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October 31, 2006
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Core
Laboratories LP
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6316 Windfern
Road
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Houston, Texas
77040
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Attn: General
Counsel
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Telephone:
(713) 328-2673
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Facsimile:
(713) 328-2152
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Lehman Brothers
Inc., acting as Agent
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Lehman Brothers
OTC Derivatives Inc., acting as Principal
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Attention:
Transaction Management Group
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Telephone:
(212) 526-9986
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Facsimile:
(646) 885-9546
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Convertible
Senior Note Hedge Transaction
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(Transaction
Reference Number:
)
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The purpose of
this communication (this “ Confirmation ”) is to
set forth the terms and conditions of the above-referenced
transaction entered into on the Trade Date specified below (the
“ Transaction ”) between Lehman Brothers OTC
Derivatives Inc. (“ Dealer ”) represented by
Lehman Brothers Inc. (“ Agent ”) as its agent,
and Core Laboratories LP (“ Counterparty ”).
This communication constitutes a “Confirmation” as
referred to in the ISDA Master Agreement specified below. Lehman
Brothers OTC Derivatives Inc. is not a member of the Securities
Investor Protection Corporation.
1. This
Confirmation is subject to, and incorporates, the definitions and
provisions of the 2000 ISDA Definitions (including the Annex
thereto) (the “ 2000 Definitions ”) and the
definitions and provisions of the 2002 ISDA Equity Derivatives
Definitions (the “ Equity Definitions ”, and
together with the 2000 Definitions, the “ Definitions
”), in each case as published by the International Swaps and
Derivatives Association, Inc. (“ ISDA ”). In the
event of any inconsistency between the 2000 Definitions and the
Equity Definitions, the Equity Definitions will govern. Certain
defined terms used herein have the meanings assigned to them in
Indenture to be dated as of November 6, 2006 between
Counterparty and Wells Fargo Bank, National Association as trustee
(the “ Indenture ”) relating to the
USD250,000,000 principal amount of 0.25% senior exchangeable notes
due 2011 (the “ Convertible Notes ”). In the
event of any inconsistency between the terms defined in the
Indenture and this Confirmation, this Confirmation shall govern.
For the avoidance of doubt, references herein to sections of the
Indenture are based on the draft of the Indenture most recently
reviewed by the parties at the time of execution of this
Confirmation. If any relevant sections of the Indenture are
changed, added or renumbered following execution of this
Confirmation, the parties will amend this Confirmation in good
faith to preserve the economic intent of the parties.
This Confirmation
evidences a complete and binding agreement between Dealer and
Counterparty as to the terms of the Transaction to which this
Confirmation relates. This Confirmation shall be subject to an
agreement (the “ Agreement ”) in the form of the
2002 ISDA Master Agreement (the “ ISDA Form ”)
as if Dealer and Counterparty had executed an agreement in such
form (without any Schedule but with the elections set forth in this
Confirmation). For the avoidance of doubt, the Transaction shall be
the only transaction under the Agreement.
All provisions
contained in, or incorporated by reference to, the Agreement will
govern this Confirmation except as expressly modified herein. In
the event of any inconsistency between this Confirmation and either
the Definitions or the Agreement, this Confirmation shall
govern.
2. The
Transaction constitutes a Share Option Transaction for purposes of
the Equity Definitions. The terms of the particular Transaction to
which this Confirmation relates are as follows:
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Trade
Date:
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October 31, 2006
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Effective
Date:
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The initial
closing date of the offering of the Convertible Notes.
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Option
Style:
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As described
under “Procedures for Exercise” below.
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Option
Type:
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Call
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Seller:
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Dealer
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Buyer:
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Counterparty
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Shares:
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The Common
Stock of Core Laboratories N.V., par value EUR 0.04 per share (NYSE
Ticker Symbol: “CLB”).
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Number of
Options:
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The number of
Convertible Notes in denominations of USD1,000 principal amount
issued by Counterparty on the closing date for the initial issuance
of the Convertible Notes.
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Number of
Shares:
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The product of
the Number of Options and the Conversion Rate (but without regard
to any adjustments to the Conversion Rate pursuant to
Section 11.09 of the Indenture).
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Conversion
Rate:
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The
“Exchange Rate,” as defined in the
Indenture.
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Premium:
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USD71,875,000.
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Premium Payment
Date:
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The Effective
Date
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Exchange:
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New York Stock
Exchange
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Related
Exchange:
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All
Exchanges
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Potential
Exercise Dates:
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Each Conversion
Date.
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Conversion
Date:
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Each
“Exchange Date,” as defined in the
Indenture.
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Required
Exercise on Conversion Dates:
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On each
Conversion Date, a number of Options equal to the number of
Convertible Notes in denominations of USD1,000 principal amount
submitted for conversion on such Conversion Date in accordance with
the terms of the Indenture shall be automatically
exercised.
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Expiration
Date:
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October 31, 2011
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Multiple
Exercise:
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Applicable, as
provided above under “Required Exercise on Conversion
Dates”.
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Minimum Number
of Options:
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Zero
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Maximum Number
of Options:
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Number of
Options
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Integral
Multiple:
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Not
Applicable
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Automatic
Exercise:
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As provided
above under “Required Exercise on Conversion
Dates”.
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2
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Notice of
Exercise:
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Notwithstanding
the exercise of any Options hereunder, Counterparty shall be
entitled to receive the deliveries provided under “Settlement
Terms” below only if Counterparty shall have notified Dealer
in writing prior to 5:00 PM, New York City time, on the Exchange
Business Day prior to the first day of the “Exchange
Reference Period”, as defined in the Indenture, relating to
the Convertible Notes converted on the Conversion Date relating to
the relevant Exercise Date of (i) the number of Options being
exercised on such Exercise Date, (ii) the scheduled settlement
date under the Indenture for the Convertible Notes converted on the
Conversion Date corresponding to such Exercise Date;
provided that Counterparty shall be entitled to receive the
deliveries provided under “Settlement Terms” in respect
of any Convertible Notes converted during the period beginning on
the 31st calendar day prior to the Stated Maturity (as defined in
the Indenture) of the Convertible Notes and ending at the close of
business on the business day immediately preceding the Stated
Maturity of the Convertible Notes if Counterparty provides Dealer
with the notice described above for each such converted Convertible
Note no later than the Stated Maturity.
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Dealer’s
Telephone Number and Telex and/or Facsimile Number and Contact
Details for purpose of Giving Notice:
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To be provided
by Dealer.
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Settlement
Date:
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In respect of
an Exercise Date occurring on a Conversion Date, the settlement
date for Shares to be delivered under the Convertible Notes
converted on such Conversion Date pursuant to Section 11.05 of
the Indenture; provided that the Settlement Date will not be
prior to the latest of (i) the date one Settlement Cycle
following the final day of the relevant “Exchange Reference
Period”, as defined in the Indenture, (ii) the Exchange
Business Day immediately following the date on which Counterparty
gives notice to Dealer of such Settlement Date prior to 5:00 PM,
New York City time and (iii) the Exchange Business Day
immediately following the date Counterparty provides the Notice of
Delivery Obligation.
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Delivery
Obligation:
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In lieu of the
obligations set forth in Sections 8.1 and 9.1 of the Equity
Definitions, and subject to “Notice of Exercise” above,
in respect of an Exercise Date occurring on a Conversion Date,
Dealer will deliver to Counterparty on the related Settlement Date
the number of Shares equal to the aggregate number of Shares that
Counterparty is obligated to deliver to the holder(s) of the
Convertible Notes converted on such Conversion Date pursuant to
Section 11.05 of the
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Indenture (the
“ Convertible Obligation ”); provided
that such obligation shall be determined (i) excluding any
Shares or cash that Counterparty is obligated to deliver to
holder(s) of the Convertible Notes as a result of any adjustments
to the Conversion Rate pursuant to Section 11.09 of the
Indenture and (ii) without regard to the election, if any, by
Counterparty to adjust the Conversion Rate and the related
conversion obligation pursuant to Section 11.10 of the
Indenture.
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Notice of
Delivery Obligation:
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No later than
the Scheduled Trading Day immediately following the last day of the
“Exchange Reference Period”, as defined in the
Indenture, Counterparty shall give Dealer notice of the final
number of Shares comprising the Convertible Obligation (it being
understood, for the avoidance of doubt, that the requirement of
Counterparty to deliver such notice shall not limit
Counterparty’s obligations with respect to Notice of
Exercise, as set forth above, in any way).
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Other
Applicable Provisions:
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To the extent
Dealer is obligated to deliver Shares hereunder, the provisions of
Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the
Representation and Agreement contained in Section 9.11 of the
Equity Definitions shall be modified by excluding any
representations therein relating to restrictions, obligations,
limitations or requirements under applicable securities laws as a
result of the fact that Counterparty is the issuer of the Shares)
and 9.12 of the Equity Definitions will be applicable as if
“Physical Settlement” applied to the
Transaction.
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Method of
Adjustment:
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Notwithstanding
Section 11.2 of the Equity Definitions, upon the occurrence of
any event or condition set forth in Sections 11.06, 11.07 and
11.08 (other than Section 11.08(d)) of the Indenture, the
Calculation Agent shall make the corresponding adjustment, if any,
to any variable relevant to the exercise, settlement or payment of
the Transaction, to the extent an analogous adjustment is made
under the Indenture.
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Merger
Events:
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Notwithstanding
Section 12.1(b) of the Equity Definitions, a “Merger
Event” means the occurrence of any event or condition set
forth in Section 11.14 of the Indenture.
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Tender
Offer:
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Applicable.
Notwithstanding Section 12.1(d) of the Equity Definitions, a
“Tender Offer” means the occurrence of any event or
condition set forth in Section 11.08(d) of the
Indenture.
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Consequences of
Merger Events and Tender Offers:
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Notwithstanding
Sections 12.2 and 12.3 of the Equity Definitions, upon the
occurrence of a Merger Event, or Tender Offer, the Calculation
Agent shall make the corresponding adjustment in respect of any
adjustment under the Indenture to any one or more of the nature of
the Shares, the Number of Options, the Option Entitlement and any
other variable relevant to the exercise, settlement or payment for
the Transaction, to the extent an analogous adjustment is made
under the Indenture; provided that such adjustment shall be
made without regard to any adjustment to the Conversion Rate
pursuant to Section 11.09 of the Indenture and the election,
if any, by Counterparty to adjust the Conversion Rate and the
related conversion obligation pursuant to Section 11.10 of the
Indenture.
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Nationalization, Insolvency and
Delisting:
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Cancellation
and Payment (Calculation Agent Determination); provided that
in addition to the provisions of Section 12.6(a)(iii) of the
Equity Definitions, it shall also constitute a Delisting if the
Exchange is located in the United States and the Shares are not
immediately re-listed, re-traded or re-quoted on any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq Global
Select Market or the Nasdaq Global Market (or their respective
successors); if the Shares are immediately re-listed, re-traded or
re-quoted on any such exchange or quotation system, such exchange
or quotation system shall thereafter be deemed to be the
Exchange.
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Notice of
Merger Consideration:
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Upon the
occurrence of a Merger Event that causes the Shares to be converted
into the right to receive more than a single type of consideration
(determined based in part upon any form of stockholder election),
Counterparty shall reasonably promptly (but in any event prior to
the Merger Date) notify the Calculation Agent of the weighted
average of the types and amounts of consideration received by the
holders of Shares entitled to receive cash, securities or other
property or assets with respect to or in exchange for such Shares
in any Merger Event who affirmatively make such an
election.
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Adjustment to
Notes:
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Counterparty
shall promptly notify the Calculation Agent in writing of any
adjustment to the Conversion Rate under the Convertible Notes upon
the occurrence of any event or condition set forth in
Sections 11.06, 11.07 and 11.08 of the Indenture or any
adjustment, determination or calculation with respect to any other
economic term relevant to the conversion of the Convertible Notes,
and, to the extent such adjustment, determination or calculation
requires an exercise of discretion by Counterparty
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under the terms
of the Indenture, shall consult with the Calculation Agent in order
to achieve a commercially reasonable adjustment, determination or
calculation; provided that such adjustment, determination or
calculation shall remain at the sole discretion of Counterparty.
The Calculation Agent shall promptly notify Dealer and Counterparty
of the corresponding adjustment, if any, to any variable relevant
to the exercise, settlement or payment of the
Transaction.
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Additional
Disruption Events:
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(a) Change in
Law:
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Applicable;
provided that Section 12.9(a)(ii) of the Equity
Definitions is hereby amended by replacing the phrase “the
interpretation” in the third line thereof with the phrase
“or announcement or statement of the formal or informal
interpretation”.
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(b)Failure to
Deliver:
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Applicable
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(c)Insolvency
Filing:
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Applicable
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(d)Hedging
Disruption:
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Not
Applicable
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(e)Increased
Cost of Hedging:
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Not
Applicable
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Hedging
Party:
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For all
applicable Additional Disruption Events, Dealer
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Determining
Party:
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For all
applicable Additional Disruption Events, Dealer
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Applicable
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Agreements and
Acknowledgments
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Regarding
Hedging Activities:
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Applicable
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Additional
Acknowledgments:
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Applicable
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3.
Calculation Agent:
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Dealer.
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4. Account
Details :
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Dealer Payment
Instructions:
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To be provided
by Dealer.
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Counterparty
Payment Instructions:
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To be provided
by Counterparty.
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5.
Offices :
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The Office of
Dealer for the Transaction is:
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Lehman Brothers
OTC Derivatives Inc.
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6
The Office of
Counterparty for the Transaction is:
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To:
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Core
Laboratories LP
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6316 Windfern
Road
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Houston, Texas
77040
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6.
Notices : For purposes of this Confirmation:
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(a)
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Address for notices or
communications to Counterparty:
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To:
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Core
Laboratories, LP
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6316 Windfern
Road
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Houston, Texas
77040
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Attn:
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General
Counsel
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Telephone:
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(713)
328-2673
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Facsimile:
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(713)
328-2152
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(b)
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Address for notices or
communications to Dealer:
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To:
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Lehman Brothers
Inc., acting as Agent
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Lehman Brothers
OTC Derivatives Inc., acting as Principal
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745 Seventh
Avenue
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New York, New
York 10019
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Attn:
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Transaction
Management Group
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Telephone
No.:
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(212)
526-9986
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Facsimile
No.:
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(646)
885-9546
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with a
copy:
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To:
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Lehman Brothers
Inc., acting as Agent
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Lehman Brothers
OTC Derivatives Inc., acting as Principal
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745 Seventh
Avenue
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New York, New
York 10019
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Attn:
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Steve Roti
— US Equity Linked
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Telephone
No.:
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(212)
526-0055
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Facsimile
No.:
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(917)
552-0561
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7.
Representations, Warranties and Agreements :
(a) In
addition to the representations and warranties in the Agreement and
those contained elsewhere herein, Counterparty represents and
warrants to and for the benefit of, and agrees with, Dealer as
follows:
(i) On the Trade
Date, (A) none of Counterparty and its officers and directors
is aware of any material nonpublic information regarding
Counterparty or the Shares and (B) all reports and other documents
filed by Counterparty with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended (the
“ Exchange Act ”), when considered as a whole
(with the more recent such reports and documents deemed to amend
inconsistent statements contained in any earlier such reports and
documents), do not 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, in the light of the
circumstances in which they were made, not misleading.
(ii) (A) On
the Trade Date, the Shares or securities that are convertible into,
or exchangeable or exercisable for Shares, are not, and shall not
be, subject to a “restricted period,” as such term is
defined in Regulation M under the Exchange Act (“
Regulation M ”) and (B) Counterparty shall
not engage in any “distribution,” as such term is
defined in Regulation M, other than a distribution meeting the
requirements of the exceptions set forth in sections 101(b)(10)
and
7
102(b)(7) of
Regulation M, until the second Exchange Business Day
immediately following the Trade Date.
(iii) On the Trade
Date, neither Counterparty nor any “affiliate” or
“affiliated purchaser” (each as defined in
Rule 10b-18 under the Exchange Act (“
Rule 10b-18 ”)) shall directly or indirectly
(including, without limitation, by means of any cash-settled or
other derivative instrument) purchase, offer to purchase, place any
bid or limit order that would effect a purchase of, or commence any
tender offer relating to, any Shares (or an equivalent interest,
including a unit of beneficial interest in a trust or limited
partnership or a depository share) or any security convertible into
or exchangeable or exercisable for Shares, except through
Dealer.
(iv) Without
limiting the generality of Section 13.1 of the Equity
Definitions, Counterparty acknowledges that Dealer is not making
any representations or warranties with respect to the treatment of
the Transaction under FASB Statements 133, 149 or 150, EITF Issue
No. 00-19 (or any successor issue statements) or under
FASB’s Liabilities & Equity Project.
(v) Counterparty
is not entering into this Confirmation to create actual or apparent
trading activity in the Shares (or any security convertible into or
exchangeable for Shares) or to raise or depress or otherwise
manipulate the price of the Shares (or any security convertible
into or exchangeable for Shares) or otherwise in violation of the
Exchange Act.
(vi) Without
limiting the generality of Section 3(a)(iii) of the Agreement,
the Transaction will not violate Rule 13e-1 or Rule 13e-4
under the Exchange Act.
(vii) Prior
to the Effective Date, Counterparty shall deliver to Dealer
evidence of corporate authority authorizing the Transaction and
such other certificate or certificates as Dealer shall reasonably
request.
(viii) Counterparty
is not, and after giving effect to the transactions contemplated
hereby will not be, an “investment company” as such
term is defined in the Investment Company Act of 1940, as
amended.
(ix) On the
Trade Date (A) the assets of Counterparty at their fair
valuation exceed the liabilities of Counterparty, including
contingent liabilities, (B) the capital of Counterparty is
adequate to conduct the business of Counterparty and
(C) Counterparty has the ability to pay its debts and
obligations as such debts mature and does not intend to, or does
not believe that it will, incur debt beyond its ability to pay as
such debts mature.
(x) Counterparty
understands that no obligations of Dealer to it hereunder will be
entitled to the benefit of deposit insurance and that such
obligations will not be guaranteed by any affiliate of Dealer or
any governmental agency.
(b) Each of
Dealer and Counterparty agrees and represents that it is an
“eligible contract participant” as defined in
Section 1a(12) of the U.S. Commodity Exchange Act, as
amended.
(c) Each of
Dealer and Counterparty
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