S-4/A 1 d407112ds4a.htm FORM S-4/A FORM S-4/A
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As filed with the Securities and Exchange Commission on February 27, 2023

Registration No. 333-269259

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

AMENDMENT NO. 2

to

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

CORE LABORATORIES LUXEMBOURG S.A.*

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Luxembourg*   1389   Not Applicable**

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification No.)

 

 

12E Rue Guillaume Kroll

L-1882 Luxembourg

Grand Duchy of Luxembourg

(31-20) 420-3191

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

Mark Tattoli

General Counsel

6316 Windfern Road

Houston, Texas 77040

(713) 328-2673

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

 

 

Copy to:

Thomas Zentner

Vinson & Elkins L.L.P.

845 Texas Ave

Suite 4700

Houston, TX 77002

(512) 542-8449

 

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions to the transactions described herein.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box.  ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the U.S. Securities Act of 1933, as amended (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 this form is a post-effective amendment filed pursuant to Rule 462(d) 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.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the U.S. Exchange Act. (Check one):

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

U.S. Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  ☐

U.S. Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  ☐

 

 

 

 

*

Core Laboratories Luxembourg S.A. (the “Registrant”) is a public limited liability company incorporated under the laws of Luxembourg. In connection with the Transaction, and subject to the satisfaction or waiver of the conditions to the Transaction, the Registrant intends to undertake a series of corporate transactions as a result of which, among other things, (i) the Registrant will merge with and into Core Laboratories N.V. (“Core Lab N.V.”), with the Registrant surviving, and (ii) the Registrant will domesticate in Delaware as Core Laboratories Inc. (“Core Lab Delaware”). Subsequent to the domestication of Core Lab Delaware, Core Lab Delaware will become the successor to the Registrant for reporting purposes, as described in the Proxy Statement/Prospectus.

 

**

Core Lab Delaware intends to obtain an employer identification number at such time as it becomes a Delaware corporation.

 

 

 

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 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.

 

 

 


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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 proxy statement/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 jurisdiction in which such offer, solicitation or sale would be unlawful.

 

PRELIMINARY—SUBJECT TO COMPLETION—DATED FEBRUARY 27, 2023

 

 

LOGO

PRELIMINARY PROXY STATEMENT FOR EXTRAORDINARY GENERAL MEETING OF CORE LABORATORIES N.V.

NOTICE OF EXTRAORDINARY GENERAL MEETING OF CORE LABORATORIES LUXEMBOURG S.A.

PROSPECTUS FOR SHARES OF COMMON STOCK OF CORE LABORATORIES INC. (AFTER ITS DOMESTICATION AS A CORPORATION IN DELAWARE)

PROPOSED TRANSACTION – YOUR VOTE IS IMPORTANT

Core Laboratories N.V. (“Core Lab N.V.” or the “Company”), a public company with limited liability (naamloze vennootschap) incorporated under Dutch law, is proposing and submitting to the holders (“Core Lab N.V. Shareholders”) of Core Lab N.V. common shares (the “Core Lab N.V. Common Shares”) for approval, a series of transactions, as described in detail below.

An extraordinary meeting of Core Lab N.V. Shareholders will be held at NautaDutilh N.V., Beethovenstraat 400, 1082 PR Amsterdam, The Netherlands, at 9:00 a.m. CEST on March 29, 2023 (the “Dutch Meeting”), at which Core Lab N.V. Shareholders will be asked to consider: (1) a resolution (the “Transaction Proposal”) to approve a series of proposed and joint transactions (the “Transaction”), which will include (a) pursuant to the merger plan (the “Merger Plan”), the downstream cross-border merger (the “Merger”) of Core Lab N.V. with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg (“Core Lab Luxembourg”), with Core Lab Luxembourg surviving, and (b) as soon as practicable following completion of the Merger, Core Lab Luxembourg migrating out of Luxembourg and domesticating as Core Laboratories Inc. (“Core Lab Delaware”), a Delaware corporation (the “U.S. Redomestication”); and (2) a resolution (the “Articles of Amendment Proposal”) to amend the articles of association of Core Lab N.V., as amended, (“Articles of Association”) to include a formula on the basis of which cash compensation to Core Lab N.V. Shareholders who exercise their withdrawal right in connection with the Merger, as referred to in Section 2:333h (1) of the Dutch Civil Code, can be readily determined. By casting a vote in favor of the Transaction Proposal, the respective Core Lab N.V. shareholder agrees to the U.S. Redomestication and grants a power of attorney (in the form attached as Appendix D – Power of Attorney) to each member of the board of directors of Core Lab Luxembourg (the “Luxembourg Meeting Proxies”) to vote, by proxy, the shares of Core Lab N.V. Shareholders in favor of the U.S. Redomestication at an extraordinary general meeting of Core Lab Luxembourg (the “Luxembourg Meeting”) to be held as per the Notice of Extraordinary General Meeting of Core Lab Luxembourg. After the Transaction is complete, Core Lab N.V. Shareholders will hold one share of common stock, par value US$0.01 per share (“Common Stock”) of Core Lab Delaware, for each one Core Lab N.V. Common Share owned immediately prior to the Transaction. The business, assets, liabilities, directors and officers of Core Lab Delaware will continue to be the same as the business, assets, liabilities, directors and officers of Core Lab N.V. immediately prior to the Transaction.

In order to implement the Transaction, and more specifically the U.S. Redomestication portion of the Transaction, Core Lab Luxembourg will convene the Luxembourg Meeting to be held at MaplesFS Luxembourg S.A., 12E, rue Guillaume Kroll, L-1882, Luxembourg, at 3:00 p.m. CEST on April 3, 2023, at which the board of directors of Core Lab Luxembourg (the “Core Lab Luxembourg Board”) will vote the Luxembourg Meeting Proxies in favor of the U.S. Redomestication. Any Core Lab N.V. Shareholders who vote against or abstain from voting on the Transaction Proposal at the Dutch Meeting will have the right to attend the Luxembourg Meeting and cast their votes in favor of or against the U.S. Redomestication.


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If the Transaction takes effect, your rights with respect to Core Lab Delaware Common Stock will be substantially the same as those currently in effect with respect to Core Lab N.V. Common Shares. For Core Lab N.V. Shareholders, the number of Core Lab Delaware shares of Common Stock you will own will be the same as the number of Core Lab N.V. Common Shares you own immediately prior to the Effective Date.

Just as is the case today with your Core Lab N.V. Common Shares, upon completion of the Transaction , the Common Stock of Core Lab Delaware will be listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “CLB” and will be registered with the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended, and be subject to the same SEC reporting requirements, the mandates of the Sarbanes-Oxley Act of 2002 and the applicable corporate governance rules of the NYSE. Core Lab Delaware will continue to report financial results in U.S. dollars and under U.S. generally accepted accounting principles (“U.S. GAAP”). Core Lab Delaware will in the ordinary course make available customary financial information and other reports filed with the SEC, consistent with Core Lab N.V.’s established current practices.

The Board of Supervisory Directors of Core Lab N.V. (the “Core Lab N.V. Board”) unanimously recommends that Core Lab N.V. Shareholders vote FOR the Transaction Proposal and FOR the Articles of Amendment Proposal.

In early 2022, the Core Lab N.V. Board and the Company’s management team undertook a review of Core Lab N.V.’s existing structure and operations, and particularly the jurisdiction of incorporation of the ultimate Core Lab N.V. parent company. The Company believes this Transaction will enhance shareholder value over the long-term through simplifying the corporate structure to reduce administrative overhead costs and gain operational efficiencies. After considering various factors, the Core Lab N.V. Board believes that the Transaction will enhance shareholder value over the long-term by providing potential strategic opportunities and benefits, including:

 

   

simplifying the Company’s corporate structure and streamlining reporting requirements, which will (i) reduce the effort and expense incurred by the Company to assess, implement and remain compliant with multiple regulatory and reporting requirements for Core Lab N.V. on a consolidated basis, and (ii) provide opportunities for the Company to improve operational efficiencies and financial flexibility in the corporate treasury, cash management, risk management and tax functions;

 

   

reducing the corporate footprint and thereby achieving consolidation, better alignment and efficiencies between the domicile of our ultimate parent entity and our corporate functions;

 

   

benefiting from well-established principles of corporate governance under Delaware law, which are more closely aligned with NYSE listing standards and SEC governance requirements; and

 

   

positioning the Company to better respond to global tax developments considering recent changes in U.S. tax laws and the increased focus on companies’ global tax footprints resulting from the Organization for Economic Cooperation and Development’s Base Erosion and Profit Shifting initiative.

The Core Lab N.V. Board has unanimously approved the plan to change the Company’s jurisdiction of organization from the Netherlands to the State of Delaware by means of a series of steps and has unanimously resolved to submit a proposal to the Company’s shareholders asking that they vote to adopt the Transaction Proposal and the Articles of Amendment Proposal. If the shareholders vote in favor of the proposals, and the other conditions to completion of the Transaction are satisfied, the Company anticipates that, on or prior to May 1, 2023, it will complete the Merger in accordance with the merger procedures of Book 2, Title 7, Sections 2, 3 and 3A of the Dutch Civil Code and Chapter II, section 1 of the Luxembourg law of 10 August 1915 on commercial companies, as amended, and will immediately thereafter complete the U.S. Redomestication in accordance with the domestication procedures of Section 388 of the DGCL and applicable provisions of Luxembourg law. Following the U.S. Redomestication, the Company will be renamed “Core Laboratories Inc.”

The Transaction cannot be completed without satisfying certain conditions, the most important of which is the adoption of the proposals by the affirmative vote of the holders of Core Lab N.V. Common Shares. The voting standard required for each proposal to be adopted is described in more detail elsewhere in this Proxy Statement/Prospectus. See “The Transaction Proposal – Required Shareholder Approvals”.

Shares of Common Stock of Core Lab Delaware are anticipated to begin trading on the NYSE promptly following the date when the U.S. Redomestication becomes effective (the “Effective Date”). See “The Transaction Proposal – Certain Legal and Regulatory Matters – Stock Exchange Listing”.


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Given the differences between the laws of the Netherlands, Luxembourg, and Delaware, your rights as a shareholder of Core Lab N.V. and a shareholder of Core Lab Delaware will be different. In addition, there are differences between Core Lab N.V.’s existing Articles of Association and Core Lab Delaware’s Certificate of Incorporation (the “Core Lab Delaware Certificate of Incorporation”) and bylaws (the “Core Lab Delaware Bylaws”) as they will be in effect upon the completion of the Transaction. See “Comparison of Rights of Core Lab N.V. Shareholders and Core Lab Delaware Stockholders” and “Description of Core Lab Delaware Capital Stock”.

The Core Lab N.V. Board weighed the estimated corporate tax liability arising from the Transaction and, with the assistance of professional advisors and based on and subject to current assumptions and market value, does not anticipate that we will incur material corporate-level Dutch or Luxembourg federal income taxes in connection with the Transaction. See “Risk Factors – Risks Relating to the Transaction – The Transaction may result in material Dutch taxes for Core Lab N.V.” and “Material Dutch Tax Considerations — Material Dutch Tax Consequences of the Merger — Material Corporate Level Tax Consequences of the Merger for Core Lab N.V.

The Transaction may have different tax consequences for Core Lab N.V. Shareholders who are residents in the Netherlands and the United States. In addition, there may be different income tax treatment that applies to Dutch holders and U.S. holders of shares of Common Stock of Core Lab Delaware in respect of dividend and withholding taxes, as compared to the tax consequences that apply in respect of holding Core Lab N.V. Common Shares. The Dutch income tax consequences of the Transaction for Core Lab N.V. Shareholders will depend on a number of factors. Determining the actual Dutch tax consequences of the Transaction may be complex and will depend on the specific situation of the shareholder. Core Lab N.V. Shareholders who are resident in the Netherlands may be subject to Dutch (corporate) income tax in respect of the Transaction, depending on the tax regime applicable to such shareholder. The U.S. federal income tax consequences of the Transaction to U.S. Holders will also depend on a number of factors and U.S. Holders may be subject to U.S. federal income taxation in connection with the Transaction. See “Material U.S. Federal Income Tax Considerations”. Core Lab N.V. Shareholders are urged to carefully read the sections of the Proxy Statement/Prospectus entitled “Material Dutch Tax Considerations” and “Material U.S. Federal Income Tax Considerations”, as applicable, and to consult with their own tax and other advisors.

Subject to the satisfaction or waiver of all other conditions precedent, if the Core Lab N.V. Shareholders approve the Transaction Proposal and the Articles of Amendment Proposal it is anticipated that the Transaction will be completed upon the publication of the Merger with the Luxembourg Public Register of Companies, which is expected to occur as soon as practicable following the lapse of the one month withdrawal period required to satisfy the rights of those holders who exercise their Withdrawal Rights. See “The Transaction Proposal – Particulars of the Transaction.”

This Proxy Statement/Prospectus is dated [                ], 2023 and is first being mailed to Core Lab N.V. Shareholders of record on or about [            ], 2023.

The purpose of the accompanying Proxy Statement/Prospectus is to explain the proposed Transaction and why the Core Lab N.V. Board believes adoption of the proposals will achieve a more efficient structure for the Core Lab N.V. group of companies and enhance shareholder value over the long-term. As such, the proxy statement/prospectus provides important information about the Dutch Meeting, the Luxembourg Meeting and the proposals described above. We urge you to read this Proxy Statement/Prospectus and the documents incorporated by reference herein carefully and in their entirety. In particular, you should consider the matters discussed in the section entitled “Risk Factors”, beginning on page 22 of this Proxy Statement/Prospectus. You are entitled to vote by attending the Dutch Meeting or by appointing a proxy. It is not necessary that the proxy appointed by you be a current shareholder of Core Lab N.V.

Neither the U.S. Securities and Exchange Commission nor any state securities commission or Dutch securities regulatory authority has approved or disapproved of the securities to be issued in connection with the Transaction described in this Proxy Statement/Prospectus or determined if this Proxy Statement/Prospectus is accurate or complete. Any representation to the contrary is a criminal offense.


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LOGO

[                ], 2023

Dear Core Lab N.V. Shareholders:

You are invited to attend an extraordinary meeting (the “Dutch Meeting”) of the holders (“Core Lab N.V. Shareholders”) of common shares (the “Core Lab N.V. Common Shares”) of Core Laboratories N.V. (“Core Lab N.V.”) to be held at NautaDutilh N.V., Beethovenstraat 400, 1082 PR Amsterdam, The Netherlands, at 9:00 a.m. CEST on March 29, 2023.

The Transaction

At the Dutch Meeting, Core Lab N.V. Shareholders will be asked to consider: (1) a resolution (the “Transaction Proposal”) to approve a series of proposed joint transactions (the “Transaction”), which will include (a) the downstream cross-border merger (the “Merger”) of Core Lab N.V. with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg (“Core Lab Luxembourg”), with Core Lab Luxembourg surviving, and (b) as soon as practicable following completion of the Merger, Core Lab Luxembourg migrating out of Luxembourg and domesticating as Core Laboratories Inc. (“Core Lab Delaware”), a Delaware corporation (the “U.S. Redomestication”); and (2) a resolution (the “Articles of Amendment Proposal”) to amend the articles of association of Core Lab N.V., as amended, (“Articles of Association”) to include a formula on the basis of which cash compensation to Core Lab N.V. Shareholders who exercise their withdrawal right in connection with the Merger, as referred to in Section 2:333h (1) of the Dutch Civil Code, can be readily determined, as more fully described in the enclosed proxy statement and prospectus dated [            ], 2023 (the “Proxy Statement/Prospectus”). By casting a vote in favor of the Transaction Proposal, the respective Core Lab N.V. shareholder agrees to the U.S. Redomestication and grants a power of attorney (in the form attached as Appendix D – Power of Attorney) to each member of the board of directors of Core Lab Luxembourg (the “Luxembourg Meeting Proxies”) to vote, by proxy, the shares of Core Lab N.V. Shareholders in favor of the U.S. Redomestication at an extraordinary general meeting of Core Lab Luxembourg (the “Luxembourg Meeting”) to be held as per the Notice of Extraordinary General Meeting of Core Lab Luxembourg. After the Transaction is complete, Core Lab N.V. Shareholders will hold one share of common stock, par value US$0.01 per share (“Common Stock”), of Core Lab Delaware for each one Core Lab N.V. Common Share owned immediately prior to the Transaction, but the business, assets, liabilities, directors and officers of Core Lab Delaware will continue to be the same as the business, assets, liabilities, directors and officers of Core Lab N.V. immediately prior to the Transaction. However, unlike the two-tier Supervisory Board and Management Board that currently exist at Core Lab N.V., Core Lab Delaware will have one board of directors.

Core Lab N.V. Board Recommendation

The Board of Supervisory Directors of Core Lab N.V. (the “Core Lab N.V. Board”) unanimously recommends that Core Lab N.V. Shareholders vote FOR the Transaction Proposal and FOR the Articles of Amendment Proposal. In making its determination, the Core Lab N.V. Board considered a number of factors as described in the Proxy Statement/Prospectus under “The Transaction Proposal – Reasons for the Transaction”.

Tax Treatment for Core Lab N.V. Shareholders

The Transaction may have different tax consequences for Core Lab N.V. Shareholders who are residents in the Netherlands and the United States. In addition, there may be different income tax treatment that applies to Dutch resident holders and U.S. Holders of shares of Common Stock of Core Lab Delaware in respect of dividend and


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withholding taxes, as compared to the tax consequences that apply in respect of holding Core Lab N.V. Common Shares. Core Lab N.V. Shareholders are urged to carefully read the sections of the Proxy Statement/Prospectus entitled “Material Dutch Tax Considerations” and “Material U.S. Federal Income Tax Considerations”, as applicable, and to consult with their own tax advisors.

Transaction Completion Date

In addition to the required shareholder approvals in favor of each of the Transaction Proposal and the Articles of Amendment Proposal, under the Merger Plan, (i) the Merger is conditioned upon the approval of the Articles of Amendment Proposal by the Core Lab N.V. Shareholders at the Dutch Meeting, (ii) in order for the Merger to become effective, the total number of votes cast against the Transaction Proposal must not exceed two percent of all votes cast at the Dutch Meeting, and (iii) at the Dutch Meeting, shareholders representing at least two-thirds of the outstanding shares of Core Lab N.V. must vote in favor of the Transaction Proposal by which they will, among other things, grant a power of attorney to the directors of Core Lab Luxembourg to represent them at the Luxembourg Meeting (the “Merger Plan Conditions”). The Merger Plan Conditions can be waived by mutual consent of the Core Lab N.V. Board and the Core Lab Luxembourg Board. Subject to the satisfaction or waiver of the Merger Plan Conditions, if the Core Lab N.V. Shareholders approve the Transaction Proposal and the Articles of Amendment Proposal, it is anticipated that the Transaction will be completed upon the publication of the Merger with the Luxembourg Public Register of Companies, which is expected to occur as soon as practicable following the lapse of the one month withdrawal period required to satisfy the rights of those holders who exercise their Withdrawal Rights. Please refer to the Proxy Statement/Prospectus for a more detailed description of the Transaction and a more detailed description of Core Lab N.V.’s reasons for the Transaction and the risk factors relating to the Transaction. Please give the Proxy Statement/Prospectus your careful consideration and consult your financial, tax or other professional advisors regarding the consequences of the Transaction to you.

The Core Lab N.V. Board unanimously recommends that Core Lab N.V. Shareholders vote FOR the Transaction Proposal and FOR the Articles of Amendment Proposal.

Voting Your Core Lab N.V. Common Shares

Your vote is very important regardless of the number of Core Lab N.V. Common Shares that you own. Enclosed with this letter is the Notice of Extraordinary Meeting and Proxy Statement/Prospectus and a form of proxy or voting instruction form. If you are unable to attend the Dutch Meeting in person please complete and deliver either the enclosed form of proxy or voting instruction form, as applicable, on the Internet, or by telephone, mail or fax, so that it is received prior to 2:00 p.m. EST on March 28, 2023, to ensure your representation at the Dutch Meeting. If you require assistance with voting your Core Lab N.V. Common Shares, please contact Core Lab N.V.’s proxy solicitors, Okapi Partners LLC, as follows:

Okapi Partners LLC

1212 Avenue of the Americas, 17th Floor

New York, NY 10036

(212) 297-0720

Toll-Free: (888) 785-6709

info@okapipartners.com

On behalf of Core Lab N.V., I would like to thank you for your continuing support.

Sincerely,

Lawrence Bruno

Chairman of the Board

Houston, Texas

[                ], 2023

Neither the U.S. Securities and Exchange Commission nor any state securities commission or Dutch securities regulatory authority has approved or disapproved of the securities to be issued in connection with the Transaction described in this Proxy Statement/Prospectus or determined if this Proxy Statement/Prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying proxy statement related to the Core Lab N.V. Common Shares is dated [                ], 2023 and is first being mailed to Core Lab N.V.’s shareholders on or about [                ], 2023.


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NOTICE OF EXTRAORDINARY MEETING OF SHAREHOLDERS OF CORE LABORATORIES N.V.

NOTICE IS HEREBY GIVEN that, an extraordinary meeting (the “Dutch Meeting”) of holders (“Core Lab N.V. Shareholders”) of common shares (“Core Lab N.V. Common Shares”) of Core Laboratories N.V. (“Core Lab N.V.”) will be held at NautaDutilh N.V., Beethovenstraat 400, 1082 PR Amsterdam, The Netherlands at 9:00 a.m. CEST on March 29, 2023, for the following purposes:

 

  1.

to consider and, if deemed advisable, to adopt a special resolution of the Core Lab N.V. Shareholders (the “Transaction Proposal”) to approve a series of transactions (the “Transaction”), which will include (i) a resolution to enter into the merger, pursuant to the merger plan (the “Merger Plan”) (in the form attached as Appendix A – Merger Plan to this Proxy Statement/Prospectus), by way of a downstream cross-border merger (the “Merger”) of Core Lab N.V. with and into Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg (“Core Lab Luxembourg”) with Core Lab Luxembourg surviving, such that all assets and liabilities of Core Lab N.V. are transferred to Core Lab Luxembourg by universal succession of title and Core Lab N.V. will cease to exist without going into liquidation, against the issuance of new Core Lab Luxembourg shares, in accordance with an exchange ratio of one Core Lab Luxembourg share for one Core Lab N.V. share, and (ii) as soon as practicable following completion of the Merger, Core Lab Luxembourg migrating out of Luxembourg and domesticating as Core Laboratories Inc. (“Core Lab Delaware”), a Delaware corporation (the “U.S. Redomestication”), as more particularly described in the accompanying proxy statement and prospectus of Core Lab N.V. dated [                ], 2023 (as may be amended, supplemented or otherwise modified from time to time) (the “Proxy Statement/Prospectus”). By casting a vote in favor of the Transaction Proposal, the respective shareholder of Core Lab N.V. agrees to the U.S. Redomestication and furthermore grants a power of attorney (in the form attached as Appendix D – Power of Attorney to this Proxy Statement/Prospectus) to each member of the board of directors of Core Lab Luxembourg (the “Luxembourg Meeting Proxies”) to individually, vote by proxy, the shares of Core Lab N.V. Shareholders in favor of the U.S. Redomestication at an extraordinary general meeting of Core Lab Luxembourg (the “Luxembourg Meeting”) to be held as per the Notice of Extraordinary General Meeting of Core Lab Luxembourg; and

 

  2.

to consider and, if deemed advisable, to adopt a special resolution of the Core Lab N.V. Shareholders (the “Articles of Amendment Proposal”), to amend the articles of association of Core Lab N.V., as amended, (“Articles of Association”) to include a formula on the basis of which cash compensation to Core Lab N.V. Shareholders who exercise their withdrawal right in connection with the Merger, as referred to in Section 2:333h (1) of the Dutch Civil Code, can be readily determined (in the form attached as Appendix E – Deed of Amendment of the Articles to this Proxy Statement/Prospectus) and to adopt a special resolution to grant a Power of Attorney to each notarial employee of HVG Law LLP jointly as well as severally to execute and sign the Deed of Amendment of the Articles.

The Transaction Proposal has been proposed to Core Lab N.V. Shareholders by the Core Lab N.V. Supervisory Board (the “Core Lab N.V. Board”). The Articles of Amendment Proposal has been proposed by the Management Board of Core Lab N.V. (the “Core Lab N.V. Management Board”) and approved by the Core Lab N.V. Board, and is now being proposed to the Core Lab N.V. Shareholders.

This notice of extraordinary meeting of Core Lab N.V. Shareholders (the “Notice of Extraordinary Meeting”) and the accompanying Proxy Statement/Prospectus are available on Core Lab N.V.’s website at www.corelab.com, on www.proxydocs.com/clb and on the SEC’s website at www.sec.gov. The deed of amendment to the Articles of Association is available at any of those websites as an appendix to the Proxy Statement/Prospectus.

The Core Lab N.V. Board is sending this Notice of Extraordinary Meeting to those shareholders who hold common shares at the close of business Central European Time on February 15, 2023 (the “Notice Record

 

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Date”). Only Core Lab N.V. Shareholders whose names have been entered in the registers of Core Lab N.V. Shareholders as of the close of business on the Notice Record Date are entitled to receive notice of the Dutch Meeting. However, the Notice Record Date only determines who receives the electronic notice and does not determine who has the right to vote at the Dutch Meeting. In order to be able to vote at the Dutch Meeting, you will have to be a record holder of shares (or otherwise a person with voting rights with respect to shares) at the close of business Central European Time on March 1, 2023. This latter date is the “day of registration” (“dag van registratie”) (the “Voting Record Date”) as referred to in the Dutch Civil Code and only holders of shares (or other persons with voting rights with respect to shares) on such date are entitled to vote. Under Dutch law, this latter date must occur exactly twenty-eight (28) days before the date of the Dutch Meeting.

Core Lab N.V. Shareholders who are unable to attend the Dutch Meeting are encouraged to complete, sign and return the enclosed form of proxy. To be valid, proxies must be received by Broadridge Financial Solutions (“Broadridge”) no later than 2:00 p.m. EST on March 28, 2023. Notwithstanding the foregoing, the Chairman of the Dutch Meeting has the discretion to accept proxies received after such deadline and the time limit for deposit of proxies may be waived or extended by the Chairman of the Dutch Meeting at his or her discretion, without notice.

If you are a beneficial (non-registered) holder of Core Lab N.V. Common Shares and receive these materials through a broker, bank, trust company or other intermediary or nominee, you must provide your voting instructions or complete, sign and return the voting instruction form in accordance with the instructions provided by your broker, bank, trust company or other intermediary or nominee.

Core Lab N.V. Shareholders who are planning to return the form of proxy or voting instruction form are encouraged to review the Proxy Statement/Prospectus carefully before submitting such form.

Pursuant to Section 2:333h of the Dutch Civil Code, shareholders in a Dutch target company are entitled to exercise a statutory withdrawal right if they vote against a cross-border merger and submit a request to receive cash compensation instead. Shareholders may exercise this right by completing and submitting a withdrawal application form (the “Withdrawal Application Form”), within one month following the Dutch Meeting. The Withdrawal Application Form can be found at https://www.corelab.com/investors/redomestication-withdrawal-application.

If you have any questions about the information contained in this Notice of Extraordinary Meeting and the accompanying Proxy Statement/Prospectus or require assistance in voting your Core Lab N.V. Common Shares, please contact Core Lab N.V.’s proxy solicitors, Okapi Partners LLC, as follows:

Okapi Partners LLC

1212 Avenue of the Americas,

17th Floor

New York, NY 10036

(212) 297-0720

Toll free: (888) 785-6709

info@okapipartners

DATED at Houston, Texas this [                ] day of [                ], 2023.

By Order of the Board of Supervisory Directors,

Lawrence Bruno

Chairman of the Board

 

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NOTICE OF EXTRAORDINARY MEETING OF SHAREHOLDERS OF CORE LABORATORIES LUXEMBOURG S.A.

NOTICE IS HEREBY GIVEN that, under condition precedent that the merger between Core Laboratories N.V. (“Core Lab N.V.”), as absorbed company, and Core Laboratories Luxembourg S.A., a public limited liability company incorporated under the laws of Luxembourg (“Core Lab Luxembourg”), as absorbing company (the “Merger”) shall be effective on or around May 1, 2023, an extraordinary meeting (the “Luxembourg Meeting”) of holders (“Core Lab Luxembourg Shareholders”) of common shares (“Core Lab Luxembourg Common Shares”) of Core Laboratories Luxembourg will be held at MaplesFS Luxembourg S.A., 12E, rue Guillaume Kroll, L-1882, Luxembourg, at 3:00 p.m. CEST on April 3, 2023, for the following purposes:

 

  1.

To approve the conversion of Core Lab Luxembourg, with immediate effect after the Merger, i.e., on the same day or as soon as reasonably possible thereafter, entailing the transfer without discontinuity of the legal personality of Core Lab Luxembourg, of the statutory registered office, effective place of management and central administration seat of Core Lab Luxembourg from 12E, rue Guillaume Kroll, L-1882 Luxembourg, Grand Duchy of Luxembourg to Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, United States of America (the “U.S. Redomestication”), having the below items on the agenda and under the following joint implementation terms:

 

  a.

(i) the transfer of the statutory registered office, effective place of management and central administration seat of Core Lab Luxembourg from Grand Duchy of Luxembourg to the State of Delaware, United States of America and (ii) the continuation of the legal personality of Core Lab Luxembourg in the State of Delaware, United States of America under the form of a Delaware corporation and under the name Core Laboratories Inc., without dissolving Core Lab Luxembourg and without the liquidation of its assets;

 

  b.

the transfer of the statutory registered office, effective place of management and central administration seat of Core Lab Luxembourg from 12E, rue Guillaume Kroll, L-1882 Luxembourg, Grand Duchy of Luxembourg to Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, United States of America, as of the legal effective date of the conversion of Core Lab Luxembourg into a Delaware corporation pursuant to a certificate of domestication filed with the Secretary of State of the State of Delaware (the “Effective Date”);

 

  c.

amendment and restatement of the articles of association of Core Lab Luxembourg in order to adopt the certificate of incorporation and bylaws of Core Lab Delaware effective upon the Effective Date;

 

  d.

acknowledging (i) the full discharge of the current directors of Core Lab Luxembourg for the execution of their mandates as directors of Core Lab Luxembourg as of their appointment until the Effective Date and (ii) the appointment of the former members of the Supervisory Board of Core Lab N.V. as directors of Core Lab Luxembourg and their continuation as directors of Core Lab Delaware as of the Effective Date;

 

  e.

approval of the deregistration of Core Lab Luxembourg from the Luxembourg Trade and Companies Register; and

 

  f.

such other actions as may be required to effect the U.S. Redomestication.

This notice of extraordinary meeting of Core Lab Luxembourg Shareholders (the “Notice of Extraordinary Meeting of Core Lab Luxembourg”) and the accompanying proxy and voting form are available on www.proxyvote.com.

Because the Luxembourg Meeting will occur shortly after an extraordinary meeting of holders of common shares of Core Lab NV to be held on March 29, 2023 (the “Dutch Meeting”), the Board of Directors of Core Lab Luxembourg are sending this Notice of Extraordinary Meeting of Core Lab Luxembourg to those shareholders who

 

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hold common shares in Core Laboratories N.V. (the “Core Lab N.V. Shareholders”), which will be the shareholders of Core Lab Luxembourg following the Merger and at the time of the Luxembourg Meeting. For that reason, this Notice of Extraordinary Meeting of Core Lab Luxembourg is being sent to Core Lab N.V. Shareholders at the close of business Eastern Standard Time on February 15, 2023 (the “Notice Record Date”). Only Core Lab N.V. Shareholders whose names have been entered in the register of Core Lab N.V. Shareholders as of the close of business on the Notice Record Date are entitled to receive notice of the Luxembourg Meeting. However, the Notice Record Date only determines who receives the electronic notice and does not determine who has the right to vote at the Luxembourg Meeting. In order to be able to vote at the Luxembourg Meeting, you will have to be a record holder of shares (or otherwise a person with voting rights with respect to shares) at the close of business Eastern Standard Time on March 1, 2023. This latter date is the “day of registration” (the “Voting Record Date”) and only holders of shares (or other persons with voting rights with respect to shares) on such date are entitled to vote.

Shareholder voting:

Core Lab Luxembourg Shareholders who voted, as Core Lab N.V. Shareholders, in favor of the Transaction Proposal at the Dutch Meeting have granted a power of attorney to the board of directors of Core Lab Luxembourg to vote individually on their behalf, and do not need to do anything further.

Core Lab Luxembourg Shareholders who (i) have not voted, as Core Lab N.V. Shareholders, in favor of the Transaction Proposal at the Dutch Meeting, and (ii) are unable to attend the Luxembourg Meeting, are encouraged to complete, sign and return the enclosed form of proxy. To be valid, proxies must be received by Broadridge Financial Solutions no later than 2:00 p.m. EST on March 28, 2023. Notwithstanding the foregoing, the Chairman of the Luxembourg Meeting has the discretion to accept proxies received after such deadline and the time limit for deposit of proxies may be waived or extended by the Chairman of the Luxembourg Meeting at his or her discretion, without notice.

If you are a beneficial (non-registered) holder of Core Lab N.V. Common Shares and receive these materials through a broker, bank, trust company or other intermediary or nominee, you must provide your voting instructions or complete, sign and return the voting instruction form in accordance with the instructions provided by your broker, bank, trust company or other intermediary or nominee.

Core Lab N.V. Shareholders who are planning to return the form of proxy or voting instruction form are encouraged to review the Proxy Statement/Prospectus carefully before submitting such form.

If you have any questions about the information contained in this Notice of Extraordinary Meeting of Core Lab Luxembourg and the accompanying Proxy Statement/Prospectus or require assistance in voting your Core Lab N.V. Common Shares, please contact Okapi Partners LLC, as follows:

Okapi Partners, LLC

1212 Avenue of the Americas, 17th Floor

New York, NY 10036

(212) 297-0720

Toll free: (888) 785-6709

info@okapipartners

DATED at Luxembourg, Grand Duchy of Luxembourg, this [        ] day of [        ], 2023.

By Order of the Board of Directors,

Mark Tattoli

Director

 

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ADDITIONAL INFORMATION

Core Lab N.V. files annual, quarterly and current reports, proxy statements and other business and financial information with the U.S. Securities and Exchange Commission (the “SEC”). Core Lab N.V. files reports and other business and financial information with the SEC electronically, and the SEC maintains a website located at www.sec.gov containing this information. You can also obtain these documents, free of charge, from Core Lab N.V. at www.corelab.com, under the heading “Investors”. The information contained on, or that may be accessed through, Core Lab N.V.’s website is not incorporated by reference into, and is not a part of, this Proxy Statement/Prospectus.

Core Lab Luxembourg, which will be a direct wholly-owned subsidiary of Core Lab N.V. prior to the Merger and will be a predecessor of Core Lab Delaware following the completion of the Transaction, has filed a registration statement on Form S-4 with respect to the shares of Common Stock of Core Lab Delaware to be issued in connection with the Transaction. This Proxy Statement/Prospectus forms a part of the registration statement. As permitted by SEC rules, this Proxy Statement/Prospectus does not contain all of the information included in the registration statement or in the exhibits or schedules to the registration statement. You may read and copy the registration statement, including any amendments, schedules and exhibits at the SEC’s website mentioned above. Statements contained in this Proxy Statement/Prospectus as to the contents of any contract or other documents referred to in this Proxy Statement/Prospectus are not necessarily complete. In each case, you should refer to the copy of the applicable agreement or other document filed as an exhibit to the registration statement. This Proxy Statement/Prospectus incorporates important business and financial information about Core Lab N.V. from documents that are not attached to this Proxy Statement/Prospectus. This information is available to you without charge upon your request. You can obtain the documents incorporated by reference into this Proxy Statement/Prospectus free of charge by requesting them in writing or by telephone from Core Lab N.V. or from its proxy solicitors at the following addresses and telephone numbers:

Okapi Partners LLC

1212 6th Avenue of the Americas

New York, NY 10036

(212) 297-0720

Toll free: (888) 785-6709

info@okapipartners.com

If you would like to request any documents, please do so by March 22, 2023 in order to receive them before the Dutch Meeting.

For a more detailed description of the information incorporated by reference into this Proxy Statement/Prospectus and how you may obtain it, see “Where You Can Find More Information”.

 

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This Proxy Statement/Prospectus, which forms part of a registration statement on Form S-4 filed with the SEC, constitutes a prospectus under the U.S. Securities Act with respect to the shares of Common Stock of Core Lab Delaware to be issued to Core Lab N.V. Shareholders in connection with the Transaction. This Proxy Statement/Prospectus also constitutes a notice of meeting with respect to the Dutch Meeting and the Luxembourg Meeting.

You should rely only on the information contained in or incorporated by reference into this Proxy Statement/Prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this Proxy Statement/Prospectus. This Proxy Statement/Prospectus is dated [                ], 2023, and you should assume that the information contained in this Proxy Statement/Prospectus is accurate only as of such date. You should also assume that the information incorporated by reference into this Proxy Statement/Prospectus is only accurate as of the date of such information.

This Proxy Statement/Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

 

 

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TABLE OF CONTENTS

 

NOTICE OF EXTRAORDINARY MEETING OF SHAREHOLDERS OF CORE LABORATORIES N.V.

     i  

ADDITIONAL INFORMATION

     v  

ABOUT THIS PROXY STATEMENT/PROSPECTUS

     vi  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     1  

QUESTIONS AND ANSWERS ABOUT THE TRANSACTION, THE DUTCH MEETING AND THE LUXEMBOURG MEETING

     3  

SUMMARY

     15  

RISK FACTORS

     22  

MEETING AND VOTING INFORMATION

     29  

THE TRANSACTION PROPOSAL

     34  

THE ARTICLES OF AMENDMENT PROPOSAL

     41  

INFORMATION CONCERNING CORE LAB LUXEMBOURG AND CORE LAB DELAWARE

     42  

INFORMATION CONCERNING CORE LAB

     44  

MATERIAL DUTCH TAX CONSIDERATIONS

     47  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     53  

MATERIAL LUXEMBOURG INCOME TAX CONSIDERATIONS

     64  

DESCRIPTION OF CORE LAB DELAWARE CAPITAL STOCK

     65  

COMPARISON OF RIGHTS OF CORE LAB N.V. SHAREHOLDERS AND CORE LAB DELAWARE STOCKHOLDERS

     70  

SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND DIRECTORS OF CORE LAB

     91  

EXECUTIVE COMPENSATION FOR CORE LAB N.V.

     93  

LEGAL MATTERS

     121  

EXPERTS

     121  

WHERE YOU CAN FIND MORE INFORMATION

     122  

GLOSSARY

     124  

APPENDIX A – Merger Plan

     A-1  

APPENDIX B – Form of Core Lab Delaware Certificate of Incorporation

     B-1  

APPENDIX C – Form of Core Lab Delaware Bylaws

     C-1  

APPENDIX D – Form of Power of Attorney to Vote Shares by Proxy

     D-1  

APPENDIX E – Form of Amended Articles of Core Lab N.V.

     E-1  

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus and the appendixes attached hereto contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the U.S. Exchange Act, and Section 27A of the U.S. Securities Act. These “forward-looking statements” are based on an analysis of currently available competitive, financial and economic data and our operating plans. They are inherently uncertain and investors should recognize that events and actual results could turn out to be significantly different from our expectations. By way of illustration, when used in this document, words such as “anticipate”, “believe”, “expect”, “intend”, “estimate”, “project”, “will”, “should”, “could”, “may”, “predict” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. You are cautioned that actual results could differ materially from those anticipated in forward-looking statements. Any forward-looking statements, including statements regarding the intent, belief or current expectations of us or our management, are not guarantees of future performance and involve risks and uncertainties that we cannot predict and assumptions about us and the industry in which we operate that may prove to be incorrect.

We based these forward-looking statements on particular assumptions that we have made in light of our industry experience, as well as our perception of historical trends, current conditions, expected future developments and other factors that we believe are appropriate under the circumstances. These forward-looking statements are not guarantees of our future performance and involve risks, uncertainties, estimates and assumptions that are difficult to predict. Therefore, our actual outcomes and results may differ materially from those expressed in these forward-looking statements. In addition to other factors and matters contained in this proxy statement/prospectus, including those disclosed under “Risk Factors” beginning on page 22, these forward-looking statements are subject to risks, uncertainties and other factors, including, among others:

 

   

our ability to obtain the required shareholder vote to adopt the Transaction Proposal and the Articles of Amendment Proposal at the Dutch Meeting;

 

   

our ability to obtain the required shareholder vote to approve the U.S. Redomestication of Core Lab Luxembourg at the Luxembourg Meeting;

 

   

the satisfaction of other conditions to the Transaction;

 

   

the outcome of any legal proceedings that may be instituted against us following announcement of the Transaction and related transactions;

 

   

our ability to maintain the listing of our common stock on the NYSE following the Transaction;

 

   

our ability to take advantage of the potential strategic opportunities provided by, and realize the potential benefits of, the Transaction;

 

   

the risk that the Transaction disrupts current plans and operations;

 

   

the risk that shareholders may recognize gain or other income with respect to their shares at the Effective Time ;

 

   

the future financial performance of the Company following the Transaction, including our anticipated growth rate and market opportunity;

 

   

changes in shareholders’ rights as a result of the Transaction;

 

   

our ability to adapt to operating under the laws of the State of Delaware;

 

   

business uncertainties while the Transaction is pending;

 

   

the risk that the Board may defer or abandon the Transaction;

 

   

costs related to the Transaction;

 

   

changes in general political, economic and competitive conditions and specific market conditions;

 

   

adverse changes in the oil and gas industry; and

 

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other risks detailed in our Annual Report on Form 10-K for the year ended December 31, 2022 filed by the Company with the SEC and incorporated herein by reference. See also “Where You Can Find More Information” and “Where You Can Find More Information — Incorporation by Reference” on page 95 of this proxy statement/prospectus.

Although Core Lab N.V. believes the expectations represented by such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned that the assumptions, risks and uncertainties referenced above and in the documents incorporated by reference herein are not exhaustive. Forward-looking statements are made as of the date of this Proxy Statement/Prospectus (or, in the case of a document incorporated by reference, the date of such document incorporated by reference) and, except as required by law, Core Lab N.V. undertakes no obligation to update publicly or revise any forward-looking statements whether as a result of changes in internal estimates or expectations, new information, subsequent events or circumstances or otherwise. The forward-looking statements contained or incorporated by reference in this Proxy Statement/Prospectus are expressly qualified by these cautionary statements.

The reader should read carefully the risk factors described in this Proxy Statement/Prospectus and in the documents incorporated by reference herein for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements.

 

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QUESTIONS AND ANSWERS ABOUT THE TRANSACTION, THE DUTCH MEETING AND THE LUXEMBOURG MEETING

The following questions and answers are intended to briefly address some commonly asked questions regarding the Transaction and the Dutch and Luxembourg Meetings. These questions and answers may not address all questions that may be important to you. To better understand these matters, and for a description of the legal terms governing the Transaction, you should carefully read this entire Proxy Statement/Prospectus, including the attached appendices, as well as the documents that have been incorporated by reference into this Proxy Statement/Prospectus. Capitalized terms used but not otherwise defined in the questions and answers set forth below have the meanings set forth under the heading “Glossary”.

Q: Why am I receiving this Notice of Extraordinary Meeting of Core Lab N.V. and Core Lab Luxembourg and accompanying Proxy Statement/Prospectus?

You are receiving this Notice of Extraordinary Meeting of Core Lab N.V. and Core Lab Luxembourg and accompanying Proxy Statement/Prospectus because you are a Core Lab N.V. Shareholder as of the Notice Record Date. If you are a Core Lab Shareholder as of the Voting Record Date, you are entitled to vote for the Transaction Proposal and the Articles of Amendment Proposal at the Dutch Meeting to be held on March 29, 2023, and the U.S. Redomestication at the Luxembourg Meeting to be held on April 3, 2023.

This Proxy Statement/Prospectus, which you should read carefully, contains important information about the proposed Transaction and how to vote at the Dutch Meeting.

Q: When and where will the Dutch Meeting be held?

The Dutch Meeting will be held at NautaDutilh N.V., Beethovenstraat 400, 1082 PR Amsterdam, The Netherlands at 9:00 a.m. CEST on March 29, 2023.

Q: When and where will the Luxembourg Meeting be held?

The Luxembourg Meeting will be held at MaplesFS Luxembourg S.A., 12E, rue Guillaume Kroll, L-1882, Luxembourg, at 3:00 p.m. CEST on April 3, 2023. At the Luxembourg Meeting, the board of directors of Core Lab Luxembourg (the “Core Lab Luxembourg Board”) will vote the Luxembourg Meeting Proxies in favor of the U.S. Redomestication. Any Core Lab N.V. Shareholders who vote against or abstain from voting on the Transaction Proposal at the Dutch Meeting will have the right to attend the Luxembourg Meeting and cast their votes in favor of or against the U.S. Redomestication.

Q: Why am I being asked to provide a power of attorney for the Luxembourg Meeting?

The Luxembourg Meeting is required to be held in the presence of a Luxembourg notary, at the registered seat of Core Lab Luxembourg or at another location in Luxembourg. To facilitate the voting process and reduce the related costs of the shareholders and of Core Lab Luxembourg (e.g., location and traveling expenses, higher notarial fees), we are asking shareholders to grant the members of the board of directors of Core Lab Luxembourg powers of attorney to represent the shareholders at the Luxembourg Meeting. This will also ensure the Luxembourg notary has sufficient time between the Dutch Meeting and the Luxembourg Meeting to assess the quorum and majority requirements under Luxembourg law based on the granted powers of attorney and facilitate an efficient Luxembourg Meeting.

Q: What is the Transaction?

The Transaction will, if completed, change the Company’s jurisdiction of organization from the Netherlands to the State of Delaware by means of a series of steps, as follows:

 

  1.

At the Dutch Meeting, Core Lab N.V. Shareholders will vote on the Transaction Proposal and the Articles of Amendment Proposal;

 

  2.

If the Transaction Proposal and the Articles of Amendment Proposal are approved by the Core Lab N.V. Shareholders, Core Lab Luxembourg will convene an Extraordinary General Meeting (the

 

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  Luxembourg Merger Meeting” and together with the Dutch Meeting and the Luxembourg Meeting, the “Meetings”) at which Core Lab N.V., as sole shareholder of Core Lab Luxembourg, will vote to approve the Merger of Core Lab Luxembourg and Core Lab N.V. The Core Lab N.V. Board and the Core Lab Luxembourg Board are not soliciting proxies from shareholders for the Luxembourg Merger Meeting, as, prior to the Merger, Core Lab N.V. will be the sole shareholder of Core Lab Luxembourg;

 

  3.

Core Lab N.V. will merge with and into Core Lab Luxembourg, with Core Lab Luxembourg surviving, in which all common shares in Core Lab N.V. will be canceled and exchanged for common stock in Core Lab Luxembourg on a one-for-one basis;

 

  4.

Core Lab Luxembourg will convene the Luxembourg Meeting and the Core Lab Luxembourg Board will vote the Luxembourg Meeting Proxies in favor of the U.S. Redomestication, along with any other present or represented shareholders who did not grant a proxy pursuant to the Transaction Proposal who may vote in favor or against the U.S. Redomestication;

 

  5.

Following approval of the U.S. Redomestication at the Luxembourg Meeting, Core Lab Luxembourg will migrate out of Luxembourg and redomesticate in Delaware as Core Lab Delaware;

 

  6.

Following completion of the Transaction, Core Lab N.V. Shareholders will hold one share of Common Stock of Core Lab Delaware for each one Core Lab N.V. Common Share owned immediately prior to the Transaction; and

 

  7.

Core Lab Delaware shares will, immediately following the completion of the Transaction, be listed on the NYSE under the stock symbol “CLB”.

Q: Why is Core Lab N.V. proposing the Transaction?

After considering various factors, the Core Lab N.V. Board believes that the Transaction will enhance shareholder value over the long-term by providing potential strategic opportunities and benefits, including, among other things:

 

   

simplifying the Company’s corporate structure and streamlining reporting requirements, which will (i) reduce the effort and expense incurred by the Company to assess, implement and remain compliant with multiple regulatory and reporting requirements for Core Lab N.V. on a consolidated basis, and (ii) provide opportunities for the Company to improve operational efficiencies and financial flexibility in the corporate treasury, cash management, risk management, and tax functions;

 

   

reducing the corporate footprint and thereby achieving consolidation and better alignment between the domicile of our ultimate parent entity and our corporate functions;

 

   

benefiting from well-established principles of corporate governance under Delaware law, which are more closely aligned with NYSE listing standards and SEC corporate governance requirements; and

 

   

positioning the Company to better respond to global tax and other regulatory developments considering recent changes in U.S. tax laws and the increased focus on companies’ global tax footprints resulting from the Organization for Economic Cooperation and Development’s Base Erosion and Profit Shifting initiative.

Q: Are there any conditions to completing the Transaction?

Yes. Under the Merger Plan, (i) the Merger is conditioned upon the approval of the Articles of Amendment Proposal by the Core Lab N.V. Shareholders at the Dutch Meeting, and (ii) in order for the Merger to become effective, the total number of votes cast against the Transaction Proposal must not exceed two percent of all votes cast at the Dutch Meeting, and (iii) at the Dutch Meeting, shareholders representing at least two-thirds of the outstanding shares of Core Lab N.V. must vote in favor of the Transaction Proposal by which they will, among other things, grant a power of attorney to the directors of Core Lab Luxembourg to represent them at the Luxembourg meeting (the “Merger Plan Conditions”). The Merger Plan Conditions can be waived by mutual consent of the Core Lab N.V. Board and the Core Lab Luxembourg Board.

 

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Q: Will the business of Core Lab N.V. change following the Transaction?

No. Core Lab Delaware will continue to pursue Core Lab N.V.’s current strategic initiatives and to provide advanced technologies that improve reservoir performance by (i) continuing the development of proprietary technologies through client-driven research and development, (ii) expanding the services and products offered throughout our global network of offices and (iii) acquiring complementary technologies that add key technologies or market presence and enhance existing services and products.

Q: Who will be the directors and executive officers of Core Lab Delaware following the Transaction?

There will be no changes to the directors or executive officers as a result of the Transaction. Once the Transaction is complete, the same individuals at Core Lab N.V. will serve in the same capacity at Core Lab Delaware. However, Core Lab N.V.’s two-tier board structure will be removed in favor of a one-tier board of directors at Core Lab Delaware, consisting of the directors of the current Supervisory Board of Core Lab N.V. See “Information Concerning Core Lab Luxembourg and Core Lab Delaware – Directors and Officers of Core Lab Delaware”.

Q: How will the directors and executive officers of Core Lab N.V. vote?

The directors and executive officers of Core Lab N.V. are in favor of the Transaction and are expected to vote FOR the Transaction Proposal and FOR the Articles of Amendment Proposal.

As of the Notice Record Date for the Dutch Meeting, the directors and executive officers of Core Lab N.V. had the right to vote approximately 249,984 Core Lab N.V. Common Shares, representing approximately 0.54% of the Core Lab N.V. Common Shares then issued and outstanding and entitled to vote at the Dutch Meeting.

Q: What will I receive for my Core Lab N.V. Common Shares under the Transaction?

Following completion of the Transaction, Core Lab N.V. Shareholders will hold one share of Common Stock of Core Lab Delaware for each one Core Lab N.V. Common Share they owned immediately prior to the Transaction.

Q: Who is Core Lab Luxembourg?

Core Laboratories Luxembourg S.A. is a public limited liability company incorporated under the laws of Luxembourg, and, immediately prior to the Transaction, will be a direct wholly-owned subsidiary of Core Lab N.V.

Q: Who is Core Lab Delaware?

Core Laboratories Inc., which we refer to as “Core Lab Delaware,” will be a newly formed Delaware corporation as a result of the U.S. Redomestication. If the Transaction is completed, Core Lab Delaware will become the ultimate parent company of the Core Lab N.V. group of companies. Prior to the Effective Date, Core Lab Delaware will not exist. At the Effective Date, all Core Lab N.V. Shareholders will be issued an identical number of common shares in Core Lab Delaware as the number of shares in Core Lab N.V. they held immediately prior to the Effective Date.

Q: Will the Transaction dilute my economic interest?

No, your fully diluted relative economic ownership will not change as a result of the Transaction. On the Effective Date, your common shares in Core Lab N.V. will be canceled and exchanged for common stock in Core Lab Luxembourg on a one-for-one basis. Following Core Lab Luxembourg’s domestication as Core Lab

 

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Delaware, all Core Lab N.V. Shareholders will hold an identical number of common shares in Core Lab Delaware as the number of shares they held in Core Lab N.V. prior to the Transaction. Core Lab Delaware will be the direct or indirect owner of all of the assets and liabilities of Core Lab N.V. following the Transaction.

Q: Will the shares of Common Stock of Core Lab Delaware issued under the Transaction be listed on an exchange?

Yes. Shares of Common Stock of Core Lab Delaware will be listed on the NYSE. On the NYSE, the stock symbol for the shares of Common Stock of Core Lab Delaware will be “CLB”. The Core Lab N.V. Common Shares currently trade on the NYSE under the stock symbol “CLB”. When the Transaction is completed, the Core Lab N.V. Common Shares currently listed on the NYSE under the stock symbol “CLB” will cease to be traded on the NYSE and will be deregistered under the U.S. Exchange Act. See “The Transaction Proposal – Certain Legal and Regulatory Matters – Stock Exchange Listing”.

Q: How do I receive shares of Common Stock of Core Lab Delaware in exchange for my Core Lab N.V. Common Shares?

The exchange of Core Lab N.V. Common Shares into shares of Core Lab Delaware common stock will occur automatically upon the effectiveness of the filing of the Proposed Certificate of Incorporation and a certificate of corporate domestication with the Delaware SOS. Beneficial holders of shares held in “street name” through a bank, broker or other nominee and record owners of shares held in book-entry form will not be required to take any action. Your ownership of Core Lab Delaware common stock will be recorded in book-entry form by your nominee (for shares held in “street name”) or by the Exchange Agent (for shares held by record owners in book-entry form), without the need for any additional action on your part. Holders of record who hold their shares in book-entry form will receive a statement of their holdings in Core Lab Delaware after the domestication.

Following completion of the Transaction, each registered holder of certificated Core Lab N.V. Common Shares will receive a Letter of Transmittal and instructions from the Exchange Agent to effect the surrender of their Core Lab N.V. Common Shares in exchange for shares of Core Lab Delaware common stock. The Letter of Transmittal, when duly completed, executed and returned, together with the certificate or certificates representing the holder’s Core Lab N.V. Common Shares and any other required documents, will enable the holder to ultimately receive one share of Common Stock of Core Lab Delaware for each one Core Lab N.V. Common Share.

Q: Can I sell my Core Lab N.V. Common Shares on the NYSE for cash? Is there any restriction on selling Core Lab N.V. Common Shares prior to completion of the Transaction?

Core Lab N.V. Common Shares will continue to trade on the NYSE up to and including the Effective Date. Following the Effective Date, shares of Common Stock of Core Lab Delaware will be listed on the NYSE. See “The Transaction Proposal – Certain Legal and Regulatory Matters – Stock Exchange Listing”. Generally speaking, registered Core Lab N.V. Shareholders who have not delivered their certificated Core Lab N.V. Common Shares to the Exchange Agent and beneficial owners of Core Lab N.V. Common Shares whose shares are held through a broker, financial institution or other nominee may sell their Core Lab N.V. Common Shares through the facilities of the NYSE for cash at any time up to and including the Effective Date. Registered Core Lab N.V. Shareholders holding certificated shares will not be able to sell their Core Lab N.V. Common Shares once they have delivered their Core Lab N.V. Common Shares to the Exchange Agent.

Q: What proposals will be considered at the Dutch Meeting?

At the Dutch Meeting, the Core Lab N.V. Shareholders will be asked to consider and vote on:

 

  1.

a proposal to approve a series of transactions, which will include (i) pursuant to the Merger Plan (in the form attached as Appendix A to this Proxy Statement/Prospectus), the downstream cross-border merger

 

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  of Core Lab N.V. with and into Core Lab Luxembourg, with Core Lab Luxembourg surviving, such that all assets and liabilities of Core Lab N.V. are transferred to Core Lab Luxembourg by universal succession of title and Core Lab N.V. will cease to exist without going into liquidation, against the issuance of new Core Lab Luxembourg shares, in accordance with an exchange ratio of one Core Lab Luxembourg share for one Core Lab N.V. share, and (ii) as soon as practicable following completion of the Merger, Core Lab Luxembourg migrating out of Luxembourg and domesticating as Core Laboratories Inc. By voting in favor of this proposal, each shareholder, for such shareholder’s own name and account, grants a power of attorney (in the form attached as Appendix D – Power of Attorney to this Proxy Statement/Prospectus) to the Core Lab Luxembourg Board to vote, by proxy, the shares of Core Lab N.V. Shareholders in favor of the U.S. Redomestication at the Luxembourg Meeting, to be held per the Notice of Extraordinary General Meeting of Core Lab Luxembourg; and

 

  3.

a proposal to amend the Articles of Association to include a formula on the basis of which cash compensation to Core Lab N.V. Shareholders who exercise their withdrawal right in connection with the Merger, as referred to in Section 2:333h (1) of the Dutch Civil Code, can be readily determined (in the form attached as Appendix E – Form of Articles of Amendment to this Proxy Statement/Prospectus) and to adopt a special resolution to grant a Power of Attorney to each notarial employee of HVG Law LLP jointly as well as severally to execute and sign the Articles of Amendment Proposal.

Q: What proposals will be considered at the Luxembourg Meeting?

At the Luxembourg Meeting, the Core Lab Luxembourg Shareholders will be asked to consider and vote:

 

  1.

To approve the conversion of Core Lab Luxembourg, with immediate effect after the Merger, i.e., on the same day or as soon as reasonably possible thereafter, entailing the transfer without discontinuity of the legal personality of Core Lab Luxembourg, of the statutory registered office, effective place of management and central administration seat of Core Lab Luxembourg from 12E, rue Guillaume Kroll, L-1882 Luxembourg, Grand Duchy of Luxembourg to Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, United States of America (the “U.S. Redomestication”), having the below items on the agenda and under the following joint implementation terms:

 

  a.

(i) the transfer of the statutory registered office, effective place of management and central administration seat of Core Lab Luxembourg from Grand Duchy of Luxembourg to the State of Delaware, United States of America and (ii) the continuation of the legal personality of Core Lab Luxembourg in the State of Delaware, United States of America under the form of a Delaware corporation and under the name Core Laboratories Inc., without dissolving Core Lab Luxembourg and without the liquidation of its assets;

 

  b.

the transfer of the statutory registered office, effective place of management and central administration seat of Core Lab Luxembourg from 12E, rue Guillaume Kroll, L-1882 Luxembourg, Grand Duchy of Luxembourg to Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801, United States of America, as of the legal effective date of the conversion of Core Lab Luxembourg into a Delaware corporation pursuant to a certificate of domestication filed with the Secretary of State of the State of Delaware (the “Effective Date”);

 

  c.

amendment and restatement of the articles of association of Core Lab Luxembourg in order to adopt the certificate of incorporation and bylaws of Core Lab Delaware effective upon the Effective Date;

 

  d.

acknowledging (i) the full discharge of the current directors of Core Lab Luxembourg for the execution of their mandates as directors of Core Lab Luxembourg as of their appointment until the Effective Date and (ii) the appointment of the former members of the Supervisory Board of Core Lab N.V. as directors of Core Lab Luxembourg and their continuation as directors of Core Lab Delaware as of the Effective Date;

 

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  f.

approval of the deregistration of Core Lab Luxembourg from the Luxembourg Trade and Companies Register; and

 

  g.

such other actions as may be required to effect the U.S. Redomestication.

Q: What vote is required to approve each of the proposals at the Dutch Meeting?

The following votes are required to approve each proposal at the Dutch Meeting:

 

   

The Transaction Proposal: Approval of the Transaction Proposal requires the affirmative vote of holders representing two-thirds of the outstanding Core Lab N.V. Common Shares as of the Voting Record Date.

 

   

The Articles of Amendment Proposal: Approval of the Articles of Amendment Proposal requires the affirmative vote of holders representing a simple majority of votes cast at the Dutch Meeting.

The Transaction Proposal has been proposed to Core Lab N.V. Shareholders by the Core Lab N.V. Board. The Articles of Amendment Proposal has been proposed by the Core Lab N.V. Management Board and approved by the Core Lab N.V. Board, and is now being proposed to the Core Lab N.V. Shareholders.

Core Lab N.V. Common Shares abstaining from voting will count as shares present at the Dutch Meeting but will not count for the purpose of determining the number of votes cast. Broker non-votes will not count as shares present at the annual meeting or for the purpose of determining the number of votes cast , and Core Lab N.V. does not expect any broker non-votes at the Dutch Meeting because the rules applicable to banks, brokers and other nominees only provide brokers with discretionary authority to vote on proposals that are considered routine, whereas the proposals to be presented at the Dutch Meeting are considered non-routine. As a result, no broker will be permitted to vote your Core Lab N.V. Common Shares at the Dutch Meeting without receiving instructions.

Q: What vote is required to approve the proposal at the Luxembourg Meeting?

Approval of the U.S. Redomestication at the Luxembourg Meeting requires the affirmative vote of holders representing two-thirds of the outstanding Core Lab N.V. Common Shares as of the Voting Record Date.

Q: Does the Core Lab N.V. Board recommend that I vote FOR the Transaction Proposal and FOR the Articles of Amendment Proposal at the Dutch Meeting?

Yes. The Core Lab N.V. Board unanimously recommends that Core Lab N.V. Shareholders vote FOR the Transaction Proposal and FOR the Articles of Amendment Proposal.

Q: Do the Core Lab N.V. Board and the Core Lab Luxembourg Board recommend that I vote FOR the U.S. Redomestication at the Luxembourg Meeting?

Yes. The Core Lab N.V. Board and the Core Lab Luxembourg Board both unanimously recommend that you vote FOR the U.S. Redomestication.

Q: What happens if the Transaction is not completed?

If the Transaction is not completed for any reason, Core Lab N.V. Shareholders will not receive shares of Common Stock of Core Lab Delaware and Core Lab N.V. will continue as a public company incorporated under the federal laws of the Netherlands, with the Core Lab N.V. Common Shares continuing to be listed for trading on the NYSE.

Q: What is the effect of the Transaction on the Core Lab N.V. Debt?

In connection with the Transaction and subject to obtaining the Required Lender Consents, Core Lab Luxembourg, and subsequently by way of the U.S. Redomestication, Core Lab Delaware, will assume, or will cause an applicable affiliate to assume, all of Core Lab N.V.’s obligations under the Core Lab N.V. Debt, such that Core Lab Delaware will become the obligor in respect of, and effectively the issuer of, such debt in lieu of Core Lab N.V. following completion of the Transaction.

 

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Q: How will the Transaction affect the public disclosure Core Lab N.V. provides to its shareholders?

Upon completion of the Transaction, Core Lab Delaware will be subject to the same reporting requirements of the SEC, the mandates of the Sarbanes-Oxley Act and the applicable corporate governance rules of the NYSE as Core Lab N.V. before the Transaction. Core Lab Delaware will be required to file periodic reports with the SEC on Forms 10-K, 10-Q and 8-K and comply with the proxy rules applicable to domestic issuers, as currently required of Core Lab N.V. If the Transaction is completed, we will no longer be required to file Core Lab N.V. consolidated financial statements, prepared in accordance with IFRS, with the Dutch Chamber of Commerce, which contain substantially similar financial information as compared to the periodic reports we currently file with the SEC.

Q: What happens to outstanding Core Lab N.V. Incentive Awards and other compensation and benefit plans in connection with the Transaction?

In connection with the Transaction, Core Lab Delaware will assume, or will cause an applicable affiliate to assume, the Core Lab N.V. Incentive Plans, as well as all other compensation or benefit plans, policies and arrangements previously maintained by Core Lab N.V. Each outstanding Core Lab N.V. Incentive Award will be exchanged for a Core Lab Delaware Incentive Award. The Core Lab Delaware Incentive Awards will be subject to substantially the same terms and conditions as the exchanged Core Lab N.V. Incentive Awards, except, in the case of equity-based Core Lab N.V. Incentive Awards, the security issuable upon exercise or settlement of the Core Lab Delaware Incentive Award, as applicable, will be shares of Common Stock of Core Lab Delaware (or its cash equivalent) rather than a Core Lab N.V. Common Share (or its cash equivalent). See “The Transaction Proposal – Effect of the Transaction on the Core Lab N.V. Incentive Awards and other Compensation and Benefit Plans”.

Q: Are there risks associated with the Transaction, including the U.S. Redomestication?

Yes. Before making a decision on whether and how to vote, you are urged to carefully read the section entitled “Risk Factors”.

Q: Is the Transaction a taxable transaction to Core Lab N.V. Shareholders?

The tax consequences of the Transaction for Core Lab N.V. Shareholders will depend on the specific situation of each shareholder. Moreover, the discussion below does not relate to the tax laws of any jurisdiction other than the U.S. and the Netherlands. Accordingly, Core Lab N.V. Shareholders are urged to consult with, and rely solely upon, their own tax advisors to determine the tax consequences of the Transaction to them in light of their particular circumstances, including the effect of any tax laws not addressed herein.

Dutch Tax Considerations

As discussed in more detail below in the section entitled “Material Dutch Tax Considerations”, Core Lab N.V. Shareholders who are not resident in the Netherlands will generally not be subject to Dutch income tax in respect of the Transaction, subject to certain assumptions and exceptions, and Core Lab N.V. Shareholders who are resident in the Netherlands may be subject to Dutch income tax in respect of the Transaction, depending on the tax regime applicable to such holder.

Core Lab N.V. believes that Core Lab N.V. Shareholders will generally not be subject to Dutch dividend withholding tax as a result of the Merger, unless a shareholder exercises its withdrawal right and receives compensation. On payments of cash compensation, dividend withholding tax may generally be due.

For a more complete discussion of the Dutch tax considerations of the Transaction for Core Lab N.V. Shareholders, please see the section entitled “Material Dutch Tax Considerations.”

 

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U.S. Federal Income Tax Considerations

As discussed more fully below in the section entitled “Material U.S. Federal Income Tax Considerations,” it is intended that the Merger and the U.S. Redomestication each qualify as a form of “reorganization” within the meaning of Section 368(a) of the Code. If the Merger and the U.S. Redomestication so qualify, Core Lab N.V. Shareholders generally should not recognize gain or loss for U.S. federal income tax purposes in connection with the Transaction, subject to the discussion contained herein regarding the “passive foreign investment company” rules and the effects of Section 367(b) of the Code on the U.S. Redomestication. Core Lab N.V. Shareholders are urged to consult with, and rely solely upon, their own tax advisors to determine the particular U.S. federal income tax consequences to them of the Transaction as well as the U.S. federal income tax consequences of the ownership and disposition of shares of Common Stock of Core Lab Delaware received pursuant to the U.S. Redomestication.

For a more complete discussion of the U.S. federal income tax considerations of the Transaction for Core Lab N.V. Shareholders, please see the section entitled “Material U.S. Federal Income Tax Considerations.”

Q: What are the corporate tax consequences of the Transaction?

Dutch Tax Considerations

For Dutch tax purposes, the Transaction is not expected to give rise to material corporate-level Dutch corporate income tax for Core Lab N.V. or Core Lab Delaware. See section entitled “Material Dutch Tax Considerations”.

Luxembourg Tax Considerations

For Luxembourg income tax purposes, the Transaction is not expected to give rise to material corporate-level Luxembourg income tax for Core Lab N.V., Core Lab Luxembourg or Core Lab Delaware. For a more complete discussion of the Luxembourg income tax considerations of the Transaction, please see the section entitled “Material Luxembourg Income Tax Considerations.”

U.S. Federal Income Tax Considerations

Core Lab N.V. believes that, and this disclosure assumes that, Core Laboratories U.S. Interests Holdings Inc. is not classified as a U.S. real property holding corporation and has not been so classified at any time during the five year period ending on the date of the Transaction. Accordingly, the Transaction is not expected to give rise to material corporate-level U.S. federal income tax for Core Lab N.V. or Core Lab Delaware.

Q: When will the Transaction become effective?

Subject to the satisfaction or waiver of the Merger Plan Conditions, if the Required Shareholder Approvals are obtained as described below, it is anticipated that the Transaction will be completed upon the publication of the Merger with the Luxembourg Public Register of Companies, which is expected to occur as soon as practicable following the lapse of the one month withdrawal period required to satisfy the rights of those holders who exercise their Withdrawal Rights. It is also anticipated that the shares of Common Stock of Core Lab Delaware will begin trading on the NYSE promptly following the Effective Date. See “The Transaction Proposal – Certain Legal and Regulatory Matters – Stock Exchange Listings”.

Q: Who is entitled to vote at the Dutch Meeting and the Luxembourg Meeting?

Only holders of Core Lab N.V. Common Shares of record at the close of business on February 15, 2023 (the “Notice Record Date”), are entitled to notice of the Dutch Meeting and Luxembourg Meeting. As of the close of business on the Notice Record Date, 46,634,027 Core Lab N.V. Common Shares were issued and outstanding. However, the Notice Record Date only determines who receives the electronic notice and does not determine

 

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who has the right to vote at the Dutch Meeting. In order to be able to vote at the Dutch Meeting, you will have to be a record holder of shares (or otherwise a person with voting rights with respect to shares) at the close of business Central European Time on March 1, 2023. This latter date is the “day of registration” (“dag van registratie”) as referred to in the Dutch Civil Code and only holders of shares (or other persons with voting rights with respect to shares) on the Voting Record Date are entitled to vote. Under Dutch law, this latter date must occur exactly twenty-eight (28) days before the date of the Dutch Meeting. Each issued and outstanding Core Lab N.V. Common Share on the Voting Record Date is entitled to one vote on each of the proposals to be considered and voted on at the Dutch Meeting and Luxembourg Meeting.

Your vote is very important, regardless of the number of Core Lab N.V. Common Shares that you own. Whether or not you expect to attend in person, you should authorize a proxyholder to vote your Core Lab N.V. Common Shares as promptly as possible so that your Core Lab N.V. Common Shares may be represented and voted at the Dutch Meeting.

Q: What is the quorum for the Dutch Meeting?

There is no required quorum under Dutch law for shareholder action at a properly convened shareholder meeting, except in specific instances prescribed by Dutch law or our Articles of Association. According to our Articles of Association, each resolution by the general meeting requires a two-thirds majority of the votes cast representing more than half of the issued share capital, except for resolutions to be adopted pursuant to a proposal by the Core Lab N.V. Board, which require a simple majority regardless of the number of votes cast at the relevant general meeting.

For more information regarding the vote required to approve the proposals, see “The Transaction Proposal – Required Shareholder Approval”.

If you submit a properly executed form of proxy or vote by telephone or the Internet, you will be considered part of the quorum.

Q: What is the quorum for the Luxembourg Meeting?

Approval of the U.S. Redomestication at the Luxembourg Meeting requires the affirmative vote of holders representing two-thirds of the outstanding Core Lab N.V. Common Shares as of the Voting Record Date.

Q: How do I vote my Core Lab N.V. Common Shares at the Dutch Meeting?

Core Lab N.V. Shareholders whose Core Lab N.V. Common Shares are registered in their names may vote their shares in the following ways:

 

   

Internet: www.proxyvote.com

 

   

Telephone: 1-800-690-6903

 

   

Mail: Complete, sign and date your proxy form and return it in the business-reply envelope included in your package.

 

   

In Person: Attend the Dutch Meeting and vote in person.

If your Core Lab N.V. Common Shares are not registered in your name, but are held in the name of a nominee (usually a broker, bank, trust company or other intermediary), you should have received a package of materials from your nominee and you should follow the instructions therein. Beneficial Core Lab N.V. Shareholders who wish to attend the Dutch Meeting and indirectly vote their Core Lab N.V. Common Shares may only do so as proxyholder for the registered Core Lab N.V. Shareholder.

 

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Q: How do I vote Core Lab N.V. Common Shares held in a Core Lab N.V. employee benefit plan?

If your Core Lab N.V. Common Shares are held in a Core Lab N.V. employee benefit plan, you will receive a separate voting direction card. The trustee and/or plan administrator of the applicable Core Lab N.V. employee benefit plan will vote your Core Lab N.V. Common Shares in accordance with the instructions on your returned direction card.

If you do not return a direction card prior to the return date indicated, the trustee and/or plan administrator will vote your Core Lab N.V. Common Shares in accordance with their normal process. If you return a direction card with no instructions, the trustee and/or plan administrator will vote your Core Lab N.V. Common Shares FOR the Transaction Proposal and FOR the Articles of Amendment Proposal. Please note that the direction cards have an earlier return date than the proxy cards. Please review your direction card for the date by which your instructions must be received in order for your Core Lab N.V. Common Shares to be voted.

In the case of Internet or telephone voting, you should have your direction card in hand and retain the card until you have completed the voting process. If you vote by Internet or telephone, you do not need to return the direction card by mail.

Please note that no votes will be accepted at the Dutch Meeting in respect of Core Lab N.V. Common Shares held in a Core Lab N.V. employee benefit plan and that all such votes must be voted prior to the Dutch Meeting.

Q: What is a proxy?

A proxy is your legal designation of another person, referred to as a “proxyholder”, to vote your Core Lab N.V. Common Shares. The document used to designate a proxyholder to vote your Core Lab N.V. Common Shares is called a “form of proxy.”

Q: Can I appoint someone other than the person(s) designated by management of Core Lab N.V. to vote my Core Lab N.V. Common Shares?

Yes. A Core Lab N.V. Shareholder who wishes to appoint some other person (who is not required to be a Core Lab N.V. Shareholder) as his, her or its proxyholder at the Dutch Meeting may do so either by inserting such person’s name in the blank space provided in the form of proxy and deleting the names printed thereon or by completing a proper proxy. Such Core Lab N.V. Shareholder should notify the nominee of his or her appointment and instruct the nominee on how the Core Lab N.V. Common Shares are to be voted.

Q: If I am not going to attend the Dutch Meeting, should I return my form of proxy or otherwise vote my Core Lab N.V. Common Shares?

Yes. Completing, signing, dating and returning the form of proxy by mail or fax, submitting a proxy by calling the toll-free number shown on the form of proxy or submitting a proxy by visiting the website shown on the form of proxy ensures that your Core Lab N.V. Common Shares will be represented and voted at the Dutch Meeting, even if you otherwise do not attend.

Q: What is the deadline to provide my proxy?

To be valid your proxy must be received no later than 2:00 p.m. EST on March 28, 2023.

The official electronic voting results will be those reported by our vote tabulator, Broadridge Financial Solutions, in its final report upon the close of business on March 28, 2023. Any other proxies that are actually received in hand by our Secretary before the polls close at the conclusion of voting at the Dutch Meeting will be voted as indicated.

 

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Q: Can I change or revoke my vote?

Yes. You may change your vote at any time before the polls close at the conclusion of voting at the Dutch Meeting. You may revoke your proxy (1) by giving written notice to Mark D. Tattoli, Secretary, in care of Core Laboratories LP, 6316 Windfern Road, Houston, Texas 77040, at any time before the proxy is voted, (2) by submitting a properly signed proxy card with a later date, or (3) by voting in person at the Dutch Meeting.

If you hold your shares through an account with a bank or broker, you may revoke your proxy by following the instructions provided to you by your bank or broker, or by obtaining a legal proxy from your bank or broker and voting in person at the annual meeting.

Q: If my Core Lab N.V. Common Shares are held in “street name” by my broker, bank or other nominee, will my broker, bank or other nominee automatically vote my shares for me?

No. If your Core Lab N.V. Common Shares are held in the name of a broker, bank or other nominee, you will receive separate instructions from your broker, bank or other nominee describing how to vote your shares. Please check with your broker, bank or other nominee and follow the voting procedures provided by your broker, bank or other nominee on your voting instruction form.

You should instruct your broker, bank or other nominee how to vote your Core Lab N.V. Common Shares. Under the rules applicable to broker-dealers, your broker, bank or other nominee does not have discretionary authority to vote your shares in respect of the Transaction Proposal and the Articles of Amendment Proposal. A so-called “broker non-vote” results when banks, brokers and other nominees return a valid proxy voting upon a matter or matters for which the applicable rules provide discretionary authority but do not vote on a particular proposal because they do not have discretionary authority to vote on the matter and have not received specific voting instructions from the beneficial owner of such shares. Broker non-votes will not count as shares present at the annual meeting or for the purpose of determining the number of votes cast, and Core Lab N.V. does not expect any broker non-votes at the Dutch Meeting because the rules applicable to banks, brokers and other nominees only provide brokers with discretionary authority to vote on proposals that are considered routine, whereas the proposals to be presented at the Dutch Meeting are considered non-routine. As a result, no broker will be permitted to vote your Core Lab N.V. Common Shares at the Dutch Meeting without receiving instructions.

Q: Who is making and paying for this proxy solicitation?

Core Lab N.V. is making this proxy solicitation and will pay for all of the costs of soliciting these proxies. Its directors and certain of its employees may solicit proxies in person or by telephone, fax or email. Core Lab N.V. will pay these employees and directors no additional compensation for these services. Core Lab N.V. has retained the services of the Proxy Solicitor to solicit proxies in the Netherlands and the United States. Core Lab N.V. will deliver proxy-related materials to nominees, custodians and fiduciaries, and they will be asked to promptly forward them to the beneficial (non-registered) Core Lab N.V. Shareholders. Core Lab N.V. will also reimburse such nominees, custodians and fiduciaries for their expenses in sending proxy-related materials to the beneficial (non-registered) Core Lab N.V. Shareholders and obtaining their proxies.

Q: How will my rights as a shareholder be affected by the Transaction?

As a result of differences between Delaware law and the Dutch Civil Code, there will be differences between your rights as a stockholder of Core Lab Delaware under Delaware law and your current rights as a shareholder of Core Lab N.V. under the Dutch Civil Code. In addition, there are differences between the organizational documents of Core Lab N.V. and Core Lab Delaware.

These differences are discussed in detail under “Comparison of Rights of Core Lab N.V. Shareholders and Core Lab Delaware Stockholders”. Also refer to “Description of Core Lab Delaware Capital Stock” for a description

 

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of the shares of Common Stock of Core Lab Delaware. The Core Lab Delaware Certificate of Incorporation and Core Lab Delaware Bylaws, in the form substantially as they will be in effect upon completion of the Transaction, are attached as Appendices B and C, respectively, of this Proxy Statement/Prospectus.

Q: Are Core Lab N.V. Shareholders entitled to appraisal or dissenters’ rights?

Section 2:333h of the Dutch Civil Code, entitles shareholders in a Dutch target company to exercise a statutory withdrawal right if they vote against a cross-border merger and submit a request to receive cash compensation instead. Shareholders may exercise this right by completing and submitting a withdrawal application form (the “Withdrawal Application Form”), during the 30-calendar day period following the Dutch Meeting. The Withdrawal Application Form can be found at https://www.corelab.com/investors/redomestication-withdrawal-application. Please see “The Transaction Proposal – Shareholder Withdrawal Rights” for more information regarding the withdrawal rights of Core Lab N.V. Shareholders.

Q: Who can answer my questions?

If you have any questions about the information contained in this Proxy Statement/Prospectus or require assistance in completing your form of proxy or voting instruction form, please contact: Okapi Partners LLC by telephone at (212) 297-0720.

Q: Where can I find more information about Core Lab N.V. and the transactions contemplated by the Transaction?

You can find out more information about Core Lab N.V. and the transactions contemplated by the Transaction by reading this Proxy Statement/Prospectus and from various sources described in the section entitled “Where You Can Find More Information”.

 

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SUMMARY

The following is a summary of certain information contained elsewhere in this Proxy Statement/Prospectus. This summary is qualified in its entirety by the more detailed information appearing elsewhere in this Proxy Statement/Prospectus, including the appendices hereto and the documents incorporated by reference herein. It is recommended that Core Lab N.V. Shareholders read this Proxy Statement/Prospectus and consult with their own legal, tax, financial and other professional advisors with respect to the matters to be acted on at the Dutch Meeting. Capitalized terms used but not otherwise defined in this summary have the meanings set forth under the heading “Glossary”.

The Meetings

Date, Time and Place

The Dutch Meeting will be held at NautaDutilh N.V., Beethovenstraat 400, 1082 PR Amsterdam, The Netherlands at 9:00 a.m. CEST on March 29, 2023.

The Luxembourg Meeting will be held at MaplesFS Luxembourg S.A., 12E, rue Guillaume Kroll, L-1882, Luxembourg at 3:00 p.m. CEST on April 3, 2023.

Meeting Record Dates and Core Lab N.V. Shareholders Entitled to Vote

Only holders of Core Lab N.V. Common Shares of record at the close of business on the Notice Record Date are entitled to notice of the Dutch Meeting and the Luxembourg Meeting. As of the close of business on the Notice Record Date, 46,634,027 Core Lab N.V. Common Shares were issued and outstanding. Each issued and outstanding Core Lab N.V. Common Share on the Voting Record Date is entitled to one vote on each of the proposals to be considered and voted on at the Dutch Meeting and the Luxembourg Meeting.

Quorum

There is no required quorum under Dutch law for shareholder action at a properly convened shareholder meeting, except in specific instances prescribed by Dutch law or our Articles of Association. According to our Articles of Association, each resolution by the general meeting requires a two-thirds majority of the votes cast representing more than half of the issued share capital, except for resolutions to be adopted pursuant to a proposal by the Supervisory Board, which require a simple majority regardless of the number of votes cast at the relevant general meeting. For more information regarding the vote required to approve each proposal at the Dutch Meeting, see “The Transaction Proposal – Required Shareholder Approval”.

At the Luxembourg Meeting, approval of the U.S. Redomestication requires the affirmative vote of holders representing two-thirds of the outstanding Core Lab N.V. Common Shares as of the Voting Record Date.

Purpose of the Dutch Meeting and the Luxembourg Meeting

The purpose of the Dutch Meeting is for Core Lab N.V. Shareholders to consider and, if thought advisable, to adopt the Transaction Proposal and the Articles of Amendment Proposal with respect to the Transaction (including the U.S. Redomestication) pursuant to which, among other things, (i) Core Lab N.V. will merge with and into Core Lab Luxembourg, with Core Lab Luxembourg surviving, and (ii) as soon as practicable following completion of the Merger, Core Lab Luxembourg migrating out of Luxembourg and domesticating as Core Laboratories Inc. Following completion of the Transaction, Core Lab N.V. Shareholders will hold one share of Common Stock of Core Lab Delaware for each one Core Lab N.V. Common Share owned immediately prior to the Transaction.

 

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If the proposals are approved at the Dutch Meeting and the Merger becomes effective, the Luxembourg Meeting will be convened and the Core Lab Luxembourg Board will vote the Luxembourg Meeting Proxies in favor of the U.S. Redomestication. Any Core Lab N.V. Shareholders who vote against or abstain from voting on the Transaction Proposal will have the right to attend the Luxembourg Meeting and cast their votes in favor of or against the U.S. Redomestication.

Information Concerning Core Lab N.V.

Core Laboratories N.V. is a Netherlands limited liability company. Core Lab N.V. was established in 1936 and is one of the world’s leading providers of proprietary and patented reservoir description and production enhancement services and products to the oil and gas industry. Core Lab N.V. has over 70 offices in more than 50 countries and has approximately 3,600 employees.

Core Lab N.V. is a public company trading on the NYSE under the symbol “CLB”. The registered and principal executive office of Core Lab N.V. is located at Van Heuven Goedhartlaan, 7 B 1181 LE, Amstelveen, The Netherlands and its telephone number is (31-20) 420-3191.

Additional information about Core Lab N.V. can be found under its profile on the SEC’s website at www.sec.gov or its website at www.corelab.com. The information contained in, or that can be accessed through, Core Lab N.V.’s website is not incorporated into this Proxy Statement/Prospectus.

Information Concerning Core Lab Luxembourg and Core Lab Delaware

Core Lab Luxembourg is a public limited liability company incorporated under the laws of Luxembourg and a direct wholly-owned subsidiary of Core Lab N.V. Following completion of the Transaction, including the Merger of Core Lab N.V. with and into Core Lab Luxembourg, Core Lab Luxembourg will domesticate in Delaware and become Core Lab Delaware, a Delaware corporation, and it and its subsidiaries will carry on the business currently conducted by Core Lab N.V. and its subsidiaries.

Recommendation of the Core Lab N.V. Board

After careful consideration of, among other things, the advice of management and after considering information provided to management by our financial, tax, accounting and legal advisors, and such other matters as it considered relevant, the Core Lab N.V. Board unanimously determined that the Transaction is in the best interests of Core Lab N.V. and its stakeholders, will enhance shareholder value over the long-term, and is fair and reasonable. Accordingly, the Core Lab N.V. Board unanimously recommends that Core Lab N.V. Shareholders vote FOR the Transaction Proposal and FOR the Articles of Amendment Proposal.

See “The Transaction Proposal – Recommendation of the Core Lab N.V. Board”.

Reasons for the Transaction

The U.S. Redomestication is the key reason for Core Lab N.V. proposing the Transaction, which also includes the adoption of a new corporate name, being “Core Laboratories Inc.”. In making its recommendation, the Core Lab N.V. Board considered a number of factors, including those listed below:

 

   

Simplified Corporate Structure, Streamlined Reporting Requirements, and Increased Business Efficiencies. We believe that the Transaction will result in a simplified corporate structure, which will improve our operational and financial flexibility. We expect to gain efficiencies through a more

 

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streamlined U.S.-based reporting structure by eliminating redundancies in regulatory reporting requirements, including the need to make certain corporate securities filings with the Dutch regulatory authorities in addition to our U.S. Exchange Act filings with the SEC. As a Dutch company listed on a U.S. securities exchange, we are also required to maintain financial accounting records in accordance with both U.S. GAAP and IFRS rules. If the Transaction is completed, we expect to realize substantial savings by focusing efforts on a single U.S. GAAP audit. Eliminating the Company’s Dutch periodic and annual reporting requirements will free up internal resources focused on these efforts and reduce costs associated with the Company’s external advisors and auditors. A simplified corporate structure, based in the United States, will also provide additional opportunities and allow us to gain efficiencies in our corporate treasury, cash management, risk management and tax functions. The Company has historically accessed debt financing from the United States capital markets, which also align with the Company’s U.S. Dollar functional currency. We believe the Transaction better aligns the domicile of the ultimate parent entity with lenders when accessing capital markets for U.S. Dollar denominated debt financing. Additionally, the Transaction is anticipated to eliminate unnecessary administrative cash management procedures and reduce transactional costs associated with intercompany cash flows. Finally, disclosure obligations, either in proposed or final form, associated with environmental, social and governance matters are rapidly changing and expanding in the United States, the Netherlands, and the European Union. If the Transaction is not completed, the Company would expect to incur higher incremental costs and risk associated with assessing, implementing and maintaining compliance with diverging regulatory frameworks in each of these jurisdictions.

 

   

Reduced Corporate Footprint. We currently maintain a corporate office in the United States where our executive management team and principal legal and accounting functions reside, as well as headquarters in the Netherlands, where certain other corporate functions have historically resided. The Transaction will allow us to relocate our headquarters to the United States and thereby eliminate redundancies in various administrative functions. Consolidating our headquarters in the United States will also eliminate the costs associated with maintaining our Dutch headquarters and create workflow and process efficiencies, which will better align the general and administrative functions currently residing in the Netherlands with the U.S.-based executive management team and other corporate departments located in the United States.

 

   

Well-Established Principles of Corporate Governance. There is substantial judicial precedent in the Delaware courts as to the legal principles applicable to measures that may be taken by a corporation and to the conduct of a corporation’s board of directors, such as under the business judgment rule and other standards. Because the judicial system is based largely on legal precedents, the abundance of Delaware case law provides clarity and predictability to many areas of corporate law. Further, U.S. investors and securities professionals are generally more familiar with Delaware corporations, and the laws governing such corporations, increasing their level of comfort with Delaware corporations relative to other jurisdictions. The Delaware courts have developed considerable expertise in dealing with corporate issues, and a substantial body of case law has developed construing Delaware law and establishing public policies with respect to corporate legal affairs. Moreover, Delaware’s vast body of law on the fiduciary duties of directors provides appropriate protection for the Company’s shareholders from possible abuses by directors and officers. Delaware corporate governance principles are also more closely aligned with NYSE listing standards and SEC governance requirements than governance principles under Dutch law, thereby eliminating the requirement to comply with multiple, dissimilar regulatory regimes.

 

   

Positioned to Better Respond to Global Tax Developments. Recent global tax developments, particularly legislative and regulatory activity stemming from the Organization for Economic Cooperation and Development’s (“OECD”) Base Erosion and Profit Shifting initiative, have given rise to increased focus on companies’ global tax footprints. The initiative suggests a range of new

 

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approaches that national governments might adopt when taxing the activities of multinational enterprises. As a result of the OECD project and other international initiatives, tax laws that currently apply to our business may be amended by the relevant authorities or interpreted differently by them, and these changes may present risks to our Company. By better aligning our corporate structure with our primary corporate and business functions, we believe that we will more fully benefit from the expenses supporting our US operations, which should reduce risks associated with tax authority challenges stemming from these and other potential changes.

In the course of their deliberations, the Core Lab N.V. Board, in consultation with management and after considering information provided to management by our financial, legal, accounting and tax advisors, also considered a variety of risks (as described in greater detail under the heading “Risk Factors”) and other potentially negative factors relating to the Transaction, including the U.S. Redomestication.

The foregoing description of the information and factors considered by the Core Lab N.V. Board includes the principal positive and negative factors considered by them, but is not intended to be exhaustive and may not include all of the factors considered, and, in view of the number and complexity of factors considered by the Core Lab N.V. Board, the Core Lab N.V. Board did not find it practicable to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors considered by them in making their recommendations (and individual members of the Core Lab N.V. Board may have given different weights to different factors). The Core Lab N.V. Board reached their recommendation based on the totality of the information presented to, and considered by, them through their deliberations.

See “The Transaction Proposal – Reasons for the Transaction”.

Risk Factors

The Transaction and the transactions contemplated by the Transaction involve risks, some of which are related to the Transaction and others of which are related to Core Lab N.V.’s business and Core Lab Delaware’s business. In considering the Transaction and the transactions contemplated in connection therewith, including whether to vote for the Transaction Proposal and the Articles of Amendment Proposal, Core Lab N.V. Shareholders should carefully consider the information about these risks set forth under the section entitled “Risk Factors”, together with the other information included or incorporated by reference in this Proxy Statement/Prospectus.

The Transaction

The purpose of the Transaction is to facilitate a series of transactions which will occur in a specific sequence and as a consequence of which, among other things, (i) as a result of the Merger, Core Lab N.V. shares will be canceled and holders of Core Lab N.V. Common Shares prior to the Merger (other than those holders who exercise their withdrawal right) will be issued new shares in Core Lab Luxembourg on a one-for-one basis, (ii) Core Lab Luxembourg will redomesticate as Core Lab Delaware, and (iii) Core Lab N.V. Shareholders will hold one share of Common Stock of Core Lab Delaware for each one Core Lab N.V. Common Share they owned immediately prior to the Transaction. Shares of Common Stock of Core Lab Delaware will be listed on the NYSE. Core Lab Delaware will be the direct or indirect owner of all of the assets and liabilities of Core Lab N.V. following the Transaction. On the NYSE, the stock symbol for the shares of Common Stock of Core Lab Delaware will be “CLB”. See “The Transaction Proposal – Certain Legal and Regulatory Matters – Stock Exchange Listing and The Transaction Proposal – Particulars of the Transaction”.

Assuming the Transaction Proposal and the Articles of Amendment Proposal are adopted at the Dutch Meeting, following the Effective Time and completion of the Transaction, the shareholders of Core Lab Delaware will be the same persons who were Core Lab N.V. Shareholders immediately prior to the Transaction. As a result, there

 

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will be no effective change of control of Core Lab N.V. as a result of the Transaction, as ultimate control will remain with the public shareholders. The charts below depict the general structure of Core Lab N.V. and its subsidiaries immediately prior to the Transaction and the structure of Core Lab Delaware and its subsidiaries after the Transaction.

 

LOGO

Effect of the Transaction on the Core Lab N.V. Incentive Awards and other Compensation and Benefit Plans

In connection with the Transaction, Core Lab Delaware will assume, or will cause an applicable affiliate to assume, the Core Lab N.V. Incentive Plans, as well as all other compensation or benefit plans, policies and arrangements previously maintained by Core Lab N.V. Each outstanding Core Lab N.V. Incentive Award will be exchanged for a Core Lab Delaware Incentive Award. The Core Lab Delaware Incentive Awards will be subject to substantially the same terms and conditions as the exchanged Core Lab N.V. Incentive Awards, except, in the case of equity-based Core Lab N.V. Incentive Awards, the security issuable upon exercise or settlement of the Core Lab Delaware Incentive Award, as applicable, will be a share of Common Stock of Core Lab Delaware (or its cash equivalent) rather than a Core Lab N.V. Common Share (or its cash equivalent).

Effect of the Transaction on the Core Lab N.V. Debt

In connection with the Transaction and subject to obtaining the Required Lender Consents, Core Lab Luxembourg, and subsequently by way of the U.S. Redomestication, Core Lab Delaware, will assume, or will cause an applicable affiliate to assume, all of Core Lab N.V.’s obligations under the Core Lab N.V. Debt, pursuant to which Core Lab Delaware will become the obligor in respect of, and effectively the issuer of, such debt in lieu of Core Lab N.V. following completion of the Transaction.

Required Shareholder Approvals

The following votes are required to approve each proposal at the Dutch Meeting (the “Required Shareholder Approvals”):

 

   

The Transaction Proposal: Approval of the Transaction Proposal requires the affirmative vote of holders representing two-thirds of the outstanding Core Lab N.V. Common Shares as of the Voting Record Date.

 

   

The Articles of Amendment Proposal: Approval of the Articles of Amendment Proposal requires the affirmative vote of holders representing a simple majority of votes cast at the Dutch Meeting.

The Transaction Proposal has been proposed to Core Lab N.V. Shareholders by the Core Lab N.V. Board. The Articles of Amendment Proposal has been proposed by the Core Lab N.V. Management Board and approved by the Core Lab N.V. Board, and is now being proposed to the Core Lab N.V. Shareholders.

 

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Core Lab N.V. Common Shares abstaining from voting will count as shares present at the Dutch Meeting but will not count for the purpose of determining the number of votes cast.

The Core Lab N.V. Board unanimously recommends that Core Lab N.V. Shareholders vote FOR the Transaction Proposal and FOR the Articles of Amendment Proposal.

Certain Legal and Regulatory Matters

Stock Exchange Listings and Securities Law Filings

The shares of Common Stock of Core Lab Delaware will be listed on the NYSE. On the NYSE, the stock symbol for the shares of Common Stock of Core Lab Delaware will be “CLB”. The Core Lab N.V. Common Shares currently trade on the NYSE under the stock symbol “CLB”. When the Transaction is completed, the Core Lab N.V. Common Shares currently listed on the NYSE under the stock symbol “CLB” will cease to be traded on the NYSE and will be deregistered under the U.S. Exchange Act. See “The Transaction Proposal – Certain Legal and Regulatory Matters – Stock Exchange Listing”.

Accounting Treatment of the Transaction

There will be no accounting effect or change in the carrying amount of the consolidated assets and liabilities of Core Lab Delaware as a result of the Transaction. The business, capitalization, assets and liabilities and financial statements of Core Lab Delaware immediately following the Transaction will be the same as those of Core Lab Delaware immediately prior to the Transaction.

Summary of the Tax Considerations of the Transaction

Determining the actual tax consequences of the Transaction may be complex and will depend on the specific situation applicable to each Core Lab N.V. Shareholder. Core Lab N.V. Shareholders are urged to consult with, and rely solely upon, their own tax advisors concerning the tax consequences of the Transaction in light of their particular circumstances.

Material Dutch Tax Considerations

The Transaction is not expected to give rise to material corporate-level Dutch income tax for Core Lab N.V. or Core Lab Delaware.

Core Lab N.V. believes that Core Lab N.V. Shareholders will generally not be subject to Dutch dividend withholding tax as a result of the Merger, unless a shareholder exercises its withdrawal right and receives compensation. On payments of cash compensation, dividend withholding tax may generally be due.

Core Lab N.V. Shareholders who are not resident in the Netherlands will generally not be subject to Dutch (corporate) income tax in respect of the Transaction, subject to certain assumptions and exceptions, and Core Lab N.V. Shareholders who are resident in the Netherlands may be subject to Dutch (corporate) income tax in respect of the Transaction, depending on the tax regime applicable to such holder.

For more information regarding material Dutch tax considerations for Core Lab N.V. Shareholders with respect to the Transaction, see the section entitled “Material Dutch Tax Considerations.”

 

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Material Luxembourg Income Tax Considerations

For Luxembourg income tax purposes, the Transaction is not expected to give rise to material corporate-level Luxembourg income tax for Core Lab N.V., Core Lab Luxembourg or Core Lab Delaware.

For more information regarding material Luxembourg tax considerations, see the section entitled “Material Luxembourg Tax Considerations.”

Material U.S. Federal Income Tax Considerations

Core Lab N.V. believes that, and this disclosure assumes that, Core Laboratories U.S. Interests Holdings Inc. is not classified as a U.S. real property holding corporation and has not been so classified at any time during the five year period ending on the date of the Transaction. Accordingly, the Transaction is not expected to give rise to material corporate-level U.S. federal income tax for Core Lab N.V. or Core Lab Delaware.

As discussed more fully below in the section entitled “Material U.S. Federal Income Tax Considerations,” it is intended that the Merger and the U.S. Redomestication each qualify as a form of “reorganization” within the meaning of Section 368(a) of the Code. If the Merger and the U.S. Redomestication so qualify, Core Lab N.V. Shareholders generally should not recognize gain or loss for U.S. federal income tax purposes in connection with the Transaction, subject to the discussion contained herein regarding the “passive foreign investment company” rules and the effects of Section 367(b) of the Code on the U.S. Redomestication. Section 367(b) of the Code may apply with respect to certain U.S. Holders on the date of the U.S. Redomestication and could require such U.S. Holders to recognize gain (but not loss) with respect to the U.S. Redomestication unless a certain election is made to include in such U.S. Holder’s income, as a dividend, the “all earnings and profits amount” attributable to such U.S. Holder, as discussed more fully below under the heading “Material U.S. Federal Income Tax Considerations—U.S. Holders—Effects of Section 367 on the U.S. Redomestication.”

Core Lab N.V. Shareholders are urged to consult with, and rely solely upon, their own tax advisors to determine the particular U.S. federal income tax consequences to them of the Transaction as well as the U.S. federal income tax consequences of the ownership and disposition of shares of Common Stock of Core Lab Delaware received pursuant to the U.S. Redomestication. For more information regarding material U.S. federal income tax considerations for Core Lab N.V. Shareholders with respect to the Transaction, see the section entitled “Material U.S. Federal Income Tax Considerations.”

Comparison of Shareholder Rights

Many of the principal attributes of Core Lab N.V. Common Shares and shares of Common Stock of Core Lab Delaware will be similar. However, there are differences between what a shareholder’s rights will be under Delaware law and what they currently are under Dutch law. In addition, there are differences between Core Lab N.V.’s existing Articles of Association and the Core Lab Delaware Certificate of Incorporation and Core Lab Delaware Bylaws as they will be in effect upon the completion of the Transaction. These differences are discussed under “Comparison of Rights of Core Lab N.V. Shareholders and Core Lab Delaware Stockholders”. In addition, see “Description of Core Lab Delaware Capital Stock” for a summary of Core Lab Delaware’s authorized capital stock and the rights and preferences thereof. Core Lab N.V. Shareholders should also review the forms of the Core Lab Delaware Certificate of Incorporation and Core Lab Delaware Bylaws, as they will be in effect upon completion of the Transaction, which are attached as Appendices B and C, respectively, of this Proxy Statement/Prospectus.

 

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RISK FACTORS

An investment in shares of Common Stock of Core Lab Delaware is subject to a number of risks. Prior to making any decision as to whether or not to vote in favor of the Transaction Proposal and the Articles of Amendment Proposal, Core Lab N.V. Shareholders should carefully consider risk factors associated with holding shares of Common Stock of Core Lab Delaware, Core Lab N.V.’s business and the industry in which it operates, together with all other information contained in this Proxy Statement/Prospectus, including, in particular the risk factors described below.

You should carefully consider the following factors as well as the other information contained in and incorporated by reference into this Proxy Statement/Prospectus, including the risks under the heading “Risk Factors” in our Annual Report on Form 10-K of Core Lab N.V. for the year ended December 31, 2022, our Quarterly Report on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022, and September 30, 2022, and our Current Report on Form 8-K filed with the SEC on June 8, 2022. For information about Core Lab N.V.’s filings incorporated by reference in this Proxy Statement/Prospectus, see the section entitled “Where You Can Find More Information”.

Risks Relating to Core Lab N.V.’s Business

You should read and consider the risk factors specific to Core Lab N.V.’s business that will continue to affect Core Lab Delaware after completion of the Transaction. These risks are described under the heading “Risk Factors” in our Annual Report on Form 10-K of Core Lab N.V. for the year ended December 31, 2022, our Quarterly Report on Form 10-Q for the quarters ended March 31, 2022, June 30, 2022, and September 30, 2022, and our Current Report on Form 8-K filed with the SEC on June 8, 2022, which are each incorporated by reference into this Proxy Statement/Prospectus, and in other documents that are incorporated by reference into this Proxy Statement/Prospectus.

Risks Relating to Core Lab Delaware

The rights of stockholders under Delaware law may differ from the rights of shareholders under Dutch law.

Currently, your rights as a shareholder of Core Lab N.V. arise under the laws of the Netherlands, as well as Core Lab N.V.’s existing Articles of Association. Upon effectiveness of the Transaction, your rights as a shareholder of Core Lab Delaware will arise under Delaware law, as well as the proposed organizational documents. The proposed organizational documents and Delaware law contain provisions that differ in certain respects from those in Core Lab N.V.’s existing Articles of Association and Dutch law and, therefore, some of your rights as a shareholder will change. For a description of your rights following the Transaction and how they may differ from your current rights, please see “Comparison of Rights of Core Lab N.V. Shareholders and Core Lab Delaware Stockholders beginning on page 71. The forms of the proposed organizational documents are attached hereto as Exhibit 3.1 and Exhibit 3.2. We urge you to read them as well.

Provisions in the Core Lab Delaware Certificate of Incorporation and Core Lab Delaware Bylaws could impact change in control transactions.

In addition to protections afforded under the DGCL, the Core Lab Delaware Certificate of Incorporation and Core Lab Delaware Bylaws will contain provisions that could have the effect of delaying or preventing changes in control or changes in management or the board of directors of Core Lab Delaware (the “Core Lab Delaware Board”). These provisions include:

 

   

dividing the Core Lab Delaware Board into three classes of directors, with each class serving staggered three-year terms;

 

   

providing that all vacancies, including newly created directorships, may, except as otherwise required by law or, if applicable, the rights of holders of a series of preferred stock, only be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum (prior to such time, vacancies may also be filled by stockholders holding a majority of the outstanding shares);

 

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permitting any action by stockholders to be taken only at an annual meeting or special meeting rather than by a written consent of the stockholders, subject to the rights of any series of preferred stock with respect to such rights;

 

   

permitting special meetings of the Core Lab Delaware stockholders to be called only by the Core Lab Delaware Chairman of the board or the board of directors pursuant to a resolution adopted by the affirmative vote of a majority of the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships;

 

   

requiring, while Core Lab Delaware has a staggered board, the affirmative vote of the holders of at least 66.66% in voting power of all then outstanding common stock entitled to vote generally in the election of directors, voting together as a single class, to remove any or all of the directors from office at any time, and directors will be removable with or without “cause;”

 

   

prohibiting cumulative voting in the election of directors;

 

   

establishing advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of stockholders; and

 

   

providing that the board of directors is expressly authorized to adopt, or to alter or repeal the Core Lab Delaware bylaws.

The Core Lab Delaware Certificate of Incorporation will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with Core Lab Delaware or its directors or officers or other matters pertaining to Core Lab Delaware’s internal affairs.

The Core Lab Delaware Certificate of Incorporation will provide that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be the exclusive forum for:

 

   

any derivative action or proceeding brought on behalf of Core Lab Delaware;

 

   

any action asserting a breach of fiduciary duty owed by any current or former director, officer or stockholder of Core Lab Delaware to Core Lab Delaware or Core Lab Delaware’s stockholders;

 

   

any action asserting a claim arising pursuant to any provision of the DGCL; or

 

   

any action asserting a claim governed by the internal affairs doctrine.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with Core Lab Delaware or its directors, officers or other matters pertaining to Core Lab Delaware’s internal affairs, and may discourage lawsuits with respect to such claims. Alternatively, if a court were to find these provisions of the Core Lab Delaware Certificate of Incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, Core Lab Delaware may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect its business, financial condition or operating results.

There has been no prior public trading for the shares of Common Stock of Core Lab Delaware on the NYSE and the market price of the shares of Common Stock of Core Lab Delaware may be subject to volatility.

Although the Core Lab N.V. Common Shares have historically been listed on the NYSE, there has been no public trading market for the shares of Common Stock of Core Lab Delaware. Following the listing of the shares of Common Stock of Core Lab Delaware on the NYSE, there can be no assurance that the trading market for such shares will continue to be as active or liquid as was the trading market for the Core Lab N.V. Common Shares prior to the Transaction or that the Trading Price of the shares of Common Stock of Core Lab Delaware following the Transaction may not be effectively lower than the Trading Price of the Core Lab N.V. Common Shares.

 

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As is the case with the Core Lab N.V. Common Shares, the market price of the shares of Common Stock of Core Lab Delaware may be volatile. The value of an investment in the shares of Common Stock of Core Lab Delaware may decrease or increase abruptly, and such volatility may bear little or no relation to Core Lab N.V.’s performance. The price of the shares of Common Stock of Core Lab Delaware may fall in response to market appraisal of Core Lab N.V.’s strategy or if Core Lab N.V.’s results of operations and/or prospects are below the expectations of market analysts or shareholders. In addition, stock markets have, from time to time, experienced significant price and volume fluctuations that have affected the market price of securities, and may, in the future, experience similar fluctuations which may be unrelated to Core Lab Delaware’s operating performance and prospects but nevertheless affect the price of the shares of Common Stock of Core Lab Delaware. This volatility may affect the ability of holders of shares of Common Stock of Core Lab Delaware to sell these at an advantageous price. Broad market fluctuations, as well as economic conditions generally may adversely affect the market price of the shares of Common Stock of Core Lab Delaware.

Risks Relating to the Transaction

The expected benefits of the Transaction may not be realized.

There can be no assurance that all of the anticipated benefits of the Transaction will be achieved. Achieving the anticipated benefits of the Transaction is subject to a number of risks and uncertainties, including factors that we do not and cannot control. In addition, if the expected benefits of the Transaction do not meet expectations of investors or securities analysts, the price of our common stock following completion of the Transaction may decline.

Core Lab N.V.’s business may be impacted by the uncertainty associated with the U.S. Redomestication.

While Core Lab N.V. will maintain operations in the Netherlands, Core Lab Delaware will be headquartered solely in the U.S. Though Core Lab Delaware and its affiliates will carry on the business currently conducted by Core Lab N.V. and its subsidiaries, certain relationships, including with employees, landowners, suppliers, lenders, partners, governments and other stakeholders, may be subject to disruption due to uncertainty associated with the U.S. Redomestication. Specifically, certain stakeholders may be reluctant to engage in business with Core Lab N.V. prior to or Core Lab Delaware following completion of the Transaction, or may impose additional conditions on or apply less favorable terms to transactions involving Core Lab N.V. and/or Core Lab Delaware. This could have an adverse effect on the business and operations of Core Lab N.V. prior to or Core Lab Delaware following completion of the Transaction.

The Transaction is conditional, and the conditions may not be satisfied.

Completion of the Transaction is conditional, among other things, upon the satisfaction or waiver of the Merger Plan Conditions, which include (i) the Articles of Amendment Proposal being adopted, and (ii) the total number of votes cast against the Transaction Proposal not exceeding two percent of all votes cast at the Dutch Meeting. The completion of the Transaction is also conditioned upon the receipt of the Required Shareholder Approvals and the authorization, upon official notice of issuance, of the listing of the shares of Common Stock of Core Lab Delaware on the NYSE. Although Core Lab N.V. is diligently applying its efforts to take, or cause to be taken, all actions to do, or cause to be done, all things necessary, proper or advisable to obtain the requisite approvals, there can be no assurance that these conditions will be fulfilled or that the Transaction will be completed. Further, even if the Required Shareholder Approvals have been obtained and the Merger Plan Conditions have been satisfied, the Core Lab N.V. Board may decide to delay or not proceed with the Transaction if it determines that the Transaction is no longer advisable.

A new EU directive may change the threshold vote required to pass certain of the resolutions proposed herein.

Proposed legislation concerning the implementation in the Netherlands of Directive (EU) 2019/2121 of the European Parliament and the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions is currently under consideration and may be adopted during the

 

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pendency of the Transaction. Such proposed legislation in the Netherlands would change the quorum requirements in certain circumstances. Under current law, a proposal requires approval of 2/3 of the votes cast when less than 50% of the share capital is represented at the meeting. The new legislation, when implemented in the Netherlands, would require approval of 2/3 of the votes cast when less than 2/3 of the share capital of the company is represented at the meeting. If the proposed legislation were to be adopted prior to Dutch Meeting or Luxembourg Meeting, that standard included in the new legislation could apply to the proposals described herein.

If the Merger and U.S. Redomestication do not qualify as a “reorganization” under Section 368(a) of the Code, Core Lab N.V. Shareholders may be required to pay U.S. federal income taxes.

It is intended that the Merger and the U.S. Redomestication each qualify as a form of “reorganization” within the meaning of Section 368(a) of the Code. Although Vinson & Elkins L.L.P., Core Lab N.V.’s U.S. tax counsel, is currently of the opinion that each of the Merger and U.S. Redomestication should qualify as a form of reorganization within the meaning of Section 368(a) of the Code, and Core Lab N.V., Core Lab Luxembourg and Core Lab Delaware intend to file tax returns consistent with this intended tax treatment, this tax treatment is not free from doubt. Your tax advisor may not agree with our intended tax treatment and the IRS may assert, or a court may sustain, a contrary position.

If the Merger or U.S. Redomestication did not qualify as a form of reorganization within the meaning of Section 368(a) of the Code, Core Lab N.V. Shareholders would generally recognize taxable gain or loss upon their exchange of stock pursuant to the Merger or U.S. Redomestication, as applicable.

For more information about the tax considerations with respect to such matters, see the section entitled “Material U.S. Federal Income Tax Considerations.”

The U.S. Redomestication will result in certain U.S. Holders of Common Stock of Core Lab Luxembourg being required to include certain amounts in income as a deemed dividend or, in some cases, to recognize gain. In such case, the resulting tax liability of a U.S. Holder of Common Stock of Core Lab Luxembourg, if any, will depend on such U.S. Holder’s particular situation. Corporate Non-U.S. Holders of Common Stock of Core Lab Luxembourg are urged to consult with their own tax advisors regarding the potential application of such requirements to them.

As discussed more fully below under the heading “Material U.S. Federal Income Tax Considerations—U.S. Holders—U.S. Federal Income Tax Consequences of the Transaction to U.S. Holders,” the U.S. Redomestication should qualify as a “reorganization” within the meaning of Section 368(a)(1)(F) of the Code (an “ F Reorganization”). Section 367(b) of the Code, which applies to the domestication of a foreign corporation in an F Reorganization, may apply with respect to certain U.S. Holders that are less than 10% shareholders and that own shares of Common Stock of Core Lab Luxembourg on the date of the U.S. Redomestication and could require such U.S. Holders to recognize gain (but not loss) with respect to the U.S. Redomestication unless a certain election is made to include in such U.S. Holder’s income, as a dividend, the “all earnings and profits amount” attributable to such U.S. holder, as discussed more fully below under the heading “Material U.S. Federal Income Tax Considerations—U.S. Holders—Effects of Section 367 on the U.S. Redomestication.” A U.S. Holder that is treated as a “United States shareholder” of Core Lab Luxembourg (in general, a 10% or greater shareholder) is required to include in income as a deemed dividend the “all earnings and profits amount” attributable to its Common Stock of Core Lab Luxembourg.

The amount of a U.S. Holder’s “all earnings and profits amount” or, if applicable, the amount of any gain required to be recognized by a U.S. Holder as a result of the U.S. Redomestication will vary depending on such U.S. Holder’s particular situation, including by reason of such U.S. Holder’s holding period in its Common Stock of Core Lab Luxembourg, the value of such stock at the time of the U.S. Redomestication, and the adjusted tax basis of such stock exchanged in the U.S. Redomestication. Because the value of the Common Stock of Core Lab Luxembourg will not be known until the effective time of the U.S. Redomestication, a U.S. Holder of Common Stock of Core Lab Luxembourg will not be able to determine its amount realized, and therefore the amount of

 

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any taxable gain it may be required to recognize, until such time. Moreover, the amount of a U.S. Holder’s “all earnings and profits amount” will not be known until after the completion of the U.S. Redomestication, so the U.S. Holder will not be able to determine prior to the U.S. Redomestication the amount of any deemed dividend that such U.S. Holder may elect, or be required, to include in income.

For a more complete discussion of the effects of the application of Section 367(b) with respect to U.S. Holders in connection with the U.S. Redomestication, see the section entitled “Material U.S. Federal Income Tax Considerations—U.S. Holders—Effects of Section 367 on the U.S. Redomestication.” Furthermore, as discussed more fully below under the heading “Material U.S. Federal Income Tax Considerations—Non-U.S. Holders—U.S. Federal Income Tax Consequences of the Transaction to Non-U.S. Holders,” corporate Non-U.S. Holders of Common Stock of Core Lab Luxembourg are urged to consult with their own tax advisors regarding the U.S. federal income tax consequences to such corporate Non-U.S. Holder, and to their “United States shareholders,” of the Transaction and of any Section 367(b) deemed dividend.

The Transaction may result in material Dutch taxes for Core Lab N.V.

For Dutch income tax purposes, the relevant step of the Transaction is the Merger, where Core Lab N.V. is legally merged into Core Lab Luxembourg, with the latter surviving. The Merger constitutes in principle a taxable transaction for Dutch corporate income tax purposes pursuant to which all assets and liabilities are deemed for Dutch tax purposes to be transferred at fair market value and any gain deemed realized as a result of the transfer is generally subject to corporate income tax. However, if a rollover facility applies, Core Lab Luxembourg is allowed to carry over the tax book value of the assets and liabilities and, as such, Core Lab N.V. is not required to report any deemed merger-gain.

Core Lab N.V. and Core Lab Luxembourg have filed a request with the Dutch tax authorities to apply the afore-mentioned rollover facility and have subsequently obtained a positive confirmation from the Dutch tax authorities as to the application of the rollover facility, subject to certain conditions. From the above-mentioned request and confirmation, provided the conditions are met, no taxable gain should be recognized and, as such, there should be no corporate-level income tax due in the Netherlands in connection with the Merger. If the steps and assumptions as outlined in the request to the Dutch tax authorities are not accurate in practice, the rollover facility may not apply and any gain deemed realized as a result of the Merger would be generally subject to Dutch corporate income tax, unless exempt by virtue of the application of the Dutch participation exemption (deelnemingsvrijstelling). Generally, gains (deemed) realized on shares in qualifying subsidiaries are exempt under the Dutch participation exemption.

 

Core Lab N.V. believes that the Merger should not give rise to Dutch dividend withholding tax, except with respect to payments of compensation to shareholders who exercise their withdrawal rights. However, in the unlikely event Dutch tax authorities were to argue successfully that the Merger is deemed as a liquidation of Core Lab N.V. for Dutch tax purposes, Dutch dividend withholding tax would be triggered with respect to Core Lab N.V. Shareholders who cannot benefit from an exemption. This could result in a tax cost of 17.65% on the fair market value of the Core Lab N.V.’s business less the liabilities; to the extent such value exceeds the average capital recognized as paid-up on the Core Lab N.V. Common Shares for Dutch dividend withholding tax purposes.

For more information about the tax considerations with respect to the above, see the section entitled “Material Dutch Tax Considerations”.

The Transaction may result in material Luxembourg taxes for Core Lab Luxembourg or Core Lab Delaware.

The migration of the registered seat and place of effective management of Core Lab Luxembourg would be seen as a deemed liquidation of the entity for Luxembourg tax purposes. As a result, all assets and liabilities held by

 

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Core Lab Luxembourg at the time of the migration would be deemed to be realized at FMV for Luxembourg tax purposes and any gain realized upon liquidation would be taxable, unless specific exemption applies. Considering that the migration should occur on the same day, no variation in the value of the assets and liabilities received from Core Lab N.V. is expected. It also means that its tax losses will no longer be available to carry forward after the migration. If the U.S. Redomestication is delayed or there is any reason to increase the FMV of Core Lab Luxembourg in the period between the Merger and the U.S. Redomestication, the Transaction may result in material Luxembourg taxes for Core Lab Luxembourg, which could carry forward after the migration to Core Lab Delaware.

Core Lab N.V. will allocate time and resources to effecting the Transaction and incur non-recurring costs related to the Transaction.

Core Lab N.V. and its management has allocated and will continue to be required to allocate time and resources to effecting the completion of the Transaction and related and incidental activities. There is a risk that the challenges associated with managing these various initiatives as described in this Proxy Statement/Prospectus may have a business impact and that consequently the underlying businesses will not perform in line with expectations. This could have an adverse effect on the business, financial condition and reputation of Core Lab Delaware.

In addition, Core Lab N.V. expects to incur a number of non-recurring costs associated with the Transaction, including legal fees, accountants’ fees, proxy solicitor fees, filing fees, mailing expenses and financial printing expenses. There can be no assurance that the actual costs will not exceed those estimated and the actual completion of the Transaction may result in additional and unforeseen expenses. Most of these costs will be payable whether or not the Transaction is completed. While it is expected that benefits of the Transaction achieved by Core Lab Delaware will offset these transaction costs over time, this net benefit may not be achieved in the short-term or at all, particularly if the Transaction is delayed or does not happen at all. These combined factors could adversely affect the business, operating profit and overall financial condition of Core Lab Delaware.

Core Lab N.V. may choose to defer or abandon the Transaction.

Even if the Required Shareholder Approvals have been obtained and other conditions required to complete the Transaction have been satisfied, Core Lab N.V. may decide to defer or abandon the Transaction at any time prior to the Effective Time of the Transaction and in such case Core Lab N.V. will have incurred costs and will have directed attention and resources relating to the Transaction, but will not realize any of the anticipated benefits of the Transaction.

Negative publicity resulting from the Transaction could adversely affect Core Lab N.V.’s business and the market price of the Core Lab N.V. Common Shares and the shares of Common Stock of Core Lab Delaware.

Domestication transactions that have been undertaken by other companies have in some cases generated significant news coverage, some of which has been negative. Negative publicity generated by the Transaction could cause certain persons with whom Core Lab N.V. has a business relationship to be more reluctant to do business with Core Lab N.V. prior to the Transaction, or Core Lab Delaware following the Transaction. Negative publicity could also cause some Core Lab N.V. Shareholders to sell Core Lab N.V. Common Shares or decrease the demand for new investors to purchase such shares, which could have an adverse impact on the price of the Core Lab N.V. Common Shares and the shares of Common Stock of Core Lab Delaware.

 

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Enforcement of Rights Against Core Lab Delaware in the Netherlands may be limited.

Core Lab Delaware will be located outside of the Netherlands and, following the Effective Time, the majority of its directors, officers and experts are likely to reside outside of the Netherlands. Accordingly, it may not be possible for Core Lab Delaware stockholders to effect service of process within the Netherlands upon Core Lab Delaware or the majority of its directors, officers or experts, or to enforce judgments obtained in Dutch courts against Core Lab Delaware or the majority of its directors, officers or experts.

 

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MEETING AND VOTING INFORMATION

General

In connection with the Transaction, there will be three extraordinary general meetings: (i) the Dutch Meeting, (ii) the Luxembourg Merger Meeting and (iii) the Luxembourg Meeting. Because Core Lab N.V. will be the sole shareholder of Core Lab Luxembourg at the time of the Luxembourg Merger Meeting, the Core Lab N.V. Board and the Core Lab Luxembourg Board are not soliciting proxies from shareholders for the Luxembourg Merger Meeting. Core Lab N.V. is furnishing this Proxy Statement/Prospectus to its stockholders as part of the solicitation of proxies by the Core Lab N.V. Board for use at the Dutch Meeting to be held on March 29, 2023 and the Luxembourg Meeting to be held on April 3, 2023. This Proxy Statement/Prospectus is first being furnished to Core Lab N.V. Shareholders on or about [                ], 2023 in connection with the vote on the Proposals described in this Proxy Statement/Prospectus. This Proxy Statement/Prospectus provides Core Lab N.V. Shareholders with information they need to know to be able to vote or instruct their vote to be cast at the Dutch Meeting and the Luxembourg Meeting.

The Dutch Meeting

Date, Time and Place

The Dutch Meeting will be held at NautaDutilh N.V., Beethovenstraat 400, 1082 PR Amsterdam, The Netherlands at 9:00 a.m., CEST, on March 29, 2023, to consider and vote upon the proposals to be put to the Core Lab N.V. Shareholders at the Dutch Meeting.

Purpose of the Dutch Meeting

At the Dutch Meeting, Core Lab N.V. is asking holders of Core Lab N.V. Common Shares to vote on proposals to:

 

  1.

approve a series of transactions, which will include (i) pursuant to the Merger Plan (in the form attached as Appendix A – Merger Plan to this Proxy Statement/Prospectus), the downstream cross-border merger of Core Lab N.V. with and into Core Lab Luxembourg, with Core Lab Luxembourg surviving, such that all assets and liabilities of Core Lab N.V. are transferred to Core Lab Luxembourg by universal succession of title and Core Lab N.V. will cease to exist without going into liquidation, against the issuance of new Core Lab Luxembourg shares, in accordance with an exchange ratio of one Core Lab Luxembourg share for one Core Lab N.V. share, and (ii) as soon as practicable following completion of the Merger, Core Lab Luxembourg migrating out of Luxembourg and domesticating as Core Laboratories Inc. By casting a vote in favor of the Transaction Proposal, the respective Core Lab N.V. Shareholder agrees to the U.S. Redomestication and grants a power of attorney (in the form attached as Appendix D – Power of Attorney) to each member of the board of directors of Core Lab Luxembourg to vote, by proxy, the shares of Core Lab N.V. Shareholders in favor of the U.S. Redomestication at the Luxembourg Meeting; and

 

  2.

amend the Articles of Association to include a formula on the basis of which cash compensation to Core Lab N.V. Shareholders who exercise their withdrawal right in connection with the Merger, as referred to in Section 2:333h (1) of the Dutch Civil Code, can be readily determined (in the form attached as Appendix E – Form of Amended Articles of Association to this Proxy Statement/Prospectus) and to adopt a special resolution to grant a Power of Attorney to each notarial employee of HVG Law LLP jointly as well as severally to execute and sign the Articles of Amendment Proposal.

Luxembourg Meeting

Date, Time and Place

The Luxembourg Meeting will be held at MaplesFS Luxembourg S.A., 12E, rue Guillaume Kroll, L-1882, Luxembourg, at 3:00, CEST, on April 3, 2023, to consider and vote upon the U.S. Redomestication.

 

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Purpose of the Luxembourg Meeting

In order to complete the U.S. Redomestication, Core Lab Luxembourg will convene the Luxembourg Meeting, at which the Core Lab Luxembourg Board will vote the Luxembourg Meeting Proxies in favor of the U.S. Redomestication. Any Core Lab N.V. Shareholders who vote against or abstain from voting on the Transaction Proposal will have the right to attend the Luxembourg Meeting and cast their votes in favor of or against the U.S. Redomestication.

Voting Shares and Principal Holders

As of the Notice Record Date for the Dutch Meeting, 46,634,027 Core Lab N.V. Common Shares were outstanding. The Core Lab N.V. Common Shares trade under the stock symbol “CLB” on the NYSE.

As of the Notice Record Date for the Dutch Meeting, the directors and executive officers of Core Lab N.V. had the right to vote approximately 249,984 Core Lab N.V. Common Shares, representing approximately 0.54% of the Core Lab N.V. Common Shares then outstanding and entitled to vote at the Dutch Meeting.

For information regarding each person known by Core Lab N.V. to beneficially own 5% or more of the outstanding Core Lab N.V. Common Shares and information regarding beneficial ownership of Core Lab N.V. Common Shares by directors and executive officers of Core Lab N.V., see “Share Ownership of Certain Beneficial Owners and Management and Directors of Core Lab”.

It is expected that each of the directors and executive officers of Core Lab N.V. will vote FOR the Transaction Proposal and FOR the Articles of Amendment Proposal.

Record Dates and Entitlement to Vote

Only holders of Core Lab N.V. Common Shares of record at the close of business on February 15, 2023 are entitled to notice of the Dutch Meeting and the Luxembourg Meeting. As of the close of business on the Notice Record Date, 46,634,027 Core Lab N.V. Common Shares were issued and outstanding. Each issued and outstanding common share of Core Lab N.V. on the Voting Record Date is entitled to one vote on each of the proposals to be considered and voted on at the Dutch Meeting and the Luxembourg Meeting.

Quorum

There is no required quorum under Dutch law for shareholder action at a properly convened shareholder meeting, except in specific instances prescribed by Dutch law or our Articles of Association. According to our Articles of Association, each resolution by the general meeting requires a two-thirds majority of the votes cast representing more than half of the issued share capital, except for resolutions to be adopted pursuant to a proposal by the Supervisory Board, which require a simple majority regardless of the number of votes cast at the relevant general meeting. For more information on the vote required to pass the proposal, see “The Transaction Proposal – Required Shareholder Approval”.

Under Luxembourg law, one half of the outstanding shares of the company must be present in person or by proxy to constitute a quorum.

Proxy Voting

The persons named in the form of proxy must vote or withhold from voting your Core Lab N.V. Common Shares in accordance with your instructions on the form of proxy. Signing the form of proxy gives authority to the persons named therein, each of whom is either a director or officer of Core Lab N.V., to vote your Core Lab N.V. Common Shares at the Dutch Meeting in accordance with your voting instructions.

 

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In the absence of such instructions, however, your Core Lab N.V. Common Shares will be voted FOR the Transaction Proposal and FOR the Articles of Amendment Proposal.

A proxy must be in writing and must be executed by you or by an attorney duly authorized in writing or, if the shareholder is a corporation or other legal entity, by a duly authorized officer or attorney. A proxy may also be completed over the telephone or on the Internet. To be valid your proxy must be received no later than 2:00 p.m. EST on March 28, 2023.

The persons named in the form of proxy will have discretionary authority with respect to amendments or variations to matters identified in the Notice of Extraordinary Meeting and with respect to other matters that properly come before the Dutch Meeting. As of the date of this Proxy Statement/Prospectus, our management knows of no such amendment, variation or other matter expected to come before the Dutch Meeting. If any other matters properly come before the Dutch Meeting, the persons named in the form of proxy will vote on them in accordance with their best judgment.

Abstentions and Broker Non-Votes

Core Lab N.V. Common Shares abstaining from voting will count as shares present at the Dutch Meeting but will not count for the purpose of determining the number of votes cast. Broker non-votes will not count as shares present at the annual meeting or for the purpose of determining the number of votes cast, and Core Lab N.V. does not expect any broker non-votes at the Dutch Meeting because the rules applicable to banks, brokers and other nominees only provide brokers with discretionary authority to vote on proposals that are considered routine, whereas the proposals to be presented at the Dutch Meeting are considered non-routine. As a result, no broker will be permitted to vote your Core Lab N.V. Common Shares at the Dutch Meeting without receiving instructions.

Transfer Agent

You can contact Computershare, Core Lab N.V.’s transfer agent, by telephone at 1-800-564-6253.

How to Vote

If you are eligible to vote and you are a registered Core Lab N.V. Shareholder, you can vote your Core Lab N.V. Common Shares in person at the Dutch Meeting or by proxy, as explained below. Voting by proxy is the easiest way to vote your Core Lab N.V. Common Shares.

Voting by Proxy

Below are the different ways in which you can give your instructions, details of which are found in the proxy form accompanying this Proxy Statement/Prospectus.

 

   

Internet: Visit www.proxyvote.com and follow the instructions.

 

   

Telephone: Call 1-800-690-6903 and follow the voice instructions. You cannot appoint a proxyholder via the telephone voting system.

 

   

Mail: Complete, sign and date your proxy form and return it in the business-reply envelope included in your package.

At any time, Broadridge may cease to provide telephone and Internet voting, in which case registered Core Lab N.V. Shareholders can elect to vote by mail or by fax, as described above.

The persons named in the enclosed form of proxy are either directors or officers of Core Lab N.V. Please see “Meeting and Voting Information – Proxy Voting” above. You have the right to appoint some other person of

 

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your choice, who need not be a Core Lab N.V. Shareholder, director or officer, to attend and act on your behalf at the Dutch Meeting. If you wish to do so, please strike out the printed names appearing on the form of proxy and insert the name of your chosen proxyholder in the space provided on the form of proxy. If you decide to vote by telephone or by the Internet, you cannot appoint a person to vote your Core Lab N.V. Common Shares other than our directors or officers whose printed names appear on the form of proxy. It is important to ensure that any other person you appoint as proxy is attending the Dutch Meeting and is aware that his or her appointment has been made to vote your Core Lab N.V. Common Shares.

Voting in Person

Attendance at the Dutch Meeting is limited to Core Lab N.V. Shareholders as of the Voting Record Date (and others with a statutory meeting right), Core Lab N.V. management and Core Lab N.V. advisors. Registration will begin at 8:00 a.m. CEST and the Dutch Meeting will begin at 9:00 a.m. CEST on March 29, 2023. Each shareholder desiring to attend MUST bring proof of share ownership as of the “day of registration” (“dag van registratie”) as referred to in the Dutch Civil Code (which is the Voting Record Date, as described further in this proxy statement) with him/her to the Dutch Meeting along with a valid form of identification. Examples of proof of share ownership include voting instruction statements from a broker or bank. In addition, you should register with Core Lab N.V. beforehand to indicate your plan to attend. Such registration may be made by contacting the Core Lab N.V.’s Secretary as described in this proxy statement. Failure to comply with these requirements may preclude you from being admitted to the Dutch Meeting.

Deadline for Voting

Your duly completed form of proxy must be received by Broadridge Financial Solutions (“Broadridge”), or you must vote by Internet or by telephone or by fax no later than 2:00 p.m. EST on March 28, 2023. The official electronic voting results will be those reported by Broadridge in its final report upon the close of business on March 28, 2023. Any other proxies that are actually received in hand by our Secretary before the polls close at the conclusion of voting at the Dutch Meeting will be voted as indicated.

Revoking your Proxy

As a registered Core Lab N.V. Shareholder, if you vote by proxy, you may revoke it by timely voting again in any manner (on the Internet, or by telephone, mail or fax), or by depositing an instrument in writing (which includes another form of proxy with a later date) executed by you or by your attorney authorized in writing at the office of the Corporate Secretary, Core Laboratories N.V., Van Heuven Goedhartlaan 7 B, 1181 LE Amstelveen, The Netherlands, at any time up to and including the last Business Day preceding the date of the Dutch Meeting, or by depositing it with the Chairman of the Dutch Meeting before the Dutch Meeting starts or, following any adjournment or postponement, before the Dutch Meeting continues. A registered Core Lab N.V. Shareholder may also revoke a proxy in any other manner permitted by law. In addition, participation in person in a vote by ballot at the Dutch Meeting will automatically revoke any proxy previously given by you in respect of business covered by that vote.

Beneficial Shareholder Voting

You are a beneficial Core Lab N.V. Shareholder if your Core Lab N.V. Common Shares are held in a nominee’s name such as a bank, trust company, securities broker or other nominee. Typically, the form of proxy or voting instruction form sent or to be sent by your nominee indicates whether you are a beneficial Core Lab N.V. Shareholder. Generally, without specific instructions, brokers and their agents or nominees are prohibited from voting shares for their client.

How to Vote

If you are eligible to vote and you are a beneficial Core Lab N.V. Shareholder, you can vote your Core Lab N.V. Common Shares in person at the Dutch Meeting or by voting instructions, as explained below. Voting by providing voting instructions is the easiest way to vote your Core Lab N.V. Common Shares.

 

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Voting Instructions

Your nominee is required to seek voting instructions from you in advance of the Dutch Meeting. Accordingly, you will receive, or have already received, a request for voting instructions or a form of proxy for the number of Core Lab N.V. Common Shares held by you.

Each nominee has its own procedures, which you should carefully follow to ensure that your Core Lab N.V. Common Shares are voted at the Dutch Meeting. These procedures generally allow voting in person or by proxy (telephone, fax, mail or Internet). Beneficial Core Lab N.V. Shareholders should contact their nominee for instructions in this regard.

Whether or not you attend the Dutch Meeting, you can appoint someone else to attend and vote as your proxyholder. To do this, please follow the procedures of your nominee carefully. The persons already named in the form of proxy are either directors or officers of Core Lab N.V. Please see “Meeting and Voting Information – Proxy Voting” above. It is important to ensure that any other person you appoint as proxy is either attending the Dutch Meeting in person or returning a proxy reflecting your instructions and is aware that his or her appointment has been made to vote your Core Lab N.V. Common Shares.

Voting in Person

If you wish to vote in person at the Dutch Meeting, insert your own name in the space provided on the request for voting instructions or form of proxy to appoint yourself as proxyholder and follow the instructions of your nominee.

Beneficial Core Lab N.V. Shareholders who instruct their nominee to appoint themselves as proxyholders must, at the Dutch Meeting, present themselves as such to a representative of Core Lab N.V. Do not otherwise complete the form of proxy sent to you as your vote will be taken and counted at the Dutch Meeting.

All attendees will be asked to present a valid government-issued photo identification, such as a driver’s license or passport, together with proof of ownership. Please follow the instructions of your nominee to obtain proof of ownership as of the Voting Record Date. If you do not have valid photo identification and we are unable to verify your ownership of Core Lab N.V. Common Shares as of the Voting Record Date, you will not be admitted into the Dutch Meeting. In order to expedite admission to the Dutch Meeting, you are encouraged to register in advance. Please include the following in your request: your name and complete mailing address; the name(s) of any immediate family member(s) who will accompany you; and proof that you own Core Lab N.V. Common Shares.

Deadline for Voting

If voting by voting instructions, your nominee must receive your voting instructions in sufficient time for your nominee to act on them. Every nominee has its own procedures which you should carefully follow to ensure that your Core Lab N.V. Common Shares are voted at the Dutch Meeting. For your vote to count it must be received by Broadridge, no later than 2:00 p.m. EST on March 28, 2023.

Revoking Voting Instructions

To revoke your voting instructions, follow the procedures provided by your nominee.

 

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THE TRANSACTION PROPOSAL

Background to the Transaction

In early 2021, the Core Lab N.V. Board and the Company’s management team undertook a review of Core Lab N.V.’s existing structure and operations, and particularly the jurisdiction of incorporation of the ultimate Core Lab N.V. parent company. The Company believes this Transaction will enhance shareholder value over the long-term through simplifying the corporate structure to reduce administrative overhead costs and gain operational efficiencies. Achieving a simplified corporate structure, increased business efficiency and other compelling reasons support reorganizing the Core Lab N.V. group of companies at this time.

Reasons for the Transaction

The U.S. Redomestication is the key reason for Core Lab N.V. proposing the Transaction, which also includes the adoption of a new corporate name, being “Core Laboratories Inc.”. In making its recommendation, the Core Lab N.V. Board considered a number of factors, including those listed below:

 

   

Simplified Corporate Structure, Streamlined Reporting Requirements, and Increased Business Efficiencies. We believe that the Transaction will result in a simplified corporate structure, which will improve our operational and financial flexibility. We expect to gain efficiencies through a more streamlined U.S.-based reporting structure by eliminating redundancies in regulatory reporting requirements, including the need to make certain corporate securities filings with the Dutch regulatory authorities in addition to our U.S. Exchange Act filings with the SEC. As a Dutch company listed on a U.S. securities exchange, we are also required to maintain financial accounting records in accordance with both U.S. GAAP and IFRS rules. If the Transaction is completed, we expect to realize substantial savings by focusing efforts on a single U.S. GAAP audit. Eliminating the Company’s Dutch periodic and annual reporting requirements will free up internal resources focused on these efforts and reduce costs associated with the Company’s external advisors and auditors. A simplified corporate structure, based in the United States, will also provide additional opportunities and allow us to gain efficiencies in our corporate treasury, cash management, risk management and tax functions. We believe the Transaction better aligns the domicile of the ultimate parent entity with lenders when accessing United States capital markets for U.S. dollar denominated debt financing. Additionally, the Transaction is anticipated to eliminate unnecessary administrative cash management procedures and reduce transactional costs associated with intercompany cash flows. Finally, disclosure obligations, either in proposed or final form associated with environmental, social and governance matters are rapidly changing and expanding in the United States, the Netherlands and the European Union. If the Transaction is not completed, the Company would expect to incur higher incremental costs and risk associated with assessing, implementing and maintaining compliance with diverging regulatory frameworks in each of these jurisdictions.

 

   

Reduced Corporate Footprint. We currently maintain a corporate profile in the United States where our executive management team and principal legal and accounting functions reside, as well as a headquarters in the Netherlands, where certain other corporate functions have historically resided. The Transaction will allow us to relocate our headquarters to the United States and thereby eliminate redundancies in various administrative functions. Consolidating our headquarters in the United States will also eliminate the costs associated with maintaining our Dutch headquarters and create workflow and process efficiencies, which will better align the general and administrative functions currently residing in the Netherlands with the U.S.-based executive management team and other corporate departments located in the United States.

 

   

Well-Established Principles of Corporate Governance. There is substantial judicial precedent in the Delaware courts as to the legal principles applicable to measures that may be taken by a corporation and to the conduct of a corporation’s board of directors, such as under the business judgment rule and other standards. Because the judicial system is based largely on legal precedents, the abundance of

 

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Delaware case law provides clarity and predictability to many areas of corporate law. Further, U.S. investors and securities professionals are generally more familiar with Delaware corporations, and the laws governing such corporations, increasing their level of comfort with Delaware corporations relative to other jurisdictions. The Delaware courts have developed considerable expertise in dealing with corporate issues, and a substantial body of case law has developed construing Delaware law and establishing public policies with respect to corporate legal affairs. Moreover, Delaware’s vast body of law on the fiduciary duties of directors provides appropriate protection for the Company’s shareholders from possible abuses by directors and officers. Delaware corporate governance principles are also more closely aligned with NYSE listing standards and SEC governance requirements than governance principles under Dutch law, thereby eliminating the requirement to comply with multiple, dissimilar regulatory regimes.

 

   

Positioned to Better Respond to Global Tax Developments. Recent global tax developments, particularly legislative and regulatory activity stemming from the OECD’s Base Erosion and Profit Shifting initiative, have given rise to increased focus on companies’ global tax footprints. The initiative suggests a range of new approaches that national governments might adopt when taxing the activities of multinational enterprises. As a result of the OECD project and other international initiatives, tax laws that currently apply to our business may be amended by the relevant authorities or interpreted differently by them, and these changes may present risks to our Company. By better aligning our corporate structure with our primary corporate and business functions, we believe that we will more fully benefit from the expenses supporting our US operations, which should reduce risks associated with tax authority challenges stemming from these and other potential changes.

In the course of their deliberations, the Core Lab N.V. Board, in consultation with management and after considering information provided to management by our financial, legal, accounting and tax advisors, also considered a variety of risks (as described in greater detail under the heading “Risk Factors”) and other potentially negative factors relating to the Transaction, including the following:

 

   

the Transaction is conditional, and the conditions may not be satisfied;

 

   

Core Lab N.V. may fail to realize the perceived benefits of the Transaction;

 

   

Core Lab N.V.’s business may be impacted by the uncertainty associated with the Transaction;

 

   

the Transaction may result in material Dutch income tax (including material Dutch “emigration tax”) and/or material U.S. federal income tax for Core Lab N.V. or Core Lab Delaware;

 

   

Core Lab N.V. will allocate time and resources to effecting the Transaction and incur non-recurring costs related to the Transaction

 

   

Completion of the Transaction may trigger certain provisions in agreements to which Core Lab N.V. is a party;

 

   

Enforcement of rights against Core Lab Delaware in the Netherlands may be limited;

The foregoing description of the information and factors considered by the Core Lab N.V. Board includes the principal positive and negative factors considered by them, but is not intended to be exhaustive and may not include all of the factors considered, and, in view of the number and complexity of factors considered by the Core Lab N.V. Board, the Core Lab N.V. Board did not find it practicable to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors considered by them in making their recommendations (and individual members of the Core Lab N.V. Board may have given different weights to different factors). The Core Lab N.V. Board reached their recommendation based on the totality of the information presented to, and considered by, them through their deliberations.

The foregoing discussion of the information and factors considered by the Core Lab N.V. Board is forward-looking in nature. This information should be read in light of the factors set forth in the sections entitled Cautionary Statement Regarding Forward-Looking Statements, The Transaction Proposal – Background to the Transaction and Risk Factors”.

 

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Particulars of the Transaction

The purpose of the Transaction is to facilitate a series of transactions which will occur in a specific sequence and as a consequence of which, among other things (i) Core Lab N.V. will merge with and into Core Lab Luxembourg, with Core Lab Luxembourg surviving, and (ii) Core Lab Luxembourg will domesticate in Delaware as Core Lab Delaware. Shares of Common Stock of Core Lab Delaware will be listed on the NYSE. On the NYSE, the stock symbol for the shares of Common Stock of Core Lab Delaware will be “CLB”. See “The Transaction Proposal – Certain Legal and Regulatory Matters – Stock Exchange Listing”.

Transaction Steps

Subject to the satisfaction or waiver of all other conditions precedent, if the Core Lab N.V. Shareholders approve the Transaction Proposal and the Articles of Amendment Proposal, it is anticipated that the Transaction will take place in the steps listed below:

 

  1.

At the Dutch Meeting, Core Lab N.V. Shareholders will vote on the Transaction Proposal and the Articles of Amendment Proposal;

 

  2.

If the Transaction Proposal and the Articles of Amendment Proposal are approved by the Core Lab N.V. Shareholders, Core Lab Luxembourg will convene an Extraordinary General Meeting (the “Luxembourg Merger Meeting”) at which Core Lab N.V., as sole shareholder of Core Lab Luxembourg, will vote to approve the Merger of Core Lab Luxembourg and Core Lab N.V. The Core Lab N.V. Board and the Core Lab Luxembourg Board are not soliciting proxies from shareholders for the Luxembourg Merger Meeting, as, prior to the Merger, Core Lab N.V. will be the sole shareholder of Core Lab Luxembourg;

 

  3.

Core Lab N.V. will merge with and into Core Lab Luxembourg, with Core Lab Luxembourg surviving, in which all Core Lab N.V. Common Shares will be canceled and exchanged for Common Stock of Core Lab Luxembourg on a one-for-one basis;

 

  4.

Core Lab Luxembourg will convene the Luxembourg Meeting and the Core Lab Luxembourg Board, along with any other present or represented shareholders, will vote the Luxembourg Meeting Proxies in favor of the U.S. Redomestication;

 

  5.

Following approval of the U.S. Redomestication at the Luxembourg Meeting, Core Lab Luxembourg will migrate out of Luxembourg and redomesticate in Delaware as Core Lab Delaware;

 

  6.

Following completion of the Transaction, Core Lab N.V. Shareholders will hold one share of Common Stock of Core Lab Delaware for each one Core Lab N.V. Common Shares owned immediately prior to the Transaction; and

 

  7.

Common Stock of Core Lab Delaware shares will be listed on the NYSE under the stock symbol “CLB”.

Conditions to the Completion of the Transaction

In addition to the other conditions discussed in this Proxy Statement/Prospectus, under the Merger Plan, (i) the Merger is conditioned upon the approval of the Articles of Amendment Proposal by the Core Lab N.V. Shareholders at the Dutch Meeting, and (ii) in order for the Merger to become effective, the total number of votes cast against the Transaction Proposal must not exceed two percent of all votes cast at the Dutch Meeting. Either of these conditions can be waived by mutual consent of the Core Lab N.V. Board and the Core Lab Luxembourg Board.

Effect of the Transaction on the Core Lab N.V. Incentive Awards and other Compensation and Benefit Plans

In connection with the Transaction, Core Lab Delaware will assume, or will cause an applicable affiliate to assume, the Core Lab N.V. Incentive Plans, as well as all other compensation or benefit plans, policies and

 

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arrangements previously maintained by Core Lab N.V. Each outstanding Core Lab N.V. Incentive Award will be exchanged for a Core Lab Delaware Incentive Award. The Core Lab Delaware Incentive Awards will be subject to substantially the same terms and conditions as the exchanged Core Lab N.V. Incentive Awards, except, in the case of equity-based Core Lab N.V. Incentive Awards, the security issuable upon exercise or settlement of the Core Lab Delaware Incentive Award, as applicable, will be a share of Common Stock of Core Lab Delaware (or its cash equivalent) rather than a Core Lab N.V. Common Share (or its cash equivalent).

Effect of the Transaction on the Core Lab N.V. Debt

In connection with the Transaction and subject to obtaining the Required Lender Consents, Core Lab Luxembourg, and subsequently by way of the U.S. Redomestication, Core Lab Delaware, will assume, or will cause an applicable affiliate to assume, all of Core Lab N.V.’s obligations under the Core Lab N.V. Debt, as a consequence of which Core Lab Delaware will be the obligor in respect of, and effectively the issuer of, such debt in lieu of Core Lab N.V. following completion of the Transaction and Core Lab N.V. will be discharged from all obligations under the Core Lab N.V. Debt.

Tax Effect of the Transaction on Core Lab Delaware

For Dutch corporate income tax purposes, the Transaction is not expected to give rise to material corporate-level Dutch income tax for Core Lab Delaware. For a detailed description of the potential tax consequences of the Transaction on Core Lab Delaware, see “Material U.S. Federal Income Tax Considerations” and “Material Luxembourg Income Tax Considerations”.

Directors and Officers of Core Lab Delaware following the Transaction

The same persons currently serving as directors and officers of Core Lab N.V. will serve as directors and officers of Core Lab Delaware following the Transaction. See “Information Concerning Core Lab Luxembourg and Core Lab Delaware – Directors and Officers of Core Lab Delaware”.

Letter of Transmittal

If the Transaction is approved and completed, the Exchange Agent will mail to each holder of certificated Core Lab N.V. Common Shares a Letter of Transmittal together with instructions to effect the surrender of Core Lab N.V. Common Shares in exchange for the shares of Common Stock of Core Lab Delaware. The Letter of Transmittal, when duly completed, executed and returned, together with accompanying Core Lab N.V. Common Share certificate(s) and/or such other documents and instruments as the Exchange Agent may reasonably require, in order to receive the shares of Common Stock of Core Lab Luxembourg to which such Core Lab N.V. Shareholder is entitled in the Merger. After completion of the U.S. Redomestication, shares in Core Lab Luxembourg will automatically convert to shares of Common Stock of Core Lab Delaware. It is recommended that Core Lab N.V. Shareholders who hold certificated shares complete, sign and return the Letter of Transmittal and accompanying documents to the Exchange Agent as soon as possible after completion of the Transaction.

Any use of the mail to transmit a certificate for Core Lab N.V. Common Shares and a related Letter of Transmittal is at the risk of the Core Lab N.V. Shareholder. If these documents are mailed, it is recommended that registered mail, properly insured, be used.

Whether or not Core Lab N.V. Shareholders forward the certificate(s) representing their Core Lab N.V. Common Shares, from and after completion of the Transaction, each certificate, agreement, note, document, electronic record, book entry or other instrument (as applicable) that immediately prior to the completion of the Transaction represented Core Lab N.V. Common Shares shall be deemed to represent only the right to receive the consideration in respect of such Core Lab N.V. Common Shares.

 

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Core Lab N.V. Shareholders who hold shares in book-entry will not need to take any action to exchange their shares. In that case, the Exchange Agent will issue and deliver the shares of Core Lab Delaware promptly after the Effective Time.

Lost Certificates

If any certificate which immediately prior to the Effective Time represented one or more outstanding Core Lab N.V. Common Shares has been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed, the Exchange Agent will deliver in exchange for such lost, stolen or destroyed certificate, the consideration to which the holder is entitled pursuant to the Transaction. When authorizing such delivery in exchange for any lost, stolen or destroyed certificate, the Person to whom such consideration is to be delivered, will as a condition precedent to the delivery of such consideration, give a bond satisfactory to Core Lab Delaware and the Exchange Agent (each acting reasonably) in such sum as Core Lab Delaware may direct, or otherwise indemnify Core Lab Delaware and the Exchange Agent in a manner satisfactory to Core Lab Delaware and the Exchange Agent (each acting reasonably) against any claim that may be made against Core Lab Delaware and the Exchange Agent with respect to the certificate alleged to have been lost, stolen or destroyed.

Cancellation of Rights

Until surrendered, each certificate that immediately prior to the Effective Time represented Core Lab N.V. Common Shares or book-entry Core Lab N.V. Common Shares will be deemed after the Effective Time to represent only the right to receive upon such surrender the consideration to which the holder is entitled to receive. Any such certificate, agreement, note, document, electronic record, book entry or other instrument (as applicable) formerly representing Core Lab N.V. Common Shares not duly surrendered prior to the Effective Date will cease to represent a claim by or interest of any kind or nature against Core Lab N.V. or Core Lab Delaware, including without limitation shares of Common Stock of Core Lab Delaware. On such date, any and all consideration to which such former holder was entitled will be deemed to have been cancelled and none of Core Lab N.V., Core Lab Delaware or any other Person will have any obligation to issue such shares of Common Stock of Core Lab Delaware.

Right to Withhold

Core Lab N.V., Core Lab Delaware and the Exchange Agent shall be entitled to deduct and withhold from any consideration payable to any Core Lab N.V. Shareholder under the Transaction, such amounts as Core Lab N.V., Core Lab Delaware or the Exchange Agent determines, acting reasonably, are required or reasonably believed to be required to be deducted and withheld from such consideration under any provision of any Laws in respect of taxes. Any such amounts shall be treated for all purposes as having been paid to the Person in respect of which such deduction, withholding and remittance was made; provided that such deducted and withheld amounts are actually remitted to the appropriate Governmental Entity.

Exchange Agent

Core Lab N.V. has retained the services of the Exchange Agent for the receipt of the Letter of Transmittal and the certificates representing Core Lab N.V. Common Shares, the surrender of book-entry Core Lab N.V. Common Shares and for the delivery of the shares of Common Stock of Core Lab Delaware in exchange for the Core Lab N.V. Common Shares under the Transaction. The Exchange Agent will receive reasonable and customary compensation for its services in connection with the Transaction, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities, including liabilities under securities laws and expenses in connection therewith.

 

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Dividends or Other Distributions

All dividends or other distributions made with respect to any shares of Common Stock of Core Lab Delaware allotted and issued pursuant to this Transaction but for which a certificate or book entry shares of Common Stock of Core Lab Delaware has not been issued shall be paid or delivered to the Exchange Agent to be held by the Exchange Agent in trust for the registered holder thereof. All monies received by the Exchange Agent shall be invested by it in interest-bearing trust accounts upon such terms as the Exchange Agent may reasonably deem appropriate. The Exchange Agent shall pay and deliver to any such registered holder, as soon as reasonably practicable after application therefor is made by the registered holder to the Exchange Agent in such form as the Exchange Agent may reasonably require, such dividends or other distributions and any interest thereon to which such holder is entitled, net of applicable withholding and other taxes. Any money held by the Exchange Agent in respect of such dividends or distributions that is unclaimed on or before the Effective Date shall be returned by the Exchange Agent to Core Lab Delaware and any right or claim to payment hereunder that remains outstanding on the Effective Date shall cease to represent a right or claim by or interest of any kind or nature, and the right of a former holder of shares of Common Stock of Core Lab Delaware to receive such dividends or other distributions, or any interest thereon, shall terminate and be deemed to be surrendered and forfeited for no consideration.

Expenses of the Transaction

Core Lab N.V. estimates that expenses in the aggregate amount of approximately $3,500,000 will be incurred by Core Lab N.V. in connection with the Transaction, including legal, tax, accounting and financial advisors, Exchange Agent, proxy solicitors, filing and printing costs and the cost of preparing and mailing this Proxy Statement/Prospectus.

For the provision of the proxy solicitation services described above and elsewhere in this Proxy Statement/Prospectus, Okapi Partners LLC will receive an estimated fee of approximately $15,000, plus reimbursement of reasonable out-of-pocket expenses and fees for any additional services. Core Lab N.V. will also reimburse brokers, banks and other nominees for their expenses in sending proxy solicitation materials to the beneficial owners of Core Lab N.V. Common Shares and obtaining their proxies.

Required Shareholder Approval

Approval of the Transaction Proposal requires the affirmative vote of holders representing two-thirds of the outstanding Core Lab N.V. Common Shares as of the Voting Record Date. The Transaction Proposal has been proposed to Core Lab N.V. Shareholders by the Core Lab N.V. Board.

Certain Legal and Regulatory Matters

Stock Exchange Listing

The shares of Common Stock of Core Lab Delaware will be listed on the NYSE. On the NYSE, the stock symbol for the shares of Common Stock of Core Lab Delaware will be “CLB”. The Core Lab N.V. Common Shares currently trade on the NYSE under the stock symbol “CLB”. When the Transaction is completed, the Core Lab N.V. Common Shares currently listed on the NYSE under the stock symbol “CLB” will cease to be traded on the NYSE and will be deregistered under the U.S. Exchange Act.

Ongoing Reporting Obligations

Following completion of the Transaction, Core Lab Delaware will be subject to the reporting requirements of the SEC as the successor issuer to Core Lab N.V.

 

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Consistent with how Core Lab N.V. currently reports, Core Lab Delaware will report consolidated financial results in U.S. dollars and in accordance with U.S. GAAP and will file reports on Form 10-K, 10-Q and 8-K with the SEC and comply with the proxy rules under the U.S. Exchange Act.

Shareholder Withdrawal Rights

Section 2:333h of the Dutch Civil Code entitles shareholders in a Dutch target company the option to exercise a statutory withdrawal right if they vote against a cross-border merger and submit, within one month after the Dutch Meeting (the “Withdrawal Period”), a withdrawal application form which requests to receive cash compensation instead if the Transaction is completed (the “Withdrawal Application Form”). The withdrawal application form will be made available on Core Lab N.V.’s website, www.corelab.com.

After submission of the withdrawal application form, shareholders should no longer sell or otherwise dispose the shares for which compensation is claimed (“Exit Shares”). Upon the completion of the Merger, the Exit Shares shall automatically cancel by operation of law.

Within 60 Business Days following the end of the Withdrawal Period, shareholders who have exercised their withdrawal rights by submitting a withdrawal application form will be paid such cash compensation in accordance with Section 2:333h and Section 2:333i (4) of the Dutch Civil Code, net of applicable withholding tax, if any, that is required to be withheld by law. To fund the cash compensation due to withdrawing shareholders, following the expiration of the Withdrawal Period, Core Lab Delaware will offer for cash a number of newly issued shares equal to the number of shares held by withdrawing shareholders. The proceeds, net of transaction costs, from the sale of such shares will be paid to the withdrawing shareholders pro rata. The procedures for the withdrawal rights and the related offering of shares are further described in the Merger Plan, which is attached hereto as Appendix A – Merger Plan and incorporated by reference herein.

In the event of implementation in the Netherlands of Directive (EU) 2019/2121 of the European Parliament and of the Council of 27 November 2019 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions, whereupon a maximum time period within which to pay cash compensation to the withdrawing shareholders who have exercised their withdrawal rights is established and it is determined that such provision shall apply to the Merger, Core Lab Luxembourg will complete the abovementioned procedure and pay the cash compensation to withdrawing shareholders within the period as prescribed by such legislation.

Effect of the Transaction Proposal

The Core Lab N.V. Shareholders who vote in favor of the Transaction Proposal will, if approved by the Required Shareholder Approval, grant a power of attorney to the Luxembourg Board (in the form attached as Appendix D to this Proxy Statement/Prospectus) to vote in favor of the U.S. Redomestication at the Luxembourg Meeting, which would result in Core Lab Luxembourg migrating out of Luxembourg and redomesticating as a Delaware corporation. Those shareholders who do not vote in favor of the Transaction Proposal will have the right to attend the Luxembourg Meeting. Please see “Notice of Extraordinary Meeting of Shareholders of Core Laboratories Luxembourg S.A.” for more information regarding the Luxembourg Meeting.

Recommendation of the Core Lab N.V. Board

After careful consideration of, among other things, the advice of management and after considering information provided to management by our financial, tax, accounting and legal advisors, and such other matters as it considered relevant, the Core Lab N.V. Board unanimously determined that the Transaction is in the best interests of Core Lab N.V. and its stakeholders, will enhance shareholder value over the long-term, and is fair and reasonable. Accordingly, the Core Lab N.V. Board unanimously recommends that Core Lab N.V. Shareholders vote FOR the Transaction Proposal.

 

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THE ARTICLES OF AMENDMENT PROPOSAL

In connection with the Transaction, Core Lab N.V. Shareholders are being asked to adopt the Articles of Amendment Proposal to amend the Core Lab N.V. Articles of Association (in the form attached as Appendix E to this Proxy Statement/Prospectus) and to adopt a special resolution to grant a Power of Attorney to each notarial employee of HVG Law LLP jointly as well as severally to execute and sign the Deed of Amendment of the Articles. The information set out above in respect of the Transaction Proposal applies equally to the Articles of Amendment Proposal.

Required Shareholder Approval

Approval of the Articles of Amendment Proposal requires the affirmative vote of holders representing a simple majority of votes cast at the Dutch Meeting. The Articles of Amendment Proposal has been proposed by the Core Lab N.V. Management Board and approved by the Core Lab N.V. Board, and is now being proposed to the Core Lab N.V. Shareholders.

Effect of the Articles of Amendment Proposal

If adopted, the Core Lab N.V. Articles of Association will be amended to include a formula on the basis of which cash compensation to Core Lab N.V. Shareholders who exercise their withdrawal right in connection with the Merger, as referred to in Section 2:333h (1) of the Dutch Civil Code, can be readily determined (in the form attached as Appendix E to this Proxy Statement/Prospectus).

Recommendation of the Core Lab N.V. Board

The Core Lab N.V. Board unanimously recommends that Core Lab N.V. Shareholders vote FOR the Articles of Amendment Proposal.

 

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INFORMATION CONCERNING CORE LAB LUXEMBOURG AND CORE LAB DELAWARE

General and Corporate Structure

Prior to the completion of the Transaction, Core Lab Luxembourg will be a public limited liability company incorporated under the laws of Luxembourg. The registered and principal office of Core Lab Luxembourg prior to completion of the Transaction will be located at 12E rue Guillaume Kroll, L-1882 Luxembourg, Grand Duchy of Luxembourg. Upon its continuance and domestication to Delaware pursuant to the Transaction, the registered and principal office of Core Lab Delaware will be Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.

Intercorporate Relationships

Assuming the Transaction Proposal and the Articles of Amendment Proposal are adopted at the Dutch Meeting, following the Effective Time and completion of the Transaction, including the Merger of Core Lab N.V. with and into Core Lab Luxembourg and the subsequent domestication of Core Lab Luxembourg to Delaware as Core Lab Delaware, the shareholders of Core Lab Delaware will be the same persons who were Core Lab N.V. Shareholders immediately prior to the Transaction and Core Lab Delaware will become the direct or indirect owner of all of the assets and liabilities of Core Lab N.V. As a result, there will be no effective change of control of Core Lab N.V. as a result of the Transaction, as ultimate control will remain with the public shareholders. The charts below depict the general structure of Core Lab N.V. and its subsidiaries immediately prior to the Transaction and the structure of Core Lab Delaware and its subsidiaries after the Transaction.

 

LOGO

Business

Prior to completion of the Transaction, Core Lab Luxembourg has not carried on any active business since its incorporation, other than to hold certain shares, intellectual property assets, and inter-company debt issued by other wholly-owned subsidiaries of Core Lab N.V. Following completion of the Transaction, Core Lab Delaware and its subsidiaries will carry on the business currently carried on by Core Lab N.V. and its subsidiaries.

Common Stock

For a description of the shares of Common Stock of Core Lab Delaware see “Description of Core Lab Delaware Capital Stock”.

Directors and Officers of Core Lab Delaware

The persons who will serve as directors and officers of Core Lab Delaware after giving effect to the Transaction are the same persons currently serving as directors and officers of Core Lab N.V. However, unlike the two-tier Supervisory Board and Management Board that currently exist at Core Lab N.V., Core Lab Delaware will have one board of directors. For information regarding the persons who will become the directors of Core Lab Delaware after giving effect to the Transaction, please refer to the information contained in Core Lab N.V.’s

 

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Notice of Annual Meeting of Shareholders and 2022 Proxy Statement/Prospectus filed on EDGAR on March 22, 2022, available under its profile on the SEC’s website at www.sec.gov or its website at www.corelab.com. For information regarding the persons who will become the officers of Core Lab Delaware after giving effect to the Transaction, please refer to the information contained in Core Lab N.V.’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on EDGAR on February 10, 2023, available under its profile on the SEC’s website at www.sec.gov or its website at www.corelab.com.

Director and Executive Compensation

The director and executive compensation programs currently offered by Core Lab N.V. are described in Core Lab N.V.’s Notice of Annual Meeting of Shareholders and 2022 Proxy Statement/Prospectus filed on EDGAR on March 22, 2022, available under its profile on the SEC’s website at www.sec.gov or its website at www.corelab.com.

Beneficial Ownership of Securities of Core Lab Luxembourg

Immediately prior to the Transaction, Core Lab N.V. will be the sole holder of shares of Common Stock of Core Lab Luxembourg. To the knowledge of the Core Lab Luxembourg board of directors, no person will beneficially own, directly or indirectly, or exercise control or discretion over 10% or more of any class of outstanding voting securities of Core Lab Luxembourg immediately prior to the Transaction, other than Core Lab N.V.

Auditor, Registrar and Transfer Agent

The auditor of Core Lab Delaware following completion of the Transaction will be KPMG LLP. The transfer agent and registrar for shares of Common Stock of Core Lab Delaware following completion of the Transaction will be Computershare Trust Company, N.A. The transfer agent and registrar’s address is 250 Royall Street, Canton, MA 02021.

Corporate Governance of Core Lab Delaware

The corporate governance practices of Core Lab Delaware, after giving effect to the Transaction, will generally be the same as the corporate governance practices of Core Lab N.V. For information regarding the corporate governance practices of Core Lab N.V., please refer to the information regarding the corporate governance practices of Core Lab N.V. contained in Core Lab N.V.’s Notice of Annual Meeting of Shareholders and 2022 Proxy Statement/Prospectus filed on EDGAR on March 22, 2022, available under its profile on the SEC’s website at www.sec.gov or its website at www.corelab.com. There are differences between Core Lab N.V.’s existing Articles of Association and the Core Lab Delaware Certificate of Incorporation and Core Lab Delaware Bylaws as they will be in effect upon the completion of the Transaction. These differences are discussed under “Comparison of Rights of Core Lab N.V. Shareholders and Core Lab Delaware Stockholders”.

Audit Committee of Core Lab Delaware

Immediately after giving effect to the Transaction, the Audit Committee of Core Lab Delaware will be comprised of the same persons currently serving on the Audit Committee of Core Lab N.V. For information regarding the Audit Committee of Core Lab Delaware after giving effect to the Transaction, please refer to the information regarding the Audit Committee of Core Lab N.V. contained in Core Lab N.V.’s Notice of Annual Meeting of Shareholders and 2022 Proxy Statement filed on EDGAR on March 22, 2022, available under its profile on the SEC’s website at www.sec.gov or its website at www.corelab.com.

 

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INFORMATION CONCERNING CORE LAB

General

Corporate Overview

Core Lab N.V. is a public company trading on the NYSE under the stock symbol “CLB”. The registered and principal office of Core Lab N.V. is located at Van Heuven Goedhartlaan, 7 B 1181 LE, Amstelveen, The Netherlands. Core Lab N.V. is a Netherlands limited liability company and was established in 1936.

Additional information about Core Lab N.V. can be found under its profile on the SEC’s website at www.sec.gov or its website at www.corelab.com. The information contained in, or that can be accessed through, Core Lab N.V.’s website is not intended to be incorporated into this Proxy Statement/Prospectus. For information about Core Lab N.V.’s filings incorporated by reference in this Proxy Statement/Prospectus, see the section entitled “Where You Can Find More Information”.

Business of Core Lab N.V.

Core Lab N.V. is one of the world’s leading providers of proprietary and patented reservoir description and production enhancement services and products to the oil and gas industry. Core Lab N.V. has over 70 offices in more than 50 countries and has approximately 3,700 employees.

Auditor, Registrar and Transfer Agent

The auditor of Core Lab Delaware following completion of the Transaction is KPMG LLP. The transfer agent and registrar for shares of Common Stock is Computershare Trust Company, N.A. The transfer agent and registrar’s address is 250 Royall Street, Canton, MA 02021.

Dividends

In 2008, the Core Lab N.V. Board announced the initiation of a cash dividend program, payable quarterly. In 2020, the Core Lab N.V. Board approved a plan to reduce the Company’s quarterly dividends to $0.01 per share beginning with the second quarter of 2020 and to focus excess free cash flows towards the reduction of debt. Each quarter, the Core Lab N.V. Board reviews Core Lab N.V.’s dividend in light of Core Lab N.V.’s other financial commitments before declaring the dividend. The declaration and payment of future dividends is at the discretion of the Supervisory Board of Directors and depends upon, among other things, future earnings, general financial condition, liquidity, capital requirements, and general business conditions.

The following table sets forth the details on the dividends declared in 2021 and 2022 and the total dividends per share declared on the Core Lab N.V. Common Shares in each of the last three most recently completed fiscal years:

 

Payment Dates

   Amount  

February 16, 2021

   $ 0.01  

May 18, 2021

   $ 0.01  

August 24, 2021

   $ 0.01  

November 29, 2021

   $ 0.01  

March 7, 2022

   $ 0.01  

May 31, 2022

   $ 0.01  

August 29, 2022

   $ 0.01  

November 28, 2022

   $ 0.01  

 

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Annualized Dividends

   Amount  

2022

   $ 0.04  

2021

   $ 0.04  

2020

   $ 0.28  

Prior Sales

Except as detailed below, within the last 12 months from the date of this Proxy Statement/Prospectus, no Core Lab N.V. Common Shares have been issued.

Previous Purchases of Securities

During the nine months ended September 30, 2022, Core Lab N.V. repurchased 92,057 of its common shares for $2.3 million, including rights to 19,776 shares valued at $0.5 million surrendered to Core Lab N.V. pursuant to the terms of a stock-based compensation plan in consideration of the participants’ tax burdens resulting from the issuance of common shares under that plan.

Market Price and Trading Volume of Core Lab N.V. Common Shares

Core Lab N.V. Common Shares are listed on the NYSE under the stock symbol “CLB”.

The following table sets out the market price ranges and trading volumes on the NYSE on a monthly basis for a period from December 2021 to January 2023:

 

Month

   High Price (US$)      Low Price (US$)      Closing Price
(US$)
     Volume  

December 2021

     25.82        21.08        22.31        8,881,759  

January 2022

     28.57        22.37        26.67        6,871,943  

February 2022

     28.64        24.45        27.56        9,699,085  

March 2022

     35.83        26.49        31.63        16,265,082  

April 2022

     34.08        24.76        26.00        10,774,301  

May 2022

     29.20        21.81        28.18        9,321,953  

June 2022

     31.42        18.41        19.81        9,563,614  

July 2022

     20.27        15.21        18.94        9,289,181  

August 2022

     19.02        15.65        16.15        8,477,777  

September 2022

     18.62        13.19        13.48        10,069,721  

October 2022

     21.50        14.19        19.46        9,868,761  

November 2022

     23.59        18.84        21.68        7,640,122  

December 2022

     22.37        17.77        20.27        7,536,103  

January 2023

     25.94        18.73        25.60        6,756,874  

February 2023 (through February 17)

     26.80        22.99        23.03        4,088,180  

Interest of Informed Persons in Material Transactions

Other than as set forth in this Proxy Statement/Prospectus, Core Lab N.V. is not aware of any material interests, direct or indirect, by way of beneficial ownership of securities or otherwise, of any director or executive officer, nominee for election as a director or any Core Lab N.V. Shareholder holding more than 10% of the voting rights attached to the Core Lab N.V. Common Shares or an associate or affiliate of any of the foregoing in any transaction since January 1, 2021, or in any proposed or ongoing transaction of Core Lab N.V. which has or would materially affect Core Lab N.V. or any of its Subsidiaries.

 

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Legal Proceedings

Core Lab N.V. is a party to various legal proceedings and claims that arise in the ordinary course of business as either a plaintiff or defendant. Core Lab N.V. analyzes all legal proceedings and the allegations therein. The outcome of any of these proceedings, either individually or in the aggregate, is not expected to have a material adverse effect on Core Lab N.V.’s financial position, results of operations or liquidity.

 

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MATERIAL DUTCH TAX CONSIDERATIONS

Scope of Discussion

This section only outlines material Dutch tax consequences for Core Lab N.V. Shareholders with respect to (i) the exchange of shares pursuant to the Merger and (ii) the ownership of Common Stock of Core Lab Delaware that are issued after the completion of the Transaction. This section does not purport to describe all possible tax considerations or consequences that may be relevant to Core Lab N.V. Shareholders and does not purport to deal with the tax consequences applicable to all categories of investors, some of which (such as trusts or similar arrangements) may be subject to special rules. In view of its general nature, this section should be treated with corresponding caution.

This section is based on the tax laws of the Netherlands, published regulations thereunder and published authoritative case law, all as in effect on the date hereof, and all of which are subject to change, possibly with retroactive effect. Where this section refers to “the Netherlands” or “Dutch” it refers only to the part of the Kingdom of the Netherlands located in Europe.

This section is intended as general information only and is not Dutch tax advice or a complete description of all Dutch tax consequences relating to the Transaction (and it does not purport to address the tax consequences of all steps in the Transaction effectuated before, after or at the same time as the Merger, whether or not in connection with the Merger). Core Lab N.V. Shareholders and Core Lab Delaware Stockholders should consult their own tax advisor regarding the Dutch tax consequences relating to the Transaction, including the exchange of shares pursuant to the Merger and the acquisition, holding and disposal of Common Stock of Core Lab Delaware, in light of their particular circumstances.

Please note that this section does not describe the Dutch tax consequences for:

 

  (i)

a holder of Core Lab N.V. Common Shares if such holder has a substantial interest (aanmerkelijk belang) or deemed substantial interest (fictief aanmerkelijk belang) in Core Lab N.V. under the Dutch Income Tax Act 2001 (Wet inkomstenbelasting 2001). Generally, a holder is considered to hold a substantial interest in Core Lab N.V., if such holder alone or, in the case of an individual, together with such holder’s partner for Dutch income tax purposes, or any relatives by blood or marriage in the direct line (including foster children), directly or indirectly, holds (i) an interest of 5% or more of the total issued and outstanding capital of Core Lab or of 5% or more of the issued and outstanding capital of a certain class of shares; or (ii) rights to acquire, directly or indirectly, such interest; or (iii) certain profit sharing rights that relate to 5% or more of Core Lab N.V.’s annual profits or to 5% or more of Core Lab N.V.’s liquidation proceeds. A deemed substantial interest may arise if a substantial interest (or part thereof) in has been disposed of, or is deemed to have been disposed of, on a non-recognition basis;

 

  (ii)

a holder of Core Lab N.V. Common Shares if the Core Lab N.V. Common Shares held by such holder qualify or qualified as a participation (deelneming) for purposes of the Dutch Corporate Income Tax Act 1969 (Wet op de vennootschapsbelasting 1969). Generally, a shareholding of, or right to acquire, 5% or more in Core Lab N.V.’s nominal paid-up share capital qualifies as a participation. A holder of Core Lab N.V. Common Shares may also have a participation if (a) such holder does not have a shareholding of 5% or more but a related entity (statutorily defined term) has a participation or (b) Core Lab is a related entity (statutorily defined term);

 

  (iii)

a holder of Core Lab N.V. Common Shares which is or who is entitled to the dividend withholding tax exemption (inhoudingsvrijstelling) with respect to any profits derived from the Core Lab N.V. Common Shares (as defined in Article 4 of the Dutch Dividend Withholding Tax Act 1965 (Wet op de dividendbelasting)). Generally, a holder of Core Lab N.V. Common Shares may be entitled or required to apply, subject to certain other requirements, the dividend withholding tax exemption if it is an entity and holds an interest of 5% or more in Core Lab N.V.’s nominal paid-up share capital;

 

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  (iv)

pension funds, investment institutions (fiscale beleggingsinstellingen) and tax exempt investment institutions (vrijgestelde beleggingsinstellingen) (each as defined in the Dutch Corporate Income Tax Act 1969) and other entities that are, in whole or in part, not subject to or exempt from Dutch corporate income tax, entities that have a function comparable to an investment institution or a tax exempt investment institution, as well as entities that are exempt from corporate income tax in their country of residence, such country of residence being another state of the European Union, Norway, Liechtenstein, Iceland or any other state with which the Netherlands has agreed to exchange information in line with international standards; and

 

  (v)

a holder of Core Lab N.V. Common Shares if such holder is an individual for whom the Core Lab N.V. Common Shares or any benefit derived from the Core Lab N.V. Common Shares is a remuneration or deemed to be a remuneration for (employment) activities performed by such holder or certain individuals related to such holder (as defined in the Dutch Income Tax Act 2001).

Material Dutch Tax Consequences of the Merger

Material Corporate-Level Tax Consequences of the Merger for Core Lab N.V.

For Dutch income tax purposes, the relevant step of the Transaction is the Merger, where Core Lab N.V. is legally merged into Core Lab Luxembourg, with the latter surviving. The Merger constitutes in principle a taxable transaction for Dutch corporate income tax purposes pursuant to which all assets and liabilities are deemed for Dutch tax purposes to be transferred at fair market value and any gain deemed realized as a result of the transfer is generally subject to corporate income tax. However, if a rollover facility applies, the transferring company is not required to report the deemed merger-gain.

Core Lab N.V. and Core Lab Luxembourg have filed a request with the Dutch tax authorities to apply the afore-mentioned rollover facility and have subsequently obtained a positive confirmation from the Dutch tax authorities as to the application of the rollover facility, subject to certain conditions. From the above-mentioned request and confirmation, provided the conditions are met, no taxable gain should be recognized upon the Merger and, as such, there should be no material corporate-level Dutch income tax due in conjunction with the Merger.

Dividend Withholding Tax

Based on current Dutch tax law, the Merger should in principle not qualify as a taxable event for purposes of the Dutch Dividend Withholding Tax Act 1965 (Wet op de dividendbelasting 1965) and should therefore not be subject to Dutch dividend withholding tax (dividendbelasting), unless a holder of Core Lab N.V. Common Shares exercises its withdrawal right and receives cash compensation. On payments of cash compensation, Dutch dividend withholding tax at a rate of 15% will generally be withheld if and to the extent that such payments exceed the average capital recognized as paid-up on the relevant Core Lab N.V. Common Shares for Dutch dividend withholding tax purposes.

It should be noted that tax regulations with respect to the Merger and their application by the relevant taxation authorities may change from time to time, with or without retroactive effect. Accordingly, it may not be possible to predict the precise tax treatment of the Merger for Dutch tax purposes at any given time. A formal tax ruling was obtained with respect to the Dutch corporate income tax aspects of the Merger but the Dutch dividend withholding tax position was not explicitly addressed. It was confirmed in the context of the ruling that Merger did not have, as its predominant objective, tax evasion or tax avoidance (which is a confirmation based largely on facts and on all the circumstances described in the tax ruling, rather than a question of law, which facts and circumstances may change). Therefore, we believe it is highly unlikely Dutch tax authorities would be able to successfully argue that the Merger should for tax purposes be ignored and actually treated as a liquidation of Core Lab N.V. (which liquidation proceeds would in principle be subject to 15% Dutch dividend withholding tax). To date, there is no Dutch case law supporting this unlikely outcome but changes to applicable laws or interpretations thereof and changes to applicable facts and circumstances (as described in the tax ruling), may result in a different conclusion.

 

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If the Dutch tax authorities were to argue successfully that the Merger is deemed as a liquidation of Core Lab N.V. for Dutch tax purposes, Dutch dividend withholding tax would be triggered with respect to Core Lab N.V. Shareholders who cannot benefit from an exemption. This could result in a tax cost of 17.65% of the fair market value of the Core Lab N.V. business less the liabilities, to the extent such value exceeds the average capital recognized as paid-up on the Core Lab N.V. Common Shares for Dutch dividend withholding tax purposes.

Furthermore, a legislative proposal (the Emergency Act on Conditional Final Dividend Withholding Tax Levy (Spoedwet conditionele eindafrekening dividendbelasting)); hereafter referred to as the “Proposal” has been submitted to the Dutch parliament providing inter alia for the imposition of Dutch dividend withholding tax (dividendbelasting) in connection with certain cross-border mergers. It is not certain if and when the Proposal will be enacted, whether in its current form or with further amendments. If the Proposal enacted in the form in which it is presently pending before the Dutch parliament, Dutch dividend withholding tax (dividendbelasting) would not become due in respect of the Merger.

Taxes on Income and Capital Gains – Dutch Resident Core Lab N.V. Shareholder

A holder of Core Lab N.V. Common Shares who is resident or deemed to be resident in the Netherlands for purposes of Dutch taxation (a “Dutch Resident”), may be subject to Dutch income tax or Dutch corporate income tax (as applicable) in connection with the exchange of shares pursuant to the Merger, depending on the tax regime applicable to such holder. A rollover relief (doorschuiving) may possibly apply as a result of which no gain will be recognized for Dutch tax purposes.

For details, see below the section on taxation of Dutch Resident Entities and Dutch Resident Individuals (both as defined below) under Taxes on income and capital gains on Material Dutch Tax Consequences on the ownership of Common Stock of Core Lab Delaware received in the Transaction.

Taxes on Income and Capital Gains – Non-Dutch Resident Core Lab N.V. Shareholder

A holder of Core Lab N.V. Common Shares that is not a Dutch Resident will not be subject to Dutch income tax in connection with the exchange of shares pursuant to the Merger, provided that:

 

  (i)

such holder does not have an interest in an enterprise or deemed enterprise (as defined in the Dutch Income Tax Act 2001 and the Dutch Corporate Income Tax Act 1969, as applicable) which, in whole or in part, is either effectively managed in the Netherlands or carried on through a permanent establishment, a deemed permanent establishment or a permanent representative in the Netherlands and to which enterprise or part of an enterprise the Core Lab N.V. Common Shares are attributable; and

 

  (ii)

in the event the holder is an individual, such holder does not carry out any activities in the Netherlands with respect to the Core Lab N.V. Common Shares that go beyond ordinary asset management and does not otherwise derive benefits from the Core Lab N.V. Common Shares that are taxable as benefits from miscellaneous activities in the Netherlands.

Other Taxes and Duties

No Dutch value added tax (VAT) or Dutch documentation taxes (commonly referred to as stamp duties) will be payable by a holder of Core Lab N.V. Common Shares in respect of or in connection with the Merger.

Material Dutch Tax Consequences on the ownership of Common Stock of Core Lab Delaware received in the Transaction

Taxes on Income and Capital Gains – Dutch Resident Entities

Generally, if the holder of Common Stock of Core Lab Delaware is a Corporate legal entity that is resident or deemed to be resident of the Netherlands for Dutch corporate income tax purposes (“Dutch Resident Entities”),

 

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any income derived or deemed to be derived from the Common Stock of Core Lab Delaware or any capital gains realized on the disposal or deemed disposal of the Common Stock of Core Lab Delaware is subject to Dutch corporate income tax at a rate of 19% with respect to taxable profits up to €200,000 and 25.8% with respect to taxable profits in excess of that amount (rates and brackets for 2023).

Taxes on Income and Capital Gains – Dutch Resident Individuals

If the holder of Common Stock of Core Lab Delaware is an individual who is resident or deemed to be resident of the Netherlands for Dutch personal income tax purposes (“Dutch Resident Individual”), any income derived or deemed to be derived from the Common Stock of Core Lab Delaware or any capital gains realized on the disposal or deemed disposal of the Common Stock of Core Lab Delaware is subject to Dutch personal income tax at the progressive rates (with a maximum of 49.5% in 2023), if:

 

  (i)

the Common Stock of Core Lab Delaware are attributable to an enterprise from which the holder of Common Stock of Core Lab Delaware derives a share of the profit, whether as an entrepreneur (ondernemer) or as a person who has a co-entitlement to the net worth (medegerechtigd tot het vermogen) of such enterprise without being a shareholder (as defined in the Dutch Income Tax Act 2001); or

 

  (ii)

the holder of Common Stock of Core Lab Delaware is considered to perform activities with respect to the Common Stock of Core Lab Delaware that go beyond ordinary asset management (normaal, actief vermogensbeheer) or otherwise derives benefits from the Common Stock of Core Lab Delaware that are taxable as benefits from miscellaneous activities (resultaat uit overige werkzaamheden).

Taxation of Savings and Investments

If the above-mentioned conditions (i) and (ii) do not apply to the Dutch Resident Individual, Common Stock of Core Lab Delaware will be subject to an annual Dutch income tax under the regime for savings and investments (inkomen uit sparen en beleggen). Taxation only occurs insofar the Dutch Resident Individual’s net investment assets for the year exceed a statutory threshold (heffingvrij vermogen). The net investment assets for the year are the fair market value of the investment assets less the fair market value of the liabilities on January 1 of the relevant calendar year (reference date; peildatum). The Common Stock of Core Lab Delaware are included as investment assets. The taxable benefit for the year (voordeel uit sparen en beleggen) is taxed at a flat rate of 32% (rate for 2023). Actual income or capital gains realized in respect of the Common Stock of Core Lab Delaware are as such not subject to Dutch income tax.

The taxable benefit for the year is calculated as follows:

 

  (i)

The Dutch Resident Individual’s assets and liabilities taxed under this regime, including the Common Stock of Core Lab Delaware, are allocated over the following three categories: (a) bank savings, (b) other investments, including the Common Stock of Core Lab Delaware, and (c) liabilities.

 

  (ii)

The return (rendement) in respect of these assets and liabilities is calculated as follows (the return is at a minimum nihil):

a) a deemed return on the fair market value of the actual amount of bank savings and cash on January 1 of the relevant calendar year; plus

b) a deemed return on the fair market value of the actual amount of other investments, including the Common Stock of Core Lab Delaware, on January 1 of the relevant calendar year; minus

c) a deemed return on the sum of the fair market value of the actual amount of liabilities on January 1 of the relevant calendar year less the statutory threshold for liabilities (drempel).

 

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  (iii)

The return percentage (%) (rendementspercentage) is calculated as follows:

a) by dividing the return calculated under (ii) above by the net investment assets for the year of the Dutch Resident Individual; multiplied by

b) 100.

 

  (iv)

The taxable base (grondslag sparen en beleggen) is calculated as follows:

a) the net investment assets for the year of the Dutch Resident Individual; minus

b) the applicable statutory threshold.

 

  (v)

The taxable benefit for the year is equal to the taxable base calculated under (iv) above multiplied by the return percentage calculated under (iii) above.

At the date hereof, the deemed returns for the different investment categories mentioned under (ii) above have been temporarily set at: (a) 0.01%, (b) 5.69% and (c) 2.46%. The definitive percentages for the year 2023 will be published in the first months of 2024 and will have retroactive effect to January 1, 2023. Transactions in the three-month period before and after January 1 of the relevant calendar year implemented to arbitrate between the deemed return percentages applicable to bank savings, other investments and liabilities will for this purpose be ignored if the holder of Common Stock of Core Lab Delaware cannot sufficiently demonstrate that such transactions are implemented for a reason other than tax reasons.

Non-residents of the Netherlands

A holder of Common Stock of Core Lab Delaware that is neither a Dutch Resident Entity nor a Dutch Resident Individual will not be subject to Dutch income tax in respect of income derived or deemed to be derived from the Common Stock of Core Lab Delaware or in respect of capital gains realized on the disposal or deemed disposal of the Common Stock of Core Lab Delaware, provided that:

 

  (i)

such holder does not have an interest in an enterprise or deemed enterprise (as defined in the Dutch Income Tax Act 2001 and the Dutch Corporate Income Tax Act 1969, as applicable) which, in whole or in part, is either effectively managed in the Netherlands or carried on through a permanent establishment, a deemed permanent establishment or a permanent representative in the Netherlands and to which enterprise or part of an enterprise the Common Stock of Core Lab Delaware are attributable; and

 

  (ii)

in the event the holder is an individual, such holder does not carry out any activities in the Netherlands with respect to the Common Stock of Core Lab Delaware that go beyond ordinary asset management and does not otherwise derive benefits from the Common Stock of Core Lab Delaware that are taxable as benefits from miscellaneous activities in the Netherlands.

Gift and Inheritance Taxes – Residents of the Netherlands

Gift or inheritance taxes will arise in the Netherlands with respect to a transfer of Common Stock of Core Lab Delaware by way of a gift by, or on the death of, a holder of Common Stock of Core Lab Delaware who is resident or deemed resident of the Netherlands at the time of the gift or such holder’s death.

Gift and Inheritance Taxes – Non-Residents of the Netherlands

No gift or inheritance taxes will arise in the Netherlands with respect to a transfer of Common Stock of Core Lab Delaware by way of a gift by, or on the death of, a holder of Common Stock of Core Lab Delaware who is neither resident nor deemed to be resident of the Netherlands, unless:

 

  (i)

in the case of a gift of a Common Stock of Core Lab Delaware by an individual who at the date of the gift was neither resident nor deemed to be resident of the Netherlands, such individual dies within 180 days after the date of the gift, while being resident or deemed to be resident of the Netherlands; or

 

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  (ii)

in the case of a gift of a Common Stock of Core Lab Delaware is made under a condition precedent, the holder of Common Stock of Core Lab Delaware is resident or is deemed to be resident of the Netherlands at the time the condition is fulfilled; or

 

  (iii)

the transfer is otherwise construed as a gift or inheritance made by, or on behalf of, a person who, at the time of the gift or death, is or is deemed to be resident of the Netherlands.

For purposes of Dutch gift and inheritance taxes, amongst others, a person that holds the Dutch nationality will be deemed to be resident of the Netherlands if such person has been a resident of the Netherlands at any time during the ten years preceding the date of the gift or such person’s death. Additionally, for purposes of Dutch gift tax, amongst others, a person not holding the Dutch nationality will be deemed to be resident of the Netherlands if such person has been a resident of the Netherlands at any time during the twelve months preceding the date of the gift. Applicable tax treaties may override deemed residency.

Value Added Tax (VAT)

No Dutch VAT will be payable by a holder of Common Stock of Core Lab Delaware in respect of any payment in consideration for the holding or disposal of the Common Stock of Core Lab Delaware.

Stamp Duties

No Dutch documentation taxes (commonly referred to as stamp duties) will be payable by a holder of Common Stock of Core Lab Delaware in respect of any payment in consideration for the holding or disposal of the Common Stock of Core Lab Delaware.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

The following is a discussion of the material U.S. federal income tax considerations for Holders (as defined below) of Core Lab N.V. Common Shares with respect to (i) the Transaction and (ii) the ownership and disposition of Common Stock of Core Lab Delaware received in the Transaction. This discussion is based on the Internal Revenue Code of 1986, as amended (the “Code”), and administrative pronouncements, judicial decisions and final, temporary and proposed U.S. Treasury regulations (“Treasury Regulations”) as of the date hereof, changes to any of which after the date of this Proxy Statement/Prospectus may affect the tax consequences described herein. We have not requested, and will not request, a ruling from the Internal Revenue Service (the “IRS”) with respect to any of the U.S. federal income tax consequences described below, and as a result there can be no assurance that the IRS will not disagree with or challenge any of the conclusions described herein. This discussion does not address the Medicare tax on net investment income or any U.S. federal tax considerations other than U.S. federal income tax considerations (such as U.S. federal estate and gift tax considerations), or the tax considerations arising under the laws of any foreign, state, local or other jurisdiction or any income tax treaty.

This discussion applies only to Core Lab N.V. Common Shares, Common Stock of Core Lab Luxembourg and Common Stock of Core Lab Delaware, as the case may be, that are held as capital assets for U.S. federal income tax purposes. In addition, this discussion does not describe all of the tax consequences that may be relevant to you in light of your particular circumstances, including the alternative minimum tax, and the different consequences that may apply if you are subject to special rules that apply to certain types of investors, such as:

 

   

financial institutions;

 

   

regulated investment companies;

 

   

real estate investment trusts;

 

   

insurance companies;

 

   

dealers or traders subject to a mark-to-market method of accounting with respect to the securities;

 

   

persons holding the securities as part of a “straddle,” hedge, integrated transaction or similar transaction;

 

   

persons who acquired Core Lab N.V. Common Shares, Common Stock of Core Lab Luxembourg or Common Stock of Core Lab Delaware through the exercise or cancellation of employee stock options or otherwise as compensation for their services;

 

   

U.S. Holders whose functional currency is not the U.S. dollar;

 

   

U.S. expatriates;

 

   

partnerships or other pass-through entities for U.S. federal income tax purposes and holders of interests therein;

 

   

U.S. Holders that own, directly, indirectly or by attribution, 5% or more (by vote or value) of the Core Lab N.V. Common Shares or shares of Common Stock of Core Lab Delaware; and

 

   

tax-exempt entities.

If you are a partnership or other pass-through entity (or other entity or arrangement treated as a partnership or pass-through entity) for U.S. federal income tax purposes, the U.S. federal income tax treatment of your partners or other owners will generally depend on the status of the partners (or other owners) and your activities. If you are a partner (or other owner) of a partnership or other pass-through entity that acquires our securities, you are urged to consult your tax advisor regarding the tax consequences of the Transaction and owning and disposing of Common Stock of Core Lab Delaware received in the Transaction.

This discussion does not address any U.S. federal income tax consequences applicable to holders of Core Lab N.V. Incentive Awards or to holders of Core Lab N.V. Debt. In addition, this summary is based on the

 

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assumptions that Core Lab N.V. is not, and has not been at any time prior to the Transaction, a “controlled foreign corporation” within the meaning of Section 957 of the Code. For purposes of this discussion, a “Holder” means a U.S. Holder (as defined below) or a Non U.S. Holder (as defined below).

THE FOLLOWING SUMMARY IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. YOU ARE URGED TO CONSULT YOUR TAX ADVISOR WITH RESPECT TO THE APPLICATION OF U.S. FEDERAL TAX LAWS TO YOUR PARTICULAR SITUATION, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. JURISDICTION.

U.S. Holders

This section applies to you if you are a “U.S. Holder.” For purposes of this discussion, a “U.S. Holder” means a beneficial owner of Core Lab N.V. Common Shares or shares of Common Stock of Core Lab Delaware received in the Transaction, that, for U.S. federal income tax purposes, is or is treated as any of the following:

 

   

an individual who is a citizen or resident of the United States;

 

   

a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia;

 

   

an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

 

   

a trust that (i) is subject to the primary supervision of a U.S. court and all substantial decisions of which are subject to the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code), or (ii) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.

U.S. Federal Income Tax Consequences of the Transaction to U.S. Holders

The following discussion under this heading “—U.S. Federal Income Tax Consequences of the Transaction to U.S. Holders” insofar as such discussion constitutes statements of U.S. federal income tax law as to the treatment of each of the Merger and U.S. Redomestication as a “reorganization” within the meaning of Section 368(a) of the Code (a “Reorganization”) constitutes the opinion of Vinson & Elkins L.L.P., U.S. tax counsel to Core Lab N.V. The U.S. federal income tax consequences of the Merger and U.S. Redomestication will depend primarily upon whether each of those transactions qualify as a Reorganization.

Although the transactions that comprise the Transaction occur as part of a single integrated plan, for purposes of addressing the U.S. federal income tax consequences of the Transaction to a U.S. Holder, we believe it is appropriate to address the U.S. federal income tax treatment of certain interim steps of the Transaction separately. Accordingly, the discussion below addresses the expected U.S. federal income tax consequences of each of the Merger and U.S. Redomestication separately.

The Merger

The Merger should qualify as a Reorganization. However, this tax treatment is not free from doubt. Assuming the Merger qualifies as a Reorganization, and subject to the discussion of the PFIC rules (see “– Passive Foreign Investment Company Status”), (i) a U.S. Holder should not recognize gain or loss for U.S. federal income tax purposes as a result of the Merger, (ii) the tax basis of a share of Common Stock of Core Lab Luxembourg received by a U.S. Holder in the Merger should to be equal to the U.S. Holder’s adjusted tax basis in the Core Lab N.V. Common Share surrendered in exchange therefor, and (iii) the holding period for a share of Common Stock of Core Lab Luxembourg received by a U.S. Holder in the Merger should include such U.S. Holder’s holding period for the Core Lab N.V. Common Share surrendered in exchange therefor.

 

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If the Merger does not qualify as a Reorganization, a U.S. Holder generally would, subject to the potential application of the PFIC rules (see “– Passive Foreign Investment Company Status”), recognize gain or loss with respect to its Core Lab N.V. Common Shares in an amount equal to the difference between the fair market value of the shares of Common Stock of Core Lab Luxembourg received in the Merger and the U.S. Holder’s adjusted tax basis in such holder’s Core Lab N.V. Common Shares surrendered in such exchange. In such event, such U.S. Holder’s basis in the shares of Common Stock of Core Lab Luxembourg would be equal to the fair market value of such stock on the date of the Merger, and such U.S. Holder’s holding period for shares of Common Stock of Core Lab Luxembourg would begin on the day following the date of the Merger.

The U.S. federal income tax treatment of the Merger is complex and subject to uncertainty. Accordingly, U.S. Holders are urged to consult their own tax advisors regarding the U.S. federal income tax consequences of the Merger to them in their particular circumstances. In addition, U.S. Holders are urged to consult their tax advisors regarding the potential application of the PFIC rules to them in connection with the Merger.

U.S. Redomestication

Pursuant to the U.S. Redomestication, Core Lab Luxembourg will change its jurisdiction of incorporation from Luxembourg to Delaware. The U.S. Redomestication should qualify as a Reorganization specifically described in Section 368(a)(1)(F) of the Code (an “F Reorganization”). However, this tax treatment is not free from doubt. Assuming the U.S. Redomestication does qualify as an F Reorganization, U.S. Holders generally should not recognize gain or loss in connection with the U.S. Redomestication for U.S. federal income tax purposes, except as provided below under the caption headings “– Effects of Section 367 on the U.S. Redomestication” and “– Passive Foreign Investment Company Status.” The U.S. Redomestication should be treated, for U.S. federal income tax purposes, as if (i) Core Lab Luxembourg transferred all of its assets and liabilities to Core Lab Delaware in exchange for all of the outstanding Common Stock of Core Lab Delaware, (ii) Core Lab Luxembourg then distributed the Common Stock of Core Lab Delaware to the shareholders of Core Lab Luxembourg in liquidation of Core Lab Luxembourg and (iii) the shareholders of Core Lab Luxembourg exchanged their shares of Common Stock in Core Lab Luxembourg for shares of Common Stock in Core Lab Delaware. The taxable year of Core Lab Luxembourg will be deemed to end at the close of the Effective Date. Assuming the U.S. Redomestication qualifies as an F Reorganization, and subject to the potential application of the PFIC rules, (i) the tax basis of a share of Common Stock in Core Lab Delaware received by a U.S. Holder in the U.S. Redomestication will equal the U.S. Holder’s adjusted tax basis in the Core Lab Luxembourg share (as determined in connection with the Merger, as described above) surrendered in exchange therefor, increased by any amount included in the income of such U.S. Holder as a result of the application of Section 367(b) of the Code (as discussed below), and (ii) the holding period for a share of Common Stock in Core Lab Delaware received by a U.S. Holder will include such U.S. Holder’s holding period for the share of Common Stock in Core Lab Luxembourg surrendered in exchange therefor.

If the U.S. Redomestication does not qualify as an F Reorganization, a U.S. Holder generally would, subject to the potential application of the PFIC rules, recognize gain or loss with respect to its Core Lab Luxembourg Common Stock in an amount equal to the difference between the fair market value of Core Lab Delaware Common Stock received in the U.S. Redomestication and the U.S. Holder’s adjusted tax basis in such holder’s Core Lab Luxembourg Common Stock (as determined in connection with the Merger, as described above) surrendered in the U.S. Redomestication. In such event, such U.S. Holder’s basis in Core Lab Delaware Common Stock would be equal to the fair market value of such Common Stock on the date of the U.S. Redomestication, and such U.S. Holder’s holding period for Core Lab Delaware Common Stock would begin on the day following the date of the U.S. Redomestication.

Effects of Section 367 on the U.S. Redomestication

Section 367 of the Code applies to certain non-recognition transactions involving foreign corporations and has the effect of imposing income tax on certain U.S. persons in connection with transactions that would otherwise

 

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be tax-free. Section 367(b) of the Code would apply to the U.S. Redomestication under the circumstances discussed below, even if the U.S. Redomestication otherwise qualifies as an F Reorganization.

U.S. Holders that own shares of Common Stock of Core Lab Luxembourg with a fair market value of less than $50,000

A U.S. Holder who, at the time of the U.S. Redomestication, beneficially owns shares of Common Stock of Core Lab Luxembourg with a fair market value of less than $50,000 (as determined on the Effective Date) should not be required to recognize any gain or loss under Section 367(b) of the Code in connection with the U.S. Redomestication, and generally should not be required to include any part of the “all earnings and profits amount” in income as discussed under “– U.S. Holders that own shares of Common Stock of Core Lab Luxembourg with a fair market value of $50,000 or more (but are not 10% U.S. Holders),” below. Such U.S. Holder generally (subject to the potential application of the PFIC rules):

 

   

should not recognize a gain or loss with respect to their shares of Common Stock of Core Lab Luxembourg;

 

   

should have an aggregate tax basis in shares of Common Stock of Core Lab Delaware received pursuant to the U.S. Redomestication equal to such U.S. Holder’s aggregate tax basis in the shares of Common Stock of Core Lab Luxembourg (as determined in connection with the Merger, as described above) surrendered in exchange therefor; and

 

   

should have a holding period for shares of Common Stock of Core Lab Delaware received pursuant to the U.S. Redomestication that includes such holder’s holding period for the shares of Common Stock of Core Lab Luxembourg surrendered in exchange therefor pursuant to the U.S. Redomestication.

U.S. Holders who acquired different blocks of Core Lab N.V. Common Shares at different times or different prices should consult with their own tax advisors as to the determination of the tax bases and holding periods of the shares of Common Stock of Core Lab Delaware deemed to be received in the U.S. Redomestication.

U.S. Holders that own shares of Common Stock of Core Lab Luxembourg with a fair market value of $50,000 or more (but are not 10% U.S. Holders)

A U.S. Holder who, at the time of the U.S. Redomestication, is not a 10% U.S. Holder and beneficially owns shares of Common Stock of Core Lab Luxembourg with a fair market value of $50,000 or more (as determined on the Effective Date) must either (a) recognize gain (if any), but not a loss, with respect to the U.S. Redomestication or, in the alternative, (b) may elect to recognize the “all earnings and profits amount” attributable to such U.S. Holder.

Unless such U.S. Holder makes the “all earnings and profits” election, such U.S. Holder generally (subject to the potential application of the PFIC rules):

 

   

should recognize gain (if any), but not a loss, with respect to their shares of Common Stock of Core Lab Luxembourg in an amount equal to the difference between the fair market value of shares of Common Stock of Core Lab Delaware received and such U.S. Holder’s adjusted tax basis in their shares of Common Stock of Core Lab Luxembourg (as determined in connection with the Merger, as described above) surrendered in exchange therefor pursuant to the U.S. Redomestication, and such gain should be long-term capital gain if the U.S. Holder’s holding period for the shares of Common Stock of Core Lab Luxembourg at the time of the U.S. Redomestication is longer than one year. See discussions above under the heading“–U.S. Federal Income Tax Consequences of the Transaction to U.S. Holders – The Merger”;

 

   

should have an aggregate tax basis in shares of Common Stock of Core Lab Delaware received pursuant to the U.S. Redomestication equal to such U.S. Holder’s aggregate tax basis in the shares of

 

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Common Stock of Core Lab Luxembourg (as determined in connection with the Merger, as described above) surrendered in exchange therefor increased by the amount of taxable gain, if any, recognized by such U.S. Holder pursuant to the U.S. Redomestication; and

 

   

should have a holding period for shares of Common Stock of Core Lab Delaware received pursuant to the U.S. Redomestication that includes such U.S. Holder’s holding period for the shares of Common Stock of Core Lab Luxembourg surrendered in exchange therefor pursuant to the U.S. Redomestication.

U.S. Holders who acquired different blocks of Core Lab N.V. Common Shares at different times or different prices should consult their own tax advisors as to the determination of the tax bases and holding periods of the shares of Common Stock of Core Lab Delaware received in the U.S. Redomestication.

In lieu of recognizing any gain as described above, a U.S. Holder that validly makes the “all earnings and profits” election will be required to include in income as a deemed dividend the “all earnings and profits amount” (within the meaning of Treasury Regulations Section 1.367(b)-2(d)) attributable to the shares of Common Stock of Core Lab Luxembourg owned directly by such U.S. Holder. Treasury Regulations under Section 367 provide that the all earnings and profits amount attributable to a shareholder’s stock is determined according to the attribution principles of Section 1248 of the Code. In general, Section 1248 of the Code and the Treasury Regulations thereunder provide that the amount of earnings and profits attributable to a block of stock in a foreign corporation is the ratably allocated portion of the foreign corporation’s earnings and profits generated during the period the shareholder held the block of stock. Accordingly, the “all earnings and profits amount” attributable to the shares of Common Stock of Core Lab Luxembourg held by a U.S. Holder should generally depend on Core Lab N.V.’s accumulated earnings and profits (as determined under U.S. federal income tax principles) from the date that the Core Lab N.V. Common Shares were acquired by such U.S. Holder through the Effective Date.

If a U.S. Holder makes the “all earnings and profits” election, the election must comply with strict conditions for making this election under applicable Treasury Regulations and generally must include, among other things (i) a statement that the U.S. Redomestication is a Section 367(b) exchange, (ii) a complete description of the U.S. Redomestication, (iii) a description of any stock, securities or other consideration transferred or received in the U.S. Redomestication, (iv) a statement describing the amounts required to be taken into account for U.S. federal income tax purposes, (v) a statement that the U.S. Holder is making the election that includes (A) a copy of the information that the U.S. Holder received from Core Lab Luxembourg establishing and substantiating the U.S. Holder’s all earnings and profits amount with respect to the U.S. Holder’s shares, and (B) a representation that the U.S. Holder has notified Core Lab Luxembourg that the U.S. Holder is making the election, and (vi) certain other information required to be furnished with the U.S. Holder’s tax return or otherwise furnished pursuant to the Code or the Treasury Regulations thereunder. In addition, the election must be attached by the U.S. Holder to its timely filed U.S. federal income tax return for the year of the U.S. Redomestication, and the U.S. Holder must send notice to Core Lab Luxembourg of the election no later than the date such tax return is filed.

10% U.S. Holders

A U.S. Holder who, at the time of the U.S. Redomestication, is a 10% U.S. Holder is subject to special rules that generally require such 10% U.S. Holder to include in income as a dividend the “all earnings and profits amount” attributable to the shares of Common Stock of Core Lab Luxembourg owned directly by such U.S. Holder.

10% U.S. Holders are strongly urged to consult their own tax advisors regarding the “all earnings and profits amount” inclusion and any special rules that may apply to such U.S. Holders.

Determination of the “All Earnings and Profits Amount”

Core Lab N.V. is currently in the process of determining its historical and current earnings and profits. As noted above, the “all earnings and profits amount” attributable to shares of Common Stock of Core Lab Luxembourg

 

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held by a particular U.S. Holder should generally depend on Core Lab N.V.’s accumulated earnings and profits from the date that the Core Lab N.V. Common Shares were acquired by such U.S. Holder through the Effective Date. While Core Lab N.V. will not be able to determine the amount of any earnings and profits for the period January 1, 2023 through the Effective Date until after completion of the Transaction, Core Lab N.V. expects that it is likely that it has positive accumulated earnings and profits in 2020, 2021, and 2022. Taking this into account, Core Lab N.V. expects that a positive accumulated “all earnings and profits amount” will be attributable to Core Lab N.V. Common Shares with a holding period beginning on or after January 1, 2020. Core Lab N.V. intends to provide on its external website (www.corelab.com), under the heading “Tax Matters for the Merger and U.S. Redomestication”, information regarding Core Lab N.V.’s earnings and profits once such information is reasonably available. The determination of Core Lab N.V.’s earnings and profits is a complex determination and may be affected by numerous factors. Further, under Notice 2016-73, the IRS has proposed changes, with potential retroactive effect, to the rules applicable to the computation of the “all earnings and profits amount.” Accordingly, there can be no assurance that the IRS will agree with Core Lab N.V.’s determination of such earnings and profits. If the IRS does not agree with such earnings and profits calculations, the earnings and profits of Core Lab N.V. may be greater than reported on Core Lab N.V.’s website (as described above). In such case, a U.S. Holder that makes an “all earnings and profits” election or a 10% U.S. Holder could have a positive (or a more positive than anticipated) “all earnings and profits amount” in respect of such U.S. Holder’s shares of Common Stock of Core Lab Luxembourg and thereby recognize greater taxable income.

U.S. HOLDERS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL INCOME TAX TREATMENT OF THE U.S. REDOMESTICATION, WHETHER TO MAKE THE “ALL EARNINGS AND PROFITS” ELECTION DESCRIBED ABOVE AND, IF THE ELECTION IS DETERMINED TO BE ADVISABLE, THE APPROPRIATE FILING REQUIREMENTS WITH RESPECT TO THIS ELECTION.

Passive Foreign Investment Company Status

If Core Lab N.V. was a PFIC under Section 1297 of the Code for any taxable year during which a U.S. Holder has held Core Lab N.V. Common Shares, certain adverse tax consequences could apply to such U.S. Holder in connection with the Merger and/or the U.S. Redomestication. In general, Core Lab N.V. would be a PFIC with respect to a U.S. Holder if for any taxable year in which the U.S. Holder held its shares, (i) at least 75% of Core Lab N.V.’s gross income for the taxable year was passive income, or (ii) at least 50% of the value, determined on the basis of a quarterly average, of Core Lab N.V.’s assets was attributable to assets that produced, or were held for the production of, passive income. Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets. If a foreign corporation is classified as a PFIC for any taxable year during which a U.S. Holder owns stock in the foreign corporation, the foreign corporation generally remains thereafter classified as a PFIC with respect to that U.S. Holder.

Based on estimates of our gross income, the nature and value of our assets and the manner in which we conduct our business, Core Lab N.V. believes that the Core Lab N.V. Common Shares should not currently be, and does not believe that they should have ever been treated as, stock of a PFIC for U.S. federal income tax purposes. However, this conclusion depends on complex factual determinations that are made annually and thus there can be no assurance that Core Lab N.V. is not and has not been a PFIC.

If Core Lab N.V. was a PFIC for any taxable year during which a U.S. Holder held Core Lab N.V. Common Shares, certain adverse tax consequences, including recognition of gain and application of an interest charge, could apply to such U.S. Holder as a result of the Transaction, unless an exception under the relevant Treasury Regulations can be relied upon. Specifically, Section 1291(f) of the Code generally requires that, to the extent provided in the Treasury Regulations, a United States person who disposes of stock of a PFIC recognizes gain notwithstanding any provision of law. No final Treasury Regulations have been promulgated under this statute. Proposed Treasury Regulations were promulgated in 1992 with a retroactive effective date (the “Proposed PFIC Regulations”). If finalized in their current form, the Proposed PFIC Regulations (i) may require gain recognition

 

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by United States persons who exchange Core Lab N.V. Common Shares for shares of Common Stock of Core Lab Luxembourg pursuant to the Merger, and (ii) would require gain recognition by United States persons who exchange shares of Common Stock of Core Lab Luxembourg for shares of Common Stock of Core Lab Delaware pursuant to the U.S. Redomestication, in each case, if Core Lab N.V. were classified as a PFIC at any time during such United States person’s holding period in such stock and such person had not made either a “qualified electing fund” election under Section 1295 of the Code for the first taxable year in which such U.S. Holder owned Core Lab N.V. Common Shares or in which Core Lab N.V. was a PFIC, whichever is later, or a “mark-to-market” election under Section 1296 of the Code. The tax on any such gain so recognized would be imposed at the rate applicable to ordinary income and an interest charge would apply based on a complex set of computational rules designed to offset the tax deferral to such stockholders on our undistributed earnings. In addition, the Treasury Regulations would provide coordinating rules with Section 367(b) of the Code whereby, if the gain recognition rule of the Proposed PFIC Regulations applied to a disposition of PFIC stock that results from a transfer with respect to which Section 367(b) requires the shareholder to recognize gain or include an amount in income as a distribution under Section 301 of the Code, the gain realized on the transfer is taxable as an excess distribution under Section 1291 of the Code, and the excess, if any, of the amount to be included in income under Section 367(b) over the gain realized under Section 1291 is taxable as provided under Section 367(b). See the discussion above under the section entitled “– Effects of Section 367 on the U.S. Redomestication.”

It is difficult to predict whether, in what form and with what effective date, final Treasury Regulations under Section 1291(f) of the Code will be adopted. The PFIC rules are very complex and are affected by various factors in addition to those described above. Accordingly, U.S. Holders of Core Lab N.V. Common Shares are urged to consult their own tax advisors concerning the potential application of the PFIC rules to such U.S. Holder under their particular circumstances.

U.S. Holders Exercising Withdrawal Rights

A U.S. Holder of Core Lab N.V. Common Shares that validly exercises their withdrawal right in connection with the Merger and receives cash compensation for such holder’s Core Lab N.V. Common Shares generally will recognize gain or loss in an amount equal to the difference, if any, between (i) the amount received by such U.S. Holder in exchange for Core Lab N.V. Common Shares (other than amounts, if any, that are or are deemed to be interest for U.S. federal income tax purposes, which amounts will be taxed as ordinary income), and (ii) the adjusted tax basis of such U.S. Holder in such Core Lab N.V. Common Shares surrendered. Subject to the potential application of the PFIC rules discussed above, such gain or loss would be long-term capital gain or loss if the U.S. Holder’s holding period for such Core Lab N.V. Common Shares was more than one year at the Effective Date. Preferential tax rates for long-term capital gains are generally applicable to a U.S. Holder that is an individual, estate or trust. Deductions for capital losses are subject to significant limitations. If Core Lab N.V. has been a PFIC at any time during which a U.S. Holder has held Core Lab N.V. Common Shares, then any gain from the exercise of such U.S. Holder’s withdrawal right may be subject to adverse U.S. federal income tax treatment under the PFIC rules. See “– Passive Foreign Investment Company Status.” It is possible that the IRS may take the position that some portion of the amounts received by a U.S. Holder exercising their withdrawal right in connection with the Merger should be treated as interest or as otherwise being subject to taxation as ordinary income. U.S. Holders that intend to exercise their withdrawal right in connection with the Merger are urged to consult their own tax advisors regarding the U.S. federal income tax consequences to such U.S. Holder of exercising such rights prior to exercising such rights and having due regard to such U.S. Holder’s particular circumstances.

Ownership and Disposition of Common Stock of Core Lab Delaware Received in the Transaction

Dividends and Other Distributions on Common Stock of Core Lab Delaware

If Core Lab Delaware pays distributions of cash or other property to U.S. Holders with respect to Common Stock of Core Lab Delaware, such distributions generally will constitute dividends for U.S. federal income tax purposes

 

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to the extent paid from Core Lab Delaware’s current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of current and accumulated earnings and profits will constitute a non-taxable return of capital to the extent of a U.S. Holder’s adjusted tax basis in its Common Stock of Core Lab Delaware, that will be applied against and reduce (but not below zero) the U.S. Holder’s adjusted tax basis in its Common Stock of Core Lab Delaware. Any remaining excess will be treated as gain realized on the sale or other disposition of Common Stock of Core Lab Delaware and will be treated as described under “—Dispositions of Common Stock of Core Lab Delaware” below. A distribution which is treated as a dividend and paid to a corporate U.S. Holder of Common Stock of Core Lab Delaware may be eligible for the dividends-received deduction, and a distribution which is treated as a dividend and paid to a non-corporate U.S. Holder of the Common Stock of Core Lab Delaware may be subject to tax at the preferential tax rates applicable to “qualified dividend income.”

Dispositions of Common Stock of Core Lab Delaware

Upon a sale or other taxable disposition of Common Stock of Core Lab Delaware, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. Holder’s adjusted tax basis in its Common Stock of Core Lab Delaware, as applicable. Generally, the amount of gain or loss recognized by a U.S. Holder is an amount equal to the difference between (i) the sum of the amount of cash and the fair market value of any property received in such disposition and (ii) the U.S. Holder’s adjusted tax basis in its Common Stock of Core Lab Delaware (as determined in connection with the Transaction, as described above) so disposed of. Any such capital gain or loss generally will be long-term capital gain or loss if the U.S. Holder’s holding period for the Common Stock of Core Lab Delaware (as determined in connection with the Transaction, as described above) so disposed of exceeds one year. Long-term capital gains recognized by non-corporate U.S. Holders will be eligible to be taxed at reduced rates. The deductibility of capital losses is subject to limitations.

Non-U.S. Holders

This section applies to you if you are a “Non-U.S. Holder.” For purposes of this discussion, a “Non-U.S. Holder” means a beneficial owner of Core Lab N.V. Common Shares or shares of Common Stock of Core Lab Delaware received in the Transaction, that is, for U.S. federal income tax purposes: (i) a non-resident alien individual, other than certain former citizens and residents of the United States subject to U.S. tax as expatriates; (ii) a foreign corporation; or (iii) an estate or trust that is not a U.S. Holder, but generally does not include an individual who is present in the United States for 183 days or more in the taxable year of disposition. If you are such an individual, you are urged to consult your own tax advisor regarding the U.S. federal income tax consequences to you of the Transaction and relating to the ownership and disposition of Common Stock of Core Lab Delaware received in the Transaction.

U.S. Federal Income Tax Consequences of the Transaction to Non-U.S. Holders

The Transaction is not expected to result in any material U.S. federal income tax consequences to Non-U.S. Holders provided that such Non-U.S. Holder (i) has not been engaged in the conduct of a trade or business within the United States (or, if required by an applicable income tax treaty, such Non-U.S. Holder has not maintained a permanent establishment within the United States), and (ii) is not a non-resident alien individual treated as present in the United States for 183 days or more during the taxable year of the Transaction and certain other requirements are met. Non-U.S. Holders of Core Lab N.V. Common Shares that validly exercise their withdrawal right in connection with the Merger and meet the requirements described in (i) and (ii) of the preceding sentence are not expected to recognize taxable gain for U.S. federal income tax purposes as a result of exercising such withdrawal right. It is possible, however, that the IRS may take the position that some portion of the amounts received by a Non-U.S. Holder exercising their withdrawal right in connection with the Merger should be treated as U.S.-source interest or other U.S.-source income. In such case, such portion may be subject to U.S. withholding tax at a rate of 30%, unless such Non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty or other exception and, in either case, provides proper certification of its

 

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eligibility. Non-U.S. Holders that intend to exercise their withdrawal right in connection with the Merger are urged to consult their own tax advisors regarding the U.S. federal income tax consequences to such Non-U.S. Holder of exercising such rights prior to exercising such rights.

Non-U.S. Holders of Core Lab Luxembourg that are corporations for U.S. federal income tax purposes, and that have one or more United States shareholders, may be treated as receiving a deemed dividend under Section 367(b) as a result of the U.S. Redomestication. Such corporate Non-U.S. Holders are urged to consult their own tax advisors regarding the U.S. federal income tax consequences to such corporate Non-U.S. Holder and to their United States shareholders, of the Transaction and of any Section 367(b) deemed dividend.

Ownership and Disposition of Common Stock of Core Lab Delaware Received in the Transaction

Dividends and Other Distributions on Common Stock of Core Lab Delaware

In general, any distributions made to a Non-U.S. Holder on Common Stock of Core Lab Delaware, to the extent paid out of Core Lab Delaware’s current or accumulated earnings and profits, as determined under U.S. federal income tax principles, will constitute dividends for U.S. federal income tax purposes and, provided such dividends are not effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States, will be subject to withholding tax from the gross amount of the dividend at a rate of 30%, unless such Non-U.S. Holder is eligible for a reduced rate of withholding tax under an applicable income tax treaty and provides proper certification of its eligibility for such reduced rate on an IRS Form W-8BEN or W-8BEN-E (or other applicable or successor form). Non-U.S. Holders should consult their tax advisors regarding their entitlement to benefits under any applicable income tax treaty and the procedures for claiming such benefits. To the extent that the amount of the distribution exceeds Core Lab Delaware’s current and accumulated earnings and profits, such excess will be treated first as a tax-free return of the Non-U.S. Holder’s tax basis in the shares of Common Stock of Core Lab Delaware, and then, to the extent such excess amount exceeds the Non-U.S. Holder’s tax basis in such stock, as capital gain. See discussion below under the heading “–Dispositions of Common Stock of Core Lab Delaware.”

Dividends paid by Core Lab Delaware to a Non-U.S. Holder that are effectively connected with such Non-U.S. Holder’s conduct of a trade or business within the United States (or if a tax treaty applies are attributable to a U.S. permanent establishment or fixed base maintained by the Non-U.S. Holder) will generally not be subject to U.S. withholding tax, provided such Non-U.S. Holder complies with certain certification and disclosure requirements usually by providing an IRS Form W-8ECI (or successor form). Instead, such dividends generally will be subject to U.S. federal income tax at the same regular U.S. federal income tax rates applicable to a comparable U.S. Holder and, in the case of a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes, also may be subject to an additional branch profits tax at a 30% rate or a lower applicable tax treaty rate.

Non-U.S. Holders of Common Stock of Core Lab Delaware are urged to consult with their own tax advisors regarding eligibility for benefits under any applicable income tax treaty with respect to dividends paid by Core Lab Delaware after the Transaction and the proper manner for claiming such benefits (including proper certification on an applicable IRS Form W-8).

Dispositions of Common Stock of Core Lab Delaware

A Non-U.S. Holder generally will not be subject to U.S. federal income tax on gain realized upon the sale or other disposition of shares of Common Stock of Core Lab Delaware unless:

 

   

the gain is effectively connected with the Non-U.S. Holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, such gain is attributable to a permanent establishment or fixed base maintained by the Non-U.S. Holder in the United States);

 

   

the Non-U.S. Holder is a non-resident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other requirements are met; or

 

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Core Lab Delaware is or has been a U.S. real property holding corporation at any time within the five-year period preceding the disposition or the Non-U.S. Holder’s holding period, whichever period is shorter, and either (i) the shares of Common Stock of Core Lab Delaware have ceased to be “regularly traded on an established securities market” within the meaning of the Treasury Regulations or (ii) the Non-U.S. Holder has owned or is deemed to have owned, at any time within the five-year period preceding the disposition or the Non-U.S. Holder’s holding period, whichever period is shorter, more than 5% of the Common Stock of Core Lab Delaware. As indicated below, Core Lab N.V. does not expect Core Lab Delaware to be classified as a U.S. real property holding corporation immediately after the Transaction.

Gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at regular graduated tax rates, generally in the same manner as if such Non-U.S. Holder were a United States person. A Non-U.S. Holder that is a corporation may also be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items.

Gain described in the second bullet point above generally would be subject to a flat 30% U.S. federal income tax.

If the third bullet point above applies to a Non-U.S. Holder, gain recognized by such Non-U.S. Holder on the sale, exchange or other disposition of shares of Common Stock of Core Lab Delaware would be subject to tax at generally applicable U.S. federal income tax rates. In addition, a buyer of such stock from a Non-U.S. Holder may be required to withhold U.S. income tax at a rate of 15% of the amount realized upon such disposition. Core Lab Delaware would generally be classified as a U.S. real property holding corporation if the fair market value of its “United States real property interests” equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business, as determined for U.S. federal income tax purposes. Core Lab N.V. believes that, and this disclosure assumes that, Core Lab Delaware is not, and does not anticipate becoming, classified as a U.S. real property holding corporation immediately after the Transaction. Even if Core Lab Delaware is or were to become a U.S. real property holding corporation, so long as the shares of Common Stock of Core Lab Delaware are treated as regularly traded on an established securities market, only a Non-U.S. Holder who owns or has owned, directly, indirectly or by attribution, more than 5% of the Common Stock of Core Lab Delaware, would be taxable by reason of Core Lab Delaware’s classification as a U.S. real property holding corporation.

Information Reporting and Backup Withholding

A Non-U.S. Holder that holds shares of Common Stock of Core Lab Delaware within the United States or through certain U.S.-related brokers may be subject to information reporting and possible backup withholding with respect to dividend payments on, and proceeds from the sale, exchange or redemption of, such shares of Common Stock of Core Lab Delaware. A Non-U.S. Holder generally may eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status, under penalties of perjury, on a duly executed applicable IRS Form W-8 or by otherwise establishing an exemption.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a Non-U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.

Additional Withholding Tax on Payments Made to Foreign Accounts

Sections 1471 through 1474 of the Code and the Treasury Regulations and administrative guidance promulgated thereunder (commonly referred to as the “Foreign Account Tax Compliance Act” or “FATCA”) generally impose withholding at a rate of 30% in certain circumstances with respect to “withholdable payments” which are held by or through certain non-U.S. financial institutions (including investment funds), as a beneficial owner or

 

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as an intermediary, unless any such institution (i) enters into, and complies with, an agreement with the IRS to report, on an annual basis, information with respect to interests in, and accounts maintained by, the institution that are owned be certain U.S. persons and by certain non-U.S. entities that are wholly or partially owned by U.S. persons and to withhold on certain payments, or (ii) if required under an intergovernmental agreement between the United States and an applicable foreign country, reports such information to its local tax authority, which will exchange such information with the U.S. authorities. For this purpose, “withholdable payments” generally include payments of dividends in addition to certain other passive income type amounts, if such amounts are from sources within the United States. Under proposed regulations promulgated by the Treasury Department on December 13, 2018, on which taxpayers may rely until final regulations are issued, withholdable payments do not include gross proceeds from any sale or other disposition of securities (including shares of Common Stock of Core Lab Delaware). An intergovernmental agreement between the United States and an applicable foreign country may modify these requirements. Accordingly, the entity through which shares of Common Stock of Core Lab Delaware are held will affect the determination of whether such withholding is required. Similarly, dividends in respect of shares of Common Stock of Core Lab Delaware held by an investor that is a non-financial non-U.S. entity (as a beneficial owner or as an intermediary) that does not qualify under certain exceptions will generally be subject to withholding at a rate of 30%, unless such entity either (i) certifies to the applicable withholding agent that such entity does not have any “substantial United States owners” or (ii) provides certain information regarding the entity’s “substantial United States owners”, which will in turn be provided to the U.S. Department of Treasury. All holders should consult their tax advisors regarding the possible implications of FATCA on their investment in shares of Common Stock of Core Lab Delaware.

ALL NON-U.S. HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF THE TRANSACTION TO THEM IN THEIR PARTICULAR CIRCUMSTANCES.

 

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MATERIAL LUXEMBOURG INCOME TAX CONSIDERATIONS

This discussion is based on the Luxembourg Income Tax Law (Loi modifiée du 4 décembre 1967 concernant l’impôt sur le revenue), as amended, and administrative pronouncements, judicial decisions and regulations as of the date hereof, changes to any of which after the date of this Proxy Statement/Prospectus may affect the tax consequences described herein.

Neither Core Lab N.V. nor Core Lab Luxembourg have requested, and will not request, a ruling from the Luxembourg tax authorities with respect to any of the Luxembourg income tax consequences described below, and as a result there can be no assurance that the Luxembourg tax authorities will not disagree with or challenge any of the conclusions described herein.

For the purpose of this discussion, it is assumed that the U.S. Redomestication will be performed with continuation of legal personality.

 

  i.

The Merger

The Merger should not lead to adverse Luxembourg tax consequences.

Upon the Merger of Core Lab N.V., Core Lab Luxembourg should take over all the assets and liabilities of Core Lab N.V. at fair market value (“FMV”), i.e., the value at which those assets and liabilities will be valued at the exit from the Netherlands.

 

  ii.

The U.S. Redomestication

Assuming the merger and the migration occur on the same day (or shortly after) such that there is no appreciation of value or the assets received through the Merger, the U.S. Redomestication should not have adverse Luxembourg tax consequences.

The migration of the registered seat and place of effective management of Core Lab Luxembourg would be seen as a deemed liquidation of the entity for Luxembourg tax purposes. As a result, all assets and liabilities held by Core Lab Luxembourg at the time of the migration would be deemed to be realized at FMV for Luxembourg tax purposes and any gain realized upon liquidation would be taxable, unless specific exemption applies. Considering that the migration should occur on the same day, no variation in the value of the assets and liabilities received from Core Lab N.V. is expected. It also means that its tax losses will no longer be available to carry forward after the migration.

Core Lab Luxembourg will have to prepare a liquidation return from 1 January up to the date of the migration date. Hence, all income generated in the course of the year should be taxable at Luxembourg. However, no Luxembourg withholding tax applies on (deemed) liquidation proceeds.

 

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DESCRIPTION OF CORE LAB DELAWARE CAPITAL STOCK

The following description of Core Lab Delaware’s capital stock, following completion of the U.S. Redomestication part of the Transaction, is a summary. This summary is qualified by the complete text of the Core Lab Delaware Certificate of Incorporation and Core Lab Delaware Bylaws to be in effect upon completion of the Transaction, which will be substantially in the forms attached as Appendices B and C, respectively, to this Proxy Statement/Prospectus. We encourage you to read those documents carefully.

There are differences between Core Lab N.V.’s Articles of Association and the Core Lab Delaware Certificate of Incorporation and Core Lab Delaware Bylaws as they are expected to be in effect upon completion of the Transaction, especially relating to changes that are required by Delaware law. For example, certain provisions of the Articles of Association were not replicated in the Core Lab Delaware Certificate of Incorporation or Core Lab Delaware Bylaws because the DGCL would not permit such replication. In addition, the Core Lab Delaware Certificate of Incorporation and Core Lab Delaware Bylaws provide for certain other provisions customarily provided with respect to publicly-traded Delaware corporations. See “Comparison of Rights of Core Lab N.V. Shareholders and Core Lab Delaware Stockholders”.

Authorized Share Capital

Prior to the completion of the Transaction, Core Lab Delaware will not have any Delaware share capital and will not exist as a Delaware entity. Upon the completion of the Transaction, Core Lab Delaware’s authorized share capital will consist of 200,000,000 shares of Common Stock, $0.01 par value per share, and 6,000,000 shares of preferred stock, $0.01 par value per share. The amount of authorized shares of Common Stock of Core Lab Delaware will be the same as the amount of authorized common shares of Core Lab N.V. prior to the Transaction.

Common Stock

Shares Outstanding. As of February 17, 2023, we had 46,634,027 shares outstanding. Upon completion of the Transaction, each Core Lab N.V. Common Share will automatically convert by operation of law into one share of Common Stock of Core Lab Delaware.

Voting Rights. Holders of shares of Common Stock are entitled to one vote per share held of record on all matters to be voted upon by the stockholders. The holders of Common Stock do not have cumulative voting rights.

Dividend Rights. Holders of shares of Core Lab Delaware’s Common Stock are entitled to ratably receive dividends when and if declared by the Core Lab Delaware Board out of funds legally available for that purpose, subject to any statutory or contractual restrictions on the payment of dividends and to any prior rights and preferences that may be applicable to any outstanding preferred stock.

Liquidation Rights. Upon the liquidation, dissolution, distribution of assets or other winding up of Core Lab Delaware, the holders of Common Stock are entitled to receive ratably the assets of Core Lab Delaware available for distribution to the stockholders after payment of liabilities and the liquidation preference of any of its outstanding shares of preferred stock.

Other Matters. The shares of Common Stock have no preemptive or conversion rights and are not subject to further calls or assessment by Core Lab Delaware. There are no redemption or sinking fund provisions applicable to the Common Stock. All outstanding shares of Core Lab Delaware Common Stock, including the Common Stock offered in this offering, are fully paid and non-assessable.

 

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Preferred Stock

The Core Lab Delaware Certificate of Incorporation will authorize the Core Lab Delaware Board from time to time to issue shares of Preferred Stock in one or more series, par value $0.01 per share, up to an aggregate of 6,000,000 shares, and, with respect to each such series, to fix the number of shares constituting such series and the designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of the shares of such series, without vote or action by the Core Lab Delaware stockholders.

Anti-Takeover Effects of Provisions of the Core Lab Delaware Certificate of Incorporation, Bylaws and Delaware Law

Some provisions of Delaware law, Core Lab Delaware’s certificate of incorporation and Core Lab Delaware’s bylaws will contain provisions that could make the following transactions more difficult: acquisitions of Core Lab Delaware by means of a tender offer, proxy contest or otherwise; or removal of Core Lab Delaware’s incumbent officers and directors. These provisions may also have the effect of preventing changes in Core Lab Delaware’s management. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in Core Lab Delaware’s best interests, including transactions that might result in a premium over the market price for Core Lab Delaware’s shares of Common Stock.

These provisions are expected to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of Core Lab Delaware to first negotiate with Core Lab Delaware. We believe that the benefits of increased protection and Core Lab Delaware’s potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure Core Lab Delaware outweigh the disadvantages of discouraging these proposals because, among other things, negotiation of these proposals could result in an improvement of their terms.

Classified Board of Directors

Core Lab Delaware’s certificate of incorporation will provide that the Core Lab Delaware Board will be classified. The Core Lab Delaware Board will be divided into three classes of directors, with the directors serving three-year terms. As a result, approximately one-third of the Core Lab Delaware Board will be elected each year. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of the Core Lab Delaware Board. The Core Lab Delaware certificate of incorporation and bylaws provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed from time to time exclusively pursuant to a resolution adopted by the board of directors.

Removal of Directors and Vacancies

Core Lab Delaware’s certificate of incorporation will provide that directors may be removed only for cause by the affirmative vote of 66 2/3% in voting power of the then-outstanding shares of stock entitled to vote thereon. Any vacancy arising on the Core Lab Delaware Board shall be filled by the affirmative vote of the majority of the remaining directors.

No Stockholder Action by Written Consent

Core Lab Delaware’s certificate of incorporation and bylaws will provide that, subject to the rights of any holders of preferred stock to act by written consent instead of a meeting, stockholder action may be taken only at an annual meeting or special meeting of stockholders and may not be taken by written consent instead of a meeting.

 

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Requirements for Advance Notification of Stockholder Meetings, Nominations and Proposals

Core Lab Delaware’s certificate of incorporation and bylaws will provide that special meetings of the stockholders may be called only by or at the direction of the board of directors or by the Chairperson of the board of directors. Core Lab Delaware’s bylaws will prohibit the conduct of any business at a special meeting other than as specified in the notice for such meeting. These provisions may have the effect of deferring, delaying or discouraging hostile takeovers or changes in control or management of Core Lab Delaware.

Core Lab Delaware’s bylaws will contain advance notice procedures with respect to stockholder proposals and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors. In order for any matter to be “properly brought” before a meeting, a stockholder must comply with the advance notice requirements. Core Lab Delaware’s bylaws will allow the presiding officer at a meeting of the stockholders to adopt rules and regulations for the conduct of meetings which may have the effect of precluding the conduct of certain business at a meeting if the rules and regulations are not followed. These provisions may also defer, delay or discourage a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of Core Lab Delaware.

Authorized but Unissued Shares

The authorized but unissued shares of Core Lab Delaware Common Stock and Core Lab Delaware preferred stock will be available for future issuance without any further vote or action by Core Lab Delaware stockholders. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of Core Lab Delaware Common Stock and Core Lab Delaware preferred stock could render more difficult or discourage an attempt to obtain control over Core Lab Delaware by means of a proxy contest, tender offer, merger or otherwise.

Delaware Law

Core Lab Delaware’s Certificate of Incorporation will opt out of Section 203 of the DGCL which prohibits a Delaware corporation, including those whose securities are listed for trading on the NYSE, from engaging in any business combination with any interested stockholder for a period of three years following the date that the stockholder became an interested stockholder, unless:

 

   

the transaction is approved by the board of directors before the date the interested stockholder attained that status;

 

   

upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or

 

   

on or after such time the business combination is approved by the board of directors and authorized at a meeting of stockholders by at least two thirds of the outstanding voting stock that is not owned by the interested stockholder.

Forum Selection

The Core Lab Delaware Certificate of Incorporation will provide that, subject to limited exceptions, the Court of Chancery of the State of Delaware will be the exclusive forum for:

 

   

any derivative action or proceeding brought on behalf of Core Lab Delaware;

 

   

any action asserting a breach of fiduciary duty owed by any current or former director, officer or stockholder of Core Lab Delaware to Core Lab Delaware or Core Lab Delaware’s stockholders;

 

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any action asserting a claim arising pursuant to any provision of the DGCL; or

 

   

any action asserting a claim governed by the internal affairs doctrine.

The Core Lab Delaware certificate of incorporation will also provide that, to the fullest extent permitted by applicable law, the federal district courts of the U.S. are the exclusive forum for resolving any complaint asserting a cause of action arising under the U.S. Securities Act, subject to and contingent upon a final adjudication in the State of Delaware of the enforceability of such exclusive forum provision. Notwithstanding the foregoing, the exclusive forum provision does not apply to suits brought to enforce any liability or duty created by the U.S. Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

The Core Lab Delaware certificate of incorporation will also provide that any person or entity purchasing or otherwise acquiring any interest in shares of Core Lab Delaware capital stock will be deemed to have notice of and to have consented to this forum selection provision. However, it is possible that a court could find Core Lab Delaware’s forum selection provision to be inapplicable or unenforceable.

Corporate Opportunities

Delaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporation or its officers, directors or stockholders. Core Lab Delaware’s certificate of incorporation will renounce, to the maximum extent permitted from time to time by Delaware law, any interest or expectancy that Core Lab Delaware have in, or right to be offered an opportunity to participate in, specified business opportunities that are from time to time presented to Core Lab Delaware’s directors or their respective affiliates, other than those directors or affiliates who are Core Lab Delaware’s or its subsidiaries’ employees. Core Lab Delaware’s certificate of incorporation will provide that, to the fullest extent permitted by law, any director who is not employed by Core Lab Delaware (including any non-employee director who serves as one of its officers in both his director and officer capacities) or his or her affiliates has no duty to refrain from (i) engaging in a corporate opportunity in the same or similar lines of business in which Core Lab Delaware or its affiliates now engage or propose to engage or (ii) otherwise competing with Core Lab Delaware or its affiliates. In addition, to the fullest extent permitted by law, in the event that any non-employee director acquires knowledge of a potential transaction or other business opportunity which may be a corporate opportunity for themselves or himself or their or his affiliates or for Core Lab Delaware or its affiliates, such person has no duty to communicate or offer such transaction or business opportunity to Core Lab Delaware or any of its affiliates and they may take any such opportunity for themselves or offer it to another person or entity. Core Lab Delaware’s certificate of incorporation will not renounce its interest in any business opportunity that is expressly offered to a non-employee director solely in his or her capacity as a director or officer of the Company. To the fullest extent permitted by law, no business opportunity will be deemed to be a potential corporate opportunity for Core Lab Delaware unless it would be permitted to undertake the opportunity under its certificate of incorporation, Core Lab Delaware has sufficient financial resources to undertake the opportunity and the opportunity would be in line with Core Lab Delaware’s business.

Limitation of Liability and Indemnification Matters

Core Lab Delaware’s Certificate of Incorporation will limit the liability of its directors and certain of its officers for monetary damages for breach of their fiduciary duty as directors, except for liability that cannot be eliminated under the DGCL. Delaware law provides that directors of a company will not be personally liable for monetary damages for breach of their fiduciary duty as directors, except for liabilities:

 

   

for any breach of their duty of loyalty to Core Lab Delaware or its stockholders;

 

   

for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

 

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for unlawful payment of dividend or unlawful stock repurchase or redemption, as provided under Section 174 of the DGCL; or

 

   

for any transaction from which the director derived an improper personal benefit.

Any amendment, repeal or modification of these provisions will be prospective only and would not affect any limitation on liability of a director for acts or omissions that occurred prior to any such amendment, repeal or modification.

Core Lab Delaware’s Certificate of Incorporation will also provide that it will indemnify its directors and officers to the fullest extent permitted by Delaware law. Core Lab Delaware’s bylaws will also permit Core Lab Delaware to purchase insurance on behalf of any officer, director, employee or other agent for any liability arising out of that person’s actions as an officer, director, employee or agent of Core Lab Delaware, regardless of whether Delaware law would permit indemnification.

Transfer Agent and Registrar

The transfer agent and registrar for Core Lab Delaware Common Stock will be Computershare Trust Company, N.A.

Listing

After completion of the Transaction, Core Lab Delaware Common Stock will be listed on the NYSE under the symbol “CLB”.

 

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COMPARISON OF RIGHTS OF CORE LAB N.V. SHAREHOLDERS AND CORE LAB DELAWARE STOCKHOLDERS

Core Lab N.V. Shareholders will exchange Core Lab N.V. Common Shares for shares of Common Stock of Core Lab Delaware as part of the Transaction. Core Lab N.V. is currently a Netherlands limited liability company incorporated under Dutch law, and, upon completion of the Transaction, Core Lab Delaware will be a Delaware corporation.

The following is a summary comparison of the significant differences between:

 

   

the current rights of Core Lab N.V. Shareholders under Dutch Law and Core Lab N.V.’s Articles of Association, as amended to date; and

 

   

the rights of Core Lab Delaware stockholders under the DGCL, the Core Lab Delaware Certificate of Incorporation and Core Lab Delaware Bylaws, upon completion of the Transaction.

The following summary is not a complete statement of the rights of Core Lab N.V. Shareholders or Core Lab Delaware stockholders or a complete description of the specific provisions referred to below. This summary is qualified in its entirety by reference to the Dutch Civil Code, the DGCL and Core Lab N.V.’s and Core Lab Delaware’s constituent documents, which Core Lab N.V. Shareholders should read. To see where copies of these documents can be obtained, see “Where You Can Find More Information”.

 

    

Core Lab N.V.

  

Core Lab Delaware

Authorized Capital Stock   

Core Lab N.V.’s Articles of Association authorize Core Lab N.V. to issue 200,000,000 ordinary shares, par value €0.02 per share, and 6,000,000 preferred shares, par value €0.02 per share.

 

Under Dutch law, the authorized capital is the maximum capital Core Lab N.V. may issue without amending the Articles of Association.

   The Core Lab Delaware Certificate of Incorporation will authorize Core Lab Delaware to issue 206,000,000 shares consisting of (1) 200,000,000 shares of Common Stock, par value US$0.01 per share, and (2) 6,000,000 shares of Preferred Stock, par value US$0.01 per share. The DGCL authorizes the Core Lab Delaware Board to issue Common Stock and Preferred Stock up to the authorized number of shares of Common Stock and Preferred Stock, respectively, without stockholder approval, and the Core Lab Delaware Certificate of Incorporation will authorize the Core Lab Delaware Board to create new series of Preferred Stock and designate the powers, preferences and other terms thereof without stockholder approval.
Dividend Rights    All outstanding ordinary shares (i.e., shares not held by Core Lab N.V.) are entitled to participate equally and receive dividends that may be paid out of available profits of the preceding fiscal year or years or distributions out of contributed surplus capital reserves. All accumulated and unpaid dividends payable on preferred shares (if issued and outstanding) must be paid prior to    The DGCL provides that a Delaware corporation may, subject to restrictions in its certificate of incorporation, pay dividends out of the corporation’s surplus or, if there is no surplus, from its net profits for the fiscal year in which the dividend is declared and/or for the preceding fiscal year. Dividends out of net profits may not be paid when the capital of a Delaware corporation has

 

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the payment of any dividends on the ordinary shares.

 

The amount available for declaration and payment of future dividends will be at the discretion of the Supervisory Board and will depend upon, among other things, future earnings, general financial condition, liquidity, capital requirements, and general business conditions.

  

diminished to an amount less than the aggregate amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets.

 

The decision whether or not to pay dividends, the amount of any such dividends, and the manner in which dividends are payable will be subject to the discretion of the Core Lab Delaware Board and the existence of legally available funds.

Issuance of Shares    Under Dutch law, Core Lab N.V. may only issue shares pursuant to a resolution of the general meeting of shareholders, unless another corporate body has been designated to do so by a resolution of the general meeting of shareholders or by Core Lab N.V.’s Articles of Association. The Supervisory Board is designated, for a period of eighteen months until November 19, 2023, to issue shares and grant rights to subscribe for shares up to 10% of the outstanding shares per annum. The designation may be extended from time to time, with periods not exceeding five years, by a resolution of the general meeting of shareholders adopted with a simple majority, provided that such resolution is proposed by the Supervisory Board.    Pursuant to the Core Lab Delaware Certificate of Incorporation, authorized but unissued shares of Core Lab Delaware Common Stock and Core Lab Delaware preferred stock will be available for future issuance without any further vote or action by Core Lab Delaware stockholders. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans.
Pre-Emptive Rights   

Under Dutch law, in the event of an issuance of ordinary shares, each holder of ordinary shares will have a pro rata pre-emptive right based on the number of ordinary shares held by such shareholder. Pre-emptive rights do not apply with respect to the issuance of preferred shares, or to ordinary shares issued to Core Lab N.V.’s employees or the employees of Core Lab N.V.’s group companies pursuant to stock awards granted under Core Lab N.V. 2020 Long-Term Incentive Plan and the Core Lab N.V. 2014 Nonemployee Director Stock Incentive Plan.

 

The Supervisory Board is authorized for a period of eighteen months until November 19, 2023 to limit or exclude

   The shares of Core Lab Delaware Common Stock will have no pre-emptive rights.

 

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any pre-emptive rights to which shareholders may otherwise be entitled in connection with the issuance of shares up to a maximum of 10% of the outstanding shares per annum. The above authority to limit or exclude pre-emptive rights can only be exercised if at that time the authority to issue shares is in full force and effect.

 

The authority to limit or exclude pre-emptive rights may be extended from time to time, with periods not exceeding five years, by a resolution of the general meeting of shareholders adopted by a simple majority if more than 50% of Core Lab N.V.’s issued capital is represented at the relevant general meeting. If less than 50% of the issued capital is represented at the relevant general meeting, a resolution to limit or exclude pre-emptive rights requires a majority of two-thirds of the votes cast.

  
Repurchase of Shares   

Under Dutch law, a public company with limited liability (naamloze venootschap) like Core Lab N.V. may acquire its own shares, subject to certain provision of Dutch law and the Articles of Association. According to the Dutch Civil Code, Core Lab N.V. and its subsidiaries may repurchase and can hold up to 50% of its issued share capital at one time, if such repurchase has been approved by the shareholders.

 

In connection with Core Lab N.V.’s initial public offering in September 1995, Core Lab N.V.’s shareholders authorized the Management Board to repurchase up to 10% of issued share capital, the maximum allowed under Dutch law at the time, for a period of 18 months. In order to not expire, this authorization of Core Lab N.V.’s Management Board must be renewed every 18 months. The current expiration date of this authorization is November 19, 2023.

  

The DGCL provides that a Delaware corporation may repurchase its issued and outstanding shares with limitations, including:

 

•  Subject to limited exceptions, a redemption may not be effected (even if drafted as mandatory in a corporation’s certificate of incorporation) if there would be no outstanding voting shares of the corporation following the redemption;

 

•  Shares that are then subject to a redemption provision giving the corporation a call option may not be purchased for more than the price at which they then may be redeemed; and

 

•  Stock that has been called for redemption can no longer vote and cannot be counted for quorum purposes when notice of the redemption has been given and the acquisition price has been irrevocably deposited or set aside for payment.

 

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Capital Reduction   

Subject to Dutch law and Core Lab N.V.’s Articles of Association, pursuant to a proposal of the Supervisory Board, the general meeting of shareholders may resolve to reduce the issued capital by cancellation of shares or by reducing the nominal value of the shares by means of an amendment to the Articles of Association.

 

The affirmative vote of the majority of the votes cast at the general meeting is required to cancel Core Lab N.V.’s repurchased shares if more than one-half of the issued share capital is represented at the general meeting. If less than one-half of the issued share capital is represented at the general meeting, then the affirmative vote of two-third of the votes cast at the general meeting is required to approve the cancellation of Core Lab N.V.’s repurchased shares. Under Dutch law and Core Lab N.V.’s Articles of Association, common shares abstaining from voting and broker non-votes will not count as votes cast at the general meeting.

  

The DGCL provides that a Delaware corporation may reduce its capital by:

 

•  By reducing the capital represented by retired shares;

 

•  By applying to an otherwise authorized purchase, redemption, conversion, or exchange of outstanding shares, capital represented by such shares or any capital that has not been allocated to any particular class (to the extent that such capital exceeds the total par value or the stated capital of shares issuable upon such conversion or exchange, if any); or

 

•  By transferring to surplus (i) capital not represented by any particular class; (ii) capital represented by, but in excess of the aggregate par value of, issued par stock; or (iii) some but not all of the capital represented by issued no-par stock.

Voting Rights    Except as otherwise provided by Dutch law or Core Lab N.V.’s Articles of Association, holders of ordinary shares are entitled to one vote for each share held of record on all matters submitted to a vote of the shareholders, will have the exclusive right to vote for the election of directors and do not have cumulative voting rights. Core Lab N.V.’s Articles of Association provide that each resolution by the general meeting requires a two-thirds majority of the votes cast representing more than half of the issued share capital, except for (i) resolutions to be adopted pursuant to a proposal by the Supervisory Board, which require a simple majority regardless of the number of votes cast at the relevant general meeting, and (ii) resolutions to amend the Articles of Association, which require a two-thirds majority of the votes cast representing more than half of the issued share capital   

The DGCL provides that each stockholder is entitled to one vote for each share of capital stock held by such stockholder, unless otherwise provided in the corporation’s certificate of incorporation.

 

Each share of Core Lab Delaware Common Stock will entitle its holder to one vote on each matter voted upon by the holders of Common Stock.

 

The Core Lab Delaware Board will be authorized by the Certificate of Incorporation to determine the voting power of any series of Preferred Stock that Core Lab Delaware creates. Except when another standard is required by the DGCL or the Core Lab Delaware Certificate of Incorporation or Core Lab Delaware Bylaws, the vote of a majority of the voting power of the shares present in person or represented by proxy at a meeting at which a quorum is present

 

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   and can be adopted only pursuant to a proposal by the Board of Management (the “Management Board”) which proposal requires approval by the Supervisory Board.    shall constitute the act of the stockholders.
Number of Directors and Size of Board   

Management Board:

 

Core Lab N.V.’s Articles of Association provide that the Management Board shall consist of one or more members. The number of managing directors in office shall be fixed by the Supervisory Board.

 

Supervisory Board:

 

Core Lab N.V.’s Articles of Association provide that the Supervisory Board shall consist of one or more natural persons. The number of supervisory directors in office shall be fixed by the Supervisory Board themselves.

  

The DGCL provides that the board of directors of a Delaware corporation must consist of one or more directors, with the precise number thereof from time to time fixed by or in the manner provided by the certificate of incorporation or bylaws.

 

The Core Lab Delaware Bylaws will provide that the number of directors will be determined from time to time by the Core Lab Delaware Board. Upon the consummation of the Transaction, it is expected that the Core Lab Delaware Board will consist of 7 members.

Director Qualifications   

Dutch law allows both natural persons and other legal entities to serve as members of the Management Board.

 

Dutch law requires that only natural persons serve as supervisory directors.

   The DGCL requires that directors of Delaware corporations be natural persons. The Core Lab Delaware Bylaws will also provide that, to be eligible for election as a director, the person must be nominated the Core Lab Delaware Board or any committee thereof or by Core Lab Delaware stockholders. In addition, the Core Lab Delaware Bylaws will provide that, to be eligible for election as a director, the person must deliver to the Secretary of Core Lab Delaware: (i) a written questionnaire with respect to his or her background and qualifications; (ii) a written representation and agreement regarding, among other things, voting commitments and adherence to corporate governance guidelines; and (iii) written director agreement including agreement to abide by all policies applicable to Core Lab Delaware directors.
Appointment/Election of Directors   

Management Board:

 

According to Core Lab N.V.’s Articles of Association, a resolution to appoint a managing director can only be passed by the general meeting, upon recommendation by the Supervisory

   The DGCL provides that directors will be elected at an annual meeting or at a special meeting called for that purpose. The Core Lab Delaware Bylaws will provide that, except as summarized in the following paragraph, directors shall

 

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Board, by the affirmative vote of a majority of the votes cast at the meeting.

 

Supervisory Board:

 

The Articles of Association also provide that Core Lab N.V.’s supervisory directors shall be appointed by the same procedure as a managing director.

 

If the Supervisory Board consists of three, four or five members, then the Supervisory Board itself may appoint one member of the Supervisory Board. If the Supervisory Board consists of six or more members, the Supervisory Board itself may appoint two members.

   be elected by a plurality of votes cast with respect to the director at any meeting for the election of directors at which quorum is present.
Vacancies   

Management Board:

 

Pursuant to Core Lab N.V.’s Articles of Association, the appointment of the managing directors may result from a binding nomination, which provides for at least two persons for each vacancy to be filled, made by the Supervisory Board within three months of such board being invited by means of a registered letter to do so by the Management Board. In case no binding nomination has been made within the abovementioned period, the general meeting shall be free in its choice. The general meeting shall also be free in its choice if it deprives any nomination of its binding character in a resolution passed by at least two thirds of the valid votes cast at a meeting where more than half of the issued share capital is present or represented.

 

Supervisory Board:

 

The Supervisory Board shall only be entitled to effect any of the appointments as described above in case of death, resignation or dismissal of a member of the Supervisory Board without the general meeting having appointed a successor. Each of the above appointments will lapse as soon as the general meeting has appointed a succeeding member of the Supervisory Board in accordance with the provisions in the Articles of Association.

   The Core Lab Delaware Certificate of Incorporation will provide that, subject to the DGCL and the rights of the holders of any class or series of Preferred Stock, any newly created directorship that results from an increase in the number of directors or any vacancy on the Core Lab Delaware Board that results from the death, disability, resignation, disqualification, or removal of any director or from any other cause shall be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall hold office for the remaining term of his or her predecessor, unless otherwise determined by the Core Lab Delaware Board.

 

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Term of Directors   

Management Board:

 

Core Lab N.V.’s Articles of Association provide that directors on the Management Board shall serve indefinitely.

 

Supervisory Board:

 

Core Lab N.V.’s Articles of Association provide that a supervisory director may be appointed to the Supervisory Board for a three-year term. With due observance of the first sentence, each supervisory director shall be eligible for immediate re-appointment.

 

The Supervisory Board shall draw up a retirement rota in order to avoid, as far as possible, a situation in which re-appointments occur simultaneously. The rota shall be made available and shall, in any event, be put on the company’s website.

 

A member of the Supervisory Board shall be re-appointed only after careful consideration.

  

The DGCL provides that directors of a Delaware corporation may, by the certificate of incorporation or by bylaws be divided into one, two or three classes.

 

Core Lab Delaware directors, others than those who may be elected by holders of any series of Preferred Stock, shall be divided with respect to terms of service into three classes. The initial term of office of the first class shall expire at the first annual stockholder meeting following the effective date of the Certificate of Incorporation; the initial term of office of the second class shall expire at the second annual stockholder meeting following the effective date of the Certificate of Incorporation; and the initial term of office of the third class shall expire at the third annual stockholder meeting following the effective date of the Certificate of Incorporation.

 

The Core Lab Delaware Certificate of Incorporation will provide that directors will hold office until their successor is duly elected.

Removal of Directors   

Management Board:

 

Consistent with Dutch law, Core Lab N.V.’s Articles of Association provide that the Supervisory Board may suspend a managing director at any time. A shareholders’ resolution to suspend or dismiss a managing director must be passed by a two thirds majority of the valid votes cast representing more than half of the issued share capital. The provision in article 2:120, paragraph 3, (Dutch) Civil Code is not applicable.

 

If, in the event of suspension of a managing director, after three months no resolution has been passed by the general meeting to dismiss him, the suspension shall terminate. A managing director shall be given the opportunity to account for his actions in the general meeting where his suspension or discharge is discussed and have an adviser assist him therein.

   The Core Lab Delaware Certificate of Incorporation will provide that, except for any directors elected by the holders of shares of any series of Preferred Stock pursuant to any certificate establishing the terms of such series, any one or more directors or the entire Core Lab Delaware Board may be removed only for cause upon the affirmative vote of the holders of at least 66 2/3% in voting power of the then-outstanding shares of stock entitled to vote thereon, acting at a meeting of the stockholders in accordance with the DGCL.

 

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Supervisory Board:

 

The Articles of Association also provide that the Supervisory Board shall at all times be empowered to suspend or dismiss each member of the Supervisory Board appointed by it.

  
Board Quorum and Vote Requirements   

The Core Lab N.V. Articles of Association are silent as to board quorum requirements.

 

Management Board:

 

Pursuant to Core Lab N.V. Articles of Association, decisions by the Management Board must be made (i) by unanimous vote and further in writing, by telegraph, by telefax or by telex messages, or (ii) by telephone by a majority of the members of the Management Board then in office, provided that all managing directors have been consulted on the resolution to be passed.

 

The Management Board shall pass all resolutions adopted at meetings with an absolute majority of the votes of all managing directors in office, excluding suspended directors.

 

After a vote, the ruling announced by the chairman shall be decisive unless its correctness is disputed and a new vote is taken and the original ruling is overturned by a majority of votes.

 

Supervisory Board:

 

The Articles of Association designate the same voting requirements discussed above for decisions by the Supervisory Board.

 

In the event of an equal division of votes, the chairman of the Supervisory Board shall have the deciding vote.

   The Core Lab Delaware Bylaws will provide that the presence of a majority of the Core Lab Delaware Board will constitute a quorum. If at any meeting of the Core Lab Delaware Board there is less than a quorum, then a majority of the directors present may adjourn the meeting. The vote of a majority of the directors present at any meeting at which a quorum is present will constitute an act of the Core Lab Delaware Board. Under the DGCL, directors are also permitted to act by unanimous written consent signed by all of the members of the board of directors or of any committee thereof, as applicable.
Annual Meetings of Stockholders    Pursuant to Core Lab N.V.’s Articles of Association, general meetings are held in Amsterdam, the Netherlands in the municipality in which the company has its corporate seat, Delft, Rotterdam, Den Haag, Utrecht or Haarlemmermeer. A general meeting of shareholders will be    The Core Lab Delaware Bylaws will provide that an annual meeting of stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly be considered at the meeting, shall be held on such

 

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held at least once a year within the period required by Dutch law, which is currently no later than six months after the end of Core Lab N.V.’s financial year.

 

The agenda for the annual general meeting of shareholders shall contain, among other items, items placed on the agenda in accordance with Dutch law and Core Lab N.V.’s Articles of Association, the consideration of the annual report, the discussion and adoption of Core Lab N.V. annual accounts, Core Lab N.V. compensation philosophy or policies, Core Lab N.V. policy regarding dividends and reserves and the proposal to pay a dividend (if applicable), proposals relating to the composition of the Management Board and Supervisory Board, including the filling of any vacancies on those boards, the proposals placed on the agenda by the Supervisory Board for their supervision during the financial year, together with the items proposed by shareholders in accordance with provisions of Dutch law and Core Lab N.V.’s Articles of Association.

 

Members of the Management Board and Supervisory Board are authorized to attend general meetings of shareholders. They have an advisory vote. The general meeting of shareholders is presided over by the Chairman of the Supervisory Board. In the absence of the chairman, the general meeting will itself decide who is to chair the meeting.

  

date and at such time as the Core Lab Delaware Board fixes and sets forth in the notice of the meeting.

 

Under the DGCL, subject to certain statutory exceptions, if Core Lab Delaware does not hold an annual meeting to elect directors within the 13-month period following its last annual meeting, the Court of Chancery may summarily order a meeting to be held upon the application of any stockholder or director.

Quorum for Stockholder Meetings    There is no required quorum under Dutch law for shareholder action at a properly convened shareholder meeting, except in specific instances prescribed by Dutch law or Core Lab N.V.’s Articles of Association.    Under the DGCL and the Core Lab Delaware Bylaws, the holders of a majority of the voting power of all outstanding shares of stock entitled to vote at the meeting of stockholders, present in person or represented by proxy, will constitute a quorum for the transaction of business at such meeting. The stockholders may continue to transact business at the meeting even if quorum is subsequently broken.

 

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Notice of Annual and Special Meetings of Stockholders    Under Dutch law, the Management Board and/or the Supervisory Board must give public note of a general meeting of shareholders or an extraordinary meeting of shareholders, by at least 15 days prior to the day of the meeting as required by Dutch law.    Under the DGCL and Core Lab Delaware’s Bylaws, except as otherwise required by the DGCL in certain circumstances, notice of any meeting of stockholders must be sent not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at the meeting as of the record date for determining the stockholders entitled to notice of the meeting. The Core Lab Bylaws will provide that attendance of a stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends such meeting for the express purpose of objecting, at the beginning of the meeting, that the meeting is not lawfully called or convened.
Calling Special Meetings of Stockholders    Dutch law provides that the Management Board and/or the Supervisory Board of a Dutch company may call an extraordinary meeting of the shareholders as frequently as needed.   

The DGCL provides that special meetings may be called by the board of directors or by such persons as may be authorized by the certificate of incorporation or by the bylaws.

 

The Core Lab Delaware Bylaws will provide that special meetings of Core Lab Delaware stockholders, for any purpose, may be called by the Chairman of the Core Lab Delaware Board or by the Core Lab Delaware Board pursuant to a resolution adopted by the affirmative vote of a majority of the Core Lab Delaware Board.

 

As required by the DGCL, business transacted at all special meetings of Core Lab Delaware stockholders is confined to the purposes stated in the notice.

Notice of Stockholder Proposals    Dutch law provides that the agenda for a meeting of shareholders must contain such items as the Management Board, Supervisory Board or the person or persons convening the meeting determine. The agenda shall also include any matter, the consideration of which has been requested by one or more shareholders, representing alone or jointly with others at least such percentage of the issued capital as   

The DGCL does not contain any limits on or requirements for stockholders to nominate directors or propose business for annual meetings.

 

The Core Lab Delaware Bylaws will provide the manner in which stockholders may give notice of director nominations and other business (that is a proper matter for stockholder action under the DGCL) to be brought before an annual meeting as well as to nominate

 

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determined by Dutch law, which is currently set at 3 percent.

 

The request to consider such matters should be received by Core Lab N.V. no later than the 60th day prior to the day of the meeting accompanied by a statement containing the reasons for the request.

  

candidates for election at a special meeting called for the purpose of director elections. In general, a stockholder may nominate a director in connection with an annual or special meeting or bring other business before an annual meeting if that stockholder (i) gives timely written notice of the nomination or other business to Core Lab Delaware’s secretary, (ii) is a stockholder of record on the date the stockholder gives notice and on the date of the meeting and (iii) is entitled to vote at the meeting.

 

To be timely in the case of an annual meeting, a stockholder’s notice must be delivered to Core Lab Delaware’s executive offices not less than 90 nor more than 120 days prior to the first anniversary of the prior year’s annual meeting, provided, however, that in the event that the date of the annual meeting is greater than 30 days before or greater than 60 days after such anniversary date, or if no annual meeting was held in the preceding year (other than with respect to the corporation’s first annual meeting of stockholders following closing of the corporation’s initial public offering), notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 150th day prior to the date of such annual meeting and not later than the close of business on the later of the 120th day prior to such annual meeting or, if the first public announcement of the date of such annual meeting is fewer than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made. To be timely in the case of a special meeting called for the purpose of electing directors, a stockholder’s notice of director nomination must be delivered to Core Lab Delaware’s executive offices not earlier than 120 days prior to such special meeting and not later than the later of 90 days prior to such special

 

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      meeting and 10 days following the date on which public announcement of the date of the special meeting at which the directors are to be elected is first made by Core Lab Delaware.
Stockholder Action by Written Consent   

Under Dutch law, shareholders’ resolutions may be adopted in writing without holding a meeting of shareholders, provided that (i) the Articles of Association explicitly allow such practice and (ii) all shareholders entitled to vote are in favor of the resolution to be adopted.

 

Core Lab N.V.’s Articles of Association prohibit shareholder action by written consent, thereby requiring all shareholder actions to be taken at a general meeting of shareholders.

   The DGCL provides that, unless otherwise provided in a corporation’s certificate of incorporation, any action required or permitted to be taken at any annual or special meeting of stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, are signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
      The Core Lab Delaware Certificate of Incorporation will provide that stockholders are not permitted to take action by written consent.
Amendment of Governing Documents   

The general meeting of shareholders is able to effect an amendment of Core Lab N.V.’s Articles of Association only upon a proposal of the Management Board, which proposal requires approval from our Supervisory Board and by a two-thirds majority of the votes cast representing more than half of the issued share capital.

 

A proposal to amend the Articles of Association where by any change would be made in the rights which vest in the holders of shares in a specific class in their capacity as such, shall require the prior approval of the meeting of the holders of the shares of that specific class.

   Under the DGCL, amendments to a Delaware corporation’s certificate of incorporation must be approved by a resolution of the board of directors declaring the advisability of the amendment, and in most cases by the affirmative vote of a majority of the voting power of the outstanding shares entitled to vote. If an amendment would increase or decrease the number of authorized shares of such class, increase or decrease the par value of the shares of such class or alter or change the powers, preferences or other special rights of a class of outstanding shares so as to affect the class adversely, then a majority of the voting power of the shares of that class also must approve the amendment. The DGCL also permits a Delaware corporation to include a provision in its certificate of incorporation requiring a greater proportion of voting power to approve a specified amendment.

 

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The Core Lab Delaware Certificate of Incorporation will provide that Core Lab Delaware shall have the right to, from time to time, amend the Certificate of Incorporation. The affirmative vote of the holders of not less than two thirds majority of the votes cast, representing more than half of the corporation’s issued share capital shall be required to amend, alter, or repeal any provision in the Certificate of Incorporation.

 

The Core Lab Delaware bylaws will provide that the bylaws may be amended, altered, or repealed by (a) the Core Lab Delaware Board by resolution adopted by a majority of the directors present at any special or regular meeting of the Core Lab Delaware Board at which a quorum is present if, in the case of such special meeting only, notice of such amendment, alteration, or repeal is contained in the notice or waiver of notice of such meeting or (b) by the stockholders at any regular or special meeting of stockholders upon the affirmative vote of at least a two-thirds majority of the voting power of the shares of Core Lab Delaware entitled to vote thereon.

Duties of Directors   

Each Director has a duty to act in the corporate interest of Core Lab N.V., its business and its stakeholders.

 

The corporate interest extends to the interests of all stakeholders, including shareholders, creditors, employees, lenders, suppliers, customers and the region in which Core Lab N.V. is located.

   Directors of Delaware corporations have common law fiduciary duties, which generally consist of duties of loyalty and care. Under Delaware law, the duty of care requires that directors inform themselves, prior to making a business decision, of all material information reasonably available to them. The duty of loyalty requires that directors act in good faith, not out of self-interest and in a manner which the directors believe to be in the best interests of the corporation and its stockholders.
Limitation on Liability of Directors    Under Dutch law, where a person is liable in his capacity as a director of a legal entity, the director and the legal entity shall be jointly and severally liable.    The Core Lab Delaware Certificate of Incorporation will limit the liability of the directors of Core Lab Delaware to the fullest extent permitted by the DGCL. Consequently, Core Lab Delaware directors will not be personally

 

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Pursuant to Core Lab N.V.’s Articles of Incorporation, Core Lab N.V. will indemnify directors against all expense, liability and loss incurred as a party to or from involvement in any criminal, civil, administrative, or investigative suit or proceeding by reason of the fact that they are a supervisory or managing director. Core Lab N.V. will also continue to indemnify a director who is no longer serving in the capacity which initially entitled them to indemnification.

 

If damage was caused by seriously culpable conduct (which is intended to be functionally the same as “gross negligence or willful misconduct” standards used in New York state law) on the part of the relevant director, the director will have no right to indemnity from Core Lab N.V.

 

Core Lab N.V. will only make indemnity payments upon delivery of a written undertaking by or on behalf of the person seeking indemnification to repay all amounts advanced if ultimately the director is not entitled to be indemnified.

 

The director seeking indemnification shall not accept any liability towards third parties and not enter into a settlement agreement without Core Lab N.V.’s prior written consent.

  

liable to Core Lab Delaware or any stockholder for monetary damages for breach of fiduciary duty as a director, except: (1) for any breach of the director’s duty of loyalty to Core Lab Delaware or its stockholders; (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (3) for willful or negligent payment of unlawful dividends or stock purchases or redemptions; or (4) for any transaction from which the director derived an improper personal benefit.

 

Under the DGCL and the Core Lab Delaware Certificate of Incorporation, Core Lab Delaware will be required to indemnify its directors and officers to the fullest extent permitted by Delaware law.

 

Additionally, the DGCL provides that a Delaware corporation must indemnify a current or former director or officer against expenses (including attorneys’ fees) actually and reasonably incurred to the extent he or she has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in the paragraph above or any claim, issue or matter therein.

 

The DGCL further provides that Core Lab Delaware may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of Core Lab Delaware, or is or was serving at the request of Core Lab Delaware as director, officer, employee or agent of another entity or enterprise, against any liability asserted against such person and incurred by such person in any such capacity, whether or not Core Lab Delaware would have the power to indemnify such person against such liability.

Merger Vote    As required by Dutch law, the approval of the general meeting of shareholders is required for any significant change in the identity of Core Lab N.V. or its business.    The DGCL provides that, subject to certain exceptions, the adoption of a merger agreement requires the approval of a majority of the voting power of the outstanding stock of the corporation

 

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Under Dutch law, a resolution for a legal merger (juridische fusie) or a legal demerger (juridische splitsing) is adopted in the same manner as a resolution to amend the Articles of Association. The general meeting of shareholders may, in accordance with the relevant merger or demerger proposal, adopt a resolution for a legal merger or legal demerger, only upon a proposal of Core Lab N.V.’s Management Board, which proposal requires approval from Core Lab N.V.’s Supervisory Board and a two-third majority of the votes cast representing more than half of the issued share capital.

 

In addition, the Transaction Proposal requires a two-thirds majority of the votes cast if less than half of the issued share capital is present or represented at the meeting.

   entitled to vote thereon. No vote of stockholders of a corporation is required to approve (1) the merger of the corporation with or into another corporation that owns 90% or more of the Common Stock of the corporation pursuant to a specific provision of the DGCL, (2) the merger of the corporation into a direct or indirect wholly- owned subsidiary of the corporation in a “holding company reorganization” meeting certain requirements, (3) in a merger in which the stock of the corporation remains outstanding, the certificate of incorporation is not amended in any respect and the corporation issues less than 20% of its stock, and (4) a merger meeting certain requirements following a tender offer in which the holders of sufficient shares to adopt the merger agreement if voted upon at a meeting tender their shares into the tender offer and those stockholders who do not tender (subject to certain statutory exceptions) receive the same consideration in the merger as those who tendered in the tender offer.
Anti-Takeover Provisions   

Under Dutch law, protective measures against takeovers are possible and permissible, within the boundaries set by Dutch law and Dutch case law. The following resolutions and provisions of the Core Lab N.V. Articles of Association may have the effect of making a takeover of Core Lab N.V. more difficult or less attractive, including:

 

•  Until November 19, 2023, Core Lab N.V.’s Supervisory Board has been designated to issue shares and grant rights to subscribe for shares in the form of ordinary or preferred shares, up to the amount of our authorized capital and to limit or exclude preemptive rights on shares; and

 

•  Shareholder action by written consent is not permitted, thereby

   Section 203 generally prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years following the date that such person became an interested stockholder, unless the business combination or the transaction in which such person became an interested stockholder is approved in a prescribed manner. Generally, a “business combination” is defined to include a merger, consolidation, a sale of assets and other transactions resulting in a financial benefit to the interested stockholder and an “interested stockholder” is a person that owns (or is an affiliate or associate of the corporation and within the prior three years did own) 15% or more of a corporation’s voting stock, and the affiliates and associates of any such person. These restrictions do not apply

 

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requiring all shareholder actions to be taken at a general meeting of shareholders.

 

Subject to the limits of the NYSE listing rules, any preferred shares described above would vote together with the ordinary shares on matters submitted to shareholders for approval and have the same number of votes per share as the number of ordinary shares. By issuing the preferred shares in the appropriate number, this anti-takeover provision may result in the holders of such preferred shares having voting power equal to all issued ordinary shares. This anti-takeover measure can be used to provide time for the Management Board and Supervisory Board to negotiate the terms of a possible transaction that is in the best interest of all stakeholders. In the event of a hostile takeover bid, in general, Core Lab N.V.’s Management Board and Supervisory Board still have the duty to act in the interest of Core Lab N.V. and all its stakeholders.

 

In accordance with the Dutch Corporate Governance Code, shareholders who have the right to put an item on the agenda for the general meeting or to request the convening of a general meeting shall not exercise such rights until after they have consulted the management board. If exercising such rights may result in a change in company strategy (for example, through the dismissal of one or more of its managing directors or supervisory directors), the management board must be given the opportunity to invoke a reasonable period of up to 180 days to respond to the shareholders’ intentions. If invoked, the management board must use such response period for further deliberation and constructive consultation, in any event with the shareholder(s) concerned and exploring alternatives. At the end of the response time, the management board, supervised by the supervisory board, shall report on this consultation

  

if, among other things, the corporation’s certificate of incorporation contains a provision electing not to be governed by Section 203.

 

Pursuant to Core Lab Delaware’s Certificate of Incorporation, Core Lab Delaware will opt out of Section 203.

 

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and the exploration of alternatives at the general meeting. The response period may be invoked only once for any given general meeting and shall not apply (i) in respect of a matter for which a response period has been previously invoked or (ii) if a shareholder holds at least 75% of our issued share capital as a consequence of a successful public bid.

 

Moreover, the management board, with the approval of the supervisory board, can invoke a cooling-off period of up to 250 days when shareholders, using their right to have items added to the agenda for a general meeting or their right to request a general meeting, propose an agenda item for the general meeting to dismiss, suspend or appoint one or more managing directors or supervisory directors (or to amend any provision in our Articles of Association dealing with those matters) or when a public offer for the company is made or announced without our support, provided, in each case, that the management board believes that such proposal or offer materially conflicts with the interests of the company and its business. During a cooling-off period, the general meeting cannot dismiss, suspend or appoint managing directors and supervisory directors (or amend the provisions in the Articles of Association dealing with those matters) except at the proposal of the management board. During a cooling-off period, the management board must gather all relevant information necessary for a careful decision-making process and at least consult with shareholders representing 3% or more of the issued share capital of the company at the time the cooling-off period was invoked, as well as with Dutch works council (if the company or, under certain circumstances, any of its subsidiaries would have one). Formal statements expressed by these stakeholders during such consultations must be published on the company’s website to the extent these stakeholders

  

 

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have approved that publication. Ultimately one week following the last day of the cooling-off period, the management board must publish a report in respect of its policy and conduct of affairs during the cooling-off period on the company’s website. This report must remain available for inspection by shareholders and others with meeting rights under Dutch law at the company’s office and must be tabled for discussion at the next general meeting. Shareholders representing at least 3% of the company’s issued share capital may request the Enterprise Chamber for early termination of the cooling-off period. The Enterprise Chamber must rule in favor of the request if the shareholders can demonstrate that:

 

•  the management board, in light of the circumstances at hand when the cooling-off period was invoked, could not reasonably have concluded that the relevant proposal or hostile offer constituted a material conflict with the interests of the company and its business;

 

•  the management board cannot reasonably believe that a continuation of the cooling-off period would contribute to careful policy-making; or

 

•  other defensive measures, having the same purpose, nature and scope as the cooling-off period, have been activated during the cooling-off period and have not since been terminated or suspended within a reasonable period at the relevant shareholders’ request (i.e., no ‘stacking’ of defensive measures).

  
Shareholder Suits    If a third party is liable to a Dutch company, under Dutch law generally shareholders do not have the right to bring an action on behalf of the company or bring an action on their own behalf to recover damages sustained as a result of a decrease in value, or loss of an increase in value, of their shares. Only in the    Pursuant to the DGCL, a stockholder may bring a derivative action to litigate on behalf of the corporation. In Delaware, before a stockholder may bring a derivative action, it must make a demand on the board. The demand requirement may be excused where it would be futile due to the interests of a

 

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event that the cause for liability of such third party to the company also constitutes a tortious act directly against such shareholder and the damages sustained are permanent may that shareholder have an individual right of action against such third party on its own behalf to recover such damages.

 

The Dutch Civil Code provides for the possibility to initiate such actions collectively. A foundation or an association whose objective, as stated in its articles of association, is to protect the rights of a group of persons having similar interests may institute a collective action. The collective action cannot result in an order for payment of monetary damages but may result in a declaratory judgment (verklaring voor recht), for example, declaring that a party has acted wrongfully or has breached fiduciary duty.

 

The foundation or association and the defendant are permitted to reach (often on the basis of such declaratory judgment) a settlement, which provides for monetary compensation of damages. A designated Dutch court may declare the settlement agreement binding upon all the injured parties whereby an individual injured party will have the choice to opt-out within the term set by the court (at least three months). Such individual injured party may also individually institute a civil claim for damages within the aforementioned term.

   majority of the board. If demand is excused, the demanding stockholder may proceed with the derivative action; if demand is required, the court will assess the reasonableness of the board’s decision not to pursue the matter.
Appraisal Rights    Section 2:333h (1) of the Dutch Civil Code entitles shareholders in a Dutch target company to exercise a statutory withdrawal right if they do not wish to participate in and vote against a cross-border merger and wish to receive cash compensation instead.    Under the DGCL, a stockholder of a Delaware corporation generally has the right to demand an appraisal of their shares by the Delaware Court of Chancery in connection with certain mergers, subject to specified procedural requirements. The DGCL does not confer appraisal rights, however, if the Delaware corporation’s stock is either listed on a national securities exchange or held of record by more than 2,000 holders unless the holders of such shares

 

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are not required to accept for their stock in such merger anything other than: (1) shares of the corporation surviving or resulting from the transaction, or depository receipts representing shares of the surviving or resulting corporation, or those shares or depository receipts plus cash in lieu of any fractional interests; (2) shares of any other corporation, or depository receipts representing shares of the other corporation, or those shares or depository receipts plus cash in lieu of any fractional interests, unless hose shares or depository receipts are listed on a national securities exchange or held of record by more than 2,000 holders; (3) cash in lieu of fractional shares or fractional depositary receipts; or (4) any combination of the foregoing.

 

In addition, if immediately before a merger, consolidation or similar transaction, shares subject to appraisal rights were listed on a national securities exchange, the DGCL does not confer appraisal rights to such shares unless: (1) the total number of shares entitled to appraisal exceeds 1% of outstanding shares of the class or series eligible for appraisal; (2) the value of consideration provided in the transaction for such shares exceeds $1 million; or (3) the merger was approved pursuant to section 253 or 267 of the DGCL.

Inspection of Corporate Records    The Core Lab N.V. Management Board provides all information related to Core Lab N.V. required by Dutch law at the general meeting of shareholders and makes the information available to individual shareholders at Core Lab N.V.’s office with copies available upon request. The part of Core Lab N.V.’s shareholders’ register kept in the Netherlands is available for inspection by the shareholders.    Under the DGCL, any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom.
Exclusive Forum    Core Lab N.V.’s shareholders may initiate actions in the Netherlands pursuant to Dutch law.    The Core Lab Delaware Certificate of Incorporation will provide that, unless Core Lab Delaware consents in writing to the selection of an alternative forum,

 

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the Court of Chancery of the State of Delaware will be the exclusive forum for:

 

•  Any derivative action or proceeding brought on behalf of Core Lab Delaware;

 

•  Any action asserting a breach of fiduciary duty owed by any current or former director, officer or stockholder of Core Lab Delaware to Core Lab Delaware or Core Lab Delaware’s stockholders;

 

•  Any action asserting a claim arising pursuant to any provision of the DGCL or Core Lab Delaware Certificate of Incorporation or Core Lab Delaware Bylaws;

 

•  Any action as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware; or

 

•  Any action asserting a claim governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.

 

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SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND DIRECTORS OF CORE LAB

To Core Lab N.V.’s knowledge, the following tables set forth certain information regarding the beneficial ownership of Core Lab N.V. Common Shares as of the close of business on February 17, 2023 (except as noted in the footnotes below) and with respect to: each person known by Core Lab N.V. to beneficially own, or control or direct, directly or indirectly, 5% or more of the outstanding Core Lab N.V. Common Shares; each member of the Core Lab N.V. Board; each named executive officer; and the members of the Core Lab N.V. Board and Core Lab N.V.’s current executive officers as a group.

Core Lab N.V. has determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, Core Lab N.V. believes, based on the information furnished to Core Lab N.V., that the persons and entities named in the table below have sole voting and investment power with respect to all Core Lab N.V. Common Shares that he, she or it beneficially owns.

Applicable percentage ownership and voting power is based on 46,634,027 Core Lab N.V. Common Shares issued and outstanding as of February 17, 2023.

Security Ownership of Core Lab N.V. Directors and Executive Officers

Unless otherwise noted below, the address of each beneficial owner listed in the table below is Van Heuven Goedhartlaan 7 B, 1181 LE Amstelveen, The Netherlands.

 

Name of Beneficial Owner (1)

   Number of
Common Shares
Beneficially
Owned
     Percentage of
Common Shares
Outstanding (2)
 

Ariel Investments, LLC (3)

     9,703,122        20.81

BlackRock, Inc. (4)

     5,848,677        12.54

The Vanguard Group, Inc. (5)

     5,262,192        11.28

Alger Associates, Inc. (6)

     3,853,977        8.26

Earnest Partners LLC (7)

     3,573,101        7.66

Lawrence Bruno

     102,518       

Christopher S. Hill

     50,231       

Gwendolyn Y. Gresham

     15,061       

Mark D. Tattoli

     6,880       

Martha Z. Carnes

     25,107       

Michael Straughen

     13,506       

Harvey Klingensmith

     20,741       

Monique van Dijken Eeuwijk

     11,633       

Kwaku Temeng

     4,307       

Katherine Murray (8)

           

All current Supervisory Board Directors and executive officers as a group (10 persons)

     249,984       

 

*

Represents less than 1%.

(1)

Unless otherwise indicated, each person has sole voting power and investment power with respect to the common shares listed.

(2)

Based on 46,634,027 common shares outstanding as of February 17, 2023.

(3)

Based upon an Amendment No. 4 to Schedule 13G filed with the SEC on February 14, 2023, Ariel Investments, LLC is deemed to be the beneficial owner of 9,703,122 shares. Ariel Investments, LLC has sole voting power of 9,048,365 shares and sole dispositive power with respect to all of the shares it is deemed to beneficially own. Ariel Investments’ current address is 200 East Randolph Street, Suite 2900, Chicago, Illinois 60601.

 

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(4)

Based upon an Amendment No. 8 to Schedule 13G filed with the SEC on January 26, 2023, BlackRock, Inc. is deemed to be the beneficial owner of 5,848,677 shares. BlackRock, Inc has sole voting power of 5,764,195 shares and sole dispositive power with respect to all of the shares it is deemed to beneficially own. BlackRock, Inc’s current address is 55 East 52nd Street New York, NY 10055.

(5)

Based upon an Amendment No. 11 to Schedule 13G filed with the SEC on February 9, 2023, The Vanguard Group, Inc. is deemed to be the beneficial owner of 5,262,192 shares. The Vanguard Group, Inc. has sole voting power of 0 shares and shared voting power of 10,100 shares. The Vanguard Group, Inc. has shared dispositive power with respect to 50,796 shares and sole dispositive power with respect to 5,211,396 shares. The Vanguard Group, Inc.’s current address is 100 Vanguard Blvd. Malvern, PA 19355.

(6)

Based upon an Amendment No. 3 to Schedule 13G filed with the SEC on February 14, 2023, Alger Associates, Inc. is deemed to be the beneficial owner of 3,853,977 shares. Alger Associates, Inc. has sole voting power of 2,931,203 shares and sole dispositive power with respect to all of the shares it is deemed to beneficially own. Alger Associates, Inc.’s current address is 100 Pearl Street, 27th Floor, New York, NY 10004.

(7)

Based upon an Amendment No. 10 to Schedule 13G filed with the SEC on February 14, 2023, Earnest Partners, LLC is deemed to be the beneficial owner of 3,573,101 shares. Earnest Partners, LLC has sole voting power of 2,639,073 and sole dispositive power with respect to all of the shares it is deemed to beneficially own. Earnest Partners, LLC’s current address is 1180 Peachtree Street NE, Suite 2300, Atlanta, Georgia 30309.

(8)

Ms. Murray joined the Core Lab N.V. Board of Directors in 2022 and received a restricted share grant of 5,485 shares on April 1, 2022. Such shares will vest, without performance criteria, at the end of a one-year vesting period on April 1, 2023, subject to the terms of issuance.

 

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EXECUTIVE COMPENSATION FOR CORE LAB N.V.

This Compensation Discussion and Analysis (“CD&A”) describes our executive compensation program as it relates to our Named Executive Officers (“NEOs”). This CD&A also summarizes the Compensation Committee’s process for making pay decisions, as well as its rationale for specific decisions related to the 2022 performance year. References in this section to “we,” “our,” “us,” “Core Lab,” or the “Company” are to Core Laboratories N.V. Our NEOs for 2022 are listed below, along with the title that each NEO held during the 2022 year:

 

Name of Executive

  

Title

Lawrence Bruno

  

Chairman, President and Chief Executive Officer

Christopher S. Hill

  

Senior Vice President and Chief Financial Officer

Gwendolyn Y. Gresham

  

Senior Vice President, Corporate Development and Investor Relations

Mark D. Tattoli

  

Senior Vice President, Secretary and General Counsel

Executive Summary

Industry Conditions and Outlook

In 2022, as the global impact from COVID-19 continued, we remained vigilant in our commitment to making health and safety a top priority in all of our facilities, ensuring a safe work environment while meeting the needs of our clients and stakeholders by maintaining many of the risk mitigation and communication efforts previously established. We have continued to operate as an essential business with timely delivery of products and services to our clients during the COVID-19 pandemic, while also maintaining a continuity plan across our global organization to protect the health of our employees while servicing our clients.

In addition, the geopolitical conflict between Russia and Ukraine that erupted in February 2022 resulted in disruptions to traditional supply chains associated with the movement and trading patterns of crude oil, adversely impacting our business in the affected region. Additionally, continued high inflation affecting most countries globally resulted in increased cost of services and cost of product sales during 2022.

Our diverse, dedicated employees are the reason the Company successfully navigated client project disruptions. Our talented workforce across our global network acted expeditiously to minimize disruptions to our operations and ensure workplace safety. The Company is well positioned as international activity builds across all regions, resulting in our positive outlook for 2023 and beyond.

As part of our long-term growth strategy, we continue to broaden our market presence by opening or expanding facilities in strategic areas which aligns with client demand and market conditions and realizing synergies within our business lines. More recently, we increased our laboratory capabilities in Qatar, Saudi Arabia and Brazil. We believe our market presence in strategic areas provides us a unique opportunity to serve our clients who have global operations, whether they are international oil companies, national oil companies, or independent oil companies.

Additionally, we continue to pursue energy transition opportunities with the introduction of our first Joint Industry Carbon Capture and Sequestration Consortium in 2021. We also conducted a series of Enhanced Oil Recovery and flow assurance studies for a multi-well onshore program using CO2-rich injection gases that can simultaneously improve oil recovery and reduce CO2 emission in 2022.

2022 Business Achievements

Over the course of our 27 years as a publicly-traded company, we have posted an annualized compounded shareholder return of 8.06%, according to Bloomberg Financial, compared to 9.17% for the S&P 500, over that same time period.

 

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In addition, during 2022, our relative and absolute results are as follows:

 

   

Revenue increase of 6.2% was at the 43rd percentile of the Bloomberg Comp Group; however, considering the devaluation of the Euro and British pound and using a constant exchange rate for the Euro and the British Pound, revenue growth would have increased by 8.2%. The Company does not have material amounts of revenue billed in currencies other than the U.S. Dollar, Euro and British Pound;

 

   

Operating margin of 10.7% was at the 93rd percentile of the Bloomberg Comp Group;

 

   

EPS increase of 3.0% was at the 64th percentile of the Bloomberg Comp Group;

 

   

Based on Bloomberg’s calculations using the latest comparable data available, our return on invested capital (“ROIC”) was approximately 5.8%; however, when considering the adverse impact associated with certain events, including the Russia-Ukraine conflict, the Company’s ROIC was in the 72nd percentile of the Bloomberg Oil and Gas Services Comp Group (“Bloomberg Comp Group”);

 

   

We recorded a Total Recordable Injury Rate of 0.31 and Lost Time Injury Rate of 0.10, an improvement over 2021; and

 

   

We maintained industry-leading above average ranking/scores/standing among our peer group on several key sustainability indexes and preserved inclusion in notable sustainability related indices in 2022 such as Bloomberg’s Gender Diversity Index and multiple MSCI indices. This reflects our emphasis on producing long-term profitable growth in a sustainable and responsible manner.

Compensation Actions

Our executive compensation decisions included:

 

   

Staged restoration of reduced salaries: NEO salaries were reduced by a total of 20% in April of 2020, in response to industry conditions and challenges faced by the Company that primarily stemmed from the COVID-19 pandemic. NEO salaries were fully restored in two installments in August of 2021 and January of 2022. Salaries for Mr. Bruno and Mr. Hill are unchanged from pre-April 2020 levels. Ms. Gresham’s salary remains unchanged since becoming an NEO in February 2021. Mr. Tattoli’s salary was adjusted in January of 2022 to be more in line with market rates for his role.

 

   

Contingent payment of bonuses to NEOs under our annual cash incentive plan: Actual performance under the plan would have justified a payout at 64.29% of the maximum for each NEO; however, based upon a broader assessment of the Company’s financial performance and uncertainties associated with the Russia-Ukraine conflict, the Chairman of the Supervisory Board, acting on authority conferred upon him by the Compensation Committee, will determine whether to pay the cash incentive award, subject to continued improvement in the Company’s financial performance and market conditions.

 

   

Continued commitment to performance-based LTI: We granted NEO equity exclusively in the form of performance share awards for 2022 and 2023.

2022 “Say-on-Pay” / Shareholder Engagement

Each year, we carefully consider the results of our shareholder say-on-pay vote from the preceding year. We also consider the feedback we receive from our major shareholders, which we solicit in various ways, including face-to-face meetings during the year. We held our 2022 annual meeting with 77.8% of shares outstanding represented at the meeting with respect to this voting item, and at that meeting, 98.5% of the votes cast approved our executive compensation program.

Our committee believes that shareholder feedback supports their view that our compensation programs remain aligned with the best interests of our shareholders. The Committee continues to review the design of our programs to ensure they remain aligned with shareholder interests, with our industry peers, and with compensation governance best practices.

 

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Best Compensation Governance Practices & Policies

Our executive compensation program is grounded in the following policies and practices, which promote sound compensation governance, enhance our pay-for-performance philosophy and further align our executives’ interests with those of our stakeholders:

 

WHAT WE DO

    

WHAT WE DO NOT DO

LOGO    100% of NEO equity awards are performance-
based and at-risk
     LOGO    No hedging transactions by executive officers
or directors
LOGO    Target performance for equity incentive awards
set at 75th percentile of industry peers.
     LOGO    No significant prerequisites
LOGO    Incentive awards based on both absolute and
relative performance results, with no
guaranteed payouts
     LOGO    No “single trigger” change in control cash
severance benefits
LOGO    Equity award grants subject to three-year
performance periods to promote retention
     LOGO    Core Laboratories stock may not be margined
by executive officers or directors
LOGO    Clawback policy applies to cash and equity
incentive compensation
           

LOGO

   Retain independent compensation consultant        

Developing, Retaining and Rewarding Our Employees

Our People Program

At Core Lab we value our employees and work hard to provide resources that enhance the work experience of our people while developing them for the future. Through our People Program we establish Core Lab’s fundamental principles for ensuring our ability to attract, engage, and retain a workforce with the right skills, attitudes and behaviors, and it outlines our approach to building and maintaining a relationship with each employee at all stages of the Employee Life Cycle.

 

   

Recruit: To ensure we have a diverse employee population reflective of our communities and client base, we’ve implemented recruiting practices that support and encourage the hiring and retention of diverse talent.

 

   

Develop: We believe the sustainable value of our organization is built as a result of great people doing outstanding work in often challenging environments. We offer a wide range of technical and non-technical development opportunities to equip our employees to meet these challenges and be successful. In 2022, we were pleased to begin to re-establishing these courses by re-launching our Business Leadership Program that was paused during the COVID-19 pandemic.

 

   

Perform: Our annual Performance Management cycle is an ongoing process that enables managers and employees to collaborate throughout the year. Individual performance goals and development objectives are set to align to business objectives, reward employees for high performance, which helps our employees understand where they add value to the organization, and provides a focused discussion around career aspirations. Recognizing that not all employees have the same positive experience within the company, we also provide conduits to proactively resolve grievances and disciplinary issues, giving employees multiple outlets to resolve issues and effectively achieve greater performance.

 

   

Reward: To ensure we stay competitive in how we compensate and reward our employees; we use a Total Rewards approach aligned to our business strategy and country specific market influences. We offer competitive compensation and benefit programs in each country where we operate. During the COVID-19 pandemic we implemented cost reduction initiatives that impacted our employee compensation and rewards. At the start of 2022 base-pay was restored for all our employees.

 

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Re-assign: To ensure that we have a workforce that is optimized to maintain our competitive advantage and, when possible, to ensure employee development and career progression, Core Lab enlists several forms of reassignment opportunities such as, transfers, promotions and international assignments. We also follow a robust and progressive performance management approach prior to termination of any employee.

 

   

Building Our Bench: In 2022, we took a step forward in highlighting our commitment to building diverse and inclusive teams through the Building Our Bench program and five-year plan. Through this program, we will move from a systematic approach to a systemic approach, building our bench and our collective ambition across the Company. The plan will create diverse candidate pools, increase our internal awareness, and expand the ability to leverage diversity in creating business value.

What Guides Our Executive Compensation Program

Compensation Philosophy and Objectives

Our executive compensation program is designed to create a strong financial incentive for our NEOs to maximize ROIC and other financial and operational metrics, which we believe leads to long-term sustainable growth in stakeholder value. Our compensation philosophy is driven by the following guiding principles and objectives:

 

Guiding Principle

  

Objective

Pay for Performance

   Drive performance relative to our financial goals, which are designed to achieve growth in shareholder returns and long-term value creation

Competitiveness

   Provide compensation at levels that will attract, motivate, and retain highly qualified executives who are focused on the long-term best interests of our shareholders

Stakeholder Alignment

   Reinforce a culture of ownership and long-term commitment to stakeholder interests through alignment of Corporate, Environmental and Social Governance

The Core Elements of Compensation

The core elements of executive compensation are summarized in the table below:

 

Element

  

Form

  

What It Does

  

How It Links to Performance

Base Salary    Cash (Fixed)    Provides a competitive rate relative to similar positions in the oilfield services industry and other service-based industries, and enables the Company to attract and retain critical executive talent   

•  Based on job scope, level of responsibilities, experience, tenure and market levels

Annual Cash Incentive Plan    Cash (Variable and At-Risk)    Focuses executives on achieving annual financial and operational goals that drive long-term stockholder value   

•  Payouts: zero to 2x target for Mr. Bruno and Hill, and zero to 1.3x target for Ms. Gresham and Mr. Tattoli, based on annual performance

•  Combination of absolute and relative financial and non-financial goals

 

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Element

  

Form

  

What It Does

  

How It Links to Performance

Long-Term Incentive Plan (LTIP)    Equity (Variable and At-Risk)    Provides incentives for executives to execute on longer-term financial/strategic growth goals that drive value creation and support talent retention   

•  Payouts: 0% to 150% of target, based on performance over a three-year period

•  Combination of relative (ROIC) and absolute (TSR) performance

Pay Mix: Emphasis on Variable Performance-based Compensation

The charts below show the target compensation of our Chief Executive Officer (“CEO”) and our other NEOs for fiscal year 2022. These charts illustrate that a majority of NEO compensation is performance-based and variable (84% for our CEO and an average of 72% for our other NEOs). We view each compensation element as a different means of encouraging and promoting performance. These elements are designed to work in tandem, not against each other. The weighting of these compensation components is consistent with the market and puts a material, significant portion of the executives’ total direct compensation “at risk” if Company performance declines or underperforms relative to the Bloomberg Comp Group and/or the compensation peer group described further below.

 

LOGO

CEO Realizable Compensation: Aligned with Performance

Our emphasis on at-risk, variable and performance-based pay elements, particularly equity incentives, helps to ensure that the actual compensation realized by our NEOs aligns with returns to our shareholders. As shown in the charts below, the relationship between CEO realizable and target pay over the past five years has aligned closely with our total shareholder return performance.

 

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CEO REALIZABLE PAY ALIGNED WITH PERFORMANCE(1)

 

LOGO

(1)   Mr. Demshur served as CEO of the Company until his retirement in May 2020.

Target compensation includes base salary, target annual incentive award, and the grant-date value of performance share units. Realizable compensation includes base salary, actual annual cash incentive paid, and the value of performance share units determined by whether the awards are still outstanding as of the end of the year or have been settled during that year. Any performance share units settled within the five-year period have been adjusted for actual payout percent. Outstanding performance share unit awards have been valued assuming a target payout with the stock price that is applicable at the end of each year.

The Role of the Compensation Committee

Our Compensation Committee’s principal functions include conducting periodic reviews of the Company’s compensation and benefits programs to ensure that they are properly designed to meet corporate objectives, overseeing of the administration of the cash incentive and equity-based plans and developing the compensation program for the Supervisory Directors.

The Compensation Committee generally focuses on compensation structures designed to reflect the middle range of the market. We believe that maintaining compensation opportunities in the middle range of our peer group supports recruitment and retention while ensuring that realized pay opportunities align appropriately with individual and Company performance. The Compensation Committee targets a market range rather than a specific percentile in order to respond better to changing business conditions, manage salaries and incentives more evenly over an individual’s career, and minimize potential for automatic increases in salaries and incentives that could occur with inflexible and narrow competitive targets. The Compensation Committee links a significant

 

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portion of each executive’s total compensation to accomplishing specific, measurable results based on both Company and individual performance intended to create value for shareholders in both the short- and long-term. Only executives with performance exceeding established targets may exceed the market median in total compensation due to incentive compensation.

The Role of Management

Our CEO provides recommendations to the Compensation Committee in its evaluation of our other NEOs, including recommendations of individual cash and equity compensation levels for each of the remaining NEOs.

The Role of the Independent Compensation Consultant

Our Compensation Committee periodically retains a consultant to provide independent advice on executive compensation matters and to perform specific project-related work. During 2022, the Compensation Committee engaged Meridian Compensation Partners (“Meridian”) to provide information on pay levels and program design for 2022. The consultant reported to and acted at the direction of the Compensation Committee. The Compensation Committee assessed the independence of the firm pursuant to applicable SEC and NYSE rules and concluded that the firm’s work for the Compensation Committee did not raise any conflict of interest for 2022.

The Role of Market Compensation Analysis

The Compensation Committee reviews several sources as a reference for determining competitive total compensation packages. For 2022 executive compensation recommendations, the Compensation Committee reviewed and considered Meridian’s evaluation and analysis of compensation survey data from multiple general industry and industry-specific sources.

In addition, the Compensation Committee reviews proxy statement data from the Company’s peer group (see below). This analysis was used to determine our NEOs’ base salary, annual incentive targets and long-term equity awards (100% performance-based) for 2022.

Selecting the Peer Group

The Compensation Committee, with the assistance of its independent consultants, developed a peer group of companies to be used for compensation comparison purposes (“Compensation Peer Group”). The Compensation Peer Group consists of publicly traded oilfield services companies comparable in size to our Company in terms of annual revenues and the value of ongoing operations. The following companies comprise our Compensation Peer Group used to evaluate the market for NEO compensation for 2022:

 

Baker Hughes Company

Champion X Corporation

Dril-Quip Inc.

Expro Group Holdings N.V.

Forum Energy Technologies

Fugro N.V.

Helix Energy Solutions Group

John Wood Group PLC

Oceaneering International

Oil States International

RPC, Inc.

TechnipFMC plc

TGS-NOPEC Geophysical Company ASA

 

The Compensation Committee periodically reviews the composition of our Compensation Peer Group to ensure it remains appropriate.

 

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2022 Compensation Program Details

Base Salary

Base salary is the fixed annual compensation we pay to an executive for performing specific job responsibilities. It represents the minimum income an executive may receive in any given year. We target annual base salaries in the middle range of our Compensation Peer Group for executives having similar responsibilities. The Compensation Committee may adjust salaries based on its annual review of the following factors:

 

   

the individual’s experience and background;

 

   

the individual’s performance during the prior year;

 

   

the benchmark salary data;

 

   

the general movement of salaries in the marketplace; and

 

   

our financial and operating results.

As a result of these factors, a particular executive’s base salary may be above or below the median of our Compensation Peer Group for a given year. The table below shows base salaries for each of our NEOs for the years ending December 31, 2022 and 2021. NEO salaries were fully reinstated in two installments of 10% in August 2021 and January 2022.

 

Name of Executive

   January 2022 (2) ($)      August 2021 (2) ($)      January 2021 (2) ($)  

Lawrence Bruno (1)

     820,000        738,000        656,000  

Christopher S. Hill (1)

     430,000        387,000        344,000  

Gwendolyn Y. Gresham (3)

     370,000        333,000        —    

Mark D. Tattoli (4)

     370,000        315,000        —    

 

(1)

NEO annual base salaries approved by the Compensation Committee in 2021, $820,000 for Mr. Bruno and $430,000 for Mr. Hill.

(2)

NEO salaries were reduced by a total of 20% from April 2020 to July 2021, Subsequently, NEO salaries were reinstated in two installments of 10% in August 2021 and January 2022.

(3)

Ms. Gresham became an executive officer in February 2021 and her annual base salary of $370,000 was approved by the Compensation Committee in 2021.

(4)

Mr. Tattoli became an executive officer in August 2021, at which time his base salary was $350,000. Mr. Tattoli’s salary was increased to $370,000 beginning January 1, 2022.

Annual Cash Incentives

All of our NEOs participate in our annual cash incentive plan. Under this plan, each NEO is assigned a target and a maximum bonus expressed as a percentage of his or her base salary. The target award opportunity is established as a percentage of the NEO’s salary based upon a review of the competitive data for that officer’s position, level of responsibility and ability to impact our financial success. The target bonus percentage and maximum bonus percentage for each NEO in 2022 is set forth in the table below.

 

          Award Percentages

Name of Executive

  

Title

   Target       Maximum

Lawrence Bruno

  

Chairman, President and Chief Executive Officer

   100%     200%

Christopher S. Hill

  

Senior Vice President and Chief Financial Officer

   75%     150%

Gwendolyn Y. Gresham

  

Senior Vice President, Corporate Development and
Investor Relations

   75%     130%

Mark D. Tattoli

  

Senior Vice President, Secretary and General Counsel

   75%     130%

 

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The target award opportunity is established as a percentage of the NEO’s salary based upon a review of the competitive data for that officer’s position, level of responsibility and ability to impact our financial success.

The Compensation Committee has set performance goals that are consistent with the Company’s business strategy and focus on creating long-term shareholder value. Performance is assessed based on the achievement of specific financial measures, safety metrics, operating objectives, and environmental, social and governance goals. The Compensation Committee may also consider individual contributions to performance results.

Relative Performance

Relative performance requires that NEOs achieve at least median performance among the Compensation Peer Group. The achievement of three different financial performance metrics accounts for 75% of the potential annual cash incentive award.

 

Metric

 

Description

  Weight

Revenue

 

Change in the Company’s annual revenue relative to Compensation Peer Group

  25%

Operating Margin

 

The Company’s margins relative to Compensation Peer Group

  25%

EPS

 

The Company’s annual EPS relative to Compensation Peer Group

  25%

Relative performance is assessed at the end of the year. Bloomberg data is analyzed on a trailing four-quarter period for the Compensation Peer Group for the period ending with the third quarter of the current year. This data is used to determine the Company’s percentile ranking in the Compensation Peer Group for each metric.

For each metric, the NEOs can achieve a maximum score of 25 and a minimum score of 12.5 for a ranking between the 100th and the 50th percentile, respectively. Performance below the 50th percentile on any metric results in a score of 0 for that metric. For example, if the Company’s ranking for change in revenue compared to the Compensation Peer Group’s change in revenue is at the 75th percentile, then the revenue metric would receive a score of 18.75, equivalent to a weighting of 18.75% for that metric.

Messrs. Bruno and Hill may earn up to 2x their target award opportunity, and Ms. Gresham and Mr. Tattoli may earn up to 1.3x their target award opportunity, for each metric in return for the Company finishing first (i.e., at the 100th percentile) in the Compensation Peer Group. Performance below the 50th percentile of the Compensation Peer Group on any metric will result in a zero percent payout for that metric. Performance between the 50th and the 100th percentile is calculated using straight-line interpolation as shown in the table below.

 

Percentile of Compensation Peer Group

  Below 50th   50th   100th

Payout as a Multiple of Target Award Opportunity (Messrs. Bruno and Hill)

  0   1.0x   2.0x

Payout as a Multiple of Target Award Opportunity (Ms. Gresham and Mr. Tattoli)

  0   1.0x   1.3x

Absolute Performance

Absolute performance accounts for 25% of the annual incentive award. The Compensation Committee evaluates the Company’s year-over-year improvement in the areas of safety and ESG. The Compensation Committee bases its determination primarily on objective third-party reports and may award a maximum score of up to 25, equivalent to a weighting of 25%, depending on the Company’s overall improvement in these areas. If the Compensation Committee determines that the Company’s performance has declined, it may award as little as zero for this metric.

 

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2022 Results

For 2022, our performance results were as follows:

 

Metric

   Weight   Ranking    Weighted Percent
of Maximum
Opportunity

Revenue

   25%   43rd percentile    0.00%

Operating Margin

   25%   93rd percentile    23.22%

EPS

   25%   64th percentile    16.07%
       

 

Weighted payout factor (relative)

        39.29%
       

 

Absolute Performance

   25%      25.00%
       

 

Weighted payout factor (total)

        64.29%
       

 

As shown, relative and actual performance under the plan produced a weighted payout factor equal to 64.29% of the maximum award opportunity. The table below reflects the actual annual cash incentive award earned by the NEOs and approved by the Compensation Committee. However, based upon a broader assessment of the Company’s financial performance and considering affordability, the Chairman of the Supervisory Board, acting on authority conferred upon him by the Compensation Committee, will determine whether to pay the cash incentive award, subject to continued improvement in the Company’s financial performance and market conditions.

 

Name of Executive

   Target Award
Opportunity
  Max Award
Opportunity
  Actual Award
Opportunity
  Actual Award
Earned ($)
     Actual Award
Paid (1) ($)
 

Lawrence Bruno

   100%   200%   129%     1,054,286         

Christopher S. Hill

   75%   150%   96%     414,643         

Gwendolyn Y. Gresham

   75%   130%   84%     309,214         

Mark D. Tattoli

   75%   130%   84%     309,214         

 

(1)

The Chairman of the Supervisory Board will determine whether to pay the cash incentive award, subject to continued improvement in the Company’s financial performance and market conditions.

Equity Incentive Compensation

We currently administer long-term incentive compensation awards through our LTIP. Under the LTIP, our NEOs are eligible for performance-based restricted shares.

Our Compensation Committee, based on recommendations from our CEO (other than with respect to awards for himself), determines the amount of each NEO’s grant by periodically reviewing competitive market data and each NEO’s long-term past performance, ability to contribute to our future success, and time in the current job. The Compensation Committee considers the risk of losing the executive to other employment opportunities and the value and potential for appreciation in our shares. The number of shares previously granted or vested pursuant to prior grants is not typically a factor in determining subsequent share grants to a NEO. The Compensation Committee considers the foregoing factors together and determines the appropriate amount of the award.

Performance Share Award Program (“PSAP”)

PSAP shares vest if we achieve certain performance goals generally over a three-year period, which allow us to compensate our employees as we meet or exceed our business objectives.

 

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PSAP Awards Generally

Under the PSAP, our NEOs are awarded rights to receive a pre-determined number of common shares if certain performance targets are met at the end of a three-year performance period and as specified in the applicable grant agreement. Awards vest at the end of each three-year performance period.

Performance share units may be earned based upon our ROIC performance against our Bloomberg Comp Group. In order for our NEOs to earn a target award, our performance must be at the 75th percentile of the group as shown in the chart below. Performance below the 50th percentile results in no payout.

 

ROIC Percentile of Bloomberg Comp Group

   Below 50th    50th    75th    100th

Shares Earned as a Percent of Target

   0%    50%    100%    150%

Beginning with PSAP shares awarded in 2020, the Compensation Committee included a modifier based upon absolute total shareholder return (“TSR”), such that the number of common shares awarded for performance in excess of the 75th percentile in ROIC will be reduced by one-half if TSR over the three-year performance period is negative.

2020 PSAP Awards

On February 11, 2020, we made grants of 134,900 restricted performance shares to three of our current NEOs. The three-year performance period began on January 1, 2020 and ended on December 31, 2022.

The 2020 PSAP awards to the executives who were NEOs on the grant date were as follows:

 

Name of Executive

   Target Award
(in Shares)
     2020 Performance
Period Proforma
ROIC Percentile
Rank (1)
   Approved Percent
of Target Award
Earned
  Actual
Share Earned
 

Lawrence Bruno

     91,212      72nd    100%     91,212  

Christopher S. Hill

     31,688      72nd    100%     31,688  

Gwendolyn Y. Gresham

     12,000      72nd    100%     12,000  

 

(1)

The Compensation Committee approved a proforma adjustment, after consideration of extraordinary items, to the Company’s 2020 ROIC Percentile Rank relative to the Bloomberg Comp Group.

In December 2022, the Compensation Committee made consideration for the adverse impact on the Company’s financial performance during 2022 caused by certain extraordinary items, including effects of the Russia-Ukraine conflict. After considering the financial impact caused by these extraordinary events, the Compensation Committee approved the vesting of the 2020 PSAP awards to Messrs. Bruno and Hill and Ms. Gresham at 100% of the target award on December 31, 2022, the end of the three-year performance period.

2022 PSAP Awards

On February 17, 2022, we made grants of 205,836 restricted performance shares to our current NEOs serving in 2022. The three-year performance period began on January 1, 2022 and will end on December 31, 2024.

The PSAP awards to our current NEOs were as follows:

 

Name of Executive

   Target Award
(in Shares)
     Maximum Possible
Incremental
Award (in Shares)
 

Lawrence Bruno

     127,424        191,136  

Christopher S. Hill

     43,236        64,854  

Gwendolyn Y. Gresham

     17,588        26,382  

Mark D. Tattoli

     17,588        26,382  

 

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Executive Compensation Policies

Stock Ownership Requirements

Alignment with shareholder interests is reinforced through meaningful stock ownership requirements among the NEOs. In order to help ensure that our NEOs maintain a meaningful ownership stake, the Compensation Committee has adopted the ownership requirements related to common shares outlined below:

 

NEO

  

Required Ownership
(multiple of salary)

CEO    5.0x
Other NEOs    3.0x

NEOs have five years from the date they become a NEO to comply with these guidelines as of December 31, 2022. All of our NEOs were either in compliance with their required ownership level or were still within the five-year compliance window for their position.

Clawback Policy

January 1, 2022, the Supervisory Board adopted a clawback policy applicable to performance-based compensation paid to the Company’s executives. The policy applies to any current or former executive of the Company who is or, as of the effective date, was an “officer” as that term is defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, which consists of all Section 16 filers of the Company, including the Company’s named executive officers.

Under the policy, if the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any financial reporting requirement under the securities laws and such noncompliance is attributable, in whole or in part, to the gross negligence, willful misconduct, fraud or other illegal or improper acts of an executive, including a violation of the Company’s Code of Conduct, then the Compensation Committee may, in its sole discretion, recover from the executive all or a portion of the performance-based compensation, whether cash or equity awards, paid to the executive at any time during the three completed fiscal years immediately prior to the date the Company is required to prepare an accounting restatement. The amount of compensation subject to recovery under the policy would be the excess paid to the executive based on the erroneous data giving rise to the restatement over the amount that would have been earned by the executive had the incentive compensation been based on the restated results. The policy applies to all incentive compensation granted, approved or awarded after the effective date of the policy.

Securities Trading Policy and Hedging Restrictions

We prohibit officers, directors and certain other managers from trading our securities on the basis of material, non-public information or “tipping” others who may so trade on such information and from trading in our securities without obtaining prior approval from our General Counsel. If a manager or officer does not have inside information that is material to the business, such officer or manager may trade immediately following quarterly earnings press releases during an open trading window. Any exceptions must be requested in writing and signed by our Chief Executive Officer, Chief Financial Officer or our General Counsel. The Company’s stock may not be placed on margin. Moreover, any derivative transaction which effectively shifts the economic risk of ownership to a third party, or any transaction that hedges or offsets, or is designed to hedge or offset, any decrease in the market value of our securities, is not allowed at any time by our NEOs and managers (including our directors), unless approved by the Compensation Committee. The policy does not apply to all of our employees, nor does it specifically apply to the designees of directors, executive officers or covered employees.

Health and Welfare Benefits

We offer a standard range of health and welfare benefits to all employees, including our NEOs. These benefits include medical, prescription drug, and dental coverages, life insurance, accidental death and dismemberment,

 

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long-term disability insurance and flexible spending accounts. Our plans do not discriminate in favor of our NEOs.

401(k)

We offer a defined contribution 401(k) plan to substantially all of our employees in the United States. We provide this plan to assist our employees in saving some amount of their cash compensation for retirement in a tax efficient manner. Participants may contribute up to 60% of their base and cash incentive compensation, subject to the current limits under the IRS Code. We provide safe harbor matching contributions under this plan up to the first 4% of the participant’s compensation and may make additional discretionary contributions. As of June 1, 2020, the safe harbor matching and discretionary contributions were suspended. On April 1, 2022, we reinstated one-half (equivalent to 2%) of the 401(k) match.

Deferred Compensation Plan

Through our subsidiary, Core Laboratories LP, we have adopted a nonqualified deferred compensation plan that permits certain employees, including our NEOs, to elect to defer all or a part of their cash compensation (base, annual incentives and/or commissions) from us until the termination of their status as an employee. Participating employees are eligible to receive a matching deferral under the nonqualified deferred compensation plan that compensates them for contributions they could not receive from us under the 401(k) plan due to the various limits imposed on 401(k) plans by the U.S. federal income tax laws. As of June 1, 2020, the matching deferral contribution was suspended and the suspension continued through the first quarter of 2022. On April 1, 2022 we reinstated the deferral match at 2%.

Discretionary employer contributions may also be made on behalf of participants in the plan and are subject to discretionary vesting schedules determined at the time of such contributions. Vesting in employer contributions is accelerated upon the death or disability of the participant or a change in control. Discretionary employer contributions under the plan are forfeited upon a participant’s termination of employment to the extent they are not vested at that time. We made discretionary employer contributions to the nonqualified deferred compensation plan on behalf of Messrs. Bruno, Hill, Tattoli and Ms. Gresham in accordance with each executive’s employment agreement, subject to a threshold based on ROIC measured against the trailing four-quarter period ended on September 30, 2022. During 2021, the age to be attained for immediate vesting changed from 62-12 years to 62 years.

Other Perquisites and Personal Benefits

We do not offer any perquisites or other personal benefits to any executive with a value over $10,000 beyond those discussed within this proxy and specifically in the table “Summary Compensation for the Years Ended December 31, 2020, 2021 and 2022” and the supplemental table titled “All Other Compensation from Summary Compensation Table” within this proxy statement.

We believe in the importance of providing attractive intangible benefits to all employees such as open and honest communications, ethical business practices, and a safe work environment.

Deductibility of Compensation Over $1 Million

Section 162(m) of the Internal Revenue Code generally limits the amount of compensation that may be deducted per covered employee to $1 million per taxable year. A “covered employee” for purposes of Section 162(m) generally includes each of our NEOs. The Compensation Committee views the tax deductibility of executive compensation as one factor to be considered in the context of its overall compensation philosophy and will consider the impact of any material tax laws on our Company’s compensation program. The Compensation Committee reviews each material element of compensation on a continuing basis to determine whether

 

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deductibility can be accomplished without sacrificing flexibility and other important elements of the overall executive compensation program. Accordingly, the Compensation Committee will continue to retain the discretion to pay compensation that is not deductible.

 

Employment Agreements and Change in Control Agreements

The employment agreements with Messrs. Bruno and Hill, Ms. Gresham and Mr. Tattoli remain in effect for and generally provide for severance compensation to be paid if the employment of these individuals is terminated under certain conditions. Effective October 18, 2021, the employment agreements for Messrs. Bruno and Hill and Ms. Gresham were amended and restated, and we entered into the employment agreement with Mr. Tattoli effective the same date. These agreements, as amended where applicable, are described in greater detail in “Information About Our Named Executive Officers and Executive Compensation—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table—Employment Agreements.”

Change in Control

As part of our normal course of business, we engage in discussions with other companies about possible collaborations and/or other ways in which the companies may work together to further our respective long-term objectives. In addition, many larger, established companies consider companies at similar stages of development to ours as potential acquisition targets. In certain scenarios, the potential for a merger or being acquired may be in the best interests of our stakeholders. We provide severance compensation if certain of our executives’ employment is terminated following a change in control transaction to promote the ability of our senior executives to act in the best interests of our stakeholders even though their employment could be terminated as a result of the transaction.

Termination Without Cause

If we terminate the employment of a NEO without cause as defined in their applicable agreements, we would be obligated to continue to pay him or her certain amounts as described in greater detail in “Potential Payments Upon Termination or Change in Control.” We believe these payments are appropriate because the terminated executive is bound by confidentiality, non-solicitation and non-compete provisions covering the two-year period immediately following termination of service and because the Company and each executive have mutually agreed to a severance package that is in place prior to any termination event. This provides us with more flexibility to make a change in senior management if such a change is in the best interests of the Company and our shareholders.

Named Executive Officers

As of December 31, 2022, our NEOs consisted of Messrs. Bruno and Hill, Ms. Gresham and Mr. Tattoli. The following biography describes the business experience of Messrs. Bruno and Hill, Ms. Gresham and Mr. Tattoli. Our NEOs are not Managing Directors of our Company for purposes of Dutch law.

Mr. Bruno, who is 63 years of age, became President of the Company on February 1, 2018 and on January 1, 2019, he also assumed the position of Chief Operating Officer. On May 20, 2020, Mr. Bruno succeeded Mr. David Demshur as the Chairman of the Supervisory Board and Chief Executive Officer and has led the Company’s global operations for both of its business segments, Reservoir Description and Production Enhancement. Over the last several years, Mr. Bruno has served as a technical spokesperson for many investor presentations and panels in the oil and gas industry, and has been instrumental in driving the Company’s technology innovation that will continue to be a critical strength in the years to come. Mr. Bruno previously led the Company’s global reservoir-based laboratories within the Company’s Reservoir Description segment, from July 2015 through January 31, 2018. Mr. Bruno has been in the industry for more than 35 years and with the

 

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Company for more than 22 years. Prior to being named as President of the Petroleum Services division in July 2015, Mr. Bruno was the General Manager of U.S. Rocks from 1999 to July 2015. Prior to joining the Company, he was employed at an oil and gas service company for 14 years before it was acquired by the Company in 1999. Mr. Bruno received a Master’s of Science degree in Geology in 1987 from the University of Houston.

Mr. Hill, who is 53 years of age, has been with the Company for over sixteen years, most recently as Chief Financial Officer, since May 24, 2018, after serving as Vice President, Chief Accounting Officer from May 2015 to May 2018. Since joining the Company in October 2006, Mr. Hill led the Company’s Investor Relations effort, was Corporate Group Controller based in Amsterdam, and was Controller of Financial Reporting. Prior to joining the Company, he worked at Halliburton from August 2000 to October 2006 as Controller—Energy & Chemicals of the KBR Division and Corporate Director of Training and Accounting Research. Mr. Hill, a CPA, worked at Ernst & Young from January 1993 until August 2000, where he held the position of Manager his last three years there. Mr. Hill has a B.B.A. in Accounting from Texas A&M University, and an M.B.A. degree from Rice University.

Ms. Gresham, who is 55 years of age, has been with the Company for over sixteen years. Since 2016 Ms. Gresham has served as Senior Vice President, Corporate Development and Investor Relations, leading the Company’s Sustainability, Investor Relations, Risk Management, and Human Resources functions. Since joining the Company in October 2006, Ms. Gresham led the Company’s Human Resources and Sustainability efforts, as Corporate Vice President based in Amsterdam from 2013 to 2016 and Director of U.S. Human Resources from 2006 to 2013. Prior to joining the company, Ms. Gresham worked at Texas Children’s Hospital Integrated Delivery System and the University of Texas MD Anderson as Assistant Director of Leadership Development and Director of Human Resources, respectively. Ms. Gresham has a B.S in Business from Lubbock Christian University and an M.B.A. from Texas Women’s University.

Mr. Tattoli, who is 51 years of age, has been with the Company for over ten years, most recently as Senior Vice President, Secretary and General Counsel, since July 1, 2021, after serving as Assistant General Counsel since November 2012. Mr. Tattoli oversees all aspects of the Company’s legal and compliance matters. Mr. Tattoli has 20 years of industry experience acting as in-house counsel and outside counsel for companies in the petroleum industry across all sectors, including upstream, midstream and downstream. Prior to joining the Company, he worked in private practice initially with the law firm of Haynes & Boone LLP in its Austin and Houston, Texas offices, and most recently as a partner at the law firm of Buchanan, Ingersoll and Rooney PC in Pittsburgh, Pennsylvania. While in private practice, Mr. Tattoli advised public and private clients on mergers and acquisitions, joint venture formation and structuring, debt and equity securities offerings, and general corporate governance and transactional matters. Mr. Tattoli has a B.S. in Chemical Engineering from the University of Notre Dame, and J.D. and M.B.A. degrees from the University of Texas at Austin.

 

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Summary Compensation

The following table summarizes, with respect to our Chief Executive Officer and each of our other NEOs as of December 31, 2022, information relating to the compensation earned for services rendered to the Company in all capacities during fiscal years 2020, 2021, and 2022.

Summary Compensation

for the Years Ended December 31, 2020, 2021 and 2022

 

Name of Executive
and Principal
Position

  Year     Salary (1)
($)
    Stock
Awards (2)
($)
    Non-Equity
Incentive Plan
Compensation
(3)
($)
    Change in Post-
employment
Benefit Value and
Nonqualified
Deferred
Compensation
Earnings (4)
($)
    All Other
Compensation
(5)

($)
    Total
($)
 

Lawrence Bruno

Chairman, President and Chief Executive Officer

    2022       820,000       4,873,523       1,054,286       —         185,730       6,933,539  
    2021       820,000       4,939,861       459,889       —         328,380       6,548,130  
    2020       820,000       4,257,913       —         —         367,131       5,445,044  

Christopher S. Hill

Senior Vice President, and Chief Financial Officer

    2022       430,000       1,653,626       414,643       —         44,700       2,542,969  
    2021       430,000       1,780,872       180,871       —         91,782       2,483,525  
    2020       430,000       1,479,243       —         —         118,029       2,027,272  

Gwendolyn Y. Gresham (6)

Senior Vice President, Corporate Development and Investor Relations

    2022       370,000       672,680       309,214       —         39,677       1,391,570  
    2021       370,000       724,414       134,882       —         74,162       1,303,458  

Mark D. Tattoli (6)

Senior Vice President, Secretary and General Counsel

    2022       370,000       672,680       309,214       —         37,834       1,389,728  
    2021       350,000       290,979       73,796       —         35,106       749,881  

David M. Demshur (7)

Former Chairman, Chief Executive Officer and Supervisory Director

    2020       1,040,000       6,750,425       —         708,000       4,033,189       12,531,614  
             

 

(1)

The values in this column disclose the full amount of base salary earned with respect to the 2020, 2021 and 2022 years, and therefore do not reflect the temporary reductions in base salaries that occurred in the respective years for Messrs. Bruno and Hill, Ms. Gresham and Mr. Tattoli.

(2)

The amounts included in the “Stock Awards” column include the aggregate grant date fair value of the equity-based awards granted during 2020, 2021 and 2022, and have been computed in accordance with FASB ASC Topic 718, formerly FAS 123I disregarding any estimate for forfeitures. Assumptions used in the calculation of these amounts are included in Note 17 to our audited financial statements for the fiscal years ended December 31, 2020, 2021 and 2022. See “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table” for a description of the material features of these awards. For accounting purposes, the probable outcome for the awards is the maximum level.

(3)

In 2022 Messrs. Bruno and Hill, Ms. Gresham and Mr. Tattoli partially earned the cash incentive bonus, however the Chairman of the Supervisory Board will determine whether to pay the bonus, subject to continued improvement in the Company’s financial performance and market conditions. With respect to the 2021 year, Messrs. Bruno and Hill, Ms. Gresham and Mr. Tattoli earned the full cash incentive bonuses, however the Chairman of the Supervisory Board elected to award a reduced payment. In 2020, Messrs. Bruno and Hill declined such awards due to industry market conditions.

(4)

The changes in post-employment benefit values for 2020, 2021 and 2022 were primarily the result of changes in the underlying actuarial assumptions. Specifically, the interest rate is based on a federal rate that changes annually and the mortality tables are pursuant to Section 417 of the IRS Code, which is required for

 

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  valuing payouts from qualified plans. These changes were not the result of additional contributions or benefits accruing to the NEOs.
(5)

All Other Compensation is described in the section entitled “All Other Compensation from Summary Compensation Table.”

(6)

Ms. Gresham and Mr. Tattoli became executive officers in February 2021 and August 2021, respectively.

(7)

Mr. Demshur served as Chief Executive Officer and Chairman of the Board from May 2001 until his retirement on May 29, 2020.

All Other Compensation from Summary Compensation Table

The following table contains a breakdown of the compensation and benefits included under All Other Compensation in the Summary Compensation table above.

 

Name of Executive

   Year      Core 401(k)
Contributions (1)
($)
     Non-Qualified
Deferred
Compensation:
Company
Contributions (2)
     Company-
Owned
Life
Insurance (3)
($)
     All Other
Compensation
Total
($)
 

Lawrence Bruno

     2022        476        184,823        431        185,730  

Christopher S. Hill

     2022        1,558        43,000        142        44,700  

Gwendolyn Y. Gresham

     2022        2,492        37,000        185        39,677  

Mark D. Tattoli

     2022        2,720        35,000        114        37,834  

 

(1)

The Company partially reinstated matching contributions beginning in April 2022.

(2)

The amounts shown reflect the additional discretionary contributions made by the Company with respect to the 2022 plan year and made in 2022 in the amount of $164,000 for Mr. Bruno, $43,000 for Mr. Hill, $37,000 for Ms. Gresham and $35,000 for Mr. Tattoli. These discretionary contributions were made in accordance with each executive’s employment agreement subject to a threshold based on ROIC and will remain unvested until the executive reaches 62 years of age.

(3)

The amounts shown reflect premiums the Company pays for life insurance coverage for the NEOs, which insurance payments will be used to assist the Company with providing death benefits under the deferred compensation plan.

Grants of Plan-Based Awards

A total of 205,836 performance shares of plan-based awards at the target level were awarded to our Chief Executive Officer and the other NEOs in 2022 under the Company’s Long-Term Incentive Plan.

The following table provides information concerning each grant of an award made to our Chief Executive Officer and each of our other NEOs in 2022 under the Company’s Long-Term Incentive Plan and our annual cash incentive plan.

Grants of Plan-Based Awards for the Year Ended December 31, 2022

 

                Estimated Future
Payouts Under
Non-Equity
Incentive Plan
Awards (1)
    Estimated Future Payouts Under
Equity Incentive Plan Awards
    Grant Date
Fair Value of
Stock and
Option

Awards (2)
($)
 

Name of Executive

  Grant Date     Approval Date     Target
($)
    Maximum
($)
    Threshold
(#)
    Target
(#)
    Maximum
(#)
 

Lawrence Bruno

    2/17/2022       2/15/2022       820,000       1,640,000       63,712       127,424       191,136       4,873,523  

Christopher S. Hill

    2/17/2022       2/15/2022       322,500       645,000       21,618       43,236       64,854       1,653,626  

Gwendolyn Y. Gresham

    2/17/2022       2/15/2022       277,500       481,000       8,794       17,588       26,382       672,680  

Mark D. Tattoli

    2/17/2022       2/15/2022       277,500       481,000       8,794       17,588       26,382       672,680  

 

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(1)

The amounts shown in these columns reflect the potential target and maximum values approved on the date of the awards.

(2)

Awards shown are at maximum award for the 2022 PSAP grants for the NEOs.

The following is a discussion of material factors necessary to an understanding of the information disclosed in the Summary Compensation Table.

Employment Agreements

The information below describes the employment agreements that we maintained with Messrs. Bruno, Hill and Tattoli, and Ms. Gresham during the 2022 year, including any amendments that were made effective during the 2022 year, as applicable.

Lawrence Bruno

Mr. Bruno serves as President and Chief Executive Officer of the Company effective from May 20, 2020, pursuant to an employment agreement entered into on March 1, 2019 and subsequently amended and restated effective as of October 15, 2021. Unless either the Company or Mr. Bruno gives notice to terminate the agreement, the agreement will automatically renew each year on the anniversary of the effective date for a successive one-year term. Mr. Bruno’s employment agreement entitles him to a base salary of $820,000 per year, subject to increase at the discretion of the Compensation Committee, and the opportunity to earn an annual bonus of up to 200% of his then-current annual base salary dependent upon his reaching certain performance objectives established by the Compensation Committee and described above under “Compensation Discussion and Analysis—Elements of Compensation—Non-Equity Incentive Compensation.” The employment agreement allows Mr. Bruno to participate in all of our benefit plans and programs that are generally available to our other executive employees.

Christopher S. Hill

Mr. Hill serves as our Senior Vice President and Chief Financial Officer pursuant to an employment agreement entered into on March 1, 2019 and subsequently amended and restated effective as of October 15, 2021. Unless either the Company or Mr. Hill gives notice to terminate the agreement, the agreement will automatically renew each year on the anniversary of the effective date for a successive one-year term. Mr. Hill’s employment agreement entitles him to a base salary of $430,000 per year, subject to increase at the discretion of the Compensation Committee, and the opportunity to earn an annual bonus of up to 150% of his then-current annual base salary dependent upon his reaching certain performance objectives established by the Compensation Committee and described above under “Compensation Discussion and Analysis – Elements of Compensation – Non-Equity Incentive Compensation.” The employment agreement allows Mr. Hill to participate in all of our benefit plans and programs that are generally available to our other executive employees.

Gwendolyn Y. Gresham

Ms. Gresham serves as our Senior Vice President, Corporate Development and Investor Relations pursuant to an employment agreement entered into on March 1, 2019 and subsequently amended and restated effective as of October 15, 2021. Unless either the Company or Ms. Gresham gives notice to terminate the agreement, the agreement will automatically renew each year on the anniversary of the effective date for a successive one-year term. Ms. Gresham’s employment agreement entitles her to a base salary of $370,000 per year, subject to increase at the discretion of the Compensation Committee, and the opportunity to earn an annual bonus of up to 130% of her then-current annual base salary dependent upon her reaching certain performance objectives established by the Compensation Committee and described above under “Compensation Discussion and Analysis—Elements of Compensation—Non-Equity Incentive Compensation.” The employment agreement allows Ms. Gresham to participate in all of our benefit plans and programs that are generally available to our other executive employees.

 

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Mark D. Tattoli

Mr. Tattoli serves as our Senior Vice President, Secretary and General Counsel pursuant to an employment agreement entered into effective as of October 15, 2021. Unless either the Company or Mr. Tattoli gives notice to terminate the agreement, the agreement will automatically renew each year on the anniversary of the effective date for a successive one-year term. Mr. Tattoli’s employment agreement entitles him to a base salary of $370,000 per year, subject to increase at the discretion of the Compensation Committee, and the opportunity to earn an annual bonus of up to 130% of his then-current annual base salary dependent upon him reaching certain performance objectives established by the Compensation Committee and described above under “Compensation Discussion and Analysis—Elements of Compensation—Non-Equity Incentive Compensation.” The employment agreement allows Mr. Tattoli to participate in all of our benefit plans and programs that are generally available to our other executive employees.

Outstanding Equity Awards at Fiscal Year End

The following table provides information concerning stock that has not vested and equity incentive plan awards for our Chief Executive Officer and each of our other NEOs as of the end of our last completed fiscal year. None of our NEOs held unexercised options as of the end of our last completed fiscal year.

Outstanding Equity Awards

at December 31, 2022

 

     Performance Share Award Program      Restricted Share Award Program  

Name of Executive

   Equity and Incentive
Plan Awards:
Number of
Shares or Units
of Stock That
Have Not Vested (1)
(#)
     Equity and Incentive
Plan Awards:
Market Value of
Shares or Units
of Stock That
Have Not Vested (2)
($)
     Equity and Incentive
Plan Awards:
Number of
Shares or Units
of Stock That
Have Not Vested (1)
(#)
     Equity and Incentive
Plan Awards:
Market Value of
Shares or Units of
Stock That
Have Not Vested (2)
($)
 

Lawrence Bruno

     332,394        6,737,626        —          —    

Christopher S. Hill

     115,779        2,346,840        —          —    

Gwendolyn Y. Gresham

     47,097        954,656        —          —    

Mark D. Tattoli

     33,282        674,626        6,050        122,634  

 

(1)

Awards shown are at maximum award for the 2021 and 2022 PSAP grants for Messrs. Bruno, Hill and Tattoli and Ms. Gresham.

(2)

Market Value is based on the closing price on December 30, 2022 (the last NYSE trading day of the year) of $20.27 per share.

Vesting Schedule for Unvested PSAPs

 

                   Vesting Schedule at
Target
 

Name of Executive

   Type of Award      Grant Date      2023      2024  

Lawrence Bruno

     PSAP        February 19, 2021        141,258        —    
        February 17, 2022        —          191,136  

Christopher S. Hill

     PSAP        February 19, 2021        50,925        —    
        February 17, 2022        —          64,854  

Gwendolyn Y. Gresham

     PSAP        February 19, 2021        20,715        —    
        February 17, 2022        —          26,382  

Mark D. Tattoli

     PSAP        February 19, 2021        6,900        —    
        February 17, 2022        —          26,382  

 

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Vesting Schedule for Unvested RSAPs

 

Name of Executive

   Type of Award      Grant Date    2023      2024      2025      2026      2027  

Mark D. Tattoli

     RSAP      December 1, 2017      160        —          —          —          —    
      August 1, 2018      120        120        —          —          —    
      May 1, 2019      200        200        200        —          —    
      May 1, 2020      250        250        250        250        —    
      October 1, 2020      700        700        700        700        —    
      August 1, 2021      250        250        250        250        250  

The following table provides information concerning each vesting of stock, including restricted stock, restricted stock units and similar instruments during the last completed fiscal year on an aggregated basis with respect to each of our NEOs.

Stock Vested

for the Year Ended December 31, 2022

 

     Stock Awards  

Name of Executive

   Number of Shares
Acquired on Vesting
(#)
     Value Realized
on Vesting
($)
 

Lawrence Bruno

     91,212        1,848,867  

Christopher S. Hill

     31,688        642,316  

Gwendolyn Y. Gresham

     12,000        243,240  

Mark D. Tattoli

     1,790        36,283  

Nonqualified Deferred Compensation Plan

The following table provides information relating to our NEOs’ benefits in our nonqualified deferred compensation plans, including, with respect to each NEO, the aggregate contributions made by such NEO during the year ended December 31, 2022, the aggregate contributions made by the Company during the year ended December 31, 2022 on behalf of the NEO, the aggregate interest or other earnings accrued during the year ended December 31, 2022, the aggregate value of withdrawals and distributions to the NEO during the year ended December 31, 2022, and the balance of each account as of December 31, 2022.

Nonqualified Deferred Compensation

for the Year Ended December 31, 2022

 

Name of Executive

  Aggregate
Balance at
December 31,
2021 ($)
    Executive
Contributions
in 2022 (1)
($)
    Company
Contributions
in 2022 (2)
($)
    Aggregate
Earnings
(Losses) in
2022
($)
    Aggregate
Withdrawals/
(Distributions)
($)
    Aggregate
Balance at
December 31,
2022
($)
 

Lawrence Bruno

    1,711,441       173,060       184,823       (317,498     —         1,751,826  

Christopher S. Hill

    843,198       —         43,000       (206,925     —         679,273  

Gwendolyn Y. Gresham

    276,327       —         37,000       4,302       —         317,629  

Mark D. Tattoli

    369,718       —         35,000       (105,564     —         299,154  

 

(1)

All amounts reflected in this column were originally reported as “Salary” within the Summary Compensation table.

(2)

Company contributions are included in the Summary Compensation table in the All Other Compensation column for 2022.

Since 2006, the Company has made certain matching contributions on participant salary reduction deferrals to our nonqualified deferred compensation plan. The plan also provides for employer contributions equal in amount

 

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to certain forfeitures of, and/or reductions in, employer contributions that participants could have received under our 401(k) plan in the absence of certain limitations imposed by the IRS Code. Distributions of a participant’s plan benefits can only be made under certain prescribed circumstances, such as termination of employment or upon a specified date as elected by the participant. In the event of a termination of employment (other than by death or disability) of a “key employee,” distributions must be delayed for six months. A participant’s plan benefits include the participant’s deferrals, the vested portion of the employer’s contributions, and deemed investment gains and losses on such amounts. In the case of a participant who dies while employed with the Company, an additional $50,000 life insurance benefit will also be paid under the nonqualified deferred compensation plan to the participant’s beneficiary. The plan was amended in 2008 to comply with the American Jobs Creation Act of 2004 to reflect certain statutorily mandated requirements applicable to the plan. For additional information, see “Components of Executive Compensation – Deferred Compensation Plan.”

Potential Payments Upon Termination or Change in Control

We have entered into certain agreements and maintain certain plans that require us to provide compensation and/or benefits to our NEOs in the event of a termination of employment or a change in control of the Company.

Messrs. Bruno and Hill and Ms. Gresham entered into their respective employment agreements on March 1, 2019, as amended and restated on October 18, 2021, and each could receive potential benefits pursuant to those agreements at termination or upon the occurrence of certain events. The compensation and benefits described in the tables beginning on page 108 assume that any termination of employment for Messrs. Bruno or Hill, or Ms. Gresham, was effective as of December 31, 2022, and thus includes amounts earned through that date.

Mr. Tattoli entered into his employment agreement on October 18, 2021, and could receive potential benefits pursuant to that agreement at termination or upon the occurrence of certain events. The compensation and benefits described in the tables beginning on page 108 assume that any termination of employment for Mr. Tattoli was effective as of December 31, 2022, and thus includes amounts earned through that date.

The tables beginning on page 108 provide estimates of the compensation and benefits that would be provided to the applicable NEOs upon their termination of employment or a change in control; however, in the event of an NEO’s separation from the Company or a change in control event, any actual amounts will be determined based on the facts and circumstances in existence at that time.

Employment Agreements

The Bruno, Hill, Gresham and Tattoli Employment Agreements

Effective October 15, 2021, we amended and restated the 2019 employment agreements with Messrs. Bruno and Hill and Ms. Gresham, and entered into an employment agreement with Mr. Tattoli (collectively the “2021 Employment Agreements”). These agreements are also described in “Information About Our Named Executive Officers and Executive Compensation—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table—Employment Agreements.”

Pursuant to the terms of the 2021 Employment Agreements, in the event that (A) any of the executives are terminated by the Company for any reason other than (i) death, (ii) Disability (as defined below), (iii) Cause (as defined below), or (iv) the executive’s material breach of a material provision of his or her 2021 Employment Agreement, (B) the executive terminates his or her employment with the Company for Good Reason (as defined below), or (C) the Company determines not to renew the executive’s employment agreement with the Company at expiration of the term, the executive shall be entitled to receive the following:

 

(I)

if such termination occurs at any time other than within two years following a Change in Control (as defined below):

 

  (1)

an amount equal to the sum of (a) a multiple of the executive’s annual base salary in effect immediately prior to the termination (such multiple being two (2) times for Mr. Bruno and one and one-half

 

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  (112) times for Mr. Hill, Ms. Gresham and Mr. Tattoli), plus (b) a pro-rata bonus calculated by multiplying the target incentive bonus amount for the year in which the termination occurs by the number of days during the applicable year that the executive was employed (the “Pro-Rata Bonus”) (together, the “Severance Payment”); and

 

  (2)

continued coverage under the Company’s medical, dental, and group life insurance plans for the executive, the executive’s spouse and the executive’s dependent children after termination at no cost to the executive for twenty-four (24) months for Mr. Bruno and eighteen (18) months for Mr. Hill, Ms. Gresham, and Mr. Tattoli, and thereafter, such coverage may be extended provided the executive pays the employee portion of the insurance premium; accelerated vesting of outstanding equity awards, with the vesting of performance-based awards measured against performance criteria as of the most recent quarter-end; and reimbursement of up to $25,000 for outplacement services for a period of twelve months following termination.

 

(II)

if such termination occurs at any time within two years following a Change in Control (as defined below):

 

  (1)

an amount equal to the sum of (a) a multiple (three (3) for Mr. Bruno and two and one-half (212) for Mr. Hill, Ms. Gresham and Mr. Tattoli) times the sum of (i) the executive’s annual base salary as in effect immediately prior to the termination, and (ii) the target annual incentive bonus the executive could have earned for the year of termination, plus (b) the Pro-Rata Bonus (together, the “Change in Control Payment”); and

 

  (2)

continued coverage under the Company’s medical, dental and group life insurance plans for the executive, executive’s spouse and the executive’s dependent children at no cost to the executive for thirty-six (36) months for Mr. Bruno and thirty (30) months for Mr. Hill, Ms. Gresham and Mr. Tattoli, and thereafter, such coverage may be extended provided the executive pays the employee portion of the insurance premium; accelerated vesting of outstanding equity awards, with the vesting of performance-based awards measured against performance criteria as of the most recent quarter-end; and reimbursement of up to $25,000 for outplacement services for a period of twelve months following termination.

In the event that the payments and benefits received by an executive in connection with a Change in Control constitute “parachute payments” (as defined in Section 280G of the Code), the payments and benefits provided to that executive shall either be reduced to $1.00 below the amount that would subject the payments to excise taxes pursuant to Section 4999 of the Code, or paid in full, whichever will result in the better net tax position for the executive.

The 2021 Employment Agreements provide that any unvested contributions to the executives’ accounts with respect to our Nonqualified Deferred Compensation Plan would vest upon the executive reaching age 62 and would likewise immediately vest upon (i) termination of the executive’s employment due to death or Disability, (ii) non-renewal of the executive’s employment agreement with the Company, (iii) termination by the executive for Good Reason, or (iv) a Change in Control event. The 2021 Employment Agreements also provide that notwithstanding anything to the contrary within an individual award agreement, any restricted stock awards granted to the executive will not be forfeited upon the executive’s voluntary retirement on or after age 62. Additionally, the 2021 Employment Agreements provide benefits to each executive upon his or her voluntary retirement on or after age 62, consisting of continued coverage under the Company’s medical, dental, and group life insurance plans for the executive, the executive’s spouse and the executive’s dependent children after termination at no cost to the executive for twenty-four (24) months for Mr. Bruno and eighteen (18) months for Mr. Hill, Ms. Gresham, and Mr. Tattoli, and thereafter, such coverage may be extended provided the executive pays the employee portion of the insurance premium.

The Severance Payment or the Change in Control Payment, as applicable, will generally be paid to the executive in equal installments over a twelve-month period following the applicable termination of employment, although certain payments may be made at different times in order to comply with Section 409A of the Code.

 

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The 2021 Employment Agreements contain customary confidentiality restrictions and impose noncompetition restrictions on the executives during their employment and for a period of two years following a termination of employment for any reason other than a termination by us without Cause or by the executive without Good Reason.

For purposes of the 2021 Employment Agreements, the terms below are generally defined as follows:

 

   

“Cause” means the executive (i) has been convicted of a misdemeanor involving moral turpitude or a felony, (ii) has engaged in conduct which is materially injurious (monetarily or otherwise) to us or any of our affiliates, or (iii) has engaged in gross negligence or willful misconduct in the performance of executive’s duties.

 

   

“Change in Control” means a merger of the Company with another entity, a consolidation involving the Company, or the sale of all or substantially all of the assets of the Company if (i) the holders of equity securities of the Company immediately prior to the transaction do not beneficially own immediately after the transaction 50% or more of the common equity of the resulting entity, (ii) the holders of equity securities of the Company immediately prior to the transaction do not beneficially own immediately after the transaction 50% of the voting securities of the resulting entity, or (iii) the persons who were members of the Supervisory Board of Directors immediately prior to the transaction are not the majority of the board of the resulting entity immediately after the transaction. A Change in Control also occurs when (i) there is shareholder approval of a plan of dissolution or liquidation of the Company, (ii) any person or entity acquires or gains ownership of control of more than 30% of the combined voting power of outstanding securities of the Company or resulting entity, or (iii) a change in the composition of the Supervisory Board of Directors the results of which are that fewer than a majority of the supervisory directors are incumbent directors.

 

   

“Disability” means that the executive has become incapacitated by accident, sickness or other circumstance that renders the executive mentally or physically incapable of performing the duties and services required of the executive pursuant to the 2021 Employment Agreements on a full-time basis for a period of at least 180 consecutive calendar days.

 

   

“Good Reason” means (i) a material diminution in the executive’s authority, duties or responsibilities, (ii) a permanent change in location of executive’s principal place of employment that is more than 50 miles away from the prior location, (iii) a material breach by us of any material provision of the 2021 Employment Agreements, or (iv) a material diminution of the executive’s annual base salary.

Nonqualified Deferred Compensation Plan

See the Nonqualified Deferred Compensation Table on page 112 and subsequent narrative discussion for a description of the benefits payable to the NEOs under the Nonqualified Deferred Compensation Plan upon death or separation from service and in connection with a change in control.

Equity Award Program

Awards under our PSAP and RSAP will vest in full (at target award) in the event an NEO’s service is terminated by reason of his or her death or disability or upon the occurrence of a Change in Control. As of December 31, 2022, following the vesting of the 2020 PSAP award, Mr. Bruno has two PSAP awards worth $6.7 million, Mr. Hill has two PSAP awards worth $2.3 million, Ms. Gresham has two PSAP awards worth $1.0 million and Mr. Tattoli has two PSAP awards worth $0.7 million and six RSAP awards worth $0.1 million. Please see table in “Information About Our Named Executive Officers—Outstanding Equity Awards at Fiscal Year End” on page 111 for further description of the assumptions used to calculate the value of the awards.

The tables below reflect the amount of compensation that would be payable to each of Messrs. Bruno, Hill, Ms. Gresham and Mr. Tattoli in various scenarios involving termination of the NEO’s employment, including

 

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following a change in control. The amount of compensation payable to each applicable NEO upon voluntary termination, involuntary not-for-cause termination (non-change in control), voluntary termination for good cause or involuntary termination following a change in control, involuntary for cause termination, and termination in the event of death or disability of each applicable NEO is shown below. The amounts shown assume that the termination was effective on December 31, 2022, and thus includes amounts earned through that time and are estimates of the amounts which would be paid out to the applicable NEOs upon their termination. The amounts payable upon termination following a change in control assume that the change in control occurred on December 31, 2022, and the termination was effective the same day. The actual amounts to be paid out can only be determined at the time of the applicable NEO’s separation from us. Each NEO would also have available the value of unvested shares reflected in the Outstanding Equity Awards at Fiscal Year End table, if any. The value of accelerated equity award amounts reflected below have been calculated using the closing price of our common stock on December 30, 2022 (the last trading day of 2022) of $20.27.

 

Lawrence Bruno   Voluntary
Termination on
12/31/2022 (1)
($)
    Involuntary Not
For Cause
Termination on
12/31/2022 (1)
($)
    For Cause
Termination on
12/31/2022
($)
    Termination
related to
Change-in-
Control on
12/31/2022
($)
    Disability on
12/31/2022 (1)
($)
    Death on
12/31/2022 (1)
($)
 

Compensation:

           

Severance

    —         1,640,000       —         4,920,000       —         —    

Short-term Incentive

    —         820,000       —         820,000       —         —    

Long-term Incentives:

           

Accelerated Equity Award Programs

    —         6,737,626       —         6,737,626       6,737,626       6,737,626  

Benefits & Perquisites:

           

Health and Welfare Benefits

    418,500       418,500       —         418,500       —         —    

Outplacement Services

    —         25,000       —         25,000       —         —    

Accelerated Deferred Comp

    —         164,000       —         164,000       164,000       164,000  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    418,500       9,805,126       —         13,085,126       6,901,626       6,901,626  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Christopher S. Hill   Voluntary
Termination on
12/31/2022 (1)
($)
    Involuntary Not
For Cause
Termination on
12/31/2022 (1)
($)
    For Cause
Termination on
12/31/2022
($)
    Termination
related to
Change-in-
Control on
12/31/2022
($)
    Disability on
12/31/2022 (1)
($)
    Death on
12/31/2022 (1)
($)
 

Compensation:

           

Severance

    —         645,000       —         1,881,250       —         —    

Short-term Incentive

    —         322,500       —         322,500       —         —    

Long-term Incentives:

           

Accelerated Equity Award Programs

    —         2,346,840       —         2,346,840       2,346,840       2,346,840  

Benefits & Perquisites:

           

Health and Welfare Benefits

    —         501,900       —         501,900       —         —    

Outplacement Services

    —         25,000       —         25,000       —         —    

Accelerated Deferred Comp

    —         43,000       —         43,000       43,000       43,000  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

    —         3,884,240       —         5,120,490       2,389,840       2,389,840  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Gwendolyn Y. Gresham   Voluntary
Termination on
12/31/2022 (1)
($)
    Involuntary Not
For Cause
Termination on
12/31/2022 (1)
($)
    For Cause
Termination on
12/31/2022
($)
    Termination
related to
Change-in-
Control on
12/31/2022
($)
    Disability on
12/31/2022 (1)
($)
    Death on
12/31/2022 (1)
($)
 

Compensation:

           

Severance

    —         555,000       —         1,618,750       —         —    

Short-term Incentive

    —         277,500       —         277,500       —         —    

Long-term Incentives:

           

Accelerated Equity Award Programs

    —         954,656       —         954,656       954,656       954,656  

Benefits & Perquisites:

           

Health and Welfare Benefits

    —         381,100       —         381,100       —         —    

Outplacement Services

    —         25,000       —         25,000       —         —    

Accelerated Deferred Comp

    —         37,000       —         37,000       37,000       37,000  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

    —         2,230,256       —         3,294,006       991,656       991,656  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Mark D. Tattoli   Voluntary
Termination on
12/31/2022 (1)
($)
    Involuntary Not
For Cause
Termination on
12/31/2022 (1)
($)
    For Cause
Termination on
12/31/2022
($)
    Termination
related to
Change-in-
Control on
12/31/2022
($)
    Disability on
12/31/2022 (1)
($)
    Death on
12/31/2022 (1)
($)
 

Compensation:

           

Severance

    —         555,000       —         1,618,750       —         —    

Short-term Incentive

    —         277,500       —         277,500       —         —    

Long-term Incentives:

           

Accelerated Equity Award Programs

    —         797,260       —         797,260       797,260       797,260  

Benefits & Perquisites:

           

Health and Welfare Benefits

    —         585,700       —         585,700       —         —    

Outplacement Services

    —         25,000       —         25,000       —         —    

Accelerated Deferred Comp

    —         35,000       —         35,000       35,000       35,000  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

    —         2,275,460       —         3,339,210       832,260       832,260  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Messrs. Bruno and Hill, Ms. Gresham and Mr. Tattoli could vest in PSAP and RSAP awards following termination if the performance criteria for vesting is met at the end of the Performance Period. See table of Outstanding Equity Awards at Fiscal Year End on page 111.

Pay Ratio Disclosure

Pursuant to Item 402(u) of Regulation S-K, we are required to disclose the ratio of our CEO’s compensation to the annual total compensation of our median employee with respect to fiscal year 2022.

We determined that the annual total compensation of our CEO, Mr. Bruno, for 2022 was $6,933,539 for the purpose of the CEO pay ratio calculation. We determined that the median of the annual total compensation from the population of our employees (other than Mr. Bruno) was $63,477; therefore, the ratio of these two amounts is 109 to 1. Please see the Summary Compensation table on page 108 for our CEO’s compensation for 2022.

 

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Our most recent identification of the median employee was performed in 2020, during which we prepared a database including the total cash compensation consisting of base salary, allowance, bonus and other cash compensation paid as reflected in our payroll records for our global workforce (other than our CEO). As needed, amounts were converted from local currency to U.S. dollars.

For the median employee we identified from the database in 2020, who remained active in 2022, we updated all compensation elements of the median employee for 2022 to calculate total annual compensation with the same methodology used in the Summary Compensation table in accordance with SEC rules and regulations.

The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal payroll and employment records, and the methodology described above. SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio for our Company.

Pay-for-Performance Disclosure

In August 2022, the SEC issued a rule requiring disclosure of the relationship between executive compensation actually paid to the achievement of the Company’s financial and operational performance objectives. The following table provides information for our NEOs calculated in accordance with SEC regulations for the year ended December 31, 2020, 2021 and 2022:

 

                                        Value of Initial Fixed
$100 Investment Based
On:
    Stated
in
Millions
       

Year

  Summary
Compensation
Table Total
for First CEO
(1)
    Summary
Compensation
Table Total
for Second
CEO (1)
    Compensation
Actually Paid
to First CEO
(2)(5)
    Compensation
Actually Paid
to Second
CEO (2)
    Average
Summary
Compensation
Table Total
for Other
NEOs (1)
    Average
Compensation
Actually Paid
to Other
NEOs (2)(5)
    Total
Shareholder
Return
    Peer Group
Total
Shareholder
Return (3)
    Net
Income
    End of
Performance
Period
ROIC
Percentile
Rank (4)
 

2022

    6,933,539       —         5,083,376       —         1,774,756       1,424,804       54.77       77.80       19,658       72 nd 

2021

    6,548,130       —         3,511,963       —         1,512,288       786,584       60.07       51.07       20,219       100 th 

2020

    5,445,044       12,531,614       3,820,946       9,059,322       2,027,272       1,381,972       71.12       54.86       (97,497     87 th 

 

(1)

The CEO and the non-CEO NEOs for each year are as follows:

  a.

2022: Mr. Bruno (CEO), Mr. Hill, Ms. Gresham and Mr. Tattoli

  b.

2021: Mr. Bruno (CEO), Mr. Hill, Ms. Gresham, and Mr. Tattoli

  c.

2020: Mr. Bruno (CEO from May 29, 2020 to Present, or “First CEO”), Mr. Demshur (CEO from January 1, 2020 to May 29, 2020, or “Second CEO”) and Mr. Hill

(2)

The values in this column disclose the amount of compensation actually paid calculated in accordance with SEC rules. These amounts do not reflect the actual amounts of compensation paid to our NEOs during the respective year. More detailed tables follow these footnotes to explain the adjustments that were made to Summary Compensation Table values.

(3)

The values in this column disclose the average cumulative total shareholder return of the Compensation Peer Group as of December 31, 2022. The Compensation Peer Group is used by the Company for purposes of determining relative performance. Total Shareholder Return has been calculated in the same manner as provided in Item 201(e) of Regulation S-K under the Exchange Act.

(4)

ROIC is one of the performance conditions associated with NEO equity incentive compensation. ROIC percentile rank reflects proforma adjustments for extraordinary events occurring in 2020 and 2022.

(5)

There are no actuarial pension plans or other pension-related costs for our CEO and other NEOs during the respective year.

 

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The following tables contain a breakdown of the “Compensation Actually Paid to CEO” and “Average Compensation Actually Paid to Other NEOs” included in the table above.

 

     2022     2021     2020  

CEO SUMMARY COMPENSATION TABLE TOTALS

     6,933,539       6,548,130       5,445,044  

Add (Subtract):

      

Fair value of equity awards granted during the year from the Summary Compensation Table (1)

     (4,873,523     (4,939,861     (4,257,913

Fair value at year end of equity awards granted during the year

     3,576,792       2,897,202       3,425,467  

Change in fair value of equity awards granted in prior years that were unvested as of the end of the year

     (370,096     (669,496     (515,960

Change in fair value of equity awards granted in prior years that vested as of the end of the year

     (183,336     (194,179     (152,691

Equity awards granted in prior years that were forfeited during the year

     —         —         —    

Dividends or other earnings paid on equity awards during the year

     —         —         —    

Salary reduction due to COVID-19 Business Interruptions

     —         (129,833     (123,000
  

 

 

   

 

 

   

 

 

 

Total Equity Award Related Adjustments

     (1,850,163     (3,036,168     (1,624,098
  

 

 

   

 

 

   

 

 

 

COMPENSATION ACTUALLY PAID TOTALS

     5,083,376       3,511,963       3,820,946  
  

 

 

   

 

 

   

 

 

 

 

(1)

The values in this column are calculated based on grant date fair value of the equity awards granted to our CEO, Mr. Bruno, for the respective year. See the Summary Compensation Table for details.

 

         2022              2021          2020  

SECOND CEO SUMMARY COMPENSATION TABLE TOTALS

     —          —          12,531,614  

Add (Subtract):

        

Fair value of equity awards granted during the year from the Summary Compensation Table (1)

     —          —          (6,750,425

Fair value at year end of equity awards granted during the year

     —          —          5,430,678  

Change in fair value of equity awards granted in prior years that were unvested as of the end of the year

     —          —          (1,225,401

Chan