EXHIBIT 2
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT is dated as of February 25, 1998 by and
between Halliburton Company, a Delaware corporation (the "Parent"), and Dresser
Industries, Inc., a Delaware corporation (the "Grantee").
RECITALS:
The Grantee, the Parent and Newco propose to enter into a Merger
Agreement providing, among other things, for the Merger pursuant to the Merger
Agreement of Newco with and into the Grantee which shall be the surviving
corporation.
As a condition and inducement to the Grantee's willingness to enter
into the Merger Agreement, the Grantee has requested that the Parent agree, and
the Parent has agreed, to grant the Grantee the Option.
The Board of Directors of the Grantee has approved the Merger
Agreement, the Merger and this Agreement and has recommended approval of the
Merger Agreement by the holders of Common Stock of the Grantee.
The Board of Directors of the Parent has approved the Merger Agreement,
the Merger and this Agreement and has recommended approval of the Charter
Amendment and the Share Issuance by the holders of Parent Common Stock.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, the Parent and the Grantee agree as follows:
1. Capitalized Terms. Those capitalized terms used but not defined
herein that are defined in the Merger Agreement 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. Those capitalized terms used in this Agreement
that are not defined in the Merger Agreement are defined in Annex A hereto and
are used herein with the meanings ascribed to them therein.
2. The Option.
(a) Grant of Option. Subject to the terms and conditions
set forth herein, the Parent hereby grants to the Grantee an
irrevocable option to purchase, out of the authorized
but unissued Parent Common Stock, 39,388,700 shares of Parent Common
Stock (as adjusted as set forth herein) (the "Option Shares"), at the
Exercise Price.
(b) Exercise Price. The exercise price (the "Exercise Price")
of the Option shall be the lesser of (i) $44.00 per Option Share and
(ii) the Common Stock Exchange Ratio multiplied by the Closing Price of
the Parent Common Stock on the date of exercise of the Option.
(c) Term. The Option shall be exercisable at any time and from
time to time following the occurrence of an Exercise Event 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 Parent of the occurrence of an Exercise Event
and (iii) termination of the Merger Agreement in accordance with its
terms prior to the occurrence of an Exercise Event (the "Option Term");
provided, however, that the Option Term shall be extended until the
commencement of the Put Period if, at the end of the Option Term, the
events described in clauses (i), (ii) and (iii) of Section 9.05(e) of
the Merger Agreement have transpired and the acceptance or agreement
referenced in clause (iii) of such Section 9.05(e) has not been
terminated without consummation of the transactions contemplated
thereby. If so extended, the Option Term shall expire contemporaneously
with any termination of the acceptance or agreement referenced in
clause (iii) of such Section 9.05(e). If the Option is not theretofore
exercised, the rights and obligations set forth in this Agreement shall
terminate at the expiration of the Option Term.
(d) Exercise of Option. The Grantee may exercise the Option,
in whole or in part, at any time and from time to time during the
Option Term. Notwithstanding the expiration of the Option 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 Option Term.
(i) If the Grantee wishes to exercise the Option, it
shall send a written notice (an "Exercise Notice") (the date
of which being herein referred to as the "Notice Date") to the
Parent specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place
and a date (the "Closing Date") not earlier than three (3)
Business Days nor later than 15 Business Days from the Notice
Date for the closing of the purchase and sale pursuant to the
Option (the "Closing").
(ii) If the Closing cannot be effected by reason of
the application of any Law, Regulation or Order, the Closing
Date shall be extended to the tenth Business Day following the
expiration or termination of the restriction imposed by such
Law,
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Regulation or Order. Without limiting the foregoing, if prior
notification to, or Authorization of, any Governmental
Authority is required in connection with the purchase of such
Option Shares by virtue of the application of such Law,
Regulation or Order, the Grantee and, if applicable, the
Parent shall promptly file the required notice or application
for Authorization and the Grantee, with the cooperation of the
Parent, shall expeditiously process the same.
(iii) Notwithstanding Section 2(d)(ii), if the
Closing Date shall not have occurred within nine months after
the related Notice Date as a result of one or more
restrictions imposed by the application of any Law, Regulation
or Order, the exercise of the Option effected on the Notice
Date shall be deemed to have expired.
(e) Payment and Delivery of Certificates.
(i) At each Closing, the Grantee shall pay to the
Parent in immediately available funds by wire transfer to a
bank account designated by the Parent an amount equal to the
Exercise Price multiplied by the Option Shares to be purchased
on such Closing Date.
(ii) At each Closing, simultaneously with the
delivery of immediately available funds as provided in Section
5(a), the Parent shall deliver to the Grantee a certificate or
certificates representing the Option Shares to be purchased at
such Closing, which Option Shares shall be duly authorized,
validly issued, fully paid and nonassessable and free and
clear of all Liens, and the Grantee shall deliver to the
Parent 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.
(f) Certificates. Certificates for the Option Shares delivered
at each Closing shall be endorsed with a restrictive legend that 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
FEBRUARY 25, 1998. A COPY OF SUCH AGREEMENT WILL BE
PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY THE PARENT OF A WRITTEN REQUEST THEREFOR.
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A new certificate or certificates evidencing the same number of shares
of the Parent Common Stock will be issued to the Grantee in lieu of the
certificate bearing the above legend, and such new certificate shall
not bear such legend, insofar as it applies to the Securities Act, if
the Grantee shall have delivered to the Parent a copy of a letter from
the staff of the Commission, or an opinion of counsel in form and
substance reasonably satisfactory to the Parent and its counsel, to the
effect that such legend is not required for purposes of the Securities
Act.
(g) If at the time of issuance of any Parent Common Stock
pursuant to any exercise of the Option, the Parent shall have issued
any share purchase rights or similar securities to holders of Parent
Common Stock, then each Option Share purchased pursuant to the Option
shall also include rights with terms substantially the same as and at
least as favorable to the Grantee as those issued to other holders of
Parent Common Stock.
3. Adjustment Upon Changes in Capitalization, Etc.
(a) In the event of any change in the Parent 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 agreement 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 Parent Common Stock if
the Option had been exercised immediately prior to such event, or the
record date therefor, as applicable.
(b) If any additional shares of Parent Common Stock are issued
after the date of this Agreement (other than pursuant to an event
described Section 3(a) above), the number of shares of Parent Common
Stock then remaining subject to the Option shall be adjusted so that,
after such issuance of additional shares, such number of shares then
remaining subject to the Option, together with shares theretofore
issued pursuant to the Option, equals 15% of the number of shares of
Parent Common Stock then issued and outstanding; provided, however,
that the number of shares of Parent Common Stock subject to the Option
shall only be increased to the extent the Parent then has available
authorized but unissued and unreserved shares of Parent Common Stock,
(c) To the extent any of the provisions of this Agreement
apply to the Exercise Price, they shall be deemed to refer to the
Exercise Price as adjusted pursuant to this Section 3.
4. Retention of Beneficial Ownership. To the extent that the Grantee
shall exercise the Option, the Grantee shall, unless the Grantee shall exercise
the Put Right or the Alternative Put
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Right or the Parent shall exercise the Call Right or the Alternative Call Right,
retain Beneficial Ownership of the shares of Parent Common Stock so acquired
through the later of the end of the Call Period or the end of the Alternative
Call Period.
5. Repurchase at the Option of Grantee.
(a) At the request of the Grantee made at any time during a
period of sixty (60) days after the termination fee for which provision
is made in Section 9.05(e) of the Merger Agreement becomes payable (the
"Put Period"), the Parent (or any successor thereto) shall, at the
election of the Grantee (the "Put Right"), repurchase from the Grantee
(i) all or any portion of the Option that then remains unexercised (or
as to which the Option has been exercised but the Closing has not
occurred) and (ii) all or any portion of the shares of Parent 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 4 is referred to as the
"Put Date." Such repurchase shall be at an aggregate price (the "Put
Consideration") equal to the sum of:
(i) the aggregate Exercise Price paid by the Grantee
for any Option Shares which the Grantee owns and as to which
the Grantee is exercising the Put Right;
(ii) the excess, if any, of the Applicable Price over
the Exercise Price paid by the Grantee for each Option Share
as to which the Grantee is exercising the Put Right multiplied
by the number of such shares; and
(iii) the excess, if any, of (x) the Applicable Price
for each share of Parent Common Stock over (y) the Exercise
Price multiplied by the number of Unexercised Option Shares as
to which the Grantee is exercising the Put Right.
(b) At the request of the Grantee made at any time after the
first Exercise Event and ending on the First Anniversary of the Notice
Date (the "Alternative Put Period"), the Parent (or any successor
thereto) shall, at the election of the Grantee (the "Alternative Put
Right"), repurchase from the Grantee all or any portion of the shares
of Parent 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 4 is
referred to as the "Alternative Put Date." Such repurchase shall be at
an aggregate price (the "Alternative Put Consideration") equal to the
Exercise Price multiplied by the number of shares of Parent Common
Stock so purchased by the Parent and for which the Alternative Put
Right has been exercised.
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(c) If the Grantee exercises its rights under this Section 4,
the Parent shall, within five Business Days after the Put Date or the
Alternative Put Period, pay the Put Consideration or the Alternative
Put Consideration, as the case may be, to the Grantee in immediately
available funds, and the Grantee shall surrender to the Parent the
Option or portion of the Option and the certificates evidencing the
shares of Parent Common Stock purchased thereunder. The Grantee shall
warrant to the Parent that, immediately prior to the repurchase thereof
pursuant to this Section 4, the Grantee had sole record and Beneficial
Ownership of the Option or such shares, or both, as the case may be,
and that the Option or such shares, or both, as the case may be, were
then held free and clear of all Liens.
(d) If the Option has been exercised, in whole or in part, as
to any Option Shares subject to the Put Right or the Alternative Put
Right but the Closing thereunder has not occurred, the payment of the
Put Consideration or the Alternative Put Consideration shall, to that
extent, render such exercise null and void.
(e) Notwithstanding any provision to the contrary in this
Agreement, the Grantee may not exercise its rights pursuant to this
Section 4 in a manner that would result in the cash payment to the
Grantee of an aggregate amount under this Section 4 of more than $225
million, including the amount, if any, 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.
6. Repurchase at the Option of the Parent.
(a) To the extent the Grantee shall not have previously
exercised its rights under Section 5, at the request of the Parent made
at any time during the sixty (60) day period commencing at the
expiration of the Put Period (the "Call Period"), the Parent may
repurchase from the Grantee, and the Grantee shall sell, or cause to be
sold, to the Parent, all (but not less than all) of the shares of
Parent Common Stock acquired by the Grantee pursuant hereto and with
respect to which the Grantee has Beneficial Ownership (other than
Beneficial Ownership derived solely from the power to vote or direct
the voting of such Parent Common Stock) at the time of such repurchase
at a price per share equal to the greater of (A) the Current Market
Price and (B) the Exercise Price per share in respect of the shares so
acquired (such price per share multiplied by the number of shares of
Parent Common Stock to be repurchased pursuant to this Section 6 being
herein called the "Call Consideration"). The date on which the Parent
exercises its rights under this Section 6 is referred to as the "Call
Date."
(b) If (x) at the end of the Option Term (without giving
effect to any extension thereof) not all the events described in
clauses (i), (ii) and (iii) of Section 9.05(e) of the
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Merger Agreement have occurred or, (y) if at the end of the Option Term
(including giving effect to any extension thereof) all the events
referenced in clause (x) have occurred but the acceptance or agreement
referenced in clause (iii) of such Section 9.05(e) has been terminated
without consummation of the transactions contemplated thereby, then, at
the request of the Parent made at any time during the sixty (60) day
period commencing at the expiration of the Alternative Put Period (the
"Alternative Call Period"), the Parent may repurchase from the Grantee,
and the Grantee shall sell, or cause to be sold, to the Parent, all
(but not less than all) of the shares of Parent Common Stock acquired
by the Grantee pursuant hereto and with respect to which the Grantee
has Beneficial Ownership (other than Beneficial Ownership derived
solely from the power to vote or direct the voting of such Parent
Common Stock) at the time of such repurchase at a price per share equal
to the Exercise Price per share in respect of the shares so acquired
(such price per share multiplied by the number of shares of Parent
Common Stock to be repurchased pursuant to this Section 6 being herein
called the "Alternative Call Consideration"). The date on which the
Parent exercises its rights under this Section 6 is referred to as the
"Alternative Call Date."
(c) If the Parent exercises its rights under this Section 6,
the Parent shall, within five Business Days pay the Call Consideration
in immediately available funds, and the Grantee shall surrender to the
Parent certificates evidencing the shares of Parent Common Stock
purchased hereunder, and the Grantee shall warrant to the Parent that,
immediately prior to the repurchase thereof pursuant to this Section 6,
the Grantee had sole record and Beneficial Ownership of such shares and
that such shares were then held free and clear of all Liens.
7. Registration Rights.
(a) The Parent shall, if requested by the Grantee at any time
and from time to time during 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 required in order to permit the offering, sale and delivery of any
or all shares of Parent 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 Parent,
a "shelf" registration statement under Rule 415 under the Securities
Act or any successor provision, and the Parent shall use all reasonable
efforts to qualify such shares or other securities under any applicable
state securities laws. The Parent shall use all reasonable efforts to
cause each such registration statement to become effective, to obtain
all consents or waivers of other parties that 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
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disposition. The obligations of the Parent hereunder to file a
registration statement and to maintain its effectiveness may be
suspended for one or more periods of time not exceeding 60 days in the
aggregate if the Board of Directors of the Parent shall have determined
in good faith that the tiling of such registration or the maintenance
of its effectiveness would require disclosure of nonpublic information
that would materially and adversely affect the Parent. For purposes of
determining whether two requests have been made under this Section 7,
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.
(b) The Registration Expenses shall be for the account of the
Parent; provided, however, that the Parent shall not be required to pay
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; and provided, further, that, if at the time of such
withdrawal Grantee has learned of a material adverse change in the
results of operations, condition (financial or other), business or
prospects of the Parent as compared with the information known to the
Grantee at the time of its request and has withdrawn the request with
reasonable promptness following disclosure by the Parent of such
material adverse change, then the Grantee shall not be required to pay
any of such Registration Expenses and shall retain all remaining rights
to request registration.
(c) The Grantee shall provide all information reasonably
requested by the Parent for inclusion in any registration statement to
be filed hereunder. If during the Registration Period the Parent shall
propose to register under the Securities Act the offering, sale and
delivery of Parent Common Stock for cash for its own account or for any
other stockholder of the Parent pursuant to a firm underwriting, it
shall, in addition to the Parent's other obligations under this Section
7 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
Parent in writing that in its opinion the number of shares of Parent
Common Stock requested to be included in such registration exceeds the
number that can be sold in such offering, the Parent shall, after fully
including therein all securities to be sold by the Parent, 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 Parent.
(d) In connection with any offering, sale and delivery of
Parent Common Stock pursuant to a registration statement effected
pursuant to this Section 7, the Parent and the Grantee shall provide
each other and each underwriter of the offering with customary
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representations, warranties and covenants, including covenants of
indemnification and contribution.
8. First Refusal. Subject to the provisions of Section 4 herein, at any
time after the first occurrence of an Exercise Event and prior to the second
anniversary of the first purchase of shares of Parent Common Stock pursuant to
the Option, if the Grantee shall desire to sell, assign, transfer or otherwise
dispose of all or any of the Option Shares or other securities acquired by it
pursuant to the Option, it shall give the Parent 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
transaction. An Offeror's Notice shall be deemed an offer by the Grantee to the
Parent, which may be accepted, in whole but not in part, within ten 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 Parent shall be settled within ten Business Days of the date
of the acceptance of the other and the purchase price shall be paid to the
Grantee in immediately available funds. If the Parent shall fail or refuse to
purchase all the shares or other securities covered by an Offeror's Notice, the
Grantee may, within 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
Parent 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 8 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 Parent, (b) any disposition of Parent
Common Stock or other securities by a Person to whom the Grantee has assigned
its rights under the Option with the consent of the Parent, (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.
9. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement, in
no event shall the Grantee's Total Profit exceed $225 million and, if
it otherwise would exceed such amount, the Grantee, at its sole
election, shall either (i) deliver to the Parent for cancellation
Option Shares previously purchased by Parent, (ii) pay cash or other
consideration to the Parent or (iii) undertake any combination thereof,
so that the Grantee's Total Profit shall not exceed 225 million after
taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement,
this Stock Option may not be exercised for a number of Option shares
that would, as of the Notice Date,
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result in a Notional Total Profit of more than $225 million, and, if
exercise of the Option otherwise would exceed such amount, the Grantee,
at its sole option, may increase the Exercise Price for that number of
Option Shares set forth in the Exercise Notice so that the Notional
Total Profit shall not exceed $225 million; provided, however, that
nothing in this sentence shall restrict any exercise of the Option
otherwise permitted by this Section 9(b) on any subsequent date at the
Exercise Price set forth in Section 2(b).
10. Listing. If the Parent Common Stock or any other securities then
subject to the Option are then listed on the New York Stock Exchange, the
Parent, upon the occurrence of an Exercise Event, will promptly file an
application to list on the New York Stock Exchange the shares of the Parent
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.
11. Replacement of Agreement. Upon receipt by the Parent 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 Parent will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement shall constitute an additional
contractual obligation of the Parent, whether or not the Agreement so lost,
stolen, destroyed or mutilated shall at any time be enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided in the Merger
Agreement or as otherwise expressly provided herein, 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) 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 and therein) (i) constitutes the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, including without limitation any
conflicting provisions of the Confidentiality Agreement, between the
parties with respect to the subject matter hereof and
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(ii) is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
(d) 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.
(e) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware,
regardless of the Laws that might otherwise govern under applicable
principles of conflicts of law.
(f) 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.
(g) 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 sent by electronic transmission to the telecopier number
specified below:
If to the Parent to:
Halliburton Company
0000 Xxxxxxx Xxxxx
000 Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
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with a copy to:
Xxxxxx & Xxxxxx L.L.P.
2300 First City Tower
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx III
Telecopier No.: (000) 000-0000
If to Grantee to:
Dresser Industries, Inc.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Block
Telecopier No.: (000)000-0000
(h) Counterparts. This Agreement and any amendments hereto may
be executed in counterparts, each of which shall be deemed an original
and all of which taken together shall constitute but a single document.
(i) 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.
(j) Further Assurances. In the event of any exercise of
the Option by the Grantee, the Parent and the Grantee shall execute and
deliver all other documents and
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instruments and take all other action that may be reasonably necessary
in order to consummate the transactions provided for by such exercise.
(k) Specific Performance. The parties hereto hereby
acknowledge and agree that the failure of any party to this Agreement
to perform its agreements and covenants hereunder will cause
irreparable injury to the other party to this Agreement for which
damages, even if available, will not be an adequate remedy.
Accordingly, each of the parties hereto hereby consents to the granting
of equitable relief (including specific performance and injunctive
relief) by any court of competent jurisdiction to enforce any party's
obligations hereunder. The 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.
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IN WITNESS WHEREOF, the Parent 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.
DRESSER INDUSTRIES, INC.
By: /s/ _________________________
HALLIBURTON COMPANY
By: _________________________
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IN WITNESS WHEREOF, the Parent 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.
DRESSER INDUSTRIES, INC.
By: ________________________
HALLIBURTON COMPANY
By: /s/ ________________________
Xxxxx X. Xxxxx
President and Chief
Operating Officer
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ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Stock Option Agreement shall have
the meanings set forth below unless the context shall otherwise require:
"Agreement" shall mean this Stock Option Agreement.
"Alternative Call Consideration" shall have the meaning ascribed to
such term in Section 6(b).
"Alternative Call Date" shall have the meaning ascribed to such term in
Section 6(b).
"Alternative Call Period" shall have the meaning ascribed to such term
in Section 6(b).
"Alternative Call Right" shall have the meaning ascribed to such term
in Section 6(b).
"Alternative Put Consideration" shall have the meaning ascribed to such
term in Section 5(b).
"Alternative Put Date" shall have the meaning ascribed to such term in
Section 5(b).
"Alternative Put Period" shall have the meaning ascribed to such term
in Section 5(b).
"Alternative Put Right" shall have the meaning ascribed to such term in
Section 5(b).
"Applicable Price" means the highest of (i) the highest purchase price
per share paid pursuant to a tender or exchange offer made for shares of Parent
Common Stock after the date hereof and on or prior to the Put Date, (ii) the
price per share to be paid by any third Person for shares of Parent Common Stock
pursuant to an agreement for a Business Combination Transaction entered into on
or prior to the Put Date, and (iii) the Current Market Price. 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 Parent, which determination shall be conclusive for all
purposes of this Agreement.
"Beneficial Ownership," "Beneficial Owner" and "Beneficially Own" shall
have the meanings ascribed to them in Rule 13d-3 under the Exchange Act.
16
"Business Combination Transaction" shall mean (i) a consolidation,
exchange of shares or merger of the Parent with any Person, other than the
Grantee or one of its subsidiaries, and, in the case of a merger, in which the
Parent shall not be the continuing or surviving corporation, (ii) a merger of
the Parent with a Person, other than the Grantee or one of its Subsidiaries, in
which the Parent shall be the continuing or surviving corporation but the then
outstanding shares of Parent Common Stock shall be changed into or exchanged for
stock or other securities of the Parent or any other Person or cash or any other
property or the shares of Parent Common stock outstanding immediately before
such merger shall after such merger represent less than 50% of the common shares
and common share equivalents of the Parent outstanding immediately after the
merger or (iii) a sale, lease or other transfer of all or substantially all the
assets of the Parent to any Person, other than the Grantee or one of its
Subsidiaries.
"Call Consideration" shall have the meaning ascribed to such term in
Section 5 herein.
"Call Date" shall have the meaning ascribed to such term in Section 5
herein.
"Call Period" shall have the meaning ascribed to such term in Section 5
herein.
"Closing" shall have the meaning ascribed to such term in Section 2
herein.
"Closing Date" shall have the meaning ascribed to such term in Section
2 herein.
"Confidentiality Agreement" shall mean that certain Letter Agreement
between the parties hereto dated February 2, 1998.
"Current Market Price" shall mean, as of any date, the average of the
closing prices (or, if such securities should not trade on any trading day, the
average of the bid and asked prices therefor on such day) of the Parent Common
Stock as reported on the New York Stock Exchange Composite Tape during the ten
consecutive trading days ending on (and including) the trading day immediately
prior to such date or, if the shares of Parent Common Stock are not quoted
thereon, on The Nasdaq Stock Market or, if the shares of Parent Common Stock are
not quoted thereon, on the principal trading market (as defined in Regulation M
under the Exchange Act) on which such shares are traded as reported by a
recognized source during such ten Business Day period.
"Exercise Event" shall mean any of the events giving rise to a right of
termination of the Merger Agreement under Section 9.01(c) (breach), 9.01(g)
(failure to obtain stockholder approval), 9.01(i) (fiduciary out) or 9.01(k)
(change of recommendation); provided, however, that, in the case of the events
set forth in Sections 9.01(c) and 9.01(g), at the time of such events described
in Section 9.01(c) or prior to the Parent Stockholders' Meeting referenced in
Section 9.01(g), there shall also have been an Acquisition Proposal involving
the Parent or any of its Subsidiaries that, at
17
the time of such events or meeting, shall not have been (x) rejected by the
Parent and its Board of Directors or (y) withdrawn by the Person making such
Acquisition Proposal.
"Exercise Notice" shall have the meaning ascribed to such term in
Section 2(d)(i) herein.
"Exercise Price" shall have the meaning ascribed to such term in
Section 2 herein.
"Merger Agreement" shall mean that certain Agreement and Plan of Merger
dated as of the date hereof among Halliburton Company, a Delaware corporation,
Dresser Industries, Inc., a Delaware corporation, and Halliburton N.C., Inc., a
Delaware corporation and a wholly owned subsidiary of Halliburton Company.
"Newco" shall mean Halliburton N.C., Inc., a Delaware corporation and a
wholly owned subsidiary of Grantee.
"Notice Date" shall have the meaning ascribed to such term in Section 2
herein.
"Notional Total Profit" shall mean, with respect to any number of
Option Shares as to which the Grantee may propose to exercise the Option, the
Total Profit determined as of the date of the Exercise Notice assuming that the
Option were exercised on such date for such number of Option Shares and assuming
such Option Shares, together with all other Option Shares held by the Grantee
and its Affiliates as of such date, were sold for cash at the closing market
price for the Parent Common Stock as of the close of business on the preceding
trading day (less customary brokerage commissions).
"Offeror's Notice" shall have the meaning ascribed to such term in
Section 8 herein.
"Option" shall mean the option granted by the Parent to Grantee
pursuant to Section 2 herein.
"Option Shares" shall have the meaning ascribed to such term in Section
2 herein.
"Option Term" shall have the meaning ascribed to such term in Section 2
herein.
"Put Consideration" shall have the meaning ascribed to such term in
Section 4 herein.
"Put Date" shall have the meaning ascribed to such term in Section 4
herein.
"Put Period" shall have the meaning ascribed to such term in Section 4
herein.
"Put Right" shall have the meaning ascribed to such term in Section 4
herein.
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"Registration Expenses" shall mean the expenses associated with the
preparation and filing of any registration statement pursuant to Section 6
herein 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.), but excluding 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.
"Registration Period" shall mean the period of two years following the
first exercise of the Option by the Grantee.
"Total Profit" shall mean the aggregate (before income taxes) of the
following: (i) all amounts received by the Grantee pursuant to Sections 5 and 6
for the repurchase of all or part of the unexercised portion of the Option, (ii)
(A) the net cash amounts received by the Grantee pursuant to the sale of Option
Shares (or any other securities into which such Option Shares are converted or
exchanges) to any party not an Affiliate of the Grantee, less (B) the Grantee's
purchase price for such Option Shares and (iii) all amounts received by the
Grantee from the Parent pursuant to Section 9.05 (other than Section 9.05(f)) of
the Merger Agreement.
"Unexercised Option Shares" shall mean those Option Shares as to which
the Option remains unexercised from time to time.
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