Annual Reward Plan - Halliburton Co.


                     HALLIBURTON COMPANY ANNUAL REWARD PLAN



















                                      INDEX

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

 ARTICLE II..................................................................  1
 DEFINITIONS.................................................................  1

      2.1      Definitions...................................................  1
      2.2      Number........................................................  4
      2.3      Headings......................................................  4

 ARTICLE III.................................................................  4
 PARTICIPATION...............................................................  4

      3.1      Participants..................................................  4
      3.2      Partial Plan Year Participation...............................  4
      3.3      No Right to Participate.......................................  5
      3.4      Plan Exclusive................................................  5

 ARTICLE IV..................................................................  5
 ADMINISTRATION..............................................................  5

 ARTICLE V...................................................................  6
 REWARD DETERMINATIONS.......................................................  6

      5.1    Performance Measure.............................................  6
      5.2    Reward Determinations...........................................  6
      5.3    Reward Opportunities............................................  7
      5.4    Discretionary Adjustments ......................................  7
      5.5    Discretionary Bonuses...........................................  7

 ARTICLE VI..................................................................  7
 DISTRIBUTION OF REWARDS.....................................................  7

      6.1    Form and Timing of Payment......................................  7
      6.2    Mandatory Deferral..............................................  8
      6.3    Elective Deferral...............................................  8
      6.4    Tax Withholding.................................................  8
      6.5    No Interest or Dividend Equivalents.............................  9
      6.6    Small Accounts..................................................  9








 ARTICLE VII.................................................................  9
 TERMINATION OF EMPLOYMENT...................................................  9

      7.1    Termination of Service During Plan Year.........................  9
      7.2    Termination of Service After End of Plan Year But Prior to Full
             Payment......................................................... 10

 ARTICLE VIII................................................................ 10
 RIGHTS OF PARTICIPANTS AND BENEFICIARIES.................................... 10

      8.1    Status as a Participant or Beneficiary.......................... 10
      8.2    Employment...................................................... 10
      8.3    Nontransferability.............................................. 10
      8.4    Nature of Plan.................................................. 11

 ARTICLE IX.................................................................. 12
 CORPORATE CHANGE............................................................ 12

 ARTICLE X................................................................... 12
 AMENDMENT AND TERMINATION................................................... 12

 ARTICLE XI.................................................................. 12
 MISCELLANEOUS............................................................... 12

      11.1   Governing Law................................................... 12
      11.2   Severability.................................................... 13
      11.3   Successor....................................................... 13
      11.4   Effective Date.................................................. 13







                                    ARTICLE I

                                     PURPOSE

         The purpose of the Halliburton  Company Annual Reward Plan (the 'Plan')
is to reward senior  management for improving  financial results which drive the
creation of shareholder value, and thereby, serve to attract,  motivate,  reward
and retain senior management talent. The Plan provides a means to link total and
individual cash compensation to Company  performance,  as measured by Cash Value
Added  ('CVA'),  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  denominated  in  Common  Stock  Equivalents  and paid in cash
installments  in the  second  and third  years  after the Plan Year based on the
value of such Common Stock Equivalents at the time of payment.

                                   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 any Subsidiary, division or designated group of
the Company.

          '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.

                                        1






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

          'Bonus  Shares' shall mean a specified  number of units  assigned to a
     Participant  for a  particular  Plan Year which are used to  calculate  the
     Reward for such Plan Year.  The value of each Bonus Share is  determined by
     dividing  the total number of Bonus  Shares for all  Participants  into the
     Bonus Pool as of the end of a particular Plan Year; provided, however, that
     the Committee may, in its discretion, in lieu of the foregoing,  establish,
     as of the  beginning of a Plan Year, a formula  pursuant to which the value
     of a Bonus  Share can be  determined  at given  levels of CVA  performance,
     regardless  of changes  during  such Plan Year in the  aggregate  number of
     Bonus Shares.

          'Bonus  Pool' shall mean the amount  available  for payment of Rewards
     based upon CVA performance for a particular Plan Year as established by the
     Committee.

          '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.

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

          '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.

          '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.

          '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 on a consolidated  basis 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.


                                        2





          '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.

          '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.

          'Key Employees' shall mean regular,  full-time management employees of
     the Company below the Company officer level.

          'Participant  Category'  shall mean a  grouping  of  Participants,  as
     determined by the Committee, based on level of responsibility.

          'Participants'  shall mean any employee of the Company or a Subsidiary
     who  participates  in the Plan  pursuant to the  provisions  of Article III
     hereof.

          '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.

          'Plan' shall mean the Halliburton Company Annual Reward Plan.

          '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 5.2.

          'Reward Opportunity' shall mean, with respect to each Participant, the
     aggregate  value of such  Participant's  Bonus Shares which  corresponds to
     levels of  pre-established  CVA  performance,  determined  pursuant  to the
     Reward Schedule.

          'Reward  Schedule' shall mean the schedule  setting forth the basis on
     which  each  of the  Participants  will  share  in  the  Bonus  Pool  for a
     particular Plan Year.

          'Section 16  Officer'  shall mean an officer who is subject to Section
     16 of the

                                        3





     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.  Employees who are members of the Executive Committee and
Company officers as of the beginning of each Plan Year shall be Participants for
such Plan Year.  In  addition,  such other 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 under the Plan 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  is newly  appointed or
elected  as a member  of the  Executive  Committee  or a Company  officer,  such
employee shall become a Participant  effective with such appointment or election
for the  balance of the 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, a person is newly hired,  promoted or transferred into a position in which
he or she is a Key

                                        4





Employee,  the CEO may designate in writing such person as a Participant for the
balance of such Plan Year, on a prorated basis.
     Contemporaneously with the promotion, demotion, reassignment or transfer of
a Participant which involves a change in Participant  Category,  the CEO (except
with respect to any action or status change  involving  himself or other Section
16 Officers,  in which case such  determination  shall be made by the Committee)
shall, in his sole and absolute discretion,  make appropriate  adjustment in the
number of Bonus Shares assigned to such Participant, on a prorated basis for the
balance  of the Plan Year,  effective  as of such  change in  status;  provided,
however, that if such change in status involves a transfer to an Affiliate whose
employees do not participate in the Plan, such  Participant's  participation  in
the Plan will be  terminated  effective  with such transfer for the remainder of
the Plan Year without otherwise  affecting such person's  employment status, and
such  Participant  shall be entitled  to receive a prorated  Reward for the Plan
Year based on the time he or she was a Participant.

     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 short-term incentive plan of an Affiliate.

                                   ARTICLE IV
                                 ADMINISTRATION
     Each Plan Year, the Committee  shall establish the basis for payments under
the Plan in relation to given CVA performance levels, as more fully described in
Article V hereof, and,

                                        5





following the end of each Plan Year, determine the actual Reward payable to each
Participant.  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  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  may
delegate  such of its  authority  granted under the Plan (except with respect to
matters  relating  to the  CEO  and  other  Section  16  Officers)  as it  deems
appropriate  to the CEO or a  committee,  which  committee  need not be composed
entirely  of  members  of the  Board of  Directors.  The  determinations  of the
Committee,  the CEO or any  committee  to which  authority  has  been  delegated
pursuant hereto shall be conclusive and binding. Subject only to compliance with
the express provisions hereof, the Committee, the CEO and any other committee to
which  responsibility  has been  delegated  may act in their  sole and  absolute
discretion with respect to the Plan.

                                    ARTICLE V
                              REWARD DETERMINATIONS
     5.1  Performance  Measure.  CVA shall be the sole  performance  measure  in
determining performance goals for any Plan Year.

     5.2 Reward  Determinations.  Prior to the last day of February of each Plan
Year,  the Committee  shall  establish a formula  relating the size of the Bonus
Pool to CVA  performance  beyond a threshold  level and a Reward  Schedule which
aligns the level of CVA  performance  with Reward  Opportunities,  such that the
level  of  achievement  of CVA  performance  at the end of the  Plan  Year  will
determine the actual Reward. After the end of

                                        6





each  Plan  Year,  the  Committee  shall  determine  the  extent  to  which  CVA
performance has been achieved and the amount of the Reward shall be computed for
each Participant in accordance with the Reward Schedule.

     5.3 Reward Opportunities.  The established Reward Opportunities may vary in
relation to the Participant Categories and within the Participant Categories. In
the event a Participant changes  Participant  Categories during a Plan Year, the
Participant's  Bonus  Shares  shall be adjusted to reflect the amount of time in
each Participant Category during the Plan Year.

     5.4 Discretionary  Adjustments.  Once established,  CVA performance  levels
will not be changed during the Plan Year. However, if the Committee, in its sole
and absolute  discretion,  determines  that a change in the Company's  business,
operations,  corporate  or capital  structure,  the manner in which it  conducts
business  or any other  material  change or event  will have a  consequence  the
Committee  did not  intend  which  affects  the  Bonus  Pool  formula,  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 CVA for purposes of application to the Bonus Pool formula for the Plan
Year.

     5.5 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. One-half of the amount of each Reward shall

                                        7





be paid in cash on the  Payment  Date.  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; 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.

     6.2 Mandatory Deferral. Notwithstanding the provisions of Section 6.1, with
respect to a  Participant  who is a 'covered  employee'  for purposes of Section
162(m) of the Internal Revenue Code of 1986, as amended, payment of that portion
of a Reward  which would  otherwise  cause such  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,'  unless the  Committee,  in its
discretion, determines that such deferral should not be required.

     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  Subsidiary  through  which
payment  of a Reward  is to be made  shall  have the  right to  deduct  from any
payment hereunder
                                        8





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.  Nothing herein shall
prohibit the  crediting of earnings or dividend  equivalents  as provided in the
Halliburton Elective Deferral Plan on portions of Rewards as to which payment is
deferred pursuant to such other plan.

     6.6 Small  Accounts.  Notwithstanding  the  provisions  of Section  6.1 and
Article  VII,  the  Committee  may, on a case by case basis to  facilitate  Plan
administration,  authorize a lump sum cash payment of a Reward or the  remaining
portion  of a Reward if it deems the  amount  thereof to be too small to justify
its deferral.

                                   ARTICLE VII
                            TERMINATION OF EMPLOYMENT
     7.1  Termination of Service During Plan Year. In the event a  Participant's
employment  is  terminated  during  a  Plan  Year  for  any  reason  other  than
termination for Cause,  provided that a Reward would have been payable under the
Plan for such Plan Year, 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  and paid in  accordance  with  Section  6.1,  except in the case of
death,  in which case the entire amount of prorated  Reward shall be paid to the
Participant's estate on the Payment Date.
     If a  Participant's  employment is terminated for Cause during a Plan Year,
all of such  Participant's  rights  to a Reward  for  such  Plan  Year  shall be
forfeited.


                                        9





     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 subsequent to the end of an applicable Plan Year but prior
to the payment of a Reward in full,  the amount of the Reward then unpaid  shall
be paid to the Participant in accordance with Section 6.1, except in the case of
death,  in  which  case the  amount  of the  Reward  then  unpaid  shall be paid
immediately to such Participant's estate.
     If a Participant's employment is terminated for Cause subsequent to the end
of an applicable  Plan Year but prior to the payment of a Reward in full, all of
such  Participant's  rights to the amount of the  Reward  then  unpaid  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.

     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 a  Subsidiary  or
constitute  any contract or agreement of employment or interfere in any way with
the right of the Company or a Subsidiary 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,
                                       10





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.  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.  The  foregoing  notwithstanding,
nothing in this Section 8.3 shall prevent transfer by Will or by applicable laws
of descent and distribution.
     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 Subsidiary by reason of any Reward  hereunder.  There shall be no funding
of any benefits which may become  payable  hereunder.  Nothing  contained 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 a Subsidiary  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
any  Subsidiary.  All  amounts  payable  under  the Plan  shall be paid from the
general assets of the Company or a Subsidiary, 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.


                                       11





                                   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.

                                    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,  except to
the extent preempted by federal law.

                                       12




     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.

     11.4 Effective Date. The Plan shall become effective as of January 1, 1995,
for Plan Years  beginning  on and after  January 1,  1995,  and shall  remain in
effect until such time as it may be terminated pursuant to Article X.


                                       13