiaries or affiliates, to which Landmark shall have
furnished information or with which Landmark shall have had any contacts or
entered into any discussions or negotiations relating to a Business
Combination at any time during the period commencing 18 months prior to the
date of the Merger Agreement through the date of termination of the Merger
Agreement and contemplating the payment to Landmark or the Landmark
stockholders, as the case may be, of consideration having a higher value in
the aggregate than the consideration payable to the Landmark stockholders
under the Merger Agreement or such transaction shall be on more favorable
terms to the Landmark stockholders than the Merger and such Business
Combination is thereafter consummated, or (2) within 12 months after such
termination of the Merger Agreement, any such person or "group" (as defined
above) shall have acquired beneficial ownership by tender offer or exchange
offer or otherwise, of 50% or more of the outstanding shares of Landmark
Common Stock and as a result the Landmark stockholders shall have received
consideration having a higher value per share than the consideration per share
payable to the Landmark stockholders under the Merger Agreement or such
transaction shall be on more favorable terms to the Landmark stockholders than
the Merger.
47
<PAGE>
INDEMNIFICATION
The Merger Agreement provides that, for a period of six years after the
Effective Time, (i) the certificate of incorporation and bylaws of the
Surviving Corporation (which will contain indemnification provisions
substantially equivalent to the current provisions in the Landmark Charter and
Bylaws) as in effect immediately following the Effective Time shall not be
amended to reduce or limit the rights of indemnity afforded to the present and
former directors and officers of Landmark thereunder or as to the ability of
the Surviving Corporation to indemnify such persons or to hinder, delay or
make more difficult the exercise of such rights of indemnity or the ability to
indemnify with respect to any claims made against such persons arising from
their service in such capacities; and (ii) Halliburton shall cause to be
maintained in effect the current policies of directors' and officers'
liability insurance maintained by Landmark (or substitute policies under
certain circumstances) with respect to claims arising from facts or events
that occurred before the Effective Time; provided, however, that in no event
shall Halliburton or the Surviving Corporation be required to expend more than
200% of the current annual premiums paid by Landmark for such insurance.
STOCK OPTION AGREEMENT
The following description does not purport to be complete and is qualified
in its entirety by reference to the Stock Option Agreement, a copy of which is
attached as Appendix B to this Proxy Statement/Prospectus and is incorporated
herein by reference.
Pursuant to the Stock Option Agreement, Landmark has granted to Halliburton
an option ("the Option") to acquire up to 2,624,759 shares, subject to certain
adjustments (the "Option Shares"), of Landmark Common Stock for $31.857 per
share in cash, subject to certain adjustments (the "Exercise Price"). The
number of Option Shares represents 15% of the shares of Landmark Common Stock
outstanding on June 30, 1996, the date of the Stock Option Agreement. The
Option was granted by Landmark as a condition of and as an inducement for
Halliburton's entering into the Merger Agreement.
The Option will remain in full force and effect from the date of the Stock
Option Agreement until the earliest to occur of (i) the Effective Time; (ii)
the first anniversary of the receipt by Halliburton of written notice from
Landmark of the occurrence of an Exercise Event, as defined below; or (iii)
termination of the Merger Agreement prior to the occurrence of such an
Exercise Event (such period being herein referred to as the "Option Term").
Halliburton may exercise the Option, in whole or in part, at any time during
the Option Term following the occurrence of any of the following events
("Exercise Events"):
(i) any person or entity (other than Halliburton or any subsidiary thereof)
shall have commenced (as such term is defined in Rule 14d-2 of the
Exchange Act) or shall have filed a registration statement under the
Securities Act with respect to a tender offer or exchange offer to
purchase any shares of Landmark Common Stock such that, upon
consummation of such offer, such person would own or control 25% or
more of the then outstanding Landmark Common Stock;
(ii) Landmark or any subsidiary of Landmark shall have authorized,
recommended, proposed or publicly announced an intention to authorize,
recommend or propose, or entered into, an agreement with any person or
entity (other than Halliburton or any subsidiary thereof) to (a)
effect a merger, consolidation, share exchange or similar transaction
involving Landmark or any of its Significant Subsidiaries (as defined
therein), (b) sell, lease or otherwise dispose of assets of Landmark
and its subsidiaries representing 15% or more of the consolidated
assets of Landmark and its subsidiaries, or (c) issue, sell or
otherwise dispose of (including by way of merger, consolidation, share
exchange or any similar transaction) securities (or options, rights or
warrants to purchase, or securities convertible into or exchangeable
for, such securities) representing 15% or more of the voting power of
Landmark or any of its Significant Subsidiaries;
48
<PAGE>
(iii) any person or entity (other than Halliburton or any subsidiary
thereof or Landmark or, in a fiduciary capacity, any subsidiary
thereof) shall have, subsequent to June 30, 1996, acquired beneficial
ownership (as such term is defined in Rule 13d-3 under the Exchange
Act) or the right to acquire beneficial ownership, or any "group" (as
defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership
of, 25% or more of the then outstanding Landmark Common Stock; or
(iv) the Landmark stockholders shall not have approved the Merger Agreement
at the meeting of such stockholders held for the purpose of voting on
the Merger Agreement or such meeting shall not have been called as
required by the terms of the Merger Agreement or shall have been
canceled, in each case after any person or entity (other than
Halliburton or any subsidiary thereof) shall have publicly announced a
proposal, or publicly disclosed an intention to make a proposal, to
engage in any transaction described in clause (i), (ii) or (iii) above,
or the Board of Directors of Landmark shall have withdrawn or modified
in a manner materially adverse to Halliburton the recommendation of the
Board of Directors of Landmark that the holders of the Landmark Common
Stock approve the Merger Agreement and the Merger.
The Stock Option Agreement contains provisions governing the procedure for
exercise of the Option and payment for the Option Shares purchased upon such
exercise and other provisions that adjust the number of Option Shares and the
Exercise Price therefor upon the occurrence of certain events, such as stock
dividends, divisions, combinations and recapitalizations, as well as certain
mergers, consolidations, share exchanges and sales of assets involving
Landmark.
The Stock Option Agreement further provides that, in the event of an
Exercise Event described in clause (ii), (iii) or (iv) above and for a period
of one year thereafter, Landmark will, upon the request of Halliburton,
repurchase (a) that portion of the Option that then remains unexercised and
(b) all the shares of Landmark Common Stock theretofore acquired upon exercise
of the Option and then held by Halliburton. The price for such repurchase
shall be paid in cash and shall be equal to the sum of:
(i) the aggregate exercise price paid for any shares of Landmark Common
Stock upon exercise of the Option and then held by Halliburton;
(ii) the excess, if any, of the Applicable Price (as defined below) over
the Exercise Price paid for each share of Landmark Common Stock
acquired by Halliburton upon exercise of the Option and then held by
Halliburton times the number of shares; and
(iii) the excess, if any, of the Applicable Price over the Exercise Price
per share of Landmark Common Stock times the number of Option Shares
as to which the Option has not yet been exercised.
For this purpose, "Applicable Price" means the highest of (i) the highest
price per share at which a tender or exchange offer has been made for shares
of Landmark Common Stock subsequent to the date of the Stock Option Agreement;
(ii) the price per share to be paid by any third person or entity for shares
of Landmark Common Stock pursuant to any agreement for a business combination
involving Landmark entered into prior to the exercise by Halliburton of its
rights to cause Landmark to repurchase the Option and Landmark Common Stock;
and (iii) the highest bid price for the Landmark Common Stock reported by
Nasdaq during the 60 business days preceding such exercise.
Notwithstanding these repurchase rights, Halliburton may not exercise such
rights to cause Landmark to repurchase the Option and Landmark Common Stock in
a manner that would result in the payment to Halliburton of an aggregate
amount of more than $24 million, including the amount of the Termination Fee,
if any.
The Stock Option Agreement also contains provisions granting Landmark, under
certain circumstances, a right of first refusal to purchase shares of Landmark
Common Stock acquired by Halliburton upon exercise of the Option and a right
at Landmark's election, for a period of six months following the date of
expiration of Halliburton's rights to cause Landmark to repurchase the Option
and Landmark Common Stock acquired
49
<PAGE>
pursuant thereto, to purchase all the shares of Landmark Common Stock acquired
by Halliburton upon exercise of the Option.
Finally, the Stock Option Agreement contains provisions obligating Landmark
to register, under the circumstances therein specified, the offering, sale and
delivery by Halliburton of shares of Landmark Common Stock acquired by it
pursuant to the exercise of the Option under the Securities Act.
VOTING AGREEMENT
The following description does not purport to be complete and is qualified
in its entirety by reference to the Voting Agreement, a copy of which is
attached as Appendix C to this Proxy Statement/Prospectus and is incorporated
herein by reference.
In order to induce Halliburton to enter into the Merger Agreement, S. Rutt
Bridges, a director and executive officer of Landmark, and Barbara Ann
Bridges, his wife (collectively, the "Stockholders"), have entered into a
voting agreement with Halliburton, dated as of June 30, 1996 (the "Voting
Agreement"). An aggregate of 1,971,263 shares of Landmark Common Stock, owned
beneficially by S. Rutt Bridges or Barbara Ann Bridges, are subject to the
Voting Agreement. Such shares, as of the date of the Record Date, represented
approximately 11.2% of the then outstanding Landmark Common Stock.
Pursuant to the Voting Agreement, the Stockholders have, among other things,
agreed to vote, and will cause each member of the Stockholder Group (as
defined below) to vote, all shares of Landmark Common Stock beneficially owned
by them in favor of the Merger and against any business combination proposal
or other matter that may interfere or be inconsistent with the Merger
(including a Competing Transaction). The Stockholders have also agreed, if
reasonably requested by Halliburton in order to facilitate the Merger, that
they will not, and they will cause each member of the Stockholder Group not
to, attend or vote any Landmark Common Stock beneficially owned by them at,
any annual or special meeting of stockholders or to execute any written
consent of stockholders.
The Stockholders have also agreed that no Stockholder or any corporation or
other person or entity controlled by any Stockholder or any affiliate or
associate thereof, other than Landmark and its subsidiaries (collectively, the
"Stockholder Group"), will, directly or indirectly, sell, transfer, pledge or
otherwise dispose of, or grant a proxy with respect to, any shares of Landmark
Common Stock beneficially owned by any member of the Stockholder Group to any
person or entity (other than to any member of the Stockholder Group or its
designee), or grant an option with respect to any of the foregoing, or enter
into any other agreement or arrangement with respect to any of the foregoing.
The Voting Agreement will terminate on the earlier of February 28, 1997 or
the termination of the Merger Agreement.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information
reflects adjustments to the historical consolidated balance sheets and
statements of income of Halliburton and Landmark to give effect to the Merger,
using the pooling of interests method of accounting for a business
combination.
Landmark's consolidated financial statements have been conformed with
Halliburton's fiscal year end of December 31. See "Notes to Unaudited Pro
Forma Condensed Combined Financial Statements" in this section for an
explanation of the pro forma adjustments.
The unaudited pro forma condensed combined statements of income for the six
months ended June 30, 1995 and 1996 and for the years ended December 31, 1993,
1994 and 1995 assume the Merger was effected as of January 1, 1993.
50
<PAGE>
The following unaudited pro forma condensed combined information has been
prepared from, and should be read in conjunction with, the historical
consolidated financial statements and notes thereto of Halliburton and
Landmark, incorporated by reference into this Proxy Statement/Prospectus. The
following unaudited pro forma condensed combined statements of income are not
necessarily indicative of the results of operations that would have occurred
had the Merger occurred on January 1, 1993, nor are they necessarily
indicative of future operating results of the combined companies.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1996
-------------------------------------------
PRO FORMA PRO FORMA
HALLIBURTON LANDMARK ADJUSTMENTS COMBINED
----------- -------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues
Energy services................. $1,384.8 $97.3 $1,482.1
Engineering and construction
services....................... 2,053.4 2,053.4
-------- ----- --------
Total revenues................ $3,438.2 $97.3 $3,535.5
Operating income (loss)
Energy services................. $ 159.4 $(3.6) $ 155.8
Engineering and construction
services....................... 48.7 48.7
General corporate............... (17.2) (17.2)
-------- ----- --------
Total operating income
(loss)....................... 190.9 (3.6) 187.3
Nonoperating income (expense),
net.............................. (7.2) 1.5 (5.7)
-------- ----- --------
Income (loss) from continuing
operations before income taxes... 183.7 (2.1) 181.6
Benefit (provision) for income
taxes............................ (65.1) .8 (64.3)
-------- ----- --------
Income (loss) from continuing
operations....................... $ 118.6 $(1.3) $ 117.3
-------- ----- --------
Income (loss) per share from
continuing operations............ $ 1.03 $(.07) $(.03)(A) $ .93
Cash dividends per share.......... $ .50 -- $ .50
Average common shares
outstanding...................... 115.5 17.5 (7.5)(A) 125.5
</TABLE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1995
-------------------------------------------
PRO FORMA PRO FORMA
HALLIBURTON LANDMARK ADJUSTMENTS COMBINED
----------- -------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues
Energy services................. $1,198.6 $94.2 $1,292.8
Engineering and construction
services....................... 1,472.9 1,472.9
-------- ----- --------
Total revenues................ $2,671.5 $94.2 $2,765.7
Operating income
Energy services................. $ 123.3 $10.2 $ 133.5
Engineering and construction
services....................... 49.0 49.0
General corporate............... (13.6) (13.6)
-------- ----- --------
Total operating income........ 158.7 10.2 168.9
Nonoperating income (expense),
net.............................. (8.4) 1.6 (6.8)
-------- ----- --------
Income from continuing operations
before income taxes.............. 150.3 11.8 162.1
Provision for income taxes........ (57.2) (3.1) (60.3)
-------- ----- --------
Income from continuing
operations....................... $ 93.1 $ 8.7 $ 101.8
-------- ----- --------
Income per share from continuing
operations....................... $ .81 $ .50 $(.49)(A) $ .82
Cash dividends per share.......... $ .50 -- $ .50
Average common shares
outstanding...................... 114.4 17.5 (7.5)(A) 124.4
</TABLE>
51
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,1995
-------------------------------------------
PRO FORMA PRO FORMA
HALLIBURTON LANDMARK ADJUSTMENTS COMBINED
----------- -------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues
Energy services................. $2.623.4 $184.2 $2,807.6
Engineering and construction
services....................... 3,075.3 3,075.3
-------- ------ --------
Total revenues................ $5,698.7 $184.2 $5,882.9
Operating income
Energy services................. $ 313.7 $ 17.7 $ 331.4
Engineering and construction
services....................... 103.0 103.0
General corporate............... (33.5) (33.5)
-------- ------ --------
Total operating income........ 383.2 17.7 400.9
Nonoperating income (expense),
net.............................. (17.5) 3.5 (14.0)
-------- ------ --------
Income from continuing operations
before income taxes.............. 365.7 21.2 386.9
Provision for income taxes........ (131.9) (5.8) (137.7)
-------- ------ --------
Income from continuing
operations....................... $ 233.8 $ 15.4 $ 249.2
-------- ------ --------
Income per share from continuing
operations....................... $ 2.04 $ .87 $(.91)(A) $ 2.00
Cash dividends per share.......... $ 1.00 -- $ 1.00
Average common shares
outstanding...................... 114.5 17.7 (7.5)(A) 124.7
</TABLE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1994
-------------------------------------------
PRO FORMA PRO FORMA
HALLIBURTON LANDMARK ADJUSTMENTS COMBINED
----------- -------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues
Energy services................. $2,514.0 $150.9 $2,664.9
Engineering construction
services....................... 2,996.2 2,996.2
-------- ------ --------
Total revenues................ $5,510.2 $150.9 $5,661.1
Operating income
Energy services................. $ 191.8 $ 3.7 $ 195.5
Engineering and construction
services....................... 67.2 67.2
General corporate............... (22.9) (22.9)
-------- ------ --------
Total operating income........ 236.1 3.7 239.8
Nonoperating income (expense),
net.............................. 55.2 2.6 57.8
-------- ------ --------
Income from continuing operations
before income taxes.............. 291.3 6.3 297.6
Provision for income taxes........ (119.0) (3.2) (122.2)
-------- ------ --------
Income from continuing
operations....................... $ 172.3 $ 3.1 $ 175.4
-------- ------ --------
Income per share from continuing
operations....................... $ 1.51 $ .18 $(.28)(A) $ 1.41
Cash dividends per share.......... $ 1.00 -- $ 1.00
Average common shares
outstanding...................... 114.2 17.5 (7.5)(A) 124.2
</TABLE>
52
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1993
------------------------------------------
PRO FORMA PRO FORMA
HALLIBURTON LANDMARK ADJUSTMENTS COMBINED
----------- -------- ----------- ---------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues
Energy services.................. $2,953.4 $130.6 $3,084.0
Engineering and construction
services........................ 3,140.7 3,140.7
-------- ------ --------
Total revenues................. $6,094.1 $130.6 $6,224.7
Operating income (loss)
Energy Services.................. $ (148.4) $ 14.1 $ (134.3)
Engineering and construction
services........................ 78.9 78.9
General corporate................ (22.0) (22.0)
-------- ------ --------
Total operating income (loss).. (91.5) 14.1 (77.4)
Nonoperating income (expense),
net............................... (54.7) 1.2 (53.5)
-------- ------ --------
Income (loss) from continuing
operations before income taxes.... (146.2) 15.3 (130.9)
Benefit (provision) for income
taxes............................. 5.7 (2.7) 3.0
-------- ------ --------
Income (loss) from continuing
operations........................ $ (140.5) $ 12.6 $ (127.9)
-------- ------ --------
Income (loss) per share from
continuing operations............. $ (1.25) $ .85 $(.66)(A) $ (1.06)
Cash dividends per share........... $ 1.00 -- $ 1.00
Average common shares outstanding.. 112.5 14.8 (6.3)(A) 121.0
</TABLE>
53
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------------------------
PRO FORMA PRO FORMA
HALLIBURTON LANDMARK ADJUSTMENTS COMBINED
----------- -------- ----------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Current assets:
Cash and equivalents............. $ 14.2 $ 58.3 $ 72.5
Receivables...................... 1,647.8 69.8 1,717.6
Inventories...................... 306.3 3.3 309.6
Other current assets............. 228.1 9.9 238.0
-------- ------- --------
Total current assets........... 2,196.4 141.3 2,337.7
Property, plant, and equipment, net
.................................. 1,124.7 47.5 1,172.2
Other assets....................... 556.9 42.3 599.2
-------- ------- --------
Total assets................... $3,878.0 $ 231.1 $4,109.1
-------- ------- --------
Current liabilities:
Short-term notes payable and
current maturities of long-term
debt............................ $ 49.5 $ 3.0 $ 52.5
Accounts payable................. 403.7 14.3 418.0
Advance billings on uncompleted
contracts....................... 397.5 25.8 423.3
Other current liabilities........ 456.8 18.9 475.7
-------- ------- --------
Total current liabilities...... 1,307.5 62.0 1,369.5
Long-term debt..................... 200.0 200.0
Other liabilities.................. 539.6 3.7 543.3
-------- ------- --------
Total liabilities................ 2,047.1 65.7 2,112.8
Shareholders' equity:
Common stock..................... 297.6 .9 23.9 (B) 322.4
Paid-in capital in excess of par
value........................... 207.4 127.7 (27.8)(B) 307.3
Cumulative translation
adjustment...................... (29.1) (29.1)
Retained earnings................ 1,492.6 40.7 1,533.3
-------- ------- ----- --------
1,968.5 169.3 (3.9) 2,133.9
Less treasury stock, at cost..... 137.6 3.9 (3.9)(B) 137.6
-------- ------- ----- --------
Total shareholders' equity..... 1,830.9 165.4 -- 1,996.3
-------- ------- ----- --------
Total liabilities and
shareholders' equity............ $3,878.0 $ 231.1 -- $4,109.1
-------- ------- ----- --------
</TABLE>
54
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION
The unaudited pro forma condensed combined statements of income for the six
months ended June 30, 1995 and 1996 and the years ended December 31, 1993,
1994 and 1995 are based on the consolidated financial statements of
Halliburton and Landmark. The unaudited pro forma condensed combined
statements of income for Landmark for the years ended December 31, 1993, 1994
and 1995 and the six months ended June 30, 1995 and 1996 were derived by
restating Landmark information to a calendar year basis. Intercompany sales
between Halliburton and Landmark are insignificant.
The unaudited pro forma condensed combined balance sheet is based on the
balance sheets of Halliburton and Landmark at June 30, 1996 and upon the
adjustments and assumptions described below.
The unaudited pro forma condensed combined financial statements do not
reflect expenses expected to be incurred by Halliburton and Landmark in
connection with the Merger or the effect of cost savings, if any, which may be
realized after consummation of the Merger.
Halliburton and Landmark employ accounting policies that are in accordance
with generally accepted accounting principles in the United States. The
preparation of financial statements in conformity with generally accepted
accounting principles requires Halliburton and Landmark management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Ultimate results could differ from those
estimates. In the opinion of Halliburton and Landmark, the unaudited pro forma
condensed combined financial statements include all adjustments necessary to
present fairly the pro forma combined financial position of Halliburton and
Landmark and the pro forma combined results of operations of Halliburton and
Landmark.
NOTE 2. PRO FORMA ADJUSTMENTS
Halliburton and Landmark expect to incur charges to operations of
approximately $7.5 million for transaction fees and costs incident to the
Merger. These expenses are not reflected in the unaudited pro forma condensed
combined financial statements. Moreover, no adjustments have been reflected in
the unaudited pro forma condensed combined financial statements for the
synergies that Halliburton management anticipates to result from the Merger as
described under "The Merger--Halliburton's Reasons for the Merger."
The unaudited pro forma condensed combined financial statements reflect the
following pro forma adjustments:
(A) The pro forma condensed combined financial statements reflect the
issuance of 0.574 of a share of Halliburton Common Stock for each
share of Landmark Common Stock in the Merger.
(B) The unaudited pro forma condensed combined balance sheet reflects the
issuance of 0.574 of a share of Halliburton Common Stock for each
share of Landmark Common Stock outstanding at June 30, 1996.
Therefore, the historical combined common stock and paid-in capital
balances have been adjusted to reflect the number of shares assumed to
be issued and the differences in par value per common share of
Halliburton and Landmark.
55
<PAGE>
SECURITY OWNERSHIP BY CERTAIN BENEFICIAL OWNERS
HALLIBURTON
The following table sets forth information with respect to stockholders of
Halliburton who were believed by management of Halliburton to own more than
five percent of the Halliburton Common Stock outstanding as of the Record
Date. The information set forth below is based solely upon information
furnished by such stockholders or contained in filings made by such persons
with the Commission, and is as of the dates specified below.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OF
BENEFICIAL OWNER OWNERSHIP CLASS
------------------- ---------- -------
<S> <C> <C>
FMR Corp. 6,807,031(1) 5.95%
82 Devonshire Street
Boston,
Massachusetts
</TABLE>
- --------
(1) Based on information contained in a Schedule 13G filed with the Commission
with respect to beneficial ownership at December 31, 1995. The number of
shares reported includes 5,539,802 shares beneficially owned by Fidelity
Management & Research Company, 1,257,429 shares owned by Fidelity
Management Trust Company and 9,800 shares held by Fidelity International
Limited. FMR Corp., through control of Fidelity Management & Research
Company and Fidelity Management Trust Company, has sole dispositive power
over the shares with the exception of those held beneficially by Fidelity
International Limited. FMR Corp. has sole power to vote or to direct the
vote of 880,529 shares of Halliburton Common Stock.
LANDMARK
SECURITY OWNERSHIP OF FIVE PERCENT BENEFICIAL OWNERS. The following table
and the notes thereto set forth certain information with respect to the
beneficial ownership of shares of Landmark Common Stock as of the Record Date
(except as noted in the footnotes to such table) by each "person" or "group"
within the meaning of Section 13(d)(3) of the Exchange Act who is known to the
management of the Company to be the beneficial owner of more than five percent
of the Landmark Common Stock outstanding as of the Record Date:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OF
BENEFICIAL OWNER OWNERSHIP(1) CLASS
------------------- ------------ -------
<S> <C> <C>
S. Rutt Bridges 1,971,263(2)(3) 11.16%
7409 South Alton Court,
Suite 100
Englewood, Colorado
80112
Halliburton Company 1,971,263(3) 11.16%
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-
3391
Merrill Lynch & Co., 2,010,700 11.38%
Inc.(4)
P.O. Box 9011
Princeton, New Jersey
08543-9011
</TABLE>
- --------
(1) Except as otherwise indicated, (i) the persons named in this table have
sole voting and investment power with respect to all shares of Landmark
Common Stock shown as beneficially owned by them, and (ii) none of the
shares shown in this table or referred to in the footnotes hereto are
shares of which the persons named in this table have the right to acquire
beneficial ownership as specified in Rule 13d-3(d)(1) under the Exchange
Act.
(2) Includes 217,634 shares of Landmark Common Stock held directly by Mr.
Bridges' wife, Barbara Ann Bridges, with respect to which Mr. Bridges
disclaims dispositive or voting power.
56
<PAGE>
(3) Pursuant to the Voting Agreement, the voting power, but not the
dispositive power, associated with the 1,971,263 shares of Landmark Common
Stock held beneficially by S. Rutt Bridges and Barbara Ann Bridges is
shared with Halliburton. As a result of obtaining such shared voting
power, Halliburton filed a Schedule 13D with the Commission on July 25,
1996 with respect to such 1,971,263 shares of Landmark Common Stock.
(4) Includes 1,300,000 shares of Landmark Common Stock held by ML Global
Allocation Fund, Inc. ("Allocation"); 40,000 shares of Landmark Common
Stock held by ML Global Smallcap Fund, Inc. ("Smallcap"); and 587,700
shares of Landmark Common Stock held by ML Special Value Fund, Inc.
("Special Value"). Merrill Lynch Asset Management L.P. ("MLAM"), a
registered investment adviser under the Investment Advisers Act of 1940,
is the investment adviser to Allocation and Smallcap and may be deemed to
be a beneficial owner of such shares. Fund Asset Management L.P. ("FAM"),
a registered investment adviser under the Investment Advisers Act of 1940,
is the investment adviser to Special Value and may be deemed to be a
beneficial owner of such shares. In addition, MLAM has voting and
dispositive power over an additional 83,000 shares of Landmark Common
Stock.
SECURITY OWNERSHIP OF MANAGEMENT. The following table and the notes thereto
set forth certain information with respect to the beneficial ownership of
shares of Landmark Common Stock, as of the Record Date by each director and
each executive officer of Landmark and by all such executive officers and
directors as a group:
<TABLE>
<CAPTION>
OPTIONS
EXERCISABLE
ON OR BEFORE COMMON STOCK PERCENT OF
COMMON STOCK NOVEMBER 15, BENEFICIALLY COMMON
NAME OF INDIVIDUAL OWNED(1) 1996(2) OWNED STOCK OWNED
------------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Charles L.
Blackburn 2,000 21,250 23,250 *
S. Rutt Bridges 1,971,263(3) -- 1,971,263(3) 11.2%
Daniel L.
Casaccia -- 71,750 71,750 *
James A. Downing
II 38,240 79,500 117,740 *
John W. Gibson -- 27,500 27,500 *
Henry P. Holland 2,470 31,250 33,720 *
Lucio L. Lanza -- 31,250 31,250 *
Theodore Levitt 1,000 13,750 14,750 *
Patti L. Massaro -- 2,500 2,500 *
Robert P. Peebler 7,000 265,000 272,000 *
William H.
Seippel 10,800(4) 79,450 90,250 *
Sam K. Smith 4,400 41,250 45,650 *
Denese D. VanDyne -- 11,500 11,500 *
All executive
officers and
directors as a
group (13)
persons) 2,037,173(3)(4) 675,950 2,713,123(3)(4) 15.4%
</TABLE>
- --------
*Represents less than one percent of the Landmark Common Stock outstanding.
(1) Except as otherwise indicated, (i) the persons named in this table have
sole voting and investment power with respect to all shares of Landmark
Common Stock shown as beneficially owned by them, and (ii) none of the
shares shown in this table or referred to in the footnotes hereto are
shares of which the persons named in this table have the right to acquire
beneficial ownership as specified in Rule 13d-3(d)(1) under the Exchange
Act.
(2) Does not include options which will become exercisable solely as a result
of the Merger. See "The Merger--Interests of Certain Persons in the
Merger--Stock Options."
(3) Includes 217,634 shares held directly by Mr. Bridges' wife with respect to
which Mr. Bridges disclaims dispositive or voting power.
(4) Includes 100 shares indirectly and beneficially owned by Mr. Seippel
through his son, as to which Mr. Seippel disclaims beneficial ownership.
57
<PAGE>
DESCRIPTION OF HALLIBURTON CAPITAL STOCK
GENERAL
The following descriptions of certain of the provisions of the Halliburton
Charter and Bylaws are necessarily general and do not purport to be complete
and are qualified in their entirety by reference to such documents, which are
included as exhibits to the Registration Statement of which this Proxy
Statement/Prospectus is a part.
HALLIBURTON COMMON STOCK
Halliburton is authorized to issue 200,000,000 shares of Halliburton Common
Stock, par value $2.50. As of August 27, 1996, there were 114,922,192 shares
of Halliburton Common Stock issued and outstanding and 15,258 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 (as defined below), the holders of
Halliburton Common Stock are entitled to receive ratably such 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 Halliburton Common Stock are entitled to
share ratably in all assets of Halliburton remaining after the full amounts,
if any, to which the holders of outstanding Halliburton Preferred Stock are
entitled. 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
On May 20, 1986, the Board of Directors of Halliburton declared a dividend
of one preferred share purchase right (a "Right") for each outstanding share
of Halliburton Common Stock held of record on June 2, 1986 and approved the
further issuance of Rights with respect to all shares of Halliburton Common
Stock that are subsequently issued. The Rights were issued subject to a Rights
Agreement that, in its amended and restated form, is the Second Amended and
Restated Rights Agreement dated as of December 15, 1995 between Halliburton
and Chemical Mellon Shareholder Services L.L.C. (now ChaseMellon Shareholder
Services, L.L.C.), as Rights Agent (the "Restated Rights Agreement"). Each
Right now entitles the registered holder to purchase from Halliburton one-
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 $150.00 per one-hundredth of a share (the "Purchase Price"), subject to
adjustment. See "Halliburton Preferred Stock--Halliburton Series A Preferred
Stock." Until the occurrence of certain 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 (defined below) have been distributed. The
Rights will separate from the Halliburton Common Stock and a distribution date
("Distribution Date") will occur upon the earlier of (i) 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, or (ii) ten business days 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 such 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 (the "Right Certificates") will be mailed to holders of record of
58
<PAGE>
Halliburton Common Stock as of the close of business on the Distribution Date
and such separate Right Certificates alone will thereafter evidence the
Rights.
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 certain
circumstances, the equivalent number of one-hundredths of a share of
Halliburton Series A Preferred Stock) that at the time of such acquisition
would have a market value of two times the Purchase Price of the Right.
If Halliburton were acquired in a merger or other business combination
transaction or more than 50% of its consolidated assets or earning power were
sold, proper provision would be made so that each holder of a Right would
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction would have a
market value of two times the Purchase Price of the Right.
ANTIDILUTION AND OTHER ADJUSTMENTS. The number of shares (or fractions
thereof) of Halliburton Series A Preferred Stock or other securities or
property issuable upon exercise of the Rights, and the Purchase Price payable,
are subject to customary adjustments from time to time to prevent dilution.
The number of outstanding Rights and the number of shares (or fractions
thereof) of Halliburton Series A Preferred Stock issuable upon exercise of
each Right are also subject to adjustment in the event of a stock split of the
Halliburton Common Stock or a stock dividend on the Halliburton Common Stock
payable in Halliburton Common Stock or any subdivision, consolidation or
combination of the Halliburton Common Stock occurring, in any such case, prior
to the Distribution Date.
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, at its option, issue
Halliburton Common Stock in mandatory redemption of, and in exchange for, all
or part of the then outstanding and exercisable Rights (other than Rights
owned by such person or group which would become null and void) at an exchange
ratio of one share of Halliburton Common Stock (or one-thousandth of a share
of Halliburton Series A Preferred Stock) for each two shares of Halliburton
Common Stock for which each right is then exercisable, subject to adjustment.
REDEMPTION OF RIGHTS. At any time prior to the first public announcement
that a person or group has become the beneficial owner of 15% or more of the
outstanding Voting Shares, the Board of Directors of Halliburton may redeem
all but not less than all the then outstanding Rights at a price of $.01 per
Right (the "Redemption Price"). The redemption of the Rights may be made
effective at such time, on such basis and with such conditions as the Board of
Directors of Halliburton in its sole discretion may establish. Immediately
upon the action of the Board of Directors of Halliburton ordering redemption
of the Rights, the right to exercise the Rights will terminate and 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 extended, redeemed or exchanged. The terms of the Rights
may be amended by the Board of Directors of Halliburton without the consent of
the holders of the Rights, including an amendment to extend the expiration
date of the Rights, and, provided a Distribution Date has not occurred, to
extend the period during which the Rights may be redeemed, except that after
the first public announcement that a person or group has become the beneficial
owner of 15% or more of the outstanding Voting Shares, no such amendment may
materially and adversely affect the interests of holders of the Rights.
The Rights have certain anti-takeover effects. The rights will cause
substantial dilution to a person or group that attempts to acquire Halliburton
without the approval of the Board of Directors of Halliburton. The Rights
should not, however, interfere with any merger or other business combination
that is approved by the Board of Directors of Halliburton.
59
<PAGE>
The foregoing description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement, a copy of
which is filed as an exhibit to the Registration Statement and is available
free of charge from Halliburton.
HALLIBURTON PREFERRED STOCK
GENERAL. Halliburton is authorized to issue 5,000,000 shares of Preferred
Stock, without par value (the "Halliburton Preferred Stock"), of which
2,000,000 shares have been designated as the Halliburton Series A Preferred
Stock. No shares of Halliburton Preferred Stock are outstanding. The Board of
Directors of Halliburton 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 such
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 and the likelihood that such holders will receive dividend
payments and payments upon liquidation and could 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.
SERIES A JUNIOR PARTICIPATING 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 (i) $1.00 in cash or (ii), 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
(i) $100.00 per share or (ii), in the aggregate, 100 times the payment made on
the Halliburton Common Stock, plus, in either case, the accrued and unpaid
dividends and distributions thereon. 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, and 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.
CERTAIN PROVISIONS OF HALLIBURTON CHARTER AND BYLAWS
The Halliburton Charter contains provisions authorizing the indemnification
of persons who become parties to any threatened, pending or completed action,
suit or proceeding by reason of the fact that such person is or was a
director, officer, employee or agent of Halliburton or is or was serving at
the request of Halliburton as a director, officer, employee or agent of
another corporation, partnership or other enterprise against expenses and
damages incurred thereby under the circumstances set forth therein. The
Halliburton Charter also contains provisions that, in accordance with the
DGCL, limit the liability of directors of Halliburton for breach of fiduciary
duty by directors acting in such capacity. Pursuant to these provisions,
directors of Halliburton may be liable for breach of fiduciary duty only (i)
under Section 174 of the DGCL (relating to the payment of unlawful dividends
and unlawful purchases of stock of the corporation) or (ii) if, in addition to
any and all other requirements for such liability, any such director (a) shall
have breached the duty of loyalty to Halliburton, (b) 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 (c) shall
have derived an improper personal benefit.
The provisions of the Halliburton Charter may be amended or repealed by the
vote of holders of a majority of the outstanding capital stock of Halliburton
entitled to vote thereon.
60
<PAGE>
Except in the case of nominations by or at the direction of the Board of
Directors of Halliburton, written notice must be given of any nomination of a
director (i), with respect to an election to be held at an annual meeting of
stockholders, not later than ninety days prior to the first anniversary of the
immediately preceding annual meeting and (ii), 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 such meeting.
Except in the case of a national emergency, all actions taken by the Board
of Directors of Halliburton, including the appointment and removal of officers
of Halliburton and the establishment and dissolution of divisions of
Halliburton, require the affirmative vote of a majority of the directors. The
Halliburton Bylaws provide that the number of directors on the Board of
Directors of Halliburton 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 Bylaws may be adopted, amended or rescinded by the vote of a
majority of the Board of Directors of Halliburton 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
ChaseMellon Shareholders Services, L.L.C.
COMPARATIVE RIGHTS OF HALLIBURTON AND LANDMARK STOCKHOLDERS
If the Merger is consummated, the stockholders of Landmark will become
stockholders of Halliburton. The rights of the stockholders of both
Halliburton and Landmark are governed by and subject to the provisions of the
DGCL. The rights of current Landmark stockholders following the Merger will be
governed by the Halliburton Charter and Bylaws rather than the provisions of
the Landmark Charter and Bylaws. The following is a brief summary of certain
differences between the rights of Halliburton stockholders and the rights of
Landmark stockholders, and is qualified in its entirety by reference to the
relevant provisions of the DGCL, the Halliburton Charter and Bylaws and the
Landmark Charter and Bylaws.
NUMBER, CLASSIFICATION AND REMOVAL OF DIRECTORS
The Halliburton Bylaws authorize no fewer than eight and no more than twenty
persons to serve on its Board of Directors. This number, which is presently
set at eleven, may be increased or decreased with the approval of a majority
of the then-authorized number of directors. 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. This provision of the Halliburton Bylaws may be
altered, amended, or repealed by the affirmative vote of the majority of
either the Board of Directors of Halliburton or the outstanding shares of
capital stock of Halliburton entitled to vote.
The Landmark Bylaws authorize no fewer than three and no more than seven
persons to serve on its Board of Directors. Landmark presently has seven
directors. The number of directors may be increased or decreased by resolution
approved by the unanimous vote of the then-authorized directors. Vacancies and
newly created directorships resulting from any such increase may be filled by
a majority of the directors then in office. This provision of the Landmark
Bylaws may be altered, amended, or repealed by the affirmative vote of the
majority of either the Board of Directors of Landmark or the outstanding
shares of capital stock of Landmark entitled to vote.
61
<PAGE>
The Landmark Bylaws allow directors to be removed with or without cause by
majority of the stock entitled to vote for the election of directors. The
Halliburton Charter and Bylaws are silent on the issue of director removal.
The DGCL, however, would allow a Halliburton director to be removed, with or
without cause, by the holders of a majority of the shares then entitled to
vote at an election of directors.
VOTING RIGHTS
Neither the Halliburton Charter nor the Landmark Charter provides for
cumulative voting rights for the election of directors or otherwise.
POWER TO CALL SPECIAL MEETINGS
The Halliburton Bylaws provide that a special meeting of stockholders may be
called by the Board of Directors of Halliburton, the Chairman of the Board,
the President, or by the holders of a majority of the issued and outstanding
shares of the capital stock of Halliburton entitled to vote. Written notice of
a special meeting must be mailed not fewer than ten nor more than fifty days
before the meeting to each stockholder of record entitled to vote.
The Landmark Bylaws provide that a special meeting of the stockholders may
be called by the Chairman of the Board, the President, or by the Board of
Directors of Landmark pursuant to a resolution approved by a majority of the
entire Board. Written notice of a special meeting must be delivered not less
than ten nor more than sixty days before the date of such meeting to each
stockholder of record entitled to vote.
STOCKHOLDER VOTE REQUIRED FOR CERTAIN TRANSACTIONS
Neither the Halliburton Charter or Bylaws nor the Landmark Charter or Bylaws
contains any provisions that would require, for the approval of any merger,
consolidation, sale of a substantial amount of assets or other similar
transactions involving Halliburton or Landmark, respectively, the affirmative
vote of stockholders owning more than a majority of the issued and outstanding
capital stock entitled to vote thereon. The DGCL generally would require that
such a transaction be submitted to the affected stockholders at an annual or
special meeting and that a majority of the outstanding stock of the affected
entity vote in favor of such a transaction. See "Description of Halliburton
Capital Stock."
ACTION BY WRITTEN CONSENT
The Landmark Bylaws permit action to be taken by the Landmark stockholders
without a meeting. Although neither the Halliburton Charter nor the
Halliburton Bylaws contains a similar provision, the DGCL would permit the
taking of an action by the Halliburton stockholders by written consent.
AMENDMENTS OF BYLAWS
The Halliburton Bylaws and the Landmark Bylaws may be amended either by
their respective Boards of Directors or by the holders of a majority of the
outstanding shares of their respective capital stock present and entitled to
vote at a meeting.
See "Description of Halliburton Capital Stock."
INDEPENDENT ACCOUNTANTS
It is expected that the representatives of Price Waterhouse LLP will be
present at the Special Meeting to respond to appropriate questions of
stockholders and to make a statement if they so desire.
62
<PAGE>
LEGAL MATTERS
The validity of the Halliburton Common Stock to be issued in the Merger has
been passed upon for Halliburton by Vinson & Elkins LLP, Houston, Texas.
Certain tax consequences of the Merger have been passed upon for Halliburton
by Vinson & Elkins LLP, Houston Texas, and for Landmark by Winstead Sechrest &
Minick P.C., Dallas, Texas.
EXPERTS
The consolidated financial statements and financial statement schedules
included in Halliburton's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and
have been incorporated by reference herein and in the Registration Statement
in reliance upon the authority of said firm as experts in accounting and
auditing in giving said reports.
The financial statements of Landmark incorporated by reference to Landmark's
Annual Report on Form 10-K for the year ended June 30, 1996 have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
STOCKHOLDER PROPOSALS
Any proposals of holders of Halliburton Common Stock intended to be
presented at the annual meeting of stockholders of Halliburton to be held in
1997 must be received by Halliburton, addressed to the Secretary of
Halliburton at 3600 Lincoln Plaza, 500 North Akard Street, Dallas, Texas,
75201-3391, no later than February 19, 1997, to be considered for inclusion in
the proxy statement and form of proxy relating to that meeting.
Any proposals of stockholders of Landmark intended to be presented at the
annual meeting of stockholders of Landmark to be held in 1996 must have been
received by Landmark, addressed to the Secretary of Landmark at 15150 Memorial
Drive, Houston, Texas, 77079-4304, no later than August 16, 1996 to comply
with the Landmark Bylaws, to be considered for inclusion in the proxy
statement and form of proxy relating to that meeting.
63
<PAGE>
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
HALLIBURTON COMPANY,
HALLIBURTON ACQ. COMPANY
AND
LANDMARK GRAPHICS CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
DEFINITIONS
<C> <S> <C>
SECTION 1.01 Definitions............................................. A-1
SECTION 1.02 Rules of Construction................................... A-1
ARTICLE II
TERMS OF MERGER
SECTION 2.01 Statutory Merger........................................ A-1
SECTION 2.02 Effective Time.......................................... A-2
SECTION 2.03 Effect of the Merger.................................... A-2
SECTION 2.04 Certificate of Incorporation; Bylaws.................... A-2
SECTION 2.05 Directors and Officers.................................. A-2
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Merger Consideration; Conversion and Cancellation of Se-
SECTION 3.01 curities................................................ A-2
SECTION 3.02 Exchange of Certificates................................ A-3
SECTION 3.03 Closing................................................. A-5
SECTION 3.04 Stock Transfer Books.................................... A-5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Organization and Qualification; Subsidiaries............ A-5
SECTION 4.02 Certificate of Incorporation and Bylaws................. A-5
SECTION 4.03 Capitalization.......................................... A-5
SECTION 4.04 Authorization of Agreement.............................. A-6
SECTION 4.05 Approvals............................................... A-7
SECTION 4.06 No Violation............................................ A-7
SECTION 4.07 Reports................................................. A-7
SECTION 4.08 No Material Adverse Effect; Conduct..................... A-8
SECTION 4.09 Title to Properties..................................... A-8
SECTION 4.10 Certain Obligations..................................... A-8
SECTION 4.11 Permits; Compliance..................................... A-9
SECTION 4.12 Litigation; Compliance with Laws........................ A-9
SECTION 4.13 Employee Benefit Plans.................................. A-9
SECTION 4.14 Taxes................................................... A-11
SECTION 4.15 Environmental Matters................................... A-11
SECTION 4.16 Intellectual Property................................... A-12
SECTION 4.17 Insurance............................................... A-12
SECTION 4.18 Pooling; Tax Matters.................................... A-12
SECTION 4.19 Affiliates.............................................. A-13
SECTION 4.20 Certain Business Practices.............................. A-13
SECTION 4.21 Opinion of Financial Advisor............................ A-13
SECTION 4.22 Brokers................................................. A-13
SECTION 4.23 Acquiring Person........................................ A-13
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
SECTION 5.01 Organization and Qualification; Subsidiaries............ A-14
SECTION 5.02 Certificate of Incorporation and Bylaws................. A-14
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
SECTION 5.03 Capitalization.......................................... A-14
SECTION 5.04 Authorization of Agreement.............................. A-15
SECTION 5.05 Approvals............................................... A-15
SECTION 5.06 No Violation............................................ A-15
SECTION 5.07 Reports................................................. A-16
SECTION 5.08 No Material Adverse Effect; Conduct..................... A-16
SECTION 5.09 Title to Properties..................................... A-16
SECTION 5.10 Certain Obligations..................................... A-17
SECTION 5.11 Permits; Compliance..................................... A-17
SECTION 5.12 Litigation; Compliance with Laws........................ A-17
SECTION 5.13 Employee Benefit Plans.................................. A-17
SECTION 5.14 Taxes................................................... A-18
SECTION 5.15 Environmental Matters................................... A-18
SECTION 5.16 Pooling; Tax Matters.................................... A-19
SECTION 5.17 Affiliates.............................................. A-19
SECTION 5.18 Brokers................................................. A-19
SECTION 5.19 Acquiring Person........................................ A-19
SECTION 5.20 Proposal to Acquire the Acquiror........................ A-19
SECTION 5.21 Certain Business Practices.............................. A-19
ARTICLE VI
COVENANTS
SECTION 6.01 Affirmative Covenants................................... A-20
SECTION 6.02 Negative Covenants...................................... A-20
SECTION 6.03 No Solicitation......................................... A-23
SECTION 6.04 Access and Information.................................. A-24
SECTION 6.05 Confidentiality Agreement............................... A-24
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Meeting of Stockholders................................. A-24
SECTION 7.02 Registration Statement; Proxy Statements................ A-24
SECTION 7.03 Appropriate Action; Consents; Filings................... A-26
SECTION 7.04 Affiliates; Pooling; Tax Treatment...................... A-27
SECTION 7.05 Public Announcements.................................... A-27
SECTION 7.06 NYSE Listing............................................ A-27
SECTION 7.07 Rights Agreement; State Takeover Statutes............... A-27
SECTION 7.08 Comfort Letters......................................... A-28
SECTION 7.09 Assumption of Obligations to Issue Stock................ A-28
SECTION 7.10 Employee Benefit Plans.................................. A-28
SECTION 7.11 Indemnification of Directors and Officers............... A-29
SECTION 7.12 Newco................................................... A-30
SECTION 7.13 Event Notices........................................... A-30
SECTION 7.14 Stratworks Divestiture.................................. A-30
SECTION 7.15 Change in Control Agreements............................ A-30
ARTICLE VIII
CLOSING CONDITIONS
Conditions to Obligations of Each Party Under This
SECTION 8.01 Agreement............................................... A-31
Additional Conditions to Obligations of the Acquiror
SECTION 8.02 Companies............................................... A-31
SECTION 8.03 Additional Conditions to Obligations of the Company..... A-32
</TABLE>
A-ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
<C> <S> <C>
SECTION 9.01 Termination............................................ A-32
SECTION 9.02 Effect of Termination.................................. A-33
SECTION 9.03 Amendment.............................................. A-33
SECTION 9.04 Waiver................................................. A-34
SECTION 9.05 Fees, Expenses and Other Payments...................... A-34
ARTICLE X
GENERAL PROVISIONS
Effectiveness of Representations, Warranties and Agree-
SECTION 10.01 ments.................................................. A-35
SECTION 10.02 Notices................................................ A-35
SECTION 10.03 Headings................................................ A-36
SECTION 10.04 Severability............................................ A-36
SECTION 10.05 Entire Agreement........................................ A-36
SECTION 10.06 Assignment.............................................. A-36
SECTION 10.07 Parties in Interest..................................... A-36
SECTION 10.08 Failure or Indulgence Not Waiver; Remedies Cumulative... A-36
SECTION 10.09 Governing Law........................................... A-36
SECTION 10.10 Counterparts............................................ A-36
</TABLE>
ANNEXES
<TABLE>
<S> <C>
Schedule of Defined Terms............................................... Annex A
Affiliate's Agreement (Landmark Graphics Corporation Affiliates)........ Annex B
Affiliate's Agreement (Halliburton Company Affiliates).................. Annex C
</TABLE>
A-iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 30, 1996 (this
"Agreement"), is by and among Halliburton Company, a Delaware corporation
("Acquiror"), Halliburton Acq. Company, a Delaware corporation and a wholly-
owned subsidiary of Acquiror ("Newco"), and Landmark Graphics Corporation, a
Delaware corporation (the "Company"). The Acquiror and Newco are sometimes
referred to herein as the "Acquiror Companies."
Recitals:
The Board of Directors of the Company has determined that the business
combination to be effected by means of the Merger is consistent with and in
furtherance of the long-term business strategy of the Company and is fair to,
and in the best interests of, the Company and its stockholders and has
approved and adopted this Agreement and recommended approval and adoption of
this Agreement by the stockholders of the Company.
The Board of Directors of the Acquiror has determined that the business
combination to be effected by means of the Merger is consistent with and in
furtherance of the long-term business strategy of the Acquiror and is fair to,
and in the best interests of, the Acquiror and its stockholders and has
approved and adopted this Agreement.
Upon the terms and subject to the conditions of this Agreement and in
accordance with the GCL, the Company will merge with and into Newco and Newco
will be the Surviving Corporation.
For federal income tax purposes, it is intended that the Merger will qualify
as a reorganization within the meaning of the provisions of Section 368(a) of
the Code.
The Merger is intended to be treated as a "pooling of interests" for
accounting purposes.
The parties hereto acknowledge the execution and delivery of the Stock
Option Agreement and the Voting Agreement concurrently with the execution and
delivery of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 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.
SECTION 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 generally accepted accounting principles as in effect from
time to time: (c) "or" is not exclusive; (d) "including" means "including,
without limitation;" and (e) words in the singular include the plural and
words in the plural include the singular.
ARTICLE II
Terms of Merger
SECTION 2.01 Statutory Merger. Subject to the terms and conditions and in
reliance upon the representations, warranties, covenants and agreements
contained herein, the Company shall merge with and into
A-1
<PAGE>
Newco at the Effective Time. The terms and conditions of the Merger and the
mode of carrying the same into effect shall be as set forth in this Agreement.
As a result of the Merger, the separate corporate existence of each of the
Constituent Corporations shall cease and Newco shall continue as the Surviving
Corporation.
SECTION 2.02 Effective Time. As soon as practicable after the satisfaction
or, if permissible, waiver of the conditions set forth in Article VIII, the
parties hereto shall cause the Merger to be consummated by filing a
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 GCL.
SECTION 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 GCL. Without
limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise provided herein, all the property, rights,
privileges, powers and franchises of Newco and the Company shall vest in the
Surviving Corporation, and all debts, liabilities and duties of Newco and the
Company shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 2.04 Certificate of Incorporation; Bylaws. At the Effective Time,
the certificate of incorporation and the bylaws of Newco, as in effect
immediately prior to the Effective Time, shall be the certificate of
incorporation and the bylaws of the Surviving Corporation, except that from
and after the Effective Time Article I of the certificate of incorporation
shall be and read in its entirety as follows:
ARTICLE I
The name of the corporation shall be "Landmark Graphics Corporation."
Prior to the Effective Time, the certificate of incorporation and bylaws of
Newco shall be amended so as to contain provisions substantially similar in
form and substance to the provisions contained in Article IX of the
certificate of incorporation and Section 6.10 of the bylaws of the Company,
respectively.
SECTION 2.05 Directors and Officers. The directors of Newco immediately
prior to the Effective Time shall be the directors of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, in each case until their respective successors are duly
elected or appointed and qualified.
ARTICLE III
Conversion of Securities; Exchange of Certificates
SECTION 3.01 Merger Consideration; Conversion and Cancellation of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of the Acquiror Companies, the Company or the holders of
any of the following securities:
(a) Subject to the other provisions of this Article III, each share of
Company Common Stock issued and outstanding immediately prior to the
Effective Time (excluding any Company Common Stock described in Section
3.01(c)) shall be converted into 0.574 shares of Acquiror Common Stock.
Notwithstanding the foregoing, if between the date of this Agreement and
the Effective Time the outstanding shares of the Acquiror Common Stock or
the Company Common Stock shall have been changed into a different number of
shares or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares, the Common Stock Exchange Ratio shall be correspondingly adjusted
to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares.
A-2
<PAGE>
(b) All shares of Company Common Stock shall, upon conversion thereof
into shares of Acquiror Common Stock at the Effective Time, cease to be
outstanding and shall automatically be cancelled and retired, and each
certificate previously evidencing Company Common Stock outstanding
immediately prior to the Effective Time (other than Company Common Stock
described in Section 3.01(c)) shall thereafter be deemed, for all purposes
other than the payment of dividends or distributions, to represent that
number of shares of Acquiror Common Stock determined pursuant to the Common
Stock Exchange Ratio and, if applicable, the right to receive cash pursuant
to Section 3.02(e). The holders of certificates previously evidencing
Company Common Stock shall cease to have any rights with respect to such
Company Common Stock except as otherwise provided herein or by law.
(c) Notwithstanding any provision of this Agreement to the contrary, each
share of Company Common Stock held in the treasury of the Company and each
share of Company Common Stock, if any, owned by the Acquiror or any direct
or indirect wholly-owned Subsidiary of the Acquiror or of the Company
immediately prior to the Effective Time shall be cancelled and extinguished
without conversion thereof.
(d) Each share of common stock, par value $1.00 per share, of Newco
issued and outstanding immediately prior to the Effective Time shall
continue to be issued and outstanding as one share of common stock, par
value $1.00 per share, of the Surviving Corporation.
SECTION 3.02 Exchange of Certificates.
(a) Exchange Fund. On the day of the Effective Time, the Acquiror shall
deposit, or cause to be deposited, with the Exchange Agent, for the benefit of
the former holders of Company Common Stock, for exchange in accordance with
this Article III, through the Exchange Agent, certificates evidencing a number
of shares of Acquiror Common Stock equal to the product of the Common Stock
Exchange Ratio multiplied by the number of shares of Company Common Stock
issued and outstanding immediately prior to the Effective Time (exclusive of
any such shares to be cancelled pursuant to Section 3.01(c)). The Exchange
Agent shall, pursuant to irrevocable instructions from the Acquiror, deliver
Acquiror Common Stock, together with any cash to be paid in lieu of fractional
interests in shares of Acquiror Common Stock pursuant to Section 3.02(e) and
any dividends or distributions related thereto, in exchange for certificates
theretofore evidencing Company Common Stock surrendered to the Exchange Agent
pursuant to Section 3.02(c). Except as contemplated by Section 3.02(e), the
Exchange Fund shall not be used for any other purpose.
(b) Letter of Transmittal. Promptly after the Effective Time, the Acquiror
will cause the Exchange Agent to send to each record holder of Company Common
Stock immediately prior to the Effective Time a letter of transmittal and
other appropriate materials for use in surrendering to the Exchange Agent
certificates that prior to the Effective Time evidenced shares of Company
Common Stock.
(c) Exchange Procedures. Promptly after the Effective Time, the Exchange
Agent shall distribute to each former holder of Company Common Stock, upon
surrender to the Exchange Agent for cancellation of one or more certificates
that theretofore evidenced shares of Company Common Stock, certificates
evidencing the appropriate number of shares of Acquiror Common Stock into
which such shares of Company Common Stock were converted pursuant to the
Merger, together with any cash to be paid in lieu of fractional interests in
shares of Acquiror Common Stock pursuant to Section 3.02(e) and any dividends
or distributions related thereto. If shares of Acquiror Common Stock are to be
issued to a Person other than the Person in whose name the surrendered
certificate or certificates are registered, it shall be a condition of
issuance of the Acquiror Common Stock that the surrendered certificate or
certificates shall be properly endorsed, with signatures guaranteed, or
otherwise in proper form for transfer and that the Person requesting such
payment shall pay any transfer or other taxes required by reason of the
issuance of Acquiror Common Stock to a Person other than the registered holder
of the surrendered certificate or certificates or such Person shall establish
to the satisfaction of the Acquiror that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to any former holder of Company Common Stock for
any Acquiror Common Stock, cash in lieu of fractional share interests or
dividends or distributions thereon delivered to a public official pursuant to
any applicable escheat law.
A-3
<PAGE>
(d) Distributions with Respect to Unexchanged Shares of Company Common
Stock. No dividends or other distributions declared or made with respect to
Acquiror Common Stock with a record date after the Effective Time shall be
paid to the holder of any certificate that theretofore evidenced shares of
Company Common Stock until the holder of such certificate shall surrender such
certificate. Subject to the effect of any applicable escheat laws, following
surrender of any such certificate, there shall be paid (i) to the holder of
the certificates evidencing whole shares of Acquiror Common Stock issued in
exchange therefor, without interest, (A) promptly, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
paid with respect to such whole shares of Acquiror Common Stock, and (B) at
the appropriate payment date, the amount of dividends or other distributions,
with a record date after the Effective Time but prior to surrender and a
payment date occurring after surrender, payable with respect to such whole
shares of Acquiror Common Stock and (ii) to the holder of any certificate that
theretofore evidenced shares of Company Common Stock, without interest,
promptly the amount of any cash payable with respect to a fractional share of
Acquiror Common Stock to which such holder is entitled pursuant to Section
3.02(e).
(e) No Fractional Shares. Notwithstanding anything herein to the contrary,
no certificates or scrip evidencing fractional shares of Acquiror Common Stock
shall be issued in connection with the Merger, and any such fractional share
interests to which a holder of record of Company Common Stock at the Effective
Time would otherwise be entitled will not entitle such holder to vote or to
any rights of a stockholder of the Acquiror. In lieu of any such fractional
shares, each holder of record of Company Common Stock at the Effective Time
who but for the provisions of this Section 3.02(e) would be entitled to
receive a fractional interest of a share of Acquiror Common Stock pursuant to
the Merger shall be paid cash, without any interest thereon, as hereinafter
provided. The Acquiror shall instruct the Exchange Agent to determine the
number of whole shares and fractional shares of Acquiror Common Stock
allocable to each holder of record of Company Common Stock at the Effective
Time, to aggregate all such fractional shares into whole shares, to sell the
whole shares obtained thereby in the open market at then prevailing prices on
behalf of holders who otherwise would be entitled to receive fractional share
interests and to distribute to each such holder such holder's ratable share of
the total proceeds of such sale, after making appropriate deductions of the
amount, if any, required for Federal income tax withholding purposes and after
deducting any applicable transfer taxes. All brokers' fees and commissions and
fees of the Exchange Agent incurred in connection with such sales shall be
paid by the Acquiror.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains unclaimed by the former holders of Company Common Stock for twelve
months after the Effective Time shall be delivered to the Acquiror, upon
demand, and any former holders of Company Common Stock who have not
theretofore complied with this Article III shall thereafter look only to the
Acquiror for the Acquiror Common Stock and any cash to which they are
entitled.
(g) Withholding of Tax. The Acquiror shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement
to any former holder of Company Common Stock such amounts as the Acquiror (or
any affiliate thereof) is required to deduct and withhold with respect to the
making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld by the Acquiror,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the former holder of Company Common Stock in respect of
which such deduction and withholding was made by the Acquiror.
(h) Lost Certificates. If any certificate evidencing Company Common Stock
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Person claiming such certificate to be lost, stolen or
destroyed and, if required by the Acquiror, the posting by such Person of a
bond, in such reasonable amount as the Acquiror may direct, as indemnity
against claims that may be made against it with respect to such certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
certificate the Acquiror Common Stock to which the holder may be entitled
pursuant to this Article III, any cash in lieu of fractional shares of
Acquiror Common Stock to which the holder thereof may be entitled pursuant to
Section 3.02(e) and any dividends or other distributions to which the holder
thereof may be entitled pursuant to Section 3.02(d).
A-4
<PAGE>
SECTION 3.03 Closing. The Closing shall take place at the offices of Vinson
& Elkins L.L.P., 1001 Fannin, 3600 First City Tower, Houston, Texas 77002-
6760, at 10:00 a.m. on the second Business Day following the date on which the
conditions to the Closing have been satisfied or waived or at such other
place, time and date as the parties hereto may agree. At the conclusion of the
Closing on the Closing Date, the parties hereto shall cause the Certificate of
Merger to be filed with the Secretary of State of the State of Delaware.
SECTION 3.04 Stock Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company.
ARTICLE IV
Representations and Warranties of the Company
The Company hereby represents and warrants to the Acquiror Companies that:
SECTION 4.01 Organization and Qualification; Subsidiaries. The Company and
each Subsidiary of the Company are legal entities duly organized, validly
existing and in good standing under the Laws of their respective jurisdictions
of incorporation or organization, have all requisite power and authority to
own, lease and operate their respective properties and to carry on their
business as it is now being conducted and are duly qualified and in good
standing to do business in each jurisdiction in which the nature of the
business conducted by them or the ownership or leasing of their respective
properties makes such qualification necessary, other than any matters,
including the failure to be so duly qualified and in good standing, that could
not reasonably be expected to have a Material Adverse Effect on the Company.
Section 4.01 of the Company's Disclosure Letter sets forth, as of the date of
this Agreement, a true and complete list of all the Company's directly or
indirectly owned Subsidiaries, together with (A) the jurisdiction of
incorporation of each Subsidiary and the percentage of each Subsidiary's
outstanding capital stock or other equity interests owned by the Company or
another Subsidiary of the Company, and (B) an indication of whether each such
Subsidiary is a "Significant Subsidiary." Neither the Company nor any of its
Subsidiaries owns an equity interest in any partnership or joint venture
arrangement or other business entity that is Material to the Company.
SECTION 4.02 Certificate of Incorporation and Bylaws. The Company has
heretofore marked for identification and furnished to the Acquiror complete
and correct copies of the certificate of incorporation and the bylaws or the
equivalent organizational documents, in each case as amended or restated to
the date hereof, of the Company and each of its Subsidiaries. Neither the
Company nor any of its Subsidiaries is in violation of any of the provisions
of its certificate of incorporation or bylaws (or equivalent organizational
documents).
SECTION 4.03 Capitalization.
(a) The authorized capital stock of the Company consists of (i) 50,000,000
shares of Company Common Stock of which, as of March 29, 1996, 17,498,396
shares were issued and outstanding, all of which are duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights
created by statute, the Company's certificate of incorporation or bylaws or
any agreement to which the Company is a party or is bound and (ii) 3,600,000
shares of Preferred Stock, par value $1.00 per share, of which none is issued
but of which 500,000 shares have been designated as Series A Junior
Participating Preferred Stock. As of June 30, 1996, 3,100,727 shares of
Company Common Stock were reserved for future issuance pursuant to outstanding
Company Stock Options granted pursuant to the Company Option Plans. Except as
set forth in Section 4.03(a) of the Company's Disclosure Letter, between March
29, 1996 and the date of this Agreement, no shares of Company Common Stock
have been issued by the Company. Except as set forth in Section 4.03(a) of the
Company's Disclosure Letter, since March 29, 1996, the Company has not granted
any options for, or other rights to purchase, shares of Company Common Stock.
A-5
<PAGE>
(b) Except as set forth in Section 4.03(a), no shares of Common Stock are
reserved for issuance, and, except for the Company's Rights Plan and Company
Stock Options listed in Section 4.03(b) of the Company's Disclosure Letter,
there are no contracts, agreements, commitments or arrangements obligating the
Company (i) to offer, sell, issue or grant any shares of, or any options,
warrants or rights of any kind to acquire any shares of, or any securities
that are convertible into or exchangeable for any shares of, capital stock of
the Company, (ii) to redeem, purchase or acquire, or offer to purchase or
acquire, any outstanding shares of, or any outstanding options, warrants or
rights of any kind to acquire any shares of, or any outstanding securities
that are convertible into or exchangeable for any shares of, capital stock of
the Company or (iii) to grant any Lien on any shares of capital stock of the
Company.
(c) The authorized, issued and outstanding capital stock of, or other equity
interests in, each of the Company's Subsidiaries and the names and addresses
of the holders of record of the capital stock or other equity interests of
each such Subsidiary are set forth in Section 4.03(c) of the Company's
Disclosure Letter. Except as set forth in the Company's Disclosure Letter, (i)
the issued and outstanding shares of capital stock of, or other equity
interests in, each of the Subsidiaries of the Company that are owned by the
Company or any of its Subsidiaries have been duly authorized and are validly
issued, and, with respect to capital stock, are fully paid and nonassessable,
and were not issued in violation of any preemptive or similar rights of any
past or present equity holder of such Subsidiary; (ii) all such issued and
outstanding shares, or other equity interests, that are indicated as owned by
the Company or one of its Subsidiaries in Section 4.03(c) of the Company's
Disclosure Letter are owned (A) beneficially as set forth therein and (B) free
and clear of all Liens; (iii) no shares of capital stock of, or other equity
interests in, any Subsidiary of the Company are reserved for issuance, and
there are no contracts, agreements, commitments or arrangements obligating the
Company or any of its Subsidiaries (A) to offer, sell, issue, grant, pledge,
dispose of or encumber any shares of capital stock of, or other equity
interests in, or any options, warrants or rights of any kind to acquire any
shares of capital stock of, or other equity interests in, or any securities
that are convertible into or exchangeable for any shares of capital stock of,
or other equity interests in, any of the Subsidiaries of the Company or (B) to
redeem, purchase or acquire, or offer to purchase or acquire, any outstanding
shares of capital stock of, or other equity interests in, or any outstanding
options, warrants or rights of any kind to acquire any shares of capital stock
of or other equity interest in, or any outstanding securities that are
convertible into or exchangeable for, any shares of capital stock of, or other
equity interests in, any of the Subsidiaries of the Company or (C) to grant
any Lien on any outstanding shares of capital stock of, or other equity
interest in, any of the Subsidiaries of the Company; except for any matter
under clause (i), (ii) or (iii) of this Section 4.03(c) that could not
reasonably be expected to have a Material Adverse Effect on the Company.
(d) Except as set forth in Section 4.03(d) of the Company's Disclosure
Letter and for the Company's Rights Agreement, the Company Stock Options
listed in Section 4.03(b) of the Company's Disclosure Letter and the Stock
Option Agreement, there are no voting trusts, proxies or other agreements,
commitments or understandings of any character to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound with respect to the voting of any shares of capital stock of the
Company or any of its Subsidiaries or with respect to the registration of the
offering, sale or delivery of any shares of capital stock of the Company or
any of its Subsidiaries under the Securities Act, except in the case of any
Subsidiaries of the Company that are not Significant Subsidiaries for any
matters that could not reasonably be expected to have a Material Adverse
Effect on the Company.
SECTION 4.04 Authorization of Agreement. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and each
instrument required hereby to be executed and delivered by it at the Closing,
to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby. The execution and delivery by the Company of
this Agreement and each instrument required hereby to be executed and
delivered by it at the Closing and the performance of its obligations
hereunder and thereunder have been duly and validly authorized by all
requisite corporate action on the part of the Company (other than, with
respect to the Merger, the approval and adoption of this Agreement by the
holders of a majority of the outstanding shares of Company Common Stock in
accordance with the GCL and
A-6
<PAGE>
the Company's certificate of incorporation). This Agreement has been duly
executed and delivered by the Company and (assuming due authorization,
execution and delivery hereof by the other parties hereto) constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as the same may be limited by
legal principles of general applicability governing the application and
availability of equitable remedies.
SECTION 4.05 Approvals. Except for the applicable requirements, if any, of
(a) the Securities Act, (b) the Exchange Act, (c) state securities or blue sky
laws, (d) the HSR Act, (e) the competition Laws, Regulations and Orders of
foreign Governmental Authorities as set forth in the Company's Disclosure
Letter, (f) the NASD, (g) the filing and recordation of appropriate merger
documents as required by the GCL and (h) those Laws, Regulations and Orders
noncompliance with which could not reasonably be expected to have a material
adverse effect on the ability of the Company to perform its obligations under
this Agreement or to have a Material Adverse Effect on the Company, no filing
or registration with, no waiting period imposed by and no Permit or Order of,
any Governmental Authority is required under any Law, Regulation or Order
applicable to the Company or any of its Subsidiaries to permit the Company to
execute, deliver or perform this Agreement or any instrument required hereby
to be executed and delivered by it at the Closing.
SECTION 4.06 No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting
periods imposed by and receipt of all Permits and Orders of, Governmental
Authorities indicated as required in Section 4.05 and receipt of the approval
of the Merger by the stockholders of the Company as required by the GCL and
except as set forth in Section 4.06 of the Company's Disclosure Letter,
neither the execution and delivery by the Company of this Agreement or any
instrument required hereby to be executed and delivered by it at the Closing
nor the performance by the Company of its obligations hereunder or thereunder
will (a) violate or breach the terms of or cause a default under (i) any Law,
Regulation or Order applicable to the Company, (ii) the certificate of
incorporation or bylaws of the Company or (iii) any contract or agreement to
which the Company or any of its Subsidiaries is a party or by which it or any
of its properties or assets is bound, or (b) with the passage of time, the
giving of notice or the taking of any action by a third Person, have any of
the effects set forth in clause (a) of this Section, except in any such case
for any matters described in this Section that could not reasonably be
expected to have a material adverse effect upon the ability of the Company to
perform its obligations under this Agreement or a Material Adverse Effect on
the Company. Prior to the execution of this Agreement, the Board of Directors
of the Company has taken all necessary action to cause this Agreement and the
transactions contemplated hereby to be exempt from the provisions of Section
203 of the GCL and to ensure that the execution, delivery and performance of
this Agreement by the parties hereto will not cause any rights to be
distributed or to become exercisable under the Company's Rights Plan.
SECTION 4.07 Reports.
(a) Since June 30, 1993, the Company and its Subsidiaries have filed (i) all
SEC Reports of the Company required to be filed with the Commission and (ii)
all other Reports of the Company required to be filed with any other
Governmental Authorities, including state securities administrators, except
where the failure to file any such Reports of the Company could not reasonably
be expected to have a Material Adverse Effect on the Company. The Reports of
the Company, including all those filed after the date of this Agreement and
prior to the Effective Time, (i) were prepared in all material respects in
accordance with the requirements of applicable Law (including, with respect to
the SEC Reports of the Company, the Securities Act and the Exchange Act, as
the case may be, and the applicable Regulations of the Commission thereunder)
and (ii), in the case of the SEC Reports of the Company, did not at the time
they were filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(b) The Company Consolidated Financial Statements and any consolidated
financial statements of the Company (including any related notes thereto)
contained in any SEC Reports of the Company filed with the Commission after
the date of this Agreement (i) have been or will have been prepared in
accordance with the
A-7
<PAGE>
published Regulations of the Commission and in accordance with GAAP (except
(A) to the extent required by changes in GAAP and (B), with respect to SEC
Reports of the Company filed prior to the date of this Agreement, as may be
indicated in the notes thereto) and (ii) fairly present the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates thereof and the consolidated results of their operations and cash flows
for the periods indicated (including, in the case of any unaudited interim
financial statements, reasonable estimates of normal and recurring year-end
adjustments).
(c) Except as set forth in Section 4.07(c) of the Company's Disclosure
Letter, there exist no liabilities or obligations of the Company and its
Subsidiaries that are Material to the Company, whether accrued, absolute,
contingent or threatened, which would be required to be reflected, reserved
for or disclosed under GAAP in consolidated financial statements of the
Company (including the notes thereto) as of and for the period ended on the
date of this representation and warranty, other than (i) liabilities or
obligations that are adequately reflected, reserved for or disclosed in the
Company's Consolidated Financial Statements, (ii) liabilities or obligations
incurred in the ordinary course of business of the Company since March 31,
1996, and (iii) liabilities or obligations the incurrence of which is not
prohibited by Section 6.02(a).
SECTION 4.08 No Material Adverse Effect; Conduct.
(a) Since March 31, 1996, no event (other than any event that is directly
attributable to the prospect of consummation of the Merger or is of general
application to all or a substantial portion of the Company's industry and
other than any event that is expressly subject to any other representation or
warranty contained in Article IV) has, to the Knowledge of the Company,
occurred that, individually or together with other similar events, could
reasonably be expected to constitute or cause a Material Adverse Effect on the
Company.
(b) Except as disclosed in Section 4.08(b) of the Company's Disclosure
Letter, during the period from March 31, 1996 to the date of this Agreement,
neither the Company nor any of its Subsidiaries has engaged in any conduct
that is proscribed during the period from the date of this Agreement to the
Effective Time by subsections (i) through (xi) of Section 6.02(a) or agreed in
writing or otherwise during such period prior to the date of this Agreement to
engage in any such conduct.
SECTION 4.09 Title to Properties. The Company or its Subsidiaries,
individually or together, have indefeasible title to all of the properties
reflected in the Company's Consolidated Balance Sheet, other than any
properties reflected in the Company's Consolidated Balance Sheet that (i) have
been sold or otherwise disposed of since the date of the Company's
Consolidated Balance Sheet in the ordinary course of business consistent with
past practice or (ii) are not, individually or in the aggregate, Material to
the Company, free and clear of Liens, other than (x) Liens the existence of
which is reflected in the Company's Consolidated Financial Statements, (y)
Permitted Encumbrances and (z) Liens that, individually or in the aggregate,
are not Material to the Company. The Company or its Subsidiaries, individually
or together, hold under valid lease agreements all real and personal
properties reflected in the Company's Consolidated Balance Sheet as being held
under capitalized leases, and all real and personal property that is subject
to the operating leases to which reference is made in the notes to the
Company's Audited Consolidated Financial Statements, and enjoy peaceful and
undisturbed possession of such properties under such leases, other than (i)
any properties as to which such leases have expired in accordance with their
terms without any liability of any party thereto since the date of the
Company's Consolidated Balance Sheet and (ii) any properties that,
individually or in the aggregate, are not Material to the Company. Neither the
Company nor any of its Subsidiaries has received any written notice of any
adverse claim to the title to any properties owned by them or with respect to
any lease under which any properties are held by them, other than any claims
that, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on the Company.
SECTION 4.10 Certain Obligations. Section 4.10 of the Company's Disclosure
Letter contains a true and complete list of the Material Contracts of the
Company and its Subsidiaries. Except as set forth in Section 4.10 of the
Company's Disclosure Letter, neither the Company nor any of its Subsidiaries
is a party to or bound by any Material Contract. All Material Contracts to
which the Company or any of its Subsidiaries is a party are in
A-8
<PAGE>
full force and effect, the Company or the Subsidiary of the Company that is a
party to or bound by such Material Contract has performed its obligations
thereunder to date and, to the Knowledge of the Company, each other party
thereto has performed its obligations thereunder to date, other than any
failure of a Material Contract to be in full force and effect or any
nonperformance thereof that could not reasonably be expected to have a
Material Adverse Effect on the Company.
SECTION 4.11 Permits; Compliance. To the Knowledge of the Company, the
Company and its Subsidiaries have obtained all Permits that are necessary to
carry on their businesses as currently conducted, except for any such Permits
as to which, individually or in the aggregate, the failure to possess could
not reasonably be expected to have a Material Adverse Effect on the Company.
Such Permits are in full force and effect, have not been violated in any
respect that could reasonably be expected to have a Material Adverse Effect on
the Company and, to the Knowledge of the Company, no suspension, revocation or
cancellation thereof has been threatened and there is no action, proceeding or
investigation pending or threatened regarding suspension, revocation or
cancellation of any of such Permits, except where the suspension, revocation
or cancellation of such Permits could not reasonably be expected to have a
Material Adverse Effect on the Company.
SECTION 4.12 Litigation; Compliance with Laws. There are no actions, suits,
investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Company, threatened against the Company or
any of its Subsidiaries, at law or in equity, in any Court or before or by any
Governmental Authority, except actions, suits or proceedings that (a) are set
forth in Section 4.12 or any other Section of the Company's Disclosure Letter
or (b), individually or, with respect to multiple actions, suits or
proceedings that allege similar theories of recovery based on similar facts,
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Company. There are no claims pending or, to the Knowledge of the
Company, threatened by any Persons against the Company or any of its
Subsidiaries for indemnification pursuant to any statute, organizational
document, contract or otherwise with respect to any action, suit,
investigation or proceeding pending in any Court or before or by any
Governmental Authority. Except as set forth in Section 4.12 of the Company's
Disclosure Letter, the Company and its Subsidiaries are in substantial
compliance with all applicable Laws and Regulations and are not in default
with respect to any Order applicable to the Company or any of its
Subsidiaries, except such events of noncompliance or defaults that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company.
SECTION 4.13 Employee Benefit Plans.
(a) Each Benefit Plan of the Company and its Subsidiaries is listed in
Section 4.13(a) of the Company's Disclosure Letter, including, with respect to
Terminated Benefit Plans, the date of termination. True and correct copies of
each of the following have been made available to the Acquiror: (i) the most
recent annual report (Form 5500) relating to each such Current Benefit Plan
filed with the IRS, (ii) each such Current Benefit Plan, (iii) the trust
agreement, if any, relating to each such Current Benefit Plan, (iv) the most
recent summary plan description for each such Current Benefit Plan for which a
summary plan description is required by ERISA, (v) the most recent actuarial
report or valuation relating to each such Current Benefit Plan subject to
Title IV of ERISA and (vi) the most recent determination letter, if any,
issued by the IRS with respect to any such Current Benefit Plan qualified
under Section 401 of the Code.
(b) No event has occurred and, to the Knowledge of the Company, there exists
no condition or set of circumstances in connection with which the Company or
any of its Subsidiaries could be subject to any liability under the terms of
such Benefit Plans, or with respect to any such Benefit Plans, under ERISA,
the Code or any other applicable Law, other than any condition or set of
circumstances that could not reasonably be expected to have a Material Adverse
Effect on the Company.
(c) As to any such Current Benefit Plan intended to be qualified under
Section 401 of the Code, such Benefit Plan has been determined by the IRS to
satisfy in form the requirements of such Section and there has been no
termination or partial termination of such Benefit Plan within the meaning of
Section 411(d)(3) of the Code.
A-9
<PAGE>
(d) As to any such Terminated Benefit Plan intended to have been qualified
under Section 401 of the Code, such Terminated Benefit Plan received a
favorable determination letter from the IRS with respect to its termination.
(e) There are no actions, suits or claims pending (other than routine claims
for benefits) or, to the Knowledge of the Company, threatened against, or with
respect to, any of such Benefit Plans or their assets that could reasonably be
expected to have a Material Adverse Effect on the Company.
(f) To the Knowledge of the Company, there is no matter pending (other than
routine qualification determination filings) with respect to any of such
Benefit Plans before the IRS, the Department of Labor or the PBGC.
(g) All contributions required to be made by the Company or the Company's
Subsidiaries to such Benefit Plans pursuant to their terms and provisions have
been made timely.
(h) As to any such Current Benefit Plan subject to Title IV of ERISA, (i)
there has been no event or condition which presents a material risk of plan
termination, (ii) no accumulated funding deficiency, whether or not waived,
within the meaning of Section 302 of ERISA or Section 412 of the Code has been
incurred within six years prior to date of this Agreement, (iii) no reportable
event within the meaning of Section 4043 of ERISA (for which the disclosure
requirements of Regulation section 2615.3 promulgated by the PBGC have not
been waived) has occurred within six years prior to the date of this
Agreement, (iv) no notice of intent to terminate such Benefit Plan has been
given under Section 4041 of ERISA, (v) no proceeding has been instituted under
Section 4042 of ERISA to terminate such Benefit Plan, (vi) no liability to the
PBGC has been incurred (other than with respect to required premium payments)
and (vii) the assets of the Benefit Plan equal or exceed the actuarial present
value of the benefit liabilities, within the meaning of Section 4041 of ERISA,
under the Benefit Plan, based upon reasonable actuarial assumptions and the
asset valuation principles established by the PBGC.
(i) Except as set forth in Section 4.13(i) of the Company's Disclosure
Letter, in connection with the consummation of the transactions contemplated
by this Agreement, no payments have been or will be made under any such
Current Benefit Plans or any of the programs, agreements, policies or other
arrangements described in Section 4.13(k) of the Company's Disclosure Letter
which, in the aggregate, would be nondeductible under Section 280G of the
Code.
(j) Except as set forth in Section 4.13(j) of the Company's Disclosure
Letter, the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby will not (i) require the Company or any
of its Subsidiaries to make a larger contribution to, or pay greater benefits
under, any Current Benefit Plan or any of the programs, agreements, policies
or other arrangements described in Section 4.13(k) of the Company's Disclosure
Letter than it otherwise would or (ii) create or give rise to any additional
vested rights or service credits under any Current Benefit Plan or any of such
programs, agreements, policies or other arrangements.
(k) Except as set forth in Section 4.13(k) of the Company's Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to or is
bound by any severance agreement (involving $50,000 or more), program or
policy. True and correct copies of all employment agreements with officers of
the Company and its Subsidiaries, and all vacation, overtime and other
compensation policies of the Company and its Subsidiaries relating to their
employees have been made available to the Acquiror.
(l) Except as set forth in Section 4.13(l) of the Company's Disclosure
Letter, no Benefit Plan provides retiree medical or retiree life insurance
benefits to any Person and neither the Company nor any of its Subsidiaries is
contractually or otherwise obligated (whether or not in writing) to provide
any Person with life insurance or medical benefits upon retirement or
termination of employment, other than as required by the provisions of
Sections 601 through 608 of ERISA and Section 4980B of the Code. Each Benefit
Plan or other arrangement described in Section 4.13(l) of the Company's
Disclosure Letter may be unilaterally amended or terminated in its entirety
without liability except as to benefits accrued thereunder prior to such
amendment or termination.
A-10
<PAGE>
(m) Neither the Company nor any of its Subsidiaries contributes or has an
obligation to contribute, and has not within six years prior to the date of
this Agreement contributed or had an obligation to contribute, to a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(n) Except as set forth in Section 4.13(n) of the Company's Disclosure
Letter, the vacation policies of the Company and its Subsidiaries do not
provide for carryover vacation from one calendar year to the next.
(o) No collective bargaining agreement to which the Company or any of its
Subsidiaries is a party is currently in effect or is being negotiated by the
Company or any of its Subsidiaries. There is no pending or, to the Knowledge
of the Company, threatened labor dispute, strike or work stoppage against the
Company or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect on the Company. To the Knowledge of the Company,
neither the Company or any of its Subsidiaries nor any representative or
employee of the Company or any of its Subsidiaries has in the United States
committed any unfair labor practices in connection with the operation of the
business of the Company and its Subsidiaries, and there is no pending or, to
the Knowledge of the Company, threatened charge or complaint against the
Company or any of its Subsidiaries by the National Labor Relations Board or
any comparable agency of any state of the United States.
SECTION 4.14 Taxes.
(a) Except for such matters as could not reasonably be expected to have a
Material Adverse Effect on the Company, (i) all Tax Returns that are required
to be filed by or with respect to the Company or any of its Subsidiaries on or
before the Effective Time have been or will be timely filed, (ii) all Taxes
that are due on or before the Effective Time have been or will be timely paid
in full, (iii) all withholding Tax requirements imposed on or with respect to
the Company or any of its Subsidiaries have been or will be satisfied in full
in all respects and (iv) no penalty, interest or other charge is or will
become due with respect to the late filing of any such Tax Return or late
payment of any such Tax.
(b) Except as set forth in Section 4.14(b) of the Company's Disclosure
Letter, all Tax Returns have been audited by the applicable Governmental
Authority or the applicable statute of limitations has expired for the period
covered by such Tax Returns.
(c) Except as set forth in Section 4.14(c) of the Company's Disclosure
Letter, there is not in force any extension of time with respect to the due
date for the filing of any material Tax Return or any waiver or agreement for
any extension of time for the assessment or payment of any material Tax due
with respect to the period covered by any Tax Return.
(d) There is no claim against the Company or any of its Subsidiaries for any
Taxes, and no assessment, deficiency or adjustment has been asserted or
proposed with respect to any Tax Return, that, in either case, could
reasonably be expected to have a Material Adverse Effect on the Company.
(e) Except as set forth in Section 4.14(e) of the Company's Disclosure
Letter, none of the Company and its Subsidiaries, during the last ten years,
has been a member of an affiliated group filing a consolidated federal income
Tax Return other than the affiliated group of which the Company is the common
parent corporation.
SECTION 4.15 Environmental Matters. Except for matters disclosed in Section
4.15 of the Company's Disclosure Letter and except for matters that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Company, (a) the properties, operations and
activities of the Company and its Subsidiaries are in compliance with all
applicable Environmental Laws; (b) the Company and its Subsidiaries and the
properties and operations of the Company and its Subsidiaries are not subject
to any existing, pending or, to the Knowledge of the Company, threatened
action, suit, investigation, inquiry or proceeding by or before any Court or
Governmental Authority under any Environmental Law; (c) all Permits, if any,
required to be obtained or filed by the Company or any of its Subsidiaries
under any Environmental Law in connection with the business of the Company and
its Subsidiaries have been obtained or filed and are valid and currently in
full force and effect; (d) there has been no release of any hazardous
substance, pollutant or
A-11
<PAGE>
contaminant into the environment by the Company or its Subsidiaries or in
connection with their properties or operations; (e) to the Company's
knowledge, there has been no exposure (attributable to the action of the
Company or its Subsidiaries) of any Person or property to any hazardous
substance, pollutant or contaminant in connection with the properties,
operations and activities of the Company and its Subsidiaries; and (f) the
Company and its Subsidiaries have made available to the Acquiror all internal
and external environmental audits and studies and all correspondence on
substantial environmental matters (in each case relevant to the Company or any
of its Subsidiaries) in the possession of the Company or its Subsidiaries.
SECTION 4.16 Intellectual Property.
(a) The Company or one or more of its Subsidiaries own, or hold licenses
under or otherwise have the right to use or sublicense, all foreign and
domestic patents, trademarks (common law and registered), trademark
registration applications, service marks (common law and registered), service
mark registration applications, trade names and copyrights, copyright
applications, trade secrets, know-how and other proprietary information
(including the Software) as are necessary for the conduct of the business of
the Company and its Subsidiaries as currently conducted except for any such
intellectual property as to which the failure to own or hold licenses could
not reasonably be expected to have a Material Adverse Effect on the Company.
Neither the Company nor any of its Subsidiaries is currently in receipt of any
notice of infringement or notice of conflict with the asserted rights of
others in any patents, trademarks, service marks, trade names, trade secrets
and copyrights owned or held by other Persons, except, in each case, for
matters that could not reasonably be expected to have a Material Adverse
Effect on the Company. Neither the execution and delivery of this Agreement
nor consummation of the transactions contemplated hereby will violate or
breach the terms of or cause any cancellation of any material license held by
the Company or any of its Subsidiaries under, any patent, trademark, service
mark, trade name, trade secret or copyright.
(b) The list of components contained in the definition of Software is, in
all material respects, a true, accurate, and complete list of the software
applications with respect to which the Company has an ownership interest. The
Software, and its use, licensing, copying and/or distribution, do not infringe
or violate any copyrights, trade secrets, patents, or other proprietary rights
of any third party. Except as set forth in Section 4.12 of the Company's
Disclosure Letter, no claim of infringement of any patent, copyright, trade
secret, or other proprietary right is pending against the Company. All
security devices, techniques, and applications used by the Company and its
Subsidiaries and contained within the Software can be identified and disabled
by the Company. Section 4.16(b) of the Company's Disclosure Letter sets forth
material third party software marketed by the Company and/or embedded into the
Software.
SECTION 4.17 Insurance. The Company and its Subsidiaries own and are
beneficiaries under all such insurance policies underwritten by reputable
insurers that, as to risks insured, coverages and related limits and
deductibles, are customary in the industries in which the Company and its
Subsidiaries operate. To the Knowledge of the Company, all such policies are
in full force and effect and all premiums due thereon have been paid. Section
4.17 of the Company's Disclosure Letter sets forth a list, including the name
of the underwriter, the risks insured, coverage and related limits and
deductibles, expiration dates and significant riders, of the principal
insurance policies currently maintained by the Company and its Subsidiaries.
SECTION 4.18 Pooling; Tax Matters. To the Knowledge of the Company, neither
the Company nor any of its Affiliates has taken or agreed to take any action
that would prevent (a) the Merger from being treated for financial accounting
purposes as a "pooling of interests" in accordance with generally accepted
accounting principles and the Regulations and interpretations of the
Commission or (b) the Merger from constituting a reorganization within the
meaning of section 368(a) of the Code. Specifically:
(i) To the Knowledge of the Company, there is no plan or intention by any
stockholder of the Company who owns five percent or more of the Company
Common Stock and there is no plan or intention on the part of any of the
remaining stockholders of the Company, to sell, exchange or otherwise
dispose of a number of shares of Acquiror Common Stock to be received in
the Merger that would reduce the ownership of Acquiror Common Stock by the
stockholders of the Company to a number of shares having a
A-12
<PAGE>
value, as of the Effective Time, of less than 50 percent of the value of
all Company Common Stock (including shares of Company Common Stock sold for
cash in lieu of fractional shares of Acquiror Common Stock) outstanding
immediately prior to the Effective Time.
(ii) The Company and the stockholders of the Company will each pay their
respective expenses, if any, incurred in connection with the Merger.
(iii) There is no intercorporate indebtedness existing between the
Company and the Acquiror or between the Company and Newco that was issued,
acquired, or will be settled at a discount.
(iv) The Company is not an investment company as defined in section
368(a)(2)(F)(iii) and (iv) of the Code.
(v) The Company is not under the jurisdiction of a court in a title 11 or
similar case within the meaning of section 368(a)(3)(A) of the Code.
(vi) The liabilities of the Company that will be assumed by the Surviving
Corporation in the Merger and any liability to which the assets to be
transferred to the Surviving Corporation are subject were incurred by the
Company in the ordinary course of its business. The total amount of such
liabilities does not equal or exceed the aggregate basis of the Company in
the assets to be transferred to the Surviving Corporation in the Merger.
SECTION 4.19 Affiliates. Section 4.19 of the Company's Disclosure Letter
contains a true and complete list of all Persons who, to the Knowledge of the
Company, may be deemed to be Affiliates of the Company, excluding all its
Subsidiaries but including all directors and executive officers of the
Company.
SECTION 4.20 Certain Business Practices. As of the date of this Agreement,
neither the Company or any of its Subsidiaries nor any director, officer,
employee or agent of the Company or any of its Subsidiaries has (i) used any
funds for unlawful contributions, gifts, entertainment or other unlawful
payments relating to political activity, (ii) made any unlawful payment to any
foreign or domestic government official or employee or to any foreign or
domestic political party or campaign or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, (iii) 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, or (iv) made any other unlawful payment, except for any such matters
that could not reasonably be expected to have a Material Adverse Effect on the
Company.
SECTION 4.21 Opinion of Financial Advisor. The Company has received the
opinion of Morgan Stanley & Co. Incorporated on the date of this Agreement to
the effect that the Common Stock Exchange Ratio is fair, from a financial
point of view, to the holders of Company Common Stock.
SECTION 4.22 Brokers. No broker, finder or investment banker (other than
Morgan Stanley & Co. Incorporated) 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.
Prior to the date of this Agreement, the Company has made available to the
Acquiror a complete and correct copy of all agreements between the Company and
Morgan Stanley & Co. Incorporated pursuant to which such firm will be entitled
to any payment relating to the transactions contemplated by this Agreement.
SECTION 4.23 Acquiring Person. None of the Acquiror Companies is (a) an
"Acquiring Person" as defined in the Company Rights Plan or (b) will become an
"Acquiring Person" as a result of any of the transactions contemplated by this
Agreement.
A-13
<PAGE>
ARTICLE V
Representations and Warranties of Acquiror
The Acquiror Companies hereby represent and warrant to the Company that:
SECTION 5.01 Organization and Qualification; Subsidiaries. The Acquiror,
Newco and each other Subsidiary of the Acquiror are legal entities duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization, have all requisite
power and authority to own, lease and operate their respective properties and
to carry on their business as it is now being conducted and are duly qualified
and in good standing to do business in each jurisdiction in which the nature
of the business conducted by them or the ownership or leasing of their
respective properties makes such qualification necessary, other than any
matters, including the failure to be so duly qualified and in good standing,
that could not reasonably be expected to have a Material Adverse Effect on the
Acquiror. Section 5.01 of the Acquiror's Disclosure Letter sets forth, as of
the date of this Agreement, a true and complete list of all Significant
Subsidiaries of the Acquiror, together with the jurisdiction of incorporation
of each such Subsidiary and the percentage of each such Subsidiary's
outstanding capital stock or other equity interests owned by the Acquiror or
another Subsidiary of the Acquiror.
SECTION 5.02 Certificate of Incorporation and Bylaws. The Acquiror has
heretofore marked for identification and furnished to the Company complete and
correct copies of the certificate of incorporation and the bylaws or the
equivalent organizational documents, in each case as amended or restated to
the date hereof, of the Acquiror and each of its Significant Subsidiaries.
None of the Acquiror, Newco or any of the Acquiror's Significant Subsidiaries
is in violation of any of the provisions of its certificate of incorporation
or bylaws (or equivalent organizational documents).
SECTION 5.03 Capitalization.
(a) The authorized capital stock of the Acquiror consists of (i) 200,000,000
shares of Acquiror Common Stock of which as of March 31, 1996: 114,787,914
shares were issued and outstanding, all of which are duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights
created by statute, the Acquiror's certificate of incorporation or bylaws or
any agreement to which the Acquiror is a party or is bound, and (ii) 5,000,000
shares of Preferred Stock, par value $1.00 per share, of which none is issued
but of which 2,000,000 shares have been designated as Series A Junior
Participating Preferred Stock. Between March 31, 1996 and the date of this
Agreement, no shares of Acquiror Common Stock have been issued by the Acquiror
except pursuant to the exercise of outstanding Acquiror Stock Options and
otherwise to the extent set forth in Section 5.03(a) of the Acquiror's
Disclosure Letter. Except as set forth in Section 5.03(a) of the Acquiror's
Disclosure Letter, from March 31, 1996 to the date of this Agreement, the
Acquiror has not granted any options for, or other rights to purchase, shares
of Acquiror Common Stock.
(b) Except as set forth in Section 5.03(b) of the Acquiror's Disclosure
Letter, no shares of Acquiror Common Stock are reserved for issuance, and,
except for the Acquiror's Rights Plan, the Acquiror Stock Options listed in
Section 5.03(b) of the Acquiror's Disclosure Letter and the other agreements
listed in Section 5.03(b) of the Acquiror's Disclosure Letter, there are no
contracts, agreements, commitments or arrangements obligating the Acquiror (i)
to offer, sell, issue or grant any shares of, or any options, warrants or
rights of any kind to acquire any shares of, or any securities that are
convertible into or exchangeable for any shares of, capital stock of the
Acquiror, (ii) to redeem, purchase or acquire, or offer to purchase or
acquire, any outstanding shares of, or any outstanding options, warrants or
rights of any kind to acquire any shares of, or any outstanding securities
that are convertible into or exchangeable for any shares of, capital stock of
the Acquiror or (iii) to grant any Lien on any shares of capital stock of the
Acquiror.
(c) Except as set forth in the Acquiror's Disclosure Letter, (i) all the
issued and outstanding shares of capital stock of, or other equity interests
in, each Subsidiary of the Acquiror are owned by the Acquiror or one of its
Subsidiaries, have been duly authorized and are validly issued, and, with
respect to capital stock, are fully paid
A-14
<PAGE>
and nonassessable, and were not issued in violation of any preemptive or
similar rights of any Person; (ii) all such issued and outstanding shares, or
other equity interests, that are owned by the Acquiror or one of its
Subsidiaries are owned free and clear of all Liens; (iii) no shares of capital
stock of, or other equity interests in, any Subsidiary of the Acquiror are
reserved for issuance, and there are no contracts, agreements, commitments or
arrangements obligating the Acquiror or any of its Subsidiaries (A) to offer,
sell, issue, grant, pledge, dispose of or encumber any shares of capital stock
of, or other equity interests in, or any options, warrants or rights of any
kind to acquire any shares of capital stock of, or other equity interests in,
or any securities that are convertible into or exchangeable for any shares of
capital stock of, or other equity interests in, any of the Subsidiaries of the
Acquiror or (B) to redeem, purchase or acquire, or offer to purchase or
acquire, any outstanding shares of capital stock of, or other equity interests
in, or any outstanding options, warrants or rights of any kind to acquire any
shares of capital stock of or other equity interest in, or any outstanding
securities that are convertible into or exchangeable for, any shares of
capital stock of, or other equity interests in, any of the Subsidiaries of the
Acquiror or (C) to grant any Lien on any outstanding shares of capital stock
of, or other equity interest in, any of the Subsidiaries of the Acquiror;
except for any matter under clause (i), (ii) or (iii) of this Section 5.03(c)
that could not reasonably be expected to have a Material Adverse Effect on the
Acquiror.
(d) There are no voting trusts, proxies or other agreements, commitments or
understandings of any character to which the Acquiror or any of its
Significant Subsidiaries is a party or by which the Acquiror or any of its
Significant Subsidiaries is bound with respect to the voting of any shares of
capital stock of the Acquiror or any of its Significant Subsidiaries.
SECTION 5.04 Authorization of Agreement. Each of the Acquiror and Newco has
all requisite corporate power and authority to execute and deliver this
Agreement and each instrument required hereby to be executed and delivered by
it at the Closing, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby. The execution and delivery by
the Acquiror and Newco of this Agreement and each instrument required hereby
to be executed and delivered by the Acquiror or Newco at the Closing and the
performance of their respective obligations hereunder and thereunder have been
duly and validly authorized by all requisite corporate action (including
stockholder action) on the part of the Acquiror and Newco, respectively. This
Agreement has been duly executed and delivered by the Acquiror and Newco and
(assuming due authorization, execution and delivery hereof by the other party
hereto) constitutes a legal, valid and binding obligation of the Acquiror and
Newco, enforceable against the Acquiror and Newco in accordance with its
terms, except as the same may be limited by legal principles of general
applicability governing the application and availability of equitable
remedies.
SECTION 5.05 Approvals. Except for the applicable requirements, if any, of
(a) the Securities Act, (b) the Exchange Act, (c) state securities or blue sky
laws, (d) the HSR Act, (e) the competition Laws, Regulations and Orders of
foreign Governmental Authorities as set forth in the Acquiror's Disclosure
Letter, (f) the NYSE, (g) the filing and recordation of appropriate merger
documents as required by the GCL and (h) those Laws, Regulations and Orders
noncompliance with which could not reasonably be expected to have a material
adverse effect on the ability of the Acquiror or Newco to perform its
obligations under this Agreement or to have a Material Adverse Effect on the
Acquiror, no filing or registration with, no waiting period imposed by and no
Permit or Order of, any Governmental Authority is required under any Law,
Regulation or Order applicable to the Acquiror or Newco to permit the Acquiror
or Newco to execute, deliver or perform this Agreement or any instrument
required hereby to be executed and delivered by it at the Closing.
SECTION 5.06 No Violation. Except as set forth in Section 5.06 of the
Acquiror's Disclosure Letter, assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting
periods imposed by and receipt of all Permits and Orders of, Governmental
Authorities indicated as required in Section 5.05, neither the execution and
delivery by the Acquiror or Newco of this Agreement or any instrument required
hereby to be executed and delivered by the Acquiror or Newco at the Closing
nor the performance by the Acquiror or Newco of their respective obligations
hereunder or thereunder will (a) violate or breach the terms of or cause a
default under (i) any Law, Regulation or Order applicable to the Acquiror or
Newco, (ii) the certificate of incorporation or bylaws of the Acquiror or
Newco or (iii) any contract or agreement to which the
A-15
<PAGE>
Acquiror or any of its Subsidiaries is a party or by which it or any of its
properties or assets is bound, or (b) with the passage of time, the giving of
notice or the taking of any action by a third Person, have any of the effects
set forth in clause (a) of this Section, except in any such case for any
matters described in this Section that could not reasonably be expected to
have a material adverse effect upon the ability of the Acquiror or Newco to
perform its obligations under this Agreement or a Material Adverse Effect on
the Acquiror.
SECTION 5.07 Reports.
(a) Since December 31, 1993, the Acquiror has filed all SEC Reports of the
Acquiror required to be filed with the Commission. The SEC Reports of the
Acquiror, including those filed after the date of this Agreement and prior to
the Effective Time, (i) were prepared in all material respects in accordance
with the applicable requirements of the Securities Act and the Exchange Act,
as the case may be, and the applicable Regulations of the Commission
thereunder and (ii) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(b) The Acquiror's Consolidated Financial Statements and any consolidated
financial statements of the Acquiror (including any related notes thereto)
contained in any SEC Reports of the Acquiror filed with the Commission after
the date of this Agreement (i) have been or will have been prepared in
accordance with the published Regulations of the Commission and in accordance
with GAAP (except (A) to the extent required by changes in GAAP and (B), with
respect to SEC Reports of the Acquiror filed prior to the date of this
Agreement, as may be indicated in the notes thereto) and (ii) fairly present
the consolidated financial position of the Acquiror and its Subsidiaries as of
the respective dates thereof and the consolidated results of their operations
and cash flows for the periods indicated (including, in the case of any
unaudited interim financial statements, reasonable estimates of normal and
recurring year-end adjustments).
(c) Except as set forth in the Acquiror's Disclosure Letter, there exist no
liabilities or obligations of the Acquiror and its Subsidiaries that are
Material to the Acquiror, whether accrued, absolute, contingent or threatened,
that would be required to be reflected, reserved for or disclosed under GAAP
in consolidated financial statements of the Acquiror as of and for the period
ended on the date of this representation and warranty, other than (i)
liabilities or obligations that are adequately reflected, reserved for or
disclosed in the Acquiror's Consolidated Financial Statements, (ii)
liabilities or obligations incurred in the ordinary course of business of the
Acquiror and its Subsidiaries since March 31, 1996, (iii) liabilities or
obligations the incurrence of which is not prohibited by Section 6.02(b) and
(iv) liabilities or obligations that are not Material to the Acquiror.
SECTION 5.08 No Material Adverse Effect; Conduct.
(a) Since March 31, 1996, no event (other than any event that is directly
attributable to the prospect of consummation of the Merger or is of general
application to all or a substantial portion of the Acquiror's industry and
other than any event that is expressly subject to any other representation or
warranty contained in Article V) has, to the Knowledge of the Acquiror,
occurred that, individually or together with other similar events, could
reasonably be expected to constitute or cause a Material Adverse Effect on the
Acquiror.
(b) Except as disclosed in the Acquiror's Disclosure Letter, during the
period from March 31, 1996 to the date of this Agreement, neither the Acquiror
nor any of its Subsidiaries has engaged in any conduct that is proscribed
during the period from the date of this Agreement to the Effective Time by
subsections (i) through (vii) of Section 6.02(b) or agreed in writing or
otherwise during such period prior to the date of this Agreement to engage in
any such conduct.
SECTION 5.09 Title to Properties. The Acquiror or its Subsidiaries,
individually or together, have indefeasible title to all of the properties
reflected in the Acquiror's Consolidated Balance Sheet, other than any
properties reflected in the Acquiror's Consolidated Balance Sheet that (i)
have been sold or otherwise disposed of since the date of the Acquiror's
Consolidated Balance Sheet or (ii) are not, individually or in the aggregate,
A-16
<PAGE>
Material to the Acquiror, free and clear of Liens, other than (x) Liens the
existence of which is reflected in the Acquiror's Consolidated Financial
Statements, (y) Permitted Encumbrances and (z) Liens that, individually or in
the aggregate, are not Material to the Acquiror. The Acquiror or its
Subsidiaries, individually or together, hold under valid lease agreements all
real and personal properties reflected in the Acquiror's Consolidated Balance
Sheet as being held under capitalized leases, and all real and personal
property that is subject to the operating leases to which reference is made in
the notes to the Acquiror's Audited Consolidated Financial Statements, and
enjoy peaceful and undisturbed possession of such properties under such
leases, other than (i) any properties as to which such leases have terminated
in the ordinary course of business since the date of the Acquiror's
Consolidated Balance Sheet and (ii) any properties that, individually or in
the aggregate, are not Material to the Acquiror.
SECTION 5.10 Certain Obligations. Except as set forth in Section 5.10 of the
Acquiror's Disclosure Letter, all Material Contracts to which the Acquiror or
any of its Subsidiaries is a party are in full force and effect, the Acquiror
or the Subsidiary of the Acquiror that is a party to or bound by such Material
Contract has performed its obligations thereunder to date and, to the
Knowledge of the Acquiror, each other party thereto has performed its
obligations thereunder to date, other than any failure of any such Material
Contract to be in full force and effect or any nonperformance thereof that
could not reasonably be expected to have a Material Adverse Effect on the
Acquiror.
SECTION 5.11 Permits; Compliance. To the Knowledge of the Acquiror, the
Acquiror and its Subsidiaries have obtained all Permits that are necessary to
carry on their businesses as currently conducted, except for any such Permits
that the failure to possess which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Acquiror. Such
Permits are in full force and effect, have not been violated in any respect
that could reasonably be expected to have a Material Adverse Effect on the
Acquiror and, to the Knowledge of the Acquiror, no suspension, revocation or
cancellation thereof has been threatened and there is no action, proceeding or
investigation pending or threatened regarding suspension, revocation or
cancellation of any of such Permits, except where the suspension, revocation
or cancellation of such Permits could not reasonably be expected to have a
Material Adverse Effect on the Acquiror.
SECTION 5.12 Litigation; Compliance with Laws. There are no actions, suits,
investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Acquiror, threatened against the Acquiror
or any of its Subsidiaries, at law or in equity, in any Court or before or by
any Governmental Authority, except actions, suits or proceedings that (a) are
set forth in Section 5.12 or any other Section of the Acquiror's Disclosure
Letter or (b), individually or, with respect to multiple actions, suits or
proceedings that allege similar theories of recovery based on similar facts,
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Acquiror. The Acquiror and its Subsidiaries are in substantial
compliance with all applicable Laws and Regulations and are not in default
with respect to any Order applicable to the Acquiror or any of its
Subsidiaries, except such events of noncompliance or defaults that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Acquiror.
SECTION 5.13 Employee Benefit Plans.
(a) No event has occurred and, to the Knowledge of the Acquiror, there
exists no condition or set of circumstances in connection with which the
Acquiror or any of its Subsidiaries could be subject to any liability under
the terms of any Benefit Plans of the Acquiror or any of its Subsidiaries or,
with respect to any such Benefit Plan, under ERISA, the Code or any other
applicable Law, other than any condition or set of circumstances that could
not reasonably be expected to have a Material Adverse Effect on the Acquiror.
(b) As to any Current Benefit Plan included in such Benefit Plans that is
intended to be qualified under Section 401 of the Code, such Current Benefit
Plan satisfies in form the requirements of such Section and there has been no
termination or partial termination of such Current Benefit Plan within the
meaning of Section 411(d)(3) of the Code.
A-17
<PAGE>
(c) As to any Terminated Benefit Plan included in such Benefit Plans that is
intended to have been qualified under Section 401 of the Code, such Terminated
Benefit Plan received a favorable determination letter from the IRS with
respect to its termination.
(d) There are no actions, suits or claims pending (other than routine claims
for benefits) or, to the Knowledge of the Acquiror, threatened against, or
with respect to, any of such Benefit Plans or their assets that could
reasonably be expected to have a Material Adverse Effect on the Acquiror.
(e) As to any such Current Benefit Plan subject to Title IV of ERISA, (i)
there has been no event or condition which presents the material risk of plan
termination, (ii) no accumulated funding deficiency, whether or not waived,
within the meaning of Section 302 of ERISA or Section 412 of the Code has been
incurred, (iii), except as set forth in Section 5.13(e) of the Acquiror's
Disclosure Letter, no reportable event within the meaning of Section 4043 of
ERISA (for which the disclosure requirements of Regulation section 2615.3
promulgated by the PBGC have not been waived) has occurred within six years
prior to the date of this Agreement, (iv) no notice of intent to terminate
such Benefit Plan has been given under Section 4041 of ERISA, (v) no
proceeding has been instituted under Section 4042 of ERISA to terminate such
Benefit Plan, (vi) no liability to the PBGC has been incurred (other than with
respect to required premium payments) and (vii) the assets of the Benefit Plan
equal or exceed the actuarial present value of the benefit liabilities, within
the meaning of Section 4041 of ERISA, under the Benefit Plan, based upon
reasonable actuarial assumptions and the asset valuation principles
established by the PBGC.
(f) Neither the Acquiror nor any of its Subsidiaries contributes or has an
obligation to contribute, and has not within six years prior to the date of
this Agreement contributed or had an obligation to contribute, to a
multiemployer plan within the meaning of Section 3(37) of ERISA.
SECTION 5.14 Taxes.
(a) Except for such matters as could not reasonably be expected to have a
Material Adverse Effect on the Acquiror, (i) all Tax Returns that are required
to be filed by or with respect to the Acquiror or any of its Subsidiaries on
or before the Effective Time have been or will be timely filed, (ii) all Taxes
that are due on or before the Effective Time have been or will be timely paid
in full, (iii) all withholding Tax requirements imposed on or with respect to
the Acquiror or any of its Subsidiaries have been or will be satisfied in full
in all respects and (iv) no penalty, interest or other charge is or will
become due with respect to the late filing of any such Tax Return or late
payment of any such Tax.
(b) There is no claim against the Acquiror or any of its Subsidiaries for
any Taxes, and no assessment, deficiency or adjustment has been asserted or
proposed with respect to any Tax Return, that, in either case, could
reasonably be expected to have a Material Adverse Effect on the Acquiror.
SECTION 5.15 Environmental Matters. Except for matters disclosed in Section
5.15 of the Acquiror's Disclosure Letter and except for matters that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Acquiror, (a) the properties, operations and
activities of the Acquiror and its Subsidiaries are in compliance with all
applicable Environmental Laws; (b) the Acquiror and its Subsidiaries and the
properties and operations of the Acquiror and its Subsidiaries are not subject
to any existing, pending or, to the Knowledge of the Acquiror, threatened
action, suit, investigation, inquiry or proceeding by or before any Court or
Governmental Authority under any Environmental Law; (c) all Permits, if any,
required to be obtained or filed by the Acquiror or any of its Subsidiaries
under any Environmental Law in connection with the business of the Acquiror
and its Subsidiaries have been obtained or filed and are valid and currently
in full force and effect; (d) there has been no release of any hazardous
substance, pollutant or contaminant into the environment by the Acquiror or
its Subsidiaries or in connection with their properties or operations; and (e)
there has been no exposure of any Person or property to any hazardous
substance, pollutant or contaminant in connection with the properties,
operations and activities of the Acquiror and its Subsidiaries.
A-18
<PAGE>
SECTION 5.16 Pooling; Tax Matters. To the Knowledge of the Acquiror, neither
the Acquiror nor any of its Affiliates has taken or agreed to take any action
that would prevent (a) the Merger from being treated for financial accounting
purposes as a "pooling of interests" in accordance with generally accepted
accounting principles and the Regulations and interpretations of the
Commission or (b) the Merger from constituting a reorganization within the
meaning of section 368(a) of the Code. Specifically:
(i) Following the Merger, the Surviving Corporation will hold at least 90
percent of the fair market value of the Company's net assets and at least
70 percent of the fair market value of the Company's gross assets and at
least 90 percent of Newco's net assets and at least 70 percent of Newco's
gross assets, held immediately prior to the Merger, taking into account
amounts used to pay Merger expenses and any distributions other than
regular dividends.
(ii) The Acquiror has no plan or intention to (A) liquidate the Surviving
Corporation, (B) merge the Surviving Corporation with or into another
corporation, (C) sell or otherwise dispose of the stock of the Surviving
Corporation, (D) cause or permit the Surviving Corporation to issue
additional shares of its capital stock that would result in the Acquiror's
losing control (within the meaning of section 368(c) of the Code) of the
Surviving Corporation, (E) cause or permit the Surviving Corporation to
sell or otherwise dispose of any of its assets or of any of the assets
acquired from Newco except for dispositions made in the ordinary course of
business and dispositions to a corporation controlled (within the meaning
of Section 368(c) of the Code) by the Surviving Corporation, or (F)
reacquire any of the Acquiror Common Stock issued to the holders of Company
Common Stock in the Merger.
(iii) Following the Merger, the Surviving Corporation will continue the
historic business of the Company or use a significant portion of its assets
in a business.
(iv) There is no intercorporate indebtedness existing between the Company
and the Acquiror or between the Company and Newco that was issued,
acquired, or will be settled at a discount.
(v) The Acquiror does not own, nor has it owned during the past five
years, any shares of capital stock of the Company.
SECTION 5.17 Affiliates. Section 5.17 of the Acquiror's Disclosure Letter
contains a true and complete list of all Persons who, to the Knowledge of the
Acquiror, may be deemed to be Affiliates of the Acquiror, excluding all its
Subsidiaries but including all directors and executive officers of the
Acquiror.
SECTION 5.18 Brokers. Except as set forth in Section 5.18 of the Acquiror's
Disclosure Letter, no broker, finder or investment banker (other than Dillon,
Read & Co., Inc.) 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 Acquiror.
SECTION 5.19 Acquiring Person. Based on the information set forth in the
Company's SEC Reports, no holder of 5 percent or more of the outstanding
Company Common Stock whose existence is disclosed therein will at the
Effective Time become an "Acquiring Person", as such term is defined in the
Acquiror's Rights Plan, as a result of any of the transactions contemplated by
this Agreement.
SECTION 5.20 Proposal to Acquire the Acquiror. There is not pending any bona
fide proposal received by the Acquiror regarding any merger, consolidation or
reorganization of the Acquiror with any other Person as a result of which less
than a majority of the combined voting power of the securities of the Person
surviving such transaction would be held immediately after such transaction by
all the holders of Acquiror Common Stock immediately prior to such transaction
and for which transaction financing, to the extent required, is then
committed.
SECTION 5.21 Certain Business Practices. As of the date of this Agreement,
neither the Acquiror or any of its Subsidiaries nor any director, officer,
employee or agent of the Acquiror or any of its Subsidiaries has (i) used any
funds for unlawful contributions, gifts, entertainment or other unlawful
payments relating to political activity, (ii) made any unlawful payment to any
foreign or domestic government official or employee or to any
A-19
<PAGE>
foreign or domestic political party or campaign or violated any provision of
the Foreign Corrupt Practices Act of 1977, as amended, (iii) 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, or (iv) made any other unlawful payment, except for any such
matters that could not reasonably be expected to have a Material Adverse
Effect on the Acquiror.
ARTICLE VI
COVENANTS
SECTION 6.01 Affirmative Covenants. Each of the Company and the Acquiror
hereby covenants and agrees that, prior to the Effective Time, unless
otherwise expressly contemplated by this Agreement or consented to in writing
by the other, it will and will cause its Subsidiaries to:
(a) operate its business in the usual and ordinary course consistent with
past practices;
(b) use all reasonable efforts to preserve substantially intact its
business organization, maintain its rights and franchises, retain the
services of its respective key employees and maintain its relationships
with its respective customers and suppliers;
(c) maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted, and maintain
supplies and inventories in quantities consistent with its customary
business practice; and
(d) use all reasonable efforts to keep in full force and effect insurance
and bonds comparable in amount and scope of coverage to that currently
maintained;
except for any matters that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on such party.
SECTION 6.02 Negative Covenants.
(a) Except as set forth in Schedule 6.02(a) of the Company's Disclosure
Letter, the Company covenants and agrees that, except as expressly
contemplated by this Agreement or otherwise consented to in writing by the
Acquiror, from the date of this Agreement until the Effective Time, it will
not do, and will not permit any of its Subsidiaries to do, any of the
following:
(i) (A) to increase the compensation payable to or to become payable to
any director or executive officer, except for increases in salary or wages
payable or to become payable upon promotion to an office having greater
operational responsibilities or otherwise in the ordinary course of
business and consistent with past practice; (B) to grant any severance or
termination pay (other than pursuant to the normal severance policy of the
Company or its Subsidiaries as in effect on the date of this Agreement) to,
or enter into or amend in any material respect any employment or severance
agreement, including any amendment whatsoever to the Employment Agreement,
with, any director, officer or employee, either individually or as part of
a class of similarly situated persons; (C) to establish, adopt or enter
into any Benefit Plan or (D), except as may be required by applicable law
and actions that are not inconsistent with the provisions of Section 7.09
of this Agreement, to amend, or to take any other actions (including the
acceleration of vesting, waiving of performance criteria or the adjustment
of awards or any other actions permitted upon a change in control of such
party or a filing under Section 13(d) or 14(d) of the Exchange Act with
respect to such party) with respect to any of the Benefit Plans of such
party;
(ii) to declare or to pay any dividend on, or to make any other
distribution in respect of, outstanding shares of capital stock, except for
dividends by a wholly-owned Subsidiary of the Company to the Company or
another wholly-owned Subsidiary of the Company;
(iii) (A) to redeem, purchase or acquire, or to offer to purchase or
acquire, any outstanding shares of capital stock of, or other equity
interests in, or any securities that are convertible into or exchangeable
for
A-20
<PAGE>
any shares of capital stock of, or other equity interests in, or any
outstanding options, warrants or rights of any kind to acquire any shares
of capital stock of, or other equity interests in, the Company or any of
its Subsidiaries (other than (1) any such acquisition by the Company or any
of its wholly-owned Subsidiaries directly from any wholly-owned Subsidiary
of the Company in exchange for capital contributions or loans to such
Subsidiary, (2) any repurchase, forfeiture or retirement of shares of
Company Common Stock or Company Stock Options occurring pursuant to the
terms (as in effect on the date of this Agreement) of any existing Benefit
Plan of the Company or any of its Subsidiaries, (3) the repurchase of
rights pursuant to the terms (as in effect on the date of this Agreement)
of the Company Rights Agreement to the extent required by a court of
competent jurisdiction or (4) any periodic purchase of Company Common Stock
for allocation to employee's accounts occurring pursuant to the terms (as
in effect on the date of this Agreement) of any existing employee stock
purchase plan); (B) to effect any reorganization or recapitalization; or
(C) to split, combine or reclassify any of the capital stock of, or other
equity interests in, the Company or any of its Subsidiaries or to issue or
to authorize or propose the issuance of any other securities in respect of,
in lieu of or in substitution for, shares of such capital stock or such
equity interests, other than intercompany transfers among the Company and
its wholly-owned Subsidiaries or among such wholly-owned Subsidiaries;
(iv) (A) to offer, sell, issue or grant, or authorize the offering, sale,
issuance or grant, of any shares of capital stock of, or other equity
interests in, any securities convertible into or exchangeable for any
shares of capital stock of, or other equity interests in, or any options,
warrants or rights of any kind to acquire any shares of capital stock of,
or other equity interests in, the Company or any of its Subsidiaries, other
than issuances of Company Common Stock (1) upon the exercise of Company
Stock Options outstanding at the date of this Agreement in accordance with
the terms thereof (as in effect on the date of this Agreement), (2) upon
the expiration of any restrictions upon issuance of any grant existing at
the date of this Agreement of restricted stock or stock bonus pursuant to
the terms (as in effect on the date of this Agreement) of any Benefit Plans
of the Company or any of its Subsidiaries or (3) any periodic issuance of
shares of Company Common Stock occurring pursuant to the terms (as in
effect on the date of this Agreement) of any Benefit Plans of the Company
or any of its Subsidiaries, (B), except as set forth in Section 4.08(b) of
the Company's Disclosure Letter, to amend or otherwise modify the terms (as
in effect on the date of this Agreement) of any outstanding options,
warrants or rights the effect of which shall be to make such terms more
favorable to the holders thereof (except as may be required by ERISA or
other applicable law); (C) to take any action to accelerate the vesting of
any outstanding Company Stock Options or (D) to grant any Lien with respect
to any shares of capital stock of, or other equity interests in, any
Subsidiary of the Company;
(v) except as set forth in Section 4.08(b) of the Company's Disclosure
Letter, to acquire or agree to acquire, by merging or consolidating with,
by purchasing an equity interest in or a portion of the assets of, or in
any other manner, any business or any corporation, partnership, association
or other business organization or division thereof or otherwise to acquire
any assets of any other Person (other than the purchase of assets from
suppliers or vendors in the ordinary course of business and consistent with
past practice and acquisitions of equity interests, assets and businesses
in an amount not to exceed $250,000 in the aggregate);
(vi) except as set forth in Section 4.08(b) of the Company's Disclosure
Letter, to sell, lease, exchange or otherwise dispose of, or to grant any
Lien (other than a Permitted Encumbrance) with respect to, any of the
assets of the Company or any of its Subsidiaries that are Material to the
Company, except for dispositions of assets and inventories in the ordinary
course of business and consistent with past practice and dispositions of
assets and purchase money Liens incurred in connection with the original
acquisition of assets and secured by the assets acquired in an amount not
to exceed $250,000 in the aggregate;
(vii) to adopt any amendments to its charter or bylaws or other
organizational documents that would alter the terms of its capital stock or
other equity interests or would have a material adverse effect on the
ability of the Company to perform its obligations under this Agreement;
(viii) (A) to change any of its methods of accounting in effect at June
30, 1995, except as may be required to comply with GAAP, (B) to make or
rescind any election relating to Taxes (other than any
A-21
<PAGE>
election which must be made periodically which is made consistent with past
practice), (C) to settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
Taxes (except where the cost to the Company and its Subsidiaries of such
settlements or compromises, individually or in the aggregate, does not
exceed $250,000) or (D) to change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year ending
June 30, 1995, except, in each case, as may be required by Law and for
matters that could not reasonably be expected to have a Material Adverse
Effect on the Company;
(ix) to incur any obligations for borrowed money or purchase money
indebtedness (other than purchase money indebtedness as to which Liens may
be granted as permitted by Section 6.02(a)(vi)) that are Material to the
Company, whether or not evidenced by a note, bond, debenture or similar
instrument, except drawings under credit lines existing at the date of this
Agreement or otherwise in the ordinary course of business consistent with
past practice and in no event (including purchase money indebtedness as to
which Liens may be granted pursuant to Section 6.02(a)(vi)) in excess of
$250,000;
(x) release any third Person from its obligations under any existing
standstill agreement relating to a Competing Transaction or otherwise under
any confidentiality agreement or similar agreement;
(xi) enter into any Material Contract with any third Person (other than
customers and vendors in the ordinary course of business) which provides
for an exclusive arrangement with that third Person or is substantially
more restrictive on the Company or any of its Subsidiaries or substantially
less advantageous to the Company or any of its Subsidiaries than Material
Contracts existing on the date hereof; or
(xii) agree in writing or otherwise to do any of the foregoing;
(b) The Acquiror covenants and agrees that, except as expressly contemplated
by this Agreement or otherwise consented to in writing by the Company, from
the date of this Agreement until the Effective Time, it will not do, and will
not permit any of its Subsidiaries to do, any of the following:
(i) to declare or to pay any dividend on, or to make any other
distribution in respect of, outstanding shares of capital stock, except for
(A) dividends by a wholly-owned Subsidiary of such party to such party or
another wholly-owned Subsidiary of such party, (B) regular quarterly
dividends payable to holders of Acquiror Common Stock in the amounts per
share and at the approximate times paid during calendar year 1995 and (C)
dividends paid by partially owned subsidiaries declared and paid in the
ordinary course of business;
(ii) (A) to redeem, purchase or acquire, or to offer to purchase or
acquire, any outstanding shares of capital stock of, or other equity
interests in, or any securities that are convertible into or exchangeable
for any shares of capital stock of, or other equity interests in, or any
outstanding options, warrants or rights of any kind to acquire any shares
of capital stock of, or other equity interests in, the Acquiror or any of
its Subsidiaries (other than (1) any such acquisition by the Acquiror or
any of its wholly-owned Subsidiaries directly from any wholly-owned
Subsidiary of the Acquiror in exchange for capital contributions or loans
to such Subsidiary, (2) any repurchase, forfeiture or retirement of shares
of Acquiror Common Stock or Acquiror Stock Options occurring pursuant to
the terms (as in effect on the date of this Agreement) of any existing
Benefit Plan of the Acquiror or any of its Subsidiaries, (3) any periodic
purchase of Acquiror Common Stock for allocation to employee's accounts
occurring pursuant to the terms (as in effect on the date of this
Agreement) of any existing Benefit Plan of the Acquiror or any of its
Subsidiaries and (4) any redemption, purchase or acquisition by a
Subsidiary that could not reasonably be expected to have a Material Adverse
Effect on the Acquiror) or (B) to effect any reorganization or
recapitalization other than any reorganization or recapitalization that
could not reasonably be expected to have a material adverse effect on the
ability of the Acquiror to perform its obligations under this Agreement;
(iii) to offer, sell, issue or grant, or authorize the offering, sale,
issuance or grant, of any shares of capital stock of, or other equity
interests in, any securities convertible into or exchangeable for any
shares of capital stock of, or other equity interests in, or any options,
warrants or rights of any kind to acquire any shares of capital stock of,
or other equity interests in, the Acquiror or any of its Subsidiaries,
other than
A-22
<PAGE>
issuances of Acquiror Common Stock (A) upon the exercise of Acquiror Stock
Options outstanding at the date of this Agreement in accordance with the
terms thereof (as in effect on the date of this Agreement), (B) upon the
expiration of any restrictions upon issuance of any grant existing at the
date of this Agreement of restricted stock or stock bonus pursuant to the
terms (as in effect on the date of this Agreement) of any Benefit Plans of
the Acquiror or any of its Subsidiaries, or (C) any periodic issuance of
shares of Acquiror Common Stock or Acquiror Stock Options pursuant to the
terms (as in effect on the date of this Agreement) of any Benefit Plan of
the Acquiror or any of its Subsidiaries or (D) any issuance of shares of
Acquiror Common Stock for cash or in connection with any acquisition of
equity interests, assets or businesses and other than any such offer, sale,
issuance or grant that could not reasonably be expected to have a Material
Adverse Effect on the Acquiror or a material adverse effect on the ability
of the Acquiror to perform its obligations under this Agreement;
(iv) to acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or in any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise to acquire
any assets of any other Person (other than the purchase of assets from
suppliers or vendors in the ordinary course of business and consistent with
past practice and acquisitions of equity interests, assets and businesses
that could not reasonably be expected to have a material adverse effect on
the ability of the Acquiror to perform its obligations under this
Agreement);
(v) to sell, lease, exchange or otherwise dispose of, or to grant any
Lien (other than a Permitted Encumbrance) with respect to, any of the
assets of the Acquiror or any of its Subsidiaries that are Material to the
Acquiror, except for dispositions of assets and inventories in the ordinary
course of business and consistent with past practice and dispositions of
assets and incurrences of Liens that could not reasonably be expected to
have a material adverse effect on the ability of the Acquiror to perform
its obligations under this Agreement;
(vi) to adopt any amendments to its charter or bylaws or other
organizational documents that would alter the terms of the Acquiror's
Common Stock or could reasonably be expected to have a material adverse
effect on the ability of the Acquiror or Newco to perform its obligations
under this Agreement;
(vii) to incur any obligations for borrowed money or purchase money
indebtedness (other than purchase money indebtedness as to which Liens may
be granted as permitted by Section 6.02(b)(vi)) that are Material to the
Acquiror, whether or not evidenced by a note, bond, debenture or similar
instrument, except drawings under credit lines existing at the date of this
Agreement, obligations incurred in the ordinary course of business
consistent with past practice and obligations that could not reasonably be
expected to have a material adverse effect on the ability of the Acquiror
to perform its obligations under this Agreement;
(viii) agree in writing or otherwise to do any of the foregoing;
SECTION 6.03 No Solicitation. From the date of this Agreement until the
Effective Time or the termination of this Agreement pursuant to Section 9.01,
the Company agrees that it will not initiate, solicit or knowingly encourage
(including by way of furnishing nonpublic information or assistance), or take
any other action knowingly to facilitate, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Competing Transaction, or enter into discussions or negotiate with any Person
in furtherance of such inquiries or to obtain a Competing Transaction, or
agree to or endorse any Competing Transaction, or authorize or permit any of
the officers, directors or employees of the Company or any of its Subsidiaries
or any investment banker, financial advisor, attorney, accountant or other
representative retained by the Company or any of the Company's Subsidiaries to
take any such action and, to the extent permitted by contracts existing at the
date of this Agreement, the Company shall promptly notify the Acquiror of any
such inquiries and proposals received by the Company or any of its
Subsidiaries or by any such officer, director, investment banker, financial
advisor or attorney, relating to any of such matters; provided, however, that
(i) nothing contained in this Section 6.03 shall prohibit the Board of
Directors of the Company from (A) furnishing information to, or entering into
discussions or negotiations with, any Persons in connection with an
unsolicited
A-23
<PAGE>
bona fide proposal in writing by such Person to acquire the Company pursuant
to a merger, consolidation, share exchange, business combination or other
similar transaction or to acquire a substantial portion of the assets of the
Company or any of its Significant Subsidiaries, if, and only to the extent
that (1) the Board of Directors of the Company, after considering the advice
of outside legal counsel to the Company, determines in good faith that such
action is required for the Board of Directors of the Company to comply with
its fiduciary duties to stockholders imposed by Law and (2) prior to
furnishing such information to, or entering into discussions or negotiations
with, such Person the Company provides written notice to the Acquiror to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such Person; or (B) complying with Rule 14e-2 promulgated
under the Exchange Act with regard to a Competing Transaction and (ii) taking
the actions contemplated by (i) above under the circumstances described
therein will not be deemed to be a breach of this Agreement.
SECTION 6.04 Access and Information.
(a) Each of the parties shall, and shall cause its Subsidiaries to, (i)
afford to the other party and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives (collectively,
the "Representatives") reasonable access at reasonable times upon reasonable
prior notice to the officers, employees, agents, properties, offices and other
facilities of such party and its Subsidiaries and to their books and records
and (ii) furnish promptly to the other party and its Representatives such
information concerning the business, properties, contracts, records and
personnel of such party and its Subsidiaries (including financial, operating
and other data and information) as may be reasonably requested, from time to
time, by or on behalf of the other party.
(b) If this Agreement is terminated for any reason pursuant to Article IX
hereof, a party that has received information in accordance with Section
6.04(a), within ten days after request therefor from the other party, shall
return or destroy (and provide the other party within such ten-day time period
with a certificate of an executive officer certifying such destruction) all of
the information furnished to it and its Representatives pursuant to the
provisions of Section 6.04(a) and all internal memoranda, analyses,
evaluations and other similar material containing or reflecting any such
information, in each case other than information available to the general
public without restriction.
SECTION 6.05 Confidentiality Agreement. The parties shall comply with, and
shall cause their respective Representatives to comply with, all of their
respective obligations under the Confidentiality Agreement.
ARTICLE VII
Additional Agreements
SECTION 7.01 Meeting of Stockholders. The Company shall, promptly after the
date of this Agreement, take all actions necessary in accordance with the GCL
and its certificate of incorporation and bylaws to convene a special meeting
of the Company's stockholders to consider approval and adoption of this
Agreement and the Merger (the "Company Stockholders' Meeting"), and the
Company shall consult with the Acquiror in connection therewith. The Company
shall use all reasonable efforts to solicit from stockholders of the Company
proxies in favor of the approval and adoption of this Agreement and the Merger
and to secure the vote or consent of stockholders required by the GCL and its
certificate of incorporation and bylaws to approve and adopt this Agreement
and the Merger.
SECTION 7.02 Registration Statement; Proxy Statements.
(a) As promptly as practicable after the execution of this Agreement, the
Acquiror Companies shall prepare and file with the Commission a registration
statement on Form S-4 (such registration statement, together with any
amendments thereof or supplements thereto, being the "Registration
Statement"), containing a proxy statement/prospectus for stockholders of the
Company (the "Company Proxy Statement/Prospectus"), in connection with the
registration under the Securities Act of the offering, sale and delivery of
Acquiror Common
A-24
<PAGE>
Stock to be issued in the Merger pursuant to this Agreement. As promptly as
practicable after the execution of this Agreement, the Company shall prepare
and file with the Commission a proxy statement that will be the same as the
Company Proxy Statement/Prospectus, and a form of proxy, in connection with
the vote of the Company's stockholders with respect to the Merger (such
Company Proxy Statement/Prospectus, together with any amendments thereof or
supplements thereto, in each case in the form or forms mailed to the Company's
stockholders, being the "Company Proxy Statement"). Each of the Acquiror
Companies and the Company will use all reasonable efforts to have or cause the
Registration Statement to become effective as promptly as practicable, and
shall take any action required to be taken under any applicable federal or
state securities Laws in connection with the issuance of shares of Acquiror
Common Stock in the Merger. Each of the Acquiror Companies and the Company
shall furnish all information concerning it and the holders of its capital
stock as the other may reasonably request in connection with such actions. As
promptly as practicable after the Registration Statement shall have become
effective, the Company shall mail the Company Proxy Statement to its
stockholders entitled to notice of and to vote at the Company Stockholders'
Meeting. The Company Proxy Statement shall, subject to the exercise, in good
faith and with due care, by the Company's Board of Directors of its fiduciary
duty to the stockholders of the Company, include the recommendation of the
Company's Board of Directors in favor of the Merger.
(b) The information supplied by the Company for inclusion in the
Registration Statement shall not, at the time the Registration Statement is
declared effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading. The information supplied by the
Company for inclusion in (i) the Company Proxy Statement to be sent to the
stockholders of the Company in connection with the Company Stockholders'
Meeting shall not, at the date the Company Proxy Statement (or any supplement
thereto) is first mailed to stockholders, at the time of the Company
Stockholders' Meeting or at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. If at any time
prior to the Effective Time any event or circumstance relating to the Company
or any of its Affiliates, or its or their respective officers or directors,
should be discovered by the Company that should be set forth in an amendment
to the Registration Statement or a supplement to the Company Proxy Statement,
the Company shall promptly inform the Acquiror, and the Company shall
undertake to amend or supplement the Company Proxy Statement accordingly. All
documents that the Company is responsible for filing with the Commission in
connection with the transactions contemplated herein shall comply as of the
time of filing as to form in all material respects with the applicable
requirements of the Securities Act and the Regulations thereunder and the
Exchange Act and the Regulations thereunder.
(c) The information supplied by the Acquiror Companies for inclusion in the
Registration Statement shall not, at the time the Registration Statement is
declared effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading. The information supplied by the
Acquiror Companies for inclusion in the Company Proxy Statement to be sent to
the stockholders of the Company in connection with the Company Stockholders'
Meeting shall not, at the date the Company Proxy Statement (or any supplement
thereto) is first mailed to stockholders, at the time of the Company
Stockholders' Meeting or at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event or circumstance relating to the Acquiror
or any of its Affiliates, or to their respective officers or directors, should
be discovered by the Acquiror that should be set forth in an amendment to the
Registration Statement or a supplement to the Company Proxy Statement, the
Acquiror shall promptly inform the Company, and the Acquiror shall undertake
to amend or supplement the Registration Statement or the prospectus contained
therein accordingly. All documents that the Acquiror Companies are responsible
for filing with the Commission in connection with the transactions
contemplated hereby shall as of the time of filing comply as to form in all
material respects with the applicable requirements of the Securities Act and
the Regulations thereunder and the Exchange Act and the Regulations
thereunder.
A-25
<PAGE>
(d) No amendment or supplement to the Registration Statement or the Company
Proxy Statement will be made by the Acquiror or the Company without the
approval of the other party. The Acquiror and the Company each will advise the
other, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, the issuance of any stop order suspending the effectiveness of the
Registration Statement or the solicitation of proxies pursuant to the Company
Proxy Statement, the suspension of the qualification of the Acquiror Common
Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, any request by the staff of the Commission for amendment of the
Registration Statement or the Company Proxy Statement, the receipt from the
staff of the Commission of comments thereon or any request by the staff of the
Commission for additional information with respect thereto.
SECTION 7.03 Appropriate Action; Consents; Filings.
(a) The Company and the Acquiror shall each use all reasonable efforts (i)
to take, or to cause to be taken, all appropriate action, and to do, or to
cause to be done, all things necessary, proper or advisable under applicable
Law or otherwise to consummate and make effective the transactions
contemplated by this Agreement, (ii) to obtain from any Governmental
Authorities any Permits or Orders required to be obtained or made by the
Acquiror or the Company or any of their Subsidiaries in connection with the
authorization, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including the Merger,
(iii) to make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required under (A)
the Securities Act (in the case of Acquiror) and the Exchange Act and the
Regulations thereunder, and any other applicable federal or state securities
Laws, (B) the HSR Act and (C) any other applicable Law; provided that the
Acquiror and the Company shall cooperate with each other in connection with
the making of all such filings, including providing copies of all such
documents to the nonfiling party and its advisors prior to filings and, if
requested, shall accept all reasonable additions, deletions or changes
suggested in connection therewith. The Company and the Acquiror shall furnish
all information required for any application or other filing to be made
pursuant to any applicable Law or any applicable Regulations of any
Governmental Authority (including all information required to be included in
the Company Proxy Statement or the Registration Statement) in connection with
the transactions contemplated by this Agreement.
(b) Each of the Company and the Acquiror shall give prompt notice to the
other of (i) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
Merger, (ii) any notice or other communication from any Governmental Authority
in connection with the Merger, (iii) any actions, suits, claims,
investigations or proceedings commenced or threatened in writing against,
relating to or involving or otherwise affecting the Company, the Acquiror or
their Subsidiaries that relate to the consummation of the Merger; (iv) the
occurrence of a default or event that, with notice or lapse of time or both,
will become a default under any Material Contract of the Acquiror or Material
Contract of the Company; and (v) any change that is reasonably likely to have
a Material Adverse Effect on the Company or the Acquiror or is likely to delay
or impede the ability of either the Acquiror or the Company to consummate the
transactions contemplated by this Agreement or to fulfill their respective
obligations set forth herein.
(c) The Acquiror Companies and the Company agree to cooperate and use all
reasonable efforts vigorously to contest and resist any action, including
legislative, administrative or judicial action, and to have vacated, lifted,
reversed or overturned any Order (whether temporary, preliminary or permanent)
of any Court or Governmental Authority that is in effect and that restricts,
prevents or prohibits the consummation of the Merger or any other transactions
contemplated by this Agreement, including the vigorous pursuit of all
available avenues of administrative and judicial appeal and all available
legislative action. Each of the Acquiror Companies and the Company also agree
to take any and all actions, including the disposition of assets or the
withdrawal from doing business in particular jurisdictions, required by any
Court or Governmental Authority as a condition to the granting of any Permit
or Order necessary for the consummation of the Merger or as may be required to
avoid, lift, vacate or reverse any legislative or judicial action which would
otherwise cause any condition to Closing not to be satisfied; provided,
however, that in no event shall either party take, or be required to take, any
action that could reasonably be expected to have an Material Adverse Effect on
the Acquiror or the Company.
A-26
<PAGE>
(d) (i) Each of the Company and Acquiror shall give (or shall cause their
respective Subsidiaries to give) any notices to third Persons, and use, and
cause their respective Subsidiaries to use, all reasonable efforts to obtain
any consents from third Persons (A) necessary, proper or advisable to
consummate the transactions contemplated by this Agreement, (B) otherwise
required under any contracts, licenses, leases or other agreements in
connection with the consummation of the transactions contemplated hereby or
(C) required to prevent a Material Adverse Effect on the Company from
occurring prior to or after the Effective Time or a Material Adverse Effect on
the Acquiror from occurring after the Effective Time.
(ii) If any party shall fail to obtain any consent from a third Person
described in subsection (d)(i) above, such party shall use all reasonable
efforts, and shall take any such actions reasonably requested by the other
parties, to limit the adverse effect upon the Company and Acquiror, their
respective Subsidiaries, and their respective businesses resulting, or which
could reasonably be expected to result after the Effective Time, from the
failure to obtain such consent.
SECTION 7.04 Affiliates; Pooling; Tax Treatment.
(a) The Company shall use all reasonable efforts to obtain an executed
letter agreement substantially in the form of Annex B hereto from (i) each
Person identified in Section 4.19 of the Company's Disclosure Letter within 15
days following the execution and delivery of this Agreement and (ii) from any
Person who may be deemed to have become an Affiliate of the Company after the
date of this Agreement and prior to the Effective Time as soon as practicable
after attaining such status.
(b) The Acquiror shall use all reasonable efforts to obtain an executed
letter agreement substantially in the form of Annex C hereto from (i) each
Person identified in Section 5.17 of the Acquiror's Disclosure Letter within
15 days following the execution and delivery of this Agreement and (ii) from
any Person who may be deemed to have become an Affiliate of the Acquiror after
the date of this Agreement and prior to the Effective Time as soon as
practicable after attaining such status.
(c) The Acquiror Companies shall not be required to maintain the
effectiveness of the Registration Statement for the purpose of resale by
stockholders of the Company who may be Affiliates of the Company pursuant to
Rule 145 under the Securities Act.
(d) Each party hereto shall use all reasonable efforts to cause the Merger
to be treated for financial accounting purposes as a Pooling Transaction, and
shall not take, and shall use all reasonable efforts to prevent any Affiliate
of such party from taking, any actions which could prevent the Merger from
being treated for financial accounting purposes as a Pooling Transaction.
(e) Each party hereto shall use all reasonable efforts to cause the Merger
to qualify, and shall not take, and shall use all reasonable efforts to
prevent any Affiliate of such party from taking, any actions which could
prevent the Merger from qualifying, as a reorganization under the provisions
of Section 368(a) of the Code.
SECTION 7.05 Public Announcements. The Acquiror and the Company shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to the Merger and shall not issue any such
press release or make any such public statement prior to such consultation.
SECTION 7.06 NYSE Listing. The Acquiror shall use all reasonable efforts to
cause the shares of Acquiror Common Stock to be issued in the Merger to be
approved for listing (subject to official notice of issuance) on the NYSE
prior to the Effective Time. To the Knowledge of the Acquiror, there are no
facts and circumstances that could reasonably be expected to preclude the
Acquiror Common Stock to be issued in the Merger from being approved for
listing on the NYSE.
SECTION 7.07 Rights Agreement; State Takeover Statutes. The Company shall
take all action (including, if necessary, redeeming all of the outstanding
rights issued pursuant to the Company Rights Agreement or amending or
terminating the Rights Agreement) so that the execution, delivery and
performance of this
A-27
<PAGE>
Agreement and the consummation of the Merger and the other transactions
contemplated hereby do not and will not result in the grant of any rights to
any Person under the Rights Agreement or enable or require any outstanding
rights to be exercised, distributed or triggered. The Company will take all
steps necessary to exempt the transactions contemplated by this Agreement from
Section 203 of the GCL.
SECTION 7.08 Comfort Letters.
(a) The Company shall use all reasonable efforts to cause Price Waterhouse
LLP to deliver a letter dated as of the date of the Company Proxy Statement,
and addressed to the Company and the Acquiror, in form and substance
reasonably satisfactory to Acquiror and customary in scope and substance for
agreed upon procedures letters delivered by independent public accountants in
connection with registration statements and proxy statements similar to the
Registration Statement and the Company Proxy Statement.
(b) The Acquiror shall use all reasonable efforts to cause Arthur Andersen
LLP to deliver a letter dated as of the date of the Company Proxy Statement,
and addressed to the Acquiror and the Company, in form and substance
reasonably satisfactory to the Company and customary in scope and substance
for agreed upon procedures letters delivered by independent public accountants
in connection with registration statements and proxy statements similar to the
Registration Statement and the Company Proxy Statement.
SECTION 7.09 Assumption of Obligations to Issue Stock.
(a) At the Effective Time, automatically and without any action on the part
of the holder thereof, each outstanding Company Stock Option shall be assumed
by the Surviving Corporation and become an option to purchase that number of
shares of Acquiror Common Stock obtained by multiplying the number of shares
of Company Common Stock issuable upon the exercise of such option by the
Common Stock Exchange Ratio at an exercise price per share equal to the per
share exercise price of such option divided by the Common Stock Exchange Ratio
and otherwise upon the same terms and conditions as such outstanding options
to purchase Company Common Stock; provided, however, that in the case of any
option to which Section 421 of the Internal Revenue Code applies by reason of
the qualifications under Section 422 or 423 of such Code, the exercise price,
the number of shares purchasable pursuant to such option and the terms and
conditions of exercise of such option shall be determined in a manner that
complies with Section 424(a) of the Code.
(b) On or prior to the Effective Time, the Company shall take or cause to be
taken all such actions, reasonably satisfactory to the Acquiror, as may be
necessary or desirable in order to authorize the transactions contemplated by
subsection (a) of this Section.
(c) The Acquiror shall take all corporate actions necessary to reserve for
issuance a sufficient number of shares of Acquiror Common Stock for delivery
upon exercise of the Company Stock Options assumed by Acquiror pursuant to
Section 7.09(a) above.
(d) As promptly as practicable after the Effective Time, the Acquiror shall
file one or more Registration Statements on Form S-8 (or any successor or
other appropriate forms) with respect to the shares of Acquiror Common Stock
subject to the Company Stock Options and shall use its reasonable efforts to
maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding and to
comply with applicable state securities and blue sky laws.
(e) Except as provided herein or as otherwise agreed to by the parties, each
of the Company Stock Option Plans providing for the issuance or grant of
Company Stock Options shall be assumed as of the Effective Time by the
Surviving Corporation with such amendments thereto as may be required to
reflect the Merger.
SECTION 7.10 Employee Benefit Plans. Provided that the Company shall not be
obligated with respect to any action taken by the Company or its Subsidiaries
with respect to the Employee Benefit Plans of the Company or its Subsidiaries
in violation of the provisions of Section 6.02(a), the Acquiror hereby agrees
to guarantee and to cause the Surviving Corporation and each Subsidiary of the
Surviving Corporation to honor
A-28
<PAGE>
and perform all obligations of the Surviving Corporation and each Subsidiary
of the Surviving Corporation under all Benefit Plans of the Company and such
Subsidiaries and all employment contracts of the Company listed on Section
4.10 of the Company's Disclosure Letter, including, except as amended by the
Employment Agreement, the Change in Control Agreements and the Restricted
Stock Agreement, including the provisions of the Change in Control Agreements
and the Restricted Stock Agreement that provide for the acceleration of
vesting schedules applicable to stock options and restricted stock awards
granted thereunder upon the Effective Time (other than the Company Option
Plans, the Company Stock Options granted thereunder (other than those granted
and outstanding on the date of this Agreement) and incentive compensation
plans of the Company and its Subsidiaries). The Acquiror shall cause the
Surviving Corporation to maintain through December 31, 1997 (the "Benefit
Continuation Period"), the Benefit Plans of the Company and its Subsidiaries
set forth in Section 4.13(a) of the Company's Disclosure Letter, substantially
as in effect immediately prior to the Effective Time (other than the Company
Option Plans, the Company Stock Options granted thereunder (other than those
granted and outstanding on the date of this Agreement) and incentive
compensation plans of the Company and its Subsidiaries). From and after the
Effective Time, including after the Benefit Continuation Period, the Acquiror
shall grant all employees of the Company and its Subsidiaries on the Closing
Date credit for all service (to the same extent as service with the Acquiror
or any Subsidiary of the Acquiror is taken into account with respect to
similarly situated employees of the Acquiror and the Subsidiaries of the
Acquiror) with the Company and any Subsidiary of the Company and their
respective predecessors prior to the Effective Time under all Benefit Plans of
the Acquiror or its Subsidiaries in which such employees shall become eligible
to participate as if such service with the Company or any Subsidiary of the
Company was service with the Acquiror or any Subsidiary of the Acquiror, and,
with respect to any medical or dental benefit plan in which such employees
become eligible to participate, the Acquiror shall waive any pre-existing
condition exclusions and actively-at-work requirements (provided, however,
that no such waiver shall apply to a pre-existing condition of any employee of
the Company or any Subsidiary of the Company who was, as of the Effective
Time, excluded from participation in a Benefit Plan by virtue of such pre-
existing condition) and provided that any covered expenses incurred on or
before the Effective Time by an employee or an employee's covered dependent
shall be taken into account for purposes of satisfying applicable deductible,
coinsurance and maximum out-of-pocket provisions after the Effective Time to
the same extent as such expenses are taken into account for the benefit of
similarly situated employees of the Acquiror and the Subsidiaries of the
Acquiror.
SECTION 7.11 Indemnification of Directors and Officers.
(a) Until six years from the Effective Time, the certificate of
incorporation and bylaws of the Surviving Corporation as in effect immediately
after the Effective Time shall not be amended to reduce or limit the rights of
indemnity afforded to the present and former directors and officers of the
Company thereunder or as to the ability of the Company to indemnify such
Persons, or to hinder, delay or make more difficult the exercise of such
rights of indemnity or the ability to indemnify. The Surviving Corporation
will at all times exercise the powers granted to it by its certificate of
incorporation, its bylaws and applicable law to indemnify to the fullest
extent possible the present and former directors, officers, employees and
agents of the Company against claims made against them arising from their
service in such capacities prior to the Effective Time.
(b) If any claim or claims shall, subsequent to the Effective Time and
within six years thereafter, be made against any present or former director,
officer, employee or agent of the Company based on or arising out of the
services of such Person prior to the Effective Time in the capacity of such
Person as a director, officer, employee or agent of the Company, the
provisions of this subsection (a) of this Section respecting the certificate
of incorporation and bylaws of the Surviving Corporation shall continue in
effect until the final disposition of all such claims.
(c) The Acquiror hereby agrees after the Effective Time to guarantee the
payment of the Surviving Corporation's indemnification obligations described
in Section 7.11(a) up to an amount determined as of the Effective Time equal
to (i) the fair market value of any assets of the Surviving Corporation or any
of its Subsidiaries distributed to the Acquiror or any of its Subsidiaries
(other than the Surviving Corporation and its Subsidiaries), minus (ii) any
liabilities of the Surviving Corporation or any of its Subsidiaries assumed by
the
A-29
<PAGE>
Acquiror or any of its Subsidiaries (other than the Surviving Corporation and
its Subsidiaries), minus (iii) the fair market value of any assets of the
Acquiror or any of its Subsidiaries (other than the Surviving Corporation and
its Subsidiaries) contributed to the Surviving Corporation or any of its
Subsidiaries and plus (iv) any liabilities of the Acquiror or any of its
Subsidiaries (other than the Surviving Corporation and its Subsidiaries)
assumed by the Surviving Corporation or any of its Subsidiaries.
(d) Notwithstanding subsection (a), (b) or (c) of this Section 7.11, the
Acquiror and the Surviving Corporation shall be released from the obligations
imposed by such subsection if the Acquiror shall assume the obligations of the
Surviving Corporation thereunder by operation of Law or otherwise.
Notwithstanding anything to the contrary in this Section 7.11, neither the
Acquiror nor the Surviving Corporation shall be liable for any settlement
effected without its written consent, which shall not be unreasonably
withheld.
(e) The Acquiror shall cause to be maintained in effect until six years from
the Effective Time the current policies of directors' and officers' liability
insurance maintained by the Company (or substitute policies providing at least
the same coverage and limits and containing terms and conditions that are not
materially less advantageous) with respect to claims arising from facts or
events which occurred before the Effective Time; provided, however, that in no
event shall the Acquiror or the Surviving Corporation be required to expend
more than 200 percent of the current annual premiums paid by the Company for
such insurance; provided, further, that, if the Acquiror or the Surviving
Corporation is unable to obtain insurance for any period for 200 percent of
the current annual premiums, then the obligation of the Acquiror and the
Surviving Corporation pursuant hereto shall be to obtain the best coverage
reasonably available under the circumstances subject to the foregoing
limitations on premiums.
(f) The provisions of this Section 7.11 are intended to be for the benefit
of, and shall be enforceable by, each Person entitled to indemnification
hereunder and the heirs and representatives of such Person.
(g) The Acquiror shall not permit the Surviving Corporation to merge or
consolidate with any other Person unless the Surviving Corporation shall
ensure that the surviving or resulting entity assumes the obligations imposed
by subsections (a), (b), (c) and (e) of this Section.
SECTION 7.12 Newco. Prior to the Effective Time, Newco shall not conduct any
business or make any investments other than as specifically contemplated by
this Agreement and will not have any assets (other than the minimum amount of
cash required to be paid to Newco for the valid issuance of its stock to the
Acquiror). The Acquiror shall take all action necessary to cause Newco to
perform its obligations under this Agreement and to consummate the Merger on
the terms and conditions set forth in this Agreement.
SECTION 7.13 Event Notices. From and after the date of this Agreement until
the Effective Time, each party hereto shall promptly notify the other party
hereto of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any condition to the
obligations of such party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied and (ii) the failure of
such party to comply with any covenant or agreement to be complied with by it
pursuant to this Agreement which would be likely to result in any condition to
the obligations of such party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied. No delivery of any notice
pursuant to this Section 7.13 shall cure any breach of any representation or
warranty of such party contained in this Agreement or otherwise limit or
affect the remedies available hereunder to the party receiving such notice.
SECTION 7.14 Stratworks Divestiture. The Company shall divest itself on or
prior to the Closing Date of any ownership interest in the software
application called "Stratworks" through the sale thereof to a Person
unaffiliated with either the Company or the Acquiror on terms reasonably
satisfactory to the Acquiror.
SECTION 7.15 Change in Control Agreements. Prior to the Effective Time, the
Company shall agree, and shall use all reasonable efforts to cause each Person
who is a party to one of the Change in Control Agreements to agree, in writing
that (a) for all purposes of such Change in Control Agreements, Newco shall be
A-30
<PAGE>
substituted for the Company as the successor to the Company, except that, for
purposes of each of the Change in Control Agreements, a "Change in Control"
shall be deemed to have occurred as a result of the Merger, (b) no payments
will be required pursuant to Section 5 of any of the Change in Control
Agreements solely as a result of the Merger and (c) Section 4(b)(ii)(A) of
each of the Change in Control Agreements will be amended and restated to read
in its entirety as follows: "Failure to elect or reelect the Executive to the
office of the Company which the Executive held immediately prior to a Change
in Control;". Such agreements shall be reasonably satisfactory in form and
substance to the Acquiror.
ARTICLE VIII
Closing Conditions
SECTION 8.01 Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and
the other transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived by the parties hereto, in whole or in part,
to the extent permitted by applicable Law:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the Commission under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the Commission and no
proceedings for that purpose shall have been initiated by the Commission.
(b) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the
Company as required by the GCL.
(c) No Order. No Court or Governmental Authority shall have 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 making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(d) HSR Act. The applicable waiting period under the HSR Act shall have
expired or been terminated.
(e) Foreign Governmental Authorities. The applicable waiting period under
any competition Laws, Regulations and Orders of foreign Governmental
Authorities, as set forth in the Acquiror's Disclosure Letter and the
Company's Disclosure Letter, shall have expired or been terminated.
(f) Pooling of Interests. The Acquiror and the Company shall have been
advised in writing by Arthur Andersen LLP as of the date upon which the
Effective Time is to occur to the effect that such firm knows of no reason
why the Merger cannot be treated for financial accounting purposes as a
pooling of interests.
SECTION 8.02 Additional Conditions to Obligations of the Acquiror
Companies. The obligations of the Acquiror Companies to effect the Merger and
the other transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived by the Acquiror Companies, in whole or in
part, to the extent permitted by applicable Law:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement shall be true and
correct in all material respects (without duplication of any materiality
exception contained in any individual representation and warranty) as of
the date of this Agreement and as of the Effective Time as though made
again on and as of the Effective Time. The Acquiror Companies shall have
received a certificate of the President and the Chief Financial Officer of
the Company, dated the date of the Effective Time, to such effect.
(b) Agreements and Covenants. The Company shall have performed or
complied with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Effective Time. The
Acquiror Companies shall have received a certificate of the President and
the Chief Financial Officer of the Company, dated the date of the Effective
Time, to such effect.
A-31
<PAGE>
(c) Tax Opinion. The Acquiror shall have received the opinion dated on or
prior to the effective date of the Registration Statement of Vinson &
Elkins LLP to the effect that (i) the Merger will constitute a
reorganization under section 368(a) of the Code, (ii) the Acquiror, the
Company and Newco will each be a party to that reorganization, and (iii) no
gain or loss will be recognized by the Acquiror, the Company or Newco by
reason of the Merger.
SECTION 8.03 Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger and the other transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions, any or all of which may be waived
by the Company, in whole or in part, to the extent permitted by applicable
Law:
(a) Representations and Warranties. Each of the representations and
warranties of the Acquiror Companies contained in this Agreement shall be
true and correct in all material respects (without duplication of any
materiality exception contained in any individual representation and
warranty) as of the date of this Agreement and as of the Effective Time as
though made again on and as of the Effective Time. The Company shall have
received a certificate of the President and the Chief Financial Officer of
each of the Acquiror Companies, dated the date of the Effective Time, to
such effect.
(b) Agreements and Covenants. The Acquiror Companies shall have performed
or complied with all agreements and covenants required by this Agreement to
be performed or complied with by them on or prior to the Effective Time.
The Company shall have received a certificate of the President and the
Chief Financial Officer of each of the Acquiror Companies, dated the date
of the Effective Time, to such effect.
(c) Tax Opinion. The Company shall have received the opinion dated on or
prior to the effective date of the Registration Statement of Winstead
Sechrest & Minick P.C. to the effect that (i) the Merger will constitute a
reorganization under section 368(a) of the Code, (ii) the Acquiror, the
Company and Newco will each be a party to that reorganization, and (iii) no
gain or loss will be recognized by the stockholders of the Company upon the
receipt of shares of Acquiror Common Stock in exchange for shares of
Company Common Stock pursuant to the Merger except with respect to any cash
received in lieu of fractional share interests.
(d) Investment Banker's Opinion. The Company shall have received, on the
date of mailing of the Company Proxy Statement to the holders of Company
Common Stock, a written opinion from Morgan Stanley & Co. Incorporated,
dated the date of such mailing, confirming the opinion to which reference
is made in Section 4.21.
(e) NYSE Listing. The shares of Acquiror Common Stock to be issued
pursuant to the Merger shall have been approved for listing, subject to
official notice of issuance, on the NYSE.
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of this Agreement and
the Merger by the stockholders of the Company:
(a) by mutual consent of the Acquiror and the Company;
(b) by the Acquiror, upon a breach of any covenant or agreement on the
part of the Company set forth in this Agreement, or if any representation
or warranty of the Company shall have become untrue, in either case such
that the conditions set forth in Section 8.02(a) or Section 8.02(b) would
not be satisfied (a "Terminating Company Breach"); provided that, if such
Terminating Company Breach is curable by the Company through the exercise
of reasonable efforts and for so long as the Company continues to exercise
such reasonable efforts, the Acquiror may not terminate this Agreement
under this Section 9.01(b);
(c) by the Company, upon breach of any covenant or agreement on the part
of the Acquiror Companies set forth in this Agreement, or if any
representation or warranty of the Acquiror Companies shall have
A-32
<PAGE>
become untrue, in either case such that the conditions set forth in Section
8.03(a) or Section 8.03(b) would not be satisfied (a "Terminating Acquiror
Breach"); provided that, if such Terminating Acquiror Breach is curable by
the Acquiror Companies through the exercise of their reasonable efforts and
for so long as the Acquiror Companies continue to exercise such reasonable
efforts, the Company may not terminate this Agreement under this Section
9.01(c);
(d) by either Acquiror or the Company, if there shall be any Order which
is final and nonappealable preventing the consummation of the Merger,
unless the party relying on such Order has not complied with its
obligations under Section 7.03;
(e) by either Acquiror or the Company, if the Merger shall not have been
consummated before December 31, 1996; provided, however, that this
Agreement may be extended by written notice of either Acquiror or the
Company to a date not later than February 28, 1997, if the Merger shall not
have been consummated as a result of the Company or the Acquiror Companies
having failed by December 31, 1996 to receive all required Permits and
Orders with respect to the Merger or as a result of the entering of an
Order by a Court or Governmental Authority;
(f) by either Acquiror or the Company, if this Agreement shall fail to
receive the requisite vote for approval and adoption by the stockholders of
the Company at the Company Stockholders' Meeting;
(g) by the Acquiror, if (i) the Board of Directors of the Company
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner materially adverse to the Acquiror Companies or shall
have resolved to do any of the foregoing or the Board of Directors of the
Company shall have recommended to the stockholders of the Company any
Competing Transaction or resolved to do so; (ii) a tender offer or exchange
offer for 50 percent or more of the outstanding shares of Company Common
Stock is commenced and the Board of Directors of the Company, within 10
Business Days after such tender offer or exchange offer is so commenced,
either fails to recommend against acceptance of such tender or exchange
offer by its stockholders or takes no position with respect to the
acceptance of such tender or exchange offer by its stockholders; or (iii)
any person shall have acquired beneficial ownership or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
Section 13(d) of the Exchange Act and the Regulations promulgated
thereunder), shall have been formed which beneficially owns, or has the
right to acquire beneficial ownership of, 50 percent or more of the then
outstanding shares of capital stock of the Company; or
(h) by the Company, if the Company accepts a Superior Proposal and makes
the payment required pursuant to Section 9.05(c)(i) of this Agreement and
pays the expenses for which the Company is responsible under Section
9.05(a) of this Agreement.
The right of any party hereto to terminate this Agreement pursuant to this
Section 9.01 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any Person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
SECTION 9.02 Effect of Termination. Except as provided in Section 9.05 or
Section 10.01 of this Agreement, in the event of the termination of this
Agreement pursuant to Section 9.01, this Agreement shall forthwith become
void, there shall be no liability on the part of the Acquiror Companies or the
Company or any of their respective officers or directors to the other and all
rights and obligations of any party hereto shall cease, except that nothing
herein shall relieve any party from liability for any breach of this
Agreement.
SECTION 9.03 Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after approval of
the Merger by the stockholders of the Company, no amendment may be made which
would reduce the amount or change the type of consideration into which each
share of Company Common Stock shall be converted pursuant to this Agreement
upon consummation of the Merger. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
A-33
<PAGE>
SECTION 9.04 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations
or other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other party
with any of the agreements or conditions contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed
by the party or parties to be bound thereby. For purposes of this Section
9.04, the Acquiror Companies shall be deemed to be one party.
SECTION 9.05 Fees, Expenses and Other Payments.
(a) Except as provided in Section 9.05(c) of this Agreement, all Expenses
incurred by the parties hereto shall be borne solely and entirely by the party
which has incurred such Expenses; provided, however, that the allocable share
of the Acquiror Companies as a group and the Company for all Expenses related
to printing, filing and mailing the Registration Statement and the Company
Proxy Statement and all Commission and other regulatory filing fees incurred
in connection with the Registration Statement and the Company Proxy Statement
shall be one-half each; and provided, further, that the Acquiror may, at its
option, pay any Expenses of the Company that are solely and directly related
to the Merger.
(b) (i) The Company agrees that, if (A) either (1) this Agreement is
terminated pursuant to Section 9.01(f) and, after the date of this Agreement
and prior to the Company Stockholders' Meeting, the Company shall have
furnished information to, or entered into discussions or negotiations with,
any Person with respect to a Competing Transaction involving the Company or
any of its Subsidiaries and the Board of Directors of the Company shall not
have reaffirmed its favorable recommendation to its stockholders with respect
to the transactions contemplated by this Agreement by the time of the Company
Stockholders' Meeting; (2) the Acquiror terminates this Agreement pursuant to
Section 9.01(g)(i) or 9.01(g)(ii); (3) the Company terminates this Agreement
pursuant to Section 9.01(h); or (4) within twelve months after the date of the
termination of this Agreement, any Person or "group" (as such term is defined
under Section 13(d) of the Exchange Act and the Regulations promulgated
thereunder), other than the Acquiror, its Subsidiaries or Affiliates, shall
have acquired beneficial ownership, by tender offer or exchange offer or
otherwise, of 50 percent or more of the outstanding Company Common Stock and
(x) the value of the consideration per share received by the stockholders of
the Company in such transaction shall have been higher on a per share basis
than the consideration payable to the stockholders of the Company under this
Agreement on a per share basis or (y) such transaction shall be on more
favorable terms to the stockholders of the Company than the Merger; then (B)
in each such case the Company shall pay to the Acquiror $18 million.
(ii) The Company agrees that, if (A) the Acquiror shall terminate this
Agreement pursuant to Section 9.01(b) and such termination is the result of an
intentional or willful breach by the Company of any agreement, covenant,
representation or warranty herein and (B) either (1) within twelve months
after such termination of this Agreement the Company shall have entered into a
definitive agreement providing for a Business Combination with any Person or
"group" (as such term is defined under Section 13(d) of the Exchange Act and
the Regulations promulgated thereunder), other than Acquiror, its Subsidiaries
or Affiliates, to which the Company shall have furnished information or with
which the Company shall have had any contacts or entered into any discussions
or negotiations relating to a Business Combination at any time during the
period commencing eighteen months prior to the date of this Agreement through
the date of termination of this Agreement and contemplating the payment to the
Company or its stockholders, as the case may be, of consideration having a
higher value on a per share basis than the consideration payable to the
Company's stockholders under this Agreement or such transaction shall be on
more favorable terms to the stockholders of the Company than the Merger and
such Business Combination is thereafter consummated or (2) within twelve
months after such termination of this Agreement, any such Person or group
shall have acquired beneficial ownership, by tender offer or exchange offer or
otherwise, of 50 percent or more of the outstanding Company Common Stock and
as a result the Company's stockholders shall have received consideration
having a higher value per share than the consideration per share payable to
the Company's stockholders under this Agreement or such transaction shall be
on more favorable terms to the stockholders of the Company than the Merger,
then in such case the Company shall pay to the Acquiror $18 million.
A-34
<PAGE>
(iii) For purposes of this Section 9.05(b), the value of the consideration
received by the Company's stockholders in connection with a transaction
described in clause (b)(i)(A), (b)(ii)(B)(1) or (b)(ii)(B)(2) of this Section
9.05 shall be determined as of the date the consideration becomes payable to
such stockholders, and the value of the consideration payable to such
stockholders under this Agreement shall be $31.857 per share.
(c) Any payment required to be made pursuant to Section 9.05(b) of this
Agreement shall be made to the Acquiror not later than two Business Days after
delivery to the Company of notice of demand for payment, and shall be made by
wire transfer of immediately available funds to an account designated by the
Acquiror in the notice of demand for payment delivered pursuant to this
Section 9.05(c).
ARTICLE X
General Provisions
SECTION 10.01 Effectiveness of Representations, Warranties and Agreements.
(a) Except as set forth in Section 10.01(b) of this Agreement, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any Person controlling any such party
or any of their officers, directors, representatives or agents whether prior
to or after the execution of this Agreement.
(b) The representations, warranties and agreements in this Agreement shall
terminate at the Effective Time or upon the termination of this Agreement
pursuant to Article IX, except that the agreements set forth in Articles II
and III and Sections 7.09, 7.10 and 7.11 shall survive the Effective Time and
those set forth in Sections 6.05, 9.02 and 9.05 and Article X hereof shall
survive termination.
SECTION 10.02 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly
given upon receipt, if delivered personally, mailed by registered or certified
mail (postage prepaid, return receipt requested) to the parties at the
following addresses or sent by electronic transmission to the telecopier
number specified below:
(a) If to any of the Acquiror Companies, to:
Halliburton Company
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
Attention: Lester L. Coleman, Executive Vice President
and General Counsel
Telecopier No.: (214) 978-2658
with a copy to:
Vinson & Elkins L.L.P.
First City Tower
1001 Fannin
Houston, Texas 77002-6760
Attention: William E. Joor III
Telecopier No.: (713) 758-2346
(b) If to the Company, to:
Landmark Graphics Corporation
15150 Memorial Drive
Houston, Texas 77079-4304
Attention: Patti Massaro, General Counsel
and Corporate Secretary
Telecopier No.: (713) 560-1383
A-35
<PAGE>
with a copy to:
Winstead Sechrest & Minick P.C. Shearman & Sterling
5400 Renaissance Tower 599 Lexington Avenue
1201 Elm Street New York, New York 10022
Dallas, Texas 75270 Attention: David W. Heleniak
Attention: Robert E. Crawford, Jr. Telecopier No.: (212) 848-7179
Telecopier No.: (214) 745-5390
or to such other address or telecopier number as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier shall be deemed delivered on the day the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee. Notice given by mail as set out above shall be deemed delivered
three days after the date the same is postmarked.
SECTION 10.03 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.04 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 conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any
manner materially adverse to 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 an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 10.05 Entire Agreement. This Agreement (together with the Annexes,
the Company's Disclosure Letter, the Acquiror's Disclosure Letter and the
Confidentiality Agreement) constitutes the entire agreement of the parties,
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, with respect to the subject matter hereof.
SECTION 10.06 Assignment. This Agreement shall not be assigned by operation
of Law or otherwise.
SECTION 10.07 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, other than pursuant to
Sections 7.09, 7.10 and 7.11 hereof, nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 10.08 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement
herein, nor shall any single or partial exercise of any such right preclude
other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive
to, and not exclusive of, any rights or remedies otherwise available.
SECTION 10.09 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Texas, regardless of
the Laws that might otherwise govern under applicable principles of conflicts
of law; provided, however, that any matter involving the internal corporate
affairs of any party hereto shall be governed by the provisions of the GCL.
SECTION 10.10 Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
A-36
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
HALLIBURTON COMPANY
By /s/ Lester L. Coleman
-----------------------------------
Lester L. Coleman
Executive Vice President and
General Counsel
HALLIBURTON ACQ. COMPANY
By /s/ Lester L. Coleman
-----------------------------------
Lester L. Coleman
President
LANDMARK GRAPHICS CORPORATION
By /s/ Robert P. Peebler
-----------------------------------
Robert P. Peebler
President and Chief Executive
Officer
A-37
<PAGE>
ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Agreement shall have the meanings set
forth below unless the context shall otherwise require:
"Acquiror" shall mean Halliburton Company, a Delaware corporation, and its
successors from time to time.
"Acquiror Common Stock" shall mean the common stock, par value $2.50 per
share, of the Acquiror.
"Acquiror Companies" shall have the meaning ascribed to such term in the
first paragraph of this Agreement.
"Acquiror's Audited Consolidated Financial Statements" shall mean the
consolidated balance sheets of the Acquiror and its Subsidiaries as of
December 31, 1994 and December 31, 1995 and the related consolidated
statements of operations and cash flows for the fiscal years ended December
31, 1993, 1994 and 1995, together with the notes thereto, all as audited by
Arthur Andersen LLP, independent accountants, under their report with respect
thereto dated January 23, 1996 and included in the Acquiror's Annual Report on
Form 10-K for the year ended December 31, 1995 filed with the Commission.
"Acquiror's Consolidated Balance Sheet" shall mean the consolidated balance
sheet of the Acquiror as of December 31, 1995 included in the Acquiror's
Audited Consolidated Financial Statements.
"Acquiror's Consolidated Financial Statements" shall mean the Acquiror's
Audited Consolidated Financial Statements and the Acquiror's Unaudited
Consolidated Financial Statements.
"Acquiror's Disclosure Letter" shall mean a letter of even date herewith
delivered by the Acquiror to the Company with the execution of the Agreement,
which, among other things, shall identify exceptions to the Acquiror's
representations and warranties contained in Article V by specific section and
subsection references.
"Acquiror's Unaudited Consolidated Financial Statements" shall mean the
unaudited consolidated balance sheet of the Acquiror and its Subsidiaries as
of March 31, 1996 and the related consolidated statements of operations and
cash flows for the fiscal quarters ended March 31, 1995 and March 31, 1996,
together with the notes thereto, included in the Acquiror's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996 filed with the Commission.
"Acquiror's Rights Agreement" shall mean the Second Amended and Restated
Rights Agreement dated December 15, 1995 between Halliburton Company and
Chemical Mellon Shareholder Services LLC, as Rights Agent.
"Acquiror Option Plan" shall mean the Halliburton Company 1993 Stock and
Long-Term Incentive Plan.
"Acquiror Stock Options" shall mean stock options granted pursuant to the
Acquiror Option Plan.
"Affiliate" shall, with respect to any Person, mean any other Person that
controls, is controlled by or is under common control with the former.
"Agreement" shall mean the Agreement and Plan of Merger made and entered
into as of June 30, 1996 among Acquiror, Newco and the Company, including any
amendments thereto and each Annex (including this Annex A) and Schedule
thereto (including the Acquiror's Disclosure Letter and the Company's
Disclosure Letter).
"Benefit Plans" shall mean, with respect to a specified Person, any employee
pension benefit plan (whether or not insured), as defined in Section 3(2) of
ERISA, any employee welfare benefit plan (whether or not insured)
A-38
<PAGE>
as defined in Section 3(1) of ERISA, any plans that would be employee pension
benefit plans or employee welfare benefit plans if they were subject to ERISA,
such as foreign plans and plans for directors, any stock bonus, stock
ownership, stock option, stock purchase, stock appreciation rights, phantom
stock or other stock plan (whether qualified or nonqualified), and any bonus
or incentive compensation plan sponsored, maintained, or contributed to by the
specified Person or any of its Subsidiaries for the benefit of any of the
present or former directors, officers, employees, agents, consultants or other
similar representatives providing services to or for the specified Person or
any of its Subsidiaries in connection with such services or any such plans
which have been so sponsored, maintained, or contributed to within six years
prior to the date of this Agreement; provided, however, that such term shall
not include (a) routine employment policies and procedures developed and
applied in the ordinary course of business and consistent with past practice,
including wage, vacation, holiday and sick or other leave policies, (b)
workers compensation insurance and (c) directors and officers liability
insurance.
"Business Combination" shall mean (a) a merger, consolidation, share
exchange, business combination or similar transaction involving the Company;
(b) a sale, lease, exchange, transfer or other disposition of 50 percent or
more of the assets of the Company and its Subsidiaries, taken as a whole, in a
single transaction or series of transactions; or (c) the acquisition by a
Person, or any "group" (as such term is defined under Section 13(d) of the
Exchange Act and the Regulations promulgated thereunder), of beneficial
ownership or the right to acquire beneficial ownership of 50 percent or more
of the outstanding Company Common Stock, whether by tender offer or exchange
offer or otherwise.
"Business Day" means any day other than a day on which banks in the State of
Texas are authorized or obligated to be closed;
"Certificate of Merger" shall have the meaning ascribed to such term in
Section 2.04.
"Change in Control Agreements" shall mean those certain Change in Control
Agreements dated as of October 19, 1995 between the Company and certain
officers of the Company.
"Closing" shall mean a meeting, which shall be held in accordance with
Section 3.03, of all Persons interested in the transactions contemplated by
the Agreement at which all documents deemed necessary by the parties to the
Agreement to evidence the fulfillment or waiver of all conditions precedent to
the consummation of the transactions contemplated by the Agreement are
executed and delivered.
"Closing Date" shall mean the date of the Closing as determined pursuant to
Section 3.03.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and Regulations promulgated thereunder.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock Exchange Ratio" shall mean the ratio of conversion of Company
Common Stock into Acquiror Common Stock pursuant to the Merger as provided in
Section 3.01(a).
"Company" shall mean Landmark Graphics Corporation, a Delaware corporation,
and its successors from time to time.
"Company Common Stock" shall mean the common stock, par value $0.05 per
share, of the Company.
"Company Option Plans" shall mean the Landmark Graphics Corporation 1984
Incentive Stock Option Plan, the Landmark Graphics Corporation 1985 Incentive
Stock Option Plan, the Landmark Graphics Corporation 1987 Nonqualified Stock
Option Plan, the Landmark Graphics Corporation 1989 Flexible Stock Option
Plan, the Landmark Graphics Corporation Directors' Stock Option Plan, the
Landmark Graphics Corporation Consultants' Stock Option Plan, the Landmark
Graphics Corporation 1990 Employee Stock Option Plan and the Landmark Graphics
Corporation 1994 Flexible Incentive Plan.
A-39
<PAGE>
"Company Proxy Statement" shall have the meaning ascribed to such term in
Section 7.02(a).
"Company Proxy Statement/Prospectus" shall have the meaning ascribed to such
term in Section 7.02(a).
"Company Stock Options" shall mean stock options granted pursuant to the
Company Option Plans.
"Company Stockholders' Meeting" shall have the meaning ascribed to such term
in Section 7.01(a).
"Company's Consolidated Balance Sheet" shall mean the consolidated balance
sheet of the Company as of June 30, 1995 included in the Company's Audited
Consolidated Financial Statements.
"Company's Audited Consolidated Financial Statements" shall mean the
consolidated balance sheets of the Company and its Subsidiaries as of June 30,
1994 and June 30, 1995 and the related consolidated and combined statements of
operations and cash flows for the fiscal years ended June 30, 1993, 1994 and
1995, together with the notes thereto, all as audited by Price Waterhouse LLP,
independent accountants, under their report with respect thereto dated July
26, 1995 and included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1995 filed with the Commission.
"Company's Consolidated Financial Statements" shall mean the Company's
Audited Consolidated Financial Statements and the Company's Unaudited
Consolidated Financial Statements.
"Company's Disclosure Letter" shall mean a letter of even date herewith
delivered by the Company to the Acquiror Companies concurrently with the
execution of the Agreement, which, among other things, shall identify
exceptions to the Company's representations and warranties contained in
Article IV by specific section and subsection references.
"Company's Rights Agreement" shall mean that certain Rights Agreement dated
as of September 1, 1995 between the Company and Chemical Bank, as Rights
Agent.
"Company's Unaudited Consolidated Financial Statements" shall mean the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
March 31, 1996 and the related consolidated statements of operations and cash
flows for the three months periods and nine months periods ended March 31,
1995 and March 31, 1996, together with the notes thereto, included in the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996
filed with the Commission.
"Competing Transaction" shall mean any merger, consolidation, share
exchange, business combination or similar transaction involving the Company or
any of its Subsidiaries or the acquisition in any manner, directly or
indirectly, of a Material equity interest in any voting securities of, or a
substantial portion of the assets of, the Company or any of its Significant
Subsidiaries, other than the transactions contemplated by this Agreement.
"Confidentiality Agreement" shall mean that certain confidentiality
agreement between the Acquiror and the Company dated June 18, 1996.
"Constituent Corporations" shall mean the Company and Newco.
"control" (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of stock or
as trustee or executor, by contract or credit arrangement or otherwise.
"Court" shall mean any court or arbitration tribunal of the United States,
any foreign country or any domestic or foreign state, and any political
subdivision thereof, and shall include the European Court of Justice.
"Current Benefit Plans" shall mean Benefit Plans that are sponsored,
maintained, or contributed to by a specified Person or any of its Subsidiaries
as of the date of this Agreement.
A-40
<PAGE>
"Effective Time" shall mean the date and time of the completion of the
filing of the Certificate of Merger with the Secretary of State of the State
of Delaware in accordance with Section 2.02.
"Employment Agreement" shall mean that certain Executive Employment
Agreement of even date herewith between the Company and Robert P. Peebler.
"Environmental Law or Laws" shall mean any and all laws, statutes,
ordinances, rules, regulations, or orders of any Governmental Authority
pertaining to health or the environment currently in effect and applicable to
a specified Person and its Subsidiaries, including the Clean Air Act, as
amended, the Comprehensive Environmental, Response, Compensation, and
Liability Act of 1980 ("CERCLA"), as amended, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976 ("RCRA"), as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Hazardous & Solid Waste Amendments Act of 1984, as
amended, the Superfund Amendments and Reauthorization Act of 1986, as amended,
the Hazardous Materials Transportation Act, as amended, the Oil Pollution Act
of 1990, as amended ("OPA"), any state or local Laws implementing the
foregoing federal Laws, and all other environmental conservation or protection
Laws. For purposes of the Agreement, the terms "hazardous substance" and
"release" have the meanings specified in CERCLA; provided, however, that, to
the extent the Laws of the state or locality in which the property is located
establish a meaning for "hazardous substance" or "release" that is broader
than that specified in CERCLA, such broader meaning shall apply within the
jurisdiction of such state or locality, and the term "hazardous substance"
shall include all dehydration and treating wastes, waste (or spilled) oil, and
waste (or spilled) petroleum products, and (to the extent in excess of
background levels) radioactive material, even if such are specifically exempt
from classification as hazardous substances pursuant to CERCLA or RCRA or the
analogous statutes of any jurisdiction applicable to the specified Person or
its Subsidiaries or any of their respective properties or assets.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the Regulations promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the Regulations promulgated thereunder.
"Exchange Agent" shall mean a bank or trust company having a net worth in
excess of $100 million designated and appointed to act in the capacities
required thereof under Section 3.02.
"Exchange Fund" shall mean the fund of Acquiror Common Stock, cash in lieu
of fractional share interests and dividends and distributions, if any, with
respect to such shares of Acquiror Common Stock established at the Exchange
Agent pursuant to Section 3.02.
"Expenses" shall mean all reasonable out-of-pocket expenses (including all
fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party or on
its behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement, the preparation,
printing, filing and mailing of the Registration Statement and the Company
Proxy Statement, the solicitation of stockholder approvals and all other
matters related to the consummation of the transactions contemplated hereby.
"GAAP" shall mean accounting principles generally accepted in the United
States consistently applied by a specified Person.
"GCL" shall mean the General Corporation Law of the State of Delaware.
"Governmental Authority" shall mean any governmental agency or authority
(other than a Court) of the United States, any foreign country, or any
domestic or foreign state, and any political subdivision or agency thereof,
and shall include any multinational authority having governmental or quasi-
governmental powers.
A-41
<PAGE>
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the Regulations promulgated thereunder.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean, with respect to either the Company or the Acquiror,
the actual knowledge (without duty of inquiry) of any executive officer of
such party.
"Law" shall mean all laws, statutes, ordinances and Regulations of the
United States, any foreign country, or any domestic or foreign state, and any
political subdivision or agency thereof, including all decisions of Courts
having the effect of Law in each such jurisdiction.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any agreement to give any of the foregoing),
any conditional sale or other title retention agreement, any lease in the
nature thereof or the filing of or agreement to give any financing statement
under the Uniform Commercial Code of any jurisdiction.
"Material" shall mean material to the condition (financial and other),
results of operations or business of a specified Person and its Subsidiaries,
if any, taken as a whole; provided, however, that, as used in this definition
the word "material" shall have the meaning accorded thereto in Section 11 of
the Securities Act.
"Material Adverse Effect" shall mean any change or effect that would be
material and adverse to the consolidated business, condition (financial or
other), operations, performance or properties (but excluding any outstanding
capital stock or other securities) of a specified Person and its Subsidiaries,
if any, taken as a whole; provided, however, that, as used in this definition
the word "material" shall have the meaning accorded thereto in Section 11 of
the Securities Act.
"Material Contract" shall mean each contract, lease, indenture, agreement,
arrangement or understanding to which a specified Person or any of its
Subsidiaries is a party or to which any of the assets or operations of such
specified Person or any of its Subsidiaries is subject that is of a type that
would be required to be included as an exhibit to a registration statement on
Form S-1 pursuant, in the case of the Company, to Paragraph (2), (4), (10) or
(14) of Item 601(b) and, in the case of the Acquiror, to Paragraph (10) (other
than clause (iii) thereof) of Item 601(b) of Regulation S-K under the
Securities Act if such a registration statement were to be filed by such
Person under the Securities Act on the date of determination. Notwithstanding
the foregoing, such term shall, in the case of the Company, include any of the
following contracts, agreements or commitments, whether oral or written:
(1) Any collective bargaining agreement or other agreement with any labor
union;
(2) any agreement, contract or commitment with any other Person, other
than any agency or representation entered in the ordinary course of
business, containing any covenant limiting the freedom of such specified
Person or any of its Subsidiaries to engage in any line of business or to
compete with any other Person;
(3) any partnership, joint venture or profit sharing agreement with any
Person, which partnership, joint venture or profit sharing agreement
generated revenues during its most recently completed fiscal year of
$100,000 or more;
(4) any employment or consulting agreement, contract or commitment
between the Company or any of its Subsidiaries and any employee, officer or
director thereof (i) having more than one year to run from the date hereof,
(ii) providing for an obligation to pay or accrue compensation of $100,000
or more per annum or (iii) providing for the payment or accrual of any
additional compensation upon a change in control of such Person or any of
its Subsidiaries or upon any termination of such employment or consulting
relationship following a change in control of such Person or any of its
Subsidiaries; and
(5) any agency or representation agreement with any Person which is not
terminable by the Company or one of its Subsidiaries without penalty upon
not more than one year's notice.
A-42
<PAGE>
"Merger" shall mean the merger of the Company with an into Newco as provided
in Article II of this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Newco" shall mean Halliburton Acq. Company, a Delaware corporation and a
wholly-owned Subsidiary of the Acquiror.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Order" shall mean any judgment, order or decree of any Court or
Governmental Authority, federal, foreign, state or local.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permit" shall mean any and all permits, licenses, authorizations, orders,
certificates, registrations or other approvals granted by any Governmental
Authority.
"Permitted Encumbrances" shall mean the following:
(1) liens for taxes, assessments and other governmental charges not
delinquent or which are currently being contested in good faith by
appropriate proceedings; provided that, in the latter case, the specified
Person or one of its Subsidiaries shall have set aside on its books
adequate reserves with respect thereto;
(2) mechanics' and materialmen's liens not filed of record and similar
charges not delinquent or which are filed of record but are being contested
in good faith by appropriate proceedings; provided that, in the latter
case, the specified Person or one of its Subsidiaries shall have set aside
on its books adequate reserves with respect thereto;
(3) liens in respect of judgments or awards with respect to which the
specified Person or one of its Subsidiaries shall in good faith currently
be prosecuting an appeal or other proceeding for review and with respect to
which such Person or such Subsidiary shall have secured a stay of execution
pending such appeal or such proceeding for review; provided that, such
Person or such Subsidiary shall have set aside on its books adequate
reserves with respect thereto;
(4) easements, leases, reservations or other rights of others in, or
minor defects and irregularities in title to, property or assets of a
specified Person or any of its Subsidiaries; provided that, such easements,
leases, reservations, rights, defects or irregularities do not materially
impair the use of such property or assets for the purposes for which they
are held; and
(5) any lien or privilege vested in any lessor, licensor or permittor for
rent or other obligations of a specified Person or any of its Subsidiaries
thereunder so long as the payment of such rent or the performance of such
obligations is not delinquent.
"Person" shall mean an individual, partnership, limited liability company,
corporation, joint stock company, trust, estate, joint venture, association or
unincorporated organization, or any other form of business or professional
entity, but shall not include a Governmental Authority.
"Registration Statement" shall have the meaning ascribed to such term in
Section 7.02(a).
"Regulation" shall mean any rule or regulation of any Governmental Authority
having the effect of Law.
"Reports" shall mean, with respect to a specified Person, all reports,
registrations, filings and other documents and instruments required to be
filed by the specified Person or any of its Subsidiaries with any Governmental
Authority (other than the Commission).
"Restricted Stock Agreement" shall mean that certain Restricted Stock
Agreement listed on Item 29 of Section 4.10 of the Company's Disclosure
Letter.
A-43
<PAGE>
"SEC Reports" shall mean (1) all Annual Reports on Form 10-K, (2) all
Quarterly Reports on Form 10-Q, (3) all proxy statements relating to meetings
of stockholders (whether annual or special), (4) all Current Reports on Form
8-K and (5) all other reports, schedules, registration statements or other
documents required to be filed during a specified period by a Person with the
Commission pursuant to the Securities Act or the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
Regulations promulgated thereunder.
"Significant Subsidiary" means any Subsidiary of the Company or Acquiror, as
the case may be, that would constitute a Significant Subsidiary of such party
within the meaning of Rule 1-02 of Regulation S-X of the Commission.
"Software" shall mean the following computer applications programs: 2DVIEW,
3D Knowledge Integrator (3DKI), 3DVIEW, Argus, Aries, Automate, BatchZAP!,
Blitz, CIMS, Compass, Continuity Tool, Contouring Assistant, DESKTOP-PVT,
DESKTOP-VIP, DIMS, DUAL, DXF (AutoCAD), EarthCube, EnerGIS, Fast Track,
GeoLink, GES, GMS, GRIDGENR, Geo-data Works, Jaguar, LeaseMap, LGR, LogEdit,
MIMIC+, MultiWell, OASIIS, OpenWorks, OpenWorks Development Kit, PAL, PARALLEL
VIP, PetroWorks, PlotView, PostStack, POWAR, Profile, ProMAX, ProMAX VSP,
QUIK+, QUIKDIG+, QUIKWELL+, RAYMAP+, RAVE, Resin-Plus, RMS, SeisCube, Seismic
Data Check, SeisTie, SeisVision, SeisWell, SeisWorks, SigmaView 2D, SigmaView
3D, SIVA+, SuperSeisWorks, SurfCube, StrataModel SGM, StrataModel GTM,
StratWorks, SynTool, TDQ, TOW CS, VESPA, VIP-COMP, VIP-CORE, VIP-Encore, VIP-
THERM, VoxCube, Wellbore Manager, Wellplan, Z3D, Z-Cap, and Z-Map Plus.
"Stock Option Agreement" shall mean that certain Stock Option Agreement of
even date herewith between the Acquiror and the Company.
A "Subsidiary" of a specified Person shall be any corporation, partnership,
limited liability company, joint venture or other legal entity of which the
specified Person (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, 50 percent or more of the stock or
other equity or partnership interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
"Superior Proposal" means a bona fide proposal made by a third Person to
acquire the Company pursuant to a tender or exchange offer for all of the
outstanding capital stock of the Company, a merger, a sale of all or
substantially all of the Company's assets or otherwise on terms that the Board
of Directors of the Company determines in its good faith judgment to be more
favorable to the Company's stockholders than the Merger (based on the written
opinion, with only customary qualifications, of the Company's independent
financial advisor that the value of the consideration to the Company's
stockholders provided for in such proposal exceeds the value of the
consideration to the Company's stockholders provided for in the Merger) and
for which financing, to the extent required, is then committed or which, in
the good faith judgment of the Board of Directors of the Company (based on the
written advice of the Company's independent financial advisor), is reasonably
capable of being obtained by such third Person.
"Surviving Corporation" shall mean Newco as the corporation surviving the
Merger.
"Tax Returns" shall mean all returns and reports of or with respect to any
Tax which are required to be filed by or with respect to the Company or any of
its Subsidiaries.
"Taxes" shall mean all taxes, charges, imposts, tariffs, fees, levies or
other similar assessments or liabilities, including income taxes, ad valorem
taxes, excise taxes, withholding taxes, stamp taxes or other taxes of or with
respect to gross receipts, premiums, real property, personal property,
windfall profits, sales, use, transfers, licensing, employment, payroll and
franchises imposed by or under any Law; and such terms shall include any
interest, fines, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any such tax or any contest or
dispute thereof.
A-44
<PAGE>
"Terminated Benefit Plans" shall mean Benefit Plans that were sponsored,
maintained, or contributed to by a specified Person or any of its Subsidiaries
within six years prior to the date of this Agreement but which have been
terminated prior to the date of this Agreement.
"Voting Agreement" shall mean that certain Voting Agreement of even date
herewith between the Acquiror and S. Rutt Bridges and Barbara Ann Bridges.
A-45
<PAGE>
ANNEX B
LANDMARK GRAPHICS CORPORATION AFFILIATES
AFFILIATE'S AGREEMENT
[Date]
Halliburton Company
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
Ladies and Gentlemen:
The undersigned has been advised that, as of the date hereof, the
undersigned may be deemed to be an "affiliate" of Landmark Graphics
Corporation, a Delaware corporation (the "Company"), as that term is defined
for purposes of paragraphs (c) and (d) of Rule 145 of the Regulations of the
Commission under the Securities Act.
Pursuant to the terms and subject to the conditions of that certain
Agreement and Plan of Merger by and among Halliburton Company, a Delaware
corporation ("Acquiror"), Halliburton Acq. Company, a newly formed Delaware
corporation and a wholly-owned Subsidiary of Acquiror ("Newco"), and the
Company dated as of June 30, 1996 (the "Merger Agreement"), providing for,
among other things, the merger of the Company with and into Newco (the
"Merger"), the undersigned will be entitled to receive shares of Acquiror
Common Stock in exchange for shares of Company Common Stock owned by the
undersigned at the Effective Time of the Merger as determined pursuant to the
Merger Agreement. Capitalized terms used but not defined herein are defined in
Annex A to the Merger Agreement and are used herein with the same meanings as
ascribed to them therein.
The undersigned understands that the Merger will be treated for financial
accounting purposes as a "pooling of interests" in accordance with generally
accepted accounting principles and that the staff of the Commission has issued
certain guidelines that should be followed to ensure the application of
pooling of interests accounting to the transaction.
In consideration of the agreements contained herein, the Acquiror's reliance
on this letter in connection with the consummation of the Merger and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned hereby represents, warrants and agrees
that the undersigned will not make any sale, transfer or other disposition of
(i) Company Common Stock during the period from the date hereof until the
earlier of the Effective Time and the termination of the Merger Agreement
(which period, if the Merger is consummated, will be greater than thirty (30)
days), (ii) Acquiror Common Stock received by the undersigned pursuant to the
Merger or otherwise owned by the undersigned until such time as financial
statements that include at least thirty (30) days of combined operations of
the Company and the Acquiror after the Merger shall have been publicly
reported, unless the undersigned shall have delivered to the Acquiror, prior
to any such sale, transfer or other disposition, a written opinion from Arthur
Andersen LLP, independent public accountants for the Acquiror, or a written
no-action letter from the accounting staff of the Commission, in either case
in form and substance reasonably satisfactory to the Acquiror, to the effect
that such sale, transfer or other disposition will not cause the Merger not to
be treated as a "pooling of interests" for financial accounting purposes in
accordance with generally accepted accounting principles and the Regulations
of the Commission or (iii) Acquiror Common Stock received by the undersigned
pursuant to the Merger in violation of the Securities Act or the Regulations
thereunder. The undersigned has been advised that the offering, sale and
delivery of the shares of Acquiror Common Stock pursuant to the Merger will
have been registered with the Commission under the Securities Act on a
Registration Statement on Form S-4. The undersigned has also been advised,
however, that, since the undersigned may be deemed to be an Affiliate of the
Company at the time the Merger is submitted
A-46
<PAGE>
for a vote of the stockholders of the Company, the Acquiror Common Stock
received by the undersigned pursuant to the Merger can be sold by the
undersigned only (i) pursuant to an effective registration statement under the
Securities Act, (ii) in conformity with the volume and other limitations of
Rule 145 promulgated by the Commission under the Securities Act or (iii) in
reliance upon an exemption from registration that is available under the
Securities Act.
The undersigned also understands that instructions will be given to the
transfer agent for the Acquiror Common Stock with respect to the Acquiror
Common Stock to be received by the undersigned pursuant to the Merger and that
there will be placed on the certificates representing such shares of Acquiror
Common Stock, or any substitutions therefor, a legend stating in substance as
follows:
"These shares were issued in a transaction to which Rule 145 promulgated
under the Securities Act of 1933, as amended, applies. These shares may
only be transferred in accordance with the terms of such Rule and an
Affiliate's Agreement between the original holder of such shares and
Halliburton Company, a copy of which agreement is on file at the principal
offices of Halliburton Company."
It is understood and agreed that the legend set forth above shall be removed
upon surrender of certificates bearing such legend by delivery of substitute
certificates without such legend if the undersigned shall have delivered to
the Acquiror an opinion of counsel, in form and substance reasonably
satisfactory to the Acquiror, to the effect that (i) the sale or disposition
of the shares represented by the surrendered certificates may be effected
without registration of the offering, sale and delivery of such shares under
the Securities Act and (ii) the shares to be so transferred may be publicly
offered, sold and delivered by the transferee thereof without compliance with
the registration provisions of the Securities Act.
By its execution hereof, the Acquiror agrees that it will, as long as the
undersigned owns any Acquiror Common Stock to be received by the undersigned
pursuant to the Merger, take all reasonable efforts to make timely filings
with the Commission of all reports required to be filed by it pursuant to the
Exchange Act and will promptly furnish upon written request of the undersigned
a written statement confirming that such reports have been so timely filed.
If you are in agreement with the foregoing, please so indicate by signing
below and returning a copy of this letter to the undersigned, at which time
this letter shall become a binding agreement between us.
Very truly yours,
By___________________________________
Name:
Title:
Date:
Address:
ACCEPTED this day
of , 1996
Halliburton Company
By___________________________________
Name:
Title:
A-47
<PAGE>
ANNEX C
HALLIBURTON COMPANY AFFILIATES
AFFILIATE'S AGREEMENT
[Date]
Halliburton Company3600 Lincoln Plaza500 North Akard StreetDallas, Texas
75201-3391
Ladies and Gentlemen:
The undersigned has been advised that, as of the date hereof, the
undersigned may be deemed to be an "affiliate" of Halliburton Company, a
Delaware corporation (the "Acquiror"), as that term is defined in the
Regulations of the Commission under the Securities Act.
The undertakings contained in this Affiliate's Agreement are being given by
the undersigned in connection with that certain Agreement and Plan of Merger
by and among Acquiror, Halliburton Acq. Company, a newly formed Delaware
corporation and a wholly-owned Subsidiary of Acquiror ("Newco"), and Landmark
Graphics Corporation, a Delaware Corporation (the "Company") dated as of June
, 1996 (the "Merger Agreement"), providing for, among other things, the
merger of the Company with and into Newco (the "Merger"). Capitalized terms
used but not defined herein are defined in Annex A to the Merger Agreement and
are used herein with the same meanings as ascribed to them therein.
The undersigned understands that the Merger will be treated for financial
accounting purposes as a "pooling of interests" in accordance with generally
accepted accounting principles and that the staff of the Commission has issued
certain guidelines that should be followed to ensure the application of
pooling of interests accounting to the transaction.
In consideration of the agreements contained herein, the Acquiror's reliance
on this letter in connection with the consummation of the Merger and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the undersigned hereby represents, warrants and agrees
that the undersigned will not make any sale, transfer or other disposition of
(i) Company Common Stock during the period from the date hereof until the
earlier of the Effective Time and the termination of the Merger Agreement
(which period, if the Merger is consummated, will be greater than thirty (30)
days) or (ii) Acquiror Common Stock owned by the undersigned until such time
as financial statements that include at least thirty (30) days of combined
operations of the Company and the Acquiror after the Merger shall have been
publicly reported, unless the undersigned shall have delivered to the
Acquiror, prior to any such sale, transfer or other disposition, a written
opinion from Arthur Andersen LLP, independent public accountants for the
Acquiror, or a written no-action letter from the accounting staff of the
Commission, in either case in form and substance reasonably satisfactory to
the Acquiror, to the effect that such sale, transfer or other disposition will
not cause the Merger not to be treated as a "pooling of interests" for
financial accounting purposes in accordance with generally accepted accounting
principles and the Regulations of the Commission.
A-48
<PAGE>
If you are in agreement with the foregoing, please so indicate by signing
below and returning a copy of this letter to the undersigned, at which time
this letter shall become a binding agreement between us.
Very truly yours,
By:__________________________________
Name:
Title:
Date:
Address:
ACCEPTED this day of , 1996
Halliburton Company
By:__________________________________
Name:
Title:
A-49
<PAGE>
APPENDIX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "Agreement"), dated as of June 30, 1996, by and
between Landmark Graphics Corporation, a Delaware corporation (the "Company"),
and Halliburton Company, a Delaware corporation (the "Grantee").
Recitals:
The Grantee, the Company and Halliburton Acq. Company, a Delaware
corporation and a wholly-owned subsidiary of the Grantee ("Newco") propose to
enter into an Agreement and Plan of Merger dated as of the date hereof (the
"Merger Agreement") providing for, among other things, the merger (the
"Merger") of the Company with and into Newco which shall be the surviving
corporation.
The Board of Directors of the Company has recommended the approval of the
Merger Agreement and the Merger by the holders of Company Common Stock.
As a condition and inducement to the Grantee's willingness to enter into the
Merger Agreement, the Grantee has requested that the Company agree, and the
Company has agreed, to grant the Grantee the Option (as defined below).
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, the Company and the Grantee agree as follows:
1. Capitalized Terms. Capitalized terms used but not defined herein are
defined in the Merger Agreement and are used herein with the same meanings
as ascribed to them therein; provided, however, that, as used in this
Agreement, "Person" shall have the meaning specified in Sections 3(a)(9)
and 13(d)(3) of the Exchange Act.
2. Grant of Option. Subject to the terms and conditions set forth
herein, the Company hereby grants to the Grantee an irrevocable option (the
"Option") to purchase, out of the authorized but unissued Company Common
Stock, a number of shares equal to up to 15.0% of the shares of Company
Common Stock outstanding as of the date hereof (as adjusted as set forth
herein) (the "Option Shares"), at a purchase price of $31.857 per Option
Share (the "Exercise Price").
3. Term. The Option shall be exercisable and shall remain in full force
and effect until the earliest to occur of (i) the Effective Time, (ii) the
first anniversary of the receipt by Grantee of written notice from the
Company of the occurrence of an Exercise Event (as hereinafter defined) or
(iii) termination of the Merger Agreement prior to the occurrence of an
Exercise Event, at which time the Option shall terminate and be of no
further force or effect (the "Term"). The rights and obligations set forth
in Sections 7, 8, 9 and 10 shall not terminate when the right to exercise
the Option terminates as set forth herein, but shall extend to such time as
is provided in those Sections.
4. Exercise of Option.
(a) The Grantee may exercise the Option, in whole or in part, at any
time and from time to time during the Term following the occurrence of
an Exercise Event. Notwithstanding the expiration of the Term, the
Grantee shall be entitled to purchase those Option Shares with respect
to which it has exercised the Option in accordance with the terms
hereof prior to the expiration of the Term.
(b) As used herein, an "Exercise Event" shall mean any of the
following events:
(i) any Person (other than the Grantee or any subsidiary of the
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) or shall have filed a registration statement
under the Securities Act with respect to a tender offer or exchange
offer to
B-1
<PAGE>
purchase any shares of Company Common Stock such that, upon
consummation of such offer, such Person would own or control 25% or
more of the then outstanding Company Common Stock;
(ii) the Company or any subsidiary of the Company shall have
authorized, recommended, proposed or publicly announced an intention
to authorize, recommend or propose, or entered into, an agreement
with any Person (other than the Grantee or any subsidiary of the
Grantee) to (A) effect a merger, consolidation, share exchange or
similar transaction involving the Company or any of its Significant
Subsidiaries, (B) sell, lease or otherwise dispose of assets of the
Company or its subsidiaries representing 15% or more of the
consolidated assets of the Company and its subsidiaries or (C)
issue, sell or otherwise dispose of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
(or options, rights or warrants to purchase, or securities
convertible into or exchangeable for, such securities) representing
15% or more of the voting power of the Company or any of its
Significant Subsidiaries;
(iii) any Person (other than the Grantee or any Subsidiary of the
Grantee or the Company or, in a fiduciary capacity, any of its
Subsidiaries) shall have, subsequent to the date of this Agreement,
acquired beneficial ownership (as such term is defined in Rule 13d-3
under the Exchange Act) or the right to acquire beneficial ownership
of, or any "Group" (as such term is defined under the Exchange Act)
shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 25% or more of the then outstanding
Company Common Stock; or
(iv) the holders of Company Common Stock shall not have approved
the Merger Agreement at the meeting of such stockholders held for
the purpose of voting on the Merger Agreement or such meeting shall
not have been called as required by the terms of the Merger
Agreement or shall have been canceled, in each case after any Person
(other than the Grantee or any subsidiary of the Grantee) shall have
publicly announced a proposal, or publicly disclosed an intention to
make a proposal, to engage in any transaction described in clause
(i), (ii) or (iii) above, or the Company's Board of Directors shall
have withdrawn or modified in a manner materially adverse to the
Grantee the recommendation of the Company's Board of Directors that
the holders of the Company Common Stock approve the Merger Agreement
and the Merger.
(c) If the Grantee wishes to exercise the Option, it shall send a
written notice (the date of which being herein referred to as the
"Notice Date") to the Company specifying (i) the total number of Option
Shares it intends to purchase pursuant to such exercise and (ii) a
place and a date not earlier than three (3) Business Days nor later
than fifteen (15) Business Days from the Notice Date for the closing of
such purchase (the "Closing Date"); provided, however, that, if the
closing of the purchase and sale pursuant to the Option (the "Closing")
cannot be consummated by reason of any applicable Law, Regulation or
Order, the period of time that otherwise would run pursuant to this
sentence shall run instead from the date on which such restriction on
consummation has expired or been terminated; and, provided, further,
that, without limiting the foregoing, if prior notification to or
approval of any Governmental Authority is required in connection with
such purchase, the Grantee and, if applicable, the Company shall
promptly file the required notice or application for approval and shall
expeditiously process the same (and the Company shall cooperate with
the Grantee in the filing of any such notice or application and the
obtaining of any such approval), and the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on
which, as the case may be, (i) any required notification period has
expired or been terminated or (ii) such approval has been obtained and,
in either event, any requisite waiting period has passed.
(d) Notwithstanding Section 4(c), in no event shall any Closing Date
be more than eighteen (18) months after the related Notice Date, and,
if the Closing Date shall not have occurred within eighteen (18) months
after the related Notice Date due to the failure to obtain any required
approval of a Governmental Authority, the exercise of the Option
effected on the Notice Date shall be deemed to have expired. If (i) the
Grantee receives official notice that an approval of any Governmental
Authority required for the purchase of Option Shares will not be issued
or granted or (ii) a Closing Date shall not
B-2
<PAGE>
have occurred within eighteen (18) months after the related Notice Date
due to the failure to obtain any such required approval of a
Governmental Authority, the Grantee shall be entitled to exercise its
right as set forth in Section 6 or to exercise the Option in connection
with the resale of the Company Common Stock or other securities
pursuant to a registration statement as provided in Section 8. The
provisions of this Section 4 and Section 5 shall apply with appropriate
adjustments to any such exercise.
5. Payment and Delivery of Certificates.
(a) On each Closing Date, the Grantee shall pay to the Company in
immediately available funds by wire transfer to a bank account
designated by the Company an amount equal to the Exercise Price
multiplied by the Option Shares to be purchased on such Closing Date.
(b) At each Closing, simultaneously with the delivery of immediately
available funds as provided in Section 5(a), the Company shall deliver
to the Grantee a certificate or certificates representing the Option
Shares to be purchased at such Closing, which Option Shares shall be
fully paid and nonassessable and free and clear of all Liens, and
Grantee shall deliver to the Company its written agreement that the
Grantee will not offer to sell or otherwise dispose of such Option
Shares in violation of applicable Law or the provisions of this
Agreement.
(c) Certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED
AS OF JUNE 30, 1996. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE COMPANY OF A
WRITTEN REQUEST THEREFOR.
A new certificate or certificates evidencing the same number of shares
of the Company Common Stock will be issued to the Grantee in lieu of
the certificate bearing the above legend, which new certificate shall
not bear such legend, insofar as it applies to the Securities Act, if
the Grantee shall have delivered to the Company a copy of a letter from
the staff of the Commission, or an opinion of counsel in form and
substance reasonably satisfactory to the Company and its counsel, to
the effect that such legend is not required for purposes of the
Securities Act.
6. Adjustment Upon Changes in Capitalization, Etc.
(a) In the event of any change in the Company Common Stock by reason
of a stock dividend, split-up, combination, recapitalization, exchange
of shares or similar transaction, the type and number of shares or
securities subject to the Option, and the Exercise Price therefor,
shall be adjusted appropriately, and proper provision shall be made in
the agreements governing such transaction, so that the Grantee shall
receive upon exercise of the Option the same class and number of
outstanding shares or other securities or property that Grantee would
have received in respect of the Company Common Stock if the Option had
been exercised immediately prior to such event, or the record date
therefor, as applicable. If any additional shares of the Company Common
Stock are issued after the date of this Agreement (other than pursuant
to an event described in the first sentence of this Section 6(a)), the
Company shall give written notice thereof to the Grantee and, at the
Grantee's option exercisable within ten (10) Business Days after the
Grantee's receipt of such notice, the number of shares of the Company
Common Stock subject to the Option shall be adjusted so that, after
such issuance, it equals 15.0% of the number of shares of the Company
Common Stock then issued and outstanding, so that shares issued
pursuant to the Option and shares remaining to be issued pursuant to
the Option will, in the aggregate, equal 15% of the then issued and
outstanding shares of Company Common Stock; provided, however, that the
number of shares of the Company Common Stock subject to the Option
shall only be increased to the extent the Company then has available
authorized but unissued and unreserved shares of the Company Common
Stock.
B-3
<PAGE>
(b) If the Company shall enter into an agreement (i) to consolidate
or exchange shares with or merge into any Person, other than the
Grantee or one of its subsidiaries, and shall not be the continuing or
surviving corporation or other Person of such consolidation or merger,
(ii) to permit any Person, other than the Grantee or one of its
Subsidiaries, to merge into the Company and the Company shall be the
continuing or surviving corporation, but, in connection with such
merger, the then outstanding shares of Company Common Stock shall be
changed into or exchanged for stock or other securities of the Company
or any other Person or cash or any other property, or the shares of
Company Common Stock outstanding immediately before such merger shall
after such merger represent less than 50% of the outstanding common
shares and common share equivalents of the Company or (iii) to sell,
lease or otherwise transfer all or substantially all of its assets to
any Person, other than the Grantee or one of its Subsidiaries, then,
and in each such case, the agreement governing such transaction shall
make proper provisions so that the Option shall, upon the consummation
of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option, at the election
of the Grantee, of any of the following Persons (as designated by the
Grantee) (A) the Acquiring Corporation (as hereinafter defined), (B)
any Person that controls the Acquiring Corporation or (C) in the case
of a merger described in clause (ii), the Company.
(c) For purposes of this Section 6, "Acquiring Corporation" means (i)
the continuing or surviving corporation or other Person of a
consolidation, share exchange or merger with the Company (if other than
the Company), (ii) the Company in a merger or share exchange in which
the Company is the continuing or surviving corporation and (iii) the
transferee of all or substantially all of the Company's assets. The
provisions of Sections 7, 8, 9, 10 and 11 shall apply with appropriate
adjustments to any securities for which the Option becomes exercisable
pursuant to this Section 6.
7. Repurchase at the Option of Grantee.
(a) Unless the Option shall have theretofore expired or been
terminated in accordance with the terms hereof, at the request of the
Grantee made at any time commencing upon the first occurrence of a
Repurchase Event (as hereinafter defined) and ending on the first
anniversary thereof (the "Put Period"), the Company (or any successor
thereto) shall repurchase from the Grantee (i) that portion of the
Option that then remains unexercised and (ii) all (but not less than
all) the shares of Company Common Stock purchased by the Grantee
pursuant hereto and with respect to which the Grantee then has
beneficial ownership. The date on which the Grantee exercises its
rights under this Section 7 is referred to as the "Request Date." Such
repurchase shall be at an aggregate price (the "Section 7 Repurchase
Consideration") equal to the sum of:
(i) the aggregate exercise price paid for any shares of Company
Common Stock acquired pursuant to the Option and with respect to
which the Grantee then has beneficial ownership;
(ii) the excess, if any, of the Applicable Price (as defined
below), over the Exercise Price (subject to adjustment pursuant to
Section 6) paid (or, in the case of Option Shares with respect to
which the Option has been exercised but the Closing Date has not
occurred, payable) by the Grantee for each share of Company Common
Stock with respect to which the Option has been exercised and with
respect to which the Grantee then has beneficial ownership,
multiplied by the number of such shares; and
(iii) the excess, if any, of (x) the Applicable Price for each
share of Company Common Stock over (y) the Exercise Price (subject
to adjustment pursuant to Section 6), multiplied by the number of
shares of Company Common Stock with respect to which the Option has
not been exercised.
(b) If the Grantee exercises its rights under this Section 7, the
Company shall, within ten (10) Business Days after the Request Date,
pay the Section 7 Repurchase Consideration to the Grantee in
immediately available funds, and the Grantee shall surrender to the
Company the Option and the certificates evidencing the shares of
Company Common Stock purchased thereunder with respect to which the
Grantee then has beneficial ownership, and the Grantee shall warrant to
the Company that, immediately prior to the repurchase thereof pursuant
to this Section 7, the Grantee had sole record and beneficial ownership
of such shares and that such shares were then held free and clear of
all Liens.
B-4
<PAGE>
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of (i) the highest price per share at which a tender or
exchange offer has been made for shares of Company Common Stock after
the date hereof and on or prior to the Request Date, (ii) the price per
share to be paid by any third Person for shares of Company Common
Stock, in each case pursuant to an agreement for a merger or other
business combination transaction with the Company entered into on or
prior to the Request Date, or (iii) the highest closing sales price per
share of Company Common Stock quoted on the New York Stock Exchange
Composite Transactions or, if not so quoted, on the New York Stock
Exchange (or if Company Common Stock is not quoted on the New York
Stock Exchange, the highest bid price per share as quoted on The NASDAQ
Stock Market or, if the shares of Company Common Stock are not quoted
thereon, on the principal trading market on which such shares are
traded as reported by a recognized source) during the sixty (60)
Business Days preceding the Request Date. If the consideration to be
offered, paid or received pursuant to either of the foregoing clauses
(i) or (ii) shall be other than in cash, the value of such
consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by the Grantee
and reasonably acceptable to the Company, which determination shall be
conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" means the occurrence of any
Exercise Event specified in Section 4(b)(ii), (iii) or (iv).
(e) Notwithstanding any provision to the contrary in this Agreement,
the Grantee may not exercise its rights pursuant to this Section 7 in a
manner that would result in the cash payment to the Grantee of an
aggregate amount determined pursuant to clauses (ii) and (iii) of
subsection (a) of this Section 7 of more than $24 million, including
the amount, if any, of the Termination Fee paid to the Grantee pursuant
to Section 9.05 of the Merger Agreement; provided, however, that
nothing in this sentence shall limit the Grantee's ability to exercise
the Option in accordance with its terms.
8. Repurchase at the Option of The Company.
(a) Unless the Grantee shall have previously exercised its rights
under Section 7, at the request of the Company during the six-month
period commencing at the expiration of the Put Period (the "Call
Period"), the Company may repurchase from the Grantee, and the Grantee
shall sell to the Company, all (but not less than all) the shares of
Company Common Stock acquired by the Grantee pursuant hereto and with
respect to which the Grantee has beneficial ownership at the time of
such repurchase at a price per share equal to the greater of (A) the
Current Market Price (as hereinafter defined) or (B) the Exercise Price
per share in respect of the shares so acquired (such price multiplied
by the number of shares of Company Common Stock to be repurchased
pursuant to this Section 8 being herein called the "Section 8
Repurchase Consideration"); provided, however, that the Grantee, within
thirty (30) days following the Company's notice of its intention to
purchase shares pursuant to this Section 8, may deliver an Offeror's
Notice pursuant to Section 10, in which case the provisions of Section
10 and not those of this Section 8 shall control (unless the sale to a
third Person contemplated thereby is not consummated); and provided,
further, that the Company's rights under this Section 8 shall be
suspended (and the Call Period shall be extended accordingly) during
any period when the exercise of such rights would subject the Grantee
to liability pursuant to Section 16(b) of the Exchange Act by reason of
the issuance of the Option, any adjustment pursuant to Section 6
hereof, the Grantee's purchase of shares of Company Common Stock
hereunder or the Grantee's sale of shares pursuant to Section 7, 8 or
10.
(b) If the Company exercises its rights under this Section 8 and the
Grantee does not deliver an Offeror's Notice or, having delivered an
Offeror's Notice, the Grantee does not sell the shares to a third
Person pursuant thereto, the Company shall, within ten (10) Business
Days after the expiration of the Grantee's rights to deliver an
Offeror's Notice or to sell the shares subject to an Offeror's Notice
to a third Person, pay the Section 8 Repurchase Consideration in
immediately available funds, and the Grantee shall surrender to the
Company certificates evidencing the shares of Company Common Stock
purchased hereunder, and the Grantee shall warrant to the Company that,
immediately prior to the
B-5
<PAGE>
repurchase thereof pursuant to this Section 8, the Grantee had sole
record and beneficial ownership of such shares and that such shares
were then held free and clear of all Liens.
(c) As used herein, "Current Market Price" means the average closing
sales price per share of Company Common Stock quoted on the New York
Stock Exchange Composite Transactions, or, if not so quoted, on the New
York Stock Exchange (or if Company Common Stock is not quoted on the
New York Stock Exchange, on The NASDAQ Stock Market or, if the shares
of Company Common Stock are not quoted thereon, on the principal
trading market on which such shares are traded as reported by a
recognized source) for the ten (10) Business Days preceding the date of
the Company's request for repurchase pursuant to this Section 8.
9. Registration Rights. The Company shall, if requested by the Grantee at
any time and from time to time within three years of the first exercise of
the Option (the "Registration Period"), as expeditiously as practicable
prepare, file and cause to be made effective up to two registration
statements under the Securities Act if such registration is necessary or
desirable in order to permit the offering, sale and delivery of any or all
shares of Company Common Stock or other securities that have been acquired
by or are issuable to the Grantee upon exercise of the Option in accordance
with the intended method of sale or other disposition stated by the
Grantee, including, at the sole discretion of the Company, a "shelf"
registration statement under Rule 415 under the Securities Act or any
successor provision, and the Company shall use all reasonable efforts to
qualify such shares or other securities under any applicable state
securities laws. Without the Grantee's prior written consent, no other
securities may be included in any such registration. The Grantee agrees to
use all reasonable efforts to cause, and to cause any underwriters of any
sale or other disposition to cause, any sale or other disposition pursuant
to such registration statement to be effected on a widely distributed basis
so that upon consummation thereof no purchaser or transferee shall own
beneficially more than 2% of the then outstanding voting power of the
Company. The Company shall use all reasonable efforts to cause each such
registration statement to become effective, to obtain all consents or
waivers of other parties which are required therefor and to keep such
registration statement effective for such period not in excess of 180 days
from the day such registration statement first becomes effective as may be
reasonably necessary to effect such sale or other disposition. The
obligations of the Company hereunder to file a registration statement and
to maintain its effectiveness may be suspended for one or more periods of
time not exceeding sixty (60) days in the aggregate if the Board of
Directors of the Company shall have determined in good faith that the
filing of such registration or the maintenance of its effectiveness would
require disclosure of nonpublic information that would materially and
adversely affect the Company. The expenses associated with the preparation
and filing of any such registration statement pursuant to this Section 9
and any sale covered thereby (including any fees related to blue sky
qualifications and filing fees in respect of the National Association of
Securities Dealers, Inc.) ("Registration Expenses") shall be for the
account of the Company except for underwriting discounts or commissions or
brokers' fees in respect to shares to be sold by the Grantee and the fees
and disbursements of the Grantee's counsel; it provided, however, that the
Company shall not be required to pay for any Registration Expenses with
respect to such registration if the registration request is subsequently
withdrawn at the request of the Grantee unless the Grantee agrees to
forfeit its right to request one registration; provided further, however,
that, if at the time of such withdrawal the Grantee has learned of a
material adverse change in the results of operations, condition (financial
or other), business or prospects of the Company from that known to the
Grantee at the time of its request and has withdrawn the request with
reasonable promptness following disclosure by the Company of such material
adverse change, then the Grantee shall not be required to pay any of such
expenses and shall retain all remaining rights to request registration. The
Grantee shall provide all information reasonably requested by the Company
for inclusion in any registration statement to be filed hereunder. If
during the Registration Period the Company shall propose to register under
the Securities Act the offering, sale and delivery of Company Common Stock
for cash for its own account or for any other stockholder of the Company
pursuant to a firm underwriting, it shall, in addition to the Company's
other obligations under this Section 9, allow the Grantee the right to
participate in such registration provided that the Grantee participates in
the underwriting; provided, however, that, if the managing underwriter of
such offering advises the Company in writing that in its opinion the number
of shares of Company Common
B-6
<PAGE>
Stock requested to be included in such registration exceeds the number
which can be sold in such offering, the Company shall, after fully
including therein all securities to be sold by the Company, include the
shares requested to be included therein by Grantee pro rata (based on the
number of shares intended to be included therein) with the shares intended
to be included therein by Persons other than the Company. In connection
with any offering, sale and delivery of Company Common Stock pursuant to a
registration statement effected pursuant to this Section 9, the Company and
the Grantee shall provide each other and each underwriter of the offering
with customary representations, warranties and covenants, including
covenants of indemnification and contribution. For purposes of determining
whether two requests have been made under this Section 9, only requests
relating to a registration statement that has become effective under the
Securities Act and pursuant to which the Grantee has disposed of all shares
covered thereby in the manner contemplated therein shall be counted.
10. First Refusal. At any time after the first occurrence of an Exercise
Event and prior to the second anniversary of the first purchase of shares of
Company Common Stock pursuant to the Option, if the Grantee shall desire to
sell, assign, transfer or otherwise dispose of all or any of the shares of
Company Common Stock or other securities acquired by it pursuant to the
Option, it shall give the Company written notice of the proposed transaction
(an "Offeror's Notice"), identifying the proposed transferee, accompanied by a
copy of a binding offer to purchase such shares or other securities signed by
such transferee and setting forth the terms of the proposed transactions. An
Offeror's Notice shall be deemed an offer by the Grantee to the Company, which
may be accepted, in whole but not in part, within ten (10) Business Days of
the receipt of such Offeror's Notice, on the same terms and conditions and at
the same price at which the Grantee is proposing to transfer such shares or
other securities to such transferee. The purchase of any such shares or other
securities by the Company shall be settled within ten (10) Business Days of
the date of the acceptance of the offer and the purchase price shall be paid
to the Grantee in immediately available funds. In the event of the failure or
refusal of the Company to purchase all the shares or other securities covered
by an Offeror's Notice, the Grantee may, within sixty (60) days from the date
of the Offeror's Notice, sell all, but not less than all, of such shares or
other securities to the proposed transferee at no less than the price
specified and on terms no more favorable than those set forth in the Offeror's
Notice; provided, however, that the provisions of this sentence shall not
limit the rights the Grantee may otherwise have if the Company has accepted
the offer contained in the Offeror's Notice and wrongfully refuses to purchase
the shares or other securities subject thereto. The requirements of this
Section 10 shall not apply to (a) any disposition as a result of which the
proposed transferee would own beneficially not more than 2% of the outstanding
voting power of the Company, (b) any disposition of Company Common Stock or
other securities by a Person to whom the Grantee has assigned its rights under
the Option with the consent of the Company, (c) any sale by means of a public
offering registered under the Securities Act or (d) any transfer to a wholly-
owned Subsidiary of the Grantee which agrees in writing to be bound by the
terms hereof.
11. Listing. If the Company Common Stock or any other securities then
subject to the Option are then listed on the New York Stock Exchange, the
Company, upon the occurrence of an Exercise Event, will promptly file an
application to list on the New York Stock Exchange the shares of the Company
Common Stock or other securities then subject to the Option and will use all
reasonable efforts to cause such listing application to be approved as
promptly as practicable.
12. Replacement of Agreement. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, the Company will execute and deliver a new Agreement
of like tenor and date. Any such new Agreement shall constitute an additional
contractual obligation of the Company, whether or not the Agreement so lost,
stolen, destroyed or mutilated shall at any time be enforceable by anyone.
13. Miscellaneous.
(a) Expenses. Except as otherwise provided in the Merger Agreement or in
Sections 7, 8 and 9 hereof, each of the parties hereto shall bear and pay
all costs and expenses incurred by it or on its behalf in connection with
the transactions contemplated hereunder, including fees and expenses of its
own financial consultants, investment bankers, accountants and counsel.
B-7
<PAGE>
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of
such provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
(c) Entire Agreement; No Third Party Beneficiary;
Severability. Except as otherwise set forth in the Merger Agreement,
this Agreement (including the Merger Agreement and the other documents
and instruments referred to herein) (i) constitutes the entire
agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject
matter hereof and (ii) is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder. If any term,
provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
(d) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the Laws of the State of Texas, regardless of the
Laws that might otherwise govern under applicable principles of
conflicts of law; provided, however, that any matter involving the
internal corporate affairs of any party hereto shall be governed by the
provisions of the GCL.
(e) Descriptive Headings. The descriptive headings contained herein
are for convenience or reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
(f) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified
by like notice):
If to the Company to:
Landmark Graphics Corporation
15150 Memorial Drive
Houston, Texas 77079-4304
Attention: Patti Massaro, General Counsel and Corporate Secretary
Telecopier No.: (713) 560-1383
with a copy to:
Winstead Sechrest & Minick P.C. Shearman & Sterling
5400 Renaissance Tower 599 Lexington Avenue
1201 Elm Street New York, New York 10022
Dallas, Texas 75270 Attention: David W. Heleniak
Attention: Robert E. Crawford, Jr. Telecopier No.: (212) 848-7179
Telecopier No.: (214) 745-5390
If to Grantee to:
Halliburton Company
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
Attention: Lester L. Coleman, Executive Vice President and General
Counsel
Telecopier No.: (214) 978-2658
with a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Attention: William E. Joor III, Esq.
Telecopier No.: (713) 615-5282
B-8
<PAGE>
(g) Counterparts. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and
the same agreement and shall become effective when both counterparts
have been signed by each of the parties and delivered to the other
party, it being understood that both parties need not execute the same
counterpart.
(h) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be
assigned by either of the parties hereto (whether by operation of law
or otherwise) without the prior written consent of the other party,
except that the Grantee may assign this Agreement to a wholly-owned
Subsidiary of the Grantee; provided, however, that no such assignment
shall have the effect of releasing the Grantee from its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
(i) Further Assurances. In the event of any exercise of the Option by
the Grantee, the Company and the Grantee shall execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided
for by such exercise.
(j) Specific Performance. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further
agree to waive any requirement for the securing or posting of any bond
in connection with the obtaining of any such equitable relief and that
this provision is without prejudice to any other rights that the
parties hereto may have for any failure to perform this Agreement.
IN WITNESS WHEREOF, the Company and the Grantee have caused this Stock
Option Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
LANDMARK GRAPHICS CORPORATION
By /s/ Robert P. Peebler
-----------------------------------
Robert P. Peebler
President, Cheif Executive Officer
and Chief Operating Officer
HALLIBURTON COMPANY
By /s/ Lester L. Coleman
-----------------------------------
Lester L. Coleman
Executive Vice President and
General Counsel
B-9
<PAGE>
APPENDIX C
VOTING AGREEMENT
VOTING AGREEMENT ("Agreement") dated as of June 30, 1996, between
Halliburton Company, a Delaware corporation (the "Acquiror"), and S. Rutt
Bridges and Barbara Ann Bridges (the "Stockholders"), holders of shares of
common stock, par value $0.05 per share, of Landmark Graphics Corporation, a
Delaware corporation (the "Company").
Recitals:
The Stockholders beneficially own an aggregate of 1,971,263 shares (together
with any additional shares as to which beneficial ownership is acquired by any
member of the Stockholder Group described below, the "Company Shares") of
common stock, par value $0.05 per share ("Company Common Stock"), of the
Company.
The Acquiror is prepared to enter into an Agreement and Plan of Merger with
the Company (the "Merger Agreement") providing for the merger of the Company
with and into a wholly-owned subsidiary of the Acquiror and the conversion in
such merger of each share of Company Common Stock into the number of shares of
the Common Stock, par value $2.50 per share, of the Acquiror set forth in the
Merger Agreement (the "Merger").
To facilitate the Merger, the Stockholders are willing to enter into certain
arrangements with respect to the Company Shares.
NOW, THEREFORE, in consideration of the premises set forth above, the mutual
promises set forth below, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Stockholders' Support of the Merger. From the date hereof until February
28, 1997, or, if earlier, termination of the Merger Agreement:
(a) Except as contemplated by the Merger Agreement, neither the
Stockholders nor any Person controlled by either Stockholder or any
Affiliate or Associate thereof, other than the Company and its subsidiaries
(collectively, the "Stockholder Group"), will, directly or indirectly,
sell, transfer, pledge or otherwise dispose of, or grant a proxy with
respect to, any Company Shares to any Person other than any member of the
Stockholder Group or the Acquiror or its designee, or grant an option with
respect to any of the Company Shares or enter into any other agreement or
arrangement with respect to any of the Company Shares.
(b) The Stockholders agree that the Stockholders will vote, and will
cause each member of the Stockholder Group to vote, all Company Shares
beneficially owned by such Persons (i) in favor of the Merger and (ii),
subject to the provisions of paragraph (c) below, against any combination
proposal or other matter that may interfere or be inconsistent with the
Merger (including without limitation a Competing Transaction).
(c) The Stockholders agree that, if reasonably requested by the Acquiror
in order to facilitate the Merger, they will not, and they will cause each
member of the Stockholder Group not to, attend or vote any Company Shares
beneficially owned by any such Person at any annual or special meeting of
stockholders or execute any written consent of stockholders.
(d) The Stockholders hereby consent to the Acquiror's announcement in any
press release, public filing, advertisement or other document, that the
Stockholders have entered into this Agreement.
(e) To the extent inconsistent with the provisions of this Section 1,
each member of the Stockholder Group hereby revokes any and all proxies
with respect to such member's Company Shares or any other voting securities
of the Company.
C-1
<PAGE>
2. Miscellaneous
(a) The Stockholders, on the one hand, and the Acquiror, on the other,
acknowledge and agree that irreparable damage would occur if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically the
terms and provisions hereof in any court of the United States or any state
thereof having jurisdiction, in addition to any other remedies to which they
may be entitled at law or equity.
(b) Descriptive headings are for convenience only and shall not control or
affect the meaning or construction of any provision of this Agreement.
(c) All notices, consents, requests, instructions, approvals and other
communications provided for herein shall be validly given, made or served, if
in writing and delivered personally, by telecopier (subject to receipt of
electronic confirmation) or sent by registered mail, postage prepaid:
If to the Acquiror:
Halliburton Company
3600 Lincoln Plaza
500 North Akard Street
Dallas, Texas 75201-3391
Attention: Lester L. Coleman, Executive Vice President and General
Counsel
Telecopier No.: (214) 978-2658
with a copy to:
Vinson & Elkins L.L.P.
First City Tower
1001 Fannin
Houston, Texas 77002-6760
Attention: William E. Joor III
Telecopier No.: (713) 758-2346
If to the Stockholders:
S. Rutt Bridges
34 Silver Fox Circle
Greenwood Village, Colorado 80121
and
Barbara Ann Bridges
4200 East Plum Court
Greenwood Village, Colorado 80121
or to such other address or telecopier number as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier shall be deemed delivered on the day the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee. Notice given by mail as set out above shall be deemed delivered
three days after the date the same is postmarked.
(d) From and after the termination of this Agreement, the covenants of the
parties set forth herein shall be of no further force or effect and the
parties shall be under no further obligation with respect thereto.
(e) Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
(i) Affiliate. "Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date hereof.
(ii) Associate. "Associate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as in
effect on the date hereof.
C-2
<PAGE>
(iii) Beneficial Owner. A person shall be deemed a "beneficial owner" of
or to have "beneficial ownership" of Company Shares in accordance with the
interpretations of the term "beneficial ownership" as defined in Rule 13-
d(3) under the Exchange Act, as in effect on the date hereof, provided that
a Person shall be deemed to be the beneficial owner of, and to have
beneficial ownership of, Company Shares that such Person or any Affiliate
of such Person has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding or upon the exercise of conversion rights,
exchange rights, warrant, options or otherwise.
(iv) Exchange Act. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(v) Person. A "Person" shall mean any individual, firm, corporation,
partnership, trust, limited liability company or other entity.
(vi) Significant Subsidiary. "Significant Subsidiary" shall have the
meaning ascribed to it in Rule 1-02 of SEC Regulation S-X as in effect on
the date hereof.
(g) Due Authorization; No Conflicts. The Stockholders hereby represent and
warrant to the Acquiror as follows: The Stockholders have full power and
authority to enter into this Agreement; neither the execution or delivery of
this Agreement nor the consummation of the transactions contemplated herein
will (a) conflict with or result in a breach, default or violation of (i) any
of the terms, provisions or conditions of the certificate of incorporation or
bylaws of any member of the Stockholder Group or (ii) any agreement, proxy,
document, instrument, judgment, decree, order, governmental permit,
certificate, license, law, statute, rule or regulation to which any member of
the Stockholder Group is a party or to which it is subject, (b) result in the
creation of any lien, charge or other encumbrance on any shares of Company
Common Stock or (c) require any member of the Stockholder Group to obtain the
consent of any private nongovernmental third party; no consent, action,
approval or authorization of, or registration, declaration or filing with, any
governmental department, commission, agency or other instrumentality or any
other person or entity is required to authorize, or is otherwise required in
connection with, the execution and delivery of this Agreement (with the
exception of an Amended Schedule 13D to be filed by the Stockholders pursuant
to the Securities Exchange Act of 1934, as amended) or the Stockholders'
performance of the terms of this Agreement or the validity or enforceability
of this Agreement; neither Stockholder has any plan or intention to sell or
otherwise dispose of any shares of Acquiror Common Stock to be received by the
undersigned pursuant to the Merger.
(h) Successors and Assigns. This Agreement shall be binding upon, and inure
to the benefit of, the parties hereto and their respective heirs, personal
representatives, successors, assigns and Affiliates, but shall not be
assignable by either party hereto without the prior written consent of the
other party hereto.
(i) Waiver. No party may waive any of the terms or conditions of this
Agreement except by a duly signed writing referring to the specific provision
to be waived.
(j) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law;
provided, however, that any matter involving the internal corporate affairs of
any party hereto shall be governed by the provisions of the General
Corporation Law of the State of Delaware.
(k) Entire Agreement. This Agreement constitutes the entire agreement and
supersedes all other and prior agreements and understandings, both written and
oral, among the parties hereto and their Affiliates.
(l) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
C-3
<PAGE>
IN WITNESS WHEREOF, the Stockholders have each executed this Agreement and
the Acquiror has caused this Agreement to be duly executed by an officer,
thereunto duly authorized, all as of the day and year first above written.
HALLIBURTON COMPANY
By: /s/ Lester L. Coleman
----------------------------------
Lester L. Coleman
Executive Vice President and
General Counsel
STOCKHOLDERS
/s/ S. Rutt Bridges
-------------------------------------
S. Rutt Bridges
/s/ Barbara Ann Bridges
-------------------------------------
Barbara Ann Bridges
C-4
<PAGE>
APPENDIX D
MORGAN STANLEY
MORGAN STANLEY & CO.
INCORPORATED
1585 BROADWAY
NEW YORK, NEW YORK 10036
(212) 761-4000
September 4, 1996
Board of Directors
Landmark Graphics Corporation
15150 Memorial Drive
Houston, Texas 77079-4304
Members of the Board:
We understand that Landmark Graphics Corporation ("Landmark" or the
"Company"), Halliburton Company ("Halliburton") and Halliburton Acq. Company,
a wholly-owned subsidiary of Halliburton ("Acquisition Sub"), have entered
into an Agreement and Plan of Merger, dated as of June 30, 1996 (the "Merger
Agreement"), which provides, among other things, for the merger (the "Merger")
of Landmark with and into Acquisition Sub. Pursuant to the Merger, the Company
will become a wholly-owned subsidiary of Halliburton and each outstanding
share of common stock, par value $0.05 per share (the "Company Common Stock"),
of Landmark, other than shares held in treasury or held by Halliburton or any
affiliate of Halliburton, will be converted into 0.5740 (the "Exchange Ratio")
shares of common stock, par value $2.50 per share ("Halliburton Common
Stock"), of Halliburton. The terms and conditions of the Merger are more fully
set forth in the Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to the holders of
shares of Company Common Stock.
For purposes of the opinion set forth herein, we have:
(i) analyzed certain publicly available financial statements and other
information of the Company;
(ii) analyzed certain publicly available financial statements and other
information of Halliburton;
(iii) analyzed certain internal financial statements and other financial
and operating data concerning the Company prepared by the management
of the Company;
(iv) analyzed certain internal financial statements and other financial and
operating data concerning Halliburton prepared by the management of
Halliburton;
(v) analyzed certain financial projections prepared by the management of
the Company;
(vi) analyzed certain financial projections prepared by the management of
Halliburton;
(vii) discussed the past and current operations and financial condition and
the prospects of the Company with senior executives of the Company;
(viii) discussed the past and current operations and financial condition
and the prospects of Halliburton with senior executives of
Halliburton and analyzed the pro forma impact of the Merger on
Halliburton's earnings per share, consolidated capitalization and
financial ratios;
(ix) reviewed the reported prices and trading activity for the Company
Common Stock;
(x) reviewed the reported prices and trading activity for the Halliburton
Common Stock;
D-1
<PAGE>
(xi) compared the financial performance of the Company and the prices,
trading activity and trading multiples of the Company Common Stock
with that of certain other comparable publicly-traded companies and
their securities;
(xii) compared the financial performance of Halliburton and the prices,
trading activity and trading multiples of the Halliburton Common
Stock with that of certain other comparable publicly-traded
companies and their securities;
(xiii) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
(xiv) participated in discussions and negotiations among representatives of
the Company, Halliburton and certain other parties and their
financial and legal advisors;
(xv) reviewed the Merger Agreement and certain related documents; and
(xvi) performed such other analyses as we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, we have assumed that they
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the future financial performance of the Company and
Halliburton. We have not made any independent valuation or appraisal of the
assets or liabilities of the Company or Halliburton, nor have we been
furnished with any such appraisals. We have assumed that the Merger will be
accounted for as a "pooling-of-interests" business combination in accordance
with U.S. generally accepted accounting principles and will qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code of 1986. We have also assumed that the Merger will be consummated in
accordance with the terms set forth in the Merger Agreement. Our opinion is
necessarily based on economic, market and other conditions as in effect on,
and the information made available to us as of, the date hereof.
We have acted as financial advisor to the Board of Directors of the Company in
connection with this transaction and will receive a fee for our services. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have
(a) provided financial advisory services to the Company and have earned fees
for the rendering of these services, and (b) provided financial advisory
services to Halliburton and received fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its
entirety in any filing made by the Company with the Securities and Exchange
Commission with respect to the Merger and the transactions related thereto. In
addition, we express no opinion or recommendation as to how the holders of
Company Common Stock should vote at the shareholders' meeting held in
connection with the Merger.
Based on the foregoing, we are of the opinion on the date hereof that the
Exchange Ratio pursuant to the Merger Agreement is fair from a financial point
of view to the holders of shares of Company Common Stock.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ L. Alex Lipe
-----------------------------------
L. Alex Lipe
Principal
D-2
