
























                     HALLIBURTON ANNUAL PERFORMANCE PAY PLAN
                AS AMENDED AND RESTATED EFFECTIVE JANUARY 1, 1997












<PAGE>


                                      INDEX

ARTICLE I....................................................................  1
PURPOSE    1

ARTICLE II...................................................................  2
DEFINITIONS..................................................................  2

         2.1      Definitions................................................  2
                  -----------
         2.2      Number.....................................................  5
                  ------
         2.3      Headings...................................................  5
                  --------

ARTICLE III..................................................................  5
PARTICIPATION................................................................  5

         3.1      Participants...............................................  5
                  ------------
         3.2      Partial Plan Year Participation............................. 5
                  -------------------------------
         3.3      No Right to Participate..................................... 7
                  -----------------------
         3.4      Plan Exclusive.............................................  7
                  --------------
         3.5      Consent to Dispute Resolution..............................  7
                  -----------------------------


ARTICLE IV...................................................................  7
ADMINISTRATION...............................................................  7

ARTICLE V....................................................................  8
REWARD DETERMINATIONS........................................................  8

         5.1      Performance Measures.......................................  8
                  --------------------
         5.2      Performance Requirements...................................  8
                  ------------------------
         5.3      Reward Determinations....................................... 9
                  ---------------------
         5.4      Reward Opportunities ......................................  9
                  --------------------
         5.5      Discretionary Adjustments..................................  9
                  -------------------------
         5.6      Discretionary Bonuses...................................... 10
                  ---------------------

ARTICLE VI..................................................................  10
DISTRIBUTION OF REWARDS.....................................................  10

         6.1      Form and Timing of Payment................................  10
                  --------------------------
         6.2      Excess Remuneration.......................................  10
                  -------------------
         6.3      Elective Deferral.........................................  11
                  -----------------
         6.4      Tax Withholding...........................................  11
                  ---------------
         6.5      No Interest or Dividend Equivalents.......................  11
                  -----------------------------------
         6.6      Lump Sum Payments.........................................  11
                  -----------------
<PAGE>
ARTICLE VII.................................................................. 12
TERMINATION OF EMPLOYMENT.................................................... 12

         7.1      Termination of Service During Plan Year.................... 12
                  --------------------------------------- 
         7.2      Termination of Service After End of Plan Year But Prior 
                  -------------------------------------------------------
                  to Full Payment............................................ 13
                  ---------------
ARTICLE VIII................................................................. 13
RIGHTS OF PARTICIPANTS AND BENEFICIARIES..................................... 13

         8.1      Status as a Participant or Beneficiary..................... 13
                  --------------------------------------
         8.2      Employment................................................. 14
                  ----------
         8.3      Nontransferability......................................... 14
                  ------------------
         8.4      Nature of Plan............................................. 14
                  --------------

ARTICLE IX................................................................... 15
CORPORATE CHANGE............................................................. 15

ARTICLE X.................................................................... 16
AMENDMENT AND TERMINATION.................................................... 16

ARTICLE XI................................................................... 16
MISCELLANEOUS................................................................ 16
         11.1     Governing Law.............................................. 16
                  ------------- 
         11.2     Severability............................................... 16
                  ------------
         11.3     Successor.................................................. 16
                  ---------
         11.4     Effective Date............................................. 17
                  --------------


<PAGE>



                                   HALLIBURTON

                           ANNUAL PERFORMANCE PAY PLAN


         The Compensation Committee of Directors of Halliburton Company,  having
heretofore  established  the Halliburton  Annual  Performance Pay Plan (formerly
known as the Annual  Reward  Plan),  pursuant to the  provisions of Article X of
said Plan,  hereby  amends and restates  said Plan to be effective in accordance
with the provisions of Section 11.4 hereof.

                                    ARTICLE I

                                     PURPOSE

         The purpose of the Halliburton Annual Performance Pay Plan (the "Plan")
is to  reward  management  and  other  key  employees  of the  Company  and  its
Affiliates for improving financial results which drive the creation of value for
shareholders of the Company and thereby, serve to attract,  motivate, reward and
retain high caliber employees required for the success of the Company.  The Plan
provides  a means to link  total and  individual  cash  compensation  to Company
performance,  as measured by Cash Value Added  ("CVA") and,  where  appropriate,
other CVA-related  performance  measures on the basis of Participant  sharing in
CVA improvement,  a demonstrated  driver of shareholder  value. In addition,  to
further relate  compensation earned under the Plan to shareholder value creation
and to provide  incentives for Participants to focus on a time frame longer than
one year, the Plan provides that one-half of incentive compensation earned for a
Plan  Year  will be paid in cash  following  the end of the  Plan  Year  and the
remaining  one-half will be converted into Common Stock  Equivalents and paid in
cash  installments  in the second  and third  years  after the Plan  Year,  each
installment based on the value at the time of payment of one-half of such Common
Stock Equivalents.



                                       1
<PAGE>


                                   ARTICLE II

                                   DEFINITIONS

         2.1      Definitions.  Where the following words  and phrases appear in
the Plan, they shall have the respective  meanings set forth below, unless their
context clearly indicates to the contrary.

                  "Affiliate"  shall  mean  a  Subsidiary  of the  Company  or a
         division or designated group of the Company or a Subsidiary.

                  "Base  Salary"  shall  mean  the  regular  cash   compensation
         actually paid during a Plan Year to a Participant for services rendered
         or labor performed while participating in the Plan,  including base pay
         a Participant  could have received in cash in lieu of (i) contributions
         made on such Participant's behalf to a qualified Plan maintained by the
         Company  or to any  cafeteria  plan  under  Section  125  of  the  Code
         maintained by the Company and (ii)  deferrals of  compensation  made at
         the  Participant's  election  pursuant to a plan or  arrangement of the
         Company or an Affiliate,  but excluding any Rewards under this Plan and
         any other bonuses, incentive pay or special awards.

                  "Beneficiary" shall mean the person,  persons, trust or trusts
         entitled by Will or the laws of descent and distribution to receive the
         benefits  specified  under the Plan in the  event of the  Participant's
         death prior to full payment of a Reward.

                  "Board of Directors" shall mean  the Board of Directors of the
         Company.

                  "Business   Unit  CVA"  shall  mean  the   respective  CVA  of
         designated  business  units,  each calculated on an aggregate basis for
         their respective operations.

                  "Cause" shall mean (i) the conviction of the  Participant of a
         felony  under  Federal law or the law of the state in which such action
         occurred,  (ii)  dishonesty in course of fulfilling  the  Participant's
         employment  duties or (iii) the  disclosure by the  Participant  to any
         unauthorized  person or competitor of any  confidential  information or
         confidential knowledge as to the business or affairs of the Company and
         its Affiliates.

                  "CEO" shall mean the Chief Executive Officer of the Company.

                  "Code"  shall  mean the  Internal  Revenue  Code  of  1986, as
         amended.

                  "Committee" shall mean the Compensation Committee of Directors
         of the  Company,  appointed  by the Board of  Directors  from among its
         members,  no member of which  shall be an  employee of the Company or a
         Subsidiary.

                                       2
<PAGE>

                  "Common  Stock" shall mean the common  stock,  par value $2.50
         per share, of the Company.

                  "Common  Stock  Equivalent"  shall  mean  a unit  entitling  a
         Participant  to receive at a  designated  time or times in the future a
         cash  payment  equal to the Fair Market  Value at such time or times of
         one share of Common Stock.

                  "Company" shall mean Halliburton Company and its successors.

                  "Company CVA"  shall mean  CVA  calculated  on a  consolidated
         basis.

                  "Corporate  Change" shall have the meaning ascribed in Article
         II,  Paragraph (h) of the Company's 1993 Stock and Long-Term  Incentive
         Plan, as amended.

                  "CVA" shall mean the  difference  between  operating cash flow
         and a capital  charge,  calculated in accordance  with the criteria and
         guidelines set forth in the Corporate Policy entitled "Cash Value Added
         (CVA)," as in effect at the time any such calculation is made.

                  "CVA Drivers" shall mean such other  measurements of operating
         performance  as may be  approved  by the CEO  which are  applicable  to
         Participants within particular Participant Categories.

                  "Deferred   Payment  Date"  shall  mean,  with  respect  to  a
         particular  Plan Year,  the last business day of February of the second
         and third years following the end of such Plan Year.

                  "Dispute   Resolution  Program"  shall  mean  the  Halliburton
         Dispute Resolution Plan.

                  "ERISA" shall mean the Employee Retirement Income Security Act
         of 1974, as amended.

                  "Executive  Committee"  shall mean the Executive  Committee of
         the Company.

                  "Fair Market  Value" shall mean the average  closing price per
         share of the Common  Stock on the New York Stock  Exchange  (or, if the
         Common Stock is not then listed on such  exchange,  such other national
         securities  exchange on which the Common  Stock is then listed) for the
         ten (10) trading days immediately  preceding a Payment Date, a Deferred
         Payment Date or such other date on which the Common  Stock  Equivalents
         are to be valued pursuant to the Plan  provisions.  If the Common Stock
         is not publicly traded on a national  securities exchange at the time a
         determination  of its  value  is  required  to be made  hereunder,  the
         determination  of its Fair Market Value shall be made by the  Committee
         in such manner as it deems appropriate.

                                       3
<PAGE>

                  "Group CVA" shall mean the respective  CVA of the  Halliburton
         Energy Group and the Engineering and Construction  Services Group, each
         calculated on an aggregate basis for their respective operations.

                  "Key Employees" shall mean regular, full-time employees of the
         Company or an Affiliate below the Officer level.

                  "Officer"  shall  mean a full  officer  of the  Company  or an
         Affiliate.

                  "Participant" shall mean any active employee of the Company or
         an Affiliate who participates in the Plan pursuant to the provisions of
         Article III hereof. An employee shall not be eligible to participate in
         the Plan while on a leave of absence.

                  "Participant  Category"  shall mean a grouping of Participants
         determined in accordance with the applicable provisions of Article III.

                  "Payment Date" shall mean,  with respect to a particular  Plan
         Year,  the last business day of February of the year next following the
         end of such Plan Year.

                  "Performance  Goals" shall mean,  for a particular  Plan Year,
         established levels of applicable Performance Measures.

                  "Performance   Measures"  shall  mean  the  criteria  used  in
         determining  Performance Goals for particular  Participant  Categories,
         which may include one or more of the following: Company CVA, Group CVA,
         Business Unit CVA and CVA Drivers.

                  "Plan" shall mean the Halliburton  Annual Performance Pay Plan
         (formerly  known as the  Halliburton  Company  Annual  Reward  Plan) as
         amended and  restated  effective  January 1, 1997,  and as the same may
         thereafter be amended from time to time.

                  "Plan Year" shall mean the calendar  year ending  December 31,
         1995 and each subsequent calendar year thereafter.

                  "Reward"   shall   mean  the   dollar   amount  of   incentive
         compensation  payable to a  Participant  under the Plan for a Plan Year
         determined in accordance with Section 5.3.

                  "Reward   Opportunity"   shall  mean,  with  respect  to  each
         Participant Category,  incentive reward payment amounts, expressed as a
         percentage  of Base  Salary,  which  corresponds  to various  levels of
         pre-established  Performance Goals,  determined  pursuant to the Reward
         Schedule.

                  "Reward  Schedule"  shall mean the  schedule  which aligns the
         level of  achievement  of  applicable  Performance  Goals  with  Reward
         Opportunities  for a  particular  Plan  Year,  such  that the  level of
         achievement of the pre-established Performance Goals at the end of such
         Plan Year will determine the actual Reward.

                                       4
<PAGE>


                  "Section 16  Officer"  shall mean an officer who is subject to
         Section 16 of the Securities Exchange Act of 1934, as amended,  and the
         rules promulgated thereunder.

                  "Subsidiary"  shall mean any corporation 50 percent or more of
         whose voting power is owned, directly or indirectly, by the Company.

         2.2      Number.  Wherever  appropriate   herein,  words  used  in  the
singular  shall be considered to include the plural and words used in the plural
shall be considered to include the singular.

         2.3      Headings.  The  headings of  Articles and  Sections herein are
included solely for  convenience,  and if there is any conflict between headings
and the text of the Plan, the text shall control.

                                   ARTICLE III

                                  PARTICIPATION

         3.1      Participants.    Active  employees  who  are  members  of  the
Executive  Committee  and Section 16 Officers as of the  beginning  of each Plan
Year shall be Participants for such Plan Year. In addition,  such other Officers
and Key Employees as may be designated annually as Participants by the CEO prior
to the last day of February each Plan Year shall be  Participants  for such Plan
Year.

         3.2      Partial Plan Year Participation.  If, after the beginning of a
Plan Year, an employee who was not  previously a Participant  for such Plan Year
(i) is newly  appointed or elected as a member of the  Executive  Committee or a
Section  16  Officer or (ii)  returns  to active  employment  as a member of the
Executive  Committee  or as a Section 16 Officer  following  a leave of absence,
such employee  shall become a Participant  effective  with such  appointment  or
election or return to active service, as the case may be, for the balance of the

                                       5
<PAGE>

Plan Year, on a prorated  basis,  unless the Committee shall  determine,  in its
sole discretion,  that the participation shall be delayed until the beginning of
the next Plan Year.  If, after the  beginning of the Plan Year,  (i) a person is
newly elected or appointed as an Officer (other than a Section 16 Officer) or is
newly hired, promoted or transferred into a position in which he or she is a Key
Employee, or (ii) an employee who was not previously a Participant for such Plan
Year  returns  to active  employment  as an  Officer  (other  than a Section  16
Officer)  or a Key  Employee  following  a leave of  absence,  the  CEO,  or his
delegate, may designate in writing such person as a Participant for the pro rata
portion of such Plan Year beginning on the first day of the month following such
designation.
         If an employee who has previously  been designated as a Participant for
a particular  Plan Year takes a leave of absence  during such Plan Year,  all of
such  Participant's  rights to a Reward for such Plan Year  shall be  forfeited,
unless  the  Committee  (with  respect to a  Participant  who is a member of the
Executive  Committee  or a Section 16 Officer)  or the CEO (with  respect to any
other Participant) shall determine that such Participant's  Reward for such Plan
Year shall be prorated  based upon that portion of the Plan Year during which he
or she was an active  Participant,  in which  case the  prorated  portion of the
Reward shall be paid in accordance with the applicable provisions of Article VI.
         Each  Participant  shall be assigned to a  Participant  Category at the
time  he  or  she  becomes  a  Participant  for a  particular  Plan  Year.  If a
Participant  thereafter  incurs a change in status due to  promotion,  demotion,
reassignment  or transfer,  (i) the  Committee,  in the case of the CEO or other
Section 16 Officer or (ii) the CEO,  or his  delegate,  in the case of any other
Participant, may approve in writing such adjustment in such Participant's Reward


                                       6
<PAGE>

Opportunity as deemed appropriate under the circumstances (including termination
of  participation  in the  Plan  for  the  remainder  of the  Plan  Year),  such
adjustment  to be made on a pro rata  basis  for the  balance  of the Plan  Year
effective with the first day of the month  following such approval,  unless some
other effective date is specified.

         3.3      No Right to Participate.  Except as provided  in Sections  3.1
and 3.2, no Participant  or other  employee of the Company  shall,  at any time,
have a right to  participate  in the Plan  for any  Plan  Year,  notwithstanding
having previously participated in the Plan.

         3.4      Plan  Exclusive.  No employee shall simultaneously participate
in this Plan and in any  other short-term  incentive plan of the  Company  or an
Affiliate unless such employee's participation in such other plan is approved by
the CEO, or his delegate.

         3.5  Consent  to  Dispute   Resolution.   Participation   in  the  Plan
constitutes  consent by the  Participant to be bound by the terms and conditions
of the Dispute  Resolution Program which in substance requires that all disputes
arising  out of or in any way  related  to  employment  with the  Company or its
Affiliates,  including any disputes concerning the Plan, be resolved exclusively
through such program, which includes binding arbitration as the last step.

                                   ARTICLE IV

                                 ADMINISTRATION

         Each Plan Year,  the Committee  shall  establish the basis for payments
under the Plan in relation to given  Performance  Goals, as more fully described
in Article V hereof,  and,  following  the end of each Plan Year,  determine the
actual Reward payable for each Participant Category. The Committee is authorized
to construe and  interpret  the Plan,  to  prescribe,  amend and rescind  rules,
regulations and procedures  relating to its administration and to make all other


                                       7
<PAGE>

determinations  necessary or advisable for  administration  of the Plan. The CEO
shall have such authority as is expressly provided in the Plan. In addition,  as
permitted  by  law,  the  Committee  and  the CEO  may  delegate  such of  their
respective  authority  granted under the Plan as deemed  appropriate;  provided,
however,  that (i) the Committee may not delegate its authority  with respect to
matters relating to the CEO and other Section 16 Officers and (ii) the Committee
and the CEO may not delegate their respective  authority under Article V hereof.
Decisions  of the  Committee  and the CEO,  or their  respective  delegaterning 
accordance with the authority granted hereby or delegated  pursuant hereto shall
be  conclusive  and  binding.  Subject  only  to  compliance  with  the  express
provisions hereof, the Committee, the CEO and their respective delegater may act
in their sole and  absolute  discretion  with  respect to matters  within  their
authority under the Plan.

                                    ARTICLE V

                              REWARD DETERMINATIONS

         5.1      Performance Measures.   CVA shall  be the  primary Performance
Measure  in  determining  Performance  Goals  for any Plan  Year.  In  addition,
appropriate  CVA Drivers  applicable to particular  Participants  within certain
Participant Categorier may also be used as Performance Measures.

         5.2      Performance Requirements. Prior to the last day of February of
each Plan Year,  (i) the  Committee  shall  approve the Company CVA,  applicable
Group  CVA and  applicable  Business  Unit CVA  Performance  Goals  for  certain
Participant  Categorier  and the  CEO  shall  approve  appropriate  CVA  Drivers
applicable  to certain  Participants  and (ii) the Committee  shall  establish a
Reward Schedule which aligns the level of achievement of applicable  Performance


                                       8
<PAGE>

Goals  with  Reward  Opportunitier,  such that the level of  achievement  of the
pre-established Performance Goals at the end of the Plan Year will determine the
actual Reward.

         5.3      Reward  Determinations.  After the end of each Plan  Year, (i)
the Committee shall  determine the extent to which the Performance  Goals (other
than CVA Drivers) have been achieved (ii) and the CEO shall determine the extent
to which the applicable  CVA Drivers have been  achieved,  and the amount of the
Reward  shall be computed for each  Participant  in  accordance  with the Reward
Schedule.

         5.4      Reward  Opportunitier.  The established Reward  Opportunitier 
may vary in relation to the  Participant  Categorier and within the  Participant
Categorier.  In the event a Participant changes Participant  Categorier during a
Plan  Year,  the  Participant's   Reward  Opportunitier  shall  be  adjusted  in
accordance with the applicable provisions of Section 3.2.

         5.5      Discretionary Adjustments. Once established, Performance Goals
will not be changed during the Plan Year. However, if the Committee, in its sole
and  absolute  discretion,  determines  that  there has been (i) a change in the
business,  operations,  corporate  or  capital  structure,  (ii) a change in the
manner in which  business is  conducted  or (iii) any other  material  change or
event which will impact one or more Performance  Goals in a manner the Committee
did not intend, then the Committee may, reasonably  contemporaneously  with such
change  or  event,  make  such  adjustments  as it shall  deem  appropriate  and
equitable  in  the  manner  of  computing  the  relevant   Performance  Measures
applicable  to such  Performance  Goal or  Goals  for the Plan  Year;  provided,
however,  that the CEO shall be authorized,  subject to the review and oversight
of the Committee, to make adjustments in the manner of computing one or more CVA


                                       9
<PAGE>

Drivers if, when  evaluated in  accordance  with the  standards set forth in the
preceding  sentence,  he shall  deem  such  adjustments  to be  appropriate  and
equitable.

         5.6      Discretionary  Bonuses.   Notwithstanding any  other provision
contained  herein to the contrary,  the Committee  may, in its sole  discretion,
make such other or additional  bonus  payments to a Participant as it shall deem
appropriate.

                                   ARTICLE VI

                             DISTRIBUTION OF REWARDS

         6.1      Form  and Timing  of Payment.  Except  as  otherwise  provided
below,  one-half  of the  amount  of each  Reward  shall  be paid in cash on the
Payment Date, or as soon  thereafter  as  practicable.  Payment of the remaining
amount  of the  Reward  shall  be  deferred  and  paid in  accordance  with  the
provisions set forth below.
         The  remaining  one-half of the Reward shall be  converted  into Common
Stock  Equivalents,  the number of which shall be  determined  by using the Fair
Market  Value per share of the Common Stock as of the Payment  Date,  rounded to
the next  even-numbered  whole share.  A cash  payment  equal to the Fair Market
Value of  one-half  of the Common  Stock  Equivalents  as of the first  Deferred
Payment Date shall be made on such date, or as soon  thereafter as  practicable;
and a cash payment equal to the Fair Market Value of the remaining  Common Stock
Equivalents as of the second  Deferred  Payment Date shall be made on such date,
or as soon thereafter as practicable.

         6.2      Excess Remuneration. Notwithstanding the provisions of Section
6.1, the Committee may, in its discretion,  with respect to a Participant who is
a "covered employee" for purposes of Section 162(m) of the Code,  determine that
payment  of  that  portion  of  a  Reward  which  would   otherwise  cause  such


                                       10
<PAGE>

Participant's   compensation   to  exceed  the   limitation  on  the  amount  of
compensation  deductible  by the  Company in any taxable  year  pursuant to such
Section 162(m), shall be deferred until such Participant is no longer a "covered
employee."

         6.3      Elective Deferral.  Nothing herein shall be deemed to preclude
a Participant's election to defer receipt of a  percentage  of his or her Reward
beyond the time such amount  would have been payable  hereunder  pursuant to the
Halliburton Elective Deferral Plan or other similar plan.

         6.4      Tax  Withholding.  The Company or employing  entity  through  
which payment of a Reward is to be made shall have  the right to deduct from any
payment  hereunder  any amounts that Federal,  state,  local or foreign tax laws
require with respect to such payments.

         6.5      No Interest or Dividend  Equivalents.  No interest or dividend
equivalents  shall be  accrued  or paid  under  this  Plan on the  amount of any
portion of a Reward as to which distribution is deferred.
         
         6.6      Lump Sum Payments.  Notwithstanding  the provisions of Section
6.1,the  CEO may,  from time to time,  determine  that  Participants  in certain
designated Participant Categories below the Officer level are to receive payment
of their  respective  Rewards in a lump sum on the  Payment  Date,  rather  than
pursuant to the deferral provisions of Section 6.1.
         Notwithstanding  the  provisions  of  Section  6.1,  in  the  event  of
termination  of a  Participant's  employment for any reason other than death (in
which event payment shall be made in accordance  with the applicable  provisions
of Article  VII),  such  Participant  shall receive the amount of any Reward (or
prorated  portion  thereof) which is payable pursuant to Section 7.1, and/or the
remaining  unpaid portion of any Reward which is payable pursuant to Section 7.2


                                       11
<PAGE>

in lump sum  payment,  unless the  Committee  (with  respect to the CEO or other
Section 16 Officer)  or the CEO (with  respect to any other  Participant)  shall
determine  that  such  amounts  shall be paid in  accordance  with the  deferral
provisions of Section 6.1. In addition,  the CEO (except with respect to himself
or other Section 16 Officers,  in which case such authorization shall be made by
the Committee) may, on a case by case basis to facilitate  Plan  administration,
authorize  the  lump sum cash  payment  of the  amount  of a Reward  and/or  the
remaining  unpaid  portion  of a Reward in lieu of the  deferral  provisions  of
Section  6.1, if the amount of such payment is deemed to be too small to justify
its deferral.
         Lump sum payment  shall be paid in cash on the Plan Year  Payment  Date
with respect to the Reward (or the  prorated  portion  thereof)  earned for such
Plan  Year.  With  respect to lump sum  payment of the unpaid  amount of Rewards
earned for prior Plan Years,  the aggregate Fair Market Value of a Participant's
remaining Common Stock Equivalents for such Plan Years shall be determined as of
the  Participant's  termination  date  or the  date  the  lump  sum  payment  is
authorized  pursuant  to the  last  sentence  of  the  preceding  paragraph,  as
applicable, and paid in cash as soon thereafter as practicable.

                                   ARTICLE VII

                            TERMINATION OF EMPLOYMENT

         7.1      Termination  of Service During  Plan  Year.  In  the  event  a
Participant's  employment is terminated prior to the last business day of a Plan
Year for any reason other than death,  normal  retirement  at or after age 65 or
disability (as determined by the CEO or his delegate), all of such Participant's
rights to a Reward for such Plan Year shall be  forfeited,  unless the Committee
(with respect to a  Participant  who was the CEO or other Section 16 Officer) or


                                       12
<PAGE>

the CEO  (with  respect  to any other  Participant)  shall  determine  that such
Participant's  Reward  for such  Plan Year  shall be  prorated  based  upon that
portion of the Plan Year during which he or she was a Participant, in which case
the  prorated  portion  of the  Reward  shall  be paid in  accordance  with  the
applicable  provisions of Article VI. In the case of death during the Plan Year,
the  prorated  amount  of  such  Participant's  Reward  shall  be  paid  to  the
Participant's  estate,  or if there is no  administration  of the estate, to the
heirs at law, on the Payment Date, or as soon thereafter as practicable.  In the
case of disability or normal  retirement at or after age 65, the prorated amount
of a  Participant's  Reward  shall be paid in  accordance  with  the  applicable
provisions of Article VI.

         7.2      Termination of  Service  After End of Plan  Year But Prior to 
Full Payment.  If a Participant's  employment is terminated for any reason other
than  termination  for Cause the unpaid  amount of any Reward  applicable to any
previous  Plan Year  shall be paid to the  Participant  in  accordance  with the
applicable  provisions of Article VI, except in the case of death, in which case
the amount of the Reward then unpaid shall be paid to such Participant's estate,
or of there is no  administration of the estate, to the heirs at law, as soon as
practicable.
         If a  Participant's  employment  is terminated  for Cause,  all of such
Participant's  rights to the  unpaid  amount  of any  Reward  applicable  to any
previous Plan Year shall be forfeited.

                                  ARTICLE VIII

                    RIGHTS OF PARTICIPANTS AND BENEFICIARIES

         8.1      Status as a  Participant or Beneficiary.  Neither  status as a
Participant  or Beneficiary  shall be construed as a commitment  that any Reward
will be paid or payable under the Plan.

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         8.2      Employment.  Nothing contained in  the Plan or in any document
related to the Plan or to any Reward shall confer upon any Participant any right
to continue as an  employee or in the employ of the Company or an  Affiliate  or
constitute  any  contract or  agreement  of  employment  for a specific  term or
interfere  in any way with the right of the  Company or an  Affiliate  to reduce
such  person's  compensation,  to change the position  held by such person or to
terminate the employment of such person, with or without cause.

         8.3      Nontransferability.  No benefit payable under, or interest in,
this Plan  shall be subject in any  manner to  anticipation,  alienation,  sale,
transfer,  assignment,  pledge,  encumbrance  or charge  and any such  attempted
action  shall be void and no such  benefit or interest  shall be, in any manner,
liable  for,  or  subject  to,  debts,  contracts,  liabilities  or torts of any
Participant or Beneficiary; provided, however, that, nothing in this Section 8.3
shall  prevent  transfer  (i) by Will,  (ii) by  applicable  laws of descent and
distribution or (iii) pursuant to an order that satisfies the requirements for a
"qualified  domestic  relations  order"  as such  term  is  defined  in  section
206(d)(3)(B) of ERISA and section  414(p)(1)(A) of the Code,  including an order
that  requires  distributions  to an  alternate  payee prior to a  Participant's
"earliest retirement age" as such term is defined in section 206(d)(3)(E)(ii) of
ERISA and section 414(p)(4)(B) of the Code. Any attempt at transfer,  assignment
or other  alienation  prohibited by the preceding  sentence shall be disregarded
and all amounts  payable  hereunder  shall be paid only in  accordance  with the
provisions of the Plan.

         8.4      Nature of Plan.  No  Participant,  Beneficiary or other person
shall have any right,  title or interest in any fund or in any specific asset of
the Company or any Affiliate by reason of any Reward  hereunder.  There shall be
no funding of any benefits which may become payable hereunder. Nothing contained


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in the Plan (or in any document related  thereto),  nor the creation or adoption
of the Plan,  nor any action taken  pursuant to the provisions of the Plan shall
create,  or be  construed  to  create,  a  trust  of  any  kind  or a  fiduciary
relationship   between  the  Company  or  an  Affiliate  and  any   Participant,
Beneficiary or other person.  To the extent that a  Participant,  Beneficiary or
other  person  acquires  a right to  receive  payment  with  respect to a Reward
hereunder,  such  right  shall be no  greater  than the  right of any  unsecured
general creditor of the Company or other employing  entity,  as applicable.  All
amounts  payable  under the Plan  shall be paid from the  general  assets of the
Company or employing entity,  as applicable,  and no special or separate fund or
deposit  shall be  established  and no  segregation  of assets  shall be made to
assure payment of such amounts.  Nothing in the Plan shall be deemed to give any
employee any right to participate in the Plan except in accordance herewith.

                                   ARTICLE IX

                                CORPORATE CHANGE

         In the event of a Corporate Change, (i) with respect to a Participant's
Reward  Opportunity  for the Plan Year in which the Corporate  Change  occurred,
such  Participant  shall be entitled to an immediate  cash payment  equal to the
maximum  amount of Reward he or she would have been  entitled to receive for the
Plan Year,  prorated to the date of the Corporate Change;  and (ii) with respect
to Rewards earned in prior Plan Years which have not been paid in full, the Fair
Market Value of each  Participant's  remaining Common Stock  Equivalents for all
such Plan Years shall be determined as of the Corporate  Change and paid in cash
immediately.


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                                    ARTICLE X

                            AMENDMENT AND TERMINATION

         Notwithstanding  anything herein to the contrary, the Committee may, at
any time,  terminate  or, from time to time  amend,  modify or suspend the Plan;
provided, however, that, without the prior consent of the Participants affected,
no such action may adversely  affect any rights or  obligations  with respect to
any Rewards  theretofore  earned for a particular Plan Year,  whether or not the
amounts of such Rewards  have been  computed and whether or not such Rewards are
then payable.

                                   ARTICLE XI

                                  MISCELLANEOUS

         11.1     Governing  Law.  The  Plan  and all  related  documents  shall
be governed  by, and  construed  in  accordance  with,  the laws of the State of
Texas,  without  giving  effect to the  principles  of conflicts of law thereof,
except to the extent preempted by federal law. The Federal Arbitration Act shall
govern all matters with regard to arbitrability.

         11.2     Severability.  If  any  provision  of the  Plan shall  be held
illegal or invalid for any  reason,  said  illegality  or  invalidity  shall not
affect the remaining provisions hereof;  instead,  each provision shall be fully
severable  and the Plan shall be  construed  and  enforced as if said illegal or
invalid provision had never been included herein.

         11.3     Successor. All obligations of the Company under the Plan shall
be  binding  upon and inure to the  benefit  of any  successor  to the  Company,
whether the  existence  of such  successor is the result of a direct or indirect
purchase,  merger,  consolidation,  or otherwise, of all or substantially all of
the business and/or assets of the Company.

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         11.4 Effective  Date.  This amendment and restatement of the Plan shall
be effective  from and after  January 1, 1997,  and shall remain in effect until
such time as it may be terminated or amended pursuant to Article X.


