exv4w4



 





	 	 	 
	 

	 	October 31, 2006
	 
	 	 	 	 	 
	To:

	 	Core Laboratories LP
	 

	 	6316 Windfern Road
	 

	 	Houston, Texas 77040
	 

	 	Attn: General Counsel
	 

	 	Telephone: (713) 328-2673
	 

	 	Facsimile: (713) 328-2152
	 
	 	 
	From:

	 	Lehman Brothers Inc., acting as Agent
	 

	 	Lehman Brothers OTC Derivatives Inc., acting as Principal
	 

	 	Attention: Transaction Management Group
	 

	 	Telephone: (212) 526-9986
	 

	 	Facsimile: (646) 885-9546
	 
	 	 
	Re:

	 	Convertible Senior Note Hedge Transaction
	 

	 	(Transaction Reference Number:                                        )





Ladies and Gentlemen:




     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:



 









 




General Terms:




	 	 	 	 	 
	 

	 	Trade Date:
	 	October 31, 2006
	 
	 	 	 	 
	 

	 	Effective Date:
	 	The initial closing date of the offering of the Convertible Notes.
	 
	 	 	 	 
	 

	 	Option Style:
	 	As described under “Procedures for Exercise” below.
	 
	 	 	 	 
	 

	 	Option Type:
	 	Call
	 
	 	 	 	 
	 

	 	Seller:
	 	Dealer
	 
	 	 	 	 
	 

	 	Buyer:
	 	Counterparty
	 
	 	 	 	 
	 

	 	Shares:
	 	The Common Stock of Core Laboratories N.V., par value EUR 0.04 per share (NYSE
Ticker Symbol: “CLB”).
	 
	 	 	 	 
	 

	 	Number of Options:
	 	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.
	 
	 	 	 	 
	 

	 	Number of Shares:
	 	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).
	 
	 	 	 	 
	 

	 	Conversion Rate:
	 	The “Exchange Rate,” as defined in the Indenture.
	 
	 	 	 	 
	 

	 	Premium:
	 	USD71,875,000.
	 
	 	 	 	 
	 

	 	Premium Payment Date:
	 	The Effective Date
	 
	 	 	 	 
	 

	 	Exchange:
	 	New York Stock Exchange
	 
	 	 	 	 
	 

	 	Related Exchange:
	 	All Exchanges





Procedures for Exercise:




	 	 	 	 	 
	 

	 	Potential Exercise Dates:
	 	Each Conversion Date.
	 
	 	 	 	 
	 

	 	Conversion Date:
	 	Each “Exchange Date,” as defined in the Indenture.

	 
	 	 	 	 
	 

	 	Required Exercise on
Conversion Dates:
	 	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.

	 
	 	 	 	 
	 

	 	Expiration Date:
	 	October 31, 2011
	 
	 	 	 	 
	 

	 	Multiple Exercise:
	 	Applicable, as provided above under “Required Exercise on Conversion
Dates”.
	 
	 	 	 	 
	 

	 	Minimum Number of Options:
	 	Zero
	 
	 	 	 	 
	 

	 	Maximum Number of Options:
	 	Number of Options
	 
	 	 	 	 
	 

	 	Integral Multiple:
	 	Not Applicable
	 
	 	 	 	 
	 

	 	Automatic Exercise:
	 	As provided above under “Required Exercise on Conversion Dates”.






2









 






	 	 	 	 	 
	 

	 	Notice of Exercise:
	 	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.
	 
	 	 	 	 
	 

	 	Dealer’s Telephone
Number
and Telex and/or
Facsimile Number
and Contact
Details for purpose of
Giving Notice:
	 	To be provided by Dealer.





Settlement Terms:




	 	 	 	 	 
	 

	 	Settlement Date:
	 	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.
	 
	 	 	 	 
	 

	 	Delivery Obligation:
	 	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






3









 






	 	 	 	 	 
	 

	 	 	 	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.
	 
	 	 	 	 
	 

	 	Notice of Delivery Obligation:
	 	 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).
	 
	 	 	 	 
	 

	 	Other Applicable Provisions:
	 	 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.





Share Adjustments:




	 	 	 	 	 
	 

	 	Method of Adjustment:
	 	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.





Extraordinary Events:




	 	 	 	 	 
	 

	 	Merger Events:
	 	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.
	 
	 	 	 	 
	 

	 	Tender Offer:
	 	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.






4









 






	 	 	 	 	 
	 
	 	 	 	 
	 

	 	Consequences of Merger
Events and
Tender Offers:
	 	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.
	 
	 	 	 	 
	 

	 	Nationalization, Insolvency
and Delisting:
	 	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.
	 
	 	 	 	 
	 

	 	Notice of Merger Consideration:
	 	 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.
	 
	 	 	 	 
	 

	 	Adjustment to Notes:
	 	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






5









 






	 	 	 	 	 
	 

	 	 	 	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.





Additional Disruption Events:




	 	 	 	 	 
	 

	 	(a) Change in Law:
	 	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”.
	 
	 	 	 	 
	 

	 	(b)Failure to Deliver:
	 	Applicable
	 
	 	 	 	 
	 

	 	(c)Insolvency Filing:
	 	Applicable
	 
	 	 	 	 
	 

	 	(d)Hedging Disruption:
	 	Not Applicable
	 
	 	 	 	 
	 

	 	(e)Increased Cost of Hedging:
	 	Not Applicable






	 	 	 	 	 
	 

	 	Hedging Party:
	 	For all applicable Additional Disruption Events, Dealer
	 
	 	 	 	 
	 

	 	Determining Party:
	 	For all applicable Additional Disruption Events, Dealer






	 	 	 
	Non-Reliance:

	 	Applicable
	 
	 	 
	Agreements and Acknowledgments
	 	 
	Regarding Hedging Activities:

	 	Applicable
	 
	 	 
	Additional Acknowledgments:

	 	Applicable






	 	 	 	 	 
	 

	 	 	 	 
	 

	 	3. Calculation Agent:
	 	Dealer.
	 
	 	 	 	 
	 

	 	4. Account Details:	 	 
	 
	 	 	 	 
	 

	 	Dealer
Payment Instructions:
	 	 
	 
	 	 	 	 
	 

	 	To
be provided by Dealer.
	 	 
	 
	 	 	 	 
	 

	 	Counterparty
Payment Instructions:
	 	 
	 
	 	 	 	 
	 

	 	To
be provided by Counterparty.
	 	 
	 
	 	 	 	 
	 

	 	5. Offices:	 	 
	 
	 	 	 	 
	 

	 	The
Office of Dealer for the Transaction is:
	 	 
	 
	 	 	 	 
	 

	 	Lehman
Brothers OTC Derivatives Inc.
	 	 
	 

	 	745
Seventh Avenue
	 	 
	 

	 	New
York, New York 10019
	 	 






6









 






     The Office of Counterparty for the Transaction is:



	 	 	 	 	 
	 

	 	To:
	 	Core Laboratories LP
	 

	 	 	 	6316 Windfern Road
	 

	 	 	 	Houston, Texas 77040






     6. Notices: For purposes of this Confirmation:




	 	(a)	 	Address for notices or communications to Counterparty:





	 	 	 	 	 
	 

	 	To:
	 	Core Laboratories, LP
	 

	 	 	 	6316 Windfern Road
	 

	 	 	 	Houston, Texas 77040
	 

	 	Attn:
	 	General Counsel
	 

	 	Telephone:
	 	(713) 328-2673
	 

	 	Facsimile:
	 	(713) 328-2152







	 	(b)	 	Address for notices or communications to Dealer:





	 	 	 	 	 
	 

	 	To:
	 	Lehman Brothers Inc., acting as Agent
	 

	 	 	 	Lehman Brothers OTC Derivatives Inc., acting as Principal
	 

	 	 	 	745 Seventh Avenue
	 

	 	 	 	New York, New York 10019
	 

	 	Attn:
	 	Transaction Management Group
	 

	 	Telephone No.:
	 	(212) 526-9986
	 

	 	Facsimile No.:
	 	(646) 885-9546
	 
	 	 	 	 
	 

	 	with a copy:	 	 
	 
	 	 	 	 
	 

	 	To:
	 	Lehman Brothers Inc., acting as Agent
	 

	 	 	 	Lehman Brothers OTC Derivatives Inc., acting as Principal
	 

	 	 	 	745 Seventh Avenue
	 

	 	 	 	New York, New York 10019
	 

	 	Attn:
	 	Steve Roti — US Equity Linked
	 

	 	Telephone No.:
	 	(212) 526-0055
	 

	 	Facsimile No.:
	 	(917) 552-0561






     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 acknowledges that the offer and sale of the Transaction to
it is intended to be exempt from registration under the Securities Act of 1933, as amended (the
“Securities Act”), by virtue of Section 4(2) thereof. Accordingly, Counterparty represents and
warrants to Dealer that (i) it has the financial ability to bear the economic risk of its
investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an
“accredited investor” as that term is defined in Regulation D as promulgated under the Securities
Act, (iii) it is entering into the Transaction for its own account and without a view to the
distribution or resale thereof, and (iv) the assignment, transfer or other disposition of the
Transaction has not been and will not be registered under the Securities Act and is restricted
under this Confirmation, the Securities Act and state securities laws.



     (d) Each of Dealer and Counterparty agrees and acknowledges that Dealer is a “financial
institution,” “swap participant” and “financial participant” within the meaning of Sections
101(22), 101(53C) and 101(22A) of Title 11 of the United States Code (the “Bankruptcy Code”). The
parties hereto further agree and acknowledge (A) that this Confirmation is (i) a “securities
contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which
each payment and delivery hereunder is a “settlement payment,” as such term is defined in Section
741(8) of the Bankruptcy Code, and



8









 





     (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the Bankruptcy Code,
with respect to which each payment and delivery hereunder is a “transfer,” as such term is defined
in Section 101(54) of the Bankruptcy Code, and (B) that Dealer is entitled to the protections
afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of
the Bankruptcy Code.



     8. Other Provisions:



     (a) Additional Termination Events. The occurrence of (i) an event of default with respect to
Counterparty under the terms of the Convertible Notes as set forth Section 6.01 in the Indenture,
(ii) an Amendment Event or (iii) a Repayment Event shall be an Additional Termination Event with
respect to which the Transaction is the sole Affected Transaction and Counterparty is the sole
Affected Party and Dealer shall be the party entitled to designate an Early Termination Date
pursuant to Section 6(b) of the Agreement; provided that in the case of a Repayment Event, the
Transaction shall be subject to termination only in respect of the number of Convertible Notes that
cease to be outstanding in connection with or as a result of such Repayment Event.




     “Amendment Event” means that Counterparty amends, modifies, supplements or waives any
term of the Indenture or the Convertible Notes governing the principal amount, coupon,
maturity, repurchase obligation of Counterparty, redemption right of Counterparty, any term
relating to conversion of the Convertible Notes (including changes to the conversion price,
conversion settlement dates or conversion conditions), or any term that would require
consent of the holders of not less than 100% of the principal amount of the Convertible
Notes to amend.




     “Repayment Event” means that (A) any Convertible Notes are repurchased (whether in
connection with or as a result of a fundamental change, howsoever defined, or for any other
reason) by Counterparty or any of its subsidiaries, (B) any Convertible Notes are delivered
to Counterparty in exchange for delivery of any property or assets of Counterparty or any
of its subsidiaries (howsoever described), (C) any principal of any of the Convertible
Notes is repaid prior to the final maturity date of the Convertible Notes (whether
following acceleration of the Convertible Notes or otherwise), or (D) any Convertible Notes
are exchanged by or for the benefit of the holders thereof for any other securities of
Counterparty or any of its affiliates (or any other property, or any combination thereof)
pursuant to any exchange offer or similar transaction; provided that, in the case of clause
(B) and clause (D), conversions of the Convertible Notes pursuant to the terms of the
Indenture as in effect on the date hereof shall not be Repayment Events.




     (b) Alternative Calculations and Payment on Early Termination and on Certain Extraordinary Events.
If, subject to Section 8(j) below, Dealer shall owe Counterparty any amount pursuant to Sections
12.6, 12.7 or 12.9 of the Equity Definitions (except in the event of an Insolvency or a
Nationalization, in each case, in which the consideration or proceeds to be paid to holders of
Shares consists solely of cash) or pursuant to Section 6(d)(ii) of the Agreement (except in the
event of an Event of Default in which Counterparty is the Defaulting Party or a Termination Event
in which Counterparty is the Affected Party, that resulted from an event or events within
Counterparty’s control) (a “Payment Obligation”), Counterparty shall have the right, in its sole
discretion, to require Dealer to satisfy any such Payment Obligation by the Share Termination
Alternative (as defined below) by giving irrevocable telephonic notice to Dealer, confirmed in
writing within one Scheduled Trading Day, between the hours of 9:00 A.M. and 4:00 P.M. New York
City time on the relevant Early Termination Date, as applicable (“Notice of Share Termination”).
Upon such Notice of Share Termination, the following provisions shall apply on the Scheduled
Trading Day immediately following the relevant Early Termination Date, as applicable:



	 	 	 
	Share Termination Alternative:

	 	Applicable and means that Dealer shall
deliver to Counterparty the Share
Termination Delivery Property on the date
on which the Payment Obligation would
otherwise be due pursuant to Section 12.7
or 12.9 of the Equity Definitions or
Section 6(d)(ii) of the Agreement, as
applicable (the “Share Termination
Payment Date”), in satisfaction of the
Payment Obligation.






9









 






	 	 	 
	Share Termination Delivery 

Property:

	 	A number of Share Termination Delivery
Units, as calculated by the Calculation
Agent, equal to the Payment Obligation
divided by the Share Termination Unit
Price. The Calculation Agent shall
adjust the Share Termination Delivery
Property by replacing any fractional
portion of a security therein with an
amount of cash equal to the value of such
fractional security based on the values
used to calculate the Share Termination
Unit Price.
	 
	 	 
	Share Termination Unit Price:

	 	The value of property contained in one
Share Termination Delivery Unit on the
date such Share Termination Delivery
Units are to be delivered as Share
Termination Delivery Property, as
determined by the Calculation Agent in
its discretion by commercially reasonable
means and notified by the Calculation
Agent to Dealer at the time of
notification of the Payment Obligation.
	 
	 	 
	Share Termination Delivery Unit:

	 	In the case of a Termination Event, Event
of Default or Delisting, one Share or, in
the case of an Insolvency or
Nationalization, a unit consisting of
the number or amount of each type of
property received by a holder of one
Share (without consideration of any
requirement to pay cash or other
consideration in lieu of fractional
amounts of any securities) in such
Insolvency or Nationalization. If such
Insolvency or Nationalization involves a
choice of consideration to be received by
holders, such holder shall be deemed to
have elected to receive the maximum
possible amount of cash.
	 
	 	 
	Failure to Deliver:

	 	Applicable
	 
	 	 
	Other applicable provisions:

	 	If Share Termination Alternative is
applicable, the provisions of Sections
9.8, 9.9, 9.10, 9.11 and 9.12 of the
Equity Definitions will be applicable as
if “Physical Settlement” were applicable,
except that all references to “Shares”
shall be read as references to “Share
Termination Delivery Units”; provided
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 Buyer is the issuer of any
Share Termination Delivery Units (or any
part thereof).






     (c) Disposition of Hedge Shares. Counterparty hereby agrees that if in the good faith
reasonable judgment of Dealer based on the advice of outside counsel, the Shares (the “Hedge
Shares”) acquired by Dealer for the purpose of hedging its obligations pursuant to the Transaction
cannot be sold in the public market by Dealer without registration under the Securities Act,
Counterparty shall, at its election: (i) in order to allow Dealer to sell the Hedge Shares in a
registered offering, make available to Dealer an effective registration statement under the
Securities Act to cover the resale of such Hedge Shares and (A) enter into an agreement, in form
and substance satisfactory to Dealer, substantially in the form of an underwriting agreement for a
registered offering, (B) provide accountant’s “comfort” letters in customary form for registered
offerings of equity securities, (C) provide disclosure opinions of nationally recognized outside
counsel to Counterparty reasonably acceptable to Dealer, (D) provide other customary opinions,
certificates and closing documents customary in form for registered offerings of equity securities
and (E) afford Dealer a reasonable opportunity to conduct a “due diligence” investigation with
respect to Counterparty customary in scope for underwritten offerings of equity securities;
provided, however, that if Dealer, in its sole reasonable discretion, is not satisfied with access
to due diligence materials, the results of its due diligence investigation, or the procedures and
documentation for the registered offering referred to above, then clause (ii) or clause (iii) of
this Section 8(c) shall apply at the election of Counterparty; (ii) in order to allow Dealer to
sell the Hedge Shares in a private placement enter into a private placement agreement substantially
similar to private placement purchase agreements customary for private placements of equity
securities, in form and substance satisfactory to Dealer, including customary representations,



10









 







covenants, blue sky and other governmental filings and/or registrations, indemnities to
Dealer, due diligence rights (for Dealer or any designated buyer of the Hedge Shares from Dealer),
opinions and certificates and such other documentation as is customary for private placements
agreements, all reasonably acceptable to Dealer (in which case, the Calculation Agent shall make
any adjustments to the terms of the Transaction that are necessary, in its reasonable judgment, to
compensate Dealer for any discount from the public market price of the Shares incurred on the sale
of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares from Dealer at the VWAP
Price on such Exchange Business Days and in the amounts as specified by Dealer in good faith.
“VWAP Price” means, on any Exchange Business Day, the per Share volume-weighted average price on
the New York Stock Exchange as displayed under the heading “Bloomberg VWAP” on Bloomberg page “CLB
<Equity> AQR.N” (or any successor thereto) in respect of the period from 9:30 AM to 4:00 PM
(New York City time) on such Exchange Business Day (or if such volume-weighted average price is
unavailable, the market value of one Share on such Exchange Business Day, as determined by the
Calculation Agent using a volume-weighted method).



     (d) Repurchase Notices. Counterparty shall, on any day on which Counterparty effects any
repurchase of Shares, promptly give Dealer a written notice of such repurchase (a “Repurchase
Notice”) on such day if, following such repurchase, the Notice Percentage as determined on such day
is (i) greater than 9.5% and (ii) greater by 0.5% than the Notice Percentage included in the
immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice,
greater than the Notice Percentage as of the date hereof). The “Notice Percentage” as of any day
is the fraction, expressed as a percentage, the numerator of which is the Number of Shares and the
denominator of which is the number of Shares outstanding on such day. In the event that
Counterparty fails to provide Dealer with a Repurchase Notice on the day and in the manner
specified in this Section 8(d), then Counterparty agrees to indemnify and hold harmless Dealer, its
affiliates and their respective directors, officers, employees, agents and controlling persons
(Dealer and each such person being an “Indemnified Party”) from and against any and all losses,
claims, damages and liabilities (or actions in respect thereof), joint or several, to which such
Indemnified Party may become subject under applicable securities laws, including without
limitation, Section 16 of the Exchange Act, relating to or arising out of such failure. If for any
reason the foregoing indemnification is unavailable to any Indemnified Party or insufficient to
hold harmless any Indemnified Party, then Counterparty shall contribute, to the maximum extent
permitted by law, to the amount paid or payable by the Indemnified Party as a result of such loss,
claim, damage or liability. In addition, Counterparty will reimburse any Indemnified Party for all
expenses (including reasonable counsel fees and expenses) as they are incurred (after notice to
Counterparty) in connection with the investigation of, preparation for or defense or settlement of
any pending or threatened claim or any action, suit or proceeding arising therefrom, whether or not
such Indemnified Party is a party thereto and whether or not such claim, action, suit or proceeding
is initiated or brought by or on behalf of Counterparty. This indemnity shall survive the
completion of the Transaction contemplated by this Confirmation and any assignment and delegation
of the Transaction made pursuant to this Confirmation or the Agreement shall inure to the benefit
of any permitted assignee of Dealer.



     (e) Transfer and Assignment. Dealer may transfer or assign its rights and obligations
hereunder and under the Agreement, in whole or in part, without the consent of Counterparty to any
Affiliate of Dealer or to any third party with a rating for its long term, unsecured and
unsubordinated indebtedness of A- or better by Standard & Poor’s Ratings Service or its successor
(“S&P”), or A3 or better by Moody’s Investors Service (“Moody’s”) or, if either S&P or Moody’s
ceases to rate such debt, at least an equivalent rating or better by a substitute rating agency
mutually agreed by Counterparty and Dealer. If at any time at which the Equity Percentage exceeds
9.00%, Dealer, in its discretion, is unable to effect such a transfer or assignment after its
commercially reasonable efforts on pricing terms reasonably acceptable to Dealer such that the
Equity Percentage is reduced to 9.00% or less, Dealer may designate any Scheduled Trading Day as an
Early Termination Date with respect to a portion (the “Terminated Portion”) of the Transaction,
such that the Equity Percentage following such partial termination will be equal to or less than
9.00%. In the event that Dealer so designates an Early Termination Date with respect to a portion
of the Transaction, a payment or delivery shall be made pursuant to Section 6 of the Agreement and
Section 8(b) of this Confirmation as if (i) an Early Termination Date had been designated in
respect of a Transaction having terms identical to the Terminated Portion of the Transaction, (ii)
Counterparty shall be the sole Affected Party with respect to such partial termination and (iii)
such portion of the Transaction shall be the only Terminated Transaction. Notwithstanding the
preceding, Dealer acknowledges that its Equity



11









 







Percentage on and immediately after the Effective Date may be in excess of 9.00% and Dealer
hereby agrees that it does not intend to designate an Early Termination Date due to its initial
Equity Percentage arising on and immediately after the Effective Date as a result of entering into
this Transaction. The “Equity Percentage” as of any day is the fraction, expressed as a
percentage, (A) the numerator of which is the sum of the number of Shares that Dealer or any of its
affiliates beneficially own (within the meaning of Section 13 of the Exchange Act) on such day,
other than any Shares so owned as a hedge of the Transaction, and the Number of Shares and (B) the
denominator of which is the number of Shares outstanding on such day.



     (f) Staggered Settlement. Dealer may, by notice to Counterparty prior to any Settlement Date
(a “Nominal Settlement Date”), elect to deliver the Shares on two or more dates (each, a “Staggered
Settlement Date”) or at two or more times on the Nominal Settlement Date as follows:




     (i) in such notice, Dealer will specify to Counterparty the related Staggered
Settlement Dates (each of which will be on or prior to such Nominal Settlement Date, but
not prior to the beginning of the related “Exchange Reference Period”) or delivery times
and how it will allocate the Shares it is required to deliver under “Delivery Obligation”
(above) among the Staggered Settlement Dates or delivery times; and




     (ii) the aggregate number of Shares that Dealer will deliver to Counterparty hereunder
on all such Staggered Settlement Dates and delivery times will equal the number of Shares
that Dealer would otherwise be required to deliver on such Nominal Settlement Date.



     (g) Extension of Settlement. Dealer may extend any Settlement Date, in whole or in part, to
the extent that a Loss of Stock Borrow (with a Maximum Stock Loan Rate of 200 basis points) exists
as of the originally scheduled Settlement Date.



     (h) Disclosure. Effective from the date of commencement of discussions concerning the
Transaction, Counterparty and each of its employees, representatives, or other agents may, at
Counterparty’s sole discretion, disclose to any and all persons, without limitation of any kind,
the tax treatment and tax structure of the Transaction and all materials of any kind (including
opinions or other tax analyses) that are provided to Counterparty relating to such tax treatment
and tax structure.



     (i) Designation by Dealer. Notwithstanding any other provision in this Confirmation to the
contrary requiring or allowing Dealer to purchase, sell, receive or deliver any Shares or other
securities to or from Counterparty, Dealer may designate any of its affiliates to purchase, sell,
receive or deliver such shares or other securities and otherwise to perform Dealer obligations in
respect of the Transaction on behalf of Dealer and any such designee may assume such obligations.
Dealer shall be discharged of its obligations to Counterparty to the extent of any such
performance.



     (j) Netting and Set-off. (i) If on any date cash would otherwise be payable or Shares or
other property would otherwise be deliverable hereunder or pursuant to the Agreement or pursuant to
any other agreement between the parties by Counterparty to Dealer and cash would otherwise be
payable or Shares or other property would otherwise be deliverable hereunder or pursuant to the
Agreement or pursuant to any other agreement between the parties by Dealer to Counterparty and the
type of property required to be paid or delivered by each such party on such date is the same,
then, on such date, each such party’s obligation to make such payment or delivery will be
automatically satisfied and discharged and, if the aggregate amount that would otherwise have been
payable or deliverable by one such party exceeds the aggregate amount that would otherwise have
been payable or deliverable by the other such party, replaced by an obligation of the party by whom
the larger aggregate amount would have been payable or deliverable to pay or deliver to the other
party the excess of the larger aggregate amount over the smaller aggregate amount.




     (ii) In addition to and without limiting any rights of set-off that a party hereto may
have as a matter of law, pursuant to contract or otherwise, upon the occurrence of an Early
Termination Date, Dealer shall have the right to terminate, liquidate and otherwise close
out the Transaction and to set off any obligation or right that Dealer may have to or
against Counterparty hereunder or under the Agreement against any right or obligation
Dealer may have against or to Counterparty, including without limitation any right to
receive a payment or delivery pursuant to any provision of the Agreement or hereunder. In
the case of a set-off of any obligation to release,



12









 







deliver or pay assets against any right to receive assets of the same type, such
obligation and right shall be set off in kind. In the case of a set-off of any obligation
to release, deliver or pay assets against any right to receive assets of any other type,
the value of each of such obligation and such right shall be determined by the Calculation
Agent and the result of such set-off shall be that the net obligor shall pay or deliver to
the other party an amount of cash or assets, at the net obligor’s option, with a value
(determined, in the case of a delivery of assets, by the Calculation Agent) equal to that
of the net obligation. In determining the value of any obligation to release or deliver
Shares or any right to receive Shares, the value at any time of such obligation or right
shall be determined by reference to the market value of the Shares at such time, as
determined by the Calculation Agent. If an obligation or right is unascertained at the
time of any such set-off, the Calculation Agent may in good faith estimate the amount or
value of such obligation or right, in which case set-off will be effected in respect of
that estimate, and the relevant party shall account to the other party at the time such
obligation or right is ascertained.




     (iii) Notwithstanding any provision of the Agreement (including without limitation
Section 6(f) thereof) and this Confirmation (including without limitation this Section
8(j)) or any other agreement between the parties to the contrary, (A) Counterparty shall
not net or set off its obligations under the Transaction, if any, against its rights
against Dealer under any other transaction or instrument; (B) Dealer may net and set off
any rights of Dealer against Counterparty arising under the Transaction only against
obligations of Dealer to Counterparty arising under any transaction or instrument if such
transaction or instrument does not convey rights to Dealer senior to the claims of common
stockholders in the event of Counterparty’s bankruptcy; and (C) in the event of
Counterparty’s bankruptcy, Dealer waives any and all rights it may have to set-off in
respect of the Transaction, whether arising under agreement, applicable law or otherwise.
Dealer will give notice to Counterparty of any netting or set off effected under this
provision.



     (k) Equity Rights. Dealer acknowledges and agrees that this Confirmation is not intended to
convey to it rights with respect to the Transaction that are senior to the claims of common
stockholders in the event of Counterparty’s bankruptcy. For the avoidance of doubt, the parties
agree that the preceding sentence shall not apply at any time other than during Counterparty’s
bankruptcy to any claim arising as a result of a breach by Counterparty of any of its obligations
under this Confirmation or the Agreement.



     (l) Early Unwind. In the event the sale by Counterparty of the Convertible Notes is not
consummated with the initial purchasers pursuant to the Purchase Agreement for any reason by the
close of business in New York on November 3, 2006 (the “Early Unwind Date”), the Transaction shall
automatically terminate (the “Early Unwind”), on the Early Unwind Date and the Transaction and all
of the respective rights and obligations of Dealer and Counterparty thereunder shall be cancelled
and terminated, and if the sale by Counterparty of the Convertible Notes is not consummated with
the initial purchasers to the Purchase Agreement by the close of business in New York on the Early
Unwind Date other than as a result of a breach or default by Dealer (or any Affiliate thereof) of
its (or such Affiliate’s) obligations under the Purchase Agreement, Counterparty shall pay to
Dealer an amount in cash equal to the aggregate amount of costs and expenses relating to the
unwinding of Dealer’s hedging activities in respect of the Transaction (including market losses
incurred in reselling any Shares purchased by Dealer or its affiliates in connection with such
hedging activities). Following such termination, cancellation and payment, each party shall be
released and discharged by the other party from and agrees not to make any claim against the other
party with respect to any obligations or liabilities of either party arising out of and to be
performed in connection with the Transaction either prior to or after the Early Unwind Date.
Dealer and Counterparty represent and acknowledge to the other that upon an Early Unwind and
following the payment referred to above, all obligations with respect to the Transaction shall be
deemed fully and finally discharged.



     (m) Waiver of Trial by Jury. EACH OF COUNTERPARTY AND DEALER HEREBY IRREVOCABLY WAIVES (ON
ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS STOCKHOLDERS) ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THE TRANSACTION OR THE ACTIONS OF DEALER OR ITS
AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.



13









 





     (n) Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL
MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY CLAIM OF
INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.



     (o) Role of Agent. Lehman Brothers Inc., in its capacity as Agent will be responsible for
(A) effecting this Transaction, (B) issuing all required confirmations and statements to Dealer and
Counterparty, (C) maintaining books and records relating to this Transaction in accordance with its
standard practices and procedures and in accordance with applicable law and (D) unless otherwise
requested by Counterparty, receiving, delivering, and safeguarding Counterparty’s funds and any
securities in connection with this Transaction, in accordance with its standard practices and
procedures and in accordance with applicable law.




	 	(i)	 	Agent is acting in connection with this Transaction solely in its capacity as
Agent for Dealer and Counterparty pursuant to instructions from Dealer and
Counterparty. Agent shall have no responsibility or personal liability to Dealer or
Counterparty arising from any failure by Dealer or Counterparty to pay or perform any
obligations hereunder, or to monitor or enforce compliance by Dealer or Counterparty
with any obligation hereunder, including, without limitation, any obligations to
maintain collateral. Each of Dealer and Counterparty agrees to proceed solely against
the other to collect or recover any securities or monies owing to it in connection
with or as a result of this Transaction. Agent shall otherwise have no liability in
respect of this Transaction, except for its gross negligence or willful misconduct in
performing its duties as Agent.
	 
	 	(ii)	 	Any and all notices, demands, or communications of any kind relating to this
Transaction between Dealer and Counterparty shall be transmitted exclusively through
Agent at the following address:
	 
	 	 	 	Lehman Brothers Inc., acting as Agent
	 
	 	 	 	Lehman Brothers OTC Derivatives Inc., acting as Principal
	 
	 	745	 	Seventh Avenue
	 
	 	 	 	New York, New York 10019
	 
	 	 	 	Attn: Transaction Management Group
	 
	 	 	 	Telephone No.: (212) 526-9986
	 
	 	 	 	Facsimile No.: (646) 885-9546
	 
	 	(iii)	 	The date and time of the Transaction evidenced hereby will be furnished by
the Agent to Dealer and Counterparty upon written request.
	 
	 	(iv)	 	The Agent will furnish to Counterparty upon written request a statement as to
the source and amount of any remuneration received or to be received by the Agent in
connection with the Transaction evidenced hereby.
	 
	 	(v)	 	Dealer and Counterparty each represents and agrees (A) that this Transaction
is not unsuitable for it in the light of such party’s financial situation, investment
objectives and needs and (B) that it is entering into this Transaction in reliance
upon such tax, accounting, regulatory, legal and financial advice as it deems
necessary and not upon any view expressed by the other or the Agent.





     (t) Regulatory Provisions. (i) Counterparty represents and warrants that it has received and
read and understands the Notice of Regulatory Treatment and the OTC Option Risk Disclosure
Statement. (i) The Agent will furnish Counterparty upon written request a statement as to the
source and amount of any remuneration received or to be received by the Agent in connection with
the Transaction evidenced hereby.



14









 





     Counterparty hereby agrees (a) to check this Confirmation carefully and immediately upon
receipt so that errors or discrepancies can be promptly identified and rectified and (b) to confirm
that the foregoing (in the exact form provided by Dealer) correctly sets forth the terms of the
agreement between Dealer and Counterparty with respect to the Transaction, by manually signing this
Confirmation or this page hereof as evidence of agreement to such terms and providing the other
information requested herein and immediately returning an executed copy via facsimile to (646)
885-9546.



	 	 	 	 	 
	 	Yours faithfully,





Lehman Brothers OTC Derivatives Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 


Agreed and Accepted By:




CORE LABORATORIES LP

By: Core Laboratories, LLC, its general partner




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name: Richard L. Bergmark
	 	 
	 

	 	Title: Chief Financial Officer	 	 







15