<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] CONFIDENTIAL, FOR USE OF THE
[_] Preliminary Proxy Statement COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CAMCO INTERNATIONAL INC.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $.01 per share, of Camco International Inc.
("Camco Common Stock")
(2) Aggregate number of securities to which transaction applies: 38,080,120
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange ActRule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
$79.39
(the average of the high and low sales prices of Schlumberger Common
Stock on the New York Stock Exchange Inc., on July 9, 1998 multiplied by
1.18, which is the value to be received for each share of Camco Common
Stock in the merger described in the attached Proxy Statement/Prospectus)
(4) Proposed maximum aggregate value of transaction: $3,023,180,727
(5) Total fee paid: $604,636
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
Notes:
<PAGE>
CAMCO INTERNATIONAL INC.
7030 ARDMORE
HOUSTON, TEXAS 77054
August 3, 1998
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders (the
"Special Meeting") of Camco International Inc. ("Camco") to be held at 10:00
a.m., Houston, Texas time, on Monday, August 31, 1998, at Chevron Tower
Auditorium, 1301 McKinney, Houston, Texas.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Merger dated as of June
18, 1998 (the "Merger Agreement"), by and among Schlumberger Technology
Corporation ("STC"), Schlumberger OFS, Inc., a newly formed wholly owned
subsidiary of STC ("Merger Sub"), and Camco, pursuant to which STC will
acquire Camco through a merger of Merger Sub with and into Camco (the
"Merger"). STC is a wholly owned subsidiary of Schlumberger N.V. (Schlumberger
Limited), a publicly traded Netherlands Antilles corporation ("Schlumberger").
The Merger Agreement provides that, upon completion of the Merger, each
outstanding share of Camco common stock, $.01 par value ("Camco Common
Stock"), will be converted into the right to receive 1.18 shares of
Schlumberger common stock, $.01 par value ("Schlumberger Common Stock"). As a
result, an aggregate of approximately 45 million shares of Schlumberger Common
Stock would be issued in exchange for shares of Camco Common Stock
(representing approximately 8% of the outstanding shares of Schlumberger
Common Stock) and approximately 2.3 million additional shares of Schlumberger
Common Stock will be reserved for issuance pursuant to outstanding employee
benefit awards of Camco. After the Merger, Camco will be a wholly owned
subsidiary of STC.
A summary of the basic terms and conditions of the Merger, certain financial
and other information relating to Schlumberger and Camco and a copy of the
Merger Agreement are set forth in the enclosed Proxy Statement/Prospectus.
Please review and consider the enclosed materials carefully. In connection
with its approval of the Merger on June 18, 1998, the Board of Directors of
Camco received and took into account the opinion of Morgan Stanley & Co.
Incorporated ("Morgan Stanley"), Camco's financial advisor, to the effect
that, as of such date and based upon and subject to certain matters stated in
such opinion, the common stock exchange ratio of 1.18 was fair to Camco's
stockholders from a financial point of view. A copy of the opinion of Morgan
Stanley dated June 18, 1998 is included in the accompanying Proxy
Statement/Prospectus as Annex C and should be read carefully in its entirety.
The Board of Directors has unanimously approved the Merger Agreement and the
related transactions. THE BOARD OF DIRECTORS AND MANAGEMENT BELIEVE THAT THE
PROPOSED MERGER IS IN THE BEST INTERESTS OF CAMCO AND THE STOCKHOLDERS OF
CAMCO AND UNANIMOUSLY RECOMMEND THAT YOU VOTE "FOR" ITS APPROVAL.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED AND VOTED. ACCORDINGLY, WE ASK THAT YOU MARK, DATE,
SIGN AND RETURN YOUR PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. If you
have multiple stockholder accounts and receive more than one set of these
materials, please be sure to vote each proxy and return it in the respective
postage-paid envelope provided.
Thank you for your continued interest and cooperation.
Very truly yours,
[SIGNATURE OF GILBERT H. TAUSCH
APPEARS HERE]
Gilbert H. Tausch
Chairman of the Board,
President and Chief Executive
Officer
<PAGE>
CAMCO INTERNATIONAL INC.
7030 ARDMORE
HOUSTON, TEXAS 77054
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 31, 1998
----------------
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Camco
International Inc. ("Camco") will be held at 10:00 a.m., Houston, Texas time,
on Monday, August 31, 1998, at Chevron Tower Auditorium, 1301 McKinney,
Houston, Texas, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger dated June 18, 1998 (the "Merger Agreement"),
by and among Schlumberger Technology Corporation ("STC," a wholly owned
subsidiary of Schlumberger N.V. (Schlumberger Limited) ("Schlumberger")),
Schlumberger OFS, Inc., a newly formed wholly owned subsidiary of STC
("Merger Sub"), and Camco, providing for the merger of Merger Sub with and
into Camco and pursuant to which each outstanding share of Camco common
stock, $.01 par value ("Camco Common Stock"), will be converted into the
right to receive 1.18 shares of Schlumberger's common stock, $.01 par value
("Schlumberger Common Stock"). As a result, an aggregate of approximately
45 million shares of Schlumberger Common Stock would be issued in exchange
for shares of Camco Common Stock (representing approximately 8% of the
outstanding shares of Schlumberger Common Stock) and approximately 2.3
million additional shares of Schlumberger Common Stock will be reserved for
issuance pursuant to outstanding employee benefit awards of Camco. After
the Merger, Camco will be a wholly owned subsidiary of STC.
2. To consider and take action upon any other business that may properly
come before the Special Meeting, or any adjournment or postponement
thereof.
THE BOARD OF DIRECTORS OF CAMCO HAS CAREFULLY CONSIDERED THE TERMS OF THE
MERGER AGREEMENT AND THE MERGER AND BELIEVES THAT THE MERGER IS FAIR TO, AND
IN THE BEST INTERESTS OF, CAMCO AND ITS STOCKHOLDERS. THE BOARD OF DIRECTORS
HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGER AND UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF THE MERGER.
The Board of Directors has fixed the close of business on July 30, 1998, as
the record date for the determination of stockholders entitled to notice of,
and to vote at, the Special Meeting or any adjournment or postponement
thereof. Only stockholders of record at the close of business on the record
date are entitled to notice of and to vote at such meeting. A complete list of
such stockholders will be available for examination at the Special Meeting and
at Camco's offices at 7030 Ardmore, Houston, Texas, during ordinary business
hours, after August 20, 1998, for the examination of any such stockholder for
any purpose germane to the Special Meeting.
By order of the Board of Directors,
[SIGNATURE OF RONALD R. RANDALL
APPEARS HERE]
Ronald R. Randall
Secretary
August 3, 1998
----------------
IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. EVEN IF
YOU PLAN TO BE PRESENT, YOU ARE URGED TO MARK, DATE, SIGN AND RETURN THE
ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE SPECIAL
MEETING, YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE>
SCHLUMBERGER N.V.
(SCHLUMBERGER LIMITED)
(COMMON STOCK, PAR VALUE $.01 PER SHARE)
PROSPECTUS
----------------
CAMCO INTERNATIONAL INC.
PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS TO BE HELD AUGUST 31, 1998
----------------
This Proxy Statement/Prospectus relates to a proposed merger (the "Merger")
pursuant to the terms of an Agreement and Plan of Merger dated June 18, 1998
(the "Merger Agreement"), by and among Schlumberger Technology Corporation
("STC," a Texas corporation and a wholly owned subsidiary of Schlumberger N.V.
(Schlumberger Limited), a Netherlands Antilles corporation ("Schlumberger")),
Schlumberger OFS, Inc., a Delaware corporation and a wholly owned subsidiary
of STC ("Merger Sub"), and Camco International Inc., a Delaware corporation
("Camco"). Pursuant to the Merger Agreement, the stockholders of Camco will
receive 1.18 shares of common stock, par value $.01 per share, of Schlumberger
("Schlumberger Common Stock") in exchange for each share of common stock, par
value $.01 per share, of Camco ("Camco Common Stock") they own on the record
date. In the Merger, Merger Sub will be merged into Camco, with Camco
surviving and becoming a wholly owned subsidiary of STC and thus of
Schlumberger.
Schlumberger has filed a registration statement on Form S-4 pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), covering such
number of shares of Schlumberger Common Stock as will need to be issued to
stockholders of Camco in the Merger (approximately 45 million shares with an
approximate aggregate market value of $2.7 billion). This Proxy
Statement/Prospectus constitutes the Prospectus to be filed by Schlumberger as
part of its registration statement and also constitutes the Proxy Statement
being furnished to stockholders of Camco in connection with the solicitation
of proxies by the Board of Directors of Camco for use at the Special Meeting
of the Stockholders of Camco (the "Special Meeting") scheduled to be held on
August 31, 1998, or at any adjournment or postponement thereof.
This Proxy Statement/Prospectus and the accompanying form of proxy are first
being mailed to stockholders of Camco on or about August 3, 1998.
On July 24, 1998, the closing price of Schlumberger Common Stock on the New
York Stock Exchange, Inc. (the "NYSE") was $60.88 and the closing price of
Camco Common Stock on the NYSE was $70.00. The equivalent value of the Camco
Common Stock (derived by multiplying the closing price of Schlumberger Common
Stock by the 1.18 exchange ratio) was $71.83 on that date.
----------------
THE SHARES OF SCHLUMBERGER COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE
MERGER HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THE PROXY STATEMENT/PROSPECTUS IS JULY 27, 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER FOR CAMCO STOCKHOLDERS.............. 1
SUMMARY.................................................................... 4
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION..................... 7
Schlumberger Summary Historical Consolidated Financial Information....... 8
Camco Summary Historical Consolidated Financial Information.............. 9
Summary Unaudited Pro Forma Combined Financial Information............... 10
COMPARATIVE PER SHARE DATA................................................. 11
MARKET PRICES AND DIVIDEND INFORMATION..................................... 12
RECENT DEVELOPMENTS........................................................ 13
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.................. 14
THE COMPANIES.............................................................. 14
Schlumberger............................................................. 14
STC...................................................................... 15
Merger Sub............................................................... 16
Camco.................................................................... 16
THE SPECIAL MEETING OF CAMCO STOCKHOLDERS.................................. 17
Time, Date and Place..................................................... 17
Purpose of the Special Meeting........................................... 17
Record Date; Voting Rights; Vote Required for Approval................... 17
Proxies.................................................................. 17
Availability of Accountants.............................................. 18
THE MERGER AND RELATED TRANSACTIONS........................................ 18
The Merger............................................................... 18
Background of the Merger................................................. 19
Camco's Reasons for the Merger........................................... 21
Recommendation of the Camco Board of Directors........................... 22
Opinion of Financial Advisor to Camco.................................... 22
Interests of Certain Persons in the Merger............................... 27
Certain United States Federal Income Tax Consequences.................... 28
Accounting Treatment..................................................... 29
Governmental and Regulatory Matters...................................... 29
No Appraisal Rights...................................................... 30
Federal Securities Law Consequences; Resale Restrictions................. 30
CERTAIN TERMS OF THE MERGER AGREEMENT...................................... 31
The Merger............................................................... 31
Certain Covenants........................................................ 31
Certain Representations and Warranties................................... 32
Conditions to the Merger................................................. 33
Termination of the Merger Agreement...................................... 34
Expenses................................................................. 36
Amendments............................................................... 36
The Transaction Agreement................................................ 36
Credit Arrangement....................................................... 37
SCHLUMBERGER SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION........ 38
CAMCO SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION............... 39
UNAUDITED ADJUSTED PRO FORMA COMBINED FINANCIAL STATEMENTS................. 40
Unaudited Adjusted Pro Forma Combined Balance Sheet...................... 41
Unaudited Adjusted Pro Forma Combined Statements of Operations........... 42
Notes to Unaudited Adjusted Pro Forma Combined Financial Statements...... 43
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF CAMCO.... 44
DESCRIPTION OF SCHLUMBERGER CAPITAL STOCK.................................. 46
Authorized, Issued and Treasury Shares................................... 46
Dividend Rights.......................................................... 46
Voting Rights............................................................ 46
Preemptive and Other Rights.............................................. 46
Listing; Transfer Agents and Registrars.................................. 47
Comparative Rights of Schlumberger and Camco Stockholders................ 47
LEGAL MATTERS.............................................................. 50
EXPERTS.................................................................... 50
WHERE YOU CAN FIND MORE INFORMATION........................................ 50
ANNEX A--Agreement and Plan of Merger...................................... A-1
ANNEX B--Transaction Agreement............................................. B-1
ANNEX C--Opinion of Camco's Financial Advisor.............................. C-1
</TABLE>
ii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER FOR CAMCO STOCKHOLDERS
The following questions and answers highlight selected information regarding
the Merger and related transactions described in this Proxy
Statement/Prospectus and may not contain all information that is important to
you as you consider the merits of the Merger. For a more complete description
of the terms of the Merger and the related transactions, please read this
entire Proxy Statement/Prospectus and the documents we refer to. See also
"Where You Can Find More Information" on page 50.
Q: PLEASE BRIEFLY DESCRIBE THE PROPOSED MERGER AND THE RELATED TRANSACTIONS.
A: Schlumberger OFS, Inc., a newly formed direct wholly owned subsidiary of
STC, will be merged into Camco, with Camco being the surviving corporation
and becoming a wholly owned subsidiary of STC and thus a subsidiary of
Schlumberger.
In this Proxy Statement/Prospectus:
. we refer to Schlumberger N.V. (Schlumberger Limited), a Netherlands An-
tilles corporation, as "Schlumberger";
. we refer to Schlumberger Technology Company, a Texas corporation and a
wholly owned subsidiary of Schlumberger, as "STC";
. we refer to Schlumberger OFS, Inc., a Delaware corporation and a newly
formed subsidiary of STC, as "Merger Sub";
. we refer to Camco International Inc., a Delaware corporation, as "Camco";
. we refer to the Merger of Merger Sub into Camco as the "Merger";
. we refer to the agreement between STC, Merger Sub and Camco concerning
the Merger as the "Merger Agreement";
. we refer to the agreement between Schlumberger and Camco concerning the
delivery by Schlumberger to STC of the Schlumberger Common Stock neces-
sary to effect the Merger as the "Transaction Agreement";
. we refer to the special meeting of Camco stockholders described on page
17 as the "Special Meeting";
. we refer to common stock, par value $.01 per share, of Schlumberger as
"Schlumberger Common Stock"; and
. we refer to common stock, par value $.01 per share, of Camco as "Camco
Common Stock."
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: As a Camco stockholder, you will receive 1.18 shares of Schlumberger Common
Stock in exchange for each share of Camco Common Stock that you own. The
1.18-to-1 exchange ratio is fixed and will not change. You will receive only
whole shares of Schlumberger Common Stock. Any fractional shares you would
otherwise receive in the exchange will be paid to you in cash.
Q: WHY IS THE BOARD OF DIRECTORS OF CAMCO RECOMMENDING THAT I VOTE IN FAVOR OF
THE MERGER?
A: In the opinion of Camco's Board of Directors, the Merger is in the best
interests of Camco and its stockholders. For the Merger to occur, the
holders of a majority of Camco's outstanding common stock must approve the
Merger. A more detailed description of the background and reasons for the
Merger appears on pages 19 and 21, respectively.
Q: HOW MANY SHARES OF SCHLUMBERGER COMMON STOCK WILL BE OUTSTANDING AFTER THE
MERGER?
A: When the Merger is completed, we expect that there will be approximately 543
million shares of Schlumberger Common Stock outstanding, approximately 8% of
which will be held by former stockholders of Camco.
1
<PAGE>
Q: WHAT DIVIDENDS WILL I RECEIVE IN THE FUTURE?
A: Schlumberger is currently paying quarterly dividends of $0.1875 per share.
Based on the 1.18-to-1 exchange ratio, this would amount to $.22125 per
share of Camco Common Stock per quarter compared to the $.05 per share
quarterly dividend currently being paid by Camco. Schlumberger does not
expect to change its dividend policy as a result of the Merger, but there
can be no assurances that this dividend will continue in the future.
Q: WHERE WILL THE SCHLUMBERGER SHARES BE LISTED?
A: The shares of Schlumberger Common Stock to be delivered in the Merger will
be listed on the New York Stock Exchange, the Paris Stock Exchange, the
London Stock Exchange, the Amsterdam Stock Exchange and the Swiss Stock
Exchange.
Q: WHAT ARE THE TAX CONSEQUENCES TO CAMCO STOCKHOLDERS OF THE MERGER?
A: STC and Camco believe the Merger will be tax-free for U.S. federal income
tax purposes to the stockholders of Camco, except for cash received instead
of fractional shares. A more detailed description of the U.S. federal
income tax consequences of the Merger appears on page 28.
Q: WHEN IS THE MERGER EXPECTED TO BE COMPLETED?
A: STC and Camco expect that the Merger will be completed promptly after the
Special Meeting and receipt of governmental approvals, including antitrust
clearance. STC and Camco anticipate closing the transaction late in the
third quarter of 1998.
Q: WHAT SHOULD I DO NOW?
A: After reading this document carefully, you should complete and sign your
proxy card and mail it in the enclosed return envelope as soon as possible,
so that your shares may be represented at the Special Meeting. The Camco
Board of Directors recommends voting for adoption of the Merger Agreement
and the Merger.
Q: SHOULD I SEND MY STOCK CERTIFICATES NOW?
A: No. After the Merger is completed, Schlumberger will send you instructions
for exchanging your shares of Camco Common Stock for shares of Schlumberger
Common Stock.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on how
to vote. You should follow the directions provided by your broker regarding
how to instruct your broker to vote your shares.
Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. You can change your vote by sending in a later-dated, signed proxy
card to Camco's Secretary before the Special Meeting or by attending the
Special Meeting and voting in person.
Q: WHAT OTHER MATTERS WILL BE VOTED ON AT THE SPECIAL MEETING?
A: We do not expect to ask you to vote on any other matters at the Special
Meeting.
Q: WHO SHOULD I CALL WITH QUESTIONS?
A: If you have any questions about the Merger, or if you would like copies of
any of the documents referred to or incorporated by reference in this Proxy
Statement/Prospectus, please call: (i) David S. Browning, General Counsel
of Schlumberger, at (212) 350-9400; or (ii) Ronald R. Randall, Vice
President and General Counsel of Camco, at (713)747-4000. See also "Where
You Can Find More Information" on page 50.
Q: WHAT WILL HAPPEN IN THE MERGER TO EMPLOYEE STOCK OPTIONS HELD BY CAMCO
EMPLOYEES?
A: Each outstanding option to purchase Camco Common Stock, whether vested or
unvested, will be converted into an option to purchase Schlumberger Common
Stock. The exercise price of any such option and the number of shares of
Schlumberger Common Stock covered by any such option will be adjusted using
formulas designed to maintain the approximate economic value of the Camco
options at the time of the Merger. For this purpose, the number of shares
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<PAGE>
that may be acquired will be multiplied by 1.18 and the exercise price per
share will be divided by 1.18.
Q: MAY I EXERCISE STOCK OPTIONS AND SELL CAMCO STOCK BETWEEN NOW AND THE
COMPLETION OF THE MERGER?
A: Yes, unless you are subject to limitations on trading by persons defined as
Camco "affiliates" and other restrictions on "insider trading" under
securities laws. The limitations on "affiliates" are described beginning on
page 30.
3
<PAGE>
SUMMARY
This summary highlights selected information from this Proxy
Statement/Prospectus and may not contain all of the information that is
important to you. To understand the Merger and related transactions more fully,
you should carefully read this entire document and the documents referred to.
See "Where You Can Find More Information" on page 50.
THE COMPANIES (SEE PAGE 14)
SCHLUMBERGER N.V.
(Schlumberger Limited)
277 Park Avenue
New York, New York 10172-0266
(212) 350-9400
42, rue Saint Dominique
Paris, France 75007
(33-1) 4062-1000
Parkstraat 83
The Hague,
The Netherlands 2514 JG
(31-70) 310-5447
Schlumberger is a Netherlands Antilles corporation organized in 1956. Through
its subsidiaries, Schlumberger engages in the following businesses: (i)
Oilfield Services, which provides exploration and production services during
the life of an oil and gas reservoir to the petroleum industry throughout the
world; (ii) Measurement & Systems, consisting of Resource Management Services
(metering equipment and systems & services) and Test & Transactions (electronic
transactions and automated test equipment); and (iii) Omnes, which provides
communications and information technology solutions to oil and gas companies
and to companies with operations in remote locations.
SCHLUMBERGER TECHNOLOGY CORPORATION
300 Schlumberger Drive
Sugar Land, Texas 77478
(281) 285-8700
STC is a Texas corporation organized in 1961. It is a wholly owned direct
subsidiary of Schlumberger. STC engages in the Oilfield Services businesses in
the United States through its operating divisions. Through wholly owned subsid-
iaries, STC also engages in the Measurement & Systems businesses in the United
States.
CAMCO INTERNATIONAL INC.
7030 Ardmore
Houston, Texas 77054
(713)747-4000
Camco was incorporated in Delaware in 1988 and is the successor to Camco,
Incorporated, which was incorporated in Texas in 1946. Camco is one of the
world's leading providers of oilfield equipment and services for numerous
speciality applications in key phases of oil and gas drilling, completion and
production.
THE MERGER AND RELATED TRANSACTIONS
(SEE PAGE 18)
Merger Sub will be merged into Camco, with Camco being the surviving
corporation and becoming a wholly owned subsidiary of STC.
The Merger Agreement and the Transaction Agreement that together provide for
the Merger and related transactions are attached as Annexes A and B to this
Proxy Statement/Prospectus. We encourage you to read these documents carefully.
CONSIDERATIONS FOR CAMCO STOCKHOLDERS
The Camco stockholders will be asked to approve the Merger Agreement and the
Merger. The favorable vote of a majority of the outstanding shares of Camco
Common Stock is required for approval.
RECOMMENDATION TO CAMCO STOCKHOLDERS
The Board of Directors of Camco believes the Merger is in the best interests
of Camco and its stockholders and recommends that you vote "FOR" the Merger
proposal.
In reaching its recommendation in favor of the Merger, the Camco Board of Di-
rectors considered the opportunities for Camco as a separate company and as
combined with Schlumberger, as well as other fac-
4
<PAGE>
tors, as discussed in "The Merger and Related Transactions--Camco's Reasons for
the Merger" beginning on page 21.
WHAT CAMCO STOCKHOLDERS WILL RECEIVE
If the Merger is completed, Camco stockholders will receive 1.18 shares of
Schlumberger Common Stock for each share of Camco Common Stock that they own.
OPINION OF CAMCO'S FINANCIAL ADVISOR
(SEE PAGE 22)
In deciding to approve the Merger, the Camco Board received and considered
the opinion of Morgan Stanley & Co. Incorporated, its financial advisor, as to
the fairness of the exchange ratio of 1.18 shares of Schlumberger Common Stock
for each share of Camco Common Stock to be received by its stockholders from a
financial point of view. The opinion is attached as Annex C to this Proxy
Statement/Prospectus. A summary of that opinion is set forth on page 22.
Schlumberger and Camco encourage you to read the summary and the opinion.
ADDITIONAL CONSIDERATIONS FOR CAMCO STOCKHOLDERS
INTERESTS OF CAMCO OFFICERS AND DIRECTORS
IN THE MERGER (SEE PAGE 27)
When considering the recommendations of the Camco Board of Directors, you
should be aware that officers and directors of Camco have interests and
arrangements that may be different from your interests as stockholders:
. Executive officers will receive cash payments.
. Certain unvested stock options and restricted shares of stock held by
executive officers will vest.
. Certain unvested stock options held by directors will vest.
CONDITIONS TO THE MERGER AND RELATED TRANSACTIONS (SEE PAGE 33)
The Merger and related transactions will be completed only if certain
conditions, including the following, are satisfied (or waived in certain
cases):
.the approval of the Camco stockholders;
.the receipt of all material governmental and other consents and approvals
required (including those under the Hart-Scott-Rodino Antitrust Improvements
Act);
.the receipt of favorable letters from the respective independent accountants
of Schlumberger, STC and Camco to the effect that the Merger qualifies to be
accounted for as a pooling-of-interests; and
.the receipt of favorable tax opinions from the respective counsel of
Schlumberger, STC and Camco.
TERMINATION OF THE MERGER AGREEMENT
(SEE PAGE 34)
STC and Camco may mutually agree to terminate the Merger Agreement without
completing the Merger.
The Merger Agreement may also be terminated in certain other circumstances,
including the following:
.Either company may terminate the Merger Agreement if (i) a court or government
authority has acted to prevent the Merger or (ii) the stockholders of Camco do
not vote to approve the Merger.
.Camco may terminate the Merger Agreement if it receives a proposal to acquire
all of the Camco Common Stock or all or substantially all of the assets of
Camco and a majority of disinterested members of Camco's Board of Directors
determines in good faith that the alternative proposal is more favorable to
Camco stockholders than the Merger.
.STC may terminate the Merger Agreement if the Camco Board of Directors
withdraws or modifies its recommendation of the Merger Agreement or approves
or recommends that Camco stockholders approve another proposal to acquire a
15% or greater equity interest in Camco.
TERMINATION FEE (SEE PAGE 35)
If the Merger Agreement is terminated for certain reasons, as explained on
page 35, Camco must pay STC a termination fee of $90 million.
REGULATORY APPROVALS (SEE PAGE 29)
STC and Camco have made filings and taken other actions necessary to obtain
approvals from certain regulatory authorities, including antitrust
5
<PAGE>
authorities, in connection with the Merger. The initial filings under the Hart-
Scott-Rodino Antitrust Improvements Act were made on June 29, 1998. Camco and
STC expect to obtain all necessary regulatory approvals before the Special
Meeting. However, it is not certain that Camco and STC will obtain all required
regulatory approvals by then, and approvals may include conditions that could
be detrimental to STC or Camco.
ACCOUNTING TREATMENT AND CONSIDERATIONS
(SEE PAGE 29)
STC and Camco expect to account for the Merger as a "pooling-of-interests."
As a result, the historical financial statements for periods prior to
consummation of the Merger will be restated as though Schlumberger and Camco
had been combined from inception.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
(SEE PAGE 28)
The Merger is conditioned on the receipt of opinions from legal counsel that,
among other things, the Merger qualifies as a tax-free reorganization and that
no gain or loss will be recognized by Camco's stockholders in connection with
the Merger (except for cash received instead of fractional shares).
Tax matters are complicated, and the tax consequences of the proposed
transactions to you will depend on the facts of your own situation. You should
consult your own tax advisors for a full understanding of the tax consequences
to you of the Merger.
NO APPRAISAL RIGHTS (SEE PAGE 30)
Under Delaware law, Camco stockholders will not have any right to an
appraisal of the value of their shares in connection with the Merger.
CAMCO MARKET PRICE INFORMATION (SEE PAGE 12)
Camco Common Stock is listed on the New York Stock Exchange. On June 18,
1998, the last full trading day prior to the public announcement of the
proposed Merger, Camco Common Stock closed at $62.25. On July 24, 1998, Camco
Common Stock closed at $70.00.
SCHLUMBERGER MARKET PRICE INFORMATION
(SEE PAGE 12)
Schlumberger Common Stock is listed on the New York Stock Exchange, the Paris
Stock Exchange, the London Stock Exchange, the Amsterdam Stock Exchange and the
Swiss Stock Exchange. On June 18, 1998, the last full trading day prior to the
public announcement of the proposed Merger, Schlumberger Common Stock closed at
$69.94 on the New York Stock Exchange. On July 24, 1998, Schlumberger Common
Stock closed at $60.88 on the New York Stock Exchange.
LISTING OF SCHLUMBERGER STOCK (SEE PAGE 33)
Schlumberger will apply to list the Schlumberger Common Stock to be delivered
to Camco stockholders pursuant to the Merger Agreement under the ticker symbol
"SLB" on the New York Stock Exchange. The Schlumberger Common Stock will also
be listed on the Paris Stock Exchange, the London Stock Exchange, the Amsterdam
Stock Exchange and the Swiss Stock Exchange.
6
<PAGE>
SUMMARY HISTORICAL AND
PRO FORMA FINANCIAL INFORMATION
SOURCES OF INFORMATION
Schlumberger and Camco are providing the following summary financial
information to help you in your analysis of the financial aspects of the
proposed Merger. Schlumberger and Camco derived this information from the
audited and unaudited financial statements for the periods presented. The
information is only a summary and you should read it in conjunction with the
financial information included or incorporated by reference in this Proxy
Statement/Prospectus. See "Where You Can Find More Information" on page 50,
"Schlumberger Selected Historical Consolidated Financial Information" on page
38, "Camco Selected Historical Consolidated Financial Information" on page 39
and "Unaudited Adjusted Pro Forma Combined Financial Statements" on page 40.
PREPARATION OF THE SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The unaudited pro forma combined financial information is presented to show
you how Schlumberger might have looked if the companies had been combined for
the periods presented. Schlumberger and Camco prepared the pro forma financial
information using the pooling-of-interests method of accounting. See "The
Merger and Related Transactions--Accounting Treatment" on page 29.
If the companies had been combined in the past, they might have performed
differently. You should not rely on the pro forma financial information as an
indication of the results that Schlumberger would have achieved if the Merger
had taken place earlier or the future results that Schlumberger will
experience after the Merger.
MERGER-RELATED EXPENSES
STC and Camco estimate that the Merger and related transactions will result
in fees and expenses totaling approximately $45 million, which will be
expensed upon closing of the Merger. After the Merger, STC may incur certain
charges and expenses relating to integrating the operations of Camco. We did
not adjust the pro forma information for these charges and expenses or for
certain operating efficiencies that STC may realize as a result of the Merger.
7
<PAGE>
SCHLUMBERGER
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The summary financial information of Schlumberger set forth below (i) as at
December 31, 1993, 1994, 1995, 1996 and 1997 and for the years then ended has
been derived from audited consolidated financial statements of Schlumberger,
and (ii) as at March 31, 1998 and for the three months ended March 31, 1997 and
1998 has been derived from unaudited consolidated financial statements of
Schlumberger. Those audited and unaudited financial statements are incorporated
by reference in this Proxy Statement/Prospectus and those financial statements
should be read in conjunction herewith. See "Where You Can Find More
Information."
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 YEAR ENDED DECEMBER 31
--------------------- -------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- ---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Operating revenues..... $2,800,134 $2,402,060 $10,647,590 $8,956,150 $7,621,694 $6,696,845 $6,705,466
Net income (1)......... 350,732 259,943 1,295,697 851,483 649,157 536,077 334,763
Earnings per share:
(2)
Basic (1)............ $ 0.70 $ 0.53 $ 2.62 $ 1.74 $ 1.33 $ 1.10 $ 0.69
Diluted (1).......... 0.68 0.51 2.52 1.70 1.32 1.10 0.67
Cash dividends per
share................. 0.1875 0.1875 0.75 0.75 0.7125 0.60 0.60
Average shares
outstanding: (2)
Basic................ 498,273 493,426 495,215 490,041 484,748 486,846 485,342
Assuming dilution.... 518,444 509,219 514,345 500,498 487,864 488,532 488,562
OTHER INFORMATION:
Capital expenditures,
excluding
acquisitions.......... $ 315,935 $ 265,530 $ 1,495,980 $1,157,957 $ 938,847 $ 782,837 $ 691,101
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31
MARCH 31, --------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET
INFORMATION:
Working capital........ $ 2,749,054 $ 2,441,322 $ 1,568,207 $1,259,431 $1,037,097 $ 907,832
Total assets........... 12,262,011 12,096,731 10,325,051 8,910,100 8,322,099 7,916,947
Long-term debt......... 1,103,479 1,069,056 637,203 613,404 394,167 446,942
Stockholders' equity... 6,957,440 6,694,924 5,626,380 4,964,017 4,582,954 4,406,340
</TABLE>
- --------
(1) Includes a charge of $248 million ($0.51 per share; basic and diluted) in
1993 relating to the cumulative effect of a change in accounting principle.
(2) Restated for the 2-for-1 split on June 2, 1997.
8
<PAGE>
CAMCO (1)
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The summary financial information of Camco set forth below (i) as at December
31, 1993, 1994, 1995, 1996 and 1997 and for the years then ended has been
derived from audited consolidated financial statements of Camco, and (ii) as at
March 31, 1998 and for the three months ended March 31, 1997 and 1998 has been
derived from uaudited consolidated financial statements of Camco. Those audited
and unaudited financial statements are incorporated by reference in this Proxy
Statement/Prospectus and those financial statements should be read in
conjunction herewith. See "Where You Can Find More Information."
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31 YEAR ENDED DECEMBER 31
----------------- --------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Operating revenues..... $228,067 $195,484 $913,841 $764,535 $667,932 $651,514 $640,099
Income from continuing
operations (2)........ 27,595 19,810 88,852 68,004 50,295 39,665 17,888
Earnings per share
from continuing
operations:
Basic (2)............ $ 0.73 $ 0.53 $ 2.37 $ 1.81 $ 1.35 $ 1.04 $ 0.47
Diluted (2).......... 0.72 0.52 2.31 1.78 1.33 1.03 0.47
Cash dividends per
share (3)............. 0.05 0.05 0.21 0.22 0.22 0.21 --
Average shares
outstanding:
Basic................ 37,674 37,277 37,386 37,506 37,257 37,857 37,972
Assuming dilution.... 38,483 38,242 38,481 38,230 37,780 38,344 38,320
OTHER INFORMATION:
Capital expenditures,
excluding
acquisitions.......... $ 14,975 $ 19,994 $ 95,754 $ 61,848 $ 89,155 $ 65,703 $ 35,963
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31
MARCH 31, ----------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET
INFORMATION:
Working capital........ $ 304,860 $ 257,699 $216,719 $219,052 $199,982 $199,828
Total assets........... 1,203,639 1,117,840 971,705 881,499 802,639 811,114
Long-term debt......... 155,300 110,300 93,551 118,003 92,122 106,875
Stockholders' equity... 717,568 686,245 594,873 536,468 497,499 479,103
</TABLE>
- --------
(1) On June 13, 1997, Camco acquired Production Operators Corp ("Production
Operators") in a business combination accounted for using the pooling-of-
interests method of accounting. Accordingly, the financial data reflected
herein was prepared as if Camco and Production Operators were combined as
of the beginning of the earliest period presented.
(2) Includes merger costs of $8.6 million ($0.23 per share basic and $0.22 per
share diluted) in 1997 relating to the acquisition of Production Operators.
Includes a charge of $2.9 million ($0.08 per share; basic and diluted) in
1997 relating to the cumulative effect of a change in accounting principle.
Excludes the following results from Production Operators' discontinued oil
and gas production activities:
- Loss of $7.2 million ($0.19 per share; basic and diluted) in 1995.
- Income of $1.0 million ($0.03 per share; basic and diluted) in 1994.
- Income of $2.8 million ($0.07 per share; basic and diluted) in 1993.
Includes a credit of $0.2 million in 1994 relating to the cumulative effect
of a change in accounting principle.
Includes a charge of $10.7 million ($0.28 per share; basic and diluted) in
1993 relating to the cumulative effect of a change in accounting principle.
(3) Camco paid annual dividends of $0.20 on its common stock since its initial
public offering in December 1993. The amounts presented include the effect
of dividends paid by Production Operators prior to its merger with Camco.
9
<PAGE>
SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The summary unaudited pro forma financial information of Schlumberger and
Camco has been derived from the Schlumberger and Camco consolidated financial
statements, selected financial data and related notes included elsewhere or
incorporated by reference in this Proxy Statement/Prospectus and gives effect
to the Merger under the pooling-of-interests accounting method and assumes that
the Merger had occurred at the beginning of the periods presented.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 YEAR ENDED DECEMBER 31
---------------------- --------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- ----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Operating revenues..... $3,028,201 $ 2,597,544 $11,561,431 $ 9,720,685 $8,289,626 $7,348,359 $7,345,565
Net income (1)......... 378,327 279,753 1,384,549 919,487 692,301 576,747 355,447
Earnings per share:
(2)
Basic (1)............ $ 0.70 $ 0.52 $ 2.57 $ 1.72 $ 1.31 $ 1.09 $ 0.67
Diluted (1).......... 0.67 0.50 2.47 1.69 1.30 1.08 0.67
Average shares
outstanding: (2)
Basic................ 542,728 537,413 539,330 534,298 528,711 531,517 530,149
Assuming dilution.... 563,854 554,345 559,753 545,609 532,444 533,778 533,780
OTHER INFORMATION:
Capital expenditures,
excluding
acquisitions.......... $ 330,910 $ 285,524 $ 1,591,734 $ 1,219,805 $1,028,022 $ 848,540 $ 727,064
<CAPTION>
DECEMBER 31
MARCH 31, --------------------------------------------------------
1998 1997 1996 1995 1994 1993
----------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET
INFORMATION:
Working capital........ $ 3,053,914 $ 2,699,021 $ 1,784,926 $1,478,483 $1,237,079 $1,107,660
Total assets (3)....... 13,465,650 13,214,571 11,296,756 9,791,599 9,124,738 8,728,061
Long-term debt (3)..... 1,258,779 1,179,356 730,754 731,407 486,289 553,817
Stockholders' equity... 7,675,008 7,381,169 6,221,253 5,500,485 5,080,453 4,885,443
</TABLE>
- --------
(1) Includes a charge of $259 million ($0.49 per share basic and $0.48 per
share diluted) in 1993 relating to the cumulative effect of a change in
accounting principle.
(2) Restated for the 2-for-1 split on June 2, 1997.
(3) STC will purchase the shares of Schlumberger Common Stock from Schlumberger
at fair market value at the Closing Date in order to fulfill its obligation
to deliver shares of Schlumberger Common Stock to stockholders of Camco in
connection with the Merger. It is expected that, prior to the Merger, STC
will enter into a credit facility (the "Credit Facility") with a group of
banks to provide for up to $4.0 billion of unsecured borrowings. STC
estimates that borrowings under the Credit Facility in connection with the
Merger will be approximately $3.0 billion on the Closing Date. The proceeds
received by Schlumberger will be invested in high-grade marketable
securities by wholly owned direct or indirect subsidiaries. The effect on
combined net income will be to increase earnings per share.
10
<PAGE>
COMPARATIVE PER SHARE DATA
The following table compares certain historical and pro forma earnings per
share and book value per share for Schlumberger and Camco. You should read the
table in conjunction with the financial information for Schlumberger and Camco
included or incorporated by reference in this Proxy Statement/Prospectus. You
should not rely on the pro forma financial information as an indication of the
results that Schlumberger would have achieved if the Merger had taken place
earlier or of the results of Schlumberger after the Merger.
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA (UNAUDITED)
---------------------- ------------------------
CAMCO
SCHLUMBERGER(1) CAMCO COMBINED(2) EQUIVALENT(3)
--------------- ------ ---------- ------------
<S> <C> <C> <C> <C>
Basic earnings per share from
continuing operations:
Three months ended March
31, 1998.................. $ 0.70 $ 0.73 $ 0.70 $ 0.83
Year ended December 31,
1997...................... 2.62 2.37 2.57 3.03
Year ended December 31,
1996...................... 1.74 1.81 1.72 2.03
Year ended December 31,
1995...................... 1.33 1.35 1.31 1.55
Diluted earnings per share
from continuing operations:
Three months ended March
31, 1998.................. $ 0.68 $ 0.72 $ 0.67 $ 0.79
Year ended December 31,
1997...................... 2.52 2.31 2.47 2.91
Year ended December 31,
1996...................... 1.70 1.78 1.69 1.99
Year ended December 31,
1995...................... 1.32 1.33 1.30 1.53
Dividends per share:
Three months ended March
31, 1998.................. $ 0.19 $ 0.05 $ 0.19 $ 0.22
Year ended December 31,
1997...................... 0.75 0.21 0.75 0.89
Year ended December 31,
1996...................... 0.75 0.22 0.75 0.89
Year ended December 31,
1995...................... 0.71 0.22 0.71 0.84
Book value per share at:
March 31, 1998............. $13.96 $18.98 $14.13 $16.67
December 31, 1997.......... 13.44 18.28 13.61 16.06
</TABLE>
- --------
(1) Restated for the 2-for-1 stock split on June 2, 1997.
(2) Schlumberger and Camco pro forma combined basic and diluted earnings per
share, and book value per share shown assumes the Merger is completed on a
pooling-of-interests basis and uses the number of Schlumberger Common
Shares that would have outstanding in each year using the exchange ratio of
1.18. The pro forma combined dividends per share shown does not give effect
to the issuance of Schlumberger Common Stock in the Merger and does not
include the historical dividends paid by Camco.
(3) Camco equivalent pro forma basic and diluted earnings per share, dividends
per share and book value per share information for Camco stockholders using
the exchange ratio of 1.18 shares of Schlumberger Common Stock for each
share of Camco Common Stock.
11
<PAGE>
MARKET PRICES AND DIVIDEND INFORMATION
Schlumberger Common Stock is traded under the symbol "SLB" on the New York
Stock Exchange (the "NYSE") and is also traded on the Paris Stock Exchange, the
London Stock Exchange, the Amsterdam Stock Exchange and the Swiss Stock
Exchange. Camco Common Stock is traded under the symbol "CAM" on the NYSE. The
following table sets forth the high and low sales prices of Schlumberger Common
Stock and Camco Common Stock as reported by the NYSE and the per share cash
dividends declared for the periods indicated. The quotations are as reported in
published financial sources. The prices for Schlumberger Common Stock have been
adjusted to reflect a two-for-one stock split effected in June 1997.
<TABLE>
<CAPTION>
SCHLUMBERGER CAMCO
COMMON STOCK COMMON STOCK
----------------------------- -------------------------
CASH CASH
DIVIDENDS DIVIDENDS
HIGH LOW DECLARED HIGH LOW DECLARED
---- ---- --------- ---- ---- ---------
<S> <C> <C> <C> <C> <C> <C>
1996
First Quarter......... $40 5/16 $32 11/16 $0.1875 $32 3/8 $25 1/4 $0.05
Second Quarter........ 45 11/16 40 1/16 0.1875 37 30 1/2 0.05
Third Quarter......... 44 9/16 39 11/16 0.1875 37 1/2 32 1/4 0.05
Fourth Quarter........ 54 1/8 42 1/8 0.1875 47 1/4 36 3/4 0.05
1997
First Quarter......... $58 3/16 $ 49 $0.1875 $51 1/4 $ 38 $0.05
Second Quarter........ 63 1/4 51 1/8 0.1875 55 1/2 41 3/8 0.05
Third Quarter......... 84 5/8 62 3/8 0.1875 74 1/4 53 7/8 0.05
Fourth Quarter........ 72 3/8 0.1875 82 1/2 53 1/2 0.05
1998
First Quarter......... $81 1/2 $65 7/8 $0.1875 $ 68 $49 3/4 $0.05
Second Quarter........ 86 3/4 66 0.1875 79 3/8 54 1/2 0.05
Third Quarter (through
July 24)............. 69 5/16 59 7/8 0.1875 80 5/8 69 1/4 0.05
</TABLE>
On June 18, 1998, the last full trading day prior to the joint public
announcement by Camco and Schlumberger of the signing of the Merger Agreement,
the closing sale prices per share of Camco Common Stock and Schlumberger Common
Stock as reported by the NYSE were $62.25 and $69.94, respectively, and the
equivalent per share price of Camco Common Stock calculated by multiplying the
closing sale price of Schlumberger Common Stock by the exchange ratio of 1.18
was $82.53. On July 24, 1998, the closing sale prices per share of Camco Common
Stock and Schlumberger Common Stock as reported by the NYSE were $70.00 and
$60.88, respectively, and the equivalent per share price of Camco Common Stock
was $71.83.
Following the Merger, the Schlumberger Common Stock will continue to be
traded on the exchanges listed above and the Camco Common Stock will cease to
be traded on the NYSE and will represent only the right to obtain Schlumberger
Common Stock pursuant to the Merger Agreement.
Schlumberger is currently paying quarterly cash dividends of $0.1875 per
share. Schlumberger does not expect to change its dividend policy as a result
of the Merger, but there can be no assurances that this dividend will continue
in the future.
12
<PAGE>
RECENT DEVELOPMENTS
On July 20, 1998, Schlumberger issued a press release announcing 1998 second
quarter earnings. Schlumberger's press release reported that revenues increased
approximately $300 million from $2.6 billion for the three months ended June
30, 1997 to $2.9 billion for the three months ended June 30, 1998. Net income
increased approximately $52 million from $307 million for the three months
ended June 30, 1997 to $359 million for the three months ended June 30, 1998.
Basic earnings per share increased $0.10 from $0.62 per share for the three
months ended June 30, 1997 to $0.72 per share for the three months ended June
30, 1998. Diluted earnings per share increased $0.09 from $0.60 per share for
the three months ended June 30, 1997 to $0.69 per share for the three months
ended June 30, 1998.
On July 21, 1998, Camco issued a press release announcing 1998 second quarter
earnings. Camco's press release reported that revenues increased approximately
$8 million from $227 million for the three months ended June 30, 1997 to $235
million for the three months ended June 30, 1998. Net income increased
approximately $12 million from $16 million for the three months ended June 30,
1997 to $28 million for the three months ended June 30, 1998. Basic earnings
per share increased $0.32 from $0.42 per share for the three months ended June
30, 1997 to $0.74 per share for the three months ended June 30, 1998. Diluted
earnings per share also increased $0.32 from $0.41 per share for the three
months ended June 30, 1997 to $0.73 per share for the three months ended June
30, 1998. Camco's results for the three months ended June 30, 1997 include a
pre-tax charge of $12.5 million or $0.23 per share after tax related to the
acquisition of Production Operators.
13
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Proxy Statement/Prospectus includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that reflect
the current views of Schlumberger and Camco on future events and financial
performance. These forward-looking statements are subject to certain risks and
uncertainties, as well as general economic, business and market conditions.
These risks and uncertainties could cause actual results to differ materially
from historical results or those anticipated. You can identify forward-looking
statements by the use of words such as "expect," "estimate," "project,"
"budget," "forecast," "anticipate," "plan" and similar expressions. Forward-
looking statements include all statements regarding expected financial
position, results of operations, cash flows, dividends, financing plans,
business strategies, operating efficiencies or synergies, budgets, capital and
other expenditures, competitive positions, growth opportunities for existing
products, plans and objectives of management, and markets for stock of
Schlumberger and Camco. Schlumberger and Camco caution you not to place undue
reliance on these forward-looking statements, which speak only as of their
dates. Schlumberger and Camco undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
THE COMPANIES
SCHLUMBERGER
Through its subsidiaries, Schlumberger engages in the following businesses:
(i) Oilfield Services; (ii) Measurement & Systems; and (iii) Omnes.
Oilfield Services. Oilfield Services provides exploration and production
service required during the life of an oil and gas reservoir: seismic data
acquisition, processing and interpretation; drilling rigs; directional
drilling and real-time drilling analysis; cementing and stimulation of wells;
wireline logging; well evaluation, testing and production; integrated data
services and software; and project management. Oilfield Services comprises
formation evaluation, well testing and production services for oil and gas
wells: borehole measurements of petrophysical, geological and seismic
properties; cement and corrosion evaluation; perforating; modular production
systems; permanent monitoring and control systems; production logging, and
light remedial and abandonment services, and engineering and pumping services
for cementing, drilling fluids, fracturing, acidizing, sand control, water
control and coiled tubing applications; seismic data acquisition, processing
and interpretation services for marine, land and transition zone; seismic
reservoir monitoring and characterization services; fully integrated project
management, including survey evaluation and design services; acquisition,
processing and sales of non-exclusive surveys; contract drilling services,
offshore and on land, with dynamically positioned drillships,
semisubmersibles, jackup rigs, drilling tenders, swamp barges and land rigs;
real-time directional drilling, measurements-while-drilling and logging-while-
drilling services; exploration and production solutions for optimizing the
value of oil and gas reservoirs: integrated software systems, data management
solutions and processing and interpretive services, and project management and
well engineering services: selection of optimum oilfield technology;
implementation of safety and quality management systems; and coordination and
management of operations of well construction, production and field
development projects.
Oilfield Services is organized in two groups, Solutions and Products. The
Solutions Group is organized along geographic lines to develop, sell and
implement all oilfield services as well as customized and integrated solutions
to meet specific client needs. The Products Group is responsible for product
development across the organization as well as training and technical support
for each type of service in the field to ensure the highest standards of
service to clients.
Schlumberger oilfield services are marketed by Schlumberger personnel. The
customer base, business risks and opportunities for growth are essentially
uniform across all services. There is sharing of production facilities and
research centers; the labor force is interchangeable. Technological
innovation, quality of service and price
14
<PAGE>
are the principal methods of competition. While there are numerous
competitors, both large and small, Schlumberger believes that it is an
industry leader in providing contract drilling services, seismic services,
measurements-while-drilling and logging-while-drilling services, and fully
computerized wireline logging and geoscience software and computing services.
Measurement & Systems. Measurement & Systems consist of Test & Transactions
and Resource Management Services ("RMS"). Test & Transactions supplies
technology, products, services and systems to the semiconductor, banking,
telecommunication, transportation and health-care industries. Test &
Transactions designs and implements broad-based, customized solutions to help
clients improve time-to-market, optimize their business opportunities and
improve their productivity. It designs and manufactures smart and magnetic
stripe cards, terminals, equipment and management systems for transactions in
a wide range of sectors, including telecommunications, retail and banking,
network access and security, parking and mass transit, health-care management
and campus communities. It also designs and manufactures back-end
manufacturing equipment for testing semiconductor devices, including
diagnostic systems, automated handling systems and test equipment. It provides
metrology solutions for the front-end semiconductor fabrication equipment
market and equipment for testing complete electronic assemblies for the
telecommunications and automotive industries.
Resource Management Services is a global solutions provider to electricity,
gas and water resource industry clients worldwide, helping them to manage
resources and enhance transactions. The RMS group delivers innovative
solutions by providing measurement products, systems and services for creating
and sharing value with all clients. It designs systems for management of
electricity distribution and usage (residential metering and energy management
systems; utility revenue collection systems; commercial, industrial,
transmission and distribution measurement and billing products and systems;
load management systems); systems for management of gas usage (residential,
commercial and industrial gas meters; regulators, governors, safety valves,
stations and systems; gas treatment, including filtration, odorization and
heating; network management; and prepayment systems); meters and systems for
management of residential, commercial and industrial water usage covering the
range of effective water distribution management and diverse heat distribution
and wireless communication systems for utility markets; distributed
measurement solutions, systems integration and data services; and services
providing software and turnkey installation, repair and maintenance solutions
to add value in fully managed projects.
Products of the Measurement & Systems industry segment are primarily sold
through the Schlumberger sales force, augmented through distributors and
representatives. The nature of the product range and customer profile allow
for transferability of sales personnel and cross-product sales forces in key
geographic areas. Such teams operate in Asia, Russia, South America and
Central America. Product demand and pricing are affected by global and
national economic conditions. The price of products in this industry segment
varies from less than one hundred dollars to more than a million dollars.
There are numerous competitors with regard to these products, and the
principal methods of competition are price, performance and service.
Omnes. Omnes provides information technology and communications services to
oil and gas companies and to companies with operations in remote regions. It
offers solutions for wide- and local-area networks, including satellite-based
networks, network security, Internet, intranet and messaging.
Schlumberger is a Netherlands Antilles corporation organized in 1956. The
principal executive offices of Schlumberger are located at (i) 42 rue Saint-
Dominique, Paris, France 75007, telephone (33-1) 4062-1000; (ii) 277 Park
Avenue, New York, New York, United States, 10172-0266, telephone (212) 350-
9400; and (iii) Parkstraat 83, The Hague, The Netherlands 2514 JG, telephone
(31-70) 310-5447.
STC
STC is a Texas corporation organized in 1961. It is a wholly owned direct
subsidiary of Schlumberger. STC engages, through its operating divisions, in
the Oilfield Services businesses in the United States. Through wholly owned
subsidiaries, STC also engages in the Measurement & Systems businesses in the
United States. The
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principal executive offices of STC are located at 300 Schlumberger Drive,
Sugar Land, Texas 77448, telephone (281) 285-8700.
MERGER SUB
Merger Sub is a newly formed wholly owned subsidiary of STC. Merger Sub has
transacted no business to date other than in connection with the Merger
Agreement. Merger Sub is a Delaware corporation that was incorporated in 1998.
CAMCO
Camco is one of the world's leading providers of oilfield equipment and
services for numerous specialty applications in key phases of oil and gas
drilling, completion and production. Many of Camco's products and services
have recognized names in the industry and are associated with technological
innovation and quality. Camco operates on a worldwide basis with its equipment
and services being sold or used in approximately 50 countries.
Camco is the leading world producer of gas lift systems. Camco is one of the
world's two leading providers of subsurface safety valve systems, synthetic
diamond drill bits and electric submersible pump systems, is the world's third
leading provider of roller cone drill bits and also operates a large fleet of
coiled tubing units in the United States. On June 13, 1997, Camco acquired
Production Operators, the market leader in total responsibility gas
compression services.
Camco's business consists of an Oilfield Equipment Segment and an Oilfield
Services Segment.
Oilfield Equipment Segment. Camco's Oilfield Equipment Segment provides a
wide range of manufactured oilfield products, principally under the names Reda
Pump ("Reda"), Lasalle Engineering ("Lasalle"), Lawrence Technology, Hycalog,
Reed Tool ("Reed"), Camco Products and Site Oil Tools ("Site"). Reda
manufactures electric submersible pumps ("ESPs") used to lift high volumes of
fluids from producing wells. Lasalle, acquired in September 1996, provides oil
well production services, project management and ancillary equipment for ESP
systems. Lawrence Technology manufactures electric cables and wire used with
ESPs. Hycalog manufactures synthetic diamond drill bits, and Reed manufactures
roller cone drill bits. Synthetic diamond drill bits have a faster rate of
penetration, drill more footage, generally have a higher unit sales price and
are used primarily in high cost drilling locations where their relatively
higher price can be justified by their corresponding reduction in total
drilling time and, therefore, costs. Roller cone drill bits generally have
lower unit prices, are less application-sensitive and are used in a wider
variety of drilling applications. Camco Products manufactures gas lift systems
used to increase the volume of production from oil wells, subsurface safety
valves used as fail-safe devices to shut-in production in oil and gas wells in
emergencies, and packers and other items used in the completion and production
phases of oil and gas development. In December 1996, Camco Products expanded
its gas lift business by acquiring the artificial lift business line of
Halliburton Company. Site Oil Tools, which was acquired by the Company in
March 1995, manufactures a full line of packers and accessory equipment and
provides related services for the completion of oil and gas wells.
Oilfield Services Segment. Camco's Oilfield Services Segment provides a wide
range of oilfield services, principally under the names Production Operators,
Camco Coiled Tubing Services ("Camco Coiled Tubing"), Camco Wireline and
Drilling & Service. Production Operators provides total responsibility gas
compression services, including project management and operation for clients
engaged in gas gathering, injection, treating and processing. Camco Coiled
Tubing provides coiled tubing services and nitrogen services, and performs
other downhole operations used in the initial completion of wells and in well
maintenance and treatment during the productive life of a well. Camco Wireline
provides mechanical wireline services used to install or retrieve downhole
flow control devices and to obtain reservoir data using specialized
instruments. Drilling & Service provides steerable rotary drilling system
services used in directional and horizontal drilling applications.
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Camco was incorporated in Delaware in 1988 and is the successor to Camco,
Incorporated, which was incorporated in Texas in 1946. The principal executive
offices of Camco are located at 7030 Ardmore, Houston, Texas, 77054, telephone
(713) 747-4000.
THE SPECIAL MEETING OF CAMCO STOCKHOLDERS
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies from the holders of Camco Common Stock by the Camco
Board of Directors for use at the Special Meeting. This Proxy
Statement/Prospectus and accompanying form of proxy are first being mailed to
the stockholders of Camco beginning on or about August 3, 1998.
TIME, DATE AND PLACE
The Special Meeting will be held at 10:00 a.m., Houston, Texas time, on
Monday, August 31, 1998, at Chevron Tower Auditorium, 1301 McKinney, Houston,
Texas.
PURPOSE OF THE SPECIAL MEETING
At the Special Meeting (and any adjournment or postponement thereof),
Camco's stockholders will be asked to consider and vote upon (i) a proposal to
approve and adopt the Merger and the Merger Agreement (the "Merger Proposal")
and (ii) such other matters as may properly be brought before the Special
Meeting.
RECORD DATE; VOTING RIGHTS; VOTE REQUIRED FOR APPROVAL
The Camco Board of Directors has fixed the close of business on July 30,
1998 (the "Camco Record Date") as the record date for Camco's stockholders
entitled to notice of and to vote at the Special Meeting.
Only holders of record of shares of Camco Common Stock on the Camco Record
Date are entitled to notice of and to vote at the Special Meeting. Each holder
of record of Camco Common Stock as of the Camco Record Date is entitled to
cast one vote per share on all matters submitted to Camco's stockholders.
At the close of business on July 24, 1998, there were approximately 450
holders of record of Camco Common Stock and approximately 38.1 million shares
of Camco Common Stock outstanding and entitled to vote at the Special Meeting.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Camco Common Stock entitled to vote is necessary to
constitute a quorum at the Special Meeting. The affirmative vote of the
holders of a majority of the outstanding shares of Camco Common Stock is
required to approve and adopt the Merger Proposal.
The directors and executive officers of Camco beneficially own approximately
2.0% of the outstanding Camco Common Stock. For additional information on the
ownership of Camco Common Stock by Camco directors and executive officers, see
"Security Ownership of Certain Beneficial Owners and Management of Camco" on
page 44.
PROXIES
All shares of Camco Common Stock represented by properly executed proxies
received prior to or at the Special Meeting, and not revoked, will be voted in
accordance with the instructions indicated in such proxies. If no instructions
are indicated on a properly executed returned proxy, such proxy will be voted
"FOR" the approval of the Merger Proposal.
Abstentions may be specified with respect to the Merger Proposal. A properly
executed proxy marked "ABSTAIN" with respect to the Merger Proposal will be
counted as present for purposes of determining whether there is a quorum and
for purposes of determining the aggregate voting power and number of shares
represented and entitled to vote at the Special Meeting with respect to the
Merger Proposal. Because the affirmative vote of a majority of the outstanding
shares of Camco Common Stock is required for approval of the Merger Proposal,
a proxy marked "ABSTAIN" with respect to the Merger Proposal will have the
effect of a vote against the Merger Proposal. In addition, the failure of a
stockholder of Camco to return a proxy will have the effect of a vote against
the Merger Proposal.
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Under NYSE rules, brokers who hold shares in street name for customers have
the authority to vote on certain "routine" proposals when they have not
received instructions from beneficial owners. Under NYSE rules, such brokers
are precluded from exercising their voting discretion with respect to
proposals for non-routine matters such as the Merger Proposal. Thus, absent
specific instructions from the beneficial owner of such shares, brokers are
not empowered to vote such shares with respect to the approval and adoption of
the Merger Proposal (i.e., "broker non-votes"). Since the affirmative votes
described above are required for approval of the Merger Proposal, a "broker
non-vote" with respect to the Merger Proposal will have the effect of a vote
against the Merger Proposal.
A stockholder may revoke his or her proxy at any time prior to its use by
delivering to the Secretary of Camco a signed notice of revocation or a later-
dated, signed proxy, or by attending the Special Meeting and voting in person.
Attendance at the Special Meeting will not in itself constitute the revocation
of a proxy.
The cost of solicitation of proxies will be paid by Camco. In addition to
solicitation by mail, arrangements will be made with brokerage houses and
other custodians, nominees and fiduciaries to send the proxy materials to
beneficial owners; and Camco will, upon request, reimburse such brokerage
houses and custodians for their reasonable expenses in so doing. Camco does
not expect to engage a firm to aid in the solicitation of proxies; however,
should it be determined necessary at a later date, Camco estimates that
related fees will not exceed $6,000 (plus expenses). To the extent necessary
in order to ensure sufficient representation at its Special Meeting, Camco or
its proxy solicitor may request the return of proxy cards by personal
interview, mail, telephone, facsimile or other means of electronic
transmission. The extent to which this will be necessary depends entirely upon
how promptly proxy cards are returned. Stockholders are urged to send in their
proxies without delay.
Stockholders should not send in any stock certificates with their proxy
cards. As soon as practicable after the consummation of the Merger, a
transmittal form will be sent to former stockholders of Camco with
instructions for receiving Schlumberger Common Stock.
As of the date of this Proxy Statement/Prospectus, the Camco Board of
Directors does not know of any business to be presented at the Special Meeting
other than the Merger Proposal. If any other matters should properly come
before the Special Meeting, it is intended that the shares represented by
proxies will be voted with respect to such matters in accordance with the
judgment of the persons voting such proxies. Proxies voted "against" the
Merger Proposal will not be used to vote for any adjournment pursuant to this
authority.
AVAILABILITY OF ACCOUNTANTS
A representative of Arthur Andersen LLP, Camco's independent public
accountants, is expected to be present at the Special Meeting and to be
available to respond to appropriate questions. Such representative will have
the opportunity to make a statement at the Special Meeting if he or she so
desires.
THE MERGER AND RELATED TRANSACTIONS
The discussion in this Proxy Statement/Prospectus of the Merger, and the
principal terms of the Merger Agreement and the Transaction Agreement, is
subject to, and qualified in its entirety by reference to, the Merger
Agreement and the Transaction Agreement, which are attached to this Proxy
Statement/Prospectus as Annexes A and B, respectively, and are incorporated
herein by reference.
THE MERGER
Pursuant to the terms and conditions of the Merger Agreement, including
approval by the stockholders of Camco, Merger Sub will be merged with and into
Camco, with Camco being the surviving corporation and
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becoming a wholly owned subsidiary of STC. In connection with the Merger, each
stockholder of Camco will receive 1.18 shares of Schlumberger Common Stock in
exchange for each share of Camco Common Stock held. Cash will be paid instead
of issuing fractional shares of Schlumberger Common Stock. At the effective
time of the Merger, each outstanding option of Camco will be converted into an
option to acquire the number of shares of Schlumberger Common Stock equal to
1.18 times the number of shares of Camco Common Stock purchasable under the
old option at a per share price equal to the exercise price under the old
option divided by 1.18.
Following the Merger, the former stockholders of Camco will hold
approximately 45 million shares of Schlumberger Common Stock or approximately
8% of the outstanding shares Schlumberger Common Stock. In addition,
approximately 2.3 million shares of Schlumberger Common Stock will be
purchasable pursuant to the converted Camco options.
The Merger will become effective when a Certificate of Merger is duly filed
with the Secretary of State of the State of Delaware or at such other time as
will be specified in the Certificate of Merger (the "Effective Time"). The
closing of the Merger (the "Closing") will occur no later than two days after
the last condition in the Merger Agreement has been satisfied or waived,
unless the parties agree otherwise. STC and Camco expect the Closing to occur
promptly after the Special Meeting if all governmental approvals have been
received at that time. STC and Camco expect the Special Meeting to be held
late in the third quarter of 1998.
BACKGROUND OF THE MERGER
On March 16, 1998, Gary Nicholson, the then Chairman and Chief Executive
Officer of Camco, met with Victor Grijalva, currently Vice Chairman of
Schlumberger, at Mr. Grijalva's request made on March 11, 1998. At the
meeting, a possible alliance or transaction between Schlumberger and Camco was
discussed. Between March 16, 1998 and April 16, 1998, Mr. Nicholson and Mr.
Grijalva had further discussions about the consolidation in the oil and gas
service industry and a possible combination of Camco and Schlumberger.
On April 6, 1998, Mr. Grijalva sent to Mr. Nicholson a letter analyzing two
stock exchange alternatives relating to a possible transaction between
Schlumberger and Camco.
On April 17, 1998, Mr. Nicholson met with Mr. Grijalva and Euan Baird,
Chairman and Chief Executive Officer of Schlumberger, to discuss a possible
combination of Schlumberger and Camco.
On April 21, 1998, Mr. Nicholson advised the Camco Board of Directors of the
status of discussions with Mr. Grijalva. At this meeting Mr. Nicholson
indicated that Mr. Grijalva had proposed financial terms for a possible merger
on the basis of an exchange ratio between 1.04 and 1.12 shares of Schlumberger
Common Stock for each share of Camco Common Stock. Based on the information
provided by Mr. Nicholson, the Board of Directors decided to engage Morgan
Stanley & Co. Incorporated ("Morgan Stanley") to advise it with respect to
financial matters.
On April 30, 1998, the Camco Board of Directors held a special meeting at
which Mr. Nicholson advised the Board of Directors that Schlumberger remained
interested in a possible merger with Camco. The Board of Directors indicated
that it was intrigued by a possible transaction with Schlumberger but that it
also believed in the favorable prospects of Camco as an independent company.
The Board of Directors determined that management of the Company should
develop an analysis of the prospects of Camco as an independent company.
On May 11, 1998, Mr. Nicholson died suddenly. In response, the Camco Board
of Directors met and appointed Gilbert Tausch as Chairman of the Board,
President and Chief Executive Officer. The Board of Directors also appointed a
special committee consisting of Charles P. Siess, Jr., Robert L. Howard and
William J. Johnson with William A. Krause to act as an alternate (the "Special
Committee") to conduct an executive search for a permanent chief executive
officer and to continue discussions concerning a possible transaction with
Schlumberger and make recommendations to the Board of Directors. Later that
day, Camco and Schlumberger signed confidentiality agreements relating to an
exchange of information in connection with a possible transaction.
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On May 18, 1998, the Special Committee met, at which time Mr. Tausch
reported that he had advised Mr. Grijalva, as directed by the Board of
Directors, that Camco was not prepared to discuss any financial terms of a
possible merger until after the Board of Directors had considered the
prospects of Camco as an independent company. The Special Committee requested
management to make a presentation of its analysis of such prospects to the
Board of Directors the following week and Morgan Stanley to be prepared to
comment thereon. The Special Committee also discussed providing management's
analysis to Schlumberger and its advisors after the Board of Directors had
completed its review.
On May 26, 1998, Camco management presented an analysis of the long-term
prospects of Camco as an independent company to the Board of Directors. Morgan
Stanley also presented its views with respect to the analysis and a possible
combination with Schlumberger. Thereafter, the Camco Board of Directors
instructed Morgan Stanley to advise Goldman, Sachs & Co. ("Goldman Sachs"),
financial advisor to Schlumberger, that if Schlumberger could deliver superior
value to the Camco stockholders than that which Camco believed it could
achieve as an independent company, the Board of Directors was prepared to
consider a transaction in light of Camco's high respect for Schlumberger and
the opportunity for its stockholders to own an equity interest therein. The
Board of Directors directed management to finalize a presentation to
Schlumberger. While the Board of Directors made no recommendation with respect
to a possible exchange ratio, the Board of Directors focused on a fixed
exchange ratio of 1.25 shares of Schlumberger Common Stock for each share of
Camco Common Stock based on the then public trading prices of approximately
$79 and $69 for Schlumberger Common Stock and Camco Common Stock,
respectively. The Board of Directors directed its advisors and Camco
management not to discuss financial terms of a possible merger with
Schlumberger or its advisors.
On May 29, 1998, Camco management made a presentation relating to Camco's
businesses and its prospects to certain officers of Schlumberger and
representatives of Goldman Sachs.
On June 1, 1998, the Camco Board of Directors met to discuss the
presentation to Schlumberger on May 29, 1998. The Board of Directors
reiterated its position that Camco was not for sale but was still interested
in evaluating a possible combination with Schlumberger. The Board of Directors
also determined that Schlumberger should substantially complete its
preliminary due diligence procedures before financial terms would be
discussed.
On June 4, 1998, the Special Committee held a meeting at which Morgan
Stanley reported that Schlumberger had completed its initial due diligence.
Morgan Stanley also reported that it had discussed with Goldman Sachs a
possible merger at an exchange ratio of 1.25 shares of Schlumberger Common
Stock for each share of Camco Common Stock. Morgan Stanley advised the Special
Committee that Goldman Sachs indicated that Schlumberger was surprised at the
magnitude of the proposed exchange ratio. Morgan Stanley further advised the
Committee that Goldman Sachs had later indicated that Schlumberger stated that
the present proposal of 1.25 was above any range previously discussed. Goldman
Sachs then advised Morgan Stanley that Schlumberger would make a final offer
of an exchange ratio of 1.16. In the discussion, Goldman Sachs pointed out
that historically Camco Common Stock had traded at a level of about .80 in
relation to the price of Schlumberger Common Stock and that Schlumberger's
proposal represented a 45% premium to historic levels. Based on the response
from Goldman Sachs and the recommendation of Morgan Stanley, the Special
Committee requested that the Committee's chairman, Mr. Siess, discuss the
financial terms directly with Mr. Baird. The Special Committee also
recommended that Mr. Siess propose either a fixed exchange ratio of 1.20 or a
floating exchange ratio which fixed the price at $90 with a collar on the
exchange ratio of 1.16 and 1.24.
On the morning of June 8, 1998, Mr. Siess met with Mr. Baird. As a result of
the meeting, Mr. Siess agreed to recommend an exchange ratio of 1.18 to the
Special Committee. The Special Committee met later that morning and Mr. Siess
reported on his meeting with Mr. Baird. Morgan Stanley then advised the
Special Committee that, subject to review with Morgan Stanley's fairness
opinion committee, it would be in a position to issue an opinion that the
1.18-to-1 exchange ratio was fair to the Camco stockholders from a financial
point of view. After discussion, the Special Committee voted unanimously to
recommend the exchange ratio of 1.18 shares of Schlumberger Common Stock for
each share of Camco Common Stock, subject to satisfactory
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negotiations of the other terms of a definitive agreement and receipt of a
fairness opinion from Morgan Stanley. Later in the day, the Special Committee
made its recommendation to the Camco Board of Directors and after discussion,
the Board of Directors unanimously accepted the recommendation of the Special
Committee as to the exchange ratio and instructed the Special Committee to
proceed to negotiate the other terms of a definitive agreement for the Merger.
On June 12, 1998, the Special Committee provided the Camco Board of
Directors with an update on the status of the negotiations of the terms of a
definitive agreement including a review of the open issues. Morgan Stanley
distributed to the Board of Directors a presentation with respect to the
Merger and reviewed that presentation with the directors. Morgan Stanley
reported that it had completed its due diligence and rendered its oral opinion
that, as of such date and based upon and subject to the various considerations
set forth in its opinion, the exchange ratio of 1.18 shares of Schlumberger
Common Stock per share of Camco Common Stock pursuant to the Merger Agreement
was fair from a financial point of view to holders of Camco Common Stock.
On June 18, 1998, the Special Committee advised the Camco Board of Directors
that the final terms of the definitive agreement had been negotiated subject
to Board of Directors approval. Morgan Stanley then advised the Board of
Directors that it would issue its fairness opinion as of that date, subject to
Board of Directors approval of the Merger. After discussion, the Board of
Directors unanimously approved the Merger Agreement and each director
acknowledged that he intended to vote his shares in favor of the Merger.
CAMCO'S REASONS FOR THE MERGER
The Camco Board of Directors believes that the terms of the Merger are in
the best interests of Camco and its stockholders, and has unanimously approved
the Merger and the Merger Agreement and recommends the approval and adoption
by Camco's stockholders.
The Camco Board of Directors views the Merger as a means of achieving the
long-term strategic and financial goals of Camco while at the same time
offering the Camco stockholders the ability to participate in a broader range
of activities of the oil and gas service industry. The Board of Directors also
believes the Merger offers a number of synergistic opportunities, including
the ability to (i) leverage Camco's product offerings within a larger
distribution and service system; (ii) increase market share and revenues by
integrating and bundling complementary products and services; (iii) increase
critical mass in technology and product development; (iv) become part of one
of the world's largest energy service companies, thereby expanding the capital
base and access to capital; and (v) reduce combined corporate and field
operating costs in relationship to revenues.
In reaching its conclusion to approve the Merger, the Camco Board of
Directors also considered the following factors:
(i) Information concerning the financial performance and condition,
business operations and prospects of each of Camco and Schlumberger, and
Camco's projected future performance and prospects as a separate entity and
on a combined basis with Schlumberger.
(ii) Current industry, economic and market conditions, which have
encouraged business combinations and other strategic alliances in the oil
and gas industry.
(iii) Recent and historical market prices of Camco Common Stock and
Schlumberger Common Stock.
(iv) The structure of the transaction and terms of the Merger Agreement
and the 1.18-to-1 exchange ratio, which were the result of arm's-length
negotiations between Camco and Schlumberger.
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(v) The financial analyses and opinion of Morgan Stanley.
(vi) The fact that the Merger would provide holders of Camco Common Stock
with the opportunity to receive a significant premium over current market
prices for Camco Common Stock.
(vii) The terms of the Merger Agreement that permit the Camco Board of
Directors, in the exercise of its fiduciary duties and subject to certain
conditions, to terminate the Merger Agreement if the Camco Board of
Directors receives a takeover proposal which the Camco Board of Directors
deems to be a "superior proposal," as that term is defined in the Merger
Agreement. In that regard, the Camco Board of Directors noted that if it so
terminates the Merger Agreement, Camco will be obligated to pay
Schlumberger a $90 million fee. The Camco Board of Directors noted that the
Merger Agreement also provides that, if another proposal is outstanding and
Camco's stockholders do not approve the Merger, then if Camco consummates
certain other transactions by September 30, 1999, Camco will be obligated
to pay Schlumberger a $90 million fee. The Camco Board of Directors did not
view the termination fee provision of the Merger Agreement as unreasonably
impeding any interested third party from proposing a superior transaction.
See "Certain Terms of the Merger Agreement--Certain Covenants--No
Solicitation" and "--Termination of the Merger Agreement--Termination Fees
Payable by Camco".
(viii) The expectation that the Merger will afford Camco's stockholders
the opportunity to receive Schlumberger Common Stock in a transaction that
is not expected to have any immediate U.S. federal income tax impact.
(ix) The expectation that the combination will be able to be accounted
for as a pooling-of-interests.
(x) The historical performance and reputation of Schlumberger.
(xi) The likelihood that the Merger would be consummated.
In determining that the Merger was in the best interest of Camco's
stockholders, the Camco Board of Directors considered the factors above as a
whole and did not assign specific or relative weights to such factors. The
Camco Board of Directors believes that the Merger is an opportunity for
Camco's stockholders to participate in a combined enterprise that has
significantly greater business and financial resources than Camco would have
absent the Merger and to receive, on a tax-deferred basis, a premium for their
Camco Common Stock based on recent market prices.
RECOMMENDATION OF THE CAMCO BOARD OF DIRECTORS
For the reasons set forth under "--Background of the Merger" and "--Camco's
Reasons for the Merger," the Camco Board of Directors believes that the Merger
is in the best interests of Camco and the holders of Camco Common Stock. THE
CAMCO BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AND THE MERGER
AGREEMENT AND RECOMMENDS THAT THE HOLDERS OF CAMCO COMMON STOCK VOTE "FOR"
ADOPTION AND APPROVAL OF THE MERGER AND THE MERGER AGREEMENT.
OPINION OF FINANCIAL ADVISOR TO CAMCO
Morgan Stanley was retained by Camco to act as financial advisor in
connection with the Merger. Morgan Stanley is an internationally recognized
investment banking firm and was selected by Camco based on Morgan Stanley's
qualifications and expertise in the oil services industry.
At the June 12, 1998 meeting of the Camco Board of Directors, Morgan Stanley
rendered its oral opinion that, as of such date and based upon and subject to
the various considerations set forth in its opinion, the exchange ratio of
1.18 shares of Schlumberger Common Stock per share of Camco Common Stock (the
"Exchange Ratio") pursuant to the Merger Agreement is fair from a financial
point of view to holders of Camco Common Stock (other than Schlumberger and
its affiliates). Morgan Stanley orally confirmed its opinion at the
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June 18, 1998 meeting of the Camco Board of Directors and delivered to the
Camco Board of Directors a written opinion dated June 18, 1998 confirming its
oral opinion.
THE FULL TEXT OF MORGAN STANLEY'S WRITTEN OPINION, WHICH SETS FORTH, AMONG
OTHER THINGS, ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED AND
THE LIMITS OF THE REVIEW UNDERTAKEN, IS ATTACHED AS ANNEX C TO THIS PROXY
STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. HOLDERS OF
SHARES OF CAMCO COMMON STOCK ARE URGED TO, AND SHOULD, READ THE OPINION
CAREFULLY AND IN ITS ENTIRETY. MORGAN STANLEY'S OPINION IS ADDRESSED TO THE
CAMCO BOARD OF DIRECTORS AND ADDRESSES THE FAIRNESS OF THE EXCHANGE RATIO
PURSUANT TO THE MERGER AGREEMENT FROM A FINANCIAL POINT OF VIEW TO THE HOLDERS
OF CAMCO COMMON STOCK AND IT DOES NOT ADDRESS ANY OTHER ASPECT OF THE MERGER
NOR DOES IT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER OF CAMCO SHARES AS
TO HOW CAMCO'S STOCKHOLDERS SHOULD VOTE AT THE SPECIAL MEETING. THE SUMMARY OF
THE OPINION OF MORGAN STANLEY SET FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINION.
In rendering its opinion, Morgan Stanley, among other things, (i) reviewed
certain publicly available financial statements and other information of Camco
and Schlumberger, respectively; (ii) reviewed certain internal financial
statements and other financial and operating data concerning Camco prepared by
the management of Camco; (iii) analyzed certain financial projections prepared
by the management of Camco; (iv) discussed the past and current operations and
financial condition and the prospects of Camco, including information related
to certain strategic, financial and operational benefits anticipated from the
Merger, with senior executives of Camco; (v) discussed the past and current
operations and financial condition and the prospects of Schlumberger with
senior executives of Schlumberger; (vi) reviewed the pro forma impact of the
Merger on Schlumberger's earnings per share and other financial ratios; (vii)
reviewed the reported prices and trading activity for the Camco Common Stock
and the Schlumberger Common Stock; (viii) discussed with senior management of
Camco and Schlumberger certain research analyst projections for Camco and
Schlumberger, respectively; (ix) compared the financial performance of Camco
and Schlumberger and the prices and trading activity of the Camco Common Stock
and the Schlumberger Common Stock with that of certain other comparable
publicly traded companies and their securities; (x) reviewed the financial
terms, to the extent publicly available, of certain comparable acquisition
transactions; (xi) participated in discussions and negotiations among
representatives of Camco and Schlumberger and their financial and legal
advisors; (xii) reviewed the draft Merger Agreement, the draft Transaction
Agreement dated June 18, 1998 between Camco and Schlumberger and certain
related documents; and (xiii) performed such other analyses as Morgan Stanley
deemed appropriate.
In rendering its opinion, Morgan Stanley assumed and relied upon, without
independent verification, the accuracy and completeness of the information
reviewed by it for the purposes of this opinion. With respect to the financial
projections, including the information relating to certain strategic,
financial and operational benefits anticipated to result from the Merger,
Morgan Stanley assumed that they have been reasonably prepared on bases
reflecting the best currently available estimates and judgments of the future
financial performance of Camco. In addition, Morgan Stanley assumed that the
Merger will be consummated in accordance with the terms set forth in the
Merger Agreement, including, among other things, that the Merger will be
accounted for as a pooling-of-interests business combination in accordance
with U.S. Generally Accepted Accounting Principles and the Merger will be
treated as a tax-free reorganization and/or exchange, each pursuant to the
Internal Revenue Code of 1986, as amended. Morgan Stanley did not make any
independent valuation or appraisal of the assets or liabilities of the Company
nor had it been furnished with any such appraisals. Morgan Stanley's opinion
is necessarily based on economic, market and other conditions as in effect on,
and the information made available to it as of, the date of its opinion.
In arriving at its opinion, Morgan Stanley was not authorized to solicit,
and did not solicit, interest from any party with respect to the acquisition
of Camco.
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The following is a brief summary of certain analyses performed by Morgan
Stanley and reviewed with the Camco Board of Directors on June 12, 1998. On
June 18, 1998, Morgan Stanley reaffirmed its opinion, as of such date, and
based upon and subject to the various considerations set forth in its written
opinion as to the fairness from a financial point of view of the Exchange
Ratio to holders of Camco Common Stock.
Historical Common Stock Performance. Morgan Stanley's analysis of Camco
Common Stock performance consisted of an historical analysis of closing prices
and trading volumes over the period from December 29, 1995 to June 11, 1998.
During that period, based on closing prices on the NYSE, Camco Common Stock
achieved a high closing price of $81.00 on October 9, 1997 and a low closing
price of $25.25 on January 17, 1996. Additionally, Morgan Stanley noted that
Camco Common Stock closed at a price of $56.94 on June 11, 1998, the last
trading day prior to Morgan Stanley rendering its oral fairness opinion to the
Board of Directors.
Morgan Stanley's analysis of Schlumberger Common Stock performance consisted
of an historical analysis of closing prices and trading volumes over the
period from December 29, 1995 to June 11, 1998. During that period, based on
closing prices on the NYSE, Schlumberger Common Stock achieved a high closing
price of $94.1875 on November 5, 1997 and a low closing price of $33.125 on
January 15, 1996. Additionally, Morgan Stanley noted that Schlumberger Common
Stock closed at a price of $70.81 on June 11, 1998.
Comparative Stock Price Performance. Morgan Stanley performed an historical
analysis of closing prices from December 29, 1995 to June 11, 1998 of: Camco
Common Stock; Schlumberger Common Stock; the S&P 400 Index; an index of large
capitalization oilfield services companies ("Large Cap Oilfield Service
Index") consisting of Baker Hughes, Inc., Dresser Industries, Inc.,
Halliburton Company and Schlumberger Limited; and an index of middle
capitalization oilfield services companies ("Mid Cap Oilfield Service Index")
consisting of BJ Services Company, EVI Weatherford, Inc., National-Oilwell,
Inc., Cooper Cameron Corp., Smith International, Inc. and Tuboscope, Inc.
Morgan Stanley compared the performance of such companies and indexes to the
performance of Camco's Common Stock during such period. Morgan Stanley
observed that Camco performed similarly to Schlumberger, and the Large Cap
Oilfield Service Index outperformed the S&P 400 Index and underperformed the
Mid Cap Oilfield Service Index.
Comparable Public Company Analysis. As part of its analysis, Morgan Stanley
compared certain publicly available financial information of two groups of
comparable publicly traded oilfield service companies, including Baker Hughes
Inc., Cooper Cameron Corp., EVI Weatherford, Inc. and Smith International,
Inc. (collectively, the "Tier One Camco Comparable Companies"); and BJ
Services Company and National-Oilwell, Inc. (collectively, the "Tier Two Camco
Comparable Companies") and applied these statistics to the financial
performance of Camco. Such financial information included the price to
earnings multiple, price to cash flow multiple and market capitalization to
earnings before interest, tax, depreciation and amortization ("EBITDA")
multiple based on First Call median EPS forecasts and research analysts'
estimates of forward operating performance.
Such analyses indicated that as of June 11, 1998 and based on a compilation
of First Call estimates, Camco traded at 18.1 times forecasted earnings for
the calendar year 1998, 11.8 times forecasted cash flow for the calendar year
1998, and market capitalization represented 8.7 times forecasted EBITDA for
the calendar year 1998, compared to a range of multiples based on 1998
forecasted earnings (12.4 to 17.4 times, 14.7 mean for the Tier One Camco
Comparable Companies; 13.3 to 16.1 times, 14.7 mean for the Tier Two Camco
Comparable Companies), 1998 forecasted cash flow (7.5 to 10.8 times, 9.4 mean
for the Tier One Camco Comparable Companies; 7.9 to 13.8 times, 10.8 mean for
the Tier Two Camco Comparable Companies) and market capitalization to 1998
forecasted EBITDA (6.4 to 8.5 times, 7.6 mean for the Tier One Camco
Comparable Companies; 6.8 to 9.1 times, 8.0 mean for the Tier Two Camco
Comparable Companies). Additionally, Morgan Stanley noted that, based on
management's estimates of forward operating performance, as of June 11, 1998,
Camco Common Stock traded at 17.4x 1998 forecasted earnings, 11.3x 1998
forecasted cash flow and 8.5x 1998 forecasted EBITDA, respectively.
As part of its analysis, Morgan Stanley also compared certain available
financial information of a group of comparable publicly traded oilfield
service companies and applied these statistics to the financial performance of
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Schlumberger. Comparable companies included Halliburton Company, Dresser
Industries, Inc., Baker Hughes Inc., BJ Services Company, Camco International
Inc., Coflexip Stena Offshore Group S.A., Cooper Cameron Corp., EVI
Weatherford, Inc., National-Oilwell, Inc., Smith International, Inc.,
Tuboscope, Inc., Varco International, Inc. and Western Atlas, Inc.
(collectively, the "Oilfield Service Comparable Companies"). Such financial
information included the price to earnings multiple and price to cash flow
multiple and EBITDA multiple based on First Call median EPS forecasts and
research analysts' estimates of forward operating performance. Such analyses
indicated that as of June 11, 1998 and based on a compilation of First Call
estimates, Schlumberger traded at 23.2 times forecasted earnings for the
calendar year 1998, 19.1 times forecasted earnings for 1999, 13.8 times
forecasted cash flow for the calendar year 1998 and 12.1 times forecasted cash
flow for the calendar year 1999. These multiples were compared to a range of
multiples based on 1998 forecasted earnings (12.4 to 32.9 times, 18.0 mean),
1999 forecasted earnings (9.2 to 26.8 times, 14.3 mean), 1998 forecasted cash
flow (7.5 to 13.8 times, 10.8 mean) and 1999 forecasted cash flow (6.1 to 11.0
times, 9.1 mean) for the Oilfield Service Comparable Companies, respectively.
No company utilized in the comparable public company analysis or the
comparable stock price performance is identical to Camco or Schlumberger.
Accordingly, an analysis of the results of the foregoing necessarily involves
complex considerations and judgments concerning differences in financial and
operating characteristics of Camco or Schlumberger and other factors that
could affect the public trading value of the companies to which they are being
compared. In evaluating the comparable companies, Morgan Stanley made
judgments and assumptions with regard to industry performance, general
business, economic, market and financial conditions and other matters, many of
which are beyond the control of Camco or Schlumberger, such as the impact of
consolidation on Camco or Schlumberger and the industry generally, industry
growth and/or cyclicality and the absence of any adverse material change in
the financial conditions and prospects of Camco or Schlumberger or the
industry or in the financial markets in general. Mathematical analysis (such
as determining the mean or median) is not, in itself, a meaningful method of
using comparable company data.
Discounted Cash Flow Analysis. Morgan Stanley performed a discounted cash
flow ("DCF") analysis of Camco based on certain financial projections prepared
by Camco management for Camco for the years 1998 through 2002. Morgan Stanley
discounted the unlevered free cash flows of Camco over the forecast period at
a range of discount rates, representing an estimated weighted average cost of
capital for Camco, and terminal values based on a range of EBITDA multiples
based on current public market valuation implied EBITDA multiples of
comparable companies. Unlevered free cash flow was calculated as net income
available to common stockholders plus the aggregate of depreciation and
amortization, deferred taxes and other non-cash expenses and after-tax net
interest expense less the sum of capital expenditures and investment in non-
cash working capital. The present values determined from these analyses were
then adjusted for long-term liabilities, including debt net of cash, to arrive
at an equity value. Based on this analysis, Morgan Stanley calculated per
share values for Camco ranging from $80.61 to $95.69. Morgan Stanley also
performed analyses to determine the sensitivity of the DCF valuation to
changes in the projections of future performance. Sensitivities to Camco
management's plan projections for either a 1% change in annual operating
margin or a 1% change in annual revenue growth yielded an impact on value of
approximately $3 to $4 per share. Sensitivities to Camco management's plan
projections for both a 1% change in annual operating margin and a 1% change in
annual revenue growth yielded an impact on value of approximately $7 to $8 per
share.
Analysis of Selected Precedent Transactions. Using publicly available
information, Morgan Stanley reviewed the terms of nine recently announced
pending or completed oilfield service acquisition transactions (collectively,
the "Oilfield Services Transactions"). For the Oilfield Services Transactions,
the premium to unaffected market price ranged from 20% to 106%, with a mean of
56%.
No transaction utilized as a comparison in the analysis of selected
precedent transactions is identical to the Merger. Accordingly, an analysis of
the results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics
and other factors that would affect the acquisition value of the companies to
which it is being compared. In evaluating the precedent transactions,
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Morgan Stanley made judgments and assumptions with regard to industry
performance, global business, economic, market and financial conditions and
other matters, many of which are beyond the control of Camco, such as the
impact of competition on Camco and the industry generally, industry growth
and/or cyclicality and the absence of any adverse material change in the
financial conditions and prospects of Camco or the industry or the financial
markets in general. Mathematical analysis (such as determining the mean or
median) is not, in itself, a meaningful method of using precedent transactions
data.
Historical Exchange Ratio Analysis. Morgan Stanley also reviewed the ratio
of the closing prices of Camco Common Stock to Schlumberger Common Stock over
the intervals of one month, three months, six months and one year prior to
June 11, 1998. Such implied ratios averaged 0.87 over the last month, 0.83
over the last three months, 0.80 over the last six months and 0.82 over the
last year. Morgan Stanley noted that the ratio based on closing prices on June
11, 1998 was 0.80.
Pro Forma Analysis of the Merger. Morgan Stanley analyzed the pro forma
impact of the Merger on earnings per share and cash flow per share for Camco
for the fiscal years 1998 through 2000. The pro forma results were calculated
as if the Merger had closed at the beginning of 1998, and were based on
projected earnings and cash flow derived from First Call Estimates for
Schlumberger and management projections for Camco. The pro forma analysis also
took into account the synergies and cost savings expected to be derived from
the Merger as estimated by management of Camco. Morgan Stanley noted that,
assuming the Merger would be treated as a pooling-of-interests for accounting
purposes, the Merger would be slightly dilutive to Schlumberger's earnings per
share in 1998 and slightly accretive to Schlumberger's earnings per share in
1999.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. Morgan
Stanley believes that its analyses must be considered as a whole and that
selecting portions of its analyses and the factors considered by it, without
considering all analyses and factors, would create an incomplete view of the
process underlying its opinion. In addition, Morgan Stanley may have deemed
various assumptions more or less probable than other assumptions, so that the
range of valuations resulting for any particular analysis described above
should therefore not be taken to be Morgan Stanley's view of the actual value
of Camco or Schlumberger.
In connection with the review of the Merger by the Camco Board of Directors,
Morgan Stanley performed a variety of financial and comparative analyses for
purposes of its opinion given in connection therewith. The summary set forth
above does not purport to be a complete description of the analyses performed
by Morgan Stanley in connection with the Merger.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Camco or Schlumberger.
The analyses performed by Morgan Stanley are not necessarily indicative of
actual values, which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of
Morgan Stanley's preparation of its fairness opinion and were provided to the
Camco Board in connection with the delivery of Morgan Stanley's oral and
written opinion. These analyses do not purport to be appraisals or to reflect
the prices at which Camco or Schlumberger might actually be sold.
As described above, Morgan Stanley's opinion and presentation to the Camco
Board of Directors were one of many factors taken into consideration by the
Camco Board of Directors in making its determination to approve the Merger
Agreement and the Transaction. Consequently, the Morgan Stanley analyses
described above should not be viewed as determinative of the opinion of the
Camco Board of Directors or the management of Camco with respect to the value
of Camco or Schlumberger or whether the Camco Board of Directors would have
been willing to agree to a different Exchange Ratio.
Morgan Stanley is a full services securities firm, engaged in securities
trading and brokerage activities, as well as providing investment banking,
financial and financial advisory services. As part of its investment banking
business, Morgan Stanley is regularly engaged in the valuation of businesses
and securities in connection with
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mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes. In the ordinary
course of its trading, brokerage and financing activities, Morgan Stanley and
its affiliates may actively trade or effect transactions in the debt and
equity securities or senior loans of Camco and Schlumberger for their own
account or for the account of customers and may, from time to time, hold a
long or short position in, and buy and sell, securities of Camco or
Schlumberger. In the past, Morgan Stanley and its affiliates have provided
financial advisory and financing services to Camco, Schlumberger and their
affiliates and have received customary fees in connection with these services.
Pursuant to an engagement letter between Camco and Morgan Stanley, Camco
retained Morgan Stanley as financial advisor in connection with a potential
transaction involving Camco. Camco has agreed to pay Morgan Stanley (i) an
advisory fee estimated to be between $150,000 and $250,000, which is payable
in the event that the Merger is not completed, and (ii) if the Merger is
successfully completed, a transaction fee equal to approximately .367% of the
aggregate consideration payable in the Merger, as calculated and payable upon
the closing of the Merger, against which any advisory fees paid will be
credited. Camco has also agreed to reimburse Morgan Stanley for its out-of-
pocket expenses related to its engagement. Camco has agreed to indemnify
Morgan Stanley and its affiliates, their respective directors, officers,
agents and employees, and each person, if any, controlling Morgan Stanley or
any of its affiliates against certain liabilities and expenses, including
liabilities under the federal securities laws arising out of or in connection
with Morgan Stanley's engagement.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Camco Board of Directors with
respect to the Merger, Camco's stockholders should be aware that certain
members of the Camco Board of Directors and certain officers of Camco have
interests in respect of the Merger separate from their interests as holders of
Camco Common Stock. Such interests include (i) potential change in control
payments of approximately $666,000, $1,301,000, $1,304,000 and $1,064,000 for
Merle C. Muckleroy, Robert J. Caldwell, Herbert S. Yates and Stephen D. Smith,
respectively, who are expected to continue in employment with Camco following
the Merger, if the employment of any such person is terminated by Schlumberger
without cause or by any such employee for good reason during the three years
following the Merger (the aggregate amount of all such payments to all
officers of Camco would be approximately $7.8 million), (ii) completion
payments of $400,000, $300,000, $400,000 and $400,000 for Messrs. Muckleroy,
Caldwell, Yates and Smith, respectively, if they remain employed by Camco
until the Merger is completed (given that assumption, the aggregate of all
such payments to all officers of Camco would be approximately $2.7 million),
(iii) retention payments of $1,100,000, $900,000, $1,100,000 and $1,100,000
for Messrs. Muckleroy, Caldwell, Yates and Smith, respectively, if they remain
employed by Camco for one year following the completion of the Merger (given
that assumption, the aggregate of all such payments to all officers of Camco
would be approximately $6.6 million) and (iv) the maintenance by Schlumberger
of directors and officers liability insurance for the benefit of the Camco
directors and officers for a period of six years after the Merger at an annual
cost not to exceed two times the last annual premium paid by Camco prior to
June 18, 1998. In addition, unvested options awarded under Camco's long-term
incentive compensation plans between December 1993 and May 1997 to purchase
27,458, 27,583, 28,415 and 20,334 shares of Camco Common Stock held by Messrs.
Muckleroy, Caldwell, Yates and Smith, respectively (158,867 shares for all
officers of Camco in the aggregate), will become vested as a result of the
Merger. The value of these unvested options, based on the difference between
the exercise price and the closing price of the Camco Common Stock on July 24,
1998, is $1,052,000, $1,059,000, $1,099,000 and $664,000 for Messrs.
Muckleroy, Caldwell, Yates and Smith, respectively (approximately $5.9 million
for all officers of Camco in the aggregate). Messrs. Muckleroy, Caldwell,
Yates and Smith also hold 8,334, 8,334, 12,800 and 7,667 shares of restricted
Camco Common Stock, respectively, granted to them under Camco's long-term
incentive compensation plans between December 1993 and July 1997 that will
become unrestricted as a result of the Merger (56,136 shares for all officers
of Camco in the aggregate). The value of these shares, based on the closing
sales price per share of Camco Common Stock on July 24, 1998, is $583,000,
$583,000, $896,000 and $537,000, respectively (approximately $4.0 million for
all officers of Camco in the aggregate). Finally, unvested options awarded
under the Board of Directors' Stock
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Option Plan between May 1996 and August 1997 to purchase 5,002, 6,700, 5,000,
6,668, 6,667, 8,335 and 8,335 shares of Camco Common Stock held by William J.
Johnson, T. Don Stacy, Gilbert H. Tausch, William A. Krause, Lester Varn, Jr.,
Robert L. Howard and Charles P. Siess, Jr., respectively, will become vested
as a result of the Merger. The value of these unvested options based on the
difference between the exercise price and the closing price of the Common
Stock on July 24, 1998 is $113,000, $62,000, $113,000, $176,000, $73,000,
$165,000 and $165,000 for Messrs. Johnson, Stacy, Tausch, Krause, Varn, Howard
and Siess, respectively.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain U.S. Federal income tax
consequences of the Merger which are generally applicable to holders of Camco
Common Stock under the Internal Revenue Code of 1986, as amended (the "Code").
Tax consequences which are different from or in addition to those described
herein may apply to Camco stockholders who are subject to special treatment
under the U.S. federal income tax laws, such as non-U.S. persons, tax exempt
organizations, financial institutions, insurance companies, broker-dealers,
Camco stockholders who hold their Camco Common Stock as part of a hedge,
straddle, wash sale, synthetic security, conversion transaction, or other
integrated investment comprised of Camco Common Stock and one or more other
investments, persons who acquired their shares in compensatory transactions,
and any Camco stockholder who, after the Merger, owns 5% or more of either the
total voting power or the total value of the stock of Schlumberger. The
discussion does not address non-U.S. or state or local tax considerations.
THIS SUMMARY IS NOT A SUBSTITUTE FOR AN INDIVIDUAL ANALYSIS OF THE TAX
CONSEQUENCES OF THE MERGER TO A CAMCO STOCKHOLDER. EACH CAMCO STOCKHOLDER
SHOULD CONSULT A TAX ADVISER REGARDING THE PARTICULAR FEDERAL, STATE, LOCAL
AND NON-U.S. TAX CONSEQUENCES OF THE MERGER IN LIGHT OF SUCH STOCKHOLDER'S OWN
SITUATION.
It is a condition precedent to the closing of the Merger that opinions of
counsel (the "Opinions") be delivered to the effect that, among other things,
the Merger qualifies as a reorganization under section 368(a) of the Code. The
Opinions will be subject to certain qualifications and assumptions as noted
therein and will rely upon certain representations of Schlumberger, STC and
Camco provided to counsel as a basis for the Opinions, including the
representation that no consideration other than Schlumberger Common Stock (and
cash for fractional shares) will be delivered in exchange for Camco Common
Stock. The Opinions will be based upon counsel's interpretation of the Code,
applicable Treasury regulations, judicial authority and administrative rulings
and practice, all as of the date of the Opinions. There can be no assurance
that future legislative, judicial or administrative changes or interpretations
will not adversely affect the accuracy of the conclusions set forth herein.
The Opinions will not be binding upon the Internal Revenue Service (the
"Service"), and the Service will not be precluded from adopting a contrary
position.
Assuming the Merger qualifies as a reorganization under Section 368(a) of
the Code, the U.S. Federal income tax consequences will include the following:
. No gain or loss will be recognized by Schlumberger or Camco as a result
of the Merger;
. No gain or loss will be recognized by holders of Camco Common Stock
solely upon their receipt in the Merger of Schlumberger Common Stock in
exchange therefor;
. The tax basis of the shares of Schlumberger Common Stock received by a
Camco stockholder in the Merger (including any fractional share not
actually received) will be the same as the tax basis of the Camco Common
Stock surrendered in exchange therefor;
. The holding period of the shares of Schlumberger Common Stock received
by a Camco stockholder in the Merger will include the holding period of the
shares of Camco Common Stock surrendered in exchange therefor, provided
that such shares of Camco Common Stock are held as capital assets at the
effective time of the Merger; and
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. A cash payment in lieu of a fractional share will be treated as if a
fractional share of Schlumberger Common Stock had been received in the
Merger and then redeemed by Schlumberger. Such redemption should qualify as
a distribution in full payment in exchange for the fractional share rather
than as a distribution of a dividend. Accordingly, a Camco stockholder
receiving cash in lieu of a fractional share will recognize gain or loss
upon such payment in an amount equal to the difference, if any, between
such stockholder's basis in the fractional share and the amount of cash
received. Such gain or loss will be a capital gain or loss if the Camco
Common Stock is held as a capital asset at the effective time of the
Merger.
In the event that the Merger were held not to qualify as a reorganization
under section 368(a) of the Code, a Camco stockholder would recognize gain or
loss in an amount equal to the difference between the stockholder's basis in
his or her shares and the fair market value, as of the effective date of the
Merger, of the Schlumberger Common Stock received in exchange therefor. In
such event, the stockholder's basis in the Schlumberger Common Stock so
received would be equal to its fair market value as of the effective date of
the Merger, and the holding period for such stock would begin on the day after
the effective date of the Merger.
THE U.S. FEDERAL INCOME TAX CONSEQUENCES SUMMARIZED ABOVE ARE FOR GENERAL
INFORMATION ONLY. EACH CAMCO STOCKHOLDER SHOULD CONSULT A TAX ADVISER AS TO
THE PARTICULAR CONSEQUENCES OF THE MERGER THAT MAY APPLY TO SUCH STOCKHOLDER,
INCLUDING THE APPLICATION OF STATE, LOCAL, NON-U.S. AND OTHER FEDERAL TAX
LAWS.
ACCOUNTING TREATMENT
STC and Camco intend to account for the Merger using the pooling-of-
interests method of accounting pursuant to Opinion No. 16 of the Accounting
Principles Board. The pooling-of-interests method of accounting assumes that
the combining companies have been merged from inception, and the historical
financial statements for periods prior to consummation of the Merger are
restated as though the companies had been combined from inception. The
restated financial statements are adjusted to conform the accounting policies
of the companies.
The Merger is conditioned on the receipt of favorable letters from the
independent public accountants of each of Schlumberger, STC and Camco to the
effect that, in accordance with generally accepted accounting principles and
the applicable rules and regulations of the Securities and Exchange
Commission, Schlumberger, STC and Camco are each eligible to be a party to a
Merger accounted for as a pooling of interests.
GOVERNMENTAL AND REGULATORY MATTERS
Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder (the "HSR Act"), the
Merger may not be consummated until notifications have been given and certain
information has been furnished to the Federal Trade Commission (the "FTC") and
the Antitrust Division of the United States Department of Justice (the
"Antitrust Division") and specified waiting period requirements have been
satisfied. Schlumberger and Camco filed the required notification and report
forms under the HSR Act with the FTC and the Antitrust Division on June 29,
1998.
Each state in which Schlumberger or Camco has operations also may review the
Merger under state antitrust laws. In addition, regulatory approvals or
filings may be required with the appropriate regulatory authorities in certain
other countries where Schlumberger or Camco conducts business.
At any time before the Effective Time, the Justice Department, the FTC, a
state or non-U.S. governmental authority or a private person or an entity
could seek under the antitrust laws, among other things, to enjoin the Merger
or to cause Schlumberger to divest itself, in whole or in part, of businesses
conducted by Camco or of other businesses conducted by Schlumberger. There can
be no assurance that a challenge to the Merger will not be made, or that, if
such a challenge is made, Schlumberger and Camco will prevail. The obligations
of STC and Camco to consummate the Merger are subject to the condition that
there be no decree, judgment, injunction or other order of a court of
competent jurisdiction or other governmental authority that imposes any
material
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restrictions or limitations on the Merger. Each party has agreed to use its
best efforts to have any such decree, judgment, injunction or order vacated or
lifted.
STC and Camco believe that they will obtain all material required regulatory
approvals prior to the Special Meeting. However, it is not certain that all
such approvals will be received by such time, or at all, and governmental
authorities may impose unfavorable conditions for granting the required
approvals.
NO APPRAISAL RIGHTS
Camco is a Delaware corporation. Section 262 of the Delaware General
Corporation Law provides appraisal rights (sometimes referred to as
"dissenters' rights") to stockholders of a Delaware corporation that is
involved in a Merger under certain circumstances. However, Section 262
appraisal rights are not available to stockholders of a corporation whose
securities are listed on a national securities exchange and whose stockholders
are not required to accept in exchange for their stock anything other than
stock of another corporation listed on a national securities exchange and cash
in lieu of fractional shares. Because Camco Common Stock is traded on the New
York Stock Exchange, and because Camco's stockholders will receive only
Schlumberger Common Stock (which is also traded on the New York Stock
Exchange) and cash in lieu of fractional shares in the Merger, stockholders of
Camco will not have appraisal rights with respect to the Merger.
FEDERAL SECURITIES LAW CONSEQUENCES; RESALE RESTRICTIONS
All shares of Schlumberger Common Stock that will be distributed to
stockholders of Camco in the Merger will be freely transferable, except for
certain restrictions applicable to "affiliates" of Camco. Shares of
Schlumberger Common Stock received by persons who are deemed to be affiliates
of Camco may be resold by them only in transactions permitted by the resale
provisions of Rule 145 (or Rule 144 in the case of such persons who become
affiliates of Schlumberger) or as otherwise permitted under the Securities Act
of 1933, as amended (the "Securities Act"). Persons who may be deemed to be
affiliates of Camco generally include certain officers, directors and
significant stockholders of Camco. The Merger Agreement requires Camco to
cause each of its directors and executive officers to execute a written
agreement to the effect that such persons will not sell, assign or transfer
any of the shares of Schlumberger Common Stock issued to them in the Merger
unless such sale, assignment or transfer has been registered under the
Securities Act, is in conformity with Rule 145 or is otherwise exempt from the
registration requirements under the Securities Act.
Under generally accepted accounting principles, the sale of Schlumberger
Common Stock or Camco Common Stock by an affiliate of either Schlumberger or
Camco within 30 days prior to the Effective Time or thereafter prior to
publication of financial results that include at least 30 days of combined
operations of Schlumberger and Camco after the Effective Time could preclude
pooling-of-interests accounting treatment for the Merger. The Merger is
conditioned on each of Camco's affiliates delivering a written undertaking
that they will not transfer any Camco Common Stock they own within 30 days
prior to the closing date of the Merger Agreement and will not transfer any of
the Schlumberger Common Stock received or to be received by them pursuant to
the Merger until final results of operations of Schlumberger covering at least
30 days of combined operations of Schlumberger and Camco have been published.
Additionally, each of Schlumberger's affiliates must deliver a written
undertaking that they will not transfer Schlumberger Common Stock they own
within 30 days prior to the closing date of the Merger Agreement or until
final results of operations of Schlumberger covering at least 30 days of
combined operations of Schlumberger and Camco have been published.
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CERTAIN TERMS OF THE MERGER AGREEMENT
This section describes the material provisions of the Merger Agreement. This
description does not purport to be complete and is qualified in its entirety
by reference to the Merger Agreement, a copy of which is attached hereto as
Annex A, and which is incorporated herein by reference. All stockholders are
urged to read the Merger Agreement carefully in its entirety.
THE MERGER
Structure. In the Merger, a wholly owned subsidiary of STC will be merged
into Camco, with Camco being the surviving corporation. As a result, Camco
will become a wholly owned subsidiary of STC.
Effective Time. The Merger will become effective when a certificate of
merger relating to the Merger is duly filed with the Secretary of State of the
State of Delaware (the "Effective Time"), which is expected to occur as soon
as possible after the stockholders of Camco have approved the Merger and all
of the other conditions set forth in the Merger Agreement have been satisfied
or waived. STC and Camco anticipate that the Effective Time will occur late in
the third quarter of 1998.
Share Conversion. Pursuant to the terms and subject to the conditions of the
Merger Agreement, each share of Camco Common Stock outstanding immediately
prior to the Effective Time will be converted into 1.18 shares of Schlumberger
Common Stock. All shares of Camco Common Stock that are owned by Camco or its
subsidiaries or Schlumberger or its subsidiaries will, at the Effective Time,
be canceled and retired and will cease to exist, without any payment for those
shares.
Camco Stock Options. Each outstanding option to purchase Camco Common Stock
as of the Effective Time will become an option to acquire a number of shares
of Schlumberger Common Stock equal to the number of shares purchasable
pursuant to the Camco option multiplied by 1.18. If the conversion in the
previous sentence would otherwise result in an optionholder's being entitled
to a fractional share of Schlumberger Common Stock, that optionholder will
receive cash in lieu of that fractional share when the option is fully
exercised as set forth in the Merger Agreement. Camco options that are
qualified under Sections 422-424 of the Internal Revenue Code may be subject
to certain limits on conversion pursuant to the requirements of those sections
in order to maintain their preferential tax treatment. Camco options subject
to Sections 422-424 of the Internal Revenue Code will be converted into as
many shares of Schlumberger Common Stock as is possible without losing their
preferential tax status (up to a maximum of 1.18 shares of Schlumberger Common
Stock per share of Camco Common Stock).
CERTAIN COVENANTS
Interim Operations. From the date of signing the Merger Agreement until the
Effective Time, Camco and its subsidiaries are required to conduct their
businesses in the ordinary course consistent with past practice, to use all
reasonable efforts to preserve their business organizations intact, to keep
available the services of their current officers and employees and to preserve
their relationships with customers, suppliers and others with whom they do
business. In addition, Camco and its subsidiaries may not (subject to certain
limited exceptions) take certain other actions during this period, including
the following:
. declare or pay any dividends other than regular quarterly cash
dividends;
. split, combine or reclassify any outstanding capital stock;
. redeem, repurchase or otherwise acquire any shares of Camco's capital
stock;
. issue, deliver or sell any of their securities;
. amend their certificates of incorporation or bylaws;
. make any acquisition of an entity or business involving the payment of
more than $5 million except as previously agreed; or
31
<PAGE>
. sell, lease, encumber or otherwise dispose of any assets in a single
transaction or in a series of related transactions, except for sales or
leases in the ordinary course of business consistent with past practice and
other dispositions not aggregating more than $5 million except as
previously agreed.
No Solicitation. Camco may not, directly or indirectly, initiate, solicit or
encourage any Acquisition Proposal (as defined below) or engage in any
discussions or negotiations relating to an Acquisition Proposal nor may it
accept an Acquisition Proposal. Camco may, however, engage in discussions with
a party making an unsolicited Acquisition Proposal for the limited purpose of
determining whether that proposal is a Superior Proposal (as defined below).
Notwithstanding these restrictions, until the Camco stockholders have
approved the Merger, Camco may furnish information (pursuant to
confidentiality arrangements) in response to an unsolicited written request
from a proposed bidder if the Camco Board of Directors concludes, based on the
written advice of outside counsel, that the failure to do so would breach the
fiduciary duties of the Camco Board of Directors. Camco has agreed to promptly
notify STC of the pendency of any negotiations respecting, or the receipt of,
any Acquisition Proposal.
If the Board of Directors of Camco receives an Acquisition Proposal that it
believes is a Superior Proposal before the stockholders of Camco have approved
the Merger, Camco may terminate the Merger Agreement and pay a $90 million
Termination Fee. See "--Termination of the Merger Agreement."
"Acquisition Proposal" means any proposal or offer for a tender or an
exchange offer, a Merger, consolidation or other business combination
involving, or a purchase of a 15% or greater equity interest in or
substantially all of the assets of Camco or any of its significant
subsidiaries.
A "Superior Proposal" means any bona fide proposal to acquire, directly or
indirectly, all of the outstanding Camco Common Stock or all or substantially
all of the assets of Camco and its subsidiaries and otherwise on terms which a
majority of the disinterested members of the Board of Directors of Camco
determines in its good faith judgment, based on the written advice of a
nationally recognized financial advisor, to be more favorable to the Camco
stockholders than the Merger.
Special Meetings of Stockholders. Camco has agreed to call the Special
Meeting as promptly as practicable for the purpose of voting upon the adoption
of the Merger Agreement and any related matters. Additionally, Camco has
agreed to use all reasonable efforts to hold the Special Meeting as soon as
practicable after the date the Securities and Exchange Commission declares
this Registration Statement effective.
Mutual Covenants. Camco and STC have agreed, among other things, not to take
any action or to fail to take any action that (i) is reasonably likely to
breach their respective representations and warranties, (ii) would cause the
Merger to fail to qualify as a Section 368(a)(1)(B) reorganization or (iii)
would knowingly jeopardize the Merger as a pooling of interests for accounting
purposes.
Certain Other Covenants. Camco and STC agreed to certain other customary
covenants in the Merger Agreement, including covenants relating to obtaining
necessary consents and approvals; cooperating with each other to obtain
antitrust clearances; providing access to and furnishing information;
providing notices of certain events and consulting with each other regarding
public statements and filings; obtaining agreements from affiliates relating
to stock trading; certain employee matters; and mutually defending any claims
or actions questioning the validity or legality of the transactions
contemplated by the Merger Agreement. STC further agreed to acquire from
Schlumberger the shares of Schlumberger Common Stock necessary to consummate
the Merger. See "--The Transaction Agreement."
CERTAIN REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains substantially reciprocal representations and
warranties by STC and Merger Sub, jointly and severally, and Camco as to the
following, among other things: capitalization; due organization
32
<PAGE>
and good standing; corporate authorization to effect the Merger; governmental
approvals required in connection with the Merger; absence of certain
undisclosed litigation; and no beneficial ownership of stock of the other
party.
In addition, Camco has made certain additional representations and
warranties to STC and Merger Sub in the Merger Agreement with respect to,
among other things: accuracy of its public filings; absence of certain changes
or events; absence of certain undisclosed liabilities; absence of defaults
under certain agreements; compliance with applicable laws; opinion of
financial advisor; antitakeover statutes; amending its rights agreement; tax
matters; employee benefit matters; labor matters; environmental matters; and
brokerage fees.
The representations and warranties in the Merger Agreement do not survive
the Effective Time.
CONDITIONS TO THE MERGER
Conditions to Each Party's Obligations. The obligations of Camco, STC and
Merger Sub to consummate the Merger are subject to the satisfaction of the
following conditions:
. the receipt of approval of the stockholders of Camco;
. the expiration or termination of the applicable waiting period under
the HSR Act and receipt of all governmental and other consents and
approvals required in connection with the consummation of the Merger;
. the absence of any law, judgment, decree, injunction or other order
prohibiting or delaying the consummation of the Merger;
. the effectiveness of this Registration Statement, with no stop order
suspending its effectiveness and no proceedings seeking a stop order;
. the receipt of all necessary authorizations relating to the issuance
and trading of the shares of Schlumberger Common Stock to be issued in
connection with the Merger on the New York Stock Exchange; and
. receipt of letters from their respective, independent accountants to
the effect that Schlumberger, STC and Camco are each eligible to be a party
to a Merger accounted for as a pooling-of-interests.
Additional Conditions to Obligations of STC and Merger Sub. The obligations
of STC and Merger Sub to consummate the Merger are subject to the satisfaction
or waiver by STC at or prior to the Closing Date of the following additional
conditions:
. the representations and warranties of Camco in the Merger Agreement
must be true in all material respects as of the date of the Merger
Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and
as of the Closing Date, except where the failure to be true would not have
a material adverse effect on Camco and its subsidiaries, taken as a whole,
that exceeds $200 million;
. the performance in all material respects by Camco of its obligations
under the Merger Agreement required to be performed at or prior to the
Closing Date;
. the receipt from Camco's directors and executive officers who are
affiliates of Camco of their agreements not to sell their stock for a
certain period of time;
. the receipt of a favorable tax opinion from Baker & Botts, L.L.P.,
counsel to STC and Merger Sub;
. the receipt of certain customary certificates, opinions and other
closing documents; and
. the performance in all material respects by Camco of its obligations
under the Transaction Agreement required to be performed at or prior to the
Delivery Date (as defined) and the satisfaction or waiver of certain
conditions set forth therein.
33
<PAGE>
Additional Conditions to Obligations of Camco. The obligations of Camco to
consummate the Merger are subject to the satisfaction or waiver by Camco at or
prior to the Closing Date of the following additional conditions:
. the representations and warranties of STC and Merger Sub in the Merger
Agreement must be true and correct in all material respects as of the date
of the Merger Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though
made on and as of the Closing Date, except where the failure to be true
would not have a material adverse effect on STC and its affiliates, taken
as a whole, that exceeds $400 million;
. the performance in all material respects by STC and Merger Sub of their
obligations under the Merger Agreement required to be performed at or prior
to the Closing Date;
. the receipt of a favorable tax opinion from Fulbright & Jaworski
L.L.P., counsel to Camco;
. the receipt of certain customary certificates, opinions and other
closing documents;
. the failure of Morgan Stanley, financial advisor to Camco, to revoke,
modify or change its opinion in any manner adverse to the holders of Camco
Common Stock; and
. the performance in all material respects by Schlumberger of its
obligations under the Transaction Agreement required to be performed at or
prior to the Delivery Date (as defined) and the satisfaction or waiver of
certain conditions set forth therein.
TERMINATION OF THE MERGER AGREEMENT
Rights to Terminate. At any time prior to the Effective Time, the Merger
Agreement may be terminated and the transactions contemplated may be abandoned
as follows (any of the following rights to terminate may be waived by the
party possessing the right):
. by the mutual written consent of each party to the Merger Agreement;
. by either Camco or STC if:
. the Merger shall not have been consummated by December 31, 1998
(however, this right is not available to a party whose breach of any
representation or warranty or failure to perform any covenant or
agreement under the Merger Agreement has been the cause of or resulted
in the failure of the Merger to occur on or before such date);
. any court or other governmental authority has issued an order,
decree or ruling restraining or prohibiting the Merger and that order,
decree or ruling is final and non-appealable; or
. any required approval of the stockholders of Camco shall not have
been obtained by reason of the failure to obtain the required vote.
. by STC if:
. Camco fails to call and hold a stockholders' meeting for the
purpose of voting upon the Merger Agreement and the Merger by December
31, 1998;
. Camco fails to comply in any material respect with any of the
covenants or agreements contained in the Merger Agreement to be
complied with or performed by Camco at or prior to such date of
termination (provided that breach has not been cured within 30 days
following receipt by Camco of notice of the breach and is existing at
the time of termination of the Merger Agreement);
. any representation or warranty of Camco contained in the Merger
Agreement was not true in all material respects when made (provided the
breach has not been cured within 30 days following receipt by Camco of
notice of the breach and is existing at the time of termination of the
Merger Agreement) or on and as of the Effective Time as if made on and
as of the Effective Time (except to the extent it
34
<PAGE>
relates to a particular date), except where the failure to be true
(without giving effect to the individual materiality thresholds of the
representations and warranties) would not have a material adverse
effect on Camco and its subsidiaries, taken as a whole, that exceeds
$200 million;
. the Board of Directors of Camco or any committee thereof: (i)
withdraws, modifies or changes its recommendation of the Merger
Agreement or the Merger in a manner adverse to Schlumberger and its
subsidiaries, taken as a whole, or has resolved to do any of the
foregoing, or (ii) approves or recommends, or proposes to approve or
recommend, any Acquisition Proposal; or
. the Transaction Agreement has been terminated by Camco.
. by Camco if:
. STC or Merger Sub fails to comply in any material respect with any
of the covenants or agreements contained in the Merger Agreement to be
complied with or performed by it at or prior to such date of
termination (provided that breach has not been cured within 30 days
following receipt by STC of notice of the breach and is existing at the
time of termination of the Merger Agreement);
. any representation or warranty of STC or Merger Sub contained in
the Merger Agreement was not true in all material respects when made
(provided that breach has not been cured within 30 days following
receipt by STC of notice of the breach and is existing at the time of
termination of the Merger Agreement) or on and as of the Effective Time
as if made on and as of the Effective Time (except to the extent it
relates to a particular date), except where the failure to be true
(without giving effect to the individual materiality thresholds of the
representations and warranties) would not have a material adverse
effect on STC and its affiliates, taken as a whole, that exceeds $400
million;
. prior to approval of the Merger and the Merger Agreement by the
stockholders of Camco, Camco receives a Superior Proposal and pays STC
the Termination Fee (described below); or
. the Transaction Agreement has been terminated by Schlumberger.
If the Merger Agreement is terminated pursuant to its terms, no provision of
the Merger Agreement will survive (other than the provisions relating to
payment of expenses and confidentiality), and termination will be without any
liability on the part of any party, other than liability for which the
Termination Fee is the sole remedy or liability for a willful breach of the
Merger Agreement.
Termination Fees Payable by Camco. Camco has agreed to pay STC $90 million
in immediately available funds (the "Termination Fee") if the Merger Agreement
is terminated:
. by Camco because it receives a Superior Proposal prior to receiving
stockholder approval of the Merger and the Merger Agreement;
. by STC because the Camco Board of Directors approves or recommends, or
proposes to approve or recommend, to Camco stockholders any Acquisition
Proposal;
. by STC because the Camco Board of Directors withdraws, modifies or
changes its recommendation of the Merger Agreement or the Merger in an
adverse manner and Camco consummates an alternative transaction on or
before September 30, 1999, in which case the termination fee will be
payable upon consummation of that transaction; or
. because an alternate Acquisition Proposal is made and publicly
announced, the stockholders of Camco do not approve the Merger, and Camco
consummates a transaction pursuant to an alternate Acquisition Proposal on
or prior to September 30, 1999, in which case the Termination Fee will be
payable upon consummation of that transaction.
35
<PAGE>
EXPENSES
Whether or not the Merger or other transactions contemplated by the Merger
Agreement are consummated, all costs and expenses incurred in connection with
the Merger Agreement and the transactions contemplated thereby will be paid by
the party incurring such costs or expenses. However, if the Merger Agreement
is terminated, STC will reimburse Camco up to $5 million for the actual cost
of its employee retention program.
AMENDMENTS
The Merger Agreement may be amended by STC and Camco by written instrument
at any time before or after adoption of the Merger Agreement by the
stockholders of Camco. However, after adoption by the Camco stockholders, no
amendment may be made that by law requires further approval by those
stockholders without such further approval.
THE TRANSACTION AGREEMENT
The following description of the Transaction Agreement does not purport to
be complete and is qualified in its entirety by reference to the Transaction
Agreement, a copy of which is attached hereto as Annex B and is incorporated
herein by reference. All stockholders are urged to read the Transaction
Agreement carefully in its entirety.
The Transaction Agreement sets forth the terms and conditions on which STC
will acquire shares of Schlumberger Common Stock from Schlumberger for use as
consideration to be paid to the stockholders of Camco pursuant to the Merger
Agreement. Schlumberger agreed to sell those shares of Schlumberger Common
Stock to STC on the terms and conditions set forth in the Transaction
Agreement. Schlumberger also agreed to register those shares with the
Securities and Exchange Commission and to have those shares listed on the New
York Stock Exchange.
The obligations of Schlumberger and Camco under the Transaction Agreement
are subject to the following conditions:
. the Merger Agreement has not been terminated;
. the satisfaction or waiver of certain conditions set forth in the
Merger Agreement;
. the representations and warranties of the other in the Transaction
Agreement being true and correct as of the date of signing the Transaction
Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the date Schlumberger delivers the
shares of Schlumberger Common Stock to STC (the "Delivery Date"), except
where the failure to be true would not have a material adverse effect on
Schlumberger and its subsidiaries, taken as a whole, that exceeds $400
million or on Camco and its subsidiaries, taken as a whole, that exceeds
$200 million;
. each of the parties having performed in all material respects its
respective obligations under the Transaction Agreement required to be
performed at or prior to the Delivery Date; and
. delivery by each party of certain customary certificates, opinions and
other closing documents.
The obligations of Camco under the Transaction Agreement are subject to the
additional condition that Morgan Stanley, financial advisor to Camco, has not
revoked, modified or changed its opinion in a manner adverse to the holders of
Camco Common Stock.
The Transaction Agreement automatically terminates if the Merger Agreement
terminates. It may also be terminated by mutual consent of Schlumberger and
Camco. In addition, either party may terminate the Transaction Agreement if:
. the other party has failed to comply in any material respect with its
obligations under the Transaction Agreement to be complied with or
performed by that party at or prior to the date of termination (provided
36
<PAGE>
that breach has not been cured within 30 days following receipt by that
party of notice of the breach and the breach is existing at the time of
termination); or
. any representation or warranty of the other party contained in the
Transaction Agreement was not true when made (provided that breach has not
been cured within 30 days following receipt by that party of notice of the
breach and the breach is existing at the time of termination) or on and as
of the effective time of the Merger as if made at such time (except to the
extent it relates to a particular date), except where the failure to be
true (without giving effect to the individual materiality thresholds
contained in any representation or warranty) would not have a material
adverse effect on that party in excess of $400 million in the case of
Schlumberger and its subsidiaries, taken as a whole, and in excess of $200
million in the case of Camco and its subsidiaries, taken as a whole.
CREDIT ARRANGEMENT
STC will purchase the shares of Schlumberger Common Stock from Schlumberger
at market prices in order to fulfill its obligation to deliver shares of
Schlumberger Common Stock to stockholders of Camco in connection with the
Merger. It is expected that, prior to the Merger, STC will enter into a credit
facility (the "Credit Facility") with a group of banks to provide for up to
$4.0 billion of unsecured borrowings. STC estimates that borrowings under the
Credit Facility in connection with the Merger will be approximately $3.0
billion on the Closing Date (which estimate is based on the closing market
price of Schlumberger Common Stock on July 24, 1998).
37
<PAGE>
SCHLUMBERGER
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected financial information of Schlumberger set forth below (i) as at
December 31, 1993, 1994, 1995, 1996 and 1997 and for the years then ended has
been derived from audited consolidated financial statements of Schlumberger,
and (ii) as at March 31, 1998 and for the three months ended March 31, 1997
and 1998 has been derived from unaudited consolidated financial statements of
Schlumberger. Those audited and unaudited financial statements are
incorporated by reference in this Proxy Statement/Prospectus and those
financial statements should be read in conjunction herewith. See "Where You
Can Find More Information."
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 YEAR ENDED DECEMBER 31
--------------------- -------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- ---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Operating revenues..... $2,800,134 $2,402,060 $10,647,590 $8,956,150 $7,621,694 $6,696,845 $6,705,466
Net income (1)......... 350,732 259,943 1,295,697 851,483 649,157 536,077 334,763
Earnings per share:
(2)
Basic (1)............ $ 0.70 $ 0.53 $ 2.62 $ 1.74 $ 1.33 $ 1.10 $ 0.69
Diluted (1).......... 0.68 0.51 2.52 1.70 1.32 1.10 0.67
Cash dividends per
share................. 0.1875 0.1875 0.75 0.75 0.7125 0.60 0.60
Average shares
outstanding: (2)
Basic................ 498,273 493,426 495,215 490,041 484,748 486,846 485,342
Assuming dilution.... 518,444 509,219 514,345 500,498 487,864 488,532 488,562
OTHER INFORMATION:
Capital expenditures,
excluding
acquisitions.......... $ 315,935 $ 265,530 $ 1,495,980 $1,157,957 $ 938,847 $ 782,837 $ 691,101
<CAPTION>
DECEMBER 31
MARCH 31, -------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET
INFORMATION:
Working capital........ $2,749,054 $ 2,441,322 $1,568,207 $1,259,431 $1,037,097 $ 907,832
Total assets........... 12,262,011 12,096,731 10,325,051 8,910,100 8,322,099 7,916,947
Long-term debt......... 1,103,479 1,069,056 637,203 613,404 394,167 446,942
Stockholders' equity... 6,957,440 6,694,924 5,626,380 4,964,017 4,582,954 4,406,340
</TABLE>
- --------
(1) Includes a charge of $248 million ($0.51 per share; basic and diluted) in
1993 relating to the cumulative effect of a change in accounting
principle.
(2) Restated for the 2-for-1 split on June 2, 1997.
38
<PAGE>
CAMCO(1)
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
The selected financial information of Camco set forth below (i) as at
December 31, 1993, 1994, 1995, 1996 and 1997 and for the years then ended has
been derived from audited consolidated financial statements of Camco, and (ii)
as at March 31, 1998 and for the three months ended March 31, 1997 and 1998
has been derived from unaudited consolidated financial statements of Camco.
Those audited and unaudited financial statements are incorporated by reference
in this Proxy Statement/Prospectus and those financial statements should be
read in conjunction herewith. See "Where You Can Find More Information."
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 YEAR ENDED DECEMBER 31
------------------- ----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- ---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Operating revenues..... $228,067 $ 195,484 $ 913,841 $764,535 $667,932 $651,514 $640,099
Income from continuing
operations (2)........ 27,595 19,810 88,852 68,004 50,295 39,665 17,888
Earnings per share
from continuing
operations:
Basic (2)............ $ 0.73 $ 0.53 $ 2.37 $ 1.81 $ 1.35 $ 1.04 $ 0.47
Diluted (2).......... 0.72 0.52 2.31 1.78 1.33 1.03 0.47
Cash dividends per
share (3)............. 0.05 0.05 0.21 0.22 0.22 0.21 --
Average shares
outstanding:
Basic................ 37,674 37,277 37,386 37,506 37,257 37,857 37,972
Assuming dilution.... 38,483 38,242 38,481 38,230 37,780 38,344 38,320
OTHER INFORMATION:
Capital expenditures,
excluding
acquisitions.......... $ 14,975 $ 19,994 $ 95,754 $ 61,848 $ 89,155 $ 65,703 $ 35,963
<CAPTION>
DECEMBER 31
MARCH 31, ----------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET
INFORMATION:
Working capital........ $ 304,860 $ 257,699 $216,719 $219,052 $199,982 $199,828
Total assets........... 1,203,639 1,117,840 971,705 881,499 802,639 811,114
Long-term debt......... 155,300 110,300 93,551 118,003 92,122 106,875
Stockholders' equity... 717,568 686,245 594,873 536,468 497,499 479,103
</TABLE>
- --------
(1) On June 13, 1997, Camco acquired Production Operators in a business
combination accounted for using the pooling-of-interests method of
accounting. Accordingly, the financial data reflected herein was prepared
as if Camco and Production Operators were combined as of the beginning of
the earliest period presented.
(2) Includes merger costs of $8.6 million ($0.23 per share basic and $0.22 per
share diluted) in 1997 relating to the acquisition of Production
Operators.
Includes a charge of $2.9 million ($0.08 per share; basic and diluted) in
1997 relating to the cumulative effect of a change in accounting principle.
Excludes the following results from Production Operators' discontinued oil
and gas production activities:
--Loss of $7.2 million ($0.19 per share; basic and diluted) in 1995.
--Income of $1.0 million ($0.03 per share; basic and diluted) in 1994.
--Income of $2.8 million ($0.07 per share; basic and diluted) in 1993.
Includes a credit of $0.2 million in 1994 relating to the cumulative effect
of a change in accounting principle.
Includes a charge of $10.7 million ($0.28 per share; basic and diluted) in
1993 relating to the cumulative effect of a change in accounting principle.
(3) Camco paid annual dividends of $0.20 on its common stock since its initial
public offering in December 1993. The amounts presented include the effect
of dividends paid by Production Operators prior to its merger with Camco.
39
<PAGE>
UNAUDITED ADJUSTED PRO FORMA COMBINED FINANCIAL STATEMENTS
The unaudited pro forma combined financial information of Schlumberger and
Camco has been derived from and should be read in conjunction with, and is
qualified in its entirety by reference to, the Schlumberger and Camco
consolidated financial statements, selected financial data and related notes
included elsewhere or incorporated by reference in this Proxy
Statement/Prospectus, gives effect to the Merger under the pooling-of-
interests accounting method and assumes that the Merger had occurred at the
beginning of the periods presented.
The unaudited pro forma combined financial information was included for
comparative purposes only and does not purport to be indicative of the results
of operations or financial position that actually would have been obtained if
the Merger had been effected at the dates indicated or of the financial
position or results of operations that may be obtained in the future.
40
<PAGE>
UNAUDITED ADJUSTED PRO FORMA COMBINED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31,
1998
------------
<S> <C>
ASSETS
------
Current Assets
Cash and short-term investments................................. $ 1,766,524
Receivables less allowance for doubtful accounts................ 3,161,672
Inventories..................................................... 1,388,288
Deferred taxes on income........................................ 212,635
Other current assets............................................ 262,699
------------
6,791,818
------------
Long-Term Investments, held to maturity........................... 709,978
Fixed Assets less accumulated depreciation........................ 4,164,845
Excess of Investments Over Net Assets of Companies
Purchased less amortization....................................... 1,382,204
Deferred Taxes on Income.......................................... 208,828
Other Assets...................................................... 207,977
------------
$ 13,465,650
============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable and accrued liabilities........................ $ 2,438,594
Estimated liability for taxes on income......................... 454,697
Bank loans...................................................... 660,717
Dividends payable............................................... 93,915
Long-term debt due within one year.............................. 89,981
------------
3,737,904
------------
Long-Term Debt.................................................... 1,258,779
Deferred Taxes on Income.......................................... 34,509
Postretirement Benefits........................................... 420,449
Other Liabilities................................................. 339,001
Stockholders' Equity
Common stock.................................................... 1,435,126
Income retained for use in the business......................... 8,548,656
Treasury stock.................................................. (2,240,484)
Translation adjustment.......................................... (68,290)
------------
7,675,008
------------
$ 13,465,650
============
</TABLE>
The accompanying notes are an integral part of this pro forma financial
statement.
41
<PAGE>
UNAUDITED ADJUSTED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31 YEAR ENDED DECEMBER 31
--------------------- ----------------------------------
1998 1997 1997 1996 1995
---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Revenue:
Operating............. $3,028,201 $2,597,544 $11,561,431 $9,720,685 $8,289,626
Interest and other
income............... 34,864 18,567 109,625 72,818 95,290
---------- ---------- ----------- ---------- ----------
3,063,065 2,616,111 11,671,056 9,793,503 8,384,916
---------- ---------- ----------- ---------- ----------
Expenses:
Cost of goods and
services............. 2,166,088 1,897,920 8,389,005 7,301,010 6,223,694
Research &
engineering.......... 143,700 124,869 519,365 478,875 452,141
Marketing............. 111,672 100,596 433,911 399,808 372,085
General............... 115,861 103,611 428,505 422,327 410,344
Interest expense...... 25,504 19,735 95,316 79,862 90,508
Unusual items......... -- -- -- 333,091 --
Taxes on income....... 121,913 89,627 420,405 (140,957) 143,843
---------- ---------- ----------- ---------- ----------
2,684,738 2,336,358 10,286,507 8,874,016 7,692,615
---------- ---------- ----------- ---------- ----------
Net Income.............. $ 378,327 $ 279,753 $ 1,384,549 $ 919,487 $ 692,301
========== ========== =========== ========== ==========
Earnings per Share:
Basic................. $ 0.70 $ 0.52 $ 2.57 $ 1.72 $ 1.31
Diluted............... 0.67 0.50 2.47 1.69 1.30
Average Shares
Outstanding:
Basic................. 542,728 537,413 539,330 534,298 528,711
Assuming dilution..... 563,854 554,345 559,753 545,609 532,444
</TABLE>
The accompanying notes are an integral part of these pro forma financial
statements.
42
<PAGE>
NOTES TO UNAUDITED ADJUSTED PRO FORMA COMBINED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS STATED IN THOUSANDS)
BASIS OF PRESENTATION
On June 19, 1998, Schlumberger and Camco jointly announced that a definitive
agreement was entered into pursuant to which Schlumberger would acquire Camco.
Under the terms of the agreement, Camco stockholders will receive 1.18 newly
issued Schlumberger Common shares for each Camco share. The business
combination will be accounted for using the pooling-of-interests method of
accounting. There are no adjustments necessary to conform the accounting
policies of Schlumberger and Camco.
PRO FORMA ADJUSTMENTS
. The treasury stock of Camco ($26,427) has been offset against common stock
in the pro forma balance Sheet.
. The additional paid-in-capital of Camco ($527,322) has been added to
common stock in the pro forma balance sheet.
PRO FORMA EARNINGS PER SHARE
The pro forma basic average common shares outstanding have been computed by
adjusting the historical average outstanding common shares of Schlumberger for
the shares assumed to be issued in exchange for the outstanding Camco common
shares.
The pro forma average common shares outstanding assuming dilution have been
computed by adjusting the historical average outstanding common and common
equivalent shares of Schlumberger for the shares assumed to be issued in
exchange for the outstanding Camco common shares and for the dilutive effect
of common stock equivalents arising from the assumption of the Camco options.
43
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT OF CAMCO
Principal Stockholders of Camco. The following table sets forth, as of June
30, 1998, the beneficial ownership of each person who is known by Camco to be
the beneficial owner of more than five percent of the outstanding Camco Common
Stock. Such information is based solely upon data provided to Camco by such
persons.
<TABLE>
<CAPTION>
BEFORE THE MERGER AFTER THE MERGER
---------------------- --------------------
SHARES OF SHARES OF
CAMCO SCHLUMBERGER
COMMON STOCK PERCENT COMMON STOCK PERCENT
BENEFICIALLY OF BENEFICIALLY OF
NAME AND ADDRESS OWNED CLASS (%) OWNED(1) CLASS (%)
---------------- ------------ ------- ------------ -------
<S> <C> <C> <C> <C>
FMR Corp...................... 2,107,310(2) 5.5 2,486,625 *
82 Devonshire
Boston Massachusetts 02109
T. Rowe Price Associates,
Inc.......................... 2,076,900(3) 5.4 2,450,742 *
100 East Pratt Street
Baltimore, Maryland 21202
Dresdner RCM Global Investors
LLC.......................... 2,057,084(4) 5.4 2,427,359 *
Four Embarcadero Center
San Francisco, California
94111
</TABLE>
- --------
* Less than 1%.
(1) Reflects the conversion of each share of Camco Common Stock beneficially
owned by the listed persons into 1.18 shares of Schlumberger Common Stock
pursuant to the Merger. Does not reflect any shares of Schlumberger Common
Stock that may otherwise may be owned.
(2) Fidelity Management & Research Company ("Fidelity"), a wholly owned
subsidiary of FMR Corp. ("FMR") and a registered investment adviser, is
the beneficial owner of 2,107,310 shares of Camco Common Stock as a result
of acting as investment advisor to various registered investment companies
(the "Funds"). Edward C. Johnson 3d, the Chairman and principal
stockholder of FMR, FMR, through its control of Fidelity, and the Funds
each have sole power to dispose of the 2,107,310 shares of Camco Common
Stock owned by the Funds; however, sole power to vote the shares owned by
the Funds resides with the Funds' Boards of Trustees. Fidelity carries out
the voting of the shares under written guidelines established by the
Funds' Board of Trustees. Members of Mr. Johnson's family and trusts for
their benefit are the predominant owners of Class B shares of common stock
of FMR. Mr. Johnson owns 12.0% and Abigail P. Johnson, Mr. Johnson's wife
and a Director of FMR, owns 24.5% of the voting stock of FMR. The Johnson
family and all other Class B shareholders have entered into a
shareholders' agreement under which all Class B shares will be voted in
accordance with the majority vote of Class B shares. Accordingly, through
their ownership of voting common stock and the execution of the
shareholders' voting agreement, members of the Johnson family may be
deemed, under the Investment Company Act of 1940, to form a controlling
group with respect to FMR.
(3) The shares owned by various individual and institutional investors which
T. Rowe Price Associates, Inc. serves as investment advisor with power to
direct investments and/or sole power to vote the shares. For purposes of
the reporting requirements of the Exchange Act, Price Associates is deemed
to be a beneficial owner of such securities; however, Price Associates
expressly disclaims that it is, in fact, the beneficial owner of such
securities.
(4) Dresdner RCM Global Investors LLC ("Dresdner RCM"), a wholly owned
subsidiary of Dresdner Bank AG ("Dresdner"), is a registered investment
advisor and the beneficial owner of 2,057,084 shares of Camco Common
Stock. RCM Limited L.P. ("RCM Limited") is the Managing Agent of Dresdner
RCM, and RCM General Corporation ("RCM General") is the General Partner of
RCM Limited. Each of Dresdner, RCM Limited and RCM General may be deemed
to have beneficial ownership of all shares that are beneficially
44
<PAGE>
owned by Dresdner RCM. Of the 2,057,084 shares of Camco Common Stock
beneficially owned by Dresdner RCM, Dresdner, Dresdner RCM, RCM Limited and
RCM General have the sole voting power with respect to 1,404,009 of such
shares of Camco Common Stock, sole dispositive power with respect to
2,029,144 of such shares of Camco Common Stock and shared dispositive power
with respect to 26,700 of such shares of Camco Common Stock. Additionally,
Dresdner has sole power to dispose of and vote 1,240 of such shares of
Camco Common Stock.
Camco Management. The following table sets forth, as of June 30, 1998, the
beneficial ownership of Camco Common Stock by each current director of Camco,
the most highly compensated executive officers of Camco for the last fiscal
year and all current directors and executive officers of the Camco as a group.
Except as footnoted, each named individual has sole voting and investment
power over the shares listed opposite that individual's name.
<TABLE>
<CAPTION>
BEFORE THE MERGER AFTER THE MERGER
--------------------- --------------------
SHARES OF SHARES OF
CAMCO SCHLUMBERGER
COMMON STOCK PERCENT COMMON STOCK PERCENT
BENEFICIALLY OF BENEFICIALLY OF
NAME OWNED(1) CLASS (%) OWNED(2) CLASS (%)
---- ------------ ------- ------------ -------
<S> <C> <C> <C> <C>
William J. Johnson............... 19,315 * 28,691 *
T. Don Stacy..................... 4,300 * 12,979 *
Gilbert H. Tausch................ 21,998 * 31,859 *
William A. Krause................ 15,165 * 25,762 *
Lester Varn, Jr.................. 306,221(3) * 369,246 *
Robert L. Howard................. 14,333 * 26,745 *
Charles P. Siess, Jr............. 16,333 * 29,105 *
Merle C. Muckleroy............... 34,387 * 82,812 *
Robert J. Caldwell............... 41,518 * 91,374 *
Herbert S. Yates................. 21,528 * 74,036 *
Stephen D. Smith................. 25,610 * 63,260 *
All Directors and Executive
Officers as a Group (15
persons)........................ 743,471 2.0 1,186,139 *
</TABLE>
- --------
* Less than 1%.
(1) Beneficial ownership by a person includes both outstanding shares of
Common Stock owned and shares of Camco Common Stock which such person has
a right to acquire within 60 days upon the exercise of outstanding
options. Except for Mr. Varn, directors and executive officers have sole
voting and investment power with respect to the shares they own. Includes
20,709, 15,417, 3,750, 10,500 and 257,059 shares of Camco Common Stock
beneficially owned by Messrs. Muckleroy, Caldwell, Yates, Smith and all
directors and executive officers of Camco as a group, respectively,
pursuant to outstanding options that are exercisable within 60 days.
(2) Reflects the conversion of each share of Camco Common Stock beneficially
owned by the listed persons into 1.18 shares of Schlumberger Common Stock.
See "The Merger and Related Transactions--Interests of Certain Persons in
the Merger" for information with respect to the vesting of stock options
and restricted stock awards as a result of the Merger.
(3) All of such shares of Camco Common Stock are held by a family limited
partnership and may be deemed to be indirectly beneficially owned by Mr.
Varn as a limited partner; provided, however, Mr. Varn has sole voting
power only with respect to 98,727 shares of Camco Common Stock and shared
voting power with respect to 97,092 shares of Camco Common Stock.
45
<PAGE>
DESCRIPTION OF SCHLUMBERGER CAPITAL STOCK
AUTHORIZED, ISSUED AND TREASURY SHARES
Schlumberger is authorized to issue 1,000,000,000 shares of Common Stock,
par value $0.01 per share ("Common Stock"), of which 619,146,659 shares were
issued; 499,065,313 shares were outstanding; and 120,081,346 shares were held
by Schlumberger as treasury stock on June 30, 1998. In addition, Schlumberger
is authorized to issue, subject to certain limitations with respect to voting
rights, liquidation and dividend preferences, 200,000,000 shares of cumulative
preferred stock, par value $0.01 per share (the "Preferred Stock"), which may
be issued in one or more separate series. If issued, the Preferred Stock may
contain provisions allowing it to be converted into Common Stock under terms
and conditions specified by the Board of Directors of Schlumberger. No shares
of Preferred Stock have been issued as of the date of this Prospectus/Proxy
Statement.
DIVIDEND RIGHTS
All outstanding shares of Schlumberger Common Stock (i.e., shares not held
by Schlumberger and its subsidiaries), are entitled to participate equally and
receive dividends which may be paid out of available profits of the preceding
fiscal year or years. All accumulated and unpaid dividends payable on
Preferred Stock (if issued and outstanding) must be paid prior to the payment
of any dividends on Common Stock. The amount of dividends payable with respect
to any fiscal year is determined by the stockholders at the annual general
meeting held within nine months of such fiscal year following such fiscal
year, except that the Board of Directors may declare interim dividends.
VOTING RIGHTS
Each holder of shares of Common Stock is entitled to one vote for each share
registered in such holder's name. Voting rights may be exercised in person or
by proxy. No action to amend the Deed of Incorporation or to sell all or
substantially all of Schlumberger's assets or to dissolve Schlumberger can be
taken except upon the authorization of the holders of at least a majority of
the outstanding shares eligible to vote. In addition, holders of Preferred
Stock (if issued and outstanding) would have additional rights to vote as a
class on certain amendments to Schlumberger's Deed of Incorporation that would
adversely affect the Preferred Stock. Any other action requiring the approval
of the stockholders may be authorized by a majority of the votes cast at any
meeting at which a quorum is present, except that, if a quorum is not present
at any meeting, a second meeting may be called, to be held within two months,
at which second meeting, despite the absence of a quorum, valid resolutions
may be adopted with respect to any matter stated in the notice of the original
meeting and of the second meeting. A quorum consists of not less than 50% of
the shares outstanding and eligible to vote.
The Board of Directors of Schlumberger is authorized to effect
reorganizations or rearrangements of the corporate structure of Schlumberger
or its subsidiaries without the vote of stockholders if such reorganization or
rearrangement does not result in any diminution of the beneficial interest of
the stockholders in the assets of Schlumberger. The Board of Directors may
change Schlumberger's corporate domicile from the Netherlands Antilles to
another jurisdiction without the necessity of any stockholder action or
approval.
PREEMPTIVE AND OTHER RIGHTS
The shares of Common Stock do not carry any preemptive or conversion rights,
and there are no redemption provisions with respect to the Common Stock. The
shares of Preferred Stock (if issued and outstanding) would not carry any
preemptive rights, but the Board of Directors could specify conversion rights,
redemption provisions and (within limits) liquidation preferences with respect
to one or more series of Preferred Stock. Schlumberger may for its own account
purchase shares of Common Stock so long as at least one-fifth of the
authorized capital stock of Schlumberger remains outstanding with holders
other than Schlumberger. In the event of liquidation, each share of Common
Stock is entitled to equal rights after satisfaction of any Preferred Stock
liquidation preference.
Upon delivery pursuant to the terms of the Merger Agreement, the shares of
Schlumberger Common Stock deliverable to the holders of Camco Common Stock
will be fully paid and non-assessable.
46
<PAGE>
LISTING; TRANSFER AGENTS AND REGISTRARS
Schlumberger Common Stock is listed for trading on the New York, London,
Paris, Amsterdam and Swiss stock exchanges. The Transfer Agent and Registrar
for the Common Stock is Boston EquiServe LP, Boston, Massachusetts.
COMPARATIVE RIGHTS OF SCHLUMBERGER AND CAMCO STOCKHOLDERS
General. As a result of the Merger, holders of Camco Common Stock will
become stockholders of Schlumberger, and the rights of the former stockholders
of Camco will thereafter be governed by the Schlumberger Deed of
Incorporation, as amended, the Schlumberger Bylaws and the Commercial Code of
the Netherlands Antilles ("Netherlands Antilles Law"). The rights of Camco
stockholders are currently governed by the Camco Certificate of Incorporation,
the Camco Bylaws and the Delaware General Corporation Law ("Delaware Law").
The following summarizes certain differences between the rights of Camco
stockholders and the rights of Schlumberger stockholders.
Stockholder Meetings. Pursuant to the Bylaws of Schlumberger, all annual
general meetings of stockholders are required to be held in Curacao and,
pursuant to Netherlands Antilles Law, a general stockholder meeting is
required to be held within nine months of the fiscal year end of Schlumberger,
which is December 31. Camco's bylaws provide that general meetings of
stockholders can be held wherever Camco's board of directors dictates and,
pursuant to Delaware Law, a stockholder meeting must be held no more than 13
months from the date of the last stockholder meeting. Under the Schlumberger
Deed of Incorporation, special meetings of stockholders may be called at any
time by the Chairman, the President, a majority of the Board of Directors or
the holders of a majority of the outstanding shares of Schlumberger voting
stock. Camco's bylaws provide that special meetings of stockholders may be
called only by the Chairman or a majority of the directors.
Stockholder Action By Written Consent. Camco's Certificate of Incorporation
specifically denies stockholders the right to act by unanimous written
consent. Schlumberger's Deed of Incorporation provides that stockholders may
act by written consent provided that holders of no less than an absolute
majority of the outstanding voting stock of Schlumberger so act (or such
higher percentage as is required by Netherlands Antilles Law or Schlumberger's
Deed of Incorporation. Each stockholder of Schlumberger is entitled to written
notice of any action proposed to be taken by written consent.
Board of Directors. Under Schlumberger's Deed of Incorporation,
Schlumberger's entire Board of Directors stands for reelection each year.
Under Camco's Certificate of Incorporation, Camco's board of directors is
divided into three classes, only one of which stands for reelection each year.
The number of directors on Schlumberger's board is set at between five and 24
by Schlumberger's Deed of Incorporation. The number of directors on Camco's
board of directors is set by the board. Schlumberger's Deed of Incorporation
and Netherlands Antilles Law provide that a director may be removed at any
general meeting of stockholders by a majority vote of the votes cast at that
meeting. Camco's Certificate of Incorporation provides that a director may be
removed only for cause by holders of a majority of shares entitled to vote on
election of directors.
Certain Transactions. Under Camco's Certificate of Incorporation, a vote of
80% or more of the outstanding voting stock of Camco is necessary to amend
Camco's Certificate of Incorporation to permit cumulative voting, change the
composition of the board of directors, permit stockholders to act by written
consent, add to directors' liability by reducing their rights to
indemnification, or change directors' authority to fix the terms or
designations of Preferred Stock. Schlumberger's Deed of Incorporation and
Bylaws require no such supermajority vote, so a vote of a majority of the
outstanding voting stock will suffice to approve such transactions. Camco's
bylaws may be amended by either an 80% stockholder vote or the vote of a
majority of the board of directors. Schlumberger's Bylaws may be amended only
by the vote of a majority of the board of directors.
Financial Statements; Dividends. Under Netherlands Antilles Law and the
Schlumberger Deed of Incorporation, Schlumberger is required to present its
financial statements and proposed dividends to its stockholders for approval
and adoption. Camco is not required to seek such approval.
47
<PAGE>
Special Vote Required for Certain Combinations with Interested Stockholders.
Delaware Law prohibits a corporation, including Camco, from engaging in a
"business combination" (as hereinafter defined) with an "interested
stockholder" (defined generally to mean a person who, together with his
affiliates owns, or if the person is an affiliate of the corporation did own
within the last three years, 15% or more of the outstanding voting stock of
the corporation) for a period of three years after the time of the transaction
in which the person became an interested stockholder, unless (i) prior to the
time of the business combination, the board of directors of the corporation
approved the business combination or the transaction in which the stockholder
became an interested stockholder, (ii) as a result of the business
combination, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced or (iii)
on or subsequent to the date of the business combination, the board of
directors and the holders of at least 66 2/3% of the outstanding voting stock
not owned by the interested stockholder approve the business combination.
Delaware Law defines a "business combination" generally as: (i) a merger or
consolidation with the interested stockholder or with any other corporation if
the merger or consolidation is caused by the interested stockholder; (ii) a
sale or other disposition to or with an interested stockholder of assets with
an aggregate market value greater than or equal to 10% or more of either the
aggregate market value of all assets of the corporation or the aggregate
market value of all of the outstanding stock of the corporation; (iii) with
certain exceptions, any transaction resulting in the issuance or transfer by
the corporation or any majority owned subsidiary of any stock of the
corporation or such subsidiary to the interested stockholder; (iv) any
transaction involving the corporation or a majority-owned subsidiary that has
the effect of increasing the proportionate share of the stock of the
corporation or any such subsidiary owned by the interested stockholder; or (v)
any receipt of the interested stockholder of the benefit of any loans or other
financial benefits provided by the corporation or any majority-owned
subsidiary.
Schlumberger is not subject to such a provision.
Camco Common Stock Purchase Rights. Camco has adopted a Rights Plan, as
amended (the "Rights Plan") which provided for the distribution by Camco of
one common share purchase right (a "Right") for each outstanding share of
Camco Common Stock to holders of record of Camco Common Stock at the close of
business on December 26, 1994, and for the issuance of one Right for each
share of Camco Common Stock thereafter issued prior to the earliest of the
date the Rights first become exercisable, the date of redemption of the Rights
or December 15, 2004 (the expiration date of the Rights). Until such time as
the Rights become exercisable, the Rights are evidenced by the certificates
representing the shares of Camco Common Stock with respect to which the Rights
were issued and may be traded only with such shares.
The Rights become exercisable on the earlier of (i) ten business days after
a public announcement that a person or group of affiliated or associated
persons (an "Acquiring Person"), which term does not include Camco, any
subsidiary of Camco, any employee benefit plan of Camco or Camco's
subsidiaries, or any entity holding Camco Common Stock for or pursuant to any
such plan, has acquired beneficial ownership of 15% or more of the Camco
Common Stock or (ii) ten business days after the commencement of, or the first
public announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in beneficial ownership by a person or
group (excluding Camco, any subsidiary of Camco, any employee benefit plan of
Camco or of its subsidiaries, and any entity holding Camco Common Stock for or
pursuant to any such plan) of 15% or more of the Camco Common Stock
outstanding (the earlier of such dates being called the "Distribution Date").
In the event, following the first date of public announcement by Camco or an
Acquiring Person, that an Acquiring Person has become such (the "Shares
Acquisition Date"), Camco is, in effect, acquired in a merger or other
business combination transaction or more than 50% of its consolidated assets
or earning power is sold, proper provision will be made so that each holder of
a Right, other than Rights that were or are beneficially owned by the
Acquiring Person, will thereafter have the right to receive, upon the exercise
thereof at a price (the "Purchase Price") of $250, subject to adjustment, that
number of shares of common stock of the Acquiring Person equal to the result
obtained by dividing (i) the then current Purchase Price multiplied by the
number of shares of Camco Common Stock for which a Right is then exercisable
by (ii) 50% of the market price per share
48
<PAGE>
of common stock of the Acquiring Person at the time of such transaction. In
the event any person becomes an Acquiring Person, proper provision is required
to be made so that each holder of a Right, other than Rights that were or are
beneficially owned by the Acquiring Person, which Rights will thereafter be
null and void and the holder thereof shall have no rights with respect to such
Rights, will thereafter have the right to receive, upon the exercise thereof
at the then current Purchase Price a number of shares of Camco Common Stock
equal to the result obtained by dividing the then current Purchase Price by
50% of the market price per share of Camco Common Stock at the date such
person became an Acquiring Person. Under certain circumstances, other
securities, property, cash or combinations thereof, including a combination
with shares of Camco Common Stock, that are equal in value to the number of
shares of Camco Common Stock for which the Right is exercisable may be issued
in lieu of shares of Camco Common Stock for which the Right is exercisable.
At any time prior to the close of business on the tenth business day after
the Shares Acquisition Date, Camco may redeem the Rights in whole, but not in
part, at a price of $.02 per Right, which may be paid in cash, with shares of
Camco Common Stock or other consideration deemed appropriate by the Board of
Directors of Camco.
Camco has amended the Rights Plan so that it does not apply to the Merger
with Schlumberger. Schlumberger has no such rights plan.
49
<PAGE>
LEGAL MATTERS
The validity of the shares of Schlumberger Common Stock to be issued in
connection with the Merger will be passed on by David S. Browning, Esq.,
General Counsel and Secretary of Schlumberger. Certain tax consequences of the
Merger will be passed on for Schlumberger by Baker & Botts, L.L.P., Houston,
Texas, and for Camco by Fulbright & Jaworski L.L.P., Houston, Texas.
EXPERTS
The financial statements of Schlumberger incorporated in this Proxy
Statement/Prospectus by reference to the Schlumberger Annual Report on Form
10-K for the year ended December 31, 1997, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
Camco's consolidated financial statements as of December 31, 1997 and 1996
and for each of the three years in the period ended December 31, 1997,
incorporated by reference in this Proxy Statement/Prospectus, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their reports with respect thereto, and are incorporated by reference
herein in reliance on the authority of said firm as experts in accounting and
auditing in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
Schlumberger and Camco are each subject to the informational requirements of
the Exchange Act and in accordance therewith file annual, quarterly and
current reports, proxy statements and other information with the Securities
and Exchange Commission (the "SEC"). You may read and copy any reports,
statements or other information Schlumberger and Camco file at the SEC's
public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549,
Seven World Trade Center, New York, New York 10048 and 500 West Madison, 14th
Floor, Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-0300 for
further information on the public reference rooms. Schlumberger and Camco SEC
filings also are available to the public from commercial document retrieval
services and at the world wide web site maintained by the SEC at
http://www.sec.gov. You may also inspect such reports, proxy statements and
other information concerning Schlumberger and Camco at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005, on which
exchange the Schlumberger Common Stock and the Camco Common Stock are listed.
In addition, you may be able to inspect such reports, proxy statements and
other information concerning Schlumberger at the offices of the London, Paris,
Amsterdam and Swiss stock exchanges, on which exchanges Schlumberger Common
Stock is also listed.
Schlumberger will file the Schlumberger Registration Statement on Form S-4
with the SEC to register the Schlumberger Common Stock to be issued in the
Merger. This Proxy Statement/Prospectus will be a part of the Schlumberger
Registration Statement and will constitute a prospectus of Schlumberger in
addition to being a proxy statement of Camco for the Special Meeting.
As allowed by SEC rules, this Proxy Statement/Prospectus does not contain
all the information you can find in the Schlumberger Registration Statement or
the exhibits to the Schlumberger Registration Statement.
The SEC allows Schlumberger and Camco to "incorporate by reference"
information into this Proxy Statement/Prospectus, which means that
Schlumberger and Camco can disclose important information to you by referring
you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this Proxy
Statement/Prospectus, except for any information superseded by information in
this Proxy Statement/Prospectus. This Proxy Statement/Prospectus incorporates
by reference the documents set forth below that Schlumberger or Camco
previously filed with the SEC. These documents contain important information
about Schlumberger or Camco, as applicable.
50
<PAGE>
The following documents filed by Schlumberger with the SEC (File No. 001-
04601) are incorporated herein by this reference:
. Schlumberger's Annual Report on Form 10-K for the year ended December
31, 1997;
. Schlumberger's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998; and
. Schlumberger's Current Report on Form 8-K dated June 18, 1998.
The following documents filed by Camco with the SEC (File No. 001-12470) are
incorporated herein by this reference:
. Camco's Annual Report on Form 10-K for the year ended December 31,
1997;
. Camco's Quarterly Report on Form 10-Q for the quarter ended March 31,
1998;
. Camco's Current Report on Form 8-K dated May 11, 1998;
. Camco's Current Report on Form 8-K dated June 18, 1998; and
. The description of Schlumberger Common Stock which is contained in a
Registration Statement on Form 20 dated January 8, 1962, filed under
the Exchange Act of 1934, as amended (the "Exchange Act"), including
any amendment or report filed for the purpose of updating such
description.
Schlumberger and Camco also are incorporating by reference all additional
documents that either files with the SEC pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act between the date of this Proxy
Statement/Prospectus and the date of the Special Meeting.
If you are a stockholder of Schlumberger or Camco, you may have already
received some of the documents incorporated by reference, but you can obtain
any of them from Schlumberger or Camco, as applicable, or the SEC. Documents
incorporated by reference are available from Schlumberger or Camco, as
applicable, without charge, excluding exhibits unless those exhibits are
specifically incorporated by reference as an exhibit in this Proxy
Statement/Prospectus. Stockholders may obtain documents that are referred to
or that are incorporated by reference in this Proxy Statement/Prospectus by
requesting them in writing or by telephone at the following addresses:
If from Schlumberger If from Camco
Schlumberger Limited Camco International
277 Park Avenue Inc.
New York, New York, 7030 Ardmore
10172 Houston, Texas 77054
Attn: Investor Attn: Investor
Relations Relations
Tel: (212) 350-9400 Tel: (713) 747-4000
If you would like to request documents, please do so by August 24, 1998 to
receive them before the Special Meeting.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS IN CONNECTION WITH DECIDING YOUR
VOTE UPON THE ADOPTION AND APPROVAL OF THE MERGER AGREEMENT AND THE MERGER.
NEITHER SCHLUMBERGER NOR CAMCO HAS AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY
STATEMENT/PROSPECTUS. THIS PROXY STATEMENT/PROSPECTUS IS DATED JULY 27, 1998.
YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT/
PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN SUCH DATE, AND NEITHER THE
MAILING OF THIS PROXY STATEMENT/PROSPECTUS TO STOCKHOLDERS NOR THE ISSUANCE OF
SCHLUMBERGER COMMON STOCK IN THE MERGER SHALL CREATE ANY IMPLICATION TO THE
CONTRARY.
51
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
AMONG
SCHLUMBERGER TECHNOLOGY CORPORATION,
SCHLUMBERGER OFS, INC.
AND
CAMCO INTERNATIONAL INC.
DATED AS OF JUNE 18, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
ARTICLE I
The Merger
<C> <S> <C>
1.1 The Merger; Effective Time of the Merger............................ A-1
1.2 Closing............................................................. A-1
1.3 Effects of the Merger............................................... A-1
ARTICLE II
Effect Of The Merger On The Capital Stock
Of The Constituent Corporations; Exchange Of Certificates
2.1 Effect on Capital Stock............................................. A-2
(a) Stock of Sub.................................................... A-2
(b) Cancellation of Treasury Stock and Related Party Stock.......... A-2
(c) Exchange Ratio for Camco Common Stock........................... A-2
(d) Conversion of Stock Options..................................... A-2
(e) Adjustment of Conversion Number................................. A-3
2.2 Exchange of Certificates............................................ A-3
(a) Exchange Agent.................................................. A-3
(b) Exchange Procedures............................................. A-3
(c) Distributions with Respect to Shares Prior to Exchange of
Certificates........................................................ A-3
(d) No Further Ownership Rights in Camco Common Stock............... A-4
(e) No Fractional Shares............................................ A-4
(f) Termination of Exchange Fund.................................... A-4
(g) No Liability.................................................... A-4
ARTICLE III
Representations And Warranties
3.1 Representations and Warranties of Camco............................. A-5
(a) Organization, Standing and Power................................ A-5
(b) Capital Structure............................................... A-5
(c) Authority; No Violations; Consents and Approvals................ A-6
(d) SEC Documents................................................... A-7
(e) Information Supplied............................................ A-8
(f) Absence of Certain Changes or Events............................ A-8
(g) No Undisclosed Material Liabilities............................. A-8
(h) No Default...................................................... A-8
(i) Compliance with Applicable Laws................................. A-9
(j) Litigation...................................................... A-9
(k) Taxes........................................................... A-9
(l) Employee Matters; ERISA......................................... A-10
(m) Labor Matters................................................... A-12
(n) Intangible Property............................................. A-13
(o) Environmental Matters........................................... A-13
(p) Opinion of Financial Advisor.................................... A-14
(q) State Takeover Statutes; Vote Required.......................... A-14
(r) Accounting Matters.............................................. A-15
(s) Beneficial Ownership of Schlumberger Common Stock............... A-15
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
(t) Insurance....................................................... A-15
(u) Brokers......................................................... A-15
(v) Material Contracts and Agreements............................... A-15
(w) Title to Properties............................................. A-15
(x) Amendment to the Camco Rights Agreement......................... A-15
3.2 Representations and Warranties of STC and Sub....................... A-16
(a) Organization, Standing and Power................................ A-16
(b) Capital Structure............................................... A-16
(c) Authority; No Violations, Consents and Approvals................ A-16
(d) Litigation...................................................... A-17
(e) Accounting Matters.............................................. A-17
(f) Beneficial Ownership of Camco Common Stock...................... A-17
(g) Transaction Agreement........................................... A-17
(h) No Other Consideration for Camco Common Stock................... A-17
ARTICLE IV
Covenants Relating To Conduct Of Business Of Camco
4.1 Conduct of Business by Camco Pending the Merger..................... A-18
(a) Ordinary Course................................................. A-18
(b) Dividends; Changes in Stock..................................... A-18
(c) Issuance of Securities.......................................... A-18
(d) Governing Documents............................................. A-18
(e) No Acquisitions................................................. A-18
(f) No Dispositions................................................. A-18
(g) No Dissolution, Etc............................................. A-19
(h) Certain Employee Matters........................................ A-19
(i) Indebtedness; Leases; Capital Expenditures...................... A-19
(j) Taxes........................................................... A-20
(k) Accounting...................................................... A-20
4.2 No Solicitation..................................................... A-20
4.3 Pooling of Interests................................................ A-21
ARTICLE V
Additional Agreements
5.1 Access to Information............................................... A-21
5.2 Camco Stockholders' Meeting......................................... A-21
5.3 Legal Conditions to Merger.......................................... A-22
5.4 Agreements of Others................................................ A-23
5.5 Stock Options....................................................... A-23
5.6 Indemnification; Directors' and Officers' Insurance................. A-23
5.7 Agreement to Defend................................................. A-24
5.8 Accounting Matters.................................................. A-24
5.9 Public Announcements................................................ A-24
5.10 Other Actions....................................................... A-24
5.11 Advice of Changes; SEC Filings...................................... A-24
5.12 Reorganization...................................................... A-24
5.13 Delivery of Schlumberger Common Stock............................... A-25
5.14 Employee Matters.................................................... A-25
(a) Employment...................................................... A-25
(b) Benefits Accrued at the Effective Time.......................... A-25
</TABLE>
A-ii
<PAGE>
<TABLE>
<CAPTION>
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<C> <S> <C>
(c) General Agreement as to Employee Benefit Coverage after the
Effective Time..................................................... A-25
(d) Specific Agreements as to Employee Benefit Coverage after the
Effective Time..................................................... A-26
(e) Vacation....................................................... A-27
(f) Retention Bonus Program........................................ A-28
(g) Collective Bargaining Exception................................ A-28
(h) Transferred Employees.......................................... A-28
ARTICLE VI
Conditions Precedent
6.1 Conditions to Each Party's Obligation to Effect the Merger......... A-28
(a) Camco Stockholder Approval..................................... A-28
(b) NYSE Listing................................................... A-28
(c) Other Approvals................................................ A-28
(d) S-4............................................................ A-29
(e) No Injunctions or Restraints................................... A-29
(f) Pooling Accounting............................................. A-29
6.2 Conditions of Obligations of STC and Sub........................... A-29
(a) Representations and Warranties................................. A-29
(b) Performance of Obligations of Camco............................ A-29
(c) Letters from Camco Directors and Executive Officers............ A-29
(d) Certifications and Opinion..................................... A-29
(e) Tax Opinion.................................................... A-30
(f) Transaction Agreement.......................................... A-30
6.3 Conditions of Obligations of Camco................................. A-30
(a) Representations and Warranties................................. A-30
(b) Performance of Obligations of STC and Sub...................... A-30
(c) Certifications and Opinion..................................... A-31
(d) Tax Opinion.................................................... A-31
(e) Fairness Opinion............................................... A-31
(f) Transaction Agreement.......................................... A-31
ARTICLE VII
Termination And Amendment
7.1 Termination........................................................ A-32
7.2 Effect of Termination.............................................. A-33
7.3 Amendment.......................................................... A-33
7.4 Extension; Waiver.................................................. A-33
ARTICLE VIII
General Provisions
8.1 Payment of Expenses................................................ A-33
8.2 Nonsurvival of Representations, Warranties and Agreements.......... A-33
8.3 Knowledge.......................................................... A-34
8.4 Notices............................................................ A-34
8.5 Interpretation..................................................... A-34
8.6 Counterparts....................................................... A-34
8.7 Entire Agreement; No Third-Party Beneficiaries..................... A-35
8.8 Governing Law...................................................... A-35
8.9 No Remedy in Certain Circumstances................................. A-35
8.10 Assignment......................................................... A-35
8.11 Enforcement of the Agreement....................................... A-35
</TABLE>
A-iii
<PAGE>
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERM DEFINED IN SECTION
- ------------ ------------------
<S> <C>
Acquisition Proposal......................................... 4.2(a)
AICPA........................................................ Recitals
Camco........................................................ Preamble
Camco Beneficiary............................................ 3.1(l)(i)
Camco Benefit Plans.......................................... 3.1(l)(i)
Camco Common Stock........................................... 2.1
Camco Disclosure Letter...................................... 3.1
Camco ERISA Affiliate........................................ 3.1(l)(ii)
Camco Intangible Property.................................... 3.1(n)
Camco Litigation............................................. 3.1(j)
Camco Order.................................................. 3.1(j)
Camco Permits................................................ 3.1(i)
Camco Preferred Stock........................................ 3.1(b)
Camco Representatives........................................ 4.2
Camco Retirees............................................... 5.14
Camco Right.................................................. 3.1(b)
Camco SEC Documents.......................................... 3.1(d)
Camco Stock Option........................................... 5.5
Camco Stock Plans............................................ 3.1(b)
CERCLA....................................................... 3.1(o)(A)
Certificate of Merger........................................ 1.1
Certificates................................................. 2.2(b)
Closing...................................................... 1.1
Closing Date................................................. 1.2
Code......................................................... Recitals
Confidentiality Agreements................................... 5.1
Constituent Corporations..................................... 1.3(a)
Continuing Employees......................................... 5.14
Conversion Number............................................ 2.1(c)
Current Balance Sheet........................................ 3.1(k)
DGCL......................................................... 1.1
Effective Time............................................... 1.1
Environmental Law............................................ 3.1(o)
ERISA........................................................ 3.1(l)(i)
Exchange Act................................................. 3.1(c)(iii)
Exchange Agent............................................... 2.2(a)
Exchange Fund................................................ 2.2(a)
FASB......................................................... Recitals
Fractional Dividends......................................... 2.2(e)
GAAP......................................................... 3.1(d)
Governmental Entity.......................................... 3.1(c)(iii)
Hazardous Material........................................... 3.1(o)(B)
HSR Act...................................................... 3.1(c)(iii)
Indemnified Liabilities...................................... 5.6
Indemnified Parties.......................................... 5.6
Injunction................................................... 6.1(e)
IRS.......................................................... 3.1(k)(ii)
Knowledge.................................................... 8.3
</TABLE>
A-iv
<PAGE>
<TABLE>
<CAPTION>
DEFINED TERM DEFINED IN SECTION
- ------------ ------------------
<S> <C>
Material Adverse Effect...................................... 3.1(a)
Merger....................................................... Recitals
Merger Agreement............................................. Preamble
Notice of Superior Proposal.................................. 4.2(b)
NYSE......................................................... 3.2(c)(iii)
OSHA......................................................... 3.1(o)(A)
Pension Benefit Guaranty Corporation......................... 3.1(l)(iv)
Proxy Statement.............................................. 3.1(c)(iii)
Release...................................................... 3.1(o)(C)
Remedial Action.............................................. 3.1(o)(D)
Returns...................................................... 3.1(k)(i)
Rights Agreement............................................. 3.1(b)
S-4.......................................................... 3.1(e)
Schlumberger................................................. Recitals
Schlumberger Common Stock.................................... 2.1(c)
SEC.......................................................... Recitals
Securities Act............................................... 3.1(d)
Significant Subsidiary....................................... 4.1(g)
STC.......................................................... Preamble
STC Affiliated Group......................................... 2.2(a)
STC Disclosure Letter........................................ 3.2
STC Group.................................................... 5.14
STC Litigation............................................... 3.2(d)
Superior Proposal............................................ 4.2(c)
Surviving Corporation........................................ 1.3(a)
Sub.......................................................... Preamble
Subsidiary................................................... 2.1(b)
Taxes........................................................ 3.1(k)
Termination Fee.............................................. 7.2(b)
Transaction Agreement........................................ 6.2(f)
Voting Debt.................................................. 3.1(b)
</TABLE>
A-v
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of June 18, 1998 (this "Merger
Agreement"), among Schlumberger Technology Corporation, a Texas corporation
("STC"), Schlumberger OFS, Inc., a Delaware corporation and a wholly owned
subsidiary of STC ("Sub"), and Camco International Inc., a Delaware
corporation ("Camco").
WHEREAS, the Boards of Directors of STC, Sub and Camco have each approved
the merger of Sub with and into Camco (the "Merger") upon the terms and
subject to the conditions of this Merger Agreement, thus enabling STC to
acquire all of the stock of Camco solely in exchange for voting stock of
Schlumberger Limited, a Netherlands Antilles corporation and the parent of STC
("Schlumberger");
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a)(1)(B)
of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a pooling of interests under the requirements of Opinion No.
16, Business Combinations, of the Accounting Principles Board of the American
Institute of Certified Public Accountants (the "AICPA"), as amended by
Statements of Financial Accounting Standards Board (the "FASB"), and the
related interpretations of the AICPA, FASB, the Emerging Issues Task Force,
and the rules and regulations of the U.S. Securities and Exchange Commission
(the "SEC"); and
WHEREAS, STC, Sub and Camco desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties agree as
follows:
ARTICLE I
The Merger
1.1 The Merger; Effective Time of the Merger. Upon the terms and conditions
of this Merger Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), Sub shall be merged with and into Camco at the
Effective Time (as hereinafter defined). The Merger shall become effective
immediately when a certificate of merger (the "Certificate of Merger"),
prepared and executed in accordance with the relevant provisions of the DGCL
is duly filed with the Secretary of State of the State of Delaware or, if
agreed to by the parties, at such time thereafter as is provided in the
Certificate of Merger (the "Effective Time"). The filing of the Certificate of
Merger shall be made as soon as practicable after the closing of the Merger
(the "Closing").
1.2 Closing. The Closing shall take place at 10:00 a.m. on a date to be
specified by the parties, which shall be no later than the second business day
after satisfaction (or waiver in accordance with this Merger Agreement) of the
latest to occur of the conditions set forth in Article VI (the "Closing
Date"), at the offices of Baker & Botts, L.L.P., 910 Louisiana, Houston,
Texas, unless another date or place is agreed to in writing by the parties.
1.3 Effects of the Merger.
(a) At the Effective Time: (i) Sub shall be merged with and into Camco, the
separate existence of Sub shall cease and Camco shall continue as the
surviving corporation (Sub and Camco are sometimes referred to herein as the
"Constituent Corporations" and Camco is sometimes referred to herein as the
"Surviving Corporation") and the merger shall have such effects as are set
forth in Section 259 of the DGCL; (ii) the Certificate of Incorporation of
Camco shall be amended to change Camco's authorized shares of capital stock to
1,000 shares, par value $.001 per share, of common stock, and so amended shall
be the Certificate of Incorporation of the
A-1
<PAGE>
Surviving Corporation; and (iii) the Bylaws of Camco as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation.
(b) The directors and officers of Sub at the Effective Time shall, from and
after the Effective Time, be the directors and officers of the Surviving
Corporation and shall serve until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal
in accordance with the Surviving Corporation's Certificate of Incorporation
and Bylaws.
ARTICLE II
Effect of the Merger on the Capital Stock of the Constituent Corporations;
Exchange of Certificates
2.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any shares of common
stock, par value $0.01 per share, of Camco ("Camco Common Stock") or capital
stock of Sub:
(a) Stock of Sub Stock of Sub. Each share of common stock, par value
$1.00 per share, of Sub issued and outstanding immediately prior to the
Effective Time will be converted into one share of common stock, par value
$.001 per share, of the Surviving Corporation, and the stock of the
Surviving Corporation issued on that conversion will constitute all of the
issued and outstanding shares of capital stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Related Party Stock. Each share of
Camco Common Stock and all other shares of capital stock of Camco that are
owned by Camco as treasury stock and any shares of Camco Common Stock and
all other shares of capital stock of Camco owned in any case by STC, any
entity controlling STC or any wholly owned Subsidiary (as hereinafter
defined) of such entities or by any wholly owned Subsidiary of Camco shall
be canceled and retired and shall cease to exist and no Schlumberger Common
Stock or cash in lieu of fractional shares shall be delivered or
deliverable in exchange therefor. As used in this Merger Agreement, the
word "Subsidiary" means, with respect to any party, any corporation or
other organization, whether incorporated or unincorporated, of which: (i)
such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which are
held by such party or any Subsidiary of such party that do not have a
majority of the voting interest in such partnership); or (ii) at least a
majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or
other organization is, directly or indirectly, owned or controlled by such
party or by any one or more of its Subsidiaries, or by such party and any
one or more of its Subsidiaries.
(c) Exchange Ratio for Camco Common Stock. Subject to the provisions of
Section 2.2(e) hereof, each share of Camco Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares to
be canceled in accordance with Section 2.1(b)) shall, at the Effective Time
and without the requirement of any action by the holder thereof, be
exchanged for and converted into 1.18 (the "Conversion Number") shares of
voting common stock, par value $.01 per share, of Schlumberger
("Schlumberger Common Stock") to be delivered by Sub pursuant to the
Merger. All references in this Merger Agreement to the Camco Common Stock
to be received pursuant to the Merger shall be deemed to include the Camco
Stock Purchase Rights. All such shares of Camco Common Stock, when so
exchanged and converted, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive a certificate
for the shares of Schlumberger Common Stock and cash in lieu of fractional
shares of Schlumberger Common Stock as contemplated by Section 2.2(e), upon
the surrender of such certificate for shares of Camco Common Stock in
accordance with Section 2.2, without interest.
(d) Conversion of Stock Options. Each outstanding Camco Stock Option (as
defined in Section 5.5) shall be converted as provided in Section 5.5.
A-2
<PAGE>
(e) Adjustment of Conversion Number. If, subsequent to the date of this
Agreement but prior to the Effective Time, the number of shares of
Schlumberger Common Stock issued and outstanding is changed as a result of
a stock split, reverse stock split, stock dividend, recapitalization or
other similar transaction, the Conversion Number and other items dependent
thereon shall be appropriately adjusted herein.
2.2 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Sub shall deposit with Boston
EquiServe LP or such other bank or trust company designated by STC or another
member of the STC Affiliated Group (as defined below) and reasonably
acceptable to Camco (the "Exchange Agent"), for the benefit of the holders of
shares of Camco Common Stock, for exchange in accordance with this Article II,
through the Exchange Agent, certificates representing the shares of
Schlumberger Common Stock (such shares of Schlumberger Common Stock, together
with any dividends or distributions with respect thereto, and any cash
deposits by STC in order to make payments in lieu of fractional shares or cash
generated by sales of fractional shares of Schlumberger Common Stock in the
open market pursuant to Section 2.2(e) being hereinafter collectively referred
to as the "Exchange Fund") issuable pursuant to Section 2.1 in exchange for
outstanding shares of Camco Common Stock. The Exchange Agent shall, pursuant
to irrevocable instructions, deliver the Schlumberger Common Stock
contemplated to be issued pursuant to Section 2.1 out of the Exchange Fund.
The Exchange Fund shall not be used for any other purpose. As used in this
Merger Agreement, "STC Affiliated Group" means any entity controlling STC and
any direct or indirect Subsidiary of such entity or of STC.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which, immediately prior to the Effective Time,
represented outstanding shares of Camco Common Stock (the "Certificates")
(other than Camco, STC, any entity controlling STC or any wholly owned
Subsidiaries of any such entities): (i) a letter of transmittal (which shall
specify that delivery shall be effected and risk of loss and title to the
Certificates shall pass only upon delivery of the Certificates to the Exchange
Agent, and shall be in such form and have such other provisions as STC or a
designated member of the STC Affiliated Group may reasonably specify); and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Schlumberger Common Stock and
any cash in lieu of a fractional share of Schlumberger Common Stock. Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by STC or a designated member of the
STC Affiliated Group and reasonably acceptable to Camco, together with such
letter of transmittal, duly executed, and any other required documents, the
holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Schlumberger Common
Stock which such holder has the right to receive pursuant to the provisions of
this Article II and any cash in lieu of fractional shares of Schlumberger
Common Stock as contemplated by Section 2.2(e), and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Camco Common Stock which is not registered in the transfer
records of Camco, a certificate representing the appropriate number of shares
of Schlumberger Common Stock may be issued to a transferee if the Certificate
representing such Camco Common Stock is presented to the Exchange Agent
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the certificate representing shares of
Schlumberger Common Stock and cash in lieu of any fractional shares of
Schlumberger Common Stock as contemplated by this Section 2.2 and all
dividends or other distributions thereon with a record date after the
Effective Time as contemplated by Section 2.2(c). The Exchange Agent shall not
be entitled to vote or exercise any rights of ownership with respect to the
Schlumberger Common Stock held by it from time to time hereunder, except that
it shall receive and hold all dividends or other distributions paid or
distributed with respect thereto for the account of persons entitled thereto.
(c) Distributions with Respect to Shares Prior to Exchange of Certificates.
No dividends or other distributions with respect to Schlumberger Common Stock
declared or made after the Effective Time with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to
A-3
<PAGE>
the Schlumberger Common Stock represented thereby as a result of the exchange
and conversion provided in Section 2.1(c), and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.2(e)
until the holder of such Certificate shall surrender such Certificate. Subject
to the effect of applicable laws, following surrender of any such Certificate,
there shall be paid to the holder thereof, without interest: (i) at the time
of such surrender, the amount of any cash payable in lieu of a fractional
share of Schlumberger Common Stock to which such holder is entitled pursuant
to Section 2.2(e) and the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
whole shares of Schlumberger Common Stock; and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a record date after
the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Schlumberger Common
Stock.
(d) No Further Ownership Rights in Camco Common Stock. All shares of
Schlumberger Common Stock issued in exchange for and upon the conversion of
Camco Common Stock in accordance with the terms hereof (including any cash
paid pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such shares of Camco Common
Stock, subject, however, to the Surviving Corporation's obligation to pay any
dividends or make any other distributions with a record date prior to the
Effective Time that may have been declared or made by Camco on such shares of
Camco Common Stock in accordance with the terms of this Merger Agreement or
prior to the date hereof and which remain unpaid at the Effective Time, and
after the Effective Time there shall be no further registration of transfers
on the stock transfer books of the Surviving Corporation of the shares of
Camco Common Stock that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article II.
(e) No Fractional Shares. No certificates or scrip representing fractional
shares of Schlumberger Common Stock shall be issued pursuant to this Article
II, and, except as provided in this Section 2.2(e), no dividend or other
distribution, stock split or interest shall relate to any such fractional
security, and such fractional interests shall not entitle the owner thereof to
vote or to any rights of a security holder of Schlumberger. In lieu of any
fractional security, STC shall pay or cause the Exchange Agent to pay, to each
holder of shares of Camco Common Stock who would otherwise have been entitled
to a fraction of a share of Schlumberger Common Stock pursuant to this Article
II, an amount in cash (without interest) equal to such holder's proportionate
interest in the sum of (i) the fraction of a share of Schlumberger Common
Stock to which such holder would otherwise have been entitled, multiplied by
the closing sale price per share of Schlumberger Common Stock on the New York
Stock Exchange on the last trading day immediately preceding the date of the
Effective Time, and (ii) the aggregate dividends or other distributions that
are payable with respect to such shares of Schlumberger Common Stock pursuant
to Section 2.2(c) (such dividends and distributions being herein called the
"Fractional Dividends"). STC shall timely make available to the Exchange Agent
any cash necessary to make payments in lieu of fractional shares as aforesaid.
For purposes of determining whether a holder of shares of Camco Common Stock
is to receive payment in lieu of fractional shares, all shares of Camco Common
Stock held of record by such holder shall be aggregated.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund that
remains undistributed to the former stockholders of Camco for one year after
the Effective Time shall be delivered to STC upon demand, and any stockholders
of Camco who have not theretofore complied with this Article II shall
thereafter look only to STC for payment of their claim for Schlumberger Common
Stock or any cash in lieu of fractional shares of Schlumberger Common Stock
and to Schlumberger for any dividends or distributions with respect to
Schlumberger Common Stock.
(g) No Liability. Neither Camco nor STC or any other member of the STC
Affiliated Group shall be liable to any holder of shares of Camco Common Stock
or Schlumberger Common Stock, as the case may be, for such shares (or
dividends or distributions with respect thereto) or cash in lieu of fractional
shares of Schlumberger Common Stock delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
A-4
<PAGE>
ARTICLE III
Representations and Warranties
3.1 Representations and Warranties of Camco. Subject to the exceptions set
forth in the disclosure letter to be delivered to STC and Sub in connection
herewith (the "Camco Disclosure Letter"), Camco represents and warrants to STC
and Sub as follows:
(a) Organization, Standing and Power. Each of Camco and its Subsidiaries
is a corporation, limited liability company or partnership duly organized,
validly existing and in good standing under the laws of its state of
incorporation or organization, has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing
to do business in each jurisdiction in which the business it is conducting,
or the operation, ownership or leasing of its properties, makes such
qualification necessary, other than where the failure to be so organized or
so to qualify (individually or in the aggregate) would not have a Material
Adverse Effect (as defined below) on Camco. Camco has heretofore delivered
to STC complete and correct copies of its Certificate of Incorporation and
Bylaws. Except as set forth in the exhibits to the Camco SEC Documents (as
defined in Section 3.1(d)), Camco does not own, directly or indirectly, any
capital stock or other ownership interest in any Subsidiary which would be
required to be listed as a Subsidiary of Camco under the rules of the SEC
with the filing by Camco of an Annual Report on Form 10-K. As used in this
Merger Agreement a "Material Adverse Effect" shall mean any effect or
change that is or would be materially adverse to the business, operations,
assets, condition (financial or otherwise) or results of operations of (i)
in respect of Camco, Camco and its direct and indirect Subsidiaries, taken
as a whole, and (ii) in respect of the STC Affiliated Group, all the
members of the STC Affiliated Group taken as a whole; provided, however, a
Material Adverse Effect shall not include (A) any effect or change,
including changes in national or international economic conditions,
relating to or affecting the oil and gas service and equipment industry as
a whole (including a decline in worldwide oil and gas commodity prices),
(B) changes, or possible changes, in foreign, Federal, state or local
statutes and regulations, (C) the loss of employees, customers or suppliers
by Camco or one or more of its Subsidiaries as a consequence of any
announcement relating to the Merger or (D) any action taken or required to
be taken to satisfy any requirement imposed in connection with the review
of the Merger under the HSR Act.
(b) Capital Structure. As of the date hereof, the authorized capital
stock of Camco consists of 100,000,000 shares of Camco Common Stock and
10,000,000 shares of preferred stock, par value $.01 per share ("Camco
Preferred Stock"). One common share purchase right (each, a "Camco Right")
issued pursuant to the Rights Agreement, dated as of December 15, 1994,
between Camco and First Chicago Trust Company of New York, as rights agent,
as amended by the First Amendment to Rights Agreement, dated as of October
21, 1997 (as so amended, the "Rights Agreement"), is associated with each
outstanding share of Camco Common Stock. At the close of business on June
8, 1998: (i) 37,968,796 shares of Camco Common Stock and no shares of Camco
Preferred Stock were issued and outstanding, and an aggregate of 2,054,358
shares of Camco Common Stock and no shares of Camco Preferred Stock were
reserved for issuance by Camco pursuant to the following plans:
<TABLE>
<CAPTION>
SHARES
PLAN RESERVED
---- --------
<S> <C>
The Camco 1997 Long-Term Incentive Plan.......................... 988,703
The Camco 1993 Long-Term Incentive Plan.......................... 644,505
The Production Operators Corp. 1992 Long-Term Incentive Plan..... 205,385
The Production Operators Corp. 1980 Long-Term Incentive Plan..... 2,600
The 1996 Savings Related Share Option Scheme..................... 81,500
The Camco Non-Employee Directors Stock Option Plan............... 131,665
</TABLE>
(collectively, the "Camco Stock Plans"); (ii) 800,802 shares of Camco
Common Stock were held by Camco in its treasury; and (iii) no bonds,
debentures, notes or other indebtedness having the right to vote (or
convertible into securities having the right to vote) on any matters on
which Camco stockholders may vote
A-5
<PAGE>
("Voting Debt") were issued or outstanding. Except as set forth on Schedule
3.1(b) to the Camco Disclosure Letter, all outstanding shares of Camco
Common Stock are validly issued, fully paid and nonassessable and are not
subject to preemptive rights. Except as set forth on Schedule 3.1(b) to the
Camco Disclosure Letter, all outstanding shares of capital stock of the
Subsidiaries of Camco have been duly authorized and validly issued and are
fully paid and non-assessable and were not issued in violation of any
preemptive rights or other preferential rights of subscription or purchase
other than those that have been waived or otherwise cured or satisfied and
all such shares are owned by Camco, or a direct or indirect wholly owned
Subsidiary of Camco, free and clear of all liens, charges, encumbrances,
claims and options of any nature. Except as set forth in this Section
3.1(b) or on Schedule 3.1(b) to the Camco Disclosure Letter and except for
changes since June 8, 1998 resulting from the exercise of employee stock
options granted pursuant to, or from issuances or purchases under, the
Camco Stock Plans or as contemplated by this Merger Agreement, there are
outstanding: (i) no shares of capital stock, Voting Debt or other voting
securities of Camco; (ii) no securities of Camco or any Subsidiary of Camco
convertible into or exchangeable for shares of capital stock, Voting Debt
or other voting securities of Camco or any Subsidiary of Camco; and (iii)
no options, warrants, calls, rights (including preemptive rights),
commitments or agreements to which Camco or any Subsidiary of Camco is a
party or by which it is bound in any case obligating Camco or any
Subsidiary of Camco to issue, deliver, sell, purchase, redeem or acquire,
or cause to be issued, delivered, sold, purchased, redeemed or acquired,
additional shares of capital stock or any Voting Debt or other voting
securities of Camco or of any Subsidiary of Camco, or obligating Camco or
any Subsidiary of Camco to grant, extend or enter into any such option,
warrant, call, right, commitment or agreement. There are not as of the date
hereof and there will not be at the Effective Time any stockholder
agreements, voting trusts or other agreements or understandings to which
Camco is a party or by which it is bound relating to the voting of any
shares of the capital stock of Camco. There are no restrictions on Camco to
vote the stock of any of its Subsidiaries.
(c) Authority; No Violations; Consents and Approvals.
(i) The Board of Directors of Camco has approved the Merger and this
Merger Agreement, by vote of the directors with no negative vote, and
declared the Merger and this Merger Agreement to be in the best
interests of the stockholders of Camco. The directors of Camco have
advised Camco and STC that they intend to vote or cause to be voted all
of the shares of Camco Common Stock for which they have voting power in
favor of approval of the Merger and this Merger Agreement. Camco has
all requisite corporate power and authority to enter into this Merger
Agreement and, subject, with respect to consummation of the Merger, to
approval of this Merger Agreement and the Merger by the stockholders of
Camco in accordance with the DGCL, to consummate the transactions
contemplated hereby. The execution and delivery of this Merger
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of Camco, subject, with respect to consummation of the Merger, to
approval of this Merger Agreement and the Merger by the stockholders of
Camco in accordance with the DGCL. This Merger Agreement has been duly
executed and delivered by Camco and, subject, with respect to
consummation of the Merger, to approval of this Merger Agreement and
the Merger by the stockholders of Camco in accordance with the DGCL,
and assuming this Merger Agreement constitutes the valid and binding
obligation of STC and Sub, constitutes a valid and binding obligation
of Camco enforceable in accordance with its terms, subject, as to
enforceability, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or effecting creditors'
rights and to general principles of equity and limitations imposed on
indemnity obligations by applicable federal and state securities laws.
(ii) Except as set forth on Schedule 3.1(c) to the Camco Disclosure
Letter, the execution and delivery of this Merger Agreement does not,
and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, or
result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
Camco or any of its Subsidiaries under, any provision of (A) the
Certificate of Incorporation or Bylaws
A-6
<PAGE>
of Camco or any provision of the comparable charter or organizational
documents of any of its Subsidiaries, (B) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument,
permit, concession, franchise or license applicable to Camco or any of
its Subsidiaries or (C) assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in
Schedule 3.1(c) to the Camco Disclosure Letter and in subparagraph
(iii) of this Section 3.1(c) are duly and timely obtained or made and
the approval of the Merger and this Merger Agreement by the
stockholders of Camco has been obtained, any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Camco or any
of its Subsidiaries or any of their respective properties or assets,
other than, in the case of clause (B) or (C), any such conflicts,
violations, defaults, rights, liens, security interests, charges or
encumbrances that, individually or in the aggregate, would not have a
Material Adverse Effect on Camco, materially impair the ability of
Camco to perform its obligations hereunder or prevent in any material
respect the consummation of any of the transactions contemplated
hereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from, any U.S. or
non-U.S. court, administrative agency or commission or other
governmental authority or instrumentality (a "Governmental Entity"), is
required by or with respect to Camco or any of its Subsidiaries in
connection with the execution and delivery of this Merger Agreement by
Camco or the consummation by Camco of the transactions contemplated
hereby, as to which the failure to obtain or make would have a Material
Adverse Effect, except for: (A) the filing of a premerger notification
report by Camco under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), and the expiration or termination
of the applicable waiting period with respect thereto; (B) the filing
with the SEC of (1) a proxy statement in preliminary and definitive
form relating to the meeting of Camco's stockholders to be held in
connection with the Merger (the "Proxy Statement") and (2) such reports
under Section 13(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and such other compliance with the Exchange Act
and the rules and regulations thereunder, as may be required in
connection with this Merger Agreement and the transactions contemplated
hereby; (C) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware; (D) such filings and approvals as
may be required by any applicable state securities, "blue sky" or
takeover laws, or environmental laws; (E) such filings and approvals as
may be required by any applicable non-U.S. Governmental Entity; and (F)
such filings and approvals as may be required by any non-U.S. premerger
notification, securities, corporate or other law, rule or regulation.
(d) SEC Documents. Camco has made available to STC a true and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by Camco with the SEC since December 31, 1995 and prior to
the date of this Merger Agreement (the "Camco SEC Documents") which are all
the documents that Camco was required to file with the SEC since such date.
As of their respective dates, the Camco SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such
Camco SEC Documents, and none of the Camco SEC Documents contained when
filed any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of Camco
included in the Camco SEC Documents complied as to form in all material
respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case
of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X
of the SEC) and fairly present in accordance with applicable requirements
of GAAP (subject, in the case of the unaudited statements, to normal year-
end adjustments and other adjustments discussed therein) the consolidated
financial position of Camco and its consolidated Subsidiaries as of their
respective dates and the consolidated results of operations and the
consolidated cash flows of Camco and its consolidated Subsidiaries for the
periods presented therein.
A-7
<PAGE>
(e) Information Supplied. None of the information supplied or to be
supplied by Camco for inclusion or incorporation by reference in the
Registration Statement on Form S-4 to be filed with the SEC in connection
with the issuance of shares of Schlumberger Common Stock in the Merger (the
"S-4") will, at the time the S-4 is filed with the SEC or when it becomes
effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
none of the information supplied or to be supplied by Camco and included or
incorporated by reference in the Proxy Statement will, at the date mailed
to stockholders of Camco or at the time of the meeting of such stockholders
to be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Camco or any of its
Subsidiaries, or with respect to other information supplied by Camco for
inclusion in the Proxy Statement or S-4, shall occur which is required to
be described in an amendment of, or a supplement to, the Proxy Statement or
the S-4, such event shall be so described, and such amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated
to the stockholders of Camco. The Proxy Statement, insofar as it relates to
Camco or its Subsidiaries or other information supplied by Camco for
inclusion therein, will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder,
except that no representations or warranties are made by Camco with respect
to statements made or incorporated by reference therein based on
information supplied by any member of the STC Affiliated Group.
(f) Absence of Certain Changes or Events. Except as disclosed in, or
reflected in the financial statements included in, the Camco SEC Documents
or on Schedule 3.1(f) to the Camco Disclosure Letter, or except as
contemplated by this Merger Agreement, since December 31, 1997, there has
not been: (i) any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to any
of Camco's capital stock, except for regular quarterly cash dividends of
$.05 per share on Camco Common Stock; (ii) any amendment of any material
term of any outstanding equity security of Camco or any Subsidiary; (iii)
any repurchase, redemption or other acquisition by Camco or any Subsidiary
of any outstanding shares of capital stock or other equity securities of,
or other ownership interests in, Camco or any Subsidiary, except as
contemplated by Camco Benefit Plans; (iv) any material change in any method
of accounting or accounting practice by Camco or any Subsidiary; or (v) a
Material Adverse Effect with respect to Camco.
(g) No Undisclosed Material Liabilities. Except as disclosed in the Camco
SEC Documents or on Schedule 3.1(g) to the Camco Disclosure Letter, there
are no liabilities of Camco or any of its Subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable
or otherwise, that would have a Material Adverse Effect on Camco, other
than: (i) liabilities adequately provided for on the balance sheet of Camco
dated as of March 31, 1998 (including the notes thereto) contained in
Camco's Quarterly Report on Form 10-Q for the quarter ended March 31, 1998;
(ii) liabilities incurred in the ordinary course of business since March
31, 1998; (iii) liabilities under this Merger Agreement and the Transaction
Agreement; and (iv) except as disclosed on Schedule 3.1(l)(i) to the Camco
Disclosure Letter and in Section 5.14(f).
(h) No Default. Neither Camco nor any of its Subsidiaries is in default
or violation (and no event has occurred which, with notice or the lapse of
time or both, would constitute a default or violation) of any term,
condition or provision of (i) in the case of Camco and its Subsidiaries,
their respective charter and bylaws, (ii) except as disclosed in Schedule
3.1(h) to the Camco Disclosure Letter, any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which Camco or any
of its Subsidiaries is now a party or by which Camco or any of its
Subsidiaries or any of their respective properties or assets may be bound
or (iii) any order, writ, injunction, decree, statute, rule or regulation
applicable to Camco or any of its Subsidiaries, except in the case of (ii)
and (iii) for defaults or violations which in the aggregate would not have
a Material Adverse Effect on Camco.
A-8
<PAGE>
(i) Compliance with Applicable Laws. Camco and its Subsidiaries hold all
permits, licenses, variances, exemptions, orders, franchises and approvals
of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Camco Permits"), except where the failure so to
hold would not have a Material Adverse Effect on Camco. Camco and its
Subsidiaries are in compliance with the terms of the Camco Permits, except
where the failure so to comply would not have a Material Adverse Effect on
Camco. Except as disclosed in the Camco SEC Documents or as set forth on
Schedule 3.1(i), 3.1(k), 3.1(l), 3.1(m) or 3.1(o) to the Camco Disclosure
Letter, the businesses of Camco and its Subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations which would not have a
Material Adverse Effect on Camco. Except as set forth on Schedule 3.1(i) to
the Camco Disclosure Letter, no investigation or review by any Governmental
Entity with respect to Camco or any of its Subsidiaries is pending or, to
the best knowledge of Camco, threatened, other than those the outcome of
which would not have a Material Adverse Effect on Camco.
(j) Litigation. Except as disclosed in the Camco SEC Documents or in the
Camco litigation report previously delivered to STC, there is no (i) suit,
action or proceeding pending, or, to the best knowledge of Camco,
threatened against or effecting Camco or any Subsidiary of Camco ("Camco
Litigation"), or (ii) judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Camco or any
Subsidiary of Camco ("Camco Order"), that would (in any case) have a
Material Adverse Effect on Camco or prevent Camco from consummating the
transactions contemplated by this Merger Agreement.
(k) Taxes.
(i) Except as set forth on Schedule 3.1(k)(i) to the Camco Disclosure
Letter, each of Camco, each of its Subsidiaries and any affiliated,
combined or unitary group of which any such corporation is or was a
member has (A) timely (taking into account any extensions) filed in
correct form all federal and all material state, local and non-U.S.
returns, declarations, reports, estimates, information returns and
statements ("Returns") required to be filed by or with respect to it in
respect of any Taxes (as hereinafter defined), (B) timely paid all
Taxes that are due and payable (except for audit adjustments which
would not have a Material Adverse Effect on Camco in the aggregate or
to the extent that liability therefor is reserved for in Camco's
unaudited balance sheet at March 31, 1998 included in the most recent
Quarterly Report on Form 10-Q of Camco (the "Current Balance Sheet"))
for which Camco or any of its Subsidiaries may be liable, (C)
established reserves which are included in the Current Balance Sheet
that are adequate for the payment of all Taxes not yet due and payable
with respect to the results of operations of Camco and its Subsidiaries
through the date of such Current Balance Sheet, and (D) complied in all
respects with all applicable laws, rules and regulations relating to
the payment and withholding of Taxes and has in all respects timely
withheld from employee wages and paid over to the proper governmental
authorities all amounts required to be so withheld and paid over,
except where such failure to comply or to withhold would not have a
Material Adverse Effect on Camco.
(ii) Schedule 3.1(k)(ii) to the Camco Disclosure Letter sets forth
the last taxable period through which the federal income Tax Returns of
Camco and any of its Subsidiaries have been examined by the Internal
Revenue Service ("IRS") or otherwise closed. Except to the extent being
contested in good faith, all deficiencies asserted as a result of such
examinations and any examination by any applicable state, local or non-
U.S. taxing authority have been paid, fully settled or adequately
provided for in the Current Balance Sheet. Except as adequately
provided for in the Camco SEC Documents or as set forth in Schedule
3.1(k)(ii) to the Camco Disclosure Letter, no federal, state, local or
non-U.S. Tax audits or other administrative proceedings or court
proceedings are presently pending with regard to any Taxes for which
Camco or any of its Subsidiaries would be liable, no deficiency for any
such Taxes has been proposed, asserted or assessed pursuant to any such
examination against Camco or any of its Subsidiaries by any federal,
state, local or non-U.S. taxing authority with respect to any period.
(iii) Except as disclosed on Schedule 3.1(k)(iii) to the Camco
Disclosure Letter, neither Camco nor any of its Subsidiaries has
executed or entered into (or prior to the close of business on the
Closing
A-9
<PAGE>
Date will execute or enter into) with the IRS or any other taxing
authority (A) any agreement or other document extending or having the
effect of extending the period for assessments or collection of any
Taxes for which Camco or any of its Subsidiaries would be liable or (B)
a closing agreement pursuant to Section 7121 of the Code, or any
predecessor provision thereof or any similar provision of state, local
or non-U.S. Tax law that relates to the assets or operations of Camco
or any of its Subsidiaries.
(iv) Except as disclosed on Schedule 3.1(k)(iv) to the Camco
Disclosure Letter, there are no liens or security interests on any of
the assets of Camco or any of its Subsidiaries that arose in connection
with any failure or alleged failure to pay any Tax other than for taxes
which are not yet delinquent.
(v) Except as disclosed on Schedule 3.1(k)(v) to the Camco Disclosure
Letter, neither Camco nor any of its Subsidiaries is a party to an
agreement that provides for the payment of any amount that would
constitute a "parachute payment" within the meaning of Section 280G of
the Code.
(vi) Neither Camco nor any of its Subsidiaries has made an election
under Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply to any disposition of a subsection (f) asset (as such
term is defined in Section 341(f)(4) of the Code) owned by Camco or any
of its Subsidiaries.
(vii) Except as set forth in Camco SEC Documents or as disclosed on
Schedule 3.1(k)(vii) to the Camco Disclosure Letter, neither Camco nor
any of its Subsidiaries is a party to, is bound by or has any
obligation under any tax sharing agreement, tax indemnity agreement or
similar agreement or arrangement.
(viii) Except as disclosed on Schedule 3.1(k)(viii) to the Camco
Disclosure Letter, neither Camco nor any of its Subsidiaries has any
liability for Taxes under Treas. Reg. (S) 1.1502-6, or any similar
provision of state, local or non-U.S. law, except for Taxes of the
affiliated group of which Camco is the common parent corporation,
within the meaning of Section 1504(a)(1) of the Code or any similar
provision of state, local or non-U.S. law.
(ix) Neither Camco nor any of its Subsidiaries has participated in
any international boycott within the meaning of Section 999 of the
Code.
(x) Except as disclosed on Schedule 3.1(k)(x) to the Camco Disclosure
Letter and minor locations not material to the business of Camco and
its U.S. Subsidiaries, neither Camco nor any of its Subsidiaries has
had a permanent establishment in any foreign country, as defined in any
applicable treaty or convention between the United States and such
foreign country.
(xi) Neither Camco nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
For purposes of this Merger Agreement, "Taxes" shall mean all federal,
state, local, non-U.S. and other taxes, charges, fees, levies, imposts,
duties, licenses or other assessments, together with any interest,
penalties, additions to tax or additional amounts imposed by any taxing
authority.
(l) Employee Matters; ERISA.
(i) Benefit Plans. Schedule 3.1(l)(i) to the Camco Disclosure Letter
contains a true and complete list of each of the following items: each
employee benefit plan, program or arrangement covering any current or
former officer, director, employee or independent contractor of Camco
(or any of its Subsidiaries) or any of their dependents or
beneficiaries (each, a "Camco Beneficiary") including, but not limited
to, any "employee benefit plan" within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), whether or not terminated or covered by ERISA, if Camco or
any of its Subsidiaries could have statutory or contractual liability
with respect thereto on or after the date hereof but excluding
immaterial plans maintained by Subsidiaries of Camco covering employees
located outside the United States where such plans cover fewer than 100
people. The items described above, together with each management,
employment,
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<PAGE>
deferred compensation, severance, change in control, bonus or other
contract for personal services with or covering any Camco Beneficiary,
whether or not terminated, if Camco or any of its Subsidiaries could
have statutory or contractual liability with respect thereto on or
after the date hereof, are referred to collectively herein as the
"Camco Benefit Plans."
(ii) Contributions and Payments. All material contributions and other
material payments required to have been made by Camco or any entity
required to be aggregated therewith pursuant to Code Section 414 (a
"Camco ERISA Affiliate") with respect to any Camco Benefit Plan (or to
any person pursuant to the terms thereof) have been or will be timely
made and all such amounts properly accrued through the date of this
Merger Agreement have been reflected in the financial statements of
Camco included in the Camco SEC Documents.
(iii) Qualification; Compliance. Each Camco Benefit Plan that is
intended to be "qualified" within the meaning of Code Section 401(a)
has been determined by the IRS to be so qualified or the applicable
remedial period applicable to the Plan will not have ended prior to the
Effective Time, and, to the best knowledge of Camco, no event or
condition exists or has occurred that would reasonably be expected to
result in the revocation or denial of any such determination which
would have a Material Adverse Effect on Camco. With respect to each
Camco Benefit Plan, Camco and each Camco ERISA Affiliate are in
compliance with, and each Camco Benefit Plan and related source of
benefit payment is and has been operated in compliance with, all
applicable laws, rules and regulations governing such plan or source,
including, without limitation, ERISA, the Code and applicable local law
(including non-U.S. law), except for violations that would not have a
Material Adverse Effect on Camco. To the best knowledge of Camco,
except as set forth in Schedule 3.1(l)(iii), no Camco Benefit Plan is
subject to any ongoing audit, investigation, or other administrative
proceeding of the IRS, the Department of Labor, or any other federal,
state, or local governmental entity or is scheduled to be subject to
such an audit investigation or proceeding.
(iv) Liabilities. With respect to the Camco Benefit Plans,
individually and in the aggregate, and, to the best knowledge of Camco,
there exists no condition or set of circumstances that could subject
Camco or any Camco ERISA Affiliate to any liability arising under the
Code, ERISA or any other applicable law (including, without limitation,
any liability to or under any such plan or to the Pension Benefit
Guaranty Corporation ("PBGC"), or under any indemnity agreement to
which Camco or any Camco ERISA Affiliate is a party), which liability,
excluding liability for benefit claims, funding obligations and PBGC
insurance premiums, each payable in the ordinary course, would have a
Material Adverse Effect on Camco. No claim, action or litigation has
been made, commenced or, to the best knowledge of Camco, threatened, by
or against Camco or any of its Subsidiaries with respect to any Camco
Benefit Plan (other than for benefits or PBGC premiums payable in the
ordinary course) that would have a Material Adverse Effect on Camco.
(v) Retiree Welfare Plans. Except as disclosed in Schedule 3.1(l)(v)
to the Camco Disclosure Letter, no Camco Benefit Plan that is a
"welfare plan" (within the meaning of ERISA Section 3(1)) provides
benefits for any retired or former employees (other than as required
pursuant to ERISA Section 601).
(vi) Payments Resulting from Merger. Except as disclosed on Schedules
3.1(k)(v), 3.1(l)(vi), 4.1(h) and 5.14 to the Camco Disclosure Letter,
the consummation or announcement of any transaction contemplated by
this Merger Agreement will not (either alone or upon the occurrence of
any additional or further acts or events) result in (A) any payment
(whether of severance pay or otherwise) becoming due from the Company
or Camco or any of their Subsidiaries to any Camco Beneficiary or to
the trustee under any "rabbi trust" or similar arrangement, or (B) any
benefit under any Camco Benefit Plan being established or increased, or
becoming accelerated, vested or payable.
(vii) Funded Status of Plans. Each Camco Benefit Plan that is subject
to either the minimum funding requirements of ERISA Section 302 or to
Title IV of ERISA has assets that, as of the date hereof, have a fair
market value not less than the present value of the accrued benefit
obligations
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thereunder on a termination basis, as of the date hereof, based on the
actuarial methods, tables and assumptions utilized by such plan's
independent actuary in preparing such plan's most recently prepared
actuarial valuation report, except to the extent that applicable law
would require the use of different actuarial assumptions if such plan
was to be terminated as of the date hereof, in which case those
different assumptions shall apply for purposes of this representation.
Camco and its Subsidiaries have no unfunded liabilities, as determined
under local funding requirements, with respect to any Camco Benefit
Plans that cover such non-U.S. employees which would, in the aggregate,
have a Material Adverse Effect on Camco.
(viii) Multiemployer Plans. Except as described on Schedule
3.1(l)(viii) to the Camco Disclosure Letter, no Camco Benefit Plan is
or was a "multiemployer plan" (within the meaning of ERISA Section
4001(a)(3)), a multiple employer plan described in Code Section 413(c),
or a "multiple employer welfare arrangement" (within the meaning of
ERISA Section 3(40)). Except as disclosed in Schedule 3.1(l)(viii) to
the Camco Disclosure Letter, neither Camco nor any Camco ERISA
Affiliate has been obligated to contribute to, or otherwise has or has
had any liability with respect to, any multiemployer plan, multiple
employer plan, or multiple employer welfare arrangement.
(m) Labor Matters. Except as set forth in Schedule 3.1(m) to the Camco
Disclosure Letter,
(i) neither Camco nor any of its Subsidiaries is a party to any
collective bargaining agreement or other current labor agreement with
any labor union or organization, and to the knowledge of Camco and its
Subsidiaries there is no current union representation dispute involving
employees of Camco or any of its Subsidiaries nor does Camco or any of
its Subsidiaries know of any activity or proceeding of any labor
organization (or representative thereof) or employee group (or
representative thereof) to organize any such employees;
(ii) there is no unfair labor practice charge or grievance arising
out of a collective bargaining agreement or other grievance procedure
against Camco or any of its Subsidiaries pending, or, to the knowledge
of Camco or any of its Subsidiaries, threatened, that has, or would
have, a Material Adverse Effect on Camco;
(iii) there is no complaint, lawsuit or proceeding in any forum by or
on behalf of any present or former employee, any applicant for
employment or any classes of the foregoing alleging breach of any
express or implied contract of employment, any law or regulation
governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the
employment relationship against Camco or any of its Subsidiaries
pending, or, to the knowledge of Camco or any of its Subsidiaries,
threatened, that has, or would have, a Material Adverse Effect on
Camco;
(iv) there is no strike, dispute, slowdown, work stoppage or lockout
pending, or, to the knowledge of Camco or any of its Subsidiaries,
threatened, ]against or involving Camco or any of its Subsidiaries that
has, or could have, a Material Adverse Effect on Camco;
(v) Camco and each of its Subsidiaries are in compliance with all
applicable laws respecting employment and employment practices, terms
and conditions of employment, wages, hours of work and occupational
safety and health, except for non-compliance that does not have, and
would not have, a Material Adverse Effect on Camco; and
(vi) there is no proceeding, claim, suit, action or governmental
investigation pending or, to the knowledge of Camco or any of its
Subsidiaries, threatened, in respect to which any current or former
director, officer, employee or agent of Camco or any of its
Subsidiaries is or may be entitled to claim indemnification from Camco
or any of its Subsidiaries (A) pursuant to their respective charters or
bylaws, (B) as provided in any indemnification agreement to which Camco
or any Subsidiary of Camco is a party or (C) pursuant to applicable law
that has, or would have, a Material Adverse Effect on Camco.
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(n) Intangible Property. Camco and its Subsidiaries possess or have
adequate rights to use all trademarks, trade names, patents, service marks,
brand marks, brand names, computer programs, database, industrial designs,
know how, trade secrets, copyrights and other intellectual property rights
which are material to the condition or conduct of the business operations
of Camco and its Subsidiaries (collectively, the "Camco Intangible
Property"). Except as set forth on Schedule 3.1(n) to the Camco Disclosure
Letter, all of the Camco Intangible Property is owned by Camco or its
Subsidiaries free and clear of any and all liens, claims or encumbrances,
except those the failure to so own would not have a Material Adverse Effect
on Camco. To the knowledge of Camco, the operation of the businesses of
each of Camco or its Subsidiaries does not, in any material respect,
conflict with, infringe upon, violate or interfere with or constitute an
appropriation of any right, title, interest or goodwill, including, without
limitation, any intellectual property right, trade secret, trademark, trade
name, patent, service mark, brand mark, brand name, computer program,
database, industrial design, copyright or any pending application therefor
of any other person and there have been no claims made in connection
therewith and neither Camco nor any of its Subsidiaries has received any
notice of any claim or otherwise knows that any of the Camco Intangible
Property is invalid or conflicts with the rights of any other person or has
not been used or enforced or has been failed to be used or enforced in a
manner that would result in the abandonment, cancellation or
unenforceability of any of the Camco Intangible Property and would
individually or in the aggregate result in a Material Adverse Effect on
Camco. All failures of the representations and warranties set forth in this
Section 3.1(n) to be true, in the aggregate, would not result in a Material
Adverse Effect on Camco.
(o) Environmental Matters.
For purposes of this Merger Agreement:
(A) "Environmental Law" means any applicable law regulating,
prohibiting or requiring the notification of Releases into any part
of the natural environment, pertaining to the protection of natural
resources, the environment and public and employee health and
safety, or governing or regulating the use, storage, handling,
transportation, treatment, processing, disposal or generation of any
Hazardous Materials, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability
Act ("CERCLA") (42 U.S.C. Section 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the
Clean Air Act (33 U.S.C. Section 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. Section 7401 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 136 et
seq.), Emergency Planning and Community Right to Know Act (42 U.S.C.
Section 11001 et seq.), Safe Drinking Water Act (Section 42 U.S.C.
Section 300 et seq.) and the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.) ("OSHA") and the regulations promulgated
pursuant thereto, and any other such applicable county, province,
state or local statutes, and the regulations promulgated pursuant
thereto, as such laws have been and may be amended or supplemented
through the Closing Date.
(B) "Hazardous Material" means any substance, material or waste
which is regulated pursuant to any Environmental Law by any public
or governmental authority in the jurisdictions in which the
applicable party or its Subsidiaries conducts business, or in the
United States, including, without limitation, any material or
substance which is defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste" or
"restricted hazardous waste," "contaminant," "pollutant," "toxic
waste" or "toxic substance" under any provision of Environmental
Law;
(C) "Release" means any release, spill, effluent, emission,
leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor
environment, or into or out of any property owned, operated or
leased by the applicable party or its Subsidiaries; and
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(D) "Remedial Action" means all actions, including, without
limitation, any capital expenditures, required by a governmental
entity or required under any Environmental Law, or voluntarily
undertaken to (I) investigate, clean up, remove, treat, or in any
other way ameliorate or address any Hazardous Materials or other
substance in the indoor or outdoor environment; (II) prevent the
Release or threat of Release, or minimize the further Release of any
Hazardous Material so it does not endanger or threaten to endanger
the public health or welfare of the indoor or outdoor environment;
(III) perform pre-remedial studies and investigations or post-
remedial monitoring and care pertaining or relating to a Release; or
(IV) bring the applicable party into compliance with any
Environmental Law.
(i) Except as disclosed on Schedule 3.1(o) to the Camco Disclosure
Letter, the operations of Camco and its Subsidiaries have been and, as
of the Closing Date, will be in compliance with all Environmental Laws,
except where the failure to so comply would not have a Material Adverse
Effect on Camco;
(ii) Except as disclosed on Schedule 3.1(o) to the Camco Disclosure
Letter, Camco and its Subsidiaries have obtained and will, as of the
Closing Date, maintain all permits required under applicable
Environmental Laws for the continued operations of their respective
businesses, except such permits the lack of which would not have a
Material Adverse Effect on Camco;
(iii) Except as disclosed on Schedule 3.1(o) to the Camco Disclosure
Letter, Camco and its Subsidiaries are not subject to any outstanding
written orders, investigations or material contracts with any
Governmental Entity or other person respecting (A) Environmental Laws,
(B) Remedial Action or (C) any Release or threatened Release of a
Hazardous Material which would have a Material Adverse Effect on Camco;
(iv) Except as disclosed on Schedule 3.1(o) to the Camco Disclosure
Letter, Camco and its Subsidiaries have not received any written
communication alleging, with respect to any such party, the violation
of or liability under any Environmental Law or liability attributable
to the Release of any Hazardous Material, which violations or
liabilities, individually or in the aggregate, would have a Material
Adverse Effect on Camco;
(v) Except as disclosed on Schedule 3.1(o) to the Camco Disclosure
Letter, neither Camco nor any of its Subsidiaries has any contingent
liabilities in connection with the Release of any Hazardous Material
into the indoor or outdoor environment (whether on-site or off-site)
that, individually or in the aggregate, would have a Material Adverse
Effect on Camco;
(vi) Except as disclosed on Schedule 3.1(o) to the Camco Disclosure
Letter, the operations of Camco or its Subsidiaries involving the
generation, transportation, treatment, storage or disposal of Hazardous
Material or any state equivalent are in compliance with applicable
Environmental Laws, except where the failure to so comply, individually
or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Camco; and
(vii) Except as disclosed on Schedule 3.1(o) to the Camco Disclosure
Letter, to the knowledge of Camco, there is not now on or in any
property of Camco or its Subsidiaries any of the following: (A) any
underground storage tanks or surface impoundments; (B) any asbestos-
containing materials; or (C) any polychlorinated biphenyls, any of
which ((A), (B), or (C) preceding), individually or in the aggregate,
would have a Material Adverse Effect on Camco.
(p) Opinion of Financial Advisor. Camco has received the opinion of
Morgan Stanley & Co. Incorporated (a copy of which has been delivered to
STC) to the effect that, as of the date hereof, the Conversion Number is
fair from a financial point of view to such holders.
(q) State Takeover Statutes; Vote Required. Camco has taken all action to
assure that no state takeover statute or similar statute or regulation,
including, without limitation, Section 203 of the DGCL, shall apply to the
Merger or any of the other transactions contemplated hereby. The
affirmative vote of the holders of a
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majority of the outstanding shares of Camco Common Stock is the only vote
of the holders of any class or series of Camco capital stock necessary to
approve this Merger Agreement and the transactions contemplated hereby.
Camco has taken such other action with respect to any other anti-takeover
provisions in its Bylaws, Certificate of Incorporation or the Rights
Agreement to the extent necessary to consummate the Merger on the terms set
forth in this Merger Agreement.
(r) Accounting Matters. To the best knowledge of Camco's financial and
accounting officers, prior to the date hereof, neither Camco nor any of its
Subsidiaries has taken any action that (without giving effect to any action
taken or agreed to be taken by STC or any of its Subsidiaries) would
jeopardize the treatment of the business combination to be effected by the
Merger as a pooling of interests for accounting purposes.
(s) Beneficial Ownership of Schlumberger Common Stock. As of the date
hereof, assuming the accuracy of the representation set forth in Section
3.2(b), neither Camco nor its Subsidiaries "beneficially owns" (as defined
in Rule 13d-3 under the Exchange Act) in the aggregate one percent (1%) or
more of the outstanding Schlumberger Common Stock.
(t) Insurance. Camco maintains insurance coverage reasonably adequate for
the operation of the business of Camco and each of its Subsidiaries (taking
into account the cost and availability of such insurance), and the
transactions contemplated hereby will not materially adversely affect such
coverage.
(u) Brokers. Except as disclosed on Schedule 3.1(u) to the Camco
Disclosure Letter hereof, no broker, investment banker, or other person is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Merger Agreement
based upon arrangements made by or on behalf of Camco.
(v) Material Contracts and Agreements. All material contracts of Camco
and its Subsidiaries have been included in Camco SEC Documents unless not
required to be so included pursuant to the rules and regulations of the
SEC. Schedule 3.1(v) to the Camco Disclosure Letter sets forth a list of
all written or oral contracts, agreements or arrangements to which Camco or
any of its Subsidiaries or any of their respective assets is bound which
would be required to be filed as exhibits to Camco's Annual Report on Form
10-K for the year ended December 31, 1997, or, based on information
currently available to Camco, are expected to be required to be filed as an
exhibit to Camco's Annual Report on Form 10-K for the year ended December
31, 1998.
(w) Title to Properties.
(i) Each of Camco and its Subsidiaries has good and indefeasible
title to, or valid leasehold interests in, all its properties and
assets purported to be owned by it in the Camco SEC Documents, except
for such as are no longer used or useful in the conduct of its
businesses or as have been disposed of in the ordinary course of
business, and except for defects in title, easements, restrictive
covenants and similar encumbrances or impediments that, in the
aggregate, do not and will not materially interfere with its ability to
conduct its business as currently conducted. All such assets and
properties, other than assets and properties in which Camco or any of
the Subsidiaries has leasehold interests, are free and clear of all
liens, other than those set forth in the Camco SEC Documents, and
except for liens, that, in the aggregate, do not and will not
materially interfere with the ability of Camco or any of its
Subsidiaries to conduct business as currently conducted.
(ii) Except as would not have a Material Adverse Effect on Camco,
each of Camco and its Subsidiaries has complied in all material
respects with the terms of all leases to which it is a party and under
which it is in occupancy, and all such leases are in full force and
effect. Each of Camco and its Subsidiaries enjoys peaceful and
undisturbed possession under all such leases.
(x) Amendment to the Camco Rights Agreement. Camco has amended the Rights
Agreement so that none of the execution and delivery of this Merger
Agreement, the conversion of shares of Camco Common Stock into the right to
receive Schlumberger Common Stock in accordance with Article II of this
Merger Agreement, and the consummation of the Merger or any other
transaction contemplated hereby will cause
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(A) the Camco Rights to become exercisable under the Rights Agreement, (B)
any member of the STC Affiliated Group to be deemed an "Acquiring Person"
(as defined in the Rights Agreement), (C) the provisions of Section 11 or
Section 13 to become applicable to any such event or (D) the "Distribution
Date" or the "Share Acquisition Date" (each as defined in the Rights
Agreement) to occur upon any such event, and so that the "Expiration Date"
(as defined in the Rights Agreement) of the Camco Rights will occur
immediately prior to the Effective Time. Camco has delivered to STC a true
and complete copy of the Rights Agreement, as amended to date.
3.2 Representations and Warranties of STC and Sub. Subject to the exceptions
set forth in the disclosure letter to be delivered to Camco in connection
herewith (the "STC Disclosure Letter"), STC and Sub jointly and severally
represent and warrant to Camco as follows:
(a) Organization, Standing and Power. Each of STC and Sub is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation or organization, has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as now being conducted, and is duly qualified and
in good standing to do business in each jurisdiction in which the business
it is conducting, or the operation, ownership or leasing of its properties,
makes such qualification necessary, other than in such jurisdictions where
the failure to be so organized or so to qualify (individually or in the
aggregate) would not have a Material Adverse Effect on the STC Affiliated
Group.
(b) Capital Structure. As of the date hereof, the authorized capital
stock of STC consists of 1,000 shares of common stock, par value $100 per
share, 500 shares of which are validly issued, fully paid and
nonassessable, and are owned by Schlumberger and the balance of which are
not issued or outstanding. As of the date hereof, the authorized capital
stock of Sub consists of 10,000 shares of common stock, par value $1.00 per
share, 1,000 shares of which are validly issued, fully paid and
nonassessable, and are owned by STC and the balance of which are not issued
or outstanding. Sub was formed solely for the purpose of participating in
the Merger, has no assets other than (i) that amount of cash which is
required for it to be organized as a corporation under the DGCL and (ii)
such shares of Schlumberger Common Stock as are necessary to effect the
transactions contemplated hereby and has conducted no activities to date,
other than in connection with the Merger.
(c) Authority; No Violations, Consents and Approvals.
(i) Each of STC and Sub has all requisite corporate power and
authority to enter into this Merger Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Merger Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on
the part of STC and Sub. This Merger Agreement has been duly executed
and delivered by STC and Sub. Assuming this Merger Agreement
constitutes the valid and binding obligation of Camco, it also
constitutes a valid and binding obligation of each of STC and Sub and
is enforceable against each of them in accordance with its terms;
provided, however, that such enforceability is subject to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general principles of
equity and limitations imposed on indemnity obligations by applicable
federal and state securities laws.
(ii) Except as set forth on Schedule 3.2(c)(ii) to the STC Disclosure
Letter, the execution and delivery of this Merger Agreement does not,
and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, or
result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
STC or Sub under, any provision of (A) the Certificate of Incorporation
or Bylaws of STC or Sub, (B) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to STC or Sub or (C)
assuming the consents, approvals, authorizations or permits and filings
or notifications referred to in Section 3.2(c)(iii) are duly
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and timely obtained or made, any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to STC or Sub or any of
properties or assets, other than, in the case of clause (B) or (C), any
such conflicts, violations, defaults, rights, liens, security
interests, charges or encumbrances that, individually or in the
aggregate, would not have a Material Adverse Effect on the STC
Affiliated Group, materially impair the ability of STC or Sub to
perform its respective obligations hereunder or prevent in any material
respect the consummation of any of the transactions contemplated
hereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from any
Governmental Entity is required by or with respect to STC or any other
member of the STC Affiliated Group in connection with the execution and
delivery of this Merger Agreement by STC and Sub or the consummation by
STC and Sub of the transactions contemplated hereby, as to which the
failure to obtain or make would have a Material Adverse Effect on the
STC Affiliated Group, except for: (A) the filing of a premerger
notification report under the HSR Act and the expiration or termination
of the applicable waiting period with respect thereto; (B) the filing
with the SEC of the Proxy Statement, the S-4, such reports under
Section 13(a) of the Exchange Act and such other compliance with the
Securities Act and the Exchange Act and the rules and regulations
thereunder as may be required in connection with this Merger Agreement
and the transactions contemplated hereby, and the obtaining from the
SEC of such orders as may be so required; (C) the filing of the
Certificate of Merger with the Secretary of State of the State of
Delaware; (D) filings with, and approval of, the New York Stock
Exchange, Inc. (the "NYSE"); (E) such filings and approvals as may be
required by any applicable state securities, "blue sky" or takeover
laws or environmental laws; (F) such filings and approvals as may be
required by any applicable non-U.S. Governmental Entity; and (G) such
filings and approvals as may be required by any non-U.S. premerger
notification, securities, corporate or other law, rule or regulation.
(d) Litigation. Except as disclosed on Schedule 3.2(d) to the STC
Disclosure Letter, there is no (i) suit, action or proceeding pending, or,
to the best knowledge of STC, threatened against or affecting any member of
the STC Affiliated Group ("STC Litigation"), or (ii) judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against STC or any Subsidiary of STC, that would (in any case)
have a Material Adverse Effect on the STC Affiliated Group or prevent STC
or Sub from consummating the transactions contemplated by this Merger
Agreement.
(e) Accounting Matters. To the best knowledge of STC's financial and
accounting officers, prior to the date hereof, no member of the STC
Affiliated Group has taken any action that (without giving effect to any
action taken or agreed to be taken by Camco or any of its Subsidiaries)
would jeopardize the treatment of the business combination to be effected
by the Merger as a pooling of interests for accounting purposes.
(f) Beneficial Ownership of Camco Common Stock. As of the date hereof,
neither STC nor any member of the STC Affiliated Group "beneficially owns"
(as defined in Rule 13d-3 under the Exchange Act) any shares of Camco
Common Stock.
(g) Transaction Agreement. The representations and warranties made by any
member of the STC Affiliated Group which is a party to the Transaction
Agreement are true and correct in all material respects as set forth
therein.
(h) No Other Consideration for Camco Common Stock. Neither STC nor any
member of the STC Affiliated Group (i) owns any stock of Camco, (ii) has
previously owned any stock of Camco, except for stock (if any) which was
subsequently disposed of to unrelated parties, (iii) has any plan or
intention to acquire any stock of Camco, other than as provided herein, or
(iv) has agreed to pay, will pay or will cause to be paid any consideration
(whether material or immaterial) for shares of Camco capital stock other
than the shares of Schlumberger Common Stock described herein and any
payments in lieu of fractional shares described in Section 2.2(e), which
consideration could cause the Merger to fail to qualify as a reorganization
under Section 368(a)(1)(B) of the Code.
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ARTICLE IV
Covenants Relating to Conduct of Business of Camco
4.1 Conduct of Business by Camco Pending the Merger. During the period from
the date of this Merger Agreement and continuing until the Effective Time,
Camco agrees as to itself and its Subsidiaries that (except as expressly
contemplated or permitted by this Merger Agreement, or to the extent that STC
shall otherwise consent in writing):
(a) Ordinary Course. Except as provided on Schedule 4.1(a) to the Camco
Disclosure Letter, each of Camco and its Subsidiaries shall carry on its
businesses in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted and, to the extent consistent
therewith, shall use all reasonable efforts to preserve intact its present
business organizations, keep available the services of its current officers
and employees and endeavor to preserve its relationships with customers,
suppliers and others having business dealings with it, in each case
consistent with past practices, to the end that its goodwill and ongoing
business shall not be impaired in any material respect to the fullest
extent reasonably possible at the Effective Time.
(b) Dividends; Changes in Stock. Except as provided on Schedule 4.1(b) to
the Camco Disclosure Letter, Camco shall not and it shall not permit any of
its Subsidiaries to: (i) declare or pay any dividends on or make other
distributions in respect of any of its capital stock or partnership
interests, except for the declaration and payment of regular quarterly cash
dividends not in excess of $.05 per share of Camco Common Stock and
dividends from a Subsidiary of Camco to Camco or another Subsidiary of
Camco and except for cash distributions paid on or with respect to
partnership interests of a Subsidiary of Camco; (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of Camco capital stock; or (iii) repurchase, redeem
or otherwise acquire, or permit any of its Subsidiaries to purchase, redeem
or otherwise acquire, any shares of Camco's capital stock, except as
required by the terms of its securities outstanding on the date hereof or
as contemplated by any existing employee benefit plan.
(c) Issuance of Securities. Except as provided on Schedule 4.1(c) to the
Camco Disclosure Letter, Camco shall not, and it shall not permit any of
its Subsidiaries to, issue, deliver or sell, or authorize or propose to
issue, deliver or sell, any shares of its capital stock of any class, any
Voting Debt or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, Voting Debt or convertible securities,
other than: (i) the issuance of Camco Common Stock upon the exercise of
stock options granted under the Camco Stock Plans that are outstanding on
the date hereof, or in satisfaction of stock grants or stock-based awards
made prior to the date hereof pursuant to the Camco Stock Plans; and (ii)
issuances by a wholly owned Subsidiary of its capital stock to its parent.
(d) Governing Documents. Except as contemplated hereby or in connection
herewith, Camco shall not amend or propose to amend its Certificate of
Incorporation or Bylaws.
(e) No Acquisitions. Except for proposed acquisitions listed on Schedule
4.1(e) to the Camco Disclosure Letter, Camco shall not and it shall not
permit any of its Subsidiaries to, acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial equity interest in or
a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof involving the payment of consideration in
excess of $5 million in the aggregate without the prior written consent of
STC.
(f) No Dispositions. Other than: (i) dispositions or proposed
dispositions listed on Schedule 4.1(f) to the Camco Disclosure Letter; (ii)
as may be necessary or required by law to consummate the transactions
contemplated hereby; (iii) sales or leases in the ordinary course of
business consistent with past practice or (iv) other dispositions not
aggregating more than $5 million, Camco shall not and it shall not permit
any of its Subsidiaries to sell, lease, encumber or otherwise dispose of,
or agree to sell, lease (whether such lease is an operating or capital
lease), encumber or otherwise dispose of, any of its assets without the
prior written consent of STC.
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(g) No Dissolution, Etc. Except as otherwise permitted or contemplated by
this Merger Agreement, Camco shall not authorize, recommend, propose or
announce an intention to adopt a plan of complete or partial liquidation or
dissolution of Camco or any of its Subsidiaries that would constitute a
"significant subsidiary" within the meaning of Rule 1.02 of Regulation S-X
promulgated under the Securities Act (a "Significant Subsidiary").
(h) Certain Employee Matters. Except as set forth on Schedules 3.1(k)(v),
3.1(l)(i), 3.1(l)(vi) and 4.1(h) to the Camco Disclosure Letter and in
Section 5.14 or as may be required by applicable law or any agreement to
which Camco or any Camco ERISA Affiliate is a party on the date hereof or
as expressly contemplated by this Merger Agreement Camco shall not, nor
shall it permit any Camco ERISA Affiliate to:
(i) amend, or increase the amount of (or accelerate the payment or
vesting of) any benefit or amount payable under, any employee benefit
plan or any other contract, agreement, commitment, arrangement, plan or
policy providing for compensation or benefits to any current or former
director, officer, employee or independent contractor who would be
deemed to be an employee under applicable guidelines published by the
IRS, and maintained by, contributed to or entered into by, Camco or any
Camco ERISA Affiliate, including, without limitation, the existing
Camco Benefit Plans;
(ii) increase (or enter into any contract, agreement, commitment or
arrangement to increase in any manner) the compensation or fringe
benefits, or otherwise to extend, expand or enhance the engagement,
employment or any related rights, of any current or former director,
officer, employee or independent contractor who would be deemed to be
an employee under applicable guidelines published by the IRS, of Camco
or any Camco ERISA Affiliate, except increases in the ordinary course
of business consistent with past practice;
(iii) adopt, establish or implement any plan, policy or other
arrangement providing for any form of benefits or other compensation to
any current or former director, officer, employee or independent
contractor who would be deemed to be an employee under applicable
guidelines published by the IRS, of Camco or any Camco ERISA Affiliate;
(iv) enter into or amend any employment agreement, severance
agreement, or other contract, agreement or arrangement with any current
or former director, officer, employee or independent contractor who
would be deemed to be an employee under applicable guidelines published
by the IRS, of Camco or any Camco ERISA Affiliate; or
(v) pay or agree to pay any pension, retirement allowance or other
benefit not required or contemplated by any of the existing Camco
Benefit Plans as in effect on the date of this Merger Agreement to any
current or former director, officer, employee or independent contractor
who would be deemed to be an employee under applicable guidelines
published by the IRS, of Camco or any Camco ERISA Affiliate.
(i) Indebtedness; Leases; Capital Expenditures. Except as set forth on
Schedule 4.1(i) to the Camco Disclosure Letter, Camco shall not, nor shall
Camco permit any of its Subsidiaries to, (A) incur any indebtedness for
borrowed money (except for working capital under Camco's existing credit
facilities, and refinancings of existing debt that permit prepayment of
such debt without penalty (other than LIBOR breakage costs)) or guarantee
any such indebtedness or issue or sell any debt securities or warrants or
rights to acquire any debt securities of Camco or any of its Subsidiaries
or guarantee any debt securities of others if the aggregate amount of all
such indebtedness incurred or guaranteed exceeds $25 million, (B) except in
the ordinary course of business, enter into any lease (whether such lease
is an operating or capital lease) or create any mortgages, liens, security
interests or other encumbrances on the property of Camco or any of its
Subsidiaries in connection with any indebtedness thereof, except for those
securing purchase money indebtedness or (C) commit to aggregate capital
expenditures in excess of $25 million outside the capital budget, as
approved by Camco prior to the date hereof and disclosed on Schedule 4.1(i)
to the Camco Disclosure Letter.
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(j) Taxes. Neither Camco nor any of its Subsidiaries shall make any
material election relating to Taxes or compromise any material Tax
liability.
(k) Accounting. Neither Camco nor any of its Subsidiaries shall change
any material accounting principle used by it, except as required by
statement, rules or regulations promulgated by the FASB or the SEC.
4.2 No Solicitation.
(a) Camco will not, and will not authorize or permit any of its officers,
directors, agents and other representatives or those of any of its
Subsidiaries (collectively, "Camco Representatives") to, and will not
authorize any employee of Camco or any of its Subsidiaries to and on becoming
aware of will take all reasonable actions to stop the employee from continuing
to, directly or indirectly, solicit or initiate or encourage (including by way
of furnishing information) any prospective buyer or the making of any proposal
that constitutes, or may reasonably be expected to lead to, an Acquisition
Proposal (as defined herein) from any person, or engage in any discussions or
negotiations relating thereto or accept any Acquisition Proposal; provided,
however, that, notwithstanding any other provision of this Merger Agreement,
Camco may, prior to the vote of the stockholders of Camco for approval of the
Merger, but not thereafter if the Merger is approved thereby, in response and
only in response to a written request made without any solicitation,
initiation, encouragement, discussion or negotiation by Camco or any Camco
Representatives, furnish information concerning Camco to any person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) pursuant to a
confidentiality agreement on substantiality the same terms (provided that the
Camco Board of Directors may, if required by its fiduciary duties, permit an
offer to be received from such group in accordance with the terms of such
confidentiality agreement) as the Confidentiality Agreements between Camco and
STC described in Section 5.1 hereof, provided that the Board of Directors of
Camco shall conclude in good faith on the basis of the written advice of
outside counsel to Camco that such action is necessary in order for the Board
of Directors of Camco to act in a manner that is consistent with its fiduciary
obligations under applicable law. Camco shall immediately cease and cause to
be terminated any existing solicitation, initiation, encouragement, activity,
discussion or negotiation with any parties conducted heretofore by Camco or
any Camco Representatives with respect to any Acquisition Proposal existing on
the date hereof. Camco will promptly notify STC of the pendency of any
negotiations respecting, or the receipt of, any Acquisition Proposal. It is
understood that any violation of this Section 4.2 by Camco or any Camco
Representative shall be deemed a material breach of this Merger Agreement by
Camco. As used in this Merger Agreement, "Acquisition Proposal" shall mean any
proposal or offer, other than a proposal or offer by STC or another member of
the STC Affiliated Group, for a tender or exchange offer, a merger,
consolidation or other business combination involving Camco or any Significant
Subsidiary of Camco or any proposal to acquire in any manner a substantial
(15% or more) equity interest in, or substantially all of the assets of, Camco
or any of its Significant Subsidiaries.
(b) Neither the Board of Directors of Camco nor any committee thereof shall,
except in connection with the termination of this Merger Agreement pursuant to
Section 7.1(a), (b) or (d), (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Schlumberger or STC, the approval or
recommendation by the Board of Directors of Camco or any such committee of
this Merger Agreement or the Merger, or take any action having such effect, or
(ii) approve or recommend, or propose to approve or recommend, any Acquisition
Proposal. Notwithstanding the foregoing, in the event the Board of Directors
of Camco receives an Acquisition Proposal that, in the exercise of its
fiduciary obligations (as determined in good faith by a majority of the
disinterested members thereof based on the advice of outside counsel), it
determines to be a Superior Proposal, the Board of Directors may withdraw or
modify its approval or recommendation of this Merger Agreement or the Merger
and may (subject to the following sentence) terminate this Merger Agreement,
in each case at any time after midnight on the second business day following
STC's receipt of written notice (a "Notice of Superior Proposal") advising STC
that the Board of Directors has received an Acquisition Proposal which it has
determined to be a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal (including the proposed financing for
such proposal and a copy of any documents conveying such proposal) and
identifying the party making such Superior Proposal. Camco may terminate this
Merger Agreement pursuant to
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the preceding sentence only if the stockholders of Camco shall not yet have
voted upon the Merger and Camco shall have paid to STC the Termination Fee (as
defined in Section 7.2(b)). Any of the foregoing to the contrary
notwithstanding, Camco may engage in discussions with any party that has made
an unsolicited takeover proposal for the limited purpose of determining
whether such proposal (as opposed to any further negotiated proposal) is a
Superior Proposal. Nothing contained herein shall prohibit Camco from taking
and disclosing to its stockholders a position contemplated by Rule 14e-2(a)
following STC's receipt of a Notice of Superior Proposal.
(c) For purposes of this Merger Agreement, a "Superior Proposal" means any
bona fide proposal to acquire, directly or indirectly, all of the Camco Common
Stock then outstanding or all or substantially all of the assets of Camco and
its Subsidiaries, and otherwise on terms which a majority of the disinterested
members of the Board of Directors of Camco determines in its good faith
reasonable judgment (based on the written advice of a financial advisor of
national recognized reputation, a copy of which shall be provided to STC) to
be more favorable to Camco's stockholders than the Merger. In reaching such
good faith determination, the Board of Directors of Camco will give
significant consideration to whether an Acquisition Proposal includes definite
financing.
4.3 Pooling of Interests. If so requested by STC, Camco shall, and shall
cause its independent accountants and other representatives to, fully
cooperate with STC, its independent accountants and other representatives in
seeking to obtain confirmation from the SEC that the Merger may be accounted
for as a "pooling of interests."
ARTICLE V
Additional Agreements
5.1 Access to Information. Subject to the provisions of Section 5.3, upon
reasonable notice, Camco shall afford to the officers, employees, accountants,
counsel and other representatives of STC, access, during normal business hours
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, Camco shall
furnish promptly to STC or a designated member of the STC Affiliated Group (a)
a copy of each report, schedule, registration statement and other document
filed or received by it during such period pursuant to SEC requirements and
(b) all other information concerning its business, properties and personnel as
STC or the other members of the STC Affiliated Group may reasonably request.
Upon reasonable notice, STC shall provide the officers, employees,
accountants, counsel and other representatives of Camco such information and
materials concerning STC and the other members of the STC Affiliated Group as
is reasonably necessary for Camco to complete its due diligence with respect
to this Merger Agreement and the Transaction Agreement. Camco agrees that
neither Camco nor any of its Subsidiaries or any representatives of any of the
foregoing entities will use any information obtained pursuant to this Section
5.1 for any purpose unrelated to the consummation of the transactions
contemplated by this Merger Agreement and the Transaction Agreement. STC
agrees that no member of the STC Affiliated Group, or any representative of
any member of the STC Affiliated Group will use any information obtained
pursuant to this Section 5.1 for any purpose unrelated to the consummation of
the transactions contemplated by this Merger Agreement and the Transaction
Agreement. Notwithstanding the foregoing, neither Camco nor STC shall be
required to give the other party any information that is subject to a
confidentiality agreement and that relates primarily to a party other than
Camco and its subsidiaries on the one hand or a member of the STC Affiliated
Group on the other. The Confidentiality Agreements dated as of May 11, 1998
between STC and Camco (the "Confidentiality Agreements") shall apply with
respect to information furnished thereunder or hereunder and any other
activities contemplated thereby.
5.2 Camco Stockholders' Meeting. Camco shall call a meeting of its
stockholders to be held as promptly as practicable after the date hereof for
the purpose of voting upon this Merger Agreement and the Merger. Subject to
Sections 4.2(a) and (b), Camco will, through its Board of Directors, recommend
to its stockholders approval of such matters and not rescind such
recommendation and shall use its best efforts to obtain approval and adoption
of this Merger Agreement and the Merger by its stockholders. Camco shall use
all reasonable efforts to hold such meeting as soon as practicable after the
date upon which the S-4 becomes effective.
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5.3 Legal Conditions to Merger.
(i) Except as otherwise provided herein, each of Camco, STC and Sub will
take all reasonable actions necessary to comply promptly with all legal
requirements that may be imposed on such party with respect to the Merger
(including, without limitation, furnishing all information required under
the HSR Act and in connection with approvals of or filings with any other
Governmental Entity) and will promptly cooperate with and furnish
information to each other in connection with any such requirements imposed
upon any of them or any of their Subsidiaries in connection with the
Merger. Each of Camco and STC will, and will cause its respective
Subsidiaries to, take all actions necessary to obtain (and will cooperate
with each other in obtaining) any consent, acquiescence, authorization,
order or approval of, or any exemption or nonopposition by, any
Governmental Entity or court required to be obtained or made by Camco, STC
or any of their Subsidiaries in connection with the Merger or the taking of
any action contemplated thereby or by this Merger Agreement, including
complying with any requests or orders made by the Justice Department or the
Federal Trade Commission in connection with the Merger.
(ii) Each of the parties hereto shall file a premerger notification and
report form under the HSR Act with respect to the Merger as promptly as
reasonably possible following execution and delivery of this Agreement.
Each of the parties agrees to use reasonable efforts to promptly respond to
any request for additional information pursuant to Section (e)(1) of the
HSR Act. Except as otherwise required by United States regulatory
considerations, Camco will furnish to STC copies of all correspondence,
filings or communications (or memoranda setting forth the substance thereof
(collectively, "Company HSR Documents")) between Camco, or any of its
respective representatives, on the one hand, and any governmental entity,
or members of the staff of such agency or authority, on the other hand,
with respect to this Agreement or the Merger; provided; however, that (x)
with respect to documents and other materials filed by or on behalf of
Camco with the Antitrust Division of the Department of Justice, the Federal
Trade Commission, or any state attorneys general that are available for
review by STC, copies will not be required to be provided to STC and (y)
with respect to any Camco HSR Documents (1) that contain any information
which, in the reasonable judgment of Fulbright & Jaworski L.L.P., should
not be furnished to STC because of antitrust considerations or (2) relating
to a request for additional information pursuant to Section (e)(1) of the
HSR Act, the obligation of Camco to furnish any such Camco HSR Documents to
STC shall be satisfied by the delivery of such Camco HSR Documents on a
confidential basis to Baker & Botts, L.L.P., pursuant to a confidentiality
agreement in form and substance reasonably satisfactory to STC. Except as
otherwise required by United States regulatory considerations, STC will
furnish to Camco copies of all correspondence, filings or communications
(or memoranda setting forth the substance thereof (collectively, "STC HSR
Documents")) between STC or any of its representatives, on the one hand,
and any Governmental Entity, or member of the staff of such agency or
authority, on the other hand, and any Governmental Entity, or member of the
staff of such agency or authority, on the other hand, with respect to this
Agreement or the Merger; provided, however, that (x) with respect to
documents and other materials filed by or on behalf of STC with the
Antitrust Division of the Department of Justice, the Federal Trade
Commission, or any state attorneys general that are available for review by
Camco, copies will not be required to be provided to Camco, and (y) with
respect to any STC HSR Documents (1) that contain information which, in the
reasonable judgment of Baker & Botts, L.L.P., should not be furnished to
Camco because of antitrust considerations or (2) relating to a request for
additional information pursuant to Section (e)(1) of the HSR Act, the
obligation of STC to furnish any such STC HSR Documents to Camco shall be
satisfied by the delivery of such STC HSR Documents on a confidential basis
to Fulbright & Jaworski L.L.P. pursuant to a confidentiality agreement in
form and substance reasonably satisfactory to Camco.
(iii) In the event that any governmental body with jurisdiction of this
Merger shall require any member of the STC Affiliated Group to agree to
take or not to take any action as a condition to approving or not objecting
to the Merger, STC will take such action (A) if the loss in annual revenues
to the Surviving Corporation would reasonably be expected not to exceed $75
million during the ensuing twelve months following the Closing, or (B) if
STC otherwise considers it reasonable and appropriate in the circumstances
to take such action.
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5.4 Agreements of Others. No later than five days prior to the day on which
the meeting of stockholders of Camco to approve the Merger is held, Camco
shall use its best efforts to cause each person who STC reasonably believes to
be an affiliate of Camco within the meaning of Rule 145 of the General Rules
and Regulations of the SEC under the Securities Act, after consultation with
Camco and its legal counsel, to deliver (a) a written agreement, in the form
to be approved by STC and Camco, that such persons will not sell, pledge,
transfer or otherwise dispose of any shares of Schlumberger Common Stock
issued to such persons pursuant to the Merger or any other shares of
Schlumberger Common Stock that such persons control the disposition of, except
pursuant to an effective registration statement or in compliance with Rule 145
or an exemption from the registration requirements of the Securities Act and
(b) a written agreement, in the form to be approved by STC and Camco, that
such persons will not sell or in any other way reduce his or her risk relative
to any shares of Schlumberger Common Stock received in the Merger (within the
meaning of Section 201.01 of the SEC's Financial Reporting Release No. 1),
until such time as financial results (including combined sales and net income)
covering at least 30 days of post-merger operations have been published,
except as permitted by Staff Accounting Bulletin No. 76 (or any successor
thereto) issued by the SEC.
5.5 Stock Options. At the Effective Time, each outstanding option to
purchase Camco Common Stock and any stock appreciation rights related thereto
that has been granted pursuant to the Camco Stock Plans ("Camco Stock
Option"), whether vested or unvested, shall be deemed to constitute an option
to acquire, on the same terms and conditions as were applicable under such
Camco Stock Option, a number of shares of Schlumberger Common Stock equal to
the number of shares of Camco Common Stock purchasable pursuant to such Camco
Stock Option multiplied by the Conversion Number, at a price per share equal
to the per-share exercise price for the shares of Camco Common Stock
purchasable pursuant to such Camco Stock Option divided by the Conversion
Number; provided, however, that in the case of any Camco Stock Option to which
Code Section 421 applies by reason of its qualification under any of the Code
Sections 422-424, the exercise price and number of shares subject to such
option shall be determined in a manner that meets the requirements for issuing
or assuming a stock option in a transaction to which Code Section 424(a)
applies and provided further, that the number of shares of Schlumberger Common
Stock that may be purchased upon exercise of such Camco Stock Option shall not
include any fractional share and, upon exercise of such Camco Stock Option, a
cash payment shall be made for any fractional share based upon the closing
price of a share of Schlumberger Common Stock on the NYSE on the last trading
day of the calendar month immediately preceding the date of exercise.
5.6 Indemnification; Directors' and Officers' Insurance.
(a) Camco shall, and from and after the Effective Time, STC and the
Surviving Corporation shall, indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date hereof or who
becomes prior to the Effective Time, an officer or director of Camco or any
of its Subsidiaries or an employee of Camco or any of its Subsidiaries who
acts as a fiduciary under any Camco Benefit Plans (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
attorneys' fees), liabilities or judgments or amounts that are paid in
settlement with the approval of the indemnifying party (which approval
shall not be unreasonably withheld) of or in connection with any threatened
or actual claim, action, suit, proceeding or investigation based in whole
or in part on or arising in whole or in part out of the fact that such
person is or was a director, officer or such employee of Camco or any
Subsidiary, whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to, or at
or after, the Effective Time (including arising out of or relating to the
Merger, the consummation of the transactions contemplated herein, and any
action taken in connection therewith) ("Indemnified Liabilities"). Any
Indemnified Party wishing to claim indemnification under this Section 5.6,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify Camco (or after the Effective Time, STC and the Surviving
Corporation), but the failure so to notify shall not relieve a party from
any liability that it may have under this Section 5.6, except to the extent
such failure materially prejudices such party. The Indemnified Parties as a
group may retain only one law firm to represent them with respect to each
such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any
two or more Indemnified Parties.
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(b) STC shall use its reasonable best efforts to purchase and maintain in
effect for the benefit of the Indemnified Parties for a period of six years
after the Effective Time, directors' and officers' liability insurance of
at least the same coverage and amounts containing terms and conditions that
are no less advantageous in any material respect to the Indemnified Parties
than that maintained by Camco and its Subsidiaries as of the date of this
Merger Agreement with respect to matters arising before the Effective Time,
provided that STC shall not be required to pay an annual premium for such
insurance in excess of two times the last annual premium paid by Camco
prior to the date hereof, but in such case shall purchase as much coverage
as possible for such amount.
(c) All rights to indemnification for acts or omissions occurring prior
to the Effective Time now existing in favor of the Indemnified Parties as
provided in the Certificate of Incorporation or by-laws of Camco or its
subsidiaries and in any indemnification agreements to which they are
parties shall survive the Merger, and the Surviving Corporation shall
continue such indemnification rights for acts or omissions prior to the
Effective Time in full force and effect in accordance with their terms and
STC shall be financially responsible therefor. The provisions of this
Section 5.6 are intended to be for the benefit of, and shall be enforceable
by, the parties hereto and each Indemnified Party, and his or her heirs and
representatives.
5.7 Agreement to Defend. In the event any claim, action, suit, investigation
or other proceeding by any governmental body or other person or other legal or
administrative proceeding is commenced that questions the validity or legality
of the transactions contemplated hereby or seeks damages in connection
therewith, the parties hereto agree to cooperate and use their reasonable
efforts to defend against and respond thereto.
5.8 Accounting Matters. During the period from the date of this Merger
Agreement through the Effective Time, unless the parties shall otherwise agree
in writing, neither STC nor Camco or any of their respective Subsidiaries
shall take or fail to take any reasonable action which action or failure to
act would knowingly jeopardize the treatment of Camco's combination with Sub
as a pooling of interests for accounting purposes and each of STC and Camco
will take all reasonable steps to permit the Merger to be treated as a pooling
of interest for accounting purposes.
5.9 Public Announcements. STC and Camco will agree with each other with
respect to the contents thereof before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated by
this Merger Agreement, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange or transaction reporting system.
5.10 Other Actions. Except as contemplated by this Merger Agreement, neither
STC nor Camco shall, and shall not permit any of its Subsidiaries to, take or
agree or commit to take any action that is reasonably likely to result in any
of its respective representations or warranties hereunder being untrue in any
material respect or in any of the conditions to the Merger set forth in
Article VI not being satisfied.
5.11 Advice of Changes; SEC Filings. STC and Camco shall confer on a regular
basis with each other, report on operational matters and promptly advise each
other orally and in writing of any change or event having, or which, insofar
as can reasonably be foreseen, could have, a Material Adverse Effect on the
STC Affiliated Group or Camco, as the case may be. Camco and STC shall
promptly provide each other (or their respective counsel) copies of all
filings made by such party (or in the case of STC, made by Schlumberger) with
the SEC or any other state or federal Governmental Entity in connection with
this Merger Agreement and the transactions contemplated hereby.
5.12 Reorganization. It is the intention of STC and Camco that the Merger
will qualify as a reorganization described in Section 368(a)(1)(B) of the Code
(and any comparable provisions of applicable state law). Neither Camco nor STC
(or any of their respective Subsidiaries) will take or omit to take any action
(whether before, on or after the Closing Date) that would cause the Merger not
to be so treated. The parties will characterize the Merger as such a
reorganization for purposes of all Returns and other filings.
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5.13 Delivery of Schlumberger Common Stock. Prior to the Merger, STC will
acquire and will contribute to Sub that number of shares of Schlumberger
Common Stock which Sub is required to deliver pursuant to Section 2.1(c).
5.14 Employee Matters.
(a) Employment. STC and Camco agree that all employees of Camco and its
Subsidiaries immediately prior to the Effective Time shall be employed by
the Surviving Corporation immediately after the Effective Time (referred to
herein during such continuing employment as "Continuing Employees").
(b) Benefits Accrued at the Effective Time. STC will take, or cause the
appropriate member of the STC Group (as defined below) to take, all actions
necessary to preserve and maintain with respect to the Camco Benefit Plans
in effect at the Effective Time, benefits accrued and service credit
accrued to the Continuing Employees and the Camco Retirees during
employment with Camco and its Subsidiaries prior to the Effective Time;
provided, however, that unless otherwise expressly provided in this
Agreement, nothing contained in this Section 5.14 shall preclude any member
of the STC Group from amending any such plan to cease the accrual of
benefits thereunder after the Effective Time or terminating any such plan
provided such amendment or termination does not adversely affect the
benefits accrued thereunder, if any, at the Effective Time. As used herein,
the "STC Group" means the Surviving Corporation and all members of the STC
Affiliated Group.
(c) General Agreement as to Employee Benefit Coverage after the Effective
Time. Unless otherwise expressly addressed in this Section 5.14, this
Section 5.14(c) shall govern the obligations of the STC Group with respect
to employee benefits for Continuing Employees and for employees who are
eligible for retirement benefits attributable to employment with Camco or a
Camco Affiliate, whether before, at or after the Effective Time (referred
to herein as "Camco Retirees").
(i) Benefit Coverage. STC will take, and cause the appropriate member
of the STC Group to take, such actions as are necessary so that for the
remainder of the calendar year in which the Effective Time occurs,
Continuing Employees and Camco Retirees will be provided with employee
benefit plans, programs, policies and arrangements that are no less
favorable to such employees and retirees as those provided as of the
Effective Time. Thereafter, the STC Group will provide the Continuing
Employees and Camco Retirees with benefits that, in the aggregate, are
not less favorable than those then provided to Similarly Situated
Employees (as defined in the next sentence). As used herein, the phrase
"Similarly Situated Employees" means that group of employees (or
retirees, as applicable) of the STC Group principally employed in the
oil field service operations of the STC Group generally whose job
descriptions, working conditions, wage rates and other conditions of
employment are (or were) the most similar to those of the Continuing
Employees (or the Camco Retirees) or, if there is no such group of
employees, a group of employees engaged in the drilling or completing
of oil and/or gas wells, all as reasonably determined by STC.
(ii) Service Crediting. In the event a STC Group employee benefit
plan, program, policy or arrangement is made available to Continuing
Employees or Camco Retirees, all periods of service with Camco and its
Subsidiaries and any other entity that is within the same controlled
group as Camco under Section 414(b), (c), (m) or (o) of the Code or
Section 4001 of ERISA (the "Camco Controlled Group"), will be credited
to such employees or retirees for all purposes (other than accrual of
benefits), including vesting and the eligibility to participate and
receive benefits for which a specified period of service is required
under such STC Group employee benefit plan, program, policy or
arrangement.
(iii) Certain Welfare Plan Provisions. STC will take, or cause the
appropriate member of the STC Group to take, such actions as are
necessary so that Continuing Employees and Camco Retirees shall not be
subject to preexisting condition exclusions or waiting periods for
welfare benefit plan coverages (except to the extent so subject prior
to the Effective Time) under any STC Group welfare benefit plan that is
made available to them and shall receive full credit for any copayments
and deductibles already
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incurred under the comparable plan of Camco and its Subsidiaries during
the applicable plan year in which the Effective Time occurs.
(d) Specific Agreements as to Employee Benefit Coverage after the
Effective Time. The following provisions shall modify the obligations of
the STC Group under Section 5.14(c) to the extent set forth below.
(i) Severance Policies or Plans. For the period commencing on the
Effective Time and ending on December 31, 1999, a Continuing Employee
who is not a party to an individual agreement providing for the payment
of severance benefits shall be provided with continued coverage under
the Camco Benefit Plan providing for severance benefit coverage to the
Continuing Employee at the Effective Time or, if any member of the STC
Group maintains a severance plan that would otherwise cover the
Continuing Employee by its terms and such plan would provide greater
benefits to the Continuing Employee, the employee instead shall be
provided with coverage under such superior STC Group severance plan
while eligible for such plan during the period commencing on the
Effective Time and ending on December 31, 1999. From and after January
1, 2000, for as long as the STC Group maintains a severance plan for
its Similarly Situated Employees, a Continuing Employee who is not a
party to an individual severance agreement shall be provided with
coverage under the STC Group severance plan. Continuing Employees will
accrue severance plan credit at the same rate as Similarly Situated
Employees and, for this purpose, years of service with the Camco
Controlled Group prior to the Effective Time will be credited.
(ii) Management and Sales Incentive Compensation Programs. The
following provisions shall apply to those Camco Benefit Plans that
provide for management and sales incentive compensation and that are in
effect at the Effective Time. In the event that a participant in an
incentive compensation program ceases to be an employee for any reason
other than termination for cause or voluntary resignation, or in the
event that a participant is reassigned to a business unit which is no
longer within the Camco incentive compensation measurements, the
participant will receive an incentive compensation payment as measured
against the plan at the end of the prior quarter and based on an annual
award prorated for the fraction of the year up to the change in
employment status. In the event that a reorganization results in a
business unit being removed from the Camco incentive compensation
measurements, the measurements of the plan will be adjusted to
eliminate the objectives of that business unit from the performance
evaluation for calculation of incentive compensation payments for the
remaining business units. Voluntary resignation shall not include
termination under Section 2(a) of a Camco Executive Severance
Agreement.
(iii) Qualified Defined Contribution Plans. No Camco Benefit Plan
that is a qualified defined contribution pension plan shall be
terminated in a manner that would generate a distributable event to a
participant (unless the corresponding plan(s) maintained by the STC
Group for Similarly Situated Employees are also so terminated). The STC
Group may make employer contributions under qualified defined
contribution plans for Continuing Employees at a rate or level that
differ from the contributions made under such plans for Similarly
Situated Employees based on the relative profits of the STC Group
operating unit or division employing Continuing Employees as compared
to the profits of the STC Group operating unit or division employing
Similarly Situated Employees.
(iv) Qualified Defined Benefit Plans.
(A) Freeze of Benefit Accruals. Benefit accruals by a participant
in any Camco Benefit Plan that is a qualified defined benefit
pension plan (a "Camco Defined Benefit Plan") may be frozen by a
member of the STC Group at any time on or after the close of the
calendar year in which the Effective Time occurs, provided that the
definition for compensation includes covered earnings up to the date
the plan is frozen and further provided that Continuing Employees
then commence accruing a benefit under a qualified defined benefit
pension plan sponsored by a member of the STC Group (a "STC Group
Defined Benefit Plan") if Similarly Situated Employees are then
accruing a benefit under such a plan. An ad hoc benefit adjustment
shall be made to the frozen
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benefit attributable to the Camco Defined Benefit Plan to the extent
such an adjustment is made under a STC Group Defined Benefit Plan.
(B) Service Crediting. In the event that the benefit accrual of a
Continuing Employee under a Camco Defined Benefit Plan is frozen, or
a Camco Defined Benefit Plan is merged into a STC Group Defined
Benefit Plan, the following service crediting provisions (in
addition to any service crediting provisions of Section 5.14(c) that
are not inconsistent with this paragraph) shall apply to any benefit
accrued after the Effective Time under such STC Group Defined
Benefit Plan: Continuing Employees will be credited with service
equal to the employees' accrued vesting service under the Camco
Defined Benefit Plan for periods prior to the Effective Time, for
purposes of vesting, eligibility to participate, eligibility for
enhanced levels of benefit accrual and eligibility for early
retirement.
(C) Early Retirement. Notwithstanding the foregoing, the early
retirement provisions of the Camco Defined Benefit Plan that is
merged into a STC Group Defined Benefit Plan or under which the
accrued benefit of a Continuing Employee is frozen shall continue to
apply to the benefit accrued under the provisions of the Camco
Defined Benefit Plan rather than the early retirement provisions of
the STC Group Defined Benefit Plan. To the extent that a Continuing
Employee commences receipt of an early retirement benefit under a
STC Group Defined Benefit Plan prior to the time that the benefit
accrued under a Camco Defined Benefit Plan would be payable, the
benefit accrued under the Camco Defined Benefit Plan shall
nevertheless commence being paid at the same time as the benefit
under the STC Group Defined Benefit Plan, but shall be actuarially
reduced to reflect such early commencement.
(v) Retiree Medical Coverage. For so long as the STC Group provides
retiree medical coverage to its eligible retiring Similarly Situated
Employees, retiree medical coverage under a Camco Benefit Plan or a
plan maintained by a member of the STC Group shall be made available to
eligible Camco Retirees. The STC Group may impose eligibility criteria
of attainment of age 60 during employment with 20 years of service
(within the meaning of the vesting service definition of the Camco
Benefit Plan that is a qualified defined benefit pension plan and that
covers the employee at the Effective Time) for such coverage, but no
more restrictive eligibility criteria unless such more restrictive
criteria also applies to Similarly Situated Employees. However, a
Continuing Employee who, at the Effective Time, is age 55 and has
accrued 15 or more years of service shall be eligible, upon an
involuntary termination of employment entitling the employee to
benefits under a STC Group or Camco severance plan or agreement, for
the same retiree medical coverage provided to other Camco Retirees,
notwithstanding the age and service eligibility criteria otherwise
applicable for retiree medical coverage. Camco Retirees may be required
to pay premiums for retiree medical coverage up to, but not in excess
of, the highest premium permitted to be charged for such continuation
coverage under the Consolidated Omnibus Budget Reconciliation Act of
1986 unless higher premiums also are required from Similarly Situated
Employees who retire.
(vii) U.K. Performance Related Pay (PRP) Plans. Camco Benefit Plans
that are PRP plans will not be discontinued prior to the close of the
calendar year in which the Effective Time occurs.
(viii) Health Care and Dependent Care Flexible Spending Accounts.
Camco Benefit Plans that are flexible spending accounts within the
meaning of Code Section 125 and the regulations thereunder will not be
discontinued prior to the close of the calendar year in which the
Effective Time occurs.
(e) Vacation. With respect to the calendar year in which the Effective
Time occurs, a Continuing Employee will be permitted to take vacation after
the Effective Time (in accordance with the STC Group vacation policies
generally applicable to Similarly Situated Employees) for accrued and
unused vacation days (determined under the vacation policies of Camco) that
such Continuing Employee is entitled to use for the calendar year in which
the Effective Time occurs. Continuing Employees shall receive pay in lieu
of such unused vacation time at the end of the calendar year in which the
Effective Time occurs. In addition, with respect to vacation time that is
earned during the calendar year in which the Effective Time occurs
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(which may be taken in the subsequent calendar year under the vacation
policies of Camco) (the "Vacation Accrual"), the Vacation Accrual shall, on
the first day of such subsequent calendar year, be credited to the
Continuing Employees' vacation credit accounts under the applicable STC
Group vacation policy for the calendar year following the Effective Time,
up to the maximum allowed under the vacation policies of the STC Group, and
the Continuing Employees will be paid for any Vacation Accrual in excess of
such maximum. Continuing Employees will, in addition to having their
Vacation Accrual credited as of the first day of the calendar year
following the Effective Time, accrue vacation time for calendar years
commencing on and after the Effective Time at the same rate as Similarly
Situated Employees and, for this purpose, years of service with the Camco
Controlled Group prior to the Effective Time will be credited.
Notwithstanding the foregoing, the total vacation time credited to a
Continuing Employee's vacation credit account for the calendar year
following the Effective Time (both by the Vacation Accrual credit made at
the beginning of the year and vacation accrued thereafter) shall not exceed
the maximum allowed under the applicable vacation policies of the STC
Group.
(f) Retention Bonus Program. Notwithstanding the provisions of Section
4.1(h), STC agrees that Camco may establish a retention bonus program for
the benefit of certain named Continuing Employees ("Eligible Employees"),
subject to the following limitations: The number of Eligible Employees
shall not exceed 100. The total amount of retention bonuses potentially
payable under the program shall not exceed $5 million. A retention bonus
will only be paid to an Eligible Employee who remains in the employ of the
STC Group until the first to occur of (i) the first anniversary of the
Effective Time or (ii) the date such Eligible Employee's employment is
involuntarily terminated other than for cause by any member of the STC
Group. Documentation of the program (including the names and titles of the
Eligible Employees and the amount of the retention bonus potentially
payable to each Eligible Employee) shall be subject to the comment and
advance approval of STC, which approval shall not unreasonably be withheld.
(g) Collective Bargaining Exception. The provisions of this Section 5.14
will not apply to Continuing Employees or Camco Retirees who are covered by
a collective bargaining agreement to the extent such provisions are
inconsistent with the terms of any applicable collective bargaining
agreement.
(h) Transferred Employees. A Continuing Employee who is transferred after
the Effective Time to employment with an operating unit, subsidiary or
affiliate of the STC Group other than the Surviving Corporation or any of
its subsidiaries shall participate in the employee benefit plans, programs,
policies and arrangements that are maintained by said employing entity for
its employees.
ARTICLE VI
Conditions Precedent
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
(a) Camco Stockholder Approval. This Merger Agreement and the Merger
shall have been approved and adopted by the affirmative vote of the holders
of a majority of the outstanding shares of Camco Common Stock entitled to
vote thereon.
(b) NYSE Listing. The shares of Schlumberger Common Stock issuable to
Camco stockholders pursuant to this Merger Agreement shall have been
authorized for listing on the NYSE upon official notice of issuance.
(c) Other Approvals. The waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated and all
filings required to be made prior to the Effective Time with, and all
consents, approvals, permits and authorizations required to be obtained
prior to the Effective Time from, any Governmental Entity in connection
with the execution and delivery of this Merger Agreement and the
consummation of the transactions contemplated hereby shall have been made
or obtained (as the case may be), except where the failure to obtain such
consents, approvals, permits and authorizations
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would not be reasonably likely to result in a Material Adverse Effect on
the STC Affiliated Group (assuming the Merger has taken place) or to
materially adversely affect the consummation of the Merger.
(d) S-4. The S-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop
order.
(e) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect;
provided, however, that prior to invoking this condition, each party shall
have complied fully with its obligations under Section 5.7 hereof and, in
addition, shall use all reasonable efforts to have any such decree, ruling,
injunction or order vacated, except as otherwise contemplated by this
Merger Agreement.
(f) Pooling Accounting. Camco and STC or a designated member of the STC
Affiliated Group shall have received a letter from each of Arthur Andersen
LLP and Price Waterhouse LLP, dated as of a date within two days prior to
the Closing Date, in form and substance satisfactory to the respective
receiving persons, to the effect that, in accordance with generally
accepted accounting principles and the applicable rules and regulations of
the SEC, Schlumberger and Camco are each eligible to be a party to a Merger
accounted for as a "pooling of interests".
6.2 Conditions of Obligations of STC and Sub. The obligations of STC and Sub
to effect the Merger are subject to the satisfaction of the following
conditions, any or all of which may be waived in whole or in part by STC.
(a) Representations and Warranties. Each of the representations and
warranties of Camco set forth in this Merger Agreement shall be true and
correct in all material respects as of the date of this Merger Agreement
and (except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of the
Closing Date, except where the failure to be so true and correct (without
giving effect to the individual materiality thresholds otherwise contained
in Section 3.1 hereof) would not have a Material Adverse Effect on Camco
(such that the aggregate of the Material Adverse Effect on Camco hereunder
exceeds $200 million) and STC shall have received a certificate dated the
Closing Date on behalf of Camco by the chief executive officer and chief
financial officer of Camco to that effect.
(b) Performance of Obligations of Camco. Camco shall have performed in
all material respects all obligations required to be performed by it under
this Merger Agreement at or prior to the Closing Date.
(c) Letters from Camco Directors and Executive Officers. STC shall have
received from each director and executive officer of Camco an executed copy
of each of the agreements described in Section 5.4.
(d) Certifications and Opinion. Camco shall have furnished STC with:
(i) a certified copy of a resolution or resolutions duly adopted by
the Board of Directors of Camco approving this Merger Agreement and
consummation of the Merger and the transactions contemplated hereby and
directing the submission of the Merger to a vote of the stockholders of
Camco;
(ii) a certified copy of a resolution or resolutions duly adopted by
the holders of a majority of the outstanding shares of Camco Common
Stock approving the Merger and the transactions contemplated hereby;
(iii) a favorable opinion, dated the Closing Date, in customary form
and substance, of Ronald R. Randall, Esquire, General Counsel of Camco,
dated the Closing Date to the effect that:
(A) Camco is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware and has
corporate power to own its properties and assets and to carry on its
business as presently conducted and as described in the Registration
Statement;
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(B) Camco has the requisite corporate power to effect the Merger
as contemplated by this Merger Agreement; the execution and delivery
of this Merger Agreement did not, and the consummation of the Merger
will not, violate any provision of Camco's Certificate of
Incorporation or Bylaws; and upon the filing by the Surviving
Corporation of the Certificate of Merger, the Merger shall become
effective;
(C) Each of Camco's Significant Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and has corporate power to own
its properties and assets and to carry on its business as presently
conducted; and
(D) The Board of Directors of Camco has taken all action required
by the DGCL and its Certificate of Incorporation or its Bylaws to
approve the Merger and to authorize the execution and delivery of
this Merger Agreement and the transactions contemplated hereby; the
Board of Directors and the stockholders of Camco have taken all
action required by the DGCL and Camco's Certificate of Incorporation
and By-Laws to authorize the Merger in accordance with the terms of
this Merger Agreement; and this Merger Agreement is a valid and
binding agreement of Camco enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws or
judicial decisions now or hereafter in effect relating to creditors'
rights generally or governing the availability of equitable relief.
(e) Tax Opinion. STC or a designated member of the STC Affiliated Group
shall have received an opinion, satisfactory to the receiving person, dated
on or about the date that is two days prior to the date the Proxy Statement
is first mailed to stockholders of Camco, of Baker & Botts, L.L.P., to the
effect that, if the Merger is consummated in accordance with the terms of
this Merger Agreement, the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Code, Schlumberger, STC and Camco will each be a party to that
reorganization within the meaning of Section 368(b) of the Code and no gain
or loss will be recognized by Schlumberger, STC or Sub as a result of the
Merger, which opinion shall not have been withdrawn or modified in any
material respect. A second opinion, reconfirming the foregoing and dated as
of the Closing Date, satisfactory to the receiving person, shall have been
issued to STC or the designated member of the STC Affiliated Group. In
rendering such opinions, such counsel may receive and rely upon
representations of fact contained in certificates of Schlumberger, STC, Sub
and Camco.
(f) Transaction Agreement. Each of the obligations required to be
performed by Camco under the Transaction Agreement of even date herewith
between Schlumberger and Camco (the "Transaction Agreement") at or prior to
the Delivery Date (as defined in the Transaction Agreement) shall have been
performed in all material respects and each of the conditions set forth in
Article V of the Transaction Agreement shall have been satisfied or waived
as set forth therein.
6.3 Conditions of Obligations of Camco. The obligation of Camco to effect
the Merger is subject to the satisfaction of the following conditions, any or
all of which may be waived in whole or in part by Camco:
(a) Representations and Warranties. Each of the representations and
warranties of STC and Sub set forth in this Merger Agreement shall be true
and correct in all material respects as of the date of this Merger
Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and
as of the Closing Date, except where the failure to be so true and correct
(without giving effect to the individual materiality thresholds otherwise
contained in Section 3.2 hereof) would not have a Material Adverse Effect
on the STC Affiliated Group (such that the aggregate of the Material
Adverse Effect on the STC Affiliated Group hereunder exceeds $400 million)
and Camco shall have received a certificate dated the Closing Date by a
duly authorized officer of STC to that effect.
(b) Performance of Obligations of STC and Sub. STC and Sub shall have
performed in all material respects all obligations required to be performed
by them under this Merger Agreement at or prior to the Closing Date.
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(c) Certifications and Opinion. STC shall have furnished Camco with:
(i) a certified copy of a resolution or resolutions duly adopted by
the Board of Directors or a duly authorized committee thereof of STC
and Sub approving this Merger Agreement and consummation of the Merger
and the transactions contemplated hereby;
(ii) a favorable opinion, dated the Closing Date, in customary form
and substance, of David S. Browning, Esquire, General Counsel of
Schlumberger, to the effect that:
(A) Each of STC and Sub is a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and has corporate power to own its
properties and assets and to carry on its business as presently
conducted and as described in the Registration Statement; STC and
Sub each has the requisite corporate power to effect the Merger as
contemplated by this Merger Agreement; the execution and delivery of
this Merger Agreement did not, and the consummation of the Merger
will not, violate any provision of STC's or Sub's Certificate of
Incorporation or Bylaws; and upon the filing by the Surviving
Corporation of the Certificate of Merger, the Merger shall become
effective;
(B) The respective Board of Directors of STC and Sub have taken
all action required under its jurisdiction of incorporation, its
Certificate of Incorporation or its Bylaws to authorize the
execution and delivery of this Merger Agreement and the transactions
contemplated hereby, and to authorize the Merger in accordance with
the terms of this Merger Agreement; and this Merger Agreement is a
valid and binding agreement of STC and Sub enforceable in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws or judicial decisions now or hereafter in effect relating to
creditors' rights generally or governing the availability of
equitable relief.
(C) The shares of Schlumberger Common Stock to be delivered to the
holders of Camco Common Stock pursuant to Article II are duly
authorized and when issued and delivered as contemplated by this
Merger Agreement will be legally and validly issued and fully paid
and nonassessable and no stockholders of Schlumberger shall have any
preemptive rights with respect thereto either pursuant to the
organizational documents of Schlumberger or under applicable law of
the jurisdiction of Schlumberger's organization.
(d) Tax Opinion. Camco shall have received an opinion, satisfactory to
Camco, dated on or about the date that is two days prior to the date the
Proxy Statement is first mailed to stockholders of Camco, a copy of which
will be furnished to STC, of Fulbright & Jaworski L.L.P., to the effect
that, if the Merger is consummated in accordance with the terms of this
Merger Agreement, the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Code, Schlumberger, STC and Camco will each be a party to that
reorganization within the meaning of Section 368(b) of the Code, no gain or
loss will be recognized by the stockholders of Camco as a result of the
Merger upon the conversion of shares of Camco Common Stock into shares of
Schlumberger Common Stock and no gain or loss will be recognized by Camco
as a result of the Merger, which opinion shall not have been withdrawn or
modified in any material respect. A second opinion, reconfirming the
foregoing and dated as of the Closing Date, shall have been issued to Camco
and a copy shall have been provided to STC. In rendering such opinions,
such counsel may receive and rely upon representations of fact contained in
certificates of Schlumberger, STC, Sub and Camco.
(e) Fairness Opinion. Morgan Stanley & Co. Incorporated has not revoked,
modified or changed its opinion referred to in Section 3.1(p) in any manner
adverse to the holders of the Common Stock of Camco.
(f) Transaction Agreement. Each of the obligations required to be
performed by Schlumberger under the Transaction Agreement at or prior to
the Delivery Date (as defined in the Transaction Agreement) shall have been
performed in all material respects and each of the conditions set forth in
Article V of the Transaction Agreement shall have been satisfied or waived
as set forth therein.
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ARTICLE VII
Termination and Amendment
7.1 Termination. This Merger Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time, whether before or after
approval of the matters presented in connection with the Merger by the
stockholders of Camco:
(a) by mutual written consent of Camco and STC, or by mutual action of
their respective Boards of Directors;
(b) by either Camco or STC if (i) the Merger shall not have been
consummated by December 31, 1998 (provided that the right to terminate this
Merger Agreement under this clause (i) shall not be available to any party
whose breach of any representation or warranty or failure to fulfill any
covenant or agreement under this Merger Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such date);
(ii) any court of competent jurisdiction, or some other governmental body
or regulatory authority shall have issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall
have become final and nonappealable; or (iii) any required approval of the
stockholders of Camco shall not have been obtained by reason of the failure
to obtain the required vote upon a vote held at a duly held meeting of
stockholders or at any adjournment thereof;
(c) by STC if (i) for any reason Camco fails to call and hold a
stockholders' meeting for the purpose of voting upon this Merger Agreement
and the Merger by December 31, 1998; (ii) Camco shall have failed to comply
in any material respect with any of the covenants or agreements contained
in this Merger Agreement to be complied with or performed by Camco at or
prior to such date of termination (provided such breach has not been cured
within 30 days following receipt by Camco of notice of such breach and is
existing at the time of termination of this Merger Agreement); (iii) any
representations and warranties of Camco contained in this Merger Agreement
shall not have been true when made (provided such breach has not been cured
within 30 days following receipt by Camco of notice of such breach and is
existing at the time of termination of this Merger Agreement) or on and as
of the Effective Time as if made on and as of the Effective Time (except to
the extent it relates to a particular date), except where the failure to be
so true and correct (without giving effect to the individual materiality
thresholds otherwise contained in Section 3.1 hereof) would not have a
Material Adverse Effect on Camco such that the aggregate of the Material
Adverse Effect on Camco exceeds $200 million; (iv) the Board of Directors
of Camco or any committee thereof (A) withdraws, modifies or changes its
recommendation of this Merger Agreement or the Merger in a manner adverse
to the STC Affiliated Group or shall have resolved to do any of the
foregoing, or (B) approves or recommends, or proposes to approve or
recommend, any Acquisition Proposal; or (v) the Transaction Agreement shall
have been terminated by Camco;
(d) by Camco if (i) STC or Sub shall have failed to comply in any
material respect with any of the covenants or agreements contained in this
Merger Agreement to be complied with or performed by it at or prior to such
date of termination (provided such breach has not been cured within 30 days
following receipt by STC of notice of such breach and is existing at the
time of termination of this Merger Agreement); (ii) any representations and
warranties of STC or Sub contained in this Merger Agreement shall not have
been true when made (provided such breach has not been cured within 30 days
following receipt by STC of notice of such breach and is existing at the
time of termination of this Merger Agreement) or on and as of the Effective
Time as if made on and as of the Effective Time (except to the extent it
relates to a particular date), except where the failure to be so true and
correct (without giving effect to the individual materiality thresholds
otherwise contained in Section 3.2 hereof) would not have a Material
Adverse Effect on the STC Affiliated Group such that the aggregate of the
Material Adverse Effect on the STC Affiliated Group exceeds $400 million;
(iii) pursuant to Section 4.2(b) or (iv) the Transaction Agreement shall
have been terminated by Schlumberger.
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7.2 Effect of Termination.
(a) In the event of termination of this Merger Agreement by either Camco
or STC as provided in Section 7.1, this Merger Agreement shall forthwith
become void and there shall be no liability or obligation on the part of
Camco or any member of the STC Affiliated Group except (i) with respect to
this Section 7.2, the third and fourth sentences of Section 5.1 and Section
8.1, and (ii) to the extent that such termination results from the willful
breach by a party hereto of any of its representations or warranties or of
any of its covenants or agreements, in each case, as set forth in this
Merger Agreement except as provided in Section 8.9.
(b) If STC or Camco, as applicable, terminates this Merger Agreement
pursuant to Section 4.2(b) or Section 7.1(c)(iv)(B), Camco shall
immediately pay STC a fee of $90 million (the "Termination Fee") in cash or
by wire transfer of immediately available funds to an account designated by
STC.
(c) If STC terminates this Agreement pursuant to Section 7.1(c)(iv)(A),
Camco shall owe to STC the Termination Fee if Camco consummates a
transaction pursuant to an Acquisition Proposal on or prior to September
30, 1999. The Termination Fee payable to STC under this Section 7.2(c), if
any, shall be payable in cash or by wire transfer of immediately available
funds to an account designated by STC on the consummation of the
transaction, if any, referred to above.
(d) Camco also agrees to pay to STC the Termination Fee if (i) after the
date hereof and before the termination of this Merger Agreement, an
Acquisition Proposal shall have been made and publicly announced by any
party, (ii) the stockholders of Camco shall not have approved the Merger
and (iii) on or prior to September 30, 1999, Camco consummated a
transaction pursuant to an Acquisition Proposal. The Termination Fee
payable under this Section 7.2(d) shall be payable on the consummation of
such transaction.
7.3 Amendment. This Merger Agreement may be amended by the parties hereto,
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of Camco, but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Merger Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Boards of Directors,
may, to the extent legally allowed: (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto; (ii) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto; and (iii) waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party.
ARTICLE VIII
General Provisions
8.1 Payment of Expenses. Each party hereto shall pay its own expenses
incident to preparing for entering into and carrying out this Merger Agreement
and the consummation of the transactions contemplated hereby, whether or not
the Merger shall be consummated. In the event the Agreement is terminated for
any reason, STC shall reimburse Camco up to $5 million for the actual cost of
Camco's employee retention program.
8.2 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties and agreements in this Merger Agreement or in any
instrument delivered pursuant to this Merger Agreement shall survive the
Effective Time and any liability for breach or violation thereof shall
terminate absolutely and be of no further force and effect at and as of the
Effective Time, except for the agreements contained in Sections 2.1, 2.2, 5.5,
5.6, 5.12, 5.13 and 7.2 and this Article VIII and the agreements delivered
pursuant to Section 5.4.
A-33
<PAGE>
The Confidentiality Agreements shall survive the execution and delivery of
this Merger Agreement, and the provisions of the Confidentiality Agreements
shall apply to all information and material delivered hereunder.
8.3 Knowledge. When used herein, the terms "knowledge", "known to", "best
knowledge" and terms of similar meaning shall mean the actual knowledge of (a)
with respect to Camco, (i) the Chief Financial Officer, the Chief Accounting
Officer, and the General Counsel and Secretary of Camco as of the date of this
Agreement and (ii) all of officers of Camco as of the Closing Date and (b)
with respect to the STC Affiliated Group, (A) (1) the President and (2) the
Vice President and Secretary of STC, as of the date of this Agreement and (B)
all of the officers of STC as of the Closing Date.
8.4 Notices. Any notice or communication required or permitted hereunder
shall be in writing and either delivered personally, telegraphed or telecopied
or sent by certified or registered mail, postage prepaid, and shall be deemed
to be given, dated and received when so delivered personally, telegraphed or
telecopied or, if mailed, five business days after the date of mailing to the
following address or telecopy number, or to such other address or addresses as
such person may subsequently designate by notice given hereunder:
(a) if to STC or Sub, to:
277 Park Avenue
New York, New York 10172
Attention: David S. Browning, Esquire
Fax: (212) 350-9457
with a copy to:
Baker & Botts, L.L.P.
910 Louisiana, Suite 3000
Houston, Texas 77002
Attention: Moulton A. Goodrum, Esquire
Fax: (713) 229-1522
and (b) if to Camco, to:
Camco International, Inc.
7030 Ardmore
Houston, Texas 77054
Attention: Ronald R. Randall, Esquire
Fax: (713) 749-5625
with a copy to:
Fulbright & Jaworski LLP
1301 McKinney, Suite 5100
Houston, Texas 77010
Attention: Michael C. Conlon, Esquire
Fax: (713) 651-5246
8.5 Interpretation. When a reference is made in this Merger Agreement to
Sections, such reference shall be to a Section of this Merger Agreement unless
otherwise indicated. The table of contents, glossary of defined terms and
headings contained in this Merger Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Merger
Agreement. Whenever the word "include," "includes" or "including" is used in
this Merger Agreement, it shall be deemed to be followed by the words "without
limitation." The phrase "made available" in this Merger Agreement shall mean
that the information referred to has been made available if requested by the
party to whom such information is to be made available.
8.6 Counterparts. This Merger Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when two or more counterparts have been
A-34
<PAGE>
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
8.7 Entire Agreement; No Third-Party Beneficiaries. This Merger Agreement
(together with the Confidentiality Agreements, the Transaction Agreement and
any other documents and instruments referred to herein) (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereto
and (b) except as provided in Section 5.6, is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
8.8 Governing Law. This Merger Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to
the principles of conflicts of law thereof.
8.9 No Remedy in Certain Circumstances. Each party agrees that, should any
court or other competent authority hold any provision of this Merger Agreement
or part hereof to be null, void or unenforceable, or order any party to take
any action inconsistent herewith or not to take an action consistent herewith
or required hereby, the validity, legality and enforceability of the remaining
provisions and obligations contained or set forth herein shall not in any way
be affected or impaired thereby, unless the foregoing inconsistent action or
the failure to take an action constitutes a material breach of this Merger
Agreement or makes the Merger Agreement impossible to perform in which case
this Merger Agreement shall terminate pursuant to Article VII hereof. Except
as otherwise contemplated by this Merger Agreement, to the extent that a party
hereto took an action inconsistent herewith or failed to take action
consistent herewith or required hereby pursuant to an order or judgment of a
court or other competent authority, such party shall not incur any liability
or obligation unless such party breached its obligations under Section 5.3
hereof or did not in good faith seek to resist or object to the imposition or
entering of such order or judgment.
8.10 Assignment. Neither this Merger Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
any newly formed direct or indirect wholly owned Subsidiary of STC. Subject to
the preceding sentence, this Merger Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective
successors and assigns.
8.11 Enforcement of the Agreement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Merger Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Merger Agreement and to
enforce specifically the terms and provisions hereof in any court of the
United States located in the State of Delaware or in the Chancery Court of the
State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Federal or state
court sitting in Wilmington, Delaware in the event any dispute between the
parties hereto arises out of this Agreement solely in connection with such a
suit between the parties, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from
any such court and (c) agrees that it will not bring any action relating to
this Agreement in any court other than a Federal or state court sitting in
Wilmington, Delaware.
A-35
<PAGE>
IN WITNESS WHEREOF, each party has caused this Merger Agreement to be signed
by its respective officers thereunto duly authorized, all as of the date first
written above.
SCHLUMBERGER TECHNOLOGY CORPORATION
/s/ Arthur Lindenauer
By:_______________________________________
Arthur Lindenauer
President
SCHLUMBERGER OFS, INC.
/s/ Arthur Lindenauer
By:_______________________________________
Arthur Lindenauer
President
CAMCO INTERNATIONAL, INC.
/s/ Gilbert H. Tausch
By:_______________________________________
Gilbert H. Tausch
President and Chief Executive Officer
A-36
<PAGE>
ANNEX B
TRANSACTION AGREEMENT
BETWEEN
SCHLUMBERGER LIMITED
AND
CAMCO INTERNATIONAL INC.
DATED AS OF JUNE 18, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE I DEFINITIONS.................................................. B-1
ARTICLE II DELIVERY, REGISTRATION AND LISTING OF SCHLUMBERGER STOCK..... B-3
2.1 Delivery of Schlumberger Common Stock........................ B-3
2.2 Preparation of S-4 and the Proxy Statement................... B-3
2.3 Authorization for Shares and Stock Exchange Listing.......... B-3
ARTICLE III REPRESENTATIONS AND WARRANTIES............................... B-3
3.1 Representations and Warranties of Camco...................... B-3
(a) Authority; No Violations; Consents and Approvals......... B-3
(b) Litigation............................................... B-5
(c) Incorporation by Reference............................... B-5
3.2 Representations and Warranties of Schlumberger............... B-5
(a) Organization, Standing and Power......................... B-5
(b) Capital Structure........................................ B-5
(c) Authority; No Violations, Consents and Approvals......... B-6
(d) SEC Documents............................................ B-7
(e) Information Supplied..................................... B-7
(f) Absence of Certain Changes or Events..................... B-7
(g) No Undisclosed Material Liabilities...................... B-8
(h) Litigation............................................... B-8
(i) No Vote Required......................................... B-8
(j) Accounting Matters....................................... B-8
(k) Beneficial Ownership of Camco Common Stock............... B-8
(l) Material Contracts and Agreements........................ B-8
ARTICLE IV ADDITIONAL AGREEMENTS........................................ B-8
4.1 Legal Conditions to Merger................................... B-8
4.2 Agreement to Defend.......................................... B-9
4.3 Accounting Matters........................................... B-9
4.4 Public Announcements......................................... B-10
4.5 Other Actions................................................ B-10
4.6 Advice of Changes; SEC Filings............................... B-10
4.7 Reorganization............................................... B-10
4.8 Takeover Defenses............................................ B-10
4.9 Letter of Camco's Accountants................................ B-10
4.10 Letter of Schlumberger's Accountants......................... B-10
4.11 Rights Agreement............................................. B-10
4.12 Stock Options................................................ B-11
ARTICLE V CONDITIONS PRECEDENT......................................... B-11
5.1 Conditions to Camco's Closing Deliveries..................... B-11
(a) Representations and Warranties........................... B-11
(b) Performance of Obligations of Schlumberger............... B-11
(c) Certifications and Opinion............................... B-11
(d) Fairness Opinion......................................... B-12
5.2 Conditions to Schlumberger's Closing Deliveries.............. B-12
(a) Representations and Warranties........................... B-12
(b) Performance of Obligations of Camco...................... B-12
(c) Certifications and Opinion............................... B-12
</TABLE>
B-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
ARTICLE VI TERMINATION AND AMENDMENT.................................... B-13
6.1 Termination.................................................. B-13
6.2 Effect of Termination........................................ B-13
6.3 Amendment.................................................... B-13
6.4 Extension; Waiver............................................ B-14
ARTICLE VII GENERAL PROVISIONS........................................... B-14
7.1 Payment of Expenses.......................................... B-14
7.2 Nonsurvival of Representations, Warranties and Agreements.... B-14
7.3 Notices...................................................... B-14
7.4 Interpretation............................................... B-15
7.5 Counterparts................................................. B-15
7.6 Entire Agreement; No Third-Party Beneficiaries............... B-15
7.7 Governing Law................................................ B-15
7.8 No Remedy in Certain Circumstances........................... B-15
7.9 Assignment................................................... B-15
7.10 Enforcement of the Agreement................................. B-15
</TABLE>
EXHIBITS:
Exhibit A--Agreement and Plan of Merger
B-ii
<PAGE>
TRANSACTION AGREEMENT
THIS TRANSACTION AGREEMENT, dated as of June 18, 1998 (this "Transaction
Agreement"), is by and between Schlumberger Limited, a Netherlands Antilles
corporation ("Schlumberger"), and Camco International Inc., a Delaware
corporation ("Camco").
WHEREAS, pursuant to that certain Agreement and Plan of Merger of even date
herewith, among Schlumberger Technology Corporation, a Texas corporation and a
wholly owned subsidiary of Schlumberger ("STC"), Schlumberger OFS, Inc., a
Delaware corporation and a wholly owned Subsidiary of STC ("Sub"), and Camco
(the "Merger Agreement"), Sub will be merged with and into Camco with Camco
becoming a wholly owned subsidiary of STC (the "Merger");
WHEREAS, the Board of Directors at Camco and Schlumberger have each
determined that this Transaction Agreement and the transactions contemplated
hereby are in the best interests of their respective stockholders;
WHEREAS, pursuant to the Merger Agreement, each outstanding share of common
stock, par value $.01 per share, of Camco ("Camco Common Stock") will be
exchanged for and converted into 1.18 (the "Conversion Number") shares of
voting common stock, par value $.01 per share of Schlumberger ("Schlumberger
Common Stock"); and
WHEREAS, Schlumberger desires to make certain representations and
commitments in connection with the Merger;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties agree as
follows:
ARTICLE I
Definitions
As used in this Transaction Agreement, the following terms shall have the
following meanings:
"Camco" has the meaning set forth in the preamble hereto.
"Camco Common Stock" has the meaning set forth in the recitals hereto.
"Camco Disclosure Letter" means the disclosure letter delivered by Camco to
STC pursuant to the Merger Agreement.
"Camco Litigation" has the meaning set forth in Section 3.1(b) hereof.
"Camco Order" has the meaning set forth in Section 3.1(j) of the Merger
Agreement.
"Camco Stock Option" has the meaning set forth in Section 5.5 of the Merger
Agreement.
"Certificate of Merger" has the meaning set forth in Section 1.1 of the
Merger Agreement.
"Closing" has the meaning set forth in Section 1.1 of the Merger Agreement.
"Closing Date" has the meaning set forth in Section 1.2 of the Merger
Agreement.
"Code" has the meaning set forth in the recitals to the Merger Agreement.
"Confidentiality Agreements" has the meaning set forth in Section 5.1 of the
Merger Agreement.
"Conversion Number" has the meaning set forth in the recitals hereto.
B-1
<PAGE>
"Delivery Date" has the meaning set forth in Section 2.1 hereof.
"DGCL" has the meaning set forth in Section 1.1 of the Merger Agreement.
"Effective Time" has the meaning set forth in Section 1.1 of the Merger
Agreement.
"Exchange Act" has the meaning set forth in Section 3.1(a)(iii) hereof.
"GAAP" has the meaning set forth in Section 3.1(d) of the Merger Agreement.
"Governmental Entity" has the meaning set forth in Section 3.1(a)(iii)
hereof.
"HSR Act" has the meaning set forth in Section 3.1(a)(iii) hereof.
"Knowledge" "known to", "best knowledge" and terms of similar meaning shall
mean (a) with respect to Camco, (i) the Chief Financial Officer, the Chief
Accounting Officer and the General Counsel and Secretary of Camco as of the
date of this Agreement and (ii) all of the officers of Camco as of the Closing
Date and (b) with respect to Schlumberger, (A) (1) the Executive Vice
President, Chief Financial Officer and (2) the General Counsel and Secretary
of Schlumberger, as of the date of this Agreement and (B) all of the officers
of Schlumberger as of the Closing Date.
"Material Adverse Effect" has the meaning set forth in Section 3.1(a)(i)
hereof.
"Merger" has the meaning set forth in the recitals hereto.
"Merger Agreement" has the meaning set forth in the recitals hereto.
"NYSE" has the meaning set forth in Section 3.2(c)(iii) hereof.
"Proxy Statement" has the meaning set forth in Section 3.1(a)(iii) hereof.
"Returns" has the meaning set forth in Section 3.1(k)(i) of the Merger
Agreement.
"Rights Agreement" has the meaning set forth in Section 3.1(b) of the Merger
Agreement.
"S-4" has the meaning set forth in Section 3.1(e) of the Merger Agreement.
"Schlumberger" has the meaning set forth in the preamble hereto.
"Schlumberger Common Stock" has the meaning set forth in the recitals
hereto.
"Schlumberger Disclosure Letter" means the disclosure letter delivered by
Schlumberger to Camco pursuant to this Transaction Agreement.
"Schlumberger Litigation" has the meaning set forth in Section 3.2(h)
hereof.
"Schlumberger Option Plans" has the meaning set forth in Section 3.2(b)
hereof.
"Schlumberger Preferred Stock" has the meaning set forth in 3.2(b) hereof.
"Schlumberger SEC Documents" has the meaning set forth in Section 3.2(d)
hereof.
"SEC" has the meaning set forth in Section 3.1(a) of the Merger Agreement.
"Securities Act" has the meaning set forth in Section 3.1(d) of the Merger
Agreement.
"Significant Subsidiary" has the meaning set forth in Section 4.1(g) of the
Merger Agreement.
B-2
<PAGE>
"STC" has the meaning set forth in the recitals hereto.
"Sub" has the meaning set forth in the recitals hereto.
"Subsidiary" has the meaning set forth in Section 2.1(b) of the Merger
Agreement.
"Voting Debt" has the meaning set forth in Section 3.1(b) of the Merger
Agreement.
ARTICLE II
Delivery, Registration and Listing of Schlumberger Stock
2.1 Delivery of Schlumberger Common Stock. Prior to the Merger, upon the
request of STC and subject to the conditions set forth in Section 5.2 hereof,
Schlumberger will sell to STC all or any portion of that number of shares of
Schlumberger Common Stock which are to be received by the holders of Camco
Common Stock in exchange for and upon conversion of the Camco Common Stock
pursuant to Section 2.1(c) of the Merger Agreement. The date on which
Schlumberger delivers such Schlumberger Common Stock to STC is referred to in
this Transaction Agreement as the "Delivery Date". Schlumberger acknowledges
that, pursuant to Section 2.1(e) of the Merger Agreement, if subsequent to the
date of this Agreement but prior to the Effective Time, the number of shares
of Schlumberger Common Stock issued and outstanding is changed as a result of
a stock split, reverse stock split, stock dividend, recapitalization or other
similar transaction, the Conversion Number and other items dependent thereon
will be appropriately adjusted in the Merger Agreement and this Transaction
Agreement.
2.2 Preparation of S-4 and the Proxy Statement. Schlumberger and Camco shall
promptly prepare and file with the SEC the Proxy Statement and Schlumberger
shall prepare and file with the SEC the S-4, in which the Proxy Statement will
be included as a prospectus. Each of Schlumberger and Camco shall use its best
efforts to have the S-4 declared effective under the Securities Act as
promptly as practicable after such filing. Each of Camco and Schlumberger
shall use its best efforts to cause the Proxy Statement to be mailed to
stockholders of Camco at the earliest practicable date. Schlumberger shall use
its best efforts to obtain all necessary state securities laws or "blue sky"
permits, approvals and registrations in connection with the issuance of
Schlumberger Common Stock in the Merger and upon the exercise of Camco Stock
Options and Camco shall furnish all information concerning Camco and the
holders of Camco Common Stock as may be reasonably requested in connection
with obtaining such permits, approvals and registrations.
2.3 Authorization for Shares and Stock Exchange Listing. Prior to the
Effective Time, Schlumberger shall have taken all action necessary to permit
it to issue the number of shares of Schlumberger Common Stock required to be
issued pursuant to Section 2.1 of the Merger Agreement. Schlumberger shall use
all reasonable efforts to cause the shares of Schlumberger Common Stock to be
delivered in the Merger to be approved for listing on the NYSE, subject to
official notice of issuance, prior to the Closing Date.
ARTICLE III
Representations and Warranties
3.1 Representations and Warranties of Camco. Camco represents and warrants
to Schlumberger as follows:
(a) Authority; No Violations; Consents and Approvals.
(i) Camco has all requisite corporate power and authority to enter
into this Transaction Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Transaction
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of Camco. This Transaction Agreement has been duly executed and
delivered by Camco and assuming this Transaction Agreement constitutes
the
B-3
<PAGE>
valid and binding obligation of Schlumberger, constitutes a valid and
binding obligation of Camco enforceable in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general principles of equity and
limitations imposed on indemnity obligations by applicable federal and
state securities laws.
(ii) Except as set forth on Schedule 3.1(c) to the Camco Disclosure
Letter, the execution and delivery of this Transaction Agreement does
not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, or
result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of
Camco or any of its Subsidiaries under, any provision of (A) the
Certificate of Incorporation or Bylaws of Camco or any provision of the
comparable charter or organizational documents of any of its
Subsidiaries, (B) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession,
franchise or license applicable to Camco or any of its Subsidiaries or
(C) assuming the consents, approvals, authorizations or permits and
filings or notifications referred to in Section 3.1(a)(iii) are duly
and timely obtained or made and the approval of the Merger and the
Merger Agreement by the stockholders of Camco has been obtained, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Camco or any of its Subsidiaries or any of their
respective properties or assets, other than, in the case of clause (B)
or (C), any such conflicts, violations, defaults, rights, liens,
security interests, charges or encumbrances that, individually or in
the aggregate, would not have a Material Adverse Effect (as defined
below) on Camco, materially impair the ability of Camco to perform its
obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby. As used in this Transaction Agreement
a "Material Adverse Effect" shall mean, any effect or change that is or
would be materially adverse to the business, operations, assets,
condition (financial or otherwise) or results of operations of (x) in
respect of Camco, Camco and its direct and indirect Subsidiaries, taken
as a whole, and (y) in respect of the STC Affiliated Group, the STC
Affiliated Group taken as a whole; provided, however, a Material
Adverse Effect shall not include (1) any effect or change, including
changes in national or international economic conditions, relating to
or affecting the oil and gas service and equipment industry as a whole
(including a decline in worldwide oil and gas commodity prices), (2)
changes, or possible changes, in foreign, federal, state or local
statutes and regulations, (3) the loss of employees, customers or
suppliers by Camco or one or more of its Subsidiaries as a direct or
indirect consequence of any announcement relating to the Merger or (4)
any action taken or required to be taken to satisfy any requirement
imposed in connection with the review of the Merger under the HSR Act.
As used herein, the term "Consideration" means the number of shares of
Camco Common Stock outstanding on the day prior to the date of this
Agreement multiplied by the Conversion Number and then multiplied by
the closing sales price of Schlumberger Common Stock on the NYSE on the
last trading day prior to the date of this Agreement.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from, any U.S. or
non-U.S. court, administrative agency or commission or other
governmental authority or instrumentality (a "Governmental Entity") is
required by or with respect to Camco or any of its Subsidiaries in
connection with the execution and delivery of this Transaction
Agreement by Camco or the consummation by Camco of the transactions
contemplated hereby, as to which the failure to obtain or make would
have a Material Adverse Effect on Camco, except for: (A) the filing of
a premerger notification report by Camco under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the
expiration or termination of the applicable waiting period with respect
thereto; (B) the filing with the SEC of (1) a proxy statement in
preliminary and definitive form relating to the meeting of Camco's
stockholders to be held in connection with the Merger (the "Proxy
Statement") and (2) such reports under Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and such other
compliance with the Exchange Act and the rules
B-4
<PAGE>
and regulations thereunder, as may be required in connection with this
Transaction Agreement, the Merger Agreement and the transactions
contemplated hereby and thereby; (C) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware; (D) such
filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws, or environmental laws; (E)
such filings and approvals as may be required by any applicable non-
U.S. Governmental Entity; and (F) such filings and approvals as may be
required by any non-U.S. premerger notification, securities, corporate
or other law, rule or regulation.
(b) Litigation. Except as disclosed in the Camco SEC Documents or in the
Camco litigation report previously delivered to Schlumberger, there is no
(i) suit, action or proceeding pending or, to the best knowledge of Camco,
threatened against or affecting Camco or any Subsidiary of Camco ("Camco
Litigation"), or (ii) Camco Order, that would (in any case) have a Material
Adverse Effect on Camco or prevent Camco from consummating the transactions
contemplated by this Transaction Agreement.
(c) Incorporation by Reference. Each of the representations and
warranties made by Camco in the Merger Agreement is incorporated by
reference herein as if fully set forth herein together with the definitions
of the defined terms used therein, mutatis mutandis, so that references to
the recipient of any such representations and warranties shall be deemed to
be references to Schlumberger. Each such representation and warranty so
incorporated herein by reference is hereby confirmed directly to
Schlumberger.
3.2 Representations and Warranties of Schlumberger. Schlumberger represents
and warrants to Camco as follows:
(a) Organization, Standing and Power. Schlumberger is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now being conducted, and is duly qualified and in good standing
to do business in each jurisdiction in which the business it is conducting,
or the operation, ownership or leasing of its properties, makes such
qualification necessary, other than where (individually as in the
aggregate) the failure to be so organized or so to qualify would not have a
Material Adverse Effect on Schlumberger. Complete and correct copies of the
Certificates of Incorporation and Bylaws of Schlumberger have heretofore
been made available to Camco.
(b) Capital Structure. As of the date hereof, the authorized capital
stock of Schlumberger consists of 1,000,000,000 shares of Schlumberger
Common Stock and 200,000,000 shares of preferred stock ("Schlumberger
Preferred Stock"). At the close of business on May 31, 1998 (i) 498,941,351
shares of Schlumberger Common Stock were issued and outstanding and an
aggregate of 58,644,415 shares of Schlumberger Common Stock were reserved
for issuance pursuant to Schlumberger's:
<TABLE>
<S> <C>
Discounted Stock Purchase Plan................................. 14,624,867
1998 Stock Option Plan......................................... 12,000,000
1979 Stock Incentive Plan...................................... 119,300
1979 Incentive Stock Option Plan............................... 86,044
1994 Stock Option Plan......................................... 19,557,184
1989 Stock Incentive Plan...................................... 12,247,263
IVS Stock Option Plan.......................................... 9,757
</TABLE>
(collectively, the "Schlumberger Option Plans"); (ii) 120,201,108 shares of
Schlumberger Common Stock were held by Schlumberger in its treasury or by
its wholly owned Subsidiaries; (iii) a warrant to acquire 15,000,000 shares
of Schlumberger Common Stock at an exercise price per share of $29.975 was
outstanding; (iv) no shares of Schlumberger Preferred Stock were
outstanding; and (v) no Voting Debt was outstanding. All outstanding shares
of Schlumberger Common Stock are, and the shares of Schlumberger Common
Stock when issued in accordance with this Transaction Agreement, and upon
exercise of the Camco Stock Options to be assumed pursuant to the Merger,
will be, validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except as set forth on Schedule 3.2(b) to the
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Schlumberger Disclosure Letter, all outstanding shares of capital stock of
the Significant Subsidiaries of Schlumberger have been duly authorized and
validly issued and are fully paid and non-assessable, and were not issued
in violation of any preemptive rights or other preferential rights of
subscription or purchase other than those that have been waived or
otherwise cured or satisfied, and, except as set forth in the Schlumberger
SEC Documents or Schedule 3.2(b) to the Schlumberger Disclosure Letter, all
such shares are owned by Schlumberger or a direct or indirect wholly owned
Subsidiary of Schlumberger, free and clear of all liens, charges,
encumbrances, claims and options of any nature.
(c) Authority; No Violations, Consents and Approvals.
(i) Schlumberger has all requisite corporate power and authority to
enter into this Transaction Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Transaction Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Schlumberger. This Transaction
Agreement has been duly executed and delivered by Schlumberger.
Assuming this Transaction Agreement constitutes the valid and binding
obligation of Camco, it also constitutes a valid and binding obligation
of Schlumberger and is enforceable against Schlumberger in accordance
with its terms; provided, however, that such enforceability is subject
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity and limitations imposed on indemnity obligations
by applicable federal and state securities laws.
(ii) Except as set forth an Schedule 3.2(c)(ii) to the Schlumberger
Disclosure Letter, the execution and delivery of this Transaction
Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not,
conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or
to the loss of a material benefit under, or result in the creation of
any lien, security interest, charge or encumbrance upon any of the
properties or assets of Schlumberger or any of its Subsidiaries under,
any provision of (A) the Certificate of Incorporation or Bylaws of
Schlumberger or any provision of the comparable charter or
organizational documents of any of its Significant Subsidiaries, (B)
any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise or license
applicable to Schlumberger or any of its Subsidiaries or (C) assuming
the consents, approvals, authorizations or permits and filings or
notifications referred to in Section 3.2(c)(iii) are duly and timely
obtained or made and the approval of the Merger and this Transaction
Agreement by the stockholders of Schlumberger has been obtained, any
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Schlumberger or any of its Subsidiaries or any of their
respective properties or assets, other than, in the case of clause (B)
or (C), any such conflicts, violations, defaults, rights, liens,
security interests, charges or encumbrances that, individually or in
the aggregate, would not have a Material Adverse Effect on Schlumberger
or prevent in any material respect the consummation of any of the
transactions contemplated hereby.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, or permit from, any
Governmental Entity is required by or with respect to Schlumberger or
any of its Subsidiaries in connection with the execution and delivery
of this Transaction Agreement by Schlumberger or the consummation by
Schlumberger of the transactions contemplated hereby, as to which the
failure to obtain or make would have a Material Adverse Effect on
Schlumberger, except for: (A) the filing of a premerger notification
report by Schlumberger under the HSR Act and the expiration or
termination of the applicable waiting period with respect thereto; (B)
the filing with the SEC of the Proxy Statement, the S-4, such reports
under Section 13(a) of the Exchange Act and such other compliance with
the Securities Act and the Exchange Act and the rules and regulations
thereunder as may be required in connection with this Transaction
Agreement, the Merger Agreement and the transactions contemplated
hereby and thereby, and the obtaining from the SEC of such orders as
may be so required; (C) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware; (D) filings with, and
approval of, the New York Stock Exchange, Inc. (the
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"NYSE"); (E) such filings and approvals as may be required by any
applicable state securities, "blue sky" or takeover laws or
environmental laws; (F) such filings and approvals as may be required
by any applicable non-U.S. Governmental Entity; and (G) such filings
and approvals as may be required by any non-U.S. premerger
notification, securities, corporate or other law, rule or regulation.
(d) SEC Documents. A true and complete copy of each report, schedule,
registration statement and definitive proxy statement filed by Schlumberger
with the SEC since January 1, 1995 and prior to the date of this
Transaction Agreement (the "Schlumberger SEC Documents") has been made
available to Camco. The Schlumberger SEC Documents are all the documents
(other than preliminary material) that Schlumberger was required to file
with the SEC since such date. As of their respective dates, the
Schlumberger SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such
Schlumberger SEC Documents, and none of the Schlumberger SEC Documents
contained when filed any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of Schlumberger included in
the Schlumberger SEC Documents complied as to form in all material respects
with the published rules and regulations of the SEC with respect thereto,
were prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto or,
in the case of the unaudited statements, as permitted by Rule 10-01 of
Regulation S-X of the SEC) and fairly present in accordance with applicable
requirements of GAAP (subject, in the case of the unaudited statements, to
normal year-end adjustments and other adjustments discussed therein) the
consolidated financial position of Schlumberger and its consolidated
Subsidiaries as of their respective dates and the consolidated results of
operations and the consolidated cash flows of Schlumberger and its
consolidated Subsidiaries for the periods presented therein.
(e) Information Supplied. None of the information supplied or to be
supplied by Schlumberger or any of its Subsidiaries for inclusion or
incorporation by reference in the S-4 will, at the time the S-4 is filed
with SEC or when it becomes effective under the Securities Act contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and none of the information supplied or to be supplied by
Schlumberger or any of its Subsidiaries and included or incorporated by
reference in the Proxy Statement will, at the date mailed to stockholders
of Camco or at the time of the meeting of such stockholders to be held in
connection with the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time
prior to the Effective Time any event with respect to Schlumberger or any
of its Subsidiaries, or with respect to other information supplied by
Schlumberger or any of its Subsidiaries for inclusion in the Proxy
Statement or S-4, shall occur which is required to be described in an
amendment of, or a supplement to, the Proxy Statement or the S-4, such
event shall be so described, and such amendment or supplement shall be
promptly filed with the SEC. The Proxy Statement, insofar as it relates to
Schlumberger or Subsidiaries of Schlumberger or other information supplied
by Schlumberger or any of its Subsidiaries for inclusion therein, will
comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder, except that no
representations or warranties are made by Schlumberger with respect to
statements made or incorporated by reference therein based on information
supplied by Camco or any of Camco's Subsidiaries.
(f) Absence of Certain Changes or Events. Except as disclosed in, or
reflected in the financial statements included in, the Schlumberger SEC
Documents or on Schedule 3.2(f) to the Schlumberger Disclosure Letter, or
except as contemplated by this Transaction Agreement or the Merger
Agreement, since December 31, 1997 there has not been: (i) any declaration,
setting aside or payment of any dividend or other distribution (whether in
cash, stock or property) with respect to any of Schlumberger's capital
stock, except for regular quarterly cash dividends of $.1875 per share on
Schlumberger Common Stock with usual record and payment dates for such
dividends; (ii) any amendment of any material term of any outstanding
equity security of Schlumberger or any Significant Subsidiary; (iii) any
material change in any method of
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accounting or accounting practice by Schlumberger or any Significant
Subsidiary; or (iv) any other transaction, commitment, dispute or other
event or condition (financial or otherwise) of any character (whether or
not in the ordinary course of business) that would have a Material Adverse
Effect on Schlumberger.
(g) No Undisclosed Material Liabilities. Except as disclosed in the
Schlumberger SEC Documents or on Schedule 3.2(g) to the Schlumberger
Disclosure Letter, there are no liabilities of Schlumberger or any of its
Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, that would have a Material Adverse
Effect on Schlumberger, other than: (i) liabilities adequately provided for
on the balance sheet of Schlumberger dated as of March 31, 1998 (including
the notes thereto) contained in Schlumberger's Quarterly Report on Form 10-
Q for the quarter ended March 31, 1998; (ii) liabilities incurred in the
ordinary course of business since March 31, 1998; and (iii) liabilities
under this Transaction Agreement and the Merger Agreement.
(h) Litigation. Except as disclosed in the Schlumberger SEC Documents or
on Schedule 3.2(h) to the Schlumberger Disclosure Letter, there is no (i)
suit, action or proceeding pending or, to the best knowledge of
Schlumberger, threatened against or affecting Schlumberger or any
Subsidiary of Schlumberger ("Schlumberger Litigation"), or (ii) judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Schlumberger or any Subsidiary of Schlumberger that (in
any case) would have a Material Adverse Effect on Schlumberger or prevent
Schlumberger from consummating the transactions contemplated by this
Transaction Agreement or by the Merger Agreement.
(i) No Vote Required. No vote of the holders of any class or series of
Schlumberger capital stock is necessary to approve the issuance of
Schlumberger Common Stock pursuant to this Transaction Agreement and the
transactions contemplated hereby.
(j) Accounting Matters. To the best knowledge of the financial and
accounting officers of Schlumberger prior to the date hereof, neither
Schlumberger nor any of its Affiliates has taken any action that (without
giving effect to any action taken or agreed to be taken by Camco or any of
its Affiliates) would jeopardize the treatment of the business combination
to be effected by the Merger as a pooling of interests for accounting
purposes.
(k) Beneficial Ownership of Camco Common Stock. As of the date hereof,
neither Schlumberger nor its Subsidiaries "beneficially owns" (as defined
in Rule 13d-3 under the Exchange Act) any shares of Camco Common Stock.
(l) Material Contracts and Agreements. All material contracts of
Schlumberger or its Subsidiaries have been included in the Schlumberger SEC
Documents unless not required to be included pursuant to the rules and
regulations of the SEC. Schedule 3.2(l) of the Schlumberger Disclosure
Letter sets forth a list of all written or oral contracts, agreements or
arrangements to which Schlumberger or any of its Subsidiaries or any of
their respective assets are bound which meet the definition of material
contracts set forth in Section 6.01 of Regulation S-K promulgated under the
Securities Act and which have not been included in the Schlumberger SEC
Documents.
ARTICLE IV
Additional Agreements
4.1 Legal Conditions to Merger.
(a) Except as otherwise provided herein, Camco and Schlumberger will each
take all reasonable actions necessary to comply promptly with all legal
requirements that may be imposed on such party with respect to the Merger
(including, without limitation, furnishing all information required under the
HSR Act and in connection with approvals of or filings with any other
Governmental Entity) and will promptly cooperate with and furnish information
to each other in connection with any such requirements imposed upon any of
them or any of their
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Subsidiaries in connection with the Merger. Each of Camco and Schlumberger
will, and will cause its respective Subsidiaries to, take all actions
necessary to obtain (and will cooperate with each other in obtaining) any
consent, acquiescence, authorization, order or approval of, or any exemption
or nonopposition by, any Governmental Entity or court required to be obtained
or made by Camco, Schlumberger or any of their Subsidiaries in connection with
the Merger or the taking of any action contemplated thereby, by the Merger
Agreement or by this Transaction Agreement, including complying with any
requests or orders made by the Justice Department or the Federal Trade
Commission in connection with the Merger.
(b) Each of the parties hereto shall file a premerger notification and
report form under the HSR Act with respect to the Merger as promptly as
reasonably possible following execution and delivery of this Agreement. Each
of the parties agrees to use reasonable efforts to promptly respond to any
request for additional information pursuant to Section (e)(1) of the HSR Act.
Except as otherwise required by United States regulatory considerations, Camco
will furnish to Schlumberger copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof
(collectively, "Company HSR Documents")) between Camco, or any of its
respective representatives, on the one hand, and any governmental entity, or
members of the staff of such agency or authority, on the other hand, with
respect to this Agreement, the Merger Agreement or the Merger; provided;
however, that (x) with respect to documents and other materials filed by or on
behalf of Camco with the Antitrust Division of the Department of Justice, the
Federal Trade Commission, or any state attorneys general that are available
for review by Schlumberger, copies will not be required to be provided to
Schlumberger and (y) with respect to any Camco HSR Documents (1) that contain
any information which, in the reasonable judgment of Fulbright & Jaworski
L.L.P., should not be furnished to Schlumberger because of antitrust
considerations or (2) relating to a request for additional information
pursuant to Section (e)(1) of the HSR Act, the obligation of Camco to furnish
any such Camco HSR Documents to Schlumberger shall be satisfied by the
delivery of such Camco HSR Documents on a confidential basis to Baker & Botts,
L.L.P., pursuant to a confidentiality agreement in form and substance
reasonably satisfactory to Schlumberger. Except as otherwise required by
United States regulatory considerations, Schlumberger will furnish to Camco
copies of all correspondence, filings or communications (or memoranda setting
forth the substance thereof (collectively, "Schlumberger HSR Documents"))
between Schlumberger or any of its representatives, on the one hand, and any
Governmental Entity, or member of the staff of such agency or authority, on
the other hand, and any Governmental Entity, or member of the staff of such
agency or authority, on the other hand, with respect to this Agreement, the
Merger Agreement or the Merger; provided, however, that (x) with respect to
documents and other materials filed by or on behalf of Schlumberger with the
Antitrust Division of the Department of Justice, the Federal Trade Commission,
or any state attorneys general that are available for review by Camco, copies
will not be required to be provided to Camco, and (y) with respect to any
Schlumberger HSR Documents (1) that contain information which, in the
reasonable judgment of Baker & Botts, L.L.P., should not be furnished to Camco
because of antitrust considerations or (2) relating to a request for
additional information pursuant to Section (e)(1) of the HSR Act, the
obligation of Schlumberger to furnish any such Schlumberger HSR Documents to
Camco shall be satisfied by the delivery of such Schlumberger HSR Documents on
a confidential basis to Fulbright & Jaworski L.L.P. pursuant to a
confidentiality agreement in form and substance reasonably satisfactory to
Camco.
(c) In the event that any governmental body with jurisdiction of this Merger
shall require Schlumberger or any of its Subsidiaries to agree to take or not
to take any action as a condition to approving or not objecting to the Merger,
Schlumberger will take such action (i) if the loss in annual revenues to the
Surviving Corporation would reasonably be expected not to exceed $75 million
during the ensuing twelve months following the Closing, or (ii) if
Schlumberger otherwise considers it reasonable and appropriate in the
circumstances to take such action.
4.2 Agreement to Defend. In the event any claim, action, suit, investigation
or other proceeding by any governmental body or other person or other legal or
administrative proceeding is commenced that questions the validity or legality
of the transactions contemplated hereby or seeks damages in connection
therewith, the parties hereto agree to cooperate and use their reasonable
efforts to defend against and respond thereto.
4.3 Accounting Matters. During the period from the date of this Transaction
Agreement through the Effective Time, unless the parties shall otherwise agree
in writing, neither Schlumberger nor Camco or any of
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their respective Subsidiaries shall knowingly take or fail to take any
reasonable action which action or failure to act would jeopardize the
treatment of the Merger as a pooling of interests for accounting purposes.
4.4 Public Announcements. Schlumberger and Camco will consult with each
other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Transaction
Agreement, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law or by obligations pursuant to any listing agreement with any national
securities exchange or transaction reporting system.
4.5 Other Actions. Except as contemplated by this Transaction Agreement or
the Merger Agreement, neither Schlumberger nor Camco shall, and neither shall
permit any of its Subsidiaries to, take or agree or commit to take or omit to
take any action that is reasonably likely to result in any of its respective
representations or warranties hereunder or under the Merger Agreement being
untrue in any material respect or in any of the conditions to the Merger set
forth in Article VI to the Merger Agreement not being satisfied.
4.6 Advice of Changes; SEC Filings. Schlumberger and Camco shall confer on a
regular basis with each other, report on operational matters of Camco and
promptly advise each other orally and in writing of any change or event
having, or which, insofar as can reasonably be foreseen, could have, a
Material Adverse Effect on Schlumberger or Camco, as the case may be. Subject
to the provisions of Section 4.1, Camco and Schlumberger shall promptly
provide each other (or their respective counsel) copies of all filings made by
such party with the SEC or any other state or federal Governmental Entity in
connection with this Transaction Agreement or the Merger Agreement and the
transactions contemplated hereby and thereby.
4.7 Reorganization. It is the intention of Schlumberger and Camco that the
Merger will qualify as a reorganization described in Section 368(a)(1)(B) of
the Code (and any comparable provisions of applicable state law). Neither
Schlumberger nor Camco (nor any of their respective Subsidiaries) will take or
omit to take any action (whether before, on or after the Closing Date) that
would cause the Merger not to be so treated. The parties (and their respective
Subsidiaries) will characterize the Merger as such a reorganization for
purposes of all Returns and other filings.
4.8 Takeover Defenses. Schlumberger and Camco shall each take such action
with respect to any takeover provisions in its respective Certificate of
Incorporation or Bylaws or afforded it by statute to the extent necessary to
consummate the Merger on the terms set forth in the Merger Agreement.
4.9 Letter of Camco's Accountants. Camco shall use its best efforts to cause
to be delivered to Schlumberger a letter of Arthur Andersen LLP, Camco's
independent public accountants, dated a date within two business days before
the date on which the S-4 shall become effective and addressed to Schlumberger
and Camco, in form and substance reasonably satisfactory to Schlumberger and
customary in scope and substance for letters delivered by independent public
accountants in connection with registration statements similar to the S-4. In
connection with Camco's efforts to obtain such letter, if requested by Arthur
Andersen LLP, Schlumberger shall provide a representation letter to Arthur
Andersen LLP complying with SAS 72, if then required.
4.10 Letter of Schlumberger's Accountants. Schlumberger shall use its best
efforts to cause to be delivered to Camco a letter of Price Waterhouse LLP,
Schlumberger's independent public accountants, dated a date within two
business days before the date on which the S-4 shall become effective and
addressed to Camco and Schlumberger, in form and substance reasonably
satisfactory to Camco and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the S-4. In connection with Schlumberger's efforts to
obtain such letter, if requested by Price Waterhouse LLP, Camco shall provide
a representation letter to Price Waterhouse LLP complying with SAS 72, if then
required.
4.11 Rights Agreement. Prior to the Effective Time, the Board of Directors
of Camco shall take any action (including, as necessary, amending or
terminating (but with respect to termination, only as of immediately prior to
the Effective Time) the Rights Agreement) necessary so that none of the
execution and delivery of this
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Transaction Agreement, the conversion of shares of Camco Common Stock into the
right to receive Schlumberger Common Stock in accordance with Article II of
this Transaction Agreement, and the consummation of the Merger or any other
transaction contemplated hereby will cause (a) the Camco Rights to become
exercisable under the Rights Agreement, (b) Schlumberger or any of its
Subsidiaries to be deemed an "Acquiring Person" (as defined in the Rights
Agreement), (c) the provisions of Section 11 or Section 13 of the Rights
Agreement to become applicable to any such event or (d) the "Distribution
Date" or the "Share Acquisition Date" (each as defined in the Rights
Agreement) to occur upon any such event, and so that the "Expiration Date" (as
defined in the Rights Agreement) of the Camco Rights will occur immediately
prior to the Effective Time. Without the prior written consent of
Schlumberger, neither the Board of Directors of Camco nor Camco shall take any
other action to terminate the Rights Agreement, redeem the Camco Rights, cause
any person not to be or become an "Acquiring Person" or otherwise amend the
Rights Agreement in a manner, or take any other action under the Rights
Agreement, adverse to Schlumberger.
4.12 Stock Options. Schlumberger shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of Schlumberger Common
Stock for delivery upon exercise of the Camco Stock Options assumed by STC in
accordance with Section 2.1(d) and Section 5.5 of the Merger Agreement. As
soon as possible after the Effective Time, Schlumberger shall file with the
SEC a registration statement on Form S-8 (or any successor form) with respect
to the shares of Schlumberger Common Stock subject to the Camco Stock Options.
ARTICLE V
Conditions Precedent
5.1 Conditions to Camco's Closing Deliveries. The obligations of Camco under
Section 5.2 hereof are subject to the conditions that the Merger Agreement
shall not have been terminated, that each of the conditions set forth in
Article VI of the Merger Agreement other than those conditions to be satisfied
at the Closing shall have been satisfied or waived as set forth therein and
that each of the following conditions shall have been satisfied or waived by
Camco:
(a) Representations and Warranties. Each of the representations and
warranties of Schlumberger set forth in this Transaction Agreement shall be
true and correct in all material respects as of the date of this
Transaction Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Delivery Date as though
made on and as of the Delivery Date, except where the failure to be so true
and correct (without giving effect to the individual materiality thresholds
otherwise contained in Section 3.2 hereof) would not have a Material
Adverse Effect on Schlumberger (such that the aggregate of the Material
Adverse Effect on Schlumberger hereunder exceeds $400 million) and
Schlumberger shall have received a certificate dated the Delivery Date by a
duly authorized officer of Schlumberger to that effect.
(b) Performance of Obligations of Schlumberger. Schlumberger shall have
performed in all material respects all obligations required to be performed
by it under this Transaction Agreement at or prior to the Delivery Date.
(c) Certifications and Opinion. Schlumberger shall have furnished Camco
with:
(i) a certified copy of a resolution or resolutions duly adopted by
the Board of Directors or a duly authorized committee thereof of
Schlumberger approving this Transaction Agreement and the transactions
contemplated hereby; and
(ii) a favorable opinion, dated the Closing Date, in customary form
and substance, of David S. Browning, Esquire, General Counsel of
Schlumberger, to the effect that:
(A) Schlumberger is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has corporate power to own its properties and
assets and to carry on its business as presently conducted and as
described in the Registration
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Statement; and the execution and delivery of this Transaction
Agreement did not, and the consummation of the transactions
contemplated hereby will not, violate any provision of
Schlumberger's Certificate of Incorporation or Bylaws;
(B) the Board of Directors of Schlumberger has taken all action
required under its jurisdiction of incorporation, its Certificate of
Incorporation or its Bylaws to authorize the execution and delivery
of this Transaction Agreement and the transactions contemplated
hereby; and this Transaction Agreement is a valid and binding
agreement of Schlumberger enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws or
judicial decisions now or hereafter in effect relating to creditors'
rights generally or governing the availability of equitable relief;
and
(C) the Schlumberger Shares to be delivered to the holders of
Camco Common Stock pursuant to Article II of the Merger Agreement
are duly authorized and when issued and delivered as contemplated by
the Merger Agreement will be legally and validly issued and fully
paid and nonassessable and no stockholders of Schlumberger shall
have any preemptive rights with respect thereto either pursuant to
the organizational documents of Schlumberger or under applicable law
of the jurisdiction of Schlumberger's organization.
(d) Fairness Opinion. Morgan Stanley & Co. Incorporated has not revoked,
modified or changed its opinion referred to in Section 3.1(p) of the Merger
Agreement in any manner adverse to the holders of the Common Stock of
Camco.
5.2 Conditions to Schlumberger's Closing Deliveries. The obligations of
Schlumberger under Section 2.1 and Section 5.1 hereof are subject to the
conditions that the Merger Agreement shall not have been terminated, that each
of the conditions set forth in Article VI of the Merger Agreement other than
those conditions to be satisfied at Closing shall have been satisfied or
waived as set forth therein and that each of the following conditions shall
have been satisfied or waived by Schlumberger:
(a) Representations and Warranties. Each of the representations and
warranties of Camco set forth in this Transaction Agreement shall be true
and correct in all material respects as of the date of this Transaction
Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Delivery Date as though made on and
as of the Deliver Date, except where the failure to be so true and correct
(without giving effect to the individual materiality thresholds otherwise
contained in Section 3.1 hereof) would not have a Material Adverse Effect
on Camco (such that the aggregate of the Material Adverse Effect on Camco
hereunder exceeds $200 million) and Schlumberger shall have received a
certificate dated the Delivery Date on behalf of Camco by the chief
executive officer and chief financial officer of Camco to that effect.
(b) Performance of Obligations of Camco. Camco shall have performed in
all material respects all obligations required to be performed by it under
this Transaction Agreement at or prior to the Delivery Date.
(c) Certifications and Opinion. Camco shall have furnished Schlumberger
with:
(i) a certified copy of a resolution or resolutions duly adopted by
the Board of Directors of Camco approving this Transaction Agreement
and consummation of the transactions contemplated hereby; and
(ii) a favorable opinion, dated the Delivery Date, in customary form
and substance, of Ronald R. Randall, Esquire, General Counsel of Camco,
to the effect that:
(A) the execution and delivery of this Transaction Agreement did
not violate any provision of Camco's Certificate of Incorporation or
Bylaws; and
(B) the Board of Directors of Camco has taken all action required
by the DGCL and its Certificate of Incorporation or its Bylaws to
authorize the execution and delivery of this Transaction Agreement
and the transactions contemplated hereby; and this Transaction
Agreement is a valid and binding agreement of Camco enforceable in
accordance with its terms, except as
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such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws or judicial
decisions now or hereafter in effect relating to creditors' rights
generally or governing the availability of equitable relief.
ARTICLE VI
Termination and Amendment
6.1 Termination. This Transaction Agreement shall automatically terminate if
the Merger Agreement is terminated. In addition, this Transaction Agreement
may be terminated:
(a) by mutual written consent of Camco and Schlumberger, or by mutual
action of their respective Boards of Directors;
(b) by Schlumberger if (i) Camco shall have failed to comply in any
material respect with any of the covenants or agreements contained in this
Transaction Agreement to be complied with or performed by Camco at or prior
to such date of termination (provided such breach has not been cured within
30 days following receipt by Camco of notice of such breach and is existing
at the time of termination of this Transaction Agreement); or (ii) any
representations and warranties of Camco contained in this Transaction
Agreement shall not have been true when made (provided such breach has not
been cured within 30 days following receipt by Camco of notice of such
breach and is existing at the time of termination of this Transaction
Agreement) or on and as of the Effective Time as if made on and as of the
Effective Time (except to the extent it relates to a particular date),
except where the failure to be so true and correct (without giving effect
to the individual materiality thresholds otherwise contained in Section 3.1
hereof) would not have a Material Adverse Effect on Camco such that the
aggregate of the Material Adverse Effect on Camco exceeds $200 million; and
(c) by Camco if (i) Schlumberger shall have failed to comply in any
material respect with any of the covenants or agreements contained in this
Transaction Agreement to be complied with or performed by it at or prior to
such date of termination (provided such breach has not been cured within 30
days following receipt by Schlumberger of notice of such breach and is
existing at the time of termination of this Transaction Agreement); or (ii)
any representations and warranties of Schlumberger contained in this
Transaction Agreement shall not have been true when made (provided such
breach has not been cured within 30 days following receipt by Schlumberger
of notice of such breach and is existing at the time of termination of this
Transaction Agreement) or on and as of the Effective Time as if made on and
as of the Effective Time (except to the extent it relates to a particular
date), except where the failure to be so true and correct (without giving
effect to the individual materiality thresholds otherwise contained in
Section 3.2 hereof) would not have a Material Adverse Effect on
Schlumberger such that the aggregate of the Material Adverse Effect on
Schlumberger exceeds $400 million.
6.2 Effect of Termination. In the event of termination of this Transaction
Agreement by either Camco or Schlumberger as provided in Section 6.1, this
Transaction Agreement shall forthwith become void and there shall be no
liability or obligation on the part of Schlumberger or Camco under this
Termination Agreement except (a) with respect to Section 7.1, and (b) to the
extent that such termination results from the willful breach by a party hereto
of any of its representations or warranties or of any of its covenants or
agreements, in each case, as set forth in this Transaction Agreement except as
provided in Section 8.9. Nothing herein shall be construed to limit any of the
rights and obligations under the Merger Agreement.
6.3 Amendment. This Transaction Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection
with the Merger by the stockholders of Camco, but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Transaction Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
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6.4 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Boards of Directors,
may, to the extent legally allowed: (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto; (b) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto; and (c) waive compliance with any of
the agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth
in a written instrument signed on behalf of such party.
ARTICLE VII
General Provisions
7.1 Payment of Expenses. Each party hereto shall pay its own expenses
incident to preparing for entering into and carrying out this Transaction
Agreement and the consummation of the transactions contemplated hereby,
whether or not the Merger shall be consummated, except that the filing fees
with respect to the Proxy Statement, and the S-4 shall be paid by
Schlumberger.
7.2 Nonsurvival of Representations, Warranties and Agreements. None of the
representations, warranties and agreements in this Transaction Agreement or in
any instrument delivered pursuant to this Transaction Agreement shall survive
the Effective Time and any liability for breach or violation thereof shall
terminate absolutely and be of no further force and effect at and as of the
Effective Time, except for the agreements contained in Section 6.2 and this
Article VI and the representations, covenants and agreements contained in
Section 4.7. The Confidentiality Agreements shall survive the execution and
delivery of this Transaction Agreement, and the provisions of the
Confidentiality Agreements shall apply to all information and material
delivered hereunder.
7.3 Notices. Any notice or communication required or permitted hereunder
shall be in writing and either delivered personally, telegraphed or telecopied
or sent by certified or registered mail, postage prepaid, and shall be deemed
to be given, dated and received when so delivered personally, telegraphed or
telecopied or, if mailed, five business days after the date of mailing to the
following address or telecopy number, or to such other address or addresses as
such person may subsequently designate by notice given hereunder.
(a) if to Schlumberger, to:
Schlumberger Limited
277 Park Avenue
New York, New York 10172
Attention: David S. Browning, Esquire
Fax: (212) 350-9457
with a copy to:
Baker & Botts, L.L.P.
910 Louisiana, Suite 3000
Houston, Texas 77002
Attention: Moulton A. Goodrum, Esquire
Fax: (713) 229-1522
and (b) if to Camco, to:
Camco International, Inc.
7030 Ardmore
Houston, Texas 77054
Attention: Ronald R. Randall, Esquire
Fax: (713) 749-5625
B-14
<PAGE>
with a copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010
Attention: Michael C. Conlon, Esquire
Fax: (713) 651-5246
7.4 Interpretation. When a reference is made in this Transaction Agreement
to Sections, such reference shall be to a Section of this Transaction
Agreement unless otherwise indicated. The table of contents, glossary of
defined terms and headings contained in this Transaction Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Transaction Agreement. Whenever the word "include",
"includes" or "including" is used in this Transaction Agreement, it shall be
deemed to be followed by the words "without limitation." The phrase "made
available" in this Transaction Agreement shall mean that the information
referred to has been made available if requested by the party to whom such
information is to be made available.
7.5 Counterparts. This Transaction Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when two or more counterparts have been signed by each
of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
7.6 Entire Agreement; No Third-Party Beneficiaries. This Transaction
Agreement (together with the Confidentiality Agreements, the Merger Agreement
and any other documents and instruments referred to herein) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereto
and is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
7.7 Governing Law. This Transaction Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
7.8 No Remedy in Certain Circumstances. Each party agrees that, should any
court or other competent authority hold any provision of this Transaction
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith or not to take an action consistent
herewith or required hereby, the validity, legality and enforceability of the
remaining provisions and obligations contained or set forth herein shall not
in any way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of this
Transaction Agreement or makes this Transaction Agreement impossible to
perform, in which case this Transaction Agreement shall terminate pursuant to
Article VI hereof. Except as otherwise contemplated by this Transaction
Agreement, to the extent that a party hereto took an action inconsistent
herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent authority, such
party shall not incur any liability or obligation unless such party breached
its obligations under Section 4.1 hereof or did not in good faith seek to
resist or object to the imposition or entering of such order or judgment.
7.9 Assignment. Neither this Transaction Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this
Transaction Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
7.10 Enforcement of the Agreement. The parties agree that irreparable damage
would occur in the event that any of the provisions of this Transaction
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this
Transaction Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States located in the State of Delaware or
in the Chancery Court of
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<PAGE>
the State of Delaware, this being in addition to any other remedy to which
they are entitled at law or in equity. In addition, each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any Federal or
state court sitting in Wilmington, Delaware in the event any dispute between
the parties hereto arises out of this Agreement solely in connection with such
a suit between the parties, (b) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from
any such court and (c) agrees that it will not bring any action relating to
this Agreement in any court other than a Federal or state court sitting in
Wilmington, Delaware.
IN WITNESS WHEREOF, each party has caused this Transaction Agreement to be
signed by its respective officers thereunto duly authorized, all as of the
date first written above.
SCHLUMBERGER LIMITED
/s/ Victor E. Grijalva
By:_______________________________________
Victor E. Grijalva
Vice Chairman
CAMCO INTERNATIONAL, INC.
/s/ Gilbert H. Tausch
By:_______________________________________
Gilbert H. Tausch
President and Chief Executive Officer
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<PAGE>
ANNEX C
June 18, 1998
Board of Directors
Camco International Inc.
7030 Ardmore
Houston, Texas 77054
Members of the Board:
We understand the Camco International Inc. ("Camco" or the "Company"),
Schlumberger Technology Corporation ("STC"), a wholly owned subsidiary of
Schlumberger Limited ("Schlumberger" or the "Buyer"), and Schlumberger OFS,
Inc., a wholly owned subsidiary of STC ("Sub"), propose to enter into an
Agreement and Plan of Merger substantially in the form of the draft dated June
18, 1998 (the "Merger Agreement"), which provides, among other things, for the
merger (the "Merger") of Sub with and into Camco. Pursuant to the Merger, the
Company will become a wholly-owned indirect subsidiary of Schlumberger and
each outstanding share of common stock, par value of $0.01 per share (the
"Camco Common Stock"), of Camco, other than shares held in treasury or by the
Buyer or any subsidiary of the Company or the Buyer, shall be converted into
the right to receive 1.18 shares (the "Exchange Ratio") of common stock, par
value $0.01 per share, of Schlumberger (the "Schlumberger Common Stock"). The
terms and conditions of the Merger are more fully set forth in the Merger
Agreement and certain related documents.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to the holders of
Camco Common Stock (other than Schlumberger and its affiliates).
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of Camco and Schlumberger, respectively;
(ii) reviewed certain internal financial statements and other financial
and operating data concerning Camco prepared by the management of Camco;
(iii) analyzed certain financial projections prepared by the management
of Camco;
(iv) discussed the past and current operations and financial condition
and the prospects of Camco, including information relating to certain
strategic, financial and operational benefits anticipated from the Merger,
with senior executives of Camco;
(v) discussed the past and current operations and financial condition and
the prospects of Schlumberger with senior executives of Schlumberger;
(vi) reviewed the pro forma impact of the Merger on Schlumberger's
earnings per share and other financial ratios;
(vii) reviewed the reported prices and trading activity for the Camco
Common Stock and the Schlumberger Common Stock;
(viii) discussed with the senior managements of Camco and Schlumberger
certain research analyst projections for Camco and Schlumberger,
respectively;
(ix) Compared the financial performance of Camco and Schlumberger and the
prices and trading activity of the Camco Common Stock and the Schlumberger
Common Stock with that of certain other comparable publicly-traded
companies and their securities;
(x) reviewed the financial terms, to the extent publicly available, of
certain comparable acquisition transactions;
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<PAGE>
(xi) participated in discussions and negotiations among representatives
of Camco and Schlumberger and their financial and legal advisors;
(xii) reviewed the draft Merger Agreement, the draft Transaction
Agreement dated June 18, 1998 between Camco and Schlumberger and certain
related documents; and
(xiii) performed such other analyses as we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, including the information
relating to certain strategic, financial and operational benefits anticipated
to result from the Merger, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the future financial performance of Camco. In addition, we have
assumed that the Merger will be consummated in accordance with the terms set
forth in the Merger Agreement, including, among other things, that the Merger
will be accounted for as a "pooling-of-interests" business combination in
accordance with U.S. Generally Accepted Accounting Principles and the Merger
will be treated as a tax-free reorganization and/or exchange, each pursuant to
the Internal Revenue Code of 1986. We have not made any independent valuation
or appraisal of the assets or liabilities of the Company, nor have we been
furnished with any such appraisals. Our opinion is necessarily based on
economic, market and other conditions as in effect on, and the information
made available to us as of, the date hereof.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of Camco.
We have acted as financial advisor to the Board of Directors of Camco in
connection with this transaction and will receive a fee for our services. In
the past, Morgan Stanley & Co. Incorporated and its affiliates have provided
financial advisory and financing services for the Company and the Buyer and
their affiliates and have received fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of Camco and may not be used for any other purpose without our prior
written consent, except that this opinion may be included in its entirety in
any filing made by Camco in respect of the transaction with the Securities and
Exchange Commission. In addition, this opinion does not in any manner address
the prices at which Schlumberger Common Stock will trade following
consummation of the Merger, and Morgan Stanley expresses no opinion or
recommendation as to how the shareholders of Camco should vote at the
shareholders' meeting held in connection with the Merger.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio pursuant to the Merger Agreement is fair from a
financial point of view to the holders of Camco Common Stock (other than
Schlumberger and its affiliates).
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
/s/ Gordon E. Dyal
By:__________________________________
Gordon E. Dyal
Managing Director
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<PAGE>
PROXY CAMCO INTERNATIONAL INC.
PROXY FOR
SPECIAL MEETING OF STOCKHOLDERS
AUGUST 31, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned stockholder of Camco International Inc. ("Camco") hereby
appoints GILBERT H. TAUSCH, HERBERT S. YATES and RONALD R. RANDALL, or any of
them, as proxies, each with power to act without the others and with full power
of substitution, for the undersigned to vote the number of shares of Common
Stock of Camco that the undersigned would be entitled to vote if personally
present at the Special Meeting of Stockholders of Camco to be held on Monday,
August 31, 1998, at 10:00 a.m., Houston time, at Chevron Tower Auditorium, 1301
McKinney, Houston, Texas, and at any adjournment or postponement thereof, on
the following matters that are more particularly described in the Proxy
Statement /Prospectus dated July 27, 1998:
(Continued and to be Signed on Other Side) SEE REVERSE
SIDE
<PAGE>
[X] Please mark your 0534
votes as in this
example.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE MERGER.
RECEIPT OF THE PROXY STATEMENT/PROSPECTUS DATED JULY 27, 1998, IS HEREBY
ACKNOWLEDGED.
<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
1. To consider and vote upon a proposal to approve and adopt the Agreement and [_] [_] [_]
Plan of Merger dated June 18, 1998 (the "Merger Agreement") by and among
Schlumberger Technology Corporation ("STC," a wholly owned subsidiary of
Schlumberger N.V. (Schlumberger Limited) ("Schlumberger")), Schlumberger
OFS, Inc., a newly formed wholly owned subsidiary of STC ("Merger Sub"), and
Camco and the Merger of Merger Sub with and into Camco pursuant thereto.
2. To consider and take action upon any other business that may properly come
before the meeting or any adjournment or postponement thereof.
NOTE: Please sign your name exactly as it appears hereon. Joint owners must
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give your full title as it appears thereon.
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Signature(s) Date
PLEASE MARK, SIGN, DATE AND RETURN USING THE ENCLOSED ENVELOPE.
</TABLE>
