-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JCKX9n+qAIwoLfbk7yeKAxkBZWBHN32eafjQsPEp/K/YFKReafsSCsrh3rg2OilF H04QrOmBjfkdzfgTyQsJxQ== 0000950129-97-004950.txt : 19971121 0000950129-97-004950.hdr.sgml : 19971121 ACCESSION NUMBER: 0000950129-97-004950 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19971120 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORE LABORATORIES N V CENTRAL INDEX KEY: 0001000229 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TESTING LABORATORIES [8734] STATE OF INCORPORATION: P7 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-39265 FILM NUMBER: 97724936 BUSINESS ADDRESS: STREET 1: 1017 BZ AMSTERDAM CITY: THE NETHERLANDS STATE: P7 BUSINESS PHONE: 3120420319 MAIL ADDRESS: STREET 1: HERENGRACHT 424 STREET 2: 1017 BZ AMSTERDAM CITY: THE NETHERLANDS STATE: P7 S-3/A 1 CORE LABORATORIES N.V. - AMEND. #1 TO 333-39265 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1997 REGISTRATION NO. 333-39265 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- CORE LABORATORIES N.V. (Exact name of registrant as specified in its charter) THE NETHERLANDS NOT APPLICABLE (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) HERENGRACHT 424 JOHN D. DENSON 1017 BZ AMSTERDAM 5295 HOLLISTER ROAD THE NETHERLANDS HOUSTON, TEXAS 77040 (31-20) 624-3699 (713) 329-7404 (Address, including zip code, and telephone (Name, address, including zip code, and number, including area code, of registrant's telephone number, including area code, of agent principal executive offices) for service)
Copies to: JOHN D. DENSON T. MARK KELLY CHRISTOPHER S. COLLINS CORE LABORATORIES INC. VINSON & ELKINS L.L.P. ANDREWS & KURTH L.L.P. 5295 HOLLISTER ROAD 2300 FIRST CITY TOWER 4200 TEXAS COMMERCE TOWER HOUSTON, TEXAS 77040 1001 FANNIN STREET 600 TRAVIS (713) 329-7404 HOUSTON, TEXAS 77002-6760 HOUSTON, TEXAS 77002 (713) 939-8295 (FAX) (713) 758-2222 (713) 220-4200 (713) 758-2346 (FAX) (713) 220-4285 (FAX)
--------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE
======================================================================================================================= PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT PRICE REGISTRATION FEE - ----------------------------------------------------------------------------------------------------------------------- Common shares................ (1) (1) $180,020,000 $54,552 =======================================================================================================================
(1) Omitted pursuant to Rule 457(o). --------------------- THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. ================================================================================ 2 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION NOVEMBER 20, 1997 3,754,278 SHARES [CORE LABORATORIES LOGO] CORE LABORATORIES N.V. COMMON SHARES ------------------ Of the 3,754,278 Common Shares, par value NLG 0.03 per share (the "Common Shares"), offered hereby (the "Offering"), 1,400,000 shares are being offered by Core Laboratories N.V., a Netherlands corporation ("Core Laboratories" or the "Company"), and 2,354,278 shares are being sold by certain shareholders of the Company (the "Selling Shareholders"). The Company will not receive any of the proceeds from the sale of shares by the Selling Shareholders. See "Principal and Selling Shareholders" and "Underwriting." The Common Shares are quoted on the Nasdaq Stock Market under the symbol "CRLBF." On November 19, 1997, the last reported sale price of the Common Shares on the Nasdaq Stock Market was $37.125 per share. See "Price Range of Common Shares." ------------------ SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN THE COMMON SHARES. ------------------ THESE SECURITIES 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 PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
======================================================================================================================= PRICE UNDERWRITING TO DISCOUNTS AND PROCEEDS TO PROCEEDS TO SELLING PUBLIC COMMISSIONS COMPANY(1) SHAREHOLDERS(2) - ----------------------------------------------------------------------------------------------------------------------- Per Share.............................. $ $ $ $ - ----------------------------------------------------------------------------------------------------------------------- Total(3)............................... $ $ $ $ =======================================================================================================================
(1) Before deducting expenses payable by the Company estimated at $960,000. (2) Before deducting expenses payable by one of the Selling Shareholders estimated at $5,000. (3) The Company and one of the Selling Shareholders have granted to the Underwriters an option exercisable within 30 days after the date of this Prospectus to purchase up to an additional 225,257 Common Shares from the Company and 337,885 Common Shares from such Selling Shareholder on the same terms as set forth above, at the Price to Public, less the Underwriting Discounts and Commissions, solely for the purpose of covering over-allotments, if any. If such option were exercised in full, the total Price to Public, total Underwriting Discounts and Commissions, total Proceeds to Company and total Proceeds to Selling Shareholders would be $ , $ , $ and $ , respectively. See "Underwriting." ------------------ The Common Shares are offered by the several Underwriters, subject to prior sale, when, as and if delivered to and accepted by them, subject to the right of the Underwriters to reject any order in whole or in part. It is expected that delivery of the Common Shares will be made at the offices of BT Alex. Brown Incorporated, Baltimore, Maryland, on or about , 1997. BT ALEX. BROWN CREDIT SUISSE FIRST BOSTON BEAR, STEARNS & CO. INC. MORGAN KEEGAN & COMPANY, INC. THE DATE OF THIS PROSPECTUS IS , 1997. 3 [ARTWORK] DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS This Prospectus includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). All statements other than statements of historical facts included or incorporated by reference in this Prospectus, including, without limitation, statements regarding the Company's financial position, business strategy, budgets, and plans and objectives of management for future operations are forward-looking statements. In addition, the words "anticipate," "estimate," "expect," and similar expressions are intended to identify forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company's expectations ("Cautionary Statements") are disclosed under "Risk Factors" and elsewhere in this Prospectus and the documents incorporated by reference herein. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the Cautionary Statements. CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON SHARES. SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH THIS OFFERING AND MAY BID FOR AND PURCHASE THE COMMON SHARES IN THE OPEN MARKET. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING." IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON SHARES ON THE NASDAQ STOCK MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M. SEE "UNDERWRITING." 2 4 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information included elsewhere in this Prospectus or incorporated by reference herein and by the consolidated financial statements, including the notes thereto, incorporated by reference in this Prospectus. Unless otherwise indicated, (i) the information in this Prospectus assumes the Underwriters' over-allotment option with respect to the sale of the Common Shares will not be exercised and (ii) no share or per share information in this Prospectus has been adjusted to give effect to the two-for-one split of the Common Shares which is payable on December 19, 1997 to shareholders of record as of the close of business on December 1, 1997. References to "Core Laboratories" or the "Company" in this Prospectus include Core Laboratories N.V. and, unless the context otherwise requires, its subsidiaries. THE COMPANY GENERAL The Company is one of the leading providers of petroleum reservoir description data and production management services for maximizing hydrocarbon recovery from new and existing fields. The Company's customers include major, independent, national and international oil and gas producers. The Company is the world's largest provider of petroleum reservoir rock and fluids analyses and multidisciplinary reservoir description studies. The Company is also a leading provider of field services evaluating the efficiencies of well completions and the effectiveness of enhanced oil recovery projects. In addition, the Company manufactures and sells petroleum reservoir rock and fluid analysis instrumentation and other integrated systems. The Company also provides analytical and field services to characterize properties of crude oil and petroleum products to the oil industry. The business of the Company was established in 1936 and was operated as a division of Western Atlas International, Inc. ("WAII") from 1987 to 1994. In 1994, the Company's initial shareholders, including 14 members of management, purchased the business and substantially all of the assets of the Company from WAII because of their belief in the potential opportunities for expansion of the Core Laboratories business. The Company is incorporated under the laws of The Netherlands, and its principal executive offices are located at Herengracht 424, 1017 BZ Amsterdam, The Netherlands, and its telephone number is (31-20) 624-3699. BUSINESS STRATEGY The Company's business strategy is to continue the expansion of its operations through (i) continued development of proprietary hydrocarbon production enhancement technologies, services and products through client-driven research and development, (ii) expanded technology services and product lines offered throughout the Company's global infrastructure, and (iii) acquisition of complementary businesses that add key technologies or market presence and enhance existing products and services. Client-Driven Research and Development The Company's research and development strategy is designed to maintain and enhance its market leadership position in its principal businesses by emphasizing the development of technology, services and products to meet the needs of its customers who are continually seeking to lower their costs of finding, developing, producing and refining hydrocarbons. The Company's strategy reflects the trend towards increased utilization of advanced technologies to enhance the efficiency of development drilling, reduce the costs associated with production of known reserves, maximize the efficiency of secondary and tertiary recovery techniques and reduce finding and development costs for new reserves. While the aggregate number of wells being drilled per year has remained relatively constant in recent years, oil and gas producers have increased expenditures on high-technology 3 5 services, including advanced reservoir rock and fluids analyses, that assist in the development of more complete and comprehensive analyses of reservoir characteristics and hydrocarbon fluids. The Company will continue to concentrate its efforts on technologies that enhance development and production efficiencies, as opposed to those related to the more volatile exploration sector of the oil and gas industry. International Expansion of Services and Products Another component of the Company's business strategy is to broaden the spectrum of services and products offered to its clients internationally. This goal is expected to be accomplished through the integration of the services and products acquired by the Company through the transactions described below into many of the Company's over 70 offices located in more than 50 different countries. Management believes this integration will expand the related markets served by ProTechnics, Scott Pickford, Saybolt (each as defined herein) and other businesses acquired in the future. Acquisitions The Company continually reviews potential acquisition possibilities in existing or related business areas to add key technologies, enhance market presence or complement existing businesses. The recent acquisitions of ProTechnics, Scott Pickford and Saybolt and the anticipated acquisition of Stim-Lab reflect the Company's desire to broaden the services offered to its clients. ProTechnics Merger. On December 31, 1996, the Company issued approximately 1.1 million Common Shares in exchange for substantially all of the outstanding capital stock of ProTechnics Company. ProTechnics Company and its subsidiaries ("ProTechnics"), headquartered in Houston, Texas, is one of the leading providers of services that measure the effectiveness of well stimulations and completions utilizing its proprietary ZeroWash(R) and SpectraScan(R) technologies. ProTechnics, supported by measured petrophysical and fluid data sets generated by Core Laboratories, is also the leader in determining the efficiencies of enhanced recovery projects through field tracer surveys. Scott Pickford Acquisition. On March 1, 1997, the Company acquired control of a majority of the outstanding shares of Scott Pickford plc and its subsidiaries ("Scott Pickford"). The Company has since acquired the remaining shares; the total consideration paid for Scott Pickford was approximately $15.1 million. Scott Pickford provides petroleum reservoir management, geoscience, geophysical and engineering services to its customers by utilizing petrophysical and phase behavior data sets measured by Core Laboratories and ProTechnics. Scott Pickford specializes in large field studies and equity determinations primarily in the North Sea. Saybolt Acquisition. On May 12, 1997, the Company consummated the acquisition of all the outstanding shares of Saybolt International B.V., a privately held Netherlands company, for $67 million in cash and the assumption of $5 million of net debt. Saybolt International B.V. and its subsidiaries ("Saybolt") operates in over 50 countries and provides analytical and field services to characterize properties of crude oil and petroleum products for the oil industry. These services complement phase behavior data sets measured on reservoir fluids by Core Laboratories. Saybolt has an existing presence in the Commonwealth of Independent States which provides the operating experience and base from which Core Laboratories can offer reservoir description and production management services. Impact of Business Strategy The Company believes that the implementation of these strategies has already contributed to the significant increase in income before interest expense, income tax and extraordinary item to $17.7 million for the nine months ended September 30, 1997, from $9.4 million for the nine months ended September 30, 1996, and $7.4 million for the nine months ended September 30, 1995. 4 6 RECENT DEVELOPMENTS Pending Stim-Lab Merger On October 22, 1997, the Company signed a letter of intent to acquire the outstanding shares of Stim-Lab, Inc., a privately-held Duncan, Oklahoma oilfield services company ("Stim-Lab") in exchange for approximately 230,000 Common Shares. Stim-Lab, with additional offices in Houston, Texas and Edinburgh, Scotland, is a leading provider of analytical and field services used to maximize the efficiencies and effectiveness of petroleum reservoir stimulations. Currently, Stim-Lab heads four industry consortia which evaluate fracture proppants, gels, acid stimulations and horizontal well completions. Both Core Laboratories and ProTechnics utilize results from these consortia to better design well completion and stimulation programs. Two-for-One Stock Split On October 22, 1997, the Company announced a two-for-one split of the outstanding Common Shares, payable on December 19, 1997 to shareholders of record as of the close of business on December 1, 1997. THE OFFERING Common Shares offered: By the Company.................... 1,400,000 By the Selling Shareholders....... 2,354,278 Common Shares to be outstanding after the Offering(1)............... 12,022,612 Use of proceeds..................... Repayment of a portion of the debt outstanding under the Credit Facility, including debt associated with the acquisitions of Saybolt and Scott Pickford. See "Use of Proceeds." Nasdaq Stock Market symbol.......... CRLBF - --------------- (1) Based upon shares outstanding as of September 30, 1997, and does not include 650,000 Common Shares reserved, as of September 30, 1997, for the exercise of outstanding options granted pursuant to the Company's stock option plans. 5 7 SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA (in thousands, except per share data) The following table presents certain consolidated financial data for the Company for the periods indicated. The following information should be read together with the consolidated financial statements of the Company, including the notes thereto, incorporated by reference in this Prospectus. Results for any interim period are not necessarily indicative of results for a full year. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."
NINE MONTHS ENDED YEAR ENDED SEPTEMBER 30, DECEMBER 31, ------------------------- ------------------ 1997(1) 1996(2) 1996(2) 1995(2) ----------- ----------- -------- ------- (UNAUDITED) STATEMENT OF OPERATIONS DATA: SERVICES AND SALES.............................. $142,887 $76,883 $105,368 $87,593 OPERATING EXPENSES: Costs of services and sales................... 113,865 61,787 84,643 71,786 General and administrative expenses........... 4,359 2,717 3,559 2,719 Depreciation and amortization................. 7,170 3,340 4,600 3,262 Transaction costs associated with merger(3)... -- -- 355 -- Other income, net............................. (169) (406) (603) (130) -------- ------- -------- ------- Total operating expenses.............. 125,225 67,438 92,554 77,637 Income before interest expense, income tax and extraordinary item......................... 17,662 9,445 12,814 9,956 INTEREST EXPENSE................................ 4,132 1,104 1,418 3,000 -------- ------- -------- ------- Income before income tax and extraordinary item....................................... 13,530 8,341 11,396 6,956 INCOME TAX EXPENSE.............................. 4,059 2,720 3,719 2,174 -------- ------- -------- ------- Income before extraordinary item.............. 9,471 5,621 7,677 4,782 EXTRAORDINARY ITEM(4)........................... -- -- -- (911) -------- ------- -------- ------- NET INCOME...................................... 9,471 5,621 7,677 3,871 LESS -- Net income applicable to preferred loan stock......................................... -- -- -- (334) -------- ------- -------- ------- NET INCOME APPLICABLE TO COMMON SHARES.......... $ 9,471 $ 5,621 $ 7,677 $ 3,537 ======== ======= ======== ======= PER SHARE DATA: Income before extraordinary item.............. $ 0.87 $ 0.53 $ 0.72 $ 0.52 Extraordinary item............................ -- -- -- (0.11) -------- ------- -------- ------- Net income.................................... $ 0.87 $ 0.53 $ 0.72 $ 0.41 ======== ======= ======== ======= WEIGHTED AVERAGE SHARES OUTSTANDING............. 10,884 10,667 10,691 8,594 ======== ======= ======== ======= BALANCE SHEET DATA(5): Working capital................................. $ 38,015 $24,652 $ 25,205 $24,459 Total assets.................................... 227,669 74,168 79,691 71,379 Long-term debt, including current maturities.... 112,840 17,391 16,024 16,269 Shareholders' equity............................ 57,067 45,271 47,411 39,665
- --------------- (1) Includes the operations of Scott Pickford beginning on March 1, 1997 and Saybolt beginning on May 1, 1997, the acquisitions of which were accounted for as purchases. (2) Historical results have been restated to reflect the operations of ProTechnics, the acquisition of which on December 31, 1996 was accounted for as a pooling-of-interests. (3) Transaction costs associated with the merger of ProTechnics. (4) Extraordinary loss due to write-off of deferred debt costs and prepayment penalties related to retirement of debt using proceeds from the initial public offering. (5) At end of period. 6 8 RISK FACTORS Prospective purchasers of the Common Shares offered hereby should carefully consider the following risk factors in addition to the other information presented or incorporated by reference in this Prospectus. RELIANCE ON THE OIL AND GAS INDUSTRY The Company's business and operations are substantially dependent upon the condition of the global oil and gas industry. The oil and gas industry is highly cyclical and has been subject to significant economic downturns at various times as a result of numerous factors affecting the supply of and demand for oil and natural gas, including the level of drilling activity, worldwide economic conditions, interest rates and the cost of capital, environmental regulation, tax policies, political requirements of national governments, coordination by the Organization of Petroleum Exporting Countries (OPEC), the cost of producing oil and natural gas, and technological advances. There can be no assurance that any future downturns in the oil and gas industry, or in the oilfield reservoir rock and fluids analyses business, will not be severe or that any such downturn will not have a material adverse effect on the Company's financial condition or results of operations. See "Business." RELIANCE ON NEW PRODUCT DEVELOPMENT AND POSSIBLE TECHNOLOGICAL OBSOLESCENCE The market for the Company's products and services is characterized by changing technology. As a result, the Company's success is dependent upon its ability to develop new products and services on a cost-effective basis and to introduce them into the marketplace in a timely manner. The Company intends to continue committing substantial financial resources and effort to the development of new products and services. There can be no assurance that the Company will successfully differentiate itself from its competitors, that the market will consider the Company's proposed products and services to be superior to its competitors' products and services or that the Company will be able to adapt to evolving markets and technologies, develop new products, or achieve and maintain technological advantages. See "Business -- Operations." RELIANCE ON PATENTS, PROPRIETARY TECHNOLOGIES AND LICENSES The Company's success depends in part on its ability to obtain patents, licenses and other intellectual property rights covering its products and services. To that end, the Company has obtained certain patents and intends to continue to seek patents on its inventions and services. The process of seeking patent protection can be long and expensive, and there can be no assurance that patents will issue from currently pending or future applications or, if patents are issued, that they will be of sufficient scope or strength to provide meaningful protection or any commercial advantage to the Company. In addition, effective copyright and trade secret protection may be unavailable or limited in certain countries. Litigation, which could demand financial and management resources, may be necessary to enforce patents or other intellectual property rights of the Company. Also, there can be no assurance that the Company can obtain licenses or other rights to necessary intellectual property on acceptable terms. See "Business -- Patents and Trademarks." DEPENDENCE ON INTERNATIONAL OPERATIONS The Company operates facilities in over 50 countries. Non-U.S. operations accounted for approximately 55% of the Company's revenues during the nine months ended September 30, 1997. The Company's business is subject to various risks beyond its control, such as instability of foreign economies and governments, currency fluctuations, potential income tax liabilities in multiple jurisdictions and changes in laws and policies affecting trade and investment. Any of such factors might cause facilities in some countries to become unprofitable, possibly resulting in the closing of such facilities. The Company attempts to limit its exposure to foreign currency fluctuations by limiting the amount by which its foreign contracts are denominated in a currency other than U.S. 7 9 dollars to an amount generally equal to expenses expected to be incurred in such foreign currency. The Company has not historically engaged in and does not currently intend to engage in any significant hedging or currency trading transactions designed to compensate for adverse currency fluctuations. RISKS OF ACQUISITION STRATEGY As a key component of its business strategy, the Company has pursued and intends to continue to pursue acquisitions of complementary assets and businesses. Certain risks are inherent in any acquisition strategy, such as increasing leverage and debt service requirements and combining disparate company cultures and facilities, which could adversely affect the Company's operating results. The success of any completed acquisition will depend in part on the Company's ability to integrate effectively the acquired business into the Company. The process of integrating such acquired businesses may involve unforeseen difficulties and may require a disproportionate amount of management's attention and the Company's financial and other resources. Possible future acquisitions may be for purchase prices significantly higher than those paid for recent and pending acquisitions. No assurance can be given that the Company will be able to continue to identify additional suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on satisfactory terms or successfully acquire identified targets. The Company's failure to achieve consolidation savings, to incorporate the acquired businesses and assets into its existing operations successfully or to minimize any unforeseen operational difficulties could have a material adverse effect on the Company's financial condition and results of operations. See "Business -- Business Strategy -- Acquisitions." ENVIRONMENTAL REGULATION The Company is subject to a variety of governmental regulations relating to the use, storage, discharge and disposal of chemicals and gases used in its analytical and manufacturing processes. Environmental claims or the failure to comply with present or future regulations could result in the assessment of damages or imposition of fines against the Company or the suspension or cessation of operations. New regulations could require the Company to acquire costly equipment or to incur other significant expenses. Any failure by the Company to control the use of, or adequately restrict the discharge of, hazardous substances could subject it to future material liabilities. In addition, public interest in the protection of the environment has increased dramatically in recent years and the Company anticipates that the trend of more expansive and stricter environmental laws and regulations will continue, the occurrence of which may result in increased capital expenditures or operating expenses by the Company. COMPETITION The businesses in which the Company operates are highly competitive. Several of the Company's competitors are divisions or subsidiaries of companies that are substantially larger and have greater financial and other resources than the Company. See "Business -- Competition." UNCERTAINTY IN SERVICE OF PROCESS AND ENFORCING UNITED STATES JUDGMENTS AGAINST NETHERLANDS CORPORATIONS, DIRECTORS AND OTHERS The Company is a Netherlands company and a substantial portion of the Company's assets are located outside the United States. In addition, members of the Supervisory Board of the Company and certain Selling Shareholders named herein are residents of countries other than the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or to enforce against such persons or the Company judgments of courts of the United States predicated upon civil liabilities under the United States federal securities laws. Because there is no treaty between the United States and The Netherlands providing for the reciprocal recognition and enforcement of judgments, United States judgments are not automatically 8 10 enforceable in The Netherlands. However, a final judgment of the payment of money obtained in a United States court and not rendered by default, which is not subject to appeal or any other means of contestation and is enforceable in the United States, would in principle be upheld and be regarded by a Netherlands court of competent jurisdiction as conclusive evidence when asked to render a judgment in accordance with such final judgment by a United States court, without substantive re-examination or relitigation on the merits of the subject matter thereof, provided that such judgment has been rendered by a court of competent jurisdiction, in accordance with rules of proper procedure, that it has not been rendered in proceedings of a penal or revenue nature and that its content and possible enforcement are not contrary to public policy or public order of The Netherlands. Notwithstanding the foregoing, there can be no assurance that United States investors will be able to enforce against the Company, or members of the Supervisory Board, certain Selling Shareholders, or certain experts named herein who are residents of The Netherlands or countries other than the United States, any judgments in civil and commercial matters, including judgments under the federal securities laws. In addition, there is doubt as to whether a Netherlands court would impose civil liability on the Company or on the members of the Supervisory Board in an original action predicated solely upon the federal securities laws of the United States brought in a court of competent jurisdiction in The Netherlands against the Company or such members. POSSIBLE ANTITAKEOVER EFFECTS The Company's Amended and Restated Articles of Association and the applicable law of The Netherlands contain provisions that may be deemed to have anti-takeover effects. Among other things, these provisions establish the authority of the Company's Supervisory Board to designate certain rights (including conversion rights) applicable to preference shares, par value NLG 0.03 per share, of the Company ("Preference Shares") and to approve the issuance of Preference Shares upon a fractional payment of the aggregate par value thereof (with the balance of the aggregate par value to be paid by the holder only after it is called in by the Company). In addition, the Company's Supervisory Board is classified into three classes, with the directors of each class having staggered three-year terms. Such provisions may delay, defer or prevent a takeover attempt that a shareholder might consider in the shareholder's best interest. See "Description of Share Capital -- Preference Shares" and "Management." NO ANTICIPATED DIVIDENDS ON COMMON SHARES The Company's Supervisory Board does not presently anticipate authorizing the payment of dividends in the foreseeable future. See "Dividend Policy." USE OF PROCEEDS The net proceeds to the Company from the Offering are estimated to be approximately $ million, after deducting underwriting discounts and commissions and estimated offering expenses. The Company intends to use all of such net proceeds to repay a portion of its indebtedness under its bank credit facility (the "Credit Facility"). See "Capitalization" and "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources." The Company will not receive any proceeds from the sale of the Common Shares by the Selling Shareholders. See "Underwriting." 9 11 CAPITALIZATION The following table sets forth the short-term debt and capitalization of the Company at September 30, 1997 and as adjusted to give effect to (i) the sale by the Company of the 1,400,000 Common Shares offered hereby, and (ii) the application of the estimated net proceeds to the Company therefrom as described under "Use of Proceeds." This table should be read in conjunction with the consolidated financial statements of the Company, including the notes thereto, incorporated by reference in this Prospectus.
SEPTEMBER 30, 1997 ---------------------- ACTUAL AS ADJUSTED -------- ----------- (DOLLARS IN THOUSANDS) Total short-term debt and current portion of long-term debt...................................................... $ 1,698 $ ======== ======== Long-term debt, less current portion: Borrowings under Credit Facility.......................... $107,000 $ Other long-term debt...................................... 4,494 -------- -------- Total long-term debt.............................. 111,494 -------- -------- Shareholders' equity: Preference Shares, NLG 0.03 par value; 3,000,000 shares authorized; no shares issued and outstanding........... -- -- Common Shares, NLG 0.03 par value; 30,000,000 shares authorized; 10,622,612 shares issued and outstanding at stated value (actual); 12,022,612 shares issued and outstanding at stated value (as adjusted).............. 186 Additional paid-in capital................................ 35,685 Retained earnings......................................... 21,196 -------- -------- Total shareholders' equity........................ 57,067 -------- -------- Total capitalization.............................. $170,249 $ ======== ========
The Credit Facility provides for (i) a term loan of $55 million, (ii) a term loan denominated in British pounds having a U.S. dollar equivalency of $15 million, (iii) a committed revolving debt facility of $50 million, and (iv) a Netherlands guilder denominated revolving debt facility with U.S. dollar equivalency of $5 million. Loans under the Credit Facility will generally bear interest from LIBOR plus 0.75% to a maximum of LIBOR plus 1.75%. The term loans require quarterly principal payments beginning March 31, 1999, with the final principal payment due June 30, 2002. The revolving debt facilities require interest payments only, until maturity on June 30, 2002. The indebtedness incurred under the Credit Facility was used to finance the acquisitions of Saybolt and Scott Pickford, as well as to refinance a previous credit facility. 10 12 PRICE RANGE OF COMMON SHARES The Company's Common Shares have been trading on the Nasdaq Stock Market under the symbol "CRLBF" since the Company's initial public offering in September 1995. The following table sets forth the high and low sales prices per share of the Common Shares as reported on the Nasdaq Stock Market for the periods indicated.
HIGH LOW ------- ------- Year ended December 31, 1995: Third Quarter (from initial public offering date of September 21 to September 30, 1995).................... $13.750 $11.375 Fourth Quarter............................................ 12.625 9.500 Year ended December 31, 1996: First Quarter............................................. $13.000 $ 9.750 Second Quarter............................................ 16.000 11.750 Third Quarter............................................. 16.500 13.625 Fourth Quarter............................................ 17.250 15.250 Year ending December 31, 1997: First Quarter............................................. $22.000 $16.750 Second Quarter............................................ 26.125 16.375 Third Quarter............................................. 36.875 24.000 Fourth Quarter (through November 19, 1997)................ 45.750 35.000
On November 19, 1997, the closing sale price of the Common Shares as reported on the Nasdaq Stock Market was $37.125 per share. DIVIDEND POLICY The Company has never paid dividends on its Common Shares and currently has no plans to pay dividends on the Common Shares. The Company expects that it will retain all available earnings generated by its operations for the development and growth of its business. Any future determination as to the payment of dividends will be made in the discretion of the Company's Supervisory Board and will depend upon the Company's operating results, financial condition, capital requirements, general business conditions and such other factors as the Supervisory Board deems relevant. Because the Company is a holding company that conducts substantially all of its operations through subsidiaries, the ability of the Company to pay cash dividends on the Common Shares is dependent upon the ability of its subsidiaries to pay cash dividends or otherwise distribute or advance funds to the Company and on the terms and conditions of its existing and future credit arrangements as may exist from time to time. In addition, under the terms of the Credit Facility, the Company is prohibited from paying cash dividends on the Common Shares without the prior written consent of the lenders thereunder. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources." 11 13 SELECTED CONSOLIDATED FINANCIAL DATA (in thousands, except per share data) The following table sets forth selected consolidated financial data for the periods indicated. The selected consolidated financial data should be read in conjunction with the Company's consolidated financial statements, including the notes thereto, incorporated by reference herein. The selected consolidated financial data for the years ended December 31, 1996 and 1995 have been derived from the consolidated financial statements of the Company which are incorporated herein by reference. The selected consolidated financial data for the nine months ended September 30, 1997 and 1996 have been derived from the unaudited interim financial statements of the Company, which, in the opinion of management, include all adjustments (which consist of only normal recurring adjustments) necessary for a fair presentation of the financial condition and results of operations of the Company for those periods. Results for any interim period are not necessarily indicative of the results for a full year. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."
NINE MONTHS ENDED YEAR ENDED SEPTEMBER 30, DECEMBER 31, ------------------ ------------------ 1997(1) 1996(2) 1996(2) 1995(2) -------- ------- -------- ------- (UNAUDITED) STATEMENT OF OPERATIONS DATA: REVENUES: Services.................................................. $122,286 $58,728 $ 80,503 $62,478 Sales..................................................... 20,601 18,155 24,865 25,115 -------- ------- -------- ------- Total revenues..................................... 142,887 76,883 105,368 87,593 OPERATING EXPENSES: Costs of services......................................... 95,166 46,920 64,853 51,018 Costs of sales............................................ 18,699 14,867 19,790 20,768 General and administrative expenses....................... 4,359 2,717 3,559 2,719 Depreciation and amortization............................. 7,170 3,340 4,600 3,262 Transaction costs associated with merger(3)............... -- -- 355 -- Other income, net......................................... (169) (406) (603) (130) -------- ------- -------- ------- Total operating expenses........................... 125,225 67,438 92,554 77,637 Income before interest expense, income tax and extraordinary item...................................... 17,662 9,445 12,814 9,956 INTEREST EXPENSE............................................ 4,132 1,104 1,418 3,000 -------- ------- -------- ------- Income before income tax and extraordinary item........... 13,530 8,341 11,396 6,956 INCOME TAX EXPENSE.......................................... 4,059 2,720 3,719 2,174 -------- ------- -------- ------- Income before extraordinary item.......................... 9,471 5,621 7,677 4,782 EXTRAORDINARY ITEM(4)....................................... -- -- -- (911) -------- ------- -------- ------- NET INCOME.................................................. 9,471 5,621 7,677 3,871 LESS -- Net income applicable to preferred loan stock....... -- -- -- (334) -------- ------- -------- ------- NET INCOME APPLICABLE TO COMMON SHARES...................... $ 9,471 $ 5,621 $ 7,677 $ 3,537 ======== ======= ======== ======= PER SHARE DATA: Income before extraordinary item.......................... $ 0.87 $ 0.53 $ 0.72 $ 0.52 Extraordinary item........................................ -- -- -- (0.11) -------- ------- -------- ------- Net income................................................ $ 0.87 $ 0.53 $ 0.72 $ 0.41 ======== ======= ======== ======= WEIGHTED AVERAGE SHARES OUTSTANDING......................... 10,884 10,667 10,691 8,594 ======== ======= ======== ======= BALANCE SHEET DATA(5): Working capital............................................. $ 38,015 $24,652 $ 25,205 $24,459 Total assets................................................ 227,669 74,168 79,691 71,379 Long-term debt, including current maturities................ 112,840 17,391 16,024 16,269 Shareholders' equity........................................ 57,067 45,271 47,411 39,665
- --------------- (1) Includes the operations of Scott Pickford beginning on March 1, 1997 and Saybolt beginning on May 1, 1997, the acquisitions of which were accounted for as purchases. (2) Historical results have been restated to reflect the operations of ProTechnics, the acquisition of which on December 31, 1996 was accounted for as a pooling-of-interests. (3) Transaction costs associated with the merger of ProTechnics. (4) Extraordinary loss due to write-off of deferred debt costs and prepayment penalties related to retirement of debt using proceeds from the initial public offering. (5) At end of period. 12 14 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the financial statements and notes thereto incorporated by reference herein. RESULTS OF OPERATIONS The following table sets forth certain percentage relationships based on the Company's consolidated statements of operations for the periods indicated; such table reflects the merger of ProTechnics on December 31, 1996 (accounted for as a pooling-of-interests) and the results of the acquisitions of Scott Pickford beginning March 1, 1997 and Saybolt beginning May 1, 1997 (accounted for as purchases). See "Business -- Acquisitions."
% INCREASE (DECREASE) ---------------------------- NINE MONTHS NINE MONTHS ENDED YEAR ENDED ENDED YEAR ENDED SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, DECEMBER 31, ------------- ------------- ------------- ------------ 1997 1996 1996 1995 1997 VS 1996 1996 VS 1995 ----- ----- ----- ----- ------------- ------------ Revenues: Services........................................ 85.6% 76.4% 76.4% 71.3% 108.2 28.9 Sales........................................... 14.4 23.6 23.6 28.7 13.5 (1.0) ----- ----- ----- ----- Total revenues............................ 100.0% 100.0% 100.0% 100.0% 85.9 20.3 ===== ===== ===== ===== Operating expenses: Costs of services............................... 66.6% 61.0% 61.5% 58.2% 102.8 27.1 Costs of sales.................................. 13.1 19.3 18.8 23.7 25.8 (4.7) General and administrative expenses............. 3.1 3.5 3.4 3.1 60.4 30.9 Depreciation and amortization................... 4.9 4.4 4.4 3.7 114.7 41.0 Transaction costs associated with merger ....... -- -- 0.3 -- * * Other income, net............................... (0.1) (0.5) (0.6) (0.1) (58.4) * ----- ----- ----- ----- Total operating expenses.................. 87.6 87.7 87.8 88.6 85.7 19.2 Income before interest expense, income tax and extraordinary item.............................. 12.4 12.3 12.2 11.4 87.0 28.7 Interest expense.................................. 2.9 1.5 1.4 3.4 274.3 (52.7) ----- ----- ----- ----- Income before income tax and extraordinary item... 9.5 10.8 10.8 8.0 62.2 63.8 Income tax expense................................ 2.9 3.5 3.5 2.5 49.2 71.1 ----- ----- ----- ----- Income before extraordinary item.................. 6.6% 7.3% 7.3% 5.5% 68.5 60.5 ===== ===== ===== =====
- --------------- * Percentage not meaningful. Nine Months Ended September 30, 1997 and 1996 Services revenue for the nine-month period ended September 30, 1997 increased 108.2% to $122.3 million. The increase was primarily due to (i) increased worldwide demand for reservoir core and fluids analysis and (ii) additional revenue attributable to the March 1, 1997 acquisition of Scott Pickford and the May 12, 1997 acquisition of Saybolt. Sales revenue for the nine month period ended September 30, 1997 was up 13.5% to $20.6 million compared to the prior year. The increase was primarily attributed to the acquisition of Scott Pickford's manufacturing division and was slightly off-set by decreased sales of integrated octane-measuring and process analyzer systems due to a weaker U.S. refining market. Costs of services as a percentage of services revenue for the nine months ended September 30, 1997 improved slightly compared to a year ago, due to improved cost savings and efficiencies. Costs of sales as a percentage of sales revenue for the nine months ended September 30, 1997 weakened compared to a year ago due to increased sales of lower margin products. General and administrative expenses for the nine months ended September 30, 1997 increased $1.6 million as compared to the corresponding period in 1996. The increase was primarily due to increased personnel costs and administrative expenses due to the Company's growth through 13 15 acquisitions; however, such expenses decreased as a percent of revenues. The Company's ongoing program to maintain tight controls over expenses has resulted in maintaining general and administrative expenses as a percentage of sales under 4%. Depreciation and amortization expense for the nine months ended September 30, 1997 increased $3.8 million as compared to the same period in 1996, due primarily to the acquisitions of Scott Pickford and Saybolt. Interest expense for the nine months ended September 30, 1997 increased $3.0 million as compared to 1996. The increase was primarily due to the additional borrowings used to finance the Saybolt and Scott Pickford acquisitions. The Company's effective income tax rate was approximately 30% for the nine months ended September 30, 1997 as compared to 32.6% for the nine months ended September 30, 1996. Years Ended December 31, 1996 and 1995 Total revenue for 1996 was $105.4 million, an increase of 20.3% from $87.6 million in the prior year. Revenue gains of 28.9% were realized by the Company's services operations for 1996 compared to 1995. Services revenue primarily increased as a result of (i) increased demand for reservoir core and fluids analysis, (ii) increased demand for tracing and logging services and (iii) additional revenue from the December 1995 acquisition of PACE Incorporated analytical laboratories ("PACE") and the January 1996 acquisition of Gulf States Analytical, Inc. ("GSAI"). Sales revenue for 1996 was comparable to 1995. The combined cost of services and sales as a percentage of revenue for 1996 improved slightly compared to the previous year due to improved cost savings and efficiencies. General and administrative expenses increased $0.8 million in 1996 to $3.6 million. The increase was primarily attributable to costs associated with being a publicly traded company and increased personnel costs due to growth. The Company's ongoing program to maintain tight controls over expenses has resulted in maintaining general and administrative expenses as a percentage of sales under 4%. As a percentage of net sales, general and administrative expenses were 3.4% and 3.1% for 1996 and 1995, respectively. Depreciation and amortization expense for 1996 increased to $4.6 million from $3.3 million in 1995 primarily due to capital expenditures for new equipment and the acquisitions of Pastech, Inc., PACE and GSAI. Transaction costs totaling $0.4 million associated with the ProTechnics merger, which was accounted for as a pooling-of-interests, were expensed in the fourth quarter of 1996 and primarily consist of legal, accounting and investment banking fees. Other income for 1996 increased $0.5 million from 1995 due primarily to (i) remuneration of $0.3 million from the State of California for property taken through rights of eminent domain in connection with road construction and (ii) exchange gains on transactions denominated in foreign currencies. Interest expense decreased 52.7% to $1.4 million for 1996 compared to $3.0 million in 1995, due to a reduction in debt after the Company's initial public offering of 2.8 million Common Shares in September 1995. The Company's effective income tax rate was 32.6% and 31.3% in 1996 and 1995, respectively. The Company's tax rate is less than the statutory rate of 35% in The Netherlands, primarily as a result of lower tax rates and export sales benefits in countries where the Company operated through subsidiaries, and is partially offset by state and provincial taxes. 14 16 LIQUIDITY AND CAPITAL RESOURCES On May 12, 1997 the Company entered into the Credit Facility, which was used to finance the acquisitions of Saybolt and Scott Pickford, as well as refinance a previous credit facility. The Credit Facility provides for (i) a term loan of $55 million, (ii) a term loan denominated in British pounds having a U.S. dollar equivalency of $15 million, (iii) a committed revolving debt facility of $50 million and (iv) a Netherlands guilder denominated revolving debt facility with a U.S. dollar equivalency of $5 million. Loans under the Credit Facility will generally bear interest from LIBOR plus 0.75% to a maximum of LIBOR plus 1.75%. The term loans require quarterly principal payments beginning March 31, 1999 with the final principal payment due June 30, 2002. The revolving debt facilities require interest payments only, until maturity on June 30, 2002. The terms of the Credit Facility require the Company to meet certain financial covenants, including certain minimum equity and cash flow tests. The Company has generally funded its activities from cash flow from operations, although the Company financed substantially all of the purchase price for the acquisitions of Saybolt and Scott Pickford with borrowings under the Credit Facility. At September 30, 1997, the Company had working capital of $38.0 million (of which $8.8 million was cash and short-term investments) and a current ratio of 1.8 to 1.0 compared to working capital of $25.2 million (of which $2.9 million was cash and short-term investments) and a current ratio of 2.5 to 1.0 at December 31, 1996. The Company is a holding company that conducts substantially all of its operations through subsidiaries. Consequently, the Company's cash flow is wholly dependent upon the ability of its subsidiaries to pay cash dividends or otherwise distribute or advance funds to the Company. All of the Company's material subsidiaries are guarantors or co-borrowers under the Credit Facility. The Company expects to fund any future acquisitions primarily through a combination of working capital, cash flow from operations, bank borrowings (including the Credit Facility) and issuance of additional equity. Although the Credit Facility imposes certain limitations on the incurrence of additional indebtedness, in general the Company will be permitted to assume, among other things, indebtedness of acquired businesses, subject to compliance with the financial covenants of the Credit Facility. The Company anticipates that its cash flow from operations will provide cash in excess of the Company's normal working capital needs and planned capital expenditures for property, plant and equipment. Capital expenditures for the first nine months of 1997 were $10.4 million and for 1996 totaled $6.3 million. The Company used existing cash and borrowed approximately $107 million under the Credit Facility to fund (i) $67.0 million paid in connection with the Saybolt Acquisition, and (ii) to retire approximately $31.1 million of its existing indebtedness ($15.1 million of which had been incurred in connection with the Company's acquisition of Scott Pickford). The Company issued 1.1 million Common Shares in December 1996 to consummate the ProTechnics merger. Due to the relatively low levels of inflation experienced in 1995, 1996 and 1997 inflation has not had a significant effect on the Company's results of operations in recent periods. OTHER MATTERS The Company believes that the occurrence of the year 2000 will not cause any material operating problem or liability for the Company or any of its subsidiaries and that its software is "year 2000 compliant" in all material respects. 15 17 BUSINESS GENERAL The Company is one of the leading providers of petroleum reservoir description data and production management services for maximizing hydrocarbon recovery from new and existing fields. The Company's customers include major, independent, national and international oil and gas producers. The Company is the world's largest provider of petroleum reservoir rock and fluids analyses and multidisciplinary reservoir description studies. The Company is also a leading provider of field services evaluating the efficiencies of well completions and the effectiveness of enhanced oil recovery projects. In addition, the Company manufactures and sells petroleum reservoir rock and fluid analysis instrumentation and other integrated systems. Currently, the Company operates over 70 facilities in over 50 countries and has approximately 3,000 employees. BACKGROUND The Company was established in 1936 and operated as a division of WAII from 1987 to 1994. On September 30, 1994, a group of investors, including 14 members of management, purchased the business and substantially all of the assets of the Core Laboratories division from WAII. In September 1995, the Company issued 2,800,000 Common Shares at $12.00 per share in an initial public offering and commenced trading on the Nasdaq Stock Market. BUSINESS STRATEGY The Company's business strategy is to continue the expansion of its operations through (i) continued development of proprietary hydrocarbon production enhancement technologies, services and products through client-driven research and development, (ii) expanded technology services and product lines offered throughout the Company's global infrastructure, and (iii) acquisition of complementary businesses that add key technologies or market presence and enhance existing products and services. Client-Driven Research and Development The Company's research and development strategy is designed to maintain and enhance its market leadership position in its principal businesses by emphasizing the development of technology, services and products to meet the needs of its customers, who are continually seeking to lower their costs of finding, developing, producing and refining hydrocarbons. The Company's strategy reflects the trend towards increased utilization of advanced technologies to enhance the efficiency of development drilling, reduce the costs associated with production of known reserves, maximize the efficiency of secondary and tertiary recovery techniques, and reduce finding and development costs for new reserves. While the aggregate number of wells being drilled per year has remained relatively constant in recent years, oil and gas producers have increased expenditures on high-technology services, including advanced reservoir rock and fluids analyses, that assist in the development of more complete and comprehensive analyses of reservoir characteristics and hydrocarbon fluids. The Company will continue to concentrate on developing technologies related more to development and production efficiencies, as opposed to those related to the more volatile exploration sector of the oil and gas industry. International Expansion of Services and Products Another component of the Company's business strategy is to broaden the spectrum of services and products offered to its clients internationally. This goal is expected to be accomplished through the integration of the services and products acquired by the Company through the transactions described below into many of the Company's over 70 offices located in more than 50 different 16 18 countries. Management believes this integration will expand the related markets served by ProTechnics, Scott Pickford, Saybolt and other businesses acquired in the future. Acquisitions The Company continually reviews potential acquisition possibilities in existing or related business areas to add key technologies, enhance market presence or complement existing businesses. The recent acquisitions of ProTechnics, Scott Pickford and Saybolt and the anticipated acquisition of Stim-Lab reflect the Company's desire to broaden the services offered to its clients. ProTechnics Merger. On December 31, 1996, the Company issued approximately 1.1 million Common Shares in exchange for substantially all of the outstanding stock of ProTechnics. ProTechnics, headquartered in Houston, Texas, is one of the leading providers of services that measure the effectiveness of well stimulations and completions utilizing its proprietary ZeroWash(R) and SpectraScan(R) technologies. ProTechnics is also the leader in determining the efficiencies of enhanced recovery projects through field tracer surveys. ProTechnics revenues totaled $11.6 million, $7.5 million and $6.5 million for fiscal 1996, 1995, and 1994, respectively. Scott Pickford Acquisition. On March 1, 1997, the Company acquired control of a majority of the outstanding shares of Scott Pickford. The Company has since acquired the remaining shares; the total consideration paid for Scott Pickford was approximately $15.1 million. Scott Pickford provides petroleum reservoir management, geoscience, geophysical and engineering services to its customers. Scott Pickford reported revenues of $13.2 million, $13.3 million and $7.5 million for its fiscal years ended March 31, 1996, 1995, and 1994, respectively. The acquisition was financed through borrowings, accounted for using the purchase method of accounting and resulted in approximately $12.2 million of goodwill which is being amortized over a 40-year period. Scott Pickford's results of operations are included with those of the Company beginning March 1, 1997. Saybolt Acquisition. On May 12, 1997, the Company consummated the Saybolt acquisition for $67 million in cash and the assumption of $5 million of net debt. Saybolt provides analytical and field services to characterize properties of crude oil and petroleum products to the oil industry. Saybolt operates in over 50 countries, including an existing presence in the Commonwealth of Independent States, which will provide the operating experience and base from which the Company can offer reservoir description and production management services. Saybolt reported revenues of $105.4 million, $97.8 million and $90.3 million in 1996, 1995 and 1994, respectively. The transaction was accounted for using the purchase method which resulted in approximately $60.6 million of goodwill which is being amortized over a 40-year period. Financing for the transaction was provided through the Credit Facility (see "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources"). Saybolt's results of operations are included with those of the Company beginning on May 1, 1997. Impact of Business Strategy The Company believes that the implementation of these strategies has already contributed to the significant increase in income before interest expense, income tax and extraordinary item to $17.7 million for the nine months ended September 30, 1997 from $9.4 million for the nine months ended September 30, 1996, and $7.4 million for the nine months ended September 30, 1995. RECENT DEVELOPMENTS Pending Stim-Lab, Inc. Merger On October 22, 1997, the Company signed a letter of intent to acquire the outstanding shares of Stim-Lab in exchange for approximately 230,000 Common Shares. Stim-Lab, with additional offices in Houston, Texas and Edinburgh, Scotland, is a leading provider of analytical and field services used to maximize the efficiencies and effectiveness of petroleum reservoir stimulations. Currently, 17 19 Stim-Lab heads four industry consortia which evaluate fracture proppants, gels, acid stimulations and horizontal well completions. Both Core Laboratories and ProTechnics utilize results from these consortia to better design well completion and stimulation programs. Two-for-One Stock Split On October 22, 1997, the Company announced a two-for-one split of the outstanding Common Shares, payable on December 19, 1997 to shareholders of record as of the close of business on December 1, 1997. OPERATIONS The Company derives its revenues from services and sales to customers primarily in one industry segment, the oil and gas industry, and conducts its business through two closely related operations: Services The Company provides reservoir rock and fluids analyses; field services to evaluate the effectiveness of well completions, stimulations and enhanced oil recovery projects; geological and geophysical engineering; and analysis of water, soil and air samples for organic and inorganic contaminants. Typically, rock and fluids samples are collected from wells drilled into known or potential petroleum reservoirs and sent to the Company for analyses. These analyses accurately measure the petrophysical properties of the rocks and pressure-volume-temperature relationships of the reservoir fluids to help determine the commercial viability of the hydrocarbon accumulation, and to develop a production program that maximizes ultimate hydrocarbon recovery. The data also are used to calibrate and validate wireline logs that may be used to estimate certain properties of the reservoir. Without measured calibration data, wireline log estimates can produce erroneous values which could lead to incorrect decisions regarding the development or abandonment of hydrocarbon accumulations. The data generated by the Company's analyses are used during all stages of the well cycle from exploration to primary and secondary production and decisions concerning the abandonment of a property. Recent advances in drilling and coring technologies have significantly reduced the cost of retrieving core samples from reservoirs. The Company expects these developments to lead to increased use of reservoir data obtained from rock core sample analyses. The data generated by the Company's analyses also provide information that is used to improve the processing and interpretation of 2-D and 3-D seismic programs and management believes such data will be used as a component of reservoir production management based on emerging 4-D seismic technologies. Oil and gas producers have been increasing expenditures for analytical services to reduce their risks in developing and producing oil and gas reservoirs, and lower their costs of finding, developing and producing oil and gas. The most basic analyses of rock properties provided by the Company measure porosity and permeability, which determine the storage and flow capacities of potential reservoirs. In addition to basic measurements, which are made at surface conditions, the Company is increasingly providing technologically advanced analyses of reservoir rock and fluids involving the simulation of the reservoir's actual subsurface conditions. The Company also performs advanced analyses of reservoir 18 20 fluids at varying pressure and temperature conditions to determine their physical and chemical properties at various points during the producing life of a field. As a result of the ProTechnics merger, the Company provides field services used to design and measure the effectiveness of well completion and stimulation programs and to maximize the hydrocarbon yields of enhanced recovery projects. The services offered by ProTechnics are field extensions of the laboratory studies of reservoir rocks and fluids conducted by Core Laboratories. As a result of the Scott Pickford acquisition, the Company provides solutions from designing the well completion, stimulation or enhanced recovery project to measuring the performance in the field. Demand for these services has been increasing, especially internationally, as oil and gas companies put more emphasis on producing incremental amounts of hydrocarbons from established fields. ProTechnics is one of the leading providers of services that measure the effectiveness of well stimulations and completions utilizing its proprietary ZeroWashH and SpectraScanH technologies. ProTechnics is also the leader in determining the efficiencies of enhanced recovery projects through field tracer surveys. The Company is currently developing electromagnetic wireless communication tools that can be used to monitor various bottom hole well conditions during completion or production operations, as well as measurement while drilling (MWD) systems. ProTechnics has won Special Meritorious Engineering Awards for its innovative technologies in three of the past four years at the annual Offshore Technology Conference (OTC). Core Laboratories employs these new technologies to complement laboratory services associated with the prevention of formation damage, phase behavior relationships of downhole reservoir fluids, and better design of water or miscible floods for enhanced recovery projects. The Company also provides analytical testing of petroleum products, including octane testing and the analysis of crude oil, natural gas, lubricants, greases and other petroleum products and chemicals. The Company's services operation serves a diverse customer base including oil and gas exploration and production companies; petroleum refineries and processors; and engineering and consulting firms. The Company adheres to the strict quality standards that are demanded by various in-house and proprietary procedures, as well as standards established by the American Society of Testing and Materials (ASTM), which are used in a variety of petroleum services analyses. Management believes the Company demonstrates its commitment to quality by providing resources, money, time and education to maintain its reputation as a high-quality provider of high-technology analytical and consulting services. All of the Company's laboratories participate in its internal quality improvement process, which is designed to ensure that customer and regulatory requirements are met. Ongoing research and development is an important part of the Company's services operations. The Company has in the past committed significant resources to research and development and anticipates that it will continue to do so in the future. Over the years, the Company has made a number of technological advances, including the development of key technologies utilized in the Company's laboratories. Substantially all of the new technologies have resulted from requests and guidance from the Company's clients, especially major oil companies. Services are offered worldwide through the Company's technology network of over 70 sales, service and laboratory facilities located in over 50 countries. Services accounted for approximately 86%, 76%, 76% and 71% of the Company's total revenues for the nine months ended September 30, 1997 and 1996 and the fiscal years ended December 31, 1996 and 1995, respectively. Sales The Company's sales operation complements its services operation. The Company designs and manufactures a wide range of laboratory instrumentation and equipment for reservoir rock and fluids analyses, including a majority of the proprietary equipment used in the Company's services facilities. The sale of the Company's proprietary equipment to non-competing customers has generated 19 21 additional revenues for its services operation by maintaining and enhancing customer relations and generating demand for complementary services. The Company is the world's leading supplier of integrated octane measurement systems, equipment and services for refineries and laboratories. The Company has no significant competitor in this market. The full range of products and services includes on-line process and laboratory equipment, engineering services, and education programs to refineries throughout the world. The Company also provides process analyzer systems that are used for the measurement, analysis and monitoring of various process streams in the refining, petrochemical and chemical industries. The Company's process analyzer systems are provided on a turnkey basis, which includes engineering and design, material procurement, assembly, piping/tubing, wiring, testing and documentation. On-site field installation, startup/commissioning, and customer training are provided by the Company's experienced technical representatives. The Company currently offers its products worldwide through 11 domestic and international facilities, including five that perform manufacturing operations. Sales revenue accounted for approximately 14%, 24%, 24% and 29% of the Company's total revenues for the nine months ended September 30, 1997 and 1996 and the fiscal years ended December 31, 1996 and 1995, respectively. The sales backlog at September 30, 1997 was approximately $14.0 million compared with $9.6 million and $9.3 million at December 31, 1996 and 1995, respectively. MARKETING AND SALES The Company markets and sells its services and products through a combination of print advertising, technical seminars and trade shows, sales personnel and representatives. Print advertising is placed on a regular basis in trade and technical magazines targeted to the Company's customers. Direct sales and marketing are carried out by the Company's integrated sales force and operating managers and enhanced by sales representatives and distributors in various markets where the Company does not have offices. RESEARCH AND DEVELOPMENT The market for the Company's products and services is characterized by changing technology. As a result, the Company's success is dependent upon its ability to develop new products and services on a cost-effective basis and to introduce them into the marketplace in a timely manner. The Company intends to continue committing substantial financial resources and effort to the development of new products and services. PATENTS AND TRADEMARKS The Company believes its patents, trademarks and other intellectual property rights are an important factor in maintaining its technological advantage. Typically, the Company will seek to protect its intellectual technology in all jurisdictions where the Company believes the cost of such protection is warranted. INTERNATIONAL OPERATIONS The Company operates facilities in over 50 countries. The Company's non-U.S. operations accounted for approximately 55%, 36% and 40% of the Company's revenues during the nine months ended September 30, 1997 and fiscal years ended December 31, 1996 and 1995, respectively. The Company's business is subject to various risks beyond its control, such as instability of foreign economies and governments, currency fluctuations, overlap of different tax structures, and changes in laws and policies affecting trade and investment. Any of such factors might cause facilities in some countries to become unprofitable, possibly resulting in the closing of such facilities. The Company attempts to limit its exposure to foreign currency fluctuations by limiting the amount which its 20 22 foreign contracts are denominated in a currency other than U.S. dollars to an amount generally equal to expenses expected to be incurred in such foreign currency. The Company has not historically engaged in and does not currently intend to engage in any significant hedging or currency trading transactions designed to compensate for adverse currency fluctuations. ENVIRONMENTAL REGULATION The Company's operations use many chemicals and gases and the Company is subject to a variety of federal, state, local and foreign laws and regulations related to the use, storage, discharge and disposal of such chemicals and gases and other emissions and wastes. Consistent with the Company's quality assurance and control principles, the Company has established proactive environmental policies with respect to the handling and disposal of such chemicals, gases, emissions and waste materials from its operations. The Company has engaged outside consultants to audit its environmental activities and has implemented health and safety education and training programs. The Company has not suffered material environmental claims in the past. Management believes that the Company's operations are in substantial compliance with applicable environmental laws and regulations, and that continued compliance with existing requirements will not have a material adverse effect on the Company. However, public interest in the protection of the environment has increased dramatically in recent years and the Company anticipates that the trend of more expansive and stricter environmental laws and regulations will continue, the occurrence of which may result in increased capital expenditures or operating expenses by the Company. COMPETITION The businesses in which the Company operates are highly competitive. Several of the Company's competitors are divisions or subsidiaries of companies that are substantially larger and have greater financial and other resources than the Company. While no one company competes with the Company in all of its product and service lines, the Company faces significant competition, primarily from independent, regional companies. The Company competes in different product and service lines to various degrees on the basis of price, technical performance, availability, quality, and technical support. The Company's ability to compete successfully depends on elements both within and outside of its control, including successful and timely development of new products and services, performance and quality, customer service, pricing, industry trends, and general economic trends. EMPLOYEES As of September 30, 1997, the Company had approximately 3,000 employees. The Company does not have any material collective bargaining agreements and considers relations with its employees to be good. 21 23 MANAGEMENT The Company's Amended and Restated Articles of Association (the "Articles of Association") provide for one or more Supervisory Directors. The Company's Supervisory Board is classified into three classes, with the directors of each class having staggered three-year terms. The members of the Supervisory Board are proposed by the Supervisory Board and elected at the general shareholders' meeting by a majority of the votes cast at the meeting. The shareholders may override the proposal of the Supervisory Board by vote of two-thirds of the votes cast at the meeting if more than one-half of the outstanding share capital is present or represented. The members of the Supervisory Board appoint a chairman of the Supervisory Board from among the members of the Supervisory Board. Resolutions of the Supervisory Board generally require the approval of a majority of its members. The Supervisory Board meets upon request by its Chairman or two or more of its members. Members of the Supervisory Board must retire no later than at the ordinary general meeting of shareholders held after a period of three years following their appointment, but may be re-elected. In addition, as required by Netherlands laws, a member of the Supervisory Board must retire at the ordinary general meeting of shareholders held in the year in which he reaches the age of 72. The Company currently has nine Supervisory Directors. Pursuant to the Articles of Association, members of the Supervisory Board may be suspended or dismissed by the general meeting of shareholders. The Supervisory Board may make a proposal to the general meeting of shareholders for the suspension or dismissal of one or more of its members. The members of the Supervisory Board may receive such compensation as may be authorized by the Supervisory Board. The information set forth below includes the names, ages, principal occupations and length of service of each of the Supervisory Directors and executive officers, as well as any other directorships held by them.
NAME AGE POSITION ---- --- -------- Bob G. Agnew................... 66 Supervisory Director Richard L. Bergmark............ 44 Chief Financial Officer, Treasurer and Supervisory Director David M. Demshur............... 42 President, Chief Executive Officer and Supervisory Director John D. Denson................. 40 Vice President, General Counsel and Secretary Joseph R. Perna................ 54 Senior Vice President and Supervisory Director Frerik Pluimers................ 50 Supervisory Director Timothy J. Probert............. 45 Supervisory Director James A. Read.................. 47 Supervisory Director Jacobus Schouten............... 44 Supervisory Director Stephen D. Weinroth............ 58 Chairman of the Supervisory Board and Supervisory Director
Bob G. Agnew was, until his retirement in January of 1994, Manager of Drilling for International Operations for Exxon Company International (a division of Exxon Corporation) and a member of the Production Advisory Committee of Exxon Production Research Company. Mr. Agnew is a member of the Society of Petroleum Engineers and has served on its Drilling Technical Committee. He has served as a Supervisory Director since 1995. Richard L. Bergmark joined WAII as Treasurer in 1987. In 1991, he became the Area Manager for Finance and Administration for Europe, Africa and the Middle East operations of Western Geophysical, and in 1994 he became Chief Financial Officer of the Company. Mr. Bergmark presently serves as Chief Financial Officer, Treasurer and a Supervisory Director of the Company. He has served as a Supervisory Director since 1995. David M. Demshur joined the Company in 1979 and has held various operating positions since that date, including Manager of Geological Sciences, Vice President of Europe, Africa and the Middle East in 1989, Senior Vice President of Petroleum Services in 1991 and President in 1994. Mr. Demshur presently serves as President, Chief Executive Officer and a Supervisory Director of the Company. He has served as a Director since 1994. Mr. Demshur is a member of the Society of 22 24 Petroleum Engineers, the American Association of Petroleum Geologists, Petroleum Exploration Society of Great Britain and the Society of Core Analysts Section of the Society of Professional Well Loggers Association. John D. Denson joined WAII as Division Counsel in 1992, with responsibility for the Core Laboratories division. Mr. Denson presently serves as Vice President, General Counsel and Secretary of the Company and is a member of the State Bar of Texas. Joseph R Perna joined the Company as General Manager in 1985 and has held various operating positions since that date. In 1991, he was promoted to Senior Vice President, with responsibility for certain Laboratory Services operations and the Technology Products Division. Mr. Perna presently serves as Senior Vice President and a Supervisory Director of the Company. He has served as a Supervisory Director since 1995. Frerik Pluimers joined Saybolt in 1973 as Laboratory Manager of one of its subsidiaries. In 1978, he became General Manager of such subsidiary. In 1982, he became Managing Director of a different Saybolt subsidiary, and in 1992 he became the President and Chief Executive Officer of Saybolt, the title he maintains as of the date hereof. Mr. Pluimers also serves as Honorary Consul of the Republic of Gambia in The Netherlands. He has served as a Supervisory Director since May 1997. Timothy J. Probert has served as the President of Baker Hughes, Inteq (a business unit of Baker Hughes Inc., a diversified oil service company ("Baker Hughes")) since September 1996 and Vice President of Baker Hughes since March 1994. He joined Baker Hughes in 1972, where he has held various management positions, including Vice President of Drilling and Evaluation Technology for Baker Hughes Inteq, President of Eastman Teleco, President of Millwork Drilling Fluids and Vice President of Marketing for Baker Sand Control. Mr. Probert has served as a Supervisory Director since 1995. James A. Read is a member of the board of directors of Mezzanine Management Limited, the firm which serves as the investment advisor to First Britannia Mezzanine N.V. ("First Britannia") since First Britannia's formation in 1988. First Britannia is an investment company whose funds are provided by institutional investors, and it has been a mezzanine lender to, and investor in, the Company since the purchase of the Company from WAII in 1994. Mr. Read has been a Director of the Company since the purchase from WAII and is also a member of the board of directors of The British Printing Company Limited, CB Holdings SA, Page One Ltd., Western Sky, Inc., ITEQ, Inc., JJI, Inc. and Wellington Holdings Plc. Jacobus Schouten has been an executive officer of First Britannia since 1989. Mr. Schouten has been a Director of the Company since 1994, and he is a member of the board of directors of various European companies, including CB Holdings SA. Stephen D. Weinroth is a Partner of Andersen, Weinroth & Co., L.P., an investment firm, and a Managing Director of First Britannia, which position he has held since its inception in 1988. From 1993 to 1995, he served as Co-Chairman and Co-Executive Officer of VETTA Sports, Inc., an international bicycle parts and accessories producer and distributor. Mr. Weinroth has been a Director since 1994, the Chairman of the Supervisory Board since 1995 and is a member of the board of directors of Hovnanian Enterprises, Inc., a publicly-traded homebuilder, and Norbank. 23 25 DESCRIPTION OF SHARE CAPITAL Core Laboratories was organized under the law of The Netherlands by Deed of Association dated August 4, 1994. Set forth below is a summary of certain provisions contained in the Articles of Association and the law of The Netherlands. Such summary does not purport to be complete statements of the Articles of Association and the law of The Netherlands and is qualified in its entirety by reference to the Articles of Association and such law. The authorized share capital of Core Laboratories is NLG 990,000, consisting of 30,000,000 Common Shares, each with a par value of NLG 0.03, and 3,000,000 Preference Shares, each with a par value of NLG 0.03 (Common Shares and Preference Shares are sometimes collectively referred to herein as "Shares"). As of September 30, 1997, 10,622,612 Common Shares were outstanding. Common Shares and Preference Shares will be issued in registered form only. The Transfer Agent and Registrar for the Common Shares is American Stock Transfer Company. COMMON SHARES Each shareholder of record is entitled to one vote for each Common Share held on every matter submitted to a vote of shareholders. In the event of the liquidation, dissolution or winding up of the Company, and subject to the liquidation preference of holders of Preference Shares, if any, holders of Common Shares are entitled to receive, on a pro rata basis, all assets of the Company remaining available for distribution to the holders of Common Shares. The Articles of Association make no provision for cumulative voting and, as a result, the holders of a majority of the Company's voting power will have the power to elect all members of the Supervisory Board. PREFERENCE SHARES No Preference Shares are outstanding. The Supervisory Board has the authority to issue Preference Shares from time to time for a period of five years from the date of the consummation of the offering, which period may be extended. If such Preference Shares are issued, holders thereof will be entitled to receive, when, as and if declared by the Supervisory Board, dividends at a rate to be determined by the Supervisory Board prior to any payment of dividends to the holders of Common Shares. In addition, the holders of Preference Shares may be entitled to a liquidation preference, payable in the event of any liquidation, dissolution or winding up of the Company after satisfaction of any indebtedness but before any distribution of assets is made to holders of Common Shares. Holders of Preference Shares will have a right to one vote for each Preference Share held on every matter submitted to a vote of shareholders and such holders will vote as a class on matters to be determined by the Supervisory Board. If issued, the Supervisory Board may designate that the Preference Shares may be converted into Common Shares under certain specified circumstances. Under Netherlands law, the Supervisory Board may also authorize the issuance of Preference Shares with payment to the Company of up to 75% of the par value of such Preference Shares being deferred until such time as it is called by the Company. Such issuance of Preference Shares may adversely affect, among other things, the voting, dividend and liquidation rights of holders of Common Shares. The issuance of Preference Shares may have the effect of delaying, deferring or preventing a change of control of the Company. The Supervisory Board has no present plans to issue any such Preference Shares. SUMMARY OF CERTAIN OTHER MATTERS Issue of Shares The Company's shareholders have approved the issuance of up to an aggregate of 1,537,000 authorized but unissued Common Shares upon exercise of options in connection with the Company's 1995 Long-Term Incentive Plan, as amended, and the Company's 1995 Nonemployee 24 26 Director Stock Option Plan, as amended. Options have been granted under the 1995 Long-Term Incentive Plan to approximately 120 key employees. Preemptive Rights The Company's shareholders have also authorized the Supervisory Board to issue such additional authorized but unissued Common Shares as the Supervisory Board shall determine. Under the law of The Netherlands, such authorization can only be granted for a five-year period and will expire May 28, 2002, subject to future extension(s). Subject to the foregoing, under the Articles of Association, each holder of Common Shares shall generally have a preemptive right to subscribe with regard to any issue of Common Shares pro rata to the shareholder's existing holdings of Common Shares, except for certain issuances to employees and issuances for noncash consideration. Repurchase of Common Shares Subject to certain restrictions contained in the law of The Netherlands and the Articles of Association, the Company currently has the authority to acquire its own fully paid shares in an amount not to exceed 10% of the outstanding shares at any time in open market purchases at any price not to exceed $50.00 per share or its equivalent in other currencies. Such authorization, which has been granted by the shareholders, may not be granted for more than 18 months, is currently valid through November 28, 1999. No such authorization will be required if the Company acquires shares in its own capital for the purpose of transferring the same to employees of the Company or of a group company under a scheme applicable to such employees, provided that such shares are officially listed on an exchange (including the Nasdaq Stock Market). 25 27 PRINCIPAL AND SELLING SHAREHOLDERS The following table sets forth certain information regarding the beneficial ownership of Common Shares as of September 30, 1997, and as adjusted to give effect to the sale of the Common Shares offered hereby, by (i) each person known to the Company to be the beneficial owner of 5% or more of the outstanding Common Shares, (ii) each of the Company's supervisory directors, (iii) all of the Company's Supervisory Directors and executive officers as a group and (iv) each of the Selling Shareholders. Unless otherwise indicated, each person has sole voting and dispositive power over the Common Shares listed. See "Underwriting."
COMMON SHARES COMMON SHARES OWNED PRIOR TO OWNED AFTER OFFERING OFFERING(1) -------------------- -------------------- NUMBER OF NUMBER OF NUMBER OF SUPERVISORY DIRECTORS AND COMMON SHARES COMMON EXECUTIVE OFFICERS SHARES PERCENT OFFERED(1) SHARES PERCENT ------------------------- --------- ------- ---------- --------- ------- Stephen D. Weinroth(2)................. 300,425(3) 2.8 -- 300,425(3) 2.5 David M. Demshur....................... 219,417(4) 2.1 -- 219,417(4) 1.8 Joseph R. Perna........................ 135,375(5) 1.3 -- 135,375(5) 1.1 Richard L. Bergmark.................... 99,806(6) * -- 99,806(6) * John D. Denson......................... 11,499(7) * -- 11,499(7) * Timothy J. Probert..................... 3,000(3) * -- 3,000(3) * Bob G. Agnew........................... 2,300(3) * -- 2,300(3) * Frerik Pluimers........................ 2,000 * -- 2,000 * James A. Read.......................... 2,000(3) * -- 2,000(3) * Jacobus Schouten....................... -- * -- -- * All Supervisory Directors and executive officers as a group.................. 775,822(8) 7.3 -- 775,822(8) 6.5 SELLING SHAREHOLDERS First Britannia Mezzanine N.V.......... 4,201,267 39.6% 2,100,000 2,101,267 17.5% Juliet Challenger, Inc.(9)............. 376,678 3.5% 188,339 188,339 1.6% HCC Investments, Inc.(9)............... 58,449 * 29,224 29,225 * ProTechnics II (Nevada), Inc.(10)...... 219,289 2.1% 19,000 200,289 1.7% The Trustees of Grinnell College....... 6,470 * 6,470 -- -- Roger N. Samdahl....................... 4,741 * 4,741 -- -- Robert Hurst(11)....................... 2,744 * 2,744 -- -- Richard Lee Heine...................... 3,994 * 1,000 2,994 * Banner Partners........................ 814 * 814 -- -- Bryco Investments...................... 814 * 814 -- -- Hubert L. Brown, Jr.................... 412 * 412 -- -- Greg T. Boser.......................... 3,994 * 300 3,664 * The Brown Children Trust #2(12)........ 200 * 200 -- -- Brown Testamentary Trust(13)........... 200 * 200 -- -- Hillman 1985 Limited Partnership(9).... 20 * 20 -- --
- --------------- * Does not exceed 1.0% (1) Assuming that the Underwriters' over-allotment option is not exercised. (2) Mr. Weinroth, a Managing Director of First Britannia Mezzanine N.V., disclaims beneficial ownership of the Common Shares owned by such company. (3) Includes 2,000 shares which may be acquired within 60 days pursuant to outstanding stock options. (4) Includes 11,911 shares held in Mr. Demshur's 401(k) plan and 7,500 shares which may be acquired within 60 days pursuant to outstanding stock options. 26 28 (5) Includes 15,688 shares held in Mr. Perna's 401(k) plan and 6,250 shares which may be acquired within 60 days pursuant to outstanding stock options. (6) Includes 13,137 shares held in Mr. Bergmark's 401(k) plan and 5,000 shares which may be acquired within 60 days pursuant to outstanding stock options. (7) Includes 832 shares held in Mr. Denson's 401(k) plan and 4,000 shares which may be acquired within 60 days pursuant to outstanding stock options. (8) Includes 30,750 shares which may be acquired within 60 days pursuant to outstanding stock options. (9) Juliet Challenger, Inc., HCC Investments, Inc. and the sole general partner of Hillman 1985 Limited Partnership are each indirect, wholly-owned subsidiaries of The Hillman Company, a private corporation engaged in diversified investments and operations. The Hillman Company is controlled by Henry L. Hillman, Elsie Hilliard Hillman and C.G. Grefenstette, Trustees of the Henry L. Hillman Trust, which Trustees share voting and dispositive power over the assets of The Hillman Company and its subsidiaries. (10) ProTechnics II is owned by John W. Chisholm, who had been President and a Director of ProTechnics until the time of its acquisition by the Company on December 31, 1996, following which, he was appointed Vice President, Sales and Marketing of the Company's Petroleum Services Division and has continued to serve as President of ProTechnics. (11) Mr. Hurst was a director of ProTechnics until December 31, 1996, following which, he has held no position with the Company. (12) The Brown Children Trust #2, Hubert L. Brown, Jr., Trustee. (13) Bayard H. Friedman, Mary Jane Johndroe and Hubert L. Brown, Jr., Trustees under the Will of H.L. Brown. 27 29 UNDERWRITING Subject to the terms and conditions of the Underwriting Agreement, the underwriters named below (the "Underwriters"), through their representatives, BT Alex. Brown Incorporated, Credit Suisse First Boston Corporation, Bear, Stearns & Co. Inc. and Morgan Keegan & Company, Inc. (together, the "Representatives"), have severally agreed to purchase from the Company and the Selling Shareholders the following respective number of Common Shares at the public offering price less the underwriting discounts and commissions set forth on the cover page of this Prospectus.
NUMBER OF UNDERWRITERS SHARES ------------ --------- BT Alex. Brown Incorporated................................. Credit Suisse First Boston Corporation...................... Bear, Stearns & Co. Inc..................................... Morgan Keegan & Company, Inc................................ --------- Total............................................. 3,754,278 =========
The Underwriting Agreement provides that the obligations of the Underwriters are subject to certain conditions precedent and that the Underwriters will purchase all of the Common Shares offered hereby if any of such shares are purchased. The Company and the Selling Shareholders have been advised by the Representatives that the Underwriters propose to offer the Common Shares to the public at the public offering price set forth on the cover page of this Prospectus and to certain dealers at such price less a concession not in excess of $0. per share. The Underwriters may allow, and such dealers may re-allow, a concession not in excess of $0. per share to certain other dealers. After the Offering, the offering price and other selling terms may be changed by the Underwriters. The Company and First Britannia have granted the Underwriters an option, exercisable not later than 30 days after the date of this Prospectus, to purchase up to 563,142 additional Common Shares at the public offering price less the underwriting discounts and commissions set forth on the cover page of this Prospectus. To the extent that the Underwriters exercise such option, each of the Underwriters will have a firm commitment to purchase approximately the same percentage thereof that the number of Common Shares purchased by it in the above table bears to 3,754,278, and the Company and the Selling Shareholders will be obligated, pursuant to the option, to sell such shares to the Underwriters. The Underwriters may exercise such option only to cover over-allotments made in connection with the sale of the Common Shares offered hereby. If purchased, the Underwriters will offer such additional shares on the same terms as those on which the 3,754,278 shares are being offered. The Company the Selling Shareholders have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act. The Company and the Selling Shareholders have agreed that they will not sell or offer any Common Shares or options, rights or warrants to acquire any Common Shares for a period of 90 days after the date of this Prospectus without the prior written consent of the Representatives, except for shares issued by the Company (i) in connection with acquisitions and (ii) pursuant to the exercise of options granted under employee stock plans. Further, the Company's Supervisory Directors and executive officers who beneficially own 775,822 shares in the aggregate have agreed not to directly or indirectly sell or offer for sale or otherwise dispose of any Common Shares for a period of 90 days after the date of this Prospectus without the prior written consent of the Representatives. In connection with the Offering, the Underwriters may purchase and sell the Common Shares in the open market. These transactions may include overallotment and stabilizing transactions, "passive" market making and purchases to cover syndicate short positions created in connection 28 30 with the Offering. Stabilizing transactions consist of certain bids or purchases for the purpose of preventing or retarding a decline in the market price of the Common Shares and syndicate short positions involve the sale by the Underwriters of a greater number of shares of Common Shares than they are required to purchase from the Company in the Offering. The Underwriters also may impose a penalty bid, whereby selling concessions allowed to syndicate members or other broker-dealers in respect of the Common Shares sold in the Offering for their account may be reclaimed by the syndicate if such Common Shares are repurchased by the syndicate in stabilizing or covering transactions. These activities may stabilize, maintain or otherwise affect the market price of the Common Shares, which may be higher than the price that might otherwise prevail in the open market; and these activities, if commenced, may be discontinued at any time. These transactions may be effected on the Nasdaq Stock Market, in the over-the-counter market or otherwise. As permitted by Rule 103 under the Exchange Act, certain Underwriters (and selling group members, if any) that are market makers ("passive market makers") in the Common Shares may make bids for or purchases of the Common Shares in the Nasdaq Stock Market until such time, if any, when a stabilizing bid for such securities has been made. Rule 103 generally provides that (1) a passive market maker's net daily purchases of the Common Shares may not exceed 30% of its average daily trading volume in such securities for the two full consecutive calendar months (or any 60 consecutive days ending within the 10 days) immediately preceding the filing date of the registration statement of which this Prospectus forms a part, (2) a passive market maker may not effect transactions or display bids for the Common Shares at a price that exceeds the highest independent bid for the Common Shares by persons who are not passive market makers and (3) bids made by passive market makers must be identified as such. Bankers Trust Company, an affiliate of BT Alex. Brown Incorporated, is a lender and the administrative agent under the Credit Facility and has received customary fees in connection therewith. The net proceeds of this Offering will be used to repay a portion of the Company's indebtedness under the Credit Facility. If the amount to be paid to Bankers Trust Company under the Credit Facility is equal to or exceeds 10% of the net proceeds of this Offering to the Company, the Offering will be conducted in accordance with Rule 2710(c)(8) of the National Association of Securities Dealers, Inc.'s Conduct Rules. See "Use of Proceeds." LEGAL MATTERS Certain legal matters in connection with the offering made hereby will be passed upon for the Company by Vinson & Elkins L.L.P., Houston, Texas, U.S. counsel to the Company. The validity of the Common Shares offered hereby is being passed upon for the Company by Nauta Dutilh, Rotterdam, The Netherlands, Netherlands counsel to the Company. Andrews & Kurth L.L.P., Houston, Texas, will serve as counsel to the Underwriters. EXPERTS The consolidated financial statements of the Company incorporated by reference in this Prospectus, to the extent and for the periods indicated in their report, have been audited by Arthur Andersen LLP, independent public accountants. In that report, that firm states that with respect to a certain subsidiary, its opinion is based on the report of other independent public accountants, namely Grant Thornton LLP. The consolidated financial statements referred to above have been incorporated by reference herein in reliance upon the authority of those firms as experts in giving said reports. The financial statements of Saybolt International B.V. incorporated in this Prospectus by reference to the Current Report on Form 8-K/A of Core Laboratories N.V. dated July 21, 1997 have been so incorporated in reliance on the report of Price Waterhouse LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. 29 31 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance therewith, files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of the Commission: Midwest Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Northeast Regional Office, 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such material also can be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates, or from the site maintained by the Commission on the Internet World Wide Web at http://www.sec.gov. In addition, copies of reports filed with the Commission may be inspected at the Nasdaq Stock Market, 80 Merritt Boulevard, Trumbull, Connecticut 06611. This Prospectus constitutes a part of a Registration Statement on Form S-3 (together with all amendments and exhibits thereto, the "Registration Statement") filed by the Company with the Commission under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Common Shares offered hereby. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Reference is made to the Registration Statement and to the exhibits relating thereto for further information with respect to the Company and the Common Shares offered hereby. Any statements contained herein concerning the provisions of any document filed as an exhibit to the Registration Statement or otherwise filed with the Commission or incorporated by reference herein are not necessarily complete, and in each instance reference is made to the copy of such document so filed for a more complete description of the matter involved. Each such statement is qualified in its entirety by such reference. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents, filed with the Commission by the Company pursuant to the Exchange Act, are incorporated herein by reference and made a part of this Prospectus: (i) the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996; (ii) the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, its Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 1997; (iii) the Company's Current Report on Form 8-K filed May 23, 1997; and (iv) the Company's Current Report on Form 8-K/A filed July 21, 1997. Each document filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of this Offering shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such document. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained in this Prospectus or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. 30 32 THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, ON THE REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED HEREIN BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS). WRITTEN OR TELEPHONE REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO JACOBUS SCHOUTEN, CORE LABORATORIES N.V., HERENGRACHT 424, 1017 BZ AMSTERDAM, THE NETHERLANDS, TELEPHONE (31-20) 420-3191. 31 33 ====================================================== NO DEALER, SALESMAN OR OTHER PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY OF THE COMMON SHARES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. ------------------ TABLE OF CONTENTS
PAGE ---- Prospectus Summary.................... 3 Risk Factors.......................... 7 Use of Proceeds....................... 9 Capitalization........................ 10 Price Range of Common Shares.......... 11 Dividend Policy....................... 11 Selected Consolidated Financial Data................................ 12 Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 13 Business.............................. 16 Management............................ 22 Description of Share Capital.......... 24 Principal and Selling Shareholders.... 26 Underwriting.......................... 28 Legal Matters......................... 29 Experts............................... 29 Available Information................. 30 Incorporation of Certain Documents by Reference........................... 30
====================================================== ====================================================== 3,754,278 SHARES [CORE LAB LOGO] CORE LABORATORIES N.V. COMMON SHARES ------------------- PROSPECTUS ------------------- BT ALEX. BROWN CREDIT SUISSE FIRST BOSTON BEAR, STEARNS & CO. INC. MORGAN KEEGAN & COMPANY, INC. , 1997 ====================================================== 34 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth all expenses payable by the Company or the Selling Shareholders in connection with the issuance and distribution of the Common Shares registered hereby, other than underwriting discounts and commissions. The Selling Shareholders will pay only the legal fees and expenses of their counsel. All the amounts shown are estimates, except the registration and NASD filing fees. Registration fee............................................ $ 59,394 NASD filing fee............................................. 18,502 Netherlands Stock Issuance Tax.............................. $560,000 Fees and expenses of accountants............................ 60,000 Fees and expenses of legal counsel of the Company........... 120,000 Fees and expenses of legal counsel of the Selling Shareholders.............................................. 20,000 NASDAQ Stock Market Listing Fee............................. 17,500 Printing and engraving expenses............................. 55,000 Blue Sky fees and expenses (including counsel).............. 2,000 Miscellaneous............................................... 52,604 -------- Total............................................. $965,000 ========
- --------------- * To be provided by amendment. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Certain of the Company's directors and executive officers have entered into indemnity agreements with the Company. The agreements provide, to the fullest extent permitted by the law of The Netherlands, that the Company will indemnify the directors and executive officers against any costs and expenses, judgments, settlements and fines incurred in connection with any claim involving a director or an executive officer by reason of his position as director or officer. A form of indemnity agreement containing such standards of conduct is included as an exhibit to the Company's Registration Statement of which this Prospectus is a part. The Articles of Association provide that the Company will, to the full extent permitted by the law of The Netherlands, as amended from time to time, indemnify, and advance expenses to, each of its now acting and former board members, officers, employees and agents, whenever any such person is made a party, or threatened to be made a party, in any action, suit or proceeding by reason of his service with the Company. The Articles of Association also provide that the Company may purchase and maintain directors' and officers' liability insurance. ITEM 16. EXHIBITS. The following documents are filed as exhibits to this Registration Statement, including those exhibits incorporated herein by reference to a prior filing of the Company under the Securities Act or the Exchange Act as indicated below:
INCORPORATED BY EXHIBIT REFERENCE FROM THE NUMBER EXHIBIT TITLE FOLLOWING DOCUMENTS ------- ------------- ------------------- **1.1 -- Form of Underwriting Agreement.................. 3.1 -- Articles of Association of the Company, as amended (including English translation)......... Form F-1, September 20, 1995 4.1 -- Form of certificate representing Common Shares.......................................... Form F-1, September 20, 1995
II-1 35
INCORPORATED BY EXHIBIT REFERENCE FROM THE NUMBER EXHIBIT TITLE FOLLOWING DOCUMENTS ------- ------------- ------------------- **5.1 -- Opinion of Nauta Dutilh......................... 10.1 -- Core Laboratories N.V. 1995 Long-Term Incentive Plan (As Amended and Restated Effective as of May 29, 1997)................................... Proxy Statement dated May 2, 1997 for Annual Meeting of Shareholders 10.2 -- Core Laboratories N.V. 1995 Nonemployee Director Stock Option Plan (As Amended and Restated Effective as of May 29, 1997)................... Proxy Statement dated May 2, 1997 for Annual Meeting of Shareholders 10.3 -- Form of Registration Rights Agreement entered into by the Company and certain of its shareholders, dated September 15, 1995.......... Form 10-Q, November 10, 1995 10.4 -- Purchase and Sale Agreement between Core Holdings B.V. and Western Atlas International, Inc., Western Atlas International, Nigeria Ltd., Western Atlas de Venezuela, C.A., Western Atlas Canada Ltd. and Core Laboratories Australia Pty. Ltd. dated as of September 30, 1994............. Form F-1, September 20, 1995 10.5 -- Non-competition Agreement between Western Atlas International, Inc. and Core Holdings B.V. dated as of September 30, 1994........................ Form F-1, September 20, 1995 10.6 -- Form of Indemnification Agreement entered into by the Company and certain of its directors and officers........................................ Form F-1, September 20, 1995 10.7 -- Indemnification Agreements, each dated as of October 20, 1995, between the Company and each of its directors and executive officers......... Form 10-Q, November 10, 1995 *10.8 -- Amended and Restated Credit Agreement among Core Laboratories N.V., Core Laboratories Inc., Core Laboratories (U.K.) Limited, Bankers Trust Company, Nationsbank, N.A. and CIBC Inc., dated as of July 18, 1997............................. **23.1 -- Consent of Arthur Andersen LLP.................. **23.2 -- Consent of Grant Thornton LLP................... **23.3 -- Consent of Price Waterhouse LLP................. **23.4 -- Consent of Nauta Dutilh......................... Contained in Exhibit 5.1 *24.1 -- Powers of Attorney.............................. Included on the signature page to this Registration Statement
- --------------- * Previously filed. ** Filed herewith. II-2 36 ITEM 17. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (b) The registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefits plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to any charter provision, by-law, contract, arrangement, statute, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted against the registrant by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-3 37 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Amsterdam, The Netherlands, on the 19th day of November, 1997. CORE LABORATORIES N.V. BY: CORE LABORATORIES INTERNATIONAL B.V. By /s/ JACOBUS SCHOUTEN -------------------------------------- Jacobus Schouten Managing Director PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE --------- ----- ---- /s/ DAVID M. DEMSHUR President, Chief Executive November 19, 1997 - ----------------------------------------------------- Officer and Supervisory Director David M. Demshur (Principal Executive Officer and Authorized Representative in the United States) /s/ JOSEPH R. PERNA Senior Vice President and November 19, 1997 - ----------------------------------------------------- Supervisory Director Joseph R. Perna /s/ RICHARD L. BERGMARK Chief Financial Officer, November 19, 1997 - ----------------------------------------------------- Treasurer and Supervisory Richard L. Bergmark Director (Principal Financial and Accounting Officer) * Supervisory Director November 19, 1997 - ----------------------------------------------------- Stephen D. Weinroth Supervisory Director - ----------------------------------------------------- James A. Read * Supervisory Director November 19, 1997 - ----------------------------------------------------- Jacobus Schouten * Supervisory Director November 19, 1997 - ----------------------------------------------------- Timothy J. Probert Supervisory Director - ----------------------------------------------------- Bob G. Agnew * Supervisory Director November 19, 1997 - ----------------------------------------------------- Frerik Pluimers *By: /s/ RICHARD L. BERGMARK ------------------------------------------------- Richard L. Bergmark Attorney-in-Fact
II-4 38 INDEX TO EXHIBITS
INCORPORATED BY EXHIBIT REFERENCE FROM THE NUMBER EXHIBIT TITLE FOLLOWING DOCUMENTS ------- ------------- ------------------- **1.1 -- Form of Underwriting Agreement.................. 3.1 -- Articles of Association of the Company, as amended (including English translation)......... Form F-1, September 20, 1995 4.1 -- Form of certificate representing Common Shares.......................................... Form F-1, September 20, 1995 **5.1 -- Opinion of Nauta Dutilh......................... 10.1 -- Core Laboratories N.V. 1995 Long-Term Incentive Plan (As Amended and Restated Effective as of May 29, 1997)................................... Proxy Statement dated May 2, 1997 for Annual Meeting of Shareholders 10.2 -- Core Laboratories N.V. 1995 Nonemployee Director Stock Option Plan (As Amended and Restated Effective as of May 29, 1997)................... Proxy Statement dated May 2, 1997 for Annual Meeting of Shareholders 10.3 -- Form of Registration Rights Agreement entered into by the Company and certain of its shareholders, dated September 15, 1995.......... Form 10-Q, November 10, 1995 10.4 -- Purchase and Sale Agreement between Core Holdings B.V. and Western Atlas International, Inc., Western Atlas International, Nigeria Ltd., Western Atlas de Venezuela, C.A., Western Atlas Canada Ltd. and Core Laboratories Australia Pty. Ltd. dated as of September 30, 1994............. Form F-1, September 20, 1995 10.5 -- Non-competition Agreement between Western Atlas International, Inc. and Core Holdings B.V. dated as of September 30, 1994........................ Form F-1, September 20, 1995 10.6 -- Form of Indemnification Agreement entered into by the Company and certain of its directors and officers........................................ Form F-1, September 20, 1995 10.7 -- Indemnification Agreements, each dated as of October 20, 1995, between the Company and each of its directors and executive officers......... Form 10-Q, November 10, 1995 *10.8 -- Amended and Restated Credit Agreement among Core Laboratories N.V., Core Laboratories Inc., Core Laboratories (U.K.) Limited, Bankers Trust Company, Nationsbank, N.A. and CIBC Inc., dated as of July 18, 1997............................. **23.1 -- Consent of Arthur Andersen LLP.................. **23.2 -- Consent of Grant Thornton LLP................... **23.3 -- Consent of Price Waterhouse LLP................. **23.4 -- Consent of Nauta Dutilh......................... Contained in Exhibit 5.1 *24.1 -- Powers of Attorney.............................. Included on the signature page to this Registration Statement
- --------------- * Previously filed. ** Filed herewith. EX-1.1 2 FORM OF UNDERWRITING AGREEMENT 1 EXHIBIT 1.1 3,754,278 Shares CORE LABORATORIES N.V. Common Shares (par value NLG 0.03 per share) EQUITY UNDERWRITING AGREEMENT ----------------------------- November __, 1997 BT Alex. Brown Incorporated Credit Suisse First Boston Corporation Bear, Stearns & Co. Inc. Morgan Keegan & Company, Inc. As Representatives of the Several Underwriters c/o BT Alex. Brown Incorporated One South Street Baltimore, Maryland 21202 Ladies and Gentlemen: Core Laboratories N.V., a Netherlands Naamloze Vennootschap (the "Company"), and certain shareholders of the Company (the "Selling Shareholders") propose to sell to the several underwriters named in Schedule I hereto (the "Underwriters") for whom you are acting as representatives (the "Representatives") an aggregate of 3,754,278 shares of the Company's Common Shares, par value NLG 0.03 per share (the "Firm Shares"), of which 1,400,000 shares will be sold by the Company and 2,354,278 shares will be sold by the Selling Shareholders. The respective amounts of the Firm Shares to be so purchased by the several Underwriters are set forth opposite their names in Schedule I hereto, and the respective amounts to be sold by the Selling Shareholders are set forth opposite their names in Schedule II hereto. The Company and the Selling Shareholders are sometimes referred to herein collectively as the "Sellers." The Company and certain of the Selling Shareholders have granted to the Underwriters an option to purchase up to an additional 563,142 Common Shares (the "Option Shares). The respective amounts of the Option Shares to be sold by 2 the Company and certain of the Selling Shareholders upon exercise in full of such option are set forth opposite their names on Schedule III hereto. As the Representatives, you have advised the Company and the Selling Shareholders (a) that you are authorized to enter into this Agreement on behalf of the several Underwriters and (b) that the several Underwriters are willing, acting severally and not jointly, to purchase the numbers of Firm Shares set forth opposite their respective names in Schedule I, plus their pro rata portion of the Option Shares if you elect to exercise the over-allotment option in whole or in part for the accounts of the several Underwriters. The Firm Shares and the Option Shares (to the extent the aforementioned option is exercised) are herein collectively called the "Shares." In consideration of the mutual agreements contained herein and of the interests of the parties in the transactions contemplated hereby, the parties hereto agree as follows: 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING SHAREHOLDERS. (a) The Company represents and warrants to each of the Underwriters, as of the date hereof, as of the Closing Date (as defined below) and as of the Option Closing Date (as defined below), as follows: (i) A registration statement on Form S-3 (File No. 333-39265) with respect to the Shares has been prepared by the Company in conformity with the requirements of the Securities Act of 1933, as amended (the "Act"), and the rules and regulations (the "Rules and Regulations") of the Securities and Exchange Commission (the "Commission") thereunder and has been filed with the Commission. The Company has complied with the conditions for the use of Form S-3. Copies of such registration statement, including any amendments thereto, the preliminary prospectuses (meeting the requirements of the Rules and Regulations) contained therein and the exhibits, financial statements and schedules, as finally amended and revised, have heretofore been delivered by the Company to the Representatives. Such registration statement, together with any registration statement filed by the Company pursuant to Rule 462(b) of the Act, is herein referred to as the "Registration Statement," which shall be deemed to include all information omitted therefrom in reliance upon Rule 430A and contained in the Prospectus referred to below. The Registration Statement has become effective under the Act and no post-effective amendment to the Registration Statement has been filed as of the date of this Agreement. "Prospectus" means the form of prospectus first filed with the Commission pursuant to Rule 424 of the Rules and Regulations. Each preliminary prospectus included in the Registration Statement prior to the time it becomes effective is herein referred to as a "Preliminary Prospectus." Any reference herein to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents incorporated by reference therein and, in the case of any reference herein to any Prospectus, also shall be deemed to include any documents incorporated by reference therein, and any supplements or amendments thereto, filed with the 2 3 Commission after the date of filing of the Prospectus under Rules 424 or 430A, and prior to the termination of the offering of the Shares by the Underwriters. (ii) The Company is a Naamloze Vennootschap duly incorporated and validly existing in good standing under the laws of The Netherlands, with corporate power and authority to own or lease and operate its properties and to conduct its business as described in the Registration Statement. The Company is duly qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification other than where the failure to be so qualified could not reasonably be expected to have a material adverse effect on the earnings, business, properties, assets, rights, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or to prevent the consummation of the transactions contemplated hereby. (iii) The outstanding shares of Common Shares of the Company, including all Shares to be sold by the Selling Shareholders, have been duly authorized and validly issued and are fully paid and non-assessable; the Shares to be issued and sold by the Company have been duly authorized and when issued and paid for as contemplated herein will be validly issued, fully paid and non-assessable. No preemptive rights of shareholders exist with respect to any of the Shares or the issue and sale thereof. Neither the filing of the Registration Statement nor the offering or sale of the Shares as contemplated by this Agreement gives rise to any rights, other than those that have been waived or satisfied, for or relating to the registration of any shares of Common Shares. (iv) There are no outstanding securities of the Company convertible or exchangeable into or evidencing the right to purchase or subscribe for any shares of capital stock of the Company and there are no outstanding or authorized options, warrants or rights of any character obligating the Company to issue any shares of its capital stock (except (i) as described in or contemplated by the Prospectus with respect to the two-for-one stock split of the outstanding Common Shares, payable on December 19, 1997 to shareholders of record as of the close of business on December 1, 1997, (ii) with respect to options to purchase 74,896 Common Shares held by former holders of options to purchase capital stock of ProTechnics Company and (iii) with respect to outstanding options issued pursuant to the Company's stock option plans) or any securities convertible or exchangeable into or evidencing the right to purchase or subscribe for any shares of such stock. In connection with this offering, the Company has not offered and will not offer its Common Shares or any other securities convertible into or exchangeable or exercisable for Common Shares in a manner in violation of the Act. The Company has not distributed and will not distribute any offering material other than the Prospectus in connection with the offer and sale of the Shares. (v) The information set forth under the caption "Capitalization" in the Prospectus is true and correct in all material respects. All of the Shares conform in all material respects to the description thereof contained in the Registration Statement. The form of certificates for the Shares conforms in all material respects to the corporate law of the jurisdiction of the 3 4 Company's organization and, when executed and delivered in definitive form, will be sufficient to convey the interest in the Company purported to be evidenced thereby. (vi) Each of the subsidiaries of the Company as listed in Exhibit A hereto (collectively, the "Subsidiaries") has been duly incorporated and is validly existing as an entity in good standing under the laws of the jurisdiction of its organization, with all power and authority to own or lease and operate its properties and to conduct its business as described in the Registration Statement. The Subsidiaries are the only "significant subsidiaries" (as such term is defined in the Rules and Regulations), direct or indirect, of the Company. Each of the Subsidiaries is duly qualified to transact business in all jurisdictions in which the conduct of such Subsidiary's business requires such qualification other than where the failure to be so qualified could not reasonably be expected to have a material adverse effect on the earnings, business, properties, assets, rights, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or to prevent the consummation of the transactions contemplated hereby. The outstanding shares of capital stock of each of the Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company or another Subsidiary free and clear of all security interests, liens, encumbrances, equities and other claims, except as otherwise indicated in Exhibit A hereto; no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligations into shares of capital stock or ownership interests in the Subsidiaries are outstanding. (vii) This Agreement has been duly authorized, executed and delivered by the Company. (viii) The Commission has not issued an order preventing or suspending the use of the Prospectus relating to the proposed offering of the Shares nor instituted proceedings for that purpose. The Registration Statement contains, and the Prospectus and any amendments or supplements thereto will contain, all statements that are required to be stated therein by the requirements of the Act and the Rules and Regulations; and the Registration Statement conforms, and the Prospectus will conform, in all material respects to the requirements of the Act and the Rules and Regulations. The documents incorporated by reference in the Registration Statement and the Prospectus, at the time filed with the Commission, conformed in all material respects to the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the Commission thereunder, or the Act and the Rules and Regulations, as applicable. The Registration Statement does not contain, and any amendment to the Registration Statement will not contain, any untrue statement of a material fact and does not omit, and will not omit, to state any material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus does not contain, and any amendments or supplements to the Prospectus will not contain, any untrue statement of material fact and does not omit, and will not omit, to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, 4 5 however, that the Company makes no representations or warranties as to information contained in or omitted from the Registration Statement or the Prospectus, or any such amendment or supplement, in reliance upon, and in conformity with, written information furnished to the Company by or on behalf of any Underwriter through the Representatives or by or on behalf of the Selling Shareholders, specifically for use in the preparation thereof. (ix) There are no contracts or other documents that are required by the Act or by the Rules and Regulations to be filed as exhibits to the Registration Statement that have not been so filed. The description in the Prospectus of material contracts and other documents is accurate in all material respects; to the knowledge of the Company, all material contracts described in or filed as exhibits to the Registration Statement are in full force and effect on the date hereof and are enforceable by the Company in accordance with their respective terms; and neither the Company nor any of its Subsidiaries, nor, to the Company's knowledge, any other party, is in breach of or default under any such contracts. (x) The consolidated financial statements of the Company and the Subsidiaries, together with related notes and schedules as incorporated by reference in the Registration Statement, present fairly the financial position and the results of operations and cash flows of the Company and the consolidated Subsidiaries, at the indicated dates and for the indicated periods. Such financial statements and related schedules have been prepared in accordance with generally accepted principles of accounting, consistently applied throughout the periods involved, except as disclosed therein, and all adjustments necessary for a fair presentation of results for such periods have been made. The summary financial and statistical data included or incorporated by reference in the Registration Statement presents in all material respects the information shown therein and such data has been compiled on a basis consistent with the financial statements presented therein and the books and records of the Company. The pro forma financial statements and other pro forma financial information incorporated by reference in the Registration Statement and the Prospectus present fairly the information shown therein, have been prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements, have been properly compiled on the pro forma bases described therein, and, in the opinion of the Company, the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions or circumstances referred to therein. (xi) Arthur Anderson LLP, who have certified certain of the financial statements filed with the Commission and incorporated by reference in the Registration Statement, are independent public accountants as required by the Act and the Rules and Regulations. Grant Thornton LLP, who have certified the financial statements of certain of the Subsidiaries that were used in preparing certain of the financial statements referred to in the preceding sentence, are independent public accountants as required by the Act and the Rules and Regulations. 5 6 (xii) There is no action, suit, claim or proceeding pending or, to the knowledge of the Company, threatened against the Company or any of the Subsidiaries before any court or administrative agency or otherwise that if determined adversely to the Company or any of its Subsidiaries might result in any material adverse change in the earnings, business, properties, assets, rights, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or to prevent the consummation of the transactions contemplated hereby. (xiii) The Company and the Subsidiaries have good and indefeasible title to all of the properties and assets reflected in the financial statements described in clause (x) above (or as described in the Registration Statement), subject to no lien, mortgage, pledge, charge or encumbrance of any kind except those reflected in such financial statements (or as described in the Registration Statement or in a document filed as an exhibit to the Registration Statement) or that are not material in amount. The Company and the Subsidiaries occupy their leased properties under valid and binding leases. (xiv) The Company and the Subsidiaries have filed all federal state, local and foreign tax returns that have been required to be filed and have paid all taxes indicated by said returns and all assessments received by them or any of them to the extent that such taxes have become due and are not being contested in good faith and for which an adequate reserve for accrual has been established in accordance with generally accepted accounting principles and except for such taxes the nonpayment of which would not have a material adverse affect on the earnings, business, properties, assets, rights, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole. All tax liabilities have been adequately provided for in the financial statements of the Company, and the Company does not know of any actual or proposed additional material tax assessments. (xv) Since the respective dates as of which information is given in the Registration Statement, as it may be amended or supplemented, there has not been any material adverse change or any development involving a prospective material adverse change in or affecting the earnings, business, properties, assets, rights, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole, whether or not occurring in the ordinary course of business, and there has not been any material transaction entered into or any material transaction that is probable of being entered into by the Company or the Subsidiaries, other than transactions in the ordinary course of business and changes and transactions described in the Registration Statement, as it may be amended or supplemented. The Company and the Subsidiaries have no material contingent obligations that are required to be disclosed in the Company's financial statements included or incorporated by reference in the Registration Statement and are not so disclosed. (xvi) Neither the Company nor any of the Subsidiaries is or with the giving of notice or lapse of time, or both, will be in violation of or in default under its charter, by-laws or other governing documents or under any agreement, lease, contract, indenture or other instrument 6 7 or obligation to which it is a party or by which it, or any of its properties, is bound except for such violations or defaults that would not reasonably be expected to have a material adverse effect on the business, properties, assets, rights, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole. The execution and delivery of this Agreement and the consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not (1) violate or conflict with any provision of the charter, by-laws or other governing documents of the Company or any of its Subsidiaries, (2) conflict with or result in a breach of any of the terms or provisions of, or constitute a default (or an event that, with the giving of notice or lapse of time, or both, would constitute a default) under, or require, except for such consents as have been obtained and are currently in effect, consent under, or result in the creation or imposition of any lien, charge, security interest or encumbrance upon any property or assets of the Company or any of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust, franchise, license, permit or other agreement, understanding or instrument to which the Company or any of its Subsidiaries is a party or by which any of them or their respective properties or assets may be bound or (3) violate or conflict with any judgment, decree, order, statute, rule or regulation applicable to the Company or any Subsidiary of any court or of any public, governmental or regulatory body or agency having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties or assets, except for any such violation, conflict, breach, default or lien specified in clause (1), (2) or (3) above as would, in the aggregate, not have a material adverse effect on the Company and its Subsidiaries taken as a whole. (xvii) Each approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body necessary in connection with the execution and delivery by the Company of this Agreement and the consummation of the transactions herein contemplated (except such additional steps as may be required by the Commission, the National Association of Securities Dealers, Inc. (the "NASD") or such additional steps as may be necessary to qualify the Shares for public offering by the Underwriters under state securities or Blue Sky laws) has been obtained or made and is in full force and effect. (xviii) The Company has timely filed all reports required to be filed under the Act and the Rules and Regulations and the Exchange Act and the rules and regulations promulgated thereunder; and all such reports, and any amendments or supplements thereto, complied at the time filed in all material respects with the provisions, as appropriate, of the Act and the Rules and Regulations or the Exchange Act and the rules and regulations promulgated thereunder. (xix) The Company and each of its Subsidiaries own or possess adequate rights to use all patents, trademarks, trademark registrations, service marks, service mark registrations, trade names, mask works, copyrights, licenses, inventions, trade secrets and rights necessary for the conduct of their business as described in the Prospectus, and the Company is not aware of any claim to the contrary or any challenge by any other person to the rights of the 7 8 Company and each of its Subsidiaries with respect to the foregoing. To the knowledge of the Company, the business of the Company and each of the Subsidiaries as now conducted does not infringe or conflict with, in any material respect, patents, trademarks, service marks, trade names, mask works, copyrights, licenses, inventions, trade secrets or other intellectual property or franchise rights of any person or entity which infringement or conflict has not been resolved. No claim has been made alleging the infringement by the Company or any Subsidiary of any patent, trademark, service mark, trade name, mask work, copyright, license, invention, trade secret or other intellectual property or franchise right of any person or entity. The Company or one of its Subsidiaries has clear title to its patents and patent applications reflected in the financial statements described in clause (x) above or discussed in the Registration Statement or the Prospectus. The Company knows of no material infringement by others of patents, trademarks, service marks, trade names, mask works, copyrights, licenses, inventions, trade secrets or other intellectual property or franchise rights owned by or licensed to the Company or one of its Subsidiaries. (xx) Neither the Company, nor to the Company's knowledge, any of its Subsidiaries, has taken or may take, directly or indirectly, any action designed to cause or result in, or that has constituted or that might reasonably be expected to constitute, the stabilization or manipulation of the price of the shares of Common Shares to facilitate the sale or resale of the Shares. The Company acknowledges that the Underwriters may engage in passive market making transactions in the Shares on The NASDAQ Stock Market in accordance with Regulation M under the Exchange Act. (xxi) Neither the Company nor any Subsidiary is an "investment company" within the meaning of such term under the Investment Company Act of 1940, (as amended, the "1940 Act") and the rules and regulations of the Commission thereunder. (xxii) The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (1) transactions are executed in accordance with management's general or specific authorization; (2) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (3) access to assets is permitted only in accordance with management's general or specific authorization; and (4) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (xxiii) The Company and each of its Subsidiaries carry, or are covered by, insurance issued by insurers of recognized financial responsibility against such losses and risks and in such amounts as is customary for companies of comparable size engaged in a similar business; and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not result in any material adverse change in the earnings, business, properties, assets, rights, operations or condition (financial or otherwise) of the 8 9 Company and its Subsidiaries taken as a whole or to prevent the consummation of the transactions contemplated hereby. (xxiv) The Company and each of its Subsidiaries are in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for which the Company or any of its Subsidiaries would have any material liability; neither the Company nor any of its Subsidiaries has incurred or expects to incur material liability under (1) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or (2) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company or any of its Subsidiaries would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and nothing has occurred, whether by action or by failure to act, that would cause the loss of such qualification. (xxv) To the Company's knowledge, there are no affiliations or associations between any member of the NASD and any of the Company's officers, directors or 5% or greater securityholders. (xxvi) To the Company's knowledge, no labor problem exists or is imminent with respect to the Company's employees or employees of any of the Subsidiaries that could reasonably be expected to have a material adverse effect on the earnings, business, properties, assets, rights, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or to prevent the consummation of the transactions contemplated hereby. (xxvii) Neither the Company nor any of its Subsidiaries nor, to the Company's knowledge, any officer or director purporting to act on behalf of the Company or any of its Subsidiaries has at any time: (1) made any contributions to any candidate for political office, or failed to disclose fully any such contributions, in violation of law; or (2) made any payment to any state, federal or foreign governmental officer or official or other person charged with similar public or quasi-public duties, other than payments required or allowed by applicable law. (xviii) Neither the Company nor any of its Subsidiaries is required to register as a "broker" or "dealer" in accordance with the provisions of the Exchange Act or the rules and regulations promulgated thereunder. (xxix) The Company and each of the Subsidiaries have complied and will comply with all the provisions of Florida Statutes, Section 517.075 (Chapter 92-198, Laws of Florida). Neither the Company nor any of its Subsidiaries does business with the government of Cuba or any person or affiliate located in Cuba. 9 10 (xxx) Neither the Company nor any of its Subsidiaries is in violation of (1) any applicable foreign, federal, state, provincial or local laws or regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants, including, without limitation, the United States Environmental Protection Act, the United States Toxic Substances Control Act and the United States Occupational Safety and Health Act (or their foreign equivalents) ("Environmental Laws"); (2) any applicable foreign, federal, state, provincial or local laws or regulations relating to discrimination in the hiring, promoting or paying of employees; or (3) any applicable foreign, federal, state, provincial or local wages and hours laws or regulations; which, in each case, could reasonably be expected to have a material adverse effect on the earnings, business, properties, assets, rights, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or to prevent the consummation of the transactions contemplated hereby. (xxxi) The Company and each of its Subsidiaries have such permits, licenses, certificates, franchises and authorizations of governmental or regulatory authorities ("permits"), including, without limitation, under any applicable Environmental Law, as are necessary to own or lease and operate their properties and to conduct their business, except for those permits, the absence of which could not reasonably be expected to have a material adverse effect on the earnings, business, properties, assets, rights, operations or condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or to prevent the consummation of the transactions contemplated hereby; the Company and each of its Subsidiaries have fulfilled and performed all material obligations with respect to such permits and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or results in any other material impairment of the rights of the holder of any such permit; and such permits contain no restrictions that are burdensome to the Company or any of its Subsidiaries, except for such restrictions that could not reasonably be expected to have a material adverse effect on the business or condition (financial or otherwise) of the Company or any of its Subsidiaries taken as a whole. (b) Each of the Selling Shareholders, severally and not jointly, represents and warrants to each of the Underwriters, as of the date hereof, as of the Closing Date and as of the Option Closing Date (with respect to those Selling Shareholders offering Option Shares), as follows: (i) Such Selling Shareholder has all requisite power, authority, authorizations, approvals, orders and consents to enter into this Agreement and the Letter of Transmittal and Custody Agreement referred to below and to carry out the provisions and conditions hereof and thereof. (ii) This Agreement and the Letter of Transmittal and Custody Agreement referred to below have been duly authorized, executed and delivered by or on behalf of such Selling Shareholder and each constitutes a legal, valid and binding agreement of such Selling Shareholder and is enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, 10 11 moratorium or similar laws relating to or affecting creditors' rights generally and by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law) and except as rights to indemnity and contribution hereunder may be limited under applicable law. (iii) All information pertaining to such Selling Shareholder furnished in writing by the Selling Shareholder expressly for use in the Registration Statement or the Prospectus did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading. (iv) Such Selling Shareholder has and will have good and valid title to the Firm Shares and any Option Shares to be sold by such Selling Shareholder pursuant hereto, free and clear of all security interests, liens, encumbrances, equities and other claims, and full right, power and authority to effect the sale and delivery of such Firm Shares and Option Shares; and upon the delivery of, against payment for, such Firm Shares and Option Shares pursuant to this Agreement, the Selling Shareholder will deliver to the Underwriters good and valid title thereto, free and clear of all security interests, liens, encumbrances, equities and other claims. (v) Such Selling Shareholder has not taken and will not take, directly or indirectly, any action designed to, or that has constituted, or that might reasonably be expected to cause or result in the stabilization or manipulation of the price of the Common Shares of the Company and, other than as permitted by the Act, the Selling Shareholder will not distribute any prospectus or other offering material in connection with the offering of the Shares. 11 12 2. PURCHASE, SALE AND DELIVERY OF THE FIRM SHARES. (a) On the basis of the representations, warranties and covenants herein contained, and subject to the conditions herein set forth, the Sellers agree to sell to the Underwriters and each Underwriter agrees, severally and not jointly, to purchase, at a price of $_____ per share, the number of Firm Shares set forth opposite the name of each Underwriter in Schedule I hereof, subject to adjustments in accordance with Section 9 hereof. The number of Firm Shares to be purchased by each Underwriter from each Seller shall be as nearly as practicable in the same proportion to the total number of Firm Shares being sold by each Seller as the number of Firm Shares being purchased by each Underwriter bears to the total number of Firm Shares to be sold hereunder. The obligations of the Company and of each of the Selling Shareholders shall be several and not joint. (b) Certificates in negotiable form for the total number of the Shares to be sold hereunder by the Selling Shareholders have been placed in custody with Richard L. Bergmark as custodian (the "Custodian") pursuant to that certain letter of transmittal and agreement between the Selling Shareholders and the Custodian (the "Letter of Transmittal and Custody Agreement") executed by each Selling Shareholder for delivery of all Firm Shares and any Option Shares to be sold hereunder by the Selling Shareholders. Each of the Selling Shareholders specifically agrees that the Firm Shares and any Option Shares represented by the certificates held in custody for the Selling Shareholders under the Letter of Transmittal and Custody Agreement are subject to the interests of the Underwriters hereunder, that the arrangements made by the Selling Shareholders for such custody are irrevocable to that extent, and that the obligations of the Selling Shareholders hereunder shall not be terminable by any act or deed of the Selling Shareholders (or by any other person, firm or corporation including the Company, the Custodian or the Underwriters) or by operation of law (including the death of an individual Selling Shareholder or the dissolution of a corporate Selling Shareholder) or by the occurrence of any other event or events, except as set forth in the Letter of Transmittal and Custody Agreement. If any such event should occur prior to the delivery to the Underwriters of the Firm Shares or the Option Shares hereunder, certificates for the Firm Shares or the Option Shares, as the case may be, shall be delivered by the Custodian in accordance with the terms and conditions of this Agreement as if such event has not occurred. The Custodian is authorized to receive and acknowledge receipt of the proceeds of sale of the Shares held by it against delivery of such Shares. (c) Payment for the Firm Shares to be sold hereunder is to be made in federal (same day) funds to an account designated by the Company for the shares to be sold by it and to an account designated by the Custodian for the shares to be sold by the Selling Shareholders, in each case against delivery of certificates therefor to the Representatives for the several accounts of the Underwriters. Such payment and delivery are to be made at the offices of BT Alex. Brown Incorporated at 10:00 a.m., New York time, on the third business day after the date of this Agreement or at such other time and date not later than five business days thereafter as the Representatives and the Company shall agree upon, such time and date being herein referred to as the "Closing Date." (As used herein, "business day" means a day on which the New York Stock Exchange is open for trading and on which banks in New York are open for business and not permitted by law or executive order to be closed.) The certificates for the Firm Shares will be delivered in such denominations and in such registrations as the Representatives request in writing not later than the second full business day prior 12 13 to the Closing Date, and will be made available for inspection by the Representatives at least one business day prior to the Closing Date. (d) In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company and certain of the Selling Shareholders listed on Schedule III hereto hereby grant an option to the several Underwriters to purchase the Option Shares at the price per share as set forth in paragraph (a) of this Section 2. The maximum number of Option Shares to be sold by the Company and the Selling Shareholders is set forth opposite their respective names on Schedule III hereto. The option granted hereby may be exercised in whole or in part by giving written notice (i) at any time before the Closing Date and (ii) only once thereafter within 30 days after the date of this Agreement, by you, as Representatives of the several Underwriters, to the Company, the Attorney-in-Fact and the Custodian setting forth the number of Option Shares as to which the several Underwriters are exercising the option, the names and denominations in which the Option Shares are to be registered and the time and date at which such certificates are to be delivered. If the option granted hereby is exercised in part, the respective number of Option Shares to be sold by the Company and each of the Selling Shareholders listed in Schedule III hereto shall be determined on a pro rata basis in accordance with the percentages set forth opposite their names on Schedule III hereto, adjusted by you in such manner as to avoid fractional shares. The time and date at which certificates for Option Shares are to be delivered shall be determined by the Representatives but shall not be earlier than three nor later than 10 full business days after the exercise of such option, nor in any event prior to the Closing Date (such time and date being herein referred to as the "Option Closing Date"). If the date of exercise of the option is three or more days before the Closing Date, the notice of exercise shall set the Closing Date as the Option Closing Date. The number of Option Shares to be purchased by each Underwriter shall be in the same proportion to the total number of Option Shares being purchased as the number of Firm Shares being purchased by such Underwriter bears to the total number of Firm Shares, adjusted by you in such manner as to avoid fractional shares. The option with respect to the Option Shares granted hereunder may be exercised only to cover over-allotments in the sale of the Firm Shares by the Underwriters. You, as Representatives of the several Underwriters, may cancel such option at any time prior to its expiration by giving written notice of such cancellation to the Company and the Attorney-in-Fact. To the extent, if any, that the option is exercised, payment for the Option Shares shall be made on the Option Closing Date in federal (same day) funds to an account designated by the Company for the shares to be sold by it and to an account designated by the Custodian for the shares to be sold by the Selling Shareholders, in each case against delivery of certificates therefor at the offices of BT Alex. Brown Incorporated on the Option Closing Date. (e) If on the Closing Date or Option Closing Date, as the case may be, any Selling Shareholder fails to sell the Firm Shares or Option Shares that such Selling Shareholder has agreed to sell on such date as set forth in Schedule II or Schedule III hereto, as applicable, the Company agrees that it will sell or arrange for the sale of that number of shares of Common Shares to the Underwriters that represents Firm Shares or the Option Shares that such Selling Shareholder has failed to so sell, as set forth in Schedule II or Schedule III hereto, as applicable, or such lesser number as may be requested by the Representatives. 13 14 3. OFFERING BY THE UNDERWRITERS. It is understood that the several Underwriters are to make a public offering of the Firm Shares as soon as the Representatives deem it advisable to do so. The Firm Shares are to be initially offered to the public at the initial public offering price set forth in the Prospectus. The Representatives may from time to time thereafter change the public offering price and other selling terms. To the extent, if at all, that any Option Shares are purchased pursuant to Section 2 hereof, the Underwriters will offer them to the public on the foregoing terms. It is further understood that you will act as the Representatives for the Underwriters in the offering and sale of the Shares in accordance with a Master Agreement Among Underwriters entered into by you and the several other Underwriters. 4. COVENANTS OF THE COMPANY AND THE SELLING SHAREHOLDERS. (a) The Company covenants and agrees with each of the Underwriters that: (i) The Company will (A) use its best efforts to cause the Registration Statement to become effective or, if the procedure in Rule 430A of the Rules and Regulations is followed, to prepare and timely file with the Commission under Rule 424 of the Rules and Regulations a Prospectus in a form approved by the Representatives containing information previously omitted at the time of effectiveness of the Registration Statement in reliance on Rule 430A of the Rules and Regulations, (B) not file any amendment to the Registration Statement or supplement to the Prospectus or document incorporated by reference therein of which the Representatives shall not previously have been advised and furnished with a copy or to which the Representatives shall have reasonably objected in writing or that is not in compliance with the Rules and Regulations and (C) file on a timely basis all reports and any definitive proxy or information statements required to be filed by the Company with the Commission subsequent to the date of the Prospectus and prior to the termination of the offering of the Shares by the Underwriters. (ii) The Company will advise the Representatives promptly (A) when the Registration Statement or any post-effective amendment thereto shall have become effective, (B) of receipt of any comments from the Commission, (C) of any request of the Commission for amendment of the Registration Statement or for supplement to the Prospectus or for any additional information and (D) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the use of the Prospectus or of the institution of any proceedings for that purpose. The Company will use its best efforts to prevent the issuance of any such stop order preventing or suspending the use of the Prospectus and to obtain as soon as possible the lifting thereof, if issued. (iii) The Company will cooperate with the Representatives in endeavoring to qualify the Shares for sale under the securities laws of such jurisdictions as the Representatives may reasonably have designated in writing and will make such applications, file such documents, 14 15 and furnish such information as may be reasonably required for that purpose, provided the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction where it is not now so qualified or required to file such a consent. The Company will, from time to time, prepare and file such statements, reports, and other documents, as are or may be required to continue such qualifications in effect for so long a period as the Representatives may reasonably request for distribution of the Shares. (iv) The Company will deliver to, or upon the order of, the Representatives, from time to time, as many copies of any Preliminary Prospectus as the Representatives may reasonably request. The Company will deliver to, or upon the order of, the Representatives during the period when delivery of a Prospectus is required under the Act, as many copies of the Prospectus in final form, or as thereafter amended or supplemented, as the Representatives may reasonably request. The Company will deliver to the Representatives at or before the Closing Date, four signed copies of the Registration Statement and all amendments thereto including all exhibits filed therewith, and will deliver to the Representatives such number of copies of the Registration Statement (including such number of copies of the exhibits filed therewith that may reasonably be requested), including documents incorporated by reference therein, and of all amendments thereto, as the Representatives may reasonably request. (v) The Company will comply with the Act and the Rules and Regulations, and the Exchange Act, and the rules and regulations of the Commission thereunder, so as to permit the completion of the distribution of the Shares as contemplated in this Agreement and the Prospectus. If during the period in which a prospectus is required by law to be delivered by an Underwriter or dealer, any event shall occur as a result of which, in the judgment of the Company or in the reasonable opinion of the Underwriters, it becomes necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances existing at the time the Prospectus is delivered to a purchaser, not misleading, or, if it is necessary at any time to amend or supplement the Prospectus to comply with any law, the Company promptly will either (1) prepare and file with the Commission an appropriate amendment to the Registration Statement or supplement to the Prospectus or (2) prepare and file with the Commission an appropriate filing under the Exchange Act that shall be incorporated by reference in the Prospectus so that the Prospectus as so amended or supplemented will not, in the light of the circumstances when it is so delivered, be misleading, or so that the Prospectus will comply with the law. (vi) The Company will make generally available to its security holders, as soon as it is practicable to do so, but in any event not later than 15 months after the effective date of the Registration Statement, an earning statement (which need not be audited) in reasonable detail, covering a period of at least 12 consecutive months beginning after the effective date of the Registration Statement, which earning statement shall satisfy the requirements of Section 11(a) of the Act and Rule 158 of the Rules and Regulations. 15 16 (vii) Prior to the Closing Date, the Company will furnish to the Underwriters, as soon as they have been prepared by or are available to the Company, a copy of any unaudited interim financial statements of the Company for any period subsequent to the period covered by the most recent financial statements included or incorporated by reference in the Registration Statement or the Prospectus. (viii) The Company will not, for a period of 90 days following the date of this Agreement, otherwise than hereunder or with the prior written consent of BT Alex. Brown Incorporated, offer, sell or contract to sell or otherwise dispose of, directly or indirectly, any Common Shares of the Company or any securities convertible into, or exchangeable or exercisable for, Common Shares, except for Common Shares issued to certain persons in connection with Company acquisitions, provided such persons agree to be bound by the terms hereof. (ix) The Company will use its best efforts to list, subject to notice of issuance, the Shares on The NASDAQ Stock Market. (x) The Company has caused the Company's Supervisory Directors, executive officers and certain shareholders who in the aggregate beneficially own 775,822 shares to furnish to the Representatives, on or prior to the date of this Agreement, a letter or letters, in form and substance satisfactory to the Underwriters, pursuant to which each such person shall agree not to offer, sell or contract to sell or otherwise dispose of, directly or indirectly, any Common Shares of the Company, or any securities convertible into, or exchangeable or exercisable for Common Shares, owned by such person or request the registration for the offer or sale of any of the foregoing (or as to which such person has the right to direct the disposition of) for a period of 90 days following the date of this Agreement, except with the prior written consent of BT Alex. Brown Incorporated ("Lockup Agreements"). (xi) The Company shall apply the net proceeds of its sale of the Shares as set forth in the Prospectus. (xii) The Company shall not invest, or otherwise use the proceeds received by the Company from its sale of the Shares in such a manner as would require the Company or any of the Subsidiaries to register as an investment company under the 1940 Act. (xiii) The Company will maintain a transfer agent and, if necessary under the jurisdiction of organization of the Company, a registrar for the Common Shares. (xiv) The Company will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Shares. (b) Each of the Selling Shareholders covenants and agrees with each of the Underwriters that: 16 17 (i) Such Selling Shareholder will not, for a period of 90 days following the date of this Agreement, otherwise than hereunder or with the prior written consent of BT Alex. Brown Incorporated, offer, sell or contract to sell or otherwise dispose of, directly or indirectly, or request the registration for the offer or sale of any of the foregoing (or as to which the Selling Shareholder has the right to direct the disposition of) any Common Shares of the Company or any securities convertible into, or exchangeable or exercisable for, Common Shares. (ii) In order to document the Underwriters' compliance with the reporting and withholding provisions of the Tax Equity and Fiscal Responsibility Act of 1982 and the Interest and Dividend Tax Compliance Act of 1983 with respect to the transactions herein contemplated, each of the Selling Shareholders agrees to deliver to the Representatives prior to or at the Closing Date a properly completed and executed United States Treasury Department Form W-8 or W-9 (or other applicable form or statement specified by Treasury Department regulations in lieu thereof). (iii) Such Selling Shareholder will not take, directly or indirectly, any action designed to cause or result in, or that has constituted or might reasonably be expected to constitute, the stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Shares. 5. COSTS AND EXPENSES. The Company will pay all costs, expenses and fees incident to the performance of the obligations of the Company under this Agreement, including, without limiting the generality of the foregoing, the following: accounting fees of the Company; the fees and disbursements of counsel for the Company and the Selling Shareholders (except for the fees and disbursements of counsel for First Britannia Mezzanine N.V.); the cost of printing and delivering to, or as requested by, the Underwriters copies of the Registration Statement, Preliminary Prospectuses, the Prospectus, this Agreement, the Underwriters' Invitation Letter, the Blue Sky Survey and any supplements or amendments thereto; the filing fees of the Commission; the filing fees and expenses (including reasonable fees and disbursements of counsel for the Underwriters) incident to securing any required review by the NASD of the terms of the sale of the Shares; the Listing Fee of the NASDAQ Stock Market; and the expenses, including the reasonable fees and disbursements of counsel for the Underwriters, incurred in connection with the qualification of the Shares under state securities or Blue Sky laws. To the extent, if at all, that any of the Selling Shareholders engage special legal counsel to represent them in connection with this offering, the fees and expenses of such counsel shall be borne by such Selling Shareholder. If this Agreement shall not be consummated because the conditions in Section 6 hereof are not satisfied, or because this Agreement is terminated by the Representatives pursuant to Sections 11(a)(i), 11(a)(vi) and 11(b) hereof, or by reason of any failure, refusal or inability on the part of the Company or the Selling Shareholders to perform any undertaking or satisfy any condition of this Agreement or to comply with any of the terms hereof on their part to be performed, unless such failure to satisfy said condition or to comply with said terms be due to the default or omission of any Underwriter, then the Company shall reimburse the several Underwriters 17 18 for reasonable out-of-pocket expenses, including reasonable fees and disbursements of counsel, reasonably incurred in connection with investigating, marketing and proposing to market the Shares or in contemplation of performing their obligations hereunder; but the Company and the Selling Shareholders shall not in any event be liable to any of the several Underwriters for damages on account of loss of anticipated profits from the sale by them of the Shares. 6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS. The several obligations of the Underwriters to purchase the Firm Shares on the Closing Date and the Option Shares, if any, on the Option Closing Date are subject to the accuracy, as of the Closing Date or the Option Closing Date, as the case may be, of the representations and warranties of the Company and the Selling Shareholders contained herein, and to the performance by the Company and the Selling Shareholders of their covenants and obligations hereunder and to the following additional conditions: (a) The Registration Statement and all post-effective amendments thereto shall have become effective and any and all filings required by Rule 424 and Rule 430A of the Rules and Regulations shall have been made, and any request of the Commission for additional information (to be included in the Registration Statement or otherwise) shall have been disclosed to the Representatives and complied with to their reasonable satisfaction. No stop order suspending the effectiveness of the Registration Statement, as amended from time to time, shall have been issued and no proceedings for that purpose shall have been taken or, to the knowledge of the Company or the Selling Shareholders, shall be contemplated by the Commission and no injunction, restraining order, or order of any nature by a federal or state court of competent jurisdiction shall have been issued as of the Closing Date that would prevent the issuance of the Shares. (b) The Representatives shall have received on the Closing Date or the Option Closing Date, as the case may be, the opinions of Nauta Dutilh, special Netherlands counsel to the Company, dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters (and stating that it may be relied upon by Vinson & Elkins L.L.P., special U.S. counsel to the Company, and by Andrews & Kurth L.L.P., counsel to the Underwriters) to the effect that: (i) The Company has been duly organized and is validly existing as a Naamloze Vennootschap in good standing under the laws of The Netherlands, with full corporate power and authority to own or lease and operate its properties and to conduct its business as described in the Registration Statement; (ii) Each of Core Laboratories International B.V. ("CLI B.V.") and Saybolt International B.V. ("SI B.V.") has been duly organized and is validly existing as a Besloten Vennootschap in good standing under the laws of The Netherlands, with full corporate power and authority to own or lease and operate its properties and to conduct its business as described in the Registration Statement; 18 19 (iii) All the outstanding shares of capital stock of CLI B.V. and SI B.V. have been duly authorized and validly issued and are fully paid and non-assessable and, except as otherwise set forth in the Registration Statement or Exhibit A to this Agreement, all outstanding shares of capital stock of each of CLI B.V. and SI B.V. are owned, directly or indirectly, by the Company free and clear of security interests, liens, encumbrances, equities or other claims; (iv) Except as disclosed or incorporated by reference in the Registration Statement, there are no preemptive or other rights to subscribe for or to purchase shares of capital stock of the Company pursuant to any applicable statute, the Articles of Association or other constituent documents of the Company or, to such counsel's knowledge, any agreement or other instrument to which the Company is a party as to which any person can successfully maintain an action, suit or proceeding against the Company for violation of his or her preemptive rights with respect to the issuance of any shares of capital stock of the Company; (v) All of the Company's issued and outstanding capital stock has been duly authorized, validly issued and is fully paid and non-assessable as of the date hereof and the capitalization of the Company conforms in all material respects to the descriptions thereof and the statements made with respect thereto in the Registration Statement; (vi) This Agreement has been duly authorized, executed and delivered by the Company and the Company has full corporate power and authority to enter into the Agreement; (vii) No consent, approval, authorization or order of any court or governmental agency or body is required in connection with the sale of the Shares pursuant to this Agreement, except such as may be required under the securities and Blue Sky laws of any jurisdiction in connection with the purchase and distribution of the Shares by the Underwriters and such other approvals (specified in such opinion) as have been obtained; (viii) None of the execution and delivery of this Agreement, the consummation of any other of the transactions herein contemplated, or the fulfillment of the terms hereof, will result in a breach of, or constitute a default under (a) any law, statute, rule, order, regulation, consent or memorandum of understanding of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Company or any of the Subsidiaries of which such counsel is aware and that is known by such counsel to be applicable to the Company or any of the Subsidiaries (where such conflict, breach or default would have a material adverse effect on the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries taken as a whole) or (b) the Articles of Association of the Company; (ix) The Shares have been duly and validly authorized by the Company for issuance and the Company has full corporate power and authority to issue, sell and deliver the Shares; and, when the Shares are issued and delivered against payment therefor as provided in this 19 20 Agreement, the Shares will have been validly issued and will be fully paid and non-assessable, and the issuance of such Shares will not be subject to any statutory preemptive rights or similar statutory rights or, to such counsel's knowledge, any other preemptive or similar rights; (x) The certificates for the Shares are in due and proper form under the laws of The Netherlands and the Articles of Association of the Company and conform with the form of certificates duly authorized by the Board of Supervisory Directors of the Company. The form of certificates for the Shares conforms to the corporate law of the jurisdiction of the Company's organization and, when executed and delivered in definitive form, will be sufficient to convey the interest in the Company purported to be evidenced thereby; (xi) The Shares, when issued, will conform in all material respects to the description thereof contained in the Prospectus under the caption "Description of Share Capital"; (xii) Except as described in or contemplated by the Prospectus, to the knowledge of such counsel, there are no outstanding securities of the Company convertible or exchangeable into or evidencing the right to purchase or subscribe for any shares of capital stock of the Company and there are no outstanding or authorized options, warrants or rights of any character obligating the Company to issue any shares of its capital stock or any securities convertible or exchangeable into or evidencing the right to purchase or subscribe for any shares of such stock; and except as described in the Prospectus, to the knowledge of such counsel, no holder of any securities of the Company or any other person has the right, contractual or otherwise, that has not been satisfied or effectively waived, to cause the Company to sell or otherwise issue to them, or to permit them to underwrite the sale of, any of the Shares or the right to have any Common Shares or other securities of the Company included in the Registration Statement or the right, as a result of the filing of the Registration Statement, to require registration under the Act of any shares of Common Shares or other securities of the Company; and (xiii) No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation by the Selling Shareholders of the transactions on their part contemplated by this Agreement in connection with the Shares to be sold by the Selling Shareholders hereunder, except such as have been obtained under the Act and such as may be required under the Blue Sky laws of any jurisdiction in connection with the purchase and distribution of such Shares by the Underwriters. The opinions of such counsel may relate solely to, be based solely upon and be limited exclusively to the laws of The Netherlands. (c) The Representatives shall have received on the Closing Date or the Option Closing Date, as the case may be, the opinions of Vinson & Elkins L.L.P., counsel for the Company, dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters (and 20 21 stating that it may be relied upon by Andrews & Kurth L.L.P., counsel to the Underwriters) to the effect that: (i) Each of Core Laboratories, Inc., a Delaware corporation ("CLI"), and Saybolt Inc., a Delaware corporation ("SI"), has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its organization, with corporate power and authority to own or lease and operate its properties and conduct its business as described in the Registration Statement; (ii) All the outstanding shares of capital stock of CLI and SI have been duly authorized and validly issued and are fully paid and non-assessable, all outstanding shares of capital stock of CLI and SI are owned, directly or indirectly, by the Company free and clear of security interests, liens, encumbrances, equities or other claims, except as otherwise set forth in the Registration Statement or Exhibit A to this Agreement; and no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligations into any shares of capital stock or of ownership interests in CLI or SI are outstanding; (iii) Each of CLI and SI is duly registered and qualified to transact business in all jurisdictions in which the conduct of its business requires such qualification, or in which the failure to qualify would have a materially adverse effect upon the business of the Company and the Subsidiaries taken as a whole; (iv) The Registration Statement has become effective under the Act and, to the best of the knowledge of such counsel, no stop order proceedings with respect thereto have been instituted or are pending or threatened under the Act; (v) Such counsel does not know of any contracts or documents required to be filed as exhibits to or incorporated by reference in the Registration Statement or described in the Registration Statement that are not so filed, incorporated by reference or described as required; (vi) Such counsel knows of no material legal or governmental proceedings pending or threatened against the Company or any of the Subsidiaries required to be disclosed in the Prospectus that is not adequately disclosed in the Prospectus; (vii) The execution and delivery of this Agreement and the consummation of the transactions herein contemplated and the fulfillment of the terms hereof will not (1) violate or 21 22 conflict with any provision of the charter, by-laws or other governing documents of the Company or any of its Subsidiaries, (2) conflict with or result in a breach of any of the terms or provisions of, or constitute a default (or an event that, with the giving of notice or lapse of time, or both, would constitute a default) under, or require, except for such consents as have been obtained and are currently in effect, consent under, or result in the creation or imposition of any lien, charge, security interest or encumbrance upon any property or assets of the Company or any of its Subsidiaries pursuant to the terms of any material indenture, mortgage, deed of trust, franchise, license, permit or other agreement, understanding or instrument to which the Company or any of its Subsidiaries is a party or by which any of them or their respective properties or assets may be bound which are identified on a schedule attached to such opinion or (3) violate or conflict with any judgment, decree, order, statute, rule or regulation of the United States, the State of Texas or the State of Delaware applicable to the Company or any Subsidiary of any court or of any public, governmental or regulatory body or agency having jurisdiction over the Company or any of its Subsidiaries or any of their respective properties or assets, which violation, conflict, breach, default or lien would, in the aggregate, have a material adverse effect on the Company and its Subsidiaries taken as a whole; provided that no opinion is required to be given pursuant to this subparagraph (viii) regarding federal or state securities laws; (viii) This Agreement has been duly authorized, executed and delivered by the Company; (ix) No approval, consent, order, authorization, designation, declaration or filing by or with any regulatory, administrative or other governmental body of the United States, the State of Texas or the State of Delaware is necessary in connection with the execution and delivery of this Agreement and the consummation of the transactions herein contemplated (other than as may be required by the NASD or as required by state securities and Blue Sky laws as to which such counsel need express no opinion) except such as have been obtained or made, specifying the same; and (x) The Company is not, and will not become, as a result of the consummation of the transactions contemplated by this Agreement, and application of the net proceeds therefrom as described in the Prospectus, required to register as an investment company under the 1940 Act. In addition to the matters set forth above, such opinion shall also include a statement to the effect that such counsel is of the opinion that the Registration Statement and the Prospectus (except the financial statements and other information of an accounting, financial or statistical nature) appear on their face to comply as to form in all material respects with the requirements of the Act. In passing upon the form of the Registration Statement and the Prospectus, such counsel may state that they have necessarily assumed the correctness and completeness of the statements made therein and that, because the primary purpose of our engagement was not to establish or confirm factual matters of financial, accounting or statistical matters or related data and because of the wholly or partially nonlegal character of many of the statements contained in the Registration Statement and the Prospectus, 22 23 they are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus. Such counsel may state that they have not independently verified the accuracy, completeness or fairness of such statements and, that without limiting the foregoing, they assume no responsibility for and have not independently verified the accuracy, completeness or fairness of the financial statements and supporting schedules and other financial, accounting or statistical data and related data included in the Registration Statement (or the exhibits to the Registration Statement, as to which they have not been asked to comment), and that they have not examined the accounting or financial records from which such financial statements, schedules and related data are derived. Such counsel may note that, although certain portions of the Registration Statement (including financial statements and supporting schedules, and related data) have been included therein on the authority of "experts" within the meaning of the Securities Act, they are not experts with respect to any portion of the Registration Statement, including, without limitation, such financial statements and supporting schedules and related data and other financial, accounting or statistical data included therein. Such counsel shall state, however, that they have participated in conferences with officers and other representatives of the Company, counsel for the Company, representatives of the independent accountants of the Company and with representatives of the Underwriters, at which the contents of the Registration Statement and Prospectus and related matters were discussed, that they have also reviewed certain corporate documents furnished to them by the Company, and, based on such participation and review (relying as to materiality to a large extent upon the officers and other representatives of the Company and upon representatives of the Underwriters), no information has come to such counsel's attention that causes them to believe that the Registration Statement, at the time it became effective, contained an 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 not misleading, or that the Prospectus, at its date or at the date hereof, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they made, not misleading. (d) The Representatives shall have received on the Closing Date or the Option Closing Date, as the case may be, the opinions of (1) Brown, Parker & Leahy, L.L.P. and (2) Nauta Dutilh, each counsel for certain of the Selling Shareholders, dated the Closing Date or the Option Closing Date, as the case may be, addressed to the Underwriters (and stating that it may be relied upon by Andrews & Kurth L.L.P., counsel to the Underwriters) to the effect that: (i) This Agreement has been duly authorized, executed and delivered on behalf of the Selling Shareholders; (ii) Each Selling Shareholder has full legal right, power and authority, and any approval required by law (other than as required by state securities and Blue Sky laws as to which such counsel need express no opinion), to sell, assign, transfer and deliver the portion of the Shares to be sold by such Selling Shareholder; (iii) The Letter of Transmittal and Custody Agreement executed and delivered by each Selling Shareholder is valid and binding; and 23 24 (iv) The Underwriters (assuming that they are bona fide purchasers within the meaning of the Uniform Commercial Code) have acquired good and marketable title to the Shares being sold by each Selling Shareholder on the Closing Date, and the Option Closing Date, as the case may be, free and clear of all security interests, liens, encumbrances, equities and other claims. (e) The Representatives shall have received from Andrews & Kurth L.L.P., counsel for the Underwriters, a favorable opinion dated the Closing Date or the Option Closing Date, as the case may be, with respect to such matters as may be reasonably requested by the Underwriters. In rendering such opinion, Andrews & Kurth L.L.P. may rely as to all matters governed other than by the general corporate laws of the State of Delaware and the laws of the States of New York, Maryland and Texas or federal laws of the United States on the opinions of counsel referred to in Paragraphs (b), (c) and (d) of this Section 6. In addition, such opinion shall also include a statement to the effect that nothing has come to the attention of such counsel that leads them to believe that (i) the Registration Statement, or any amendment thereto, as of the time it became effective under the Act (but after giving effect to any modifications incorporated therein pursuant to Rule 430A under the Act) as of the Closing Date or the Option Closing Date, as the case may be, contained an 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 not misleading, and (ii) the Prospectus, or any supplement thereto, on the date it was filed pursuant to the Rules and Regulations and as of the Closing Date or the Option Closing Date, as the case may be, contained an untrue statement of a material fact or omitted to state a material fact, necessary in order to make the statements, in the light of the circumstances under which they are made, not misleading (except that such counsel need express no view as to financial statements, schedules and statistical information therein). With respect to such statement, Andrews & Kurth L.L.P. may state that their belief is based upon the procedures set forth therein, but is without independent check and verification. (f) The Representatives shall have received at or prior to the Closing Date from Andrews & Kurth L.L.P. a memorandum or summary, in form and substance satisfactory to the Representatives, with respect to the qualification for offering and sale by the Underwriters of the Shares under state securities or Blue Sky laws of such jurisdictions as the Representatives may reasonably have designated to the Company. (g) The Representatives shall have received, on each of the dates hereof, the Closing Date and the Option Closing Date, as the case may be, a letter dated the date hereof, the Closing Date or the Option Closing Date, as the case may be, in form and substance reasonably satisfactory to you, of Arthur Anderson LLP confirming that they are independent public accountants within the meaning of the Act and the applicable Rules and Regulations thereunder and stating that in their opinion the financial statements and schedules examined by them and included or incorporated by reference in the Registration Statement comply in form in all material respects with the applicable accounting requirements of the Act and the related published Rules and Regulations; and containing such other statements and information as are ordinarily included in accountants' "comfort letters" to Underwriters with respect to the financial statements and certain financial and statistical information included or incorporated by reference in the Registration Statement or the Prospectus. 24 25 (h) The Representatives shall have received on the Closing Date or the Option Closing Date, as the case may be, a certificate or certificates of the Chief Executive Officer and the Chief Financial Officer of the Company to the effect that, as of the Closing Date or the Option Closing Date, as the case may be, each of them severally represents as follows: (1) The Registration Statement has become effective under the Act and no stop order suspending the effectiveness of the Registration Statement has been issued, and no proceedings for such purpose have been taken or are, to his knowledge, contemplated by the Commission. (2) The representations and warranties of the Company contained in Section 1 hereof are true and correct as of the Closing Date or the Option Closing Date, as the case may be. (3) All filings required to have been made pursuant to Rules 424 or 430A under the Act have been made. (4) Since the respective dates as of which information is given in the Registration Statement and Prospectus, in his or her opinion, there has not been any material adverse change or any development involving a prospective material adverse change in or affecting the condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or the earnings, business, properties, assets, rights, operations or condition (financial or otherwise) of the Company and the Subsidiaries taken as a whole, whether or not arising in the ordinary course of business. (i) The Company and the Selling Shareholders shall have furnished to the Representatives such further certificates and documents confirming the representations and warranties, covenants and conditions contained herein and related matters as the Representatives may reasonably have requested. (j) The Firm Shares and Option Shares have been approved for listing upon notice of issuance on the NASDAQ Stock Market. (k) The Lockup Agreements described in Section 4(x) are in full force and effect. The opinions and certificates mentioned in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in all material respects satisfactory to the Representatives and to Andrews & Kurth L.L.P., counsel for the Underwriters. If any of the conditions hereinabove provided for in this Section 6 shall not have been fulfilled when and as required by this Agreement to be fulfilled, the obligations of the Underwriters hereunder may be terminated by the Representatives by notifying the Company and the Selling Shareholders of such termination in writing or by telegram at or prior to the Closing Date or the Option Closing Date, as the case may be. In such event, the Selling Shareholders, the Company and 25 26 the Underwriters shall not be under any obligation to each other (except to the extent provided in Sections 5 and 8 hereof). 7. CONDITIONS OF THE OBLIGATIONS OF THE SELLERS. The obligations of the Sellers to sell and deliver the portion of the Shares required to be delivered as and when specified in this Agreement are subject to the conditions that at the Closing Date or the Option Closing Date, as the case may be, no stop order suspending the effectiveness of the Registration Statement shall have been issued and in effect or proceedings therefor initiated or threatened. 8. INDEMNIFICATION. (a) The Company agrees: (1) to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of the Act, and each Selling Shareholder and each person, if any, who controls any Selling Shareholder within the meaning of the Act, against any losses, claims, damages or liabilities to which such Underwriter, such Selling Shareholder or any such controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading any act or failure to act; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission made in the Registration Statement, any Preliminary Prospectus, the Prospectus, or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by or through the Representatives specifically for use in the preparation thereof; provided, further, that the foregoing indemnity obligation with respect to any Preliminary Prospectus shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages and liabilities purchased shares, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented) was not sent or given by or on behalf of such Underwriter to such person and if the Prospectus (as so amended or 26 27 supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities. (2) to reimburse each Underwriter, each Selling Shareholder and each such controlling person upon demand for any legal or other out-of-pocket expenses reasonably incurred by such Underwriter, such Selling Shareholder or such controlling person in connection with investigating or defending any such loss, claim, damage or liability, action or proceeding or in responding to a subpoena or governmental inquiry related to the offering of the Shares, whether or not such Underwriter, such Selling Shareholder or controlling person is a party to any action or proceeding. In the event that it is finally judicially determined that the Underwriters, the Selling Shareholders or such controlling persons were not entitled to receive payments for legal and other expenses pursuant to this subparagraph, the Underwriters, the Selling Shareholders or such controlling persons will promptly return all sums that had been advanced pursuant hereto. This indemnity obligation will be in addition to any liability that the Company may otherwise have. (b) Each Selling Shareholder agrees to indemnify the Underwriters and each person, if any, who controls any Underwriter within the meaning of the Act, and the Company and each person, if any, who controls the Company within the meaning of the Act, against any losses, claims, damages or liabilities to which such Underwriter, the Company or controlling person may become subject under the Act or otherwise insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof), arise out of or are based on any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto or caused by any omission or alleged omission to state therein, a material fact required to be stated therein and necessary to make the statements therein not misleading, but only with reference to information relating to such Selling Shareholder furnished to the Underwriters or the Company in writing by such Selling Shareholder expressly for use therein. In no event, however, shall the liability of any Selling Shareholder for indemnification under this Section 8(a) exceed the proceeds, less underwriting discounts and before expenses, received by such Selling Shareholder from the Underwriters in the offering. This indemnity obligation will be in addition to any liability that such Selling Shareholder and the Company may otherwise have. (c) Each Underwriter severally and not jointly will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Registration Statement, the Selling Shareholders, and each person, if any, who controls the Company or the Selling Shareholders within the meaning of the Act, against any losses, claims, damages or liabilities to which the Company or any such director, officer, Selling Shareholder or controlling person may become subject under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any Preliminary Prospectus, the Prospectus or any amendment or supplement thereto, or (ii) the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made; and 27 28 will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, Selling Shareholder or controlling person in connection with investigating or defending any such loss, claim, damage, liability, action or proceeding; provided, however, that each Underwriter will be liable in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission has been made in the Registration Statement, any Preliminary Prospectus, the Prospectus or such amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representatives specifically for use in the preparation thereof. This indemnity obligation will be in addition to any liability that such Underwriter may otherwise have. (d) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to this Section 8, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing. No indemnification provided for in Section 8(a), (b) or (c) shall be available to any party who shall fail to give notice as provided in this Section 8(d) if the party to whom notice was not given was unaware of the proceeding to which such notice would have related and was materially prejudiced by the failure to give such notice, but the failure to give such notice shall not relieve the indemnifying party or parties from any liability that it or they may have to the indemnified party for contribution or otherwise than on account of the provisions of Section 8(a), (b) or (c). In case any such proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party and shall pay as incurred the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel at its own expense. Notwithstanding the foregoing, the indemnifying party shall pay as incurred (or within 30 days of presentation) the fees and expenses of the counsel retained by the indemnified party in the event (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them or (iii) the indemnifying party shall have failed to assume the defense and employ counsel reasonably acceptable to the indemnified party within a reasonable period of time after notice of commencement of the action. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm for all such indemnified parties. Such firm shall be designated in writing by the Representatives in the case of parties indemnified pursuant to Section 8(a) or (b) and by the Company and the Selling Shareholders in the case of parties indemnified pursuant to Section 8(c). The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. In addition, the indemnifying party will not, without the prior written consent of the indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding of 28 29 which indemnification may be sought hereunder (whether or not any indemnified party is an actual or potential party to such claim, action or proceeding) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action or proceeding. (e) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under Section 8(a), (b) or (c) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Shareholders on the one hand and the Underwriters on the other from the offering of the Shares. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Selling Shareholders on the one hand and the Underwriters on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, (or actions or proceedings in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Shareholders on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company and the Selling Shareholders bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the Prospectus. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Selling Shareholders on the one hand or the Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, the Selling Shareholders and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section 8(e) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to above in this Section 8(e). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to above in this Section 8(e) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (e), (i) no Underwriter shall be required to contribute any amount in excess of the underwriting discounts and commissions applicable to the Shares purchased by such Underwriter, (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation, and (iii) no Selling Shareholder shall be required to contribute any amount in excess of the proceeds, less underwriting discounts and before expenses, received by such Selling Shareholder from the 29 30 Underwriters in the offering. The Underwriters' obligations in this Section 8(e) to contribute are several in proportion to their respective underwriting obligations and not joint. (f) In any proceeding relating to the Registration Statement, any Preliminary Prospectus, the Prospectus or any supplement or amendment thereto, each party against whom contribution may be sought under this Section 8 hereby consents to the jurisdiction of any United States court having jurisdiction over any other contributing party, agrees that process issuing from such court may be served upon him or it by any other contributing party and consents to the service of such process and agrees that any other contributing party may join him or it as an additional defendant in any such proceeding in which such other contributing party is a party. Solely for purposes of this Section 8(f), the Company's United States agent for service of process is John D. Denson, Core Laboratories Inc., 5295 Hollister Road, Houston, Texas 77040, or such other person as is designated in writing by the Company. (g) Any losses, claims, damages, liabilities or expenses for which an indemnified party is entitled to indemnification or contribution under this Section 8 shall be paid by the indemnifying party to the indemnified party as such losses, claims, damages, liabilities or expenses are incurred. The indemnity and contribution agreements contained in this Section 8 and the representations and warranties of the Company and the Selling Shareholders set forth in this Agreement shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter, the Company, its directors or officers or any persons controlling the Company, or the Selling Shareholders or any person controlling any Selling Shareholder (ii) acceptance of any Shares and payment therefor hereunder, and (iii) the closing of the transactions contemplated by this Agreement. A successor to any Underwriter, or to the Company, its directors or officers, or any person controlling the Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement agreements contained in this Section 8. 9. DEFAULT BY UNDERWRITERS. If on the Closing Date or the Option Closing Date, as the case may be, any Underwriter shall fail to purchase and pay for the portion of the Shares that such Underwriter has agreed to purchase and pay for on such date (otherwise than by reason of any default on the part of the Company or a Selling Shareholder), you, as Representatives of the Underwriters, shall use your reasonable efforts to procure within 36 hours thereafter one or more of the other Underwriters, or any others, to purchase from the Company and the Selling Shareholders such amounts as may be agreed upon and upon the terms set forth herein, the Firm Shares or Option Shares, as the case may be, that the defaulting Underwriter or Underwriters failed to purchase. If during such 36 hours you, as such Representatives, shall not have procured such other Underwriters, or any others, to purchase the Firm Shares or Option Shares, as the case may be, agreed to be purchased by the defaulting Underwriter or Underwriters, then (a) if the aggregate number of shares with respect to which such default shall occur does not exceed 10% of the Firm Shares or Option Shares, as the case may be, covered hereby, the other Underwriters shall be obligated, severally, in proportion to the respective numbers of Firm Shares or Option Shares, as the case may be, that they are obligated to purchase hereunder, to purchase the Firm Shares or Option Shares, as the case may be, that such defaulting Underwriter or 30 31 Underwriters failed to purchase, or (b) if the aggregate number of shares of Firm Shares or Option Shares, as the case may be, with respect to which such default shall occur exceeds 10% of the Firm Shares or Option Shares, as the case may be, covered hereby, the Company and the Selling Shareholders or you as the Representatives of the Underwriters will have the right, by written notice given within the next 36-hour period to the parties to this Agreement, to terminate this Agreement without liability on the part of the non-defaulting Underwriters or of the Company or of the Selling Shareholders except to the extent provided in Section 8 hereof. In the event of a default by any Underwriter or Underwriters, as set forth in this Section 9, the Closing Date or Option Closing Date, as the case may be, may be postponed for such period, not exceeding seven days, as you, as Representatives, may determine in order that the required changes in the Registration Statement or in the Prospectus or in any other documents or arrangements may be effected. The term "Underwriter" includes any person substituted for a defaulting Underwriter. Any action taken under this Section 9 shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. 10. NOTICES. All communications hereunder shall be in writing and, except as otherwise provided herein, will be mailed, delivered, telecopied or telegraphed and confirmed as follows: if to the Underwriters, to BT Alex. Brown Incorporated, One South Street, Baltimore, Maryland 21202, Attention: General Counsel; with a copy to BT Alex. Brown Incorporated, One Bankers Trust Plaza, 130 Liberty Street, New York, New York 10006, Attention: General Counsel; if to the Company, to Core Laboratories N.V. c/o Core Laboratories, Inc., 5295 Hollister Road, Houston, Texas 77040, Attention: General Counsel; or, if sent to the Selling Shareholders, at their respective addresses set forth on Schedule II hereto. 11. TERMINATION. (a) This Agreement may be terminated by you, as Representatives, by notice to the Company and the Sellers at any time prior to the Closing Date if any of the following has occurred: (i) since the respective dates as of which information is given in the Registration Statement, any material adverse change or any development involving a prospective material adverse change in or affecting the condition (financial or otherwise) of the Company and its Subsidiaries taken as a whole or the earnings, business, management, properties, assets, rights, operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries taken as a whole, whether or not arising in the ordinary course of business; (ii) any outbreak or escalation of hostilities or declaration of war or national emergency or other national or international calamity or crisis or change in economic or political conditions if the effect of such outbreak, escalation, declaration, emergency, calamity, crisis or change on the financial markets of the United States would, in your reasonable judgment, make it impracticable or inadvisable to market the Shares or to enforce contracts for the sale of the Shares; (iii) suspension of trading in securities generally on the New York Stock Exchange or the American Stock Exchange or limitation on prices (other than limitations on hours or numbers of days of trading) for securities on either such Exchange; (iv) the enactment, publication, decree or other promulgation of any statute, regulation, rule or order of any court or other governmental authority that in your 31 32 reasonable judgment materially and adversely affects or may materially and adversely affect the business or operations of the Company; (v) declaration of a banking moratorium by United States or New York State authorities; (vi) the suspension of trading of the Company's Common Shares by the NASDAQ Stock Market, the Commission or any other governmental authority; or (vii) the taking of any action by any governmental body or agency in respect of its monetary or fiscal affairs that in your reasonable opinion has a material adverse effect on the securities markets in the United States; or (b) as provided in Sections 6 of this Agreement; or (c) as provided in Section 9 of this Agreement. 12. SUCCESSORS. This Agreement has been and is made solely for the benefit of the Underwriters, the Company and the Selling Shareholders and their respective successors, executors, administrators, heirs and assigns, and the officers, directors and controlling persons referred to herein, and no other person will have any right or obligation hereunder. No purchaser of any of the Shares from any Underwriter shall be deemed a successor or assign merely because of such purchase. 13. INFORMATION PROVIDED BY UNDERWRITERS. The Company, the Selling Shareholders and the Underwriters acknowledge and agree that the only information furnished or to be furnished by any Underwriter to the Company for inclusion in the Registration Statement consists of the information set forth in the last paragraph on the front cover page (insofar as such information relates to the Underwriters) of the Prospectus, legends required by Item 502(d) of Regulation S-K under the Act and the information in the third, seventh, eighth, ninth and tenth paragraphs under the caption "Underwriting" in the Prospectus. 14. MISCELLANEOUS. The reimbursement, indemnification and contribution agreements contained in this Agreement and the representations, warranties and covenants in this Agreement shall remain in full force and effect regardless of (a) any termination of this Agreement, (b) any investigation made by or on behalf of any Underwriter or controlling person thereof, or by or on behalf of the Company or its directors or officers or the Selling Shareholders and (c) delivery of and payment for the Shares under this Agreement. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Maryland. 32 33 If the foregoing letter is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicates hereof, whereupon it will become a binding agreement among the Selling Shareholders, the Company and the several Underwriters in accordance with its terms. 33 34 Any person executing and delivering this Agreement as Attorney-in-Fact for a Selling Shareholder represents by so doing that he has been duly appointed as Attorney-in-Fact by such Selling Shareholder pursuant to a validly existing and binding power of attorney that authorizes such Attorney-in-Fact to take such action. Very truly yours, CORE LABORATORIES N.V. By:------------------------------- David M. Demshur, President Selling Shareholders listed on Schedule II By: [Attorney-in-Fact] The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written. BT ALEX. BROWN INCORPORATED CREDIT SUISSE FIRST BOSTON CORPORATION BEAR, STEARNS & CO. INC. MORGAN KEEGAN & COMPANY, INC. As Representatives of the several Underwriters listed on Schedule I By: BT Alex. Brown Incorporated By: ----------------------------- Authorized Officer 34 35 SCHEDULE I ---------- SCHEDULE OF UNDERWRITERS
Number of Firm Shares Underwriter to be Purchased ----------- --------------------- BT Alex. Brown Incorporated Credit Suisse First Boston Corporation Bear, Stearns & Co. Inc. Morgan Keegan & Company, Inc. ---------- 3,754,278 Total ----------
Schedule I 36
SCHEDULE II ----------- SCHEDULE OF SELLING SHAREHOLDERS Number of Firm Shares Selling Shareholder to be Sold ------------------- --------------------- First Britannia Mezzanine N.V. 2,100,000 de Ruyterkade 62 Curacuo, Netherlands Antilles Juliet Challenger, Inc. 188,339 c/o Darlene Clarke 824 Market Street, Suite 900 Wilmington, Delaware 19801 cc: Russell Ayres 1900 Grant Building Pittsburgh, Pennsylvania 15219 HCC Investments, Inc. 29,224 c/o Darlene Clarke 824 Market Street, Suite 900 Wilmington, Delaware 19801 cc: Russell Ayres 1900 Grant Building Pittsburgh, Pennsylvania 15219 ProTechnics II (Nevada), Inc. 19,000 One East First Street Suite 1404 Reno, Nevada 89503 Trustees of Grinnel College 6,470 1103 Park Street Grinnel, Iowa 50112 Attention: David Clay, Treasurer
Schedule II-1 37
SCHEDULE OF SELLING SHAREHOLDERS (continued) Number of Firm Shares Selling Shareholder to be Sold ------------------- --------------------- 4,471 Roger Samdahl 4130 Beebe Circle San Jose, California 95135 Robert Hurst 2,744 322 South Colgate Perryton, Texas 79070 Richard Lee Heine 1,000 2001 Commerce Street Midland, Texas 79703 Banner Partners 814 c/o Bryan & Edwards 3000 Sand Hill Road Building 1, Suite 190 Menlo Park, California 94025 Attention: Alan R. Brudos Bryco Investments 814 c/o Bryan & Edwards 3000 Sand Hill Road Building 1, Suite 190 Menlo Park, California 94025 Attention: Alan R. Brudos Hubert L. Brown, Jr. 412 300 West Louisiana Midland, Texas 79701 Greg T. Boser 300 406,206 7th Avenue S.W. Calgary, Alberta T2P 0W7
Schedule II-2 38
SCHEDULE OF SELLING SHAREHOLDERS (continued) Number of Firm Shares Selling Shareholder to be Sold ------------------- --------------------- The Brown Children Trust #2 200 Elizabeth M. Brown, Trustee c/o Hubert L. Brown, Jr. 300 West Louisiana Midland, Texas 79701 Elizabeth Marie Brown, Hubert L. Brown, Jr. and John F. Flynn, Trustees Under the Will of H.L. Brown 200 Elizabeth M. Brown, Trustee c/o Hubert L. Brown, Jr. 300 West Louisiana Midland, Texas 79701 Hillman 1985 Limited Partnership 20 c/o Darlene Clarke 824 Market Street, Suite 900 Wilmington, Delaware 19801 cc: Russell Ayres 1900 Grant Building Pittsburgh, Pennsylvania 15219 TOTAL [ 2,354,278 ] -------------------------
Schedule II-3 39
SCHEDULE III SCHEDULE OF OPTION SHARES Maximum Number Percentage of of Option Shares Total Number of Name of Seller to be Sold Option Shares - -------------- ---------------- --------------- Core Laboratories N.V. 225,257 40% First Britannia Mezzanine N.V. 337,885 60% ---------------- -- TOTAL 563,142 100% ---------------- ---
Schedule III 40 EXHIBIT A --------- SUBSIDIARIES Subsidiary - ---------- Core Laboratories, Inc. Core Laboratories International B.V. Saybolt International B.V. Saybolt, Inc. ProTechnics Company Exhibit A EX-5.1 3 OPINION OF NAUTA DUTILH 1 [NAUTA DUTILH LETTERHEAD] November 19, 1997 Core Laboratories N.V. 5295 Hollister Road Houston, Texas 77040 Attention: John D. Denson, Esq. Re: Core Laboratories N.V. ("the Company") Dear Sirs: At your request we have, as your legal counsel in The Netherlands, advised on matters of Netherlands law in connection with the registration statement on Form S-3 (Registration No. 333-39265) filed by the Company with the Securities and Exchange Commission (the "Commission") on October 31, 1997 (the "Registration Statement"), in connection with the registration under the Securities Act of 1933, as amended, of 4,439,221 common shares in the capital of the Company ("Common Shares"), each such shares with a par value of NLG 0.03. Capitalized terms used but not defined herein shall have the same meetings as in the Registration Statement. For the purposes of this opinion, we have examined and relied only on the following documents: (a) a faxed copy of the Registration Statement; (b) a faxed copy of the prospectus included in such Registration Statement (the "Prospectus"); and (c) copies of the following documents in relation to the Company; 1. the deed of incorporation of the Company as a private company with limited liability under Netherlands law ("besloten vennootscap met beperkte aansprakelijkheid") under the name of Core Holdings B.V. with its corporate seat at Amsterdam, The Netherlands, dated 8 August 1994, incorporating the articles of association (statuten) of the Company; 2 2. a notarial deed providing for the amendment of the articles of association of the Company, dated 6 April 1995; 3. a notarial deed dated 31 August 1995, providing for the conversion of the Company (following such conversion known as: "Core Laboratories N.V.") into a company limited by shares ("naamloze vennootschap") and embodying the new articles of association of the Company; 4. written statements from all shareholders in the Company, together constituting a unanimous resolution of the general meeting of shareholders of the Company in favor of the contents of the notarial deed mentioned in item 3 above; 5. a certificate, dated 31 August 1995, signed by Arthur Andersen confirming that on the basis of their work, Arthur Andersen are of the opinion that at 30 June 1995 the Company's (at that time Core Holdings B.V.'s) shareholders' equity was at least equal to the paid-in and called-up share capital, such certificate -- by virtue of the provisions in Section 2:72 of the Dutch Civil Code -- having been attached to the deed mentioned in item 3 above); and 6. a faxed copy of the resolutions adopted by the Board of Supervisory Directors of the Company at a meeting held on 30 October 1997 authorizing, inter alia, the issue of the Common Shares (as defined in such resolutions). The documents referred to in paragraphs (a) and (b) inclusive above are hereinafter referred to as the "Documents") and the documents referred to in paragraph (c) above as the "Certificates." In connection with such examination and in giving this opinion, we have assumed: (i) the genuineness of all signatures to all Documents and Certificates, the authenticity and completion of all Documents and Certificate submitted to us as originals, the completeness and the conformity to the original documents of all Documents and Certificates submitted to us as faxed copies or photocopies and the authenticity of such original documents; (ii) the legal capacity ("handelingsbekwaamheid") of the natural persons acting on behalf of any of the parties, the due incorporation and valid existence of, the power, authority and legal rights of, and the due authorization and execution of each of the Documents by, each of the parties thereto (other than the Company) under any applicable law to execute the Documents, to which it is a party and to perform its obligations thereunder; (iii) the due compliance with all matters of, and the validity, binding effect and enforceability of, each of the Documents under, any applicable law other than Netherlands law; (iv) the accuracy, validity and binding effect of the Certificates and the matters certified or evidenced thereby at the date hereof and any other relevant date; -2- 3 (v) that payment for the Common Shares issued by the Company will not be made by the Company or a Dutch subsidiary of the Company; (vi) that the shares to be issued by the Company have been accepted; and (vii) that the resolutions referred to in item (c) 6 above are in full force and effect. This opinion shall be governed by and construed in accordance with Netherlands law and is given only with respect to Netherlands law in effect on the date of this opinion. We have not investigated the laws of any jurisdiction other than The Netherlands, any representations or warranties made by the parties to the Documents, any matters of fact, tax law, anti-trust law or international law, including, without limitation, the law of the European Community. Based on and subject to the foregoing, and subject to the qualifications set forth below, we express the following opinion: The shares in the capital of the Company to be issued by the Company or sold by the selling shareholders referred to in the Registration Statement, as reflected in the Registration Statement, consisting of a maximum of 4,439,221 common shares, when issued by the Company or sold by the said selling shareholders, as applicable, in the manner and on the terms as referred to in the Registration Statement and the Prospectus, will be duly and validly issued and, subject to payment for such shares issued by the Company, such shares will be fully paid and non-assessable. The opinion expressed above is subject to the following qualifications: We have assumed that any foreign law which may apply with respect to the Documents or the transactions contemplated thereby would not be such as to affect the opinion expressed herein. We consent to the inclusion of this opinion as an Exhibit to the Registration Statement. We further consent to all references to us in the Registration Statement, the Prospectus and any amendments or supplements thereto. Very truly yours, NAUTA DUTILH By: ______________________________ C.A. Fonteijn -3- EX-23.1 4 CONSENT OF ARTHUR ANDERSEN LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our report dated February 25, 1997, included in the Core Laboratories N.V. Form 10-K for the year ended December 31, 1996 and to all references to our Firm included in this registration statement. ARTHUR ANDERSEN LLP Houston, Texas November 18, 1997 EX-23.2 5 CONSENT OF GRANT THORNTON LLP 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our report dated July 19, 1996 accompanying the consolidated financial statements of ProTechnics Company and subsidiaries as of and for the years ended March 31, 1996 and 1995. The consolidated financial statements of ProTechnics Company and subsidiaries are not presented separately, but are included in the financial statements in the Annual Report on Form 10-K of Core Laboratories N.V. for the year ended December 31, 1996. We consent to the incorporation by reference in the Registration Statement of the aforementioned report and to the use of our name as it appears under the caption "Experts." GRANT THORNTON LLP Houston, Texas November 18, 1997 EX-23.3 6 CONSENT OF PRICE WATERHOUSE LLP 1 EXHIBIT 23.3 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the Incorporation by reference in the Prospectus on Form S-3 of Core Laboratories N.V. of our report dated April 1, 1997 relating to the consolidated financial statements of Saybolt International B.V., which appears in the Current Report on Form 8-K/A of Core Laboratories N.V. dated July 21, 1997. We also consent to the reference to us under the heading "Experts" in such Prospectus. PRICE WATERHOUSE LLP Morristown, NJ November 18, 1997 -----END PRIVACY-ENHANCED MESSAGE-----