Exhibit 10.1

CONTRIBUTION AGREEMENT

AMONG

APOLO TUBOS E EQUIPAMENTOS S.A.

LONE STAR BRAZIL HOLDINGS 2 LTDA.

APOLO MECÂNICA E ESTRUTURAS LTDA.

GPC PARTICIPACOES S.A.

CIRRUS PARTICIPACOES LTDA.

AND

LONE STAR TECHNOLOGIES, INC.

 

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Dated as of October 24, 2006

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

 

ARTICLE 1

 

DEFINITIONS

 

2

1.1

 

Defined Terms

 

2

 

 

 

 

 

ARTICLE 2

 

CONTRIBUTION

 

12

2.1

 

LSB 2 Investment

 

12

2.2

 

Anticipated Payments of the Promissory Note

 

13

2.3

 

Closing Statement

 

13

2.4

 

Purchase Price Adjustment

 

14

2.5

 

Use of the LSB 2 Investment

 

17

 

 

 

 

 

ARTICLE 3

 

CLOSING

 

17

3.1

 

Closing Date

 

17

 

 

 

 

 

ARTICLE 4

 

DELIVERABLES

 

17

4.1

 

Items to Be Delivered by Tubos

 

17

4.2

 

Items to Be Delivered by LSB 2

 

18

4.3

 

Items to Be Delivered by the Company

 

19

 

 

 

 

 

ARTICLE 5

 

REPRESENTATIONS AND WARRANTIES OF TUBOS, THE COMPANY, GPC AND CIRRUS

 

19

5.1

 

Existence and Good Standing

 

20

5.2

 

Authorization of Agreement

 

20

5.3

 

Conflicts; Consents of Third Parties

 

21

5.4

 

No Undisclosed Liability

 

21

5.5

 

Real Property

 

22

5.6

 

Environmental Matters

 

23

5.7

 

Taxes

 

23

5.8

 

Intellectual Property

 

24

5.9

 

Ownership

 

25

5.10

 

Subsidiaries

 

25

5.11

 

Compliance with Law

 

25

5.12

 

Financial Statements

 

25

5.13

 

Material Adverse Effect

 

26

5.14

 

Material Contracts

 

26

 

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TABLE OF CONTENTS
(continued)

 

 

 

Page

 

 

 

 

 

5.15

 

Employee Matters

 

28

5.16

 

Legal Proceeding

 

29

5.17

 

Insurance

 

29

5.18

 

Inventory

 

29

5.19

 

Accounts Receivable

 

30

5.20

 

Related Persons

 

30

5.21

 

Tubular Products Contracts

 

30

5.22

 

GPC, Cirrus or Tubos Legal Proceeding

 

30

 

 

 

 

 

ARTICLE 6

 

REPRESENTATIONS AND WARRANTIES OF LSB 2 AND LONE STAR

 

31

6.1

 

Existence and Good Standing

 

31

6.2

 

Authorization of Agreement

 

31

6.3

 

Conflicts; Consents of Third Parties

 

32

6.4

 

Ownership of Star Brazil Cayman

 

32

6.5

 

No Liabilities; Assets

 

32

6.6

 

Employee Matters

 

32

6.7

 

Legal Proceeding

 

32

6.8

 

Compliance with Law

 

33

6.9

 

Contracts

 

33

6.10

 

Taxes

 

33

 

 

 

 

 

ARTICLE 7

 

COVENANTS

 

34

7.1

 

No-Shop

 

34

7.2

 

Operations Prior to the Closing Date

 

34

7.3

 

Indebtedness

 

37

7.4

 

Employees

 

37

7.5

 

Transfer of Assets

 

37

7.6

 

Subsidiaries

 

38

7.7

 

PAT Registration

 

38

7.8

 

Antitrust Filing

 

39

7.9

 

Realization of Tax Receivables and Other Tax Assets/Credits

 

39

 

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TABLE OF CONTENTS
(continued)

 

 

 

Page

 

 

 

 

 

7.10

 

Conversion of the Company

 

39

7.11

 

Special Oto Mills Production Line

 

39

7.12

 

Best Efforts

 

40

 

 

 

 

 

ARTICLE 8

 

CONDITIONS TO CLOSING

 

40

8.1

 

Conditions Precedent to Obligations of Tubos

 

40

8.2

 

Conditions Precedent to Obligations of LSB 2

 

40

 

 

 

 

 

ARTICLE 9

 

TERMINATION

 

42

9.1

 

Termination of Agreement

 

42

9.2

 

Procedure for Termination

 

43

9.3

 

Effect of Termination

 

43

 

 

 

 

 

ARTICLE 10

 

INDEMNIFICATION

 

43

10.1

 

Survival of Representations, Warranties and Covenants

 

43

10.2

 

Indemnification

 

44

10.3

 

Indemnification Procedures

 

45

10.4

 

Limitations on Indemnification for Breaches of Representations and Warranties

 

47

 

 

 

 

 

ARTICLE 11

 

MISCELLANEOUS

 

48

11.1

 

Waiver of Default

 

48

11.2

 

Amendment

 

48

11.3

 

No Third Party Rights

 

48

11.4

 

Severability

 

48

11.5

 

Binding Effect; Assignment

 

49

11.6

 

Headings

 

49

11.7

 

Word Meanings

 

49

11.8

 

Counterparts

 

49

11.9

 

Entire Agreement

 

49

11.10

 

Arbitration

 

49

11.11

 

Governing Law

 

50

11.12

 

Notices

 

50

 

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TABLE OF CONTENTS
(continued)

 

 

 

Page

 

 

 

 

 

11.13

 

Guarantee of the Obligations of Tubos

 

54

11.14

 

Guarantee of the Obligations of LSB 2

 

54

11.15

 

Expenses

 

55

11.16

 

Further Assurances

 

55

11.17

 

Language

 

55

 

iv

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TABLE OF CONTENTS
(continued)

EXHIBITS

EXHIBIT A

 

AMENDED AND RESTATED BY-LAWS

EXHIBIT B

 

LSS TRADEMARK CROSS LICENSE AGREEMENT

EXHIBIT C

 

PROMISSORY NOTE

EXHIBIT D

 

SALE, MARKETING AND SUPPLY AGREEMENT

EXHIBIT E

 

SHAREHOLDERS AGREEMENT

EXHIBIT F

 

TUBOS TRANSITION SERVICES AGREEMENT

EXHIBIT G

 

TUBOS TRADEMARK LICENSE AGREEMENT

EXHIBIT H

 

LSS TRANSITION SERVICES AGREEMENT

EXHIBIT I

 

MEMORANDUM AND ARTICLES OF ASSOCIATION OF STAR CAYMAN BRAZIL

EXHIBIT J

 

AA PURCHASE AGREEMENT

 

SCHEDULES

SCHEDULE 1.1

 

COMPANY ASSETS

SCHEDULE 2.3

 

AGREED PRINCIPLES

SCHEDULE 2.4(a)

 

AGREED PROCEDURES FOR PREPARATION OF CLOSING STATEMENT AND CLOSING BALANCE SHEET

SCHEDULE 2.5

 

USE OF THE LSB 2 INVESTMENT

SCHEDULE 5.2(b)

 

AUTHORIZATION OF AGREEMENT

SCHEDULE 5.3

 

CONFLICTS; CONSENTS OF THIRD PARTIES

SCHEDULE 5.5(a)

 

REAL PROPERTY LIENS

SCHEDULE 5.5(b)

 

REAL PROPERTY STRUCTURAL DEFECTS

SCHEDULE 5.5(c)

 

REAL PROPERTY CERTIFICATES OF OCCUPANCY AND OTHER PERMITS

SCHEDULE 5.6

 

ENVIRONMENTAL MATTERS

SCHEDULE 5.8

 

INTELLECTUAL PROPERTY

SCHEDULE 5.9(a)

 

OWNERSHIP OF THE COMPANY

SCHEDULE 5.9(b)

 

OWNERSHIP OF APOLO AMERICA

SCHEDULE 5.10

 

SUBSIDIARIES

SCHEDULE 5.14

 

MATERIAL CONTRACTS

SCHEDULE 5.15(a)

 

EMPLOYEES

SCHEDULE 5.15(b)

 

EMPLOYEE MATERIAL BENEFITS

SCHEDULE 5.16

 

LEGAL PROCEEDING

SCHEDULE 5.20

 

RELATED PERSONS

SCHEDULE 5.21

 

TUBULAR PRODUCTS CONTRACTS

SCHEDULE 5.22

 

GPC, CIRRUS OR TUBOS LEGAL PROCEEDING

SCHEDULE 6.2(b)

 

AUTHORIZATION OF AGREEMENT

SCHEDULE 6.3

 

CONFLICTS; CONSENTS OF THIRD PARTIES

SCHEDULE 6.6

 

EMPLOYEE MATTERS

 

v

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TABLE OF CONTENTS
(continued)

SCHEDULE 7.3(a)

 

AFFILIATE INDEBTEDNESS

SCHEDULE 7.3(b)

 

EXCLUDED INDEBTEDNESS

SCHEDULE 7.5(a)

 

TRANSFER OF ASSETS

SCHEDULE 7.5(c)

 

TRANSFER OF CALDERARIA ASSETS

SCHEDULE 7.9(a)

 

TAX RECEIVABLES

SCHEDULE 7.9(b)

 

FIS AND COFINS

 

vi

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CONTRIBUTION AGREEMENT

THIS CONTRIBUTION AGREEMENT (this “Agreement”) is made and entered into as of
the 24th day of October, 2006, by and among Apolo Tubos e Equipamentos S.A., a
corporation (sociedade anônima / stock corporation), organized under the laws of
the Federative Republic of Brazil, with head offices in the city of Rio de
Janeiro, State of Rio de Janeiro, at Av. Chrisótomo Pimentel de Oliveira, No.
2651, Pavuna, CEP 21650-000, duly enrolled with the CNPJ under No.
33.017.088/0001-03, herein represented by its undersigned legal representatives,
duly authorized as they solely declare (“Tubos”), Lone Star Brazil Holdings 2
Ltda., a limited liability company (sociedade empresária limitada) organized
under the laws of the Federative Republic of Brazil, with head offices at City
of São Paulo, State of São Paulo, at Rua Funchal, 263, 10º andar, sala 17-I, CEP
04551-060, duly enrolled with the CNPJ under No. 08.278.633/0001-78, herein
represented by its undersigned legal representatives, duly authorized as they
solely declare (“LSB 2”), Apolo Mecânica e Estruturas Ltda., a limited liability
company (sociedade empresária limitada), organized under the laws of the
Federative Republic of Brazil, with head offices in the city of Lorena, State of
São Paulo, at Av. Dr. Léo de Affonseca Netto, 750, CEP 12600-000, duly enrolled
with the CNPJ under No. 42.419.150/0001-84, herein represented by its
undersigned legal representatives, duly authorized as they solely declare (the
“Company”), Lone Star Technologies, Inc., a Delaware corporation, herein
represented by its undersigned legal representatives, duly authorized as they
solely declare (“Lone Star”), GPC Participacoes S.A., a corporation (sociedade
anônima / stock corporation), organized under the laws of the Federative
Republic of Brazil, with head offices in the city of Rio de Janeiro, State of
Rio de Janeiro, at Rua do Passeio, No. 70, 13rd floor - part, CEP 20021-290,
duly enrolled with the CNPJ under No. 02.193.750/0001-52, herein represented by
its undersigned legal representatives, duly authorized as they solely declare
(“GPC”), and Cirrus Participacoes Ltda., a limited liability company (sociedade
empresária limitada) organized under the laws of the Federative Republic of
Brazil, with head offices in the city of of Rio de Janeiro, State of Rio de
Janeiro, at Rua do Passeio, No. 70, 10th floor - part, CEP 20021-290, duly
enrolled with the CNPJ under No. 27.083.872/0001-17, herein represented by its
undersigned legal representatives, duly authorized as they solely declare
(“Cirrus”).  Each of Tubos and LSB 2 are periodically referred to herein as a
“Shareholder” and collectively as the “Shareholders.”

WHEREAS, Lone Star has agreed to contribute the LSB 2 Investment (as defined
below) to the Company using LSB 2, an indirect wholly-owned subsidiary of Lone
Star, as a vehicle for such investment upon the terms and subject to the
conditions of this Agreement;

WHEREAS, prior to the contribution by LSB 2 of the LSB 2 Investment, Tubos owns
one-hundred percent (100%) of the outstanding Common Shares (as defined below)
of the Company;

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WHEREAS, after the contribution by LSB 2 of the LSB 2 Investment, each of LSB 2
and Tubos (including their respective directors of the Company) shall own fifty
percent (50%) of the outstanding Common Shares of the Company;

WHEREAS, at a future date, LSB 2 will merge with and into the Company and LSB 1
(as defined below) will succeed to all the rights and obligations of LSB 2 under
this Agreement;

WHEREAS, such merger will not result in the dilution of the Common Shares held
by the Shareholders; and

WHEREAS, upon the terms and subject to the conditions contained in this
Agreement, LSB 2 desires to make certain contributions to the Company, and the
Company desires to accept such contributions from LSB 2.

NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

1.1           Defined Terms.

As used herein, the following terms shall have the following meanings, unless
the context otherwise requires:

“AA Purchase Agreement” means the Stock Purchase Agreement by and among the
Company, Tubos, GPC, Cirrus, Antonio Joaquim Peixoto de Castro Palhares and
Paulo Cesar Peixoto de Castro Palhares, in substantially the form attached
hereto as Exhibit J.

“Actions” means any suit, action, claim, hearing, administrative action, demand
letter, investigation by any Governmental Authority, notice of violation, or
proceeding arising out of any violation or alleged violation of any Law, breach
or alleged breach of any Contract or violation or alleged violation relating to
any Person.

“Adjusted LSB 2 Investment” has the meaning set forth in Section 2.3 hereof.

“Affiliate” of a specified person (the “Specified Person”) means any Person
(a) who, directly or indirectly, controls, is controlled by, or is under common
control with the Specified Person, (b) who, directly or indirectly, owns or
controls fifty percent (50%) or more of the Specified Person’s outstanding
voting securities or equity interests, (c) of whom the Specified Person,
directly or indirectly, owns or controls fifty percent (50%) or more of the
outstanding voting securities or equity interests or (d) who has the right,
directly or indirectly, to appoint or elect fifty percent (50%) or more of the
Specified Person’s board of directors or equivalent managing body.

2

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“Agreed Principles” has the meaning set forth in Section 2.3 hereof.

“Agreement” means this Contribution Agreement, as amended from time to time.

“Amended and Restated By-Laws” means the Amended and Restated By-Laws of the
Company, in substantially the form attached hereto as Exhibit A.

“Ancillary Agreements” means each of the Sale, Marketing and Supply Agreement,
the Shareholders Agreement, the LSS Trademark Cross License Agreement, the Tubos
Trademark License Agreement, the Tubos Transition Services Agreement, the LSS
Transition Services Agreement, the Amended and Restated By-Laws, the Promissory
Note and the AA Purchase Agreement.

“Apolo America” means Apolo America Pipe and Tube Corp., a Texas corporation.

“Apolo America Financial Statements” means the financial statements of Apolo
America, as of and for the year ended December 31, 2005, and as of and for the
period ended June 30, 2006, and the financial statements of Apolo America as of
September 30, 2006, all prepared in accordance with Brazilian GAAP.

“Apolo America Shares” has the meaning set forth in Section 7.6(a).

“BACEN” means the Central Bank of Brazil.

“Balance Sheet Date” means December 31, 2005.

“Basket” has the meaning set forth in Section 10.4(a) hereof.

“Brazilian GAAP” means generally accepted accounting principles as used in
Brazil, from time to time, applied on a consistent basis from period to period.

“Business” means the business of manufacturing, processing and finishing Tubular
Products.

“Business Day” means a day on which banks are open for general banking business
in both São Paulo, Brazil and Dallas, Texas, the United States of America
(excluding Saturdays, Sundays and public holidays).

“CADE” has the meaning set forth in Section 7.8(a) hereof.

“Calderaria Assets” has the meaning set forth in Section 7.5(c) hereof.

“Cap” has the meaning set forth in Section 10.4(b) hereof.

“Cayman Shares” has the meaning set forth in Section 2.1(a) hereof.

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“Charter Documents” means the limited liability company agreement, limited
partnership agreement, certificate or articles of incorporation, certificate of
formation, certificate of limited partnership, by-laws, articles of association
or other governing documents, as applicable, of the Person in question, as may
be in effect from time to time.

“Cirrus” has the meaning set forth in the introductory paragraph hereof.

“Closing” has the meaning set forth in Section 3.1 hereof.

“Closing Balance Sheet” has the meaning set forth in Section 2.4(a) hereof.

“Closing Date” has the meaning set forth in Section 3.1 hereof.

“Closing Statement” has the meaning set forth in Section 2.4(a) hereof

“Closing Working Capital” has the meaning set forth in Section 2.4(a) hereof.

“Cofins” means Contribution for the Financing of Social Security (Contribuição
para o Financiamento da Seguridade Social).

“Common Shares” means the common shares of the Company.

“Company” has the meaning set forth in the introductory paragraph hereof.

“Company Assets” means all properties and assets of the Company as of the date
hereof, including but not limited to the Facility and the assets set forth on
Schedule 1.1.

“Contingent Tax Credit/Asset” has the meaning set forth in Section 7.9(b)
hereof.

 “Contract” means any contract, agreement, instrument, commitment or other
binding arrangement, whether written or oral.

“Coupling” means a tubular section used for the exclusive purpose of joining two
threaded pin ends of pipe or equipment having the same external and internal
diameters and same thread.

“Coupling Materials” means seamless pipes from which tubular sections are
prepared for the manufacture of Couplings or Cross-Overs.

“Cross-Over” means a tubular section used for the exclusive purpose of joining
two threaded pin ends of pipe having different dimensions or threads.

“Demand” has the meaning set forth in Section 2.2(a) hereof.

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“Dispute” has the meaning set forth in Section 11.10 hereof.

“Environmental Costs” means, with respect to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, costs and expenses (including all reasonable
fees, disbursements and expenses of counsel, experts and consultants and costs
of investigation and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any Action by any other Person or in response
to any violation of Environmental Law, whether known or unknown, accrued or
contingent, whether based in contract, implied or express warranty, strict
liability, criminal or civil statute, to the extent based upon, related to, or
arising under or pursuant to any Environmental Law, Environmental Permit, Order
or agreement with any Governmental Authority or other Person, which relates to
any environmental, health or safety condition, violation of Environmental Law or
a Release or threatened Release of Hazardous Materials.

“Environmental Laws” means any Laws as now or hereafter in effect in any way
relating to the protection of human health and safety, the environment or
natural resources, applicable to the Company, the Company Assets and the
Business, as each has been or may be amended and the regulations promulgated
pursuant thereto.

“Environmental Permits” means any Permits required by Environmental Laws for the
operation of the Business.

“Estimate Statement” has the meaning set forth in Section 2.3 hereof.

“Estimate Statement Delivery Date” has the meaning set forth in Section 2.3
hereof.

“Estimated Closing Balance Sheet” has the meaning set forth in Section 2.3
hereof.

“Estimated Closing Working Capital” has the meaning set forth in Section 2.3
hereof.

“Exchange Rate” means for any given date, the selling rate for US Dollars as
quoted by BACEN via SISBACEN for PTAX-800, option 5, rates for accounting
transaction, on the Business Day immediately preceding the relevant date. If, by
any reason, the PTAX-800 rate is not quoted by BACEN, the Exchange Rate shall be
the exchange rate determined by BACEN for US Dollars referring to the foreign
investment transactions, registered or to be registered before BACEN or, if such
determination is not made, the Exchange Rate shall be the average of the three
average exchange selling rates of US Dollars quoted by each of the following
Brazilian banks: (a) Citibank S.A., (b) Banco ABN-AMRO Real S.A. and (c)
Unibanco – União de Bancos Brasileiros S.A. for the commercial transactions
performed in the Business Day immediately preceding the relevant date.

5

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“E&Y” means Ernst & Young LLP.

“Facility” means the real property, improvements, equipment and other assets
located at Lorena, State of São Paulo, Brazil.

“Final Closing Balance Sheet” has the meaning set forth in Section 2.4(e)
hereof.

“Final Working Capital” has the meaning set forth in Section 2.4(e) hereof.

“FINAME Loan” means the Industrial Credit Certificate No. 343.700.406 between
Banco do Brasil S/A and the Company dated September 12, 2005 in the amount of
R$339,705.89 originated by the Special Agency for Industrial Financing (FINAME)
for the purposes of the purchase of a mechanical lathe.

“Financial Statements” means the financial statements of the Company and its
subsidiaries audited by KPMG as a part of the audited consolidated financial
statements of its parent company, Tubos, as of and for the year ended December
31, 2005, and as of and for the period ended June 30, 2006, and the unaudited
balance sheet of the Company as of September 30, 2006, all prepared in
accordance with Brazilian GAAP.

“Governmental Authority” means any authority, regulatory or administrative
agency, commission, department, board, bureau, agency, instrumentality or court
of Brazil, the United States of America, or any other nation or sovereign state,
any federal, bilateral, or multilateral governmental authority, any state,
possession, territory, county, district, city, or other governmental unit or
subdivision, and any branch, agency, or judicial body of any of the foregoing.

“GPC” has the meaning set forth in the introductory paragraph hereof.

“Hazardous Material” means any substance, material or waste that is regulated,
classified, or otherwise characterized under or pursuant to any Environmental
Law as “hazardous,” “toxic,” “pollutant,” “contaminant,” “radioactive,” or words
of similar meaning or effect, including petroleum and its by-products, asbestos,
polychlorinated biphenyls, radon, mold or other fungi and urea formaldehyde
insulation.

“ICMS” means the Tax on the Circulation of Goods and Interstate and
Inter-municipal Transportation Services and Communication Services (Imposto
sobre Circulação de Mercadorias e Serviços de Transporte Interestadual e
Intermunicipal e de Comunicação).

“IFC” has the meaning set forth in Section 8.2(g) hereof.

“Indebtedness” of any Person means, without duplication, (a) the principal,
accreted value, accrued and unpaid interest, prepayment and redemption premiums
or penalties (if any), unpaid fees or expenses and other monetary obligations in
respect of (i) indebtedness of such Person for money borrowed and
(ii) indebtedness evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such

6

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Person is responsible or liable, (b) all obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable and other accrued
current liabilities arising in the ordinary course of business) (other than the
current liability portion of any indebtedness for borrowed money), (c) all
obligations of such Person under leases required to be capitalized in accordance
with Brazilian GAAP, (d) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker’s acceptance or similar credit
transaction, (e) all obligations of such Person under interest rate or currency
swap transactions (valued at the termination value thereof), (f) the liquidation
value, accrued and unpaid dividends and prepayment or redemption premiums and
penalties (if any), unpaid fees or expense and other monetary obligations in
respect of any and all redeemable preferred stock of such Person, (g) all
obligations of the type referred to in clauses (a) through (f) of any Persons
for the payment of which such Person is responsible or liable, directly or
indirectly, as obligor, guarantor, surety or otherwise, including guarantees of
such obligations and (h) all obligations of the type referred to in clauses (a)
through (g) of other Persons secured by (or for which the holder of such
obligations has an existing right, contingent or otherwise, to be secured by)
any Lien on any property or asset of such Person (whether or not such obligation
is assumed by such Person).

“Independent Accountant” has the meaning set forth in Section 2.4(c) hereof.

“Intellectual Property” means all intellectual property rights and related
priority rights, arising from or in respect of the following, whether protected,
created or arising under the Laws of Brazil or any other jurisdiction or under
any international convention, including: (a) all patents and patent
applications, including all continuations, divisionals, continuations-in-part
and provisionals and patents issuing thereon, and all reissues, reexaminations,
substitutions, renewals and extensions thereof (collectively, “Patents”); (b)
all trademarks, service marks, trade names, trade dress, logos, corporate names
and other source or business identifiers, together with the goodwill associated
with any of the foregoing, and all applications, registrations, renewals and
extensions thereof; (c) all Internet domain names; (d) all copyrights, works of
authorship and moral rights, and all registrations, applications, renewals,
extensions and reversions thereof; and (e) all discoveries, concepts, ideas,
research and development, know-how, formulae, inventions, compositions,
manufacturing and production processes and techniques, technical data,
procedures, designs, drawings, specifications, databases, and other proprietary
or confidential information, including customer lists, supplier lists, pricing
and cost information, and business and marketing plans and proposals, in each
case excluding any rights in respect of any of the foregoing that comprise or
are protected by Patents.

“Knowledge” is deemed to include knowledge, information and belief which a party
would have if the party had made all reasonable enquiries and, without
limitation, includes the knowledge, information and belief of its directors,
officers and employees.

“KPMG” means KPMG International.

7

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“Law” means any statute, law, treaty, ordinance, rule, regulation, instrument,
directive, decree, permit, agreement, Order or injunction of or with any
Governmental Authority, and includes, without limitation, rules or regulations
of any regulatory or self-regulatory authority compliance with which is required
by law.

“Legal Proceedings” means any judicial, administrative or arbitral actions,
suits, proceedings (public or private), claims or governmental proceedings.

“Liability” means any debt, loss, damage, adverse claim, adverse Action, fines,
penalties, liability or obligation (whether direct or indirect, known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
matured or unmatured, determined or determinable, disputed or undisputed,
liquidated or unliquidated, or due or to become due, and whether in contract,
tort, strict liability or otherwise), and including all costs and expenses
relating thereto (including all fees, disbursements and expenses of legal
counsel, experts, engineers and consultants and costs of investigation).

“Lien” means any lien, encumbrance, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, proxy, voting trust or agreement, transfer restriction under any
shareholder or similar agreement, encumbrance or any other restriction or
limitation whatsoever.

“Line Pipe” means finished or unfinished line pipe.

“Lone Star” has the meaning set forth in the introductory paragraph hereof.

“Lone Star Steel” means Lone Star Steel Company, L.P., a Delaware limited
partnership.

“Loss” and “Losses” have the meaning set forth in Section 10.2(a) hereof.

“LSB 1” means Lone Star Brazil Holdings 1 Ltda., a limited liability company
(sociedade empresária limitada) organized under the laws of the Federative
Republic of Brazil, with head offices at City of São Paulo, State of São Paulo,
at Rua Funchal, 263, 10º andar, sala 16-I, CEP 04551-060, duly enrolled with the
CNPJ under No. 08.278.615/0001-96 and an indirect wholly-owned subsidiary of
Lone Star.

“LSB 2” has the meaning set forth in the introductory paragraph hereof and shall
include LSB1 as successor upon the merger of LSB 2 with and into the Company.

“LSB 2 Indemnified Parties” has the meaning set forth in Section 10.2(a) hereof.

“LSB 2 Investment” has the meaning set forth in Section 2.1 hereof.

“LSB 2 Obligations” has the meaning set forth in Section 11.14 hereof.

“LSS Trademark Cross License Agreement” means the Trademark Cross License
Agreement between Lone Star Steel and the Company pursuant to which the Company

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shall license certain trademarks to Lone Star Steel and Lone Star Steel shall
license certain trademarks to the Company, in substantially the form attached
hereto as Exhibit B.

“LSS Transition Services Agreement” means the Transition Services Agreement
between Lone Star Steel and the Company pursuant to which Lone Star Steel shall
provide certain transition services to the Company, in substantially the form
attached hereto as Exhibit H.

“Material Adverse Effect” means a material adverse effect on (a) the near-term
or long-term projected business, assets, properties, results of operations,
condition (financial or otherwise) or prospects of the Company, (b) the value of
the Facility or (c) the ability of LSB 2, Lone Star, Tubos, GPC or Cirrus, as
the case may be, to consummate the transactions contemplated by this Agreement
or perform their respective obligations under this Agreement or the Ancillary
Agreements to which either of them is a party.

“Material Contracts” has the meaning set forth in Section 5.14 hereof.

“Negative Adjustment” has the meaning set forth in Section 2.3 hereof.

“Net Working Capital” has the meaning set forth in Section 2.3 hereof.

“Notional Account” has the meaning set forth in Section 10.3(e) hereof.

“Notice” means a writing, containing the information required by this Agreement
to be communicated to a party, delivered or sent in the manner set forth in
Section 11.12 hereof.

“Oil Country Tubular Goods or OCTG” means casing, tubing, drill pipe,
semi-finished and unfinished green tubes, integral connections, Coupling
Materials and finished Couplings.

“Order” means any writ, judgment, decree, injunction or similar order of any
Governmental Authority.

“PAT” means Programa de Alimentação do Trabalhador, controlled by the Ministry
of Labor of the Federative Republic of Brazil.

“PAT Registration” has the meaning set forth in Section 7.7 hereof.

“Patents” has the meaning set forth in the definition of Intellectual Property.

“Permits” means any approvals, authorizations, consents, licenses, permits or
certificates of a Governmental Authority.

“Permitted Exceptions” means (a) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance that have been

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delivered to LSB 2, (b) statutory liens for current Taxes, assessments or other
governmental charges not yet delinquent or the amount or validity of which is
being contested in good faith by appropriate proceedings and which have been
disclosed in writing to LSB 2, (c) the liens arising or incurred in the ordinary
course of business that have been disclosed to LSB 2 on Schedule 5.5(a) and are
not material to the business, operations and financial condition of the asset so
encumbered and that are not resulting from a breach, default or violation by
Tubos or any of its subsidiaries of any Contract or Law, (d) zoning, entitlement
and other land use and environmental regulations by any Governmental Authority,
provided that such regulations have not been violated and will not be violated
in the operation of the Business, and (e) liens resulting from any Actions in
respect of which the Company is a party, and that may be required for the
purposes of enabling the Company to present a defense, counterclaim or appeal,
as applicable.

“Person” means any individual, partnership, limited liability company,
corporation, cooperative, joint venture, trust, estate or other entity.

“PIS” means Program of Social Integration (Programa de Integração Social).

“Positive Adjustment” has the meaning set forth in Section 2.3 hereof.

“Promissory Note” means the Promissory Note to be issued by Star Capital Funding
to Star Brazil Cayman in substantially the form attached hereto as Exhibit C.

“PTAX” means the exchange rate calculated at the end of each day, which is the
average rate of all the exchanges made in US Dollars on the same date in the
interbank exchange market, with liquidation D2.

“Realization Date” has the meaning set forth in Section 7.9 hereof.

“Related Persons” has the meaning set forth in Section 5.20 hereof.

“Release” means any release, spill, emission, leaking, pumping, pouring,
injection, deposit, dumping, emptying, disposal, discharge, dispersal, leaching
or migration into the indoor or outdoor environment, or into or out of any
property.

“Remedial Action” means all actions including any capital expenditures
undertaken to (a) clean up, remove, treat or in any other way address any
Hazardous Material, (b) prevent the Release or threat of Release, or minimize
the further Release of any Hazardous Material so it does not endanger or
threaten to endanger public health or welfare or the indoor or outdoor
environment, (c) perform pre-remedial studies and investigations or
post-remedial monitoring and care or (d) to correct a condition of noncompliance
with Environmental Laws.

“R$”, “Reais”, “Real” or “Centavos” means the lawful currency of the Federative
Republic of Brazil.

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“Sale, Marketing and Supply Agreement” means the Sale, Marketing and Supply
Agreement between the Company and Lone Star Steel, in substantially the form
attached hereto as Exhibit D.

“SELIC” means the interest rate equivalent to the reference interest rate of the
Sistema Especial de Liquidação e Custódia for federal bonds of the Brazilian
government.

“Shareholders” has the meaning set forth in the introductory paragraph hereof.

“Shareholders Agreement” means the Shareholders Agreement of the Company between
Tubos, LSB 2, GPC, Cirrus and Lone Star, in substantially the form attached
hereto as Exhibit E.

“SISBACEN” means the Information System of BACEN (Sistema de Informações do
Banco Central do Brasil).

“Specialty Tubing” means mechanical and pressure tubes, cold drawn and hot
finished tubes, shells for redraw and other boiler tubes.

“Specified Person” has the meaning set forth in the definition of Affiliate.

“Star Capital Funding” means Star Capital Funding, Inc., a corporation organized
under the laws of the State of Delaware.

“Star Brazil Cayman” means Star Brazil Cayman Ltd., a corporation organized
under the laws of the Cayman Islands.

“Survival Period” has the meaning set forth in Section 10.1 hereof.

“Target Working Capital” has the meaning set forth in Section 2.3 hereof

“Tax” or “Taxes” means (a) any and all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including all net income,
gross receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes, customs duties, fees, assessments and charges of
any kind whatsoever, (b) all interest, penalties, fines, additions to tax or
additional amounts imposed by any Taxing Authority in connection with any item
described in clause (a), and (c) any Liability in respect of any items described
in clauses (a) and/or (b) payable by reason of Contract, assumption, transferee
Liability, operation of law, or otherwise.

“Tax Return” means any return, report or statement required to be filed with
respect to any Tax (including any elections, declarations, schedules or
attachments thereto, and any amendment thereof), including any information
return, claim for refund,

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amended return or declaration of estimated Tax, and including, where permitted
or required, combined, consolidated or unitary returns for any group of
entities.

“Taxing Authority” means the Brazilian Federal, State and Municipal Tax
Authority, the United States Internal Revenue Service, and any other
Governmental Authority responsible for the administration of any Tax.

“Termination Agreement” has the meaning set forth in Section 4.1(g) hereof.

“Third Party Claim” has the meaning set forth in Section 10.3(b) hereof.

“Tubos” has the meaning set forth in the introductory paragraph hereof.

“Tubos Guarantors” has the meaning set forth in Section 11.13 hereof.

“Tubos Indemnified Parties” has the meaning set forth in Section 10.2(b) hereof.

“Tubos Obligations” has the meaning set forth in Section 11.13 hereof.

“Tubos Trademark License Agreement” means the Trademark License Agreement
between Tubos and the Company pursuant to which Tubos shall license certain
trademarks to the Company, in substantially the form attached hereto as
Exhibit G.

“Tubos Transition Services Agreement” means the Transition Services Agreement
between Tubos and the Company pursuant to which Tubos shall provide certain
transition services to the Company, in substantially the form attached hereto as
Exhibit F.

“Tubular Products” means Oil Country Tubular Goods, Specialty Tubing, and/or
Line Pipe; for greater clarity, such term shall not include galvanized
unfinished line or other pipe.

“US Dollars” or “US$” means legal currency in the United States of America.

“Working Capital Payment Date” has the meaning set forth in Section 2.4(f)
hereof.

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ARTICLE 2

CONTRIBUTION

2.1           LSB 2 Investment.

(a)           The aggregate consideration made by LSB 2 for 38,346,462 Common
Shares (fifty percent (50%) of the outstanding Common Shares) shall be the
amount in Reais (R$) equivalent to US$42,350,000, consisting of US$23,550,000 in
cash and US$18,800,000 by means of the contribution of all of the outstanding
shares (the “Cayman Shares”) of Star Brazil Cayman, the holder of the Promissory
Note as of the date hereof (the “LSB 2 Investment”).  The LSB 2 Investment will
be subject to adjustment pursuant to Sections 2.3 and 2.4.

(i)            For the purposes of Section 2.1(a) above, Tubos, in its capacity
as controlling shareholder of the Company, agrees to call a Shareholders’
Meeting to be held on or before the Closing Date, at which Tubos shall approve
the issuance of 38,346,462 Common Shares, and with respect to which Tubos shall
waive, and shall cause all remaining shareholders to waive, their right of first
refusal for the subscription of such Common Shares.

(b)           At the Closing, upon the terms and subject to the conditions
contained herein, LSB 2 shall subscribe for the Adjusted LSB 2 Investment (as
defined below) in exchange for 38,346,462 Common Shares (fifty percent (50%) of
the outstanding Common Shares).

(c)           At the Closing, upon the terms and subject to the conditions
contained herein, LSB 2 shall contribute the amount in Reais (R$) equivalent to
US$23,550,000, in cash, in immediately available funds, to the Company, to
pay-up for 21,099,728 Common Shares.

(d)           At the Closing, upon the terms and subject to the conditions
contained herein, LSB 2 shall contribute the Cayman Shares to pay-up for the
remaining 17,246,734 Common Shares.

(e)           Upon the receipt of the amount referred to in Section 2.1(c) and
the Cayman Shares by the Company, the LSB 2 Investment shall be considered fully
paid, and the 38,346,462 Common Shares subscribed by LSB 2 shall be considered
fully paid-up.

(f)            The parties agree that the LSB 2 Investment will be registered in
the Company’s balance sheet partly as capital, in the amount equivalent to the
net worth value of the Common Shares subscribed as determined by E&Y and
verified by KPMG, acting in its capacity as the Company’s auditor, and applying
Brazilian GAAP, and partly as a capital reserve, in the amount equivalent to the
difference between the total amount of the LSB 2 Investment and the net worth
value of the Common Shares subscribed,

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provided that in any event the number of Common Shares to be subscribed by LSB 2
shall be 38,346,462 Common Shares.

2.2           Anticipated Payments of the Promissory Note.  Without prejudice to
any of the foregoing provisions in this Article 2, the Company shall have the
right to demand (or cause Star Brazil Cayman to demand) from Star Capital
Funding the anticipated payment of the Promissory Note, upon the delivery to
Star Capital Funding, with a copy to LSB 2, of a request notice, in accordance
with the terms and conditions set forth herein (the “Demand”).  The Demand will
only be valid and enforceable when approved by all of the members of the Board
of Directors of the Company and issued by the Board of Officers.

2.3           Closing Statement.  At least three (3) Business Days before
Closing (the ”Estimate Statement Delivery Date”), the Company shall cause to be
prepared and delivered to LSB 2 an estimated balance sheet of the Company as of
the end of business on the Closing Date and prior to the consummation of the
transactions contemplated hereby (the ”Estimated Closing Balance Sheet”) and a
statement (the ”Estimate Statement”) setting forth the Company’s good faith
estimate of Net Working Capital (as defined below) derived from the Estimated
Closing Balance Sheet (the “Estimated Closing Working Capital”) and, if
applicable, the corresponding Adjusted LSB 2 Investment (as defined below) to be
paid at Closing, if any.  The Company shall provide LSB 2 with copies of or
reasonable access to such books, records and personnel as are reasonably
necessary for purposes of verifying the amounts set forth in the Estimated
Closing Balance Sheet and the Estimate Statement.  “Net Working Capital” means,
at the time of determination, all assets of the Company (excluding net fixed
assets) reduced by all liabilities of the Company (which shall include all
Indebtedness, whether current or long-term), in each case as determined in
accordance with Brazilian GAAP, and the accounting principles set forth on
Schedule 2.3 (the ”Agreed Principles”).  An example, for illustrative purposes
only, of the calculation of Net Working Capital as of September 30, 2006 is set
forth on Schedule 2.3.  The Company shall use the latest available information
as of the Estimate Statement Delivery Date to prepare the Estimated Closing
Balance Sheet and to calculate the Estimated Closing Working Capital and the
Adjusted LSB 2 Investment.  The preparation of the Estimate Statement shall be
for the purpose of determining the difference between Estimated Closing Working
Capital and Target Working Capital.  If Estimated Closing Working Capital
exceeds US$8,500,000 (“Target Working Capital”), the LSB 2 Investment shall be
increased by the amount of such excess by increasing the amounts in Sections
2.1(a) and 2.1(c) by the amount of such excess (such increase, a ”Positive
Adjustment”) and, if Target Working Capital exceeds Estimated Closing Working
Capital, the LSB 2 Investment shall be reduced by the amount of such excess by
reducing the amounts in Sections 2.1(a) and 2.1(c) by the amount of such excess
(such reduction, a “Negative Adjustment”).  “Adjusted LSB 2 Investment” means
the LSB 2 Investment plus any Positive Adjustment or the LSB 2 Investment minus
any Negative Adjustment, as applicable.

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2.4              Purchase Price Adjustment.

(a)           As promptly as practicable, but no later than ninety (90) days
after the Closing Date, LSB 2 shall cause E&Y to prepare and deliver to Tubos a
balance sheet of the Company (the “Closing Balance Sheet”) and a closing
statement (the “Closing Statement”) based on the Closing Balance Sheet setting
forth LSB 2’s calculation of Net Working Capital (“Closing Working Capital”). 
The Closing Statement and the Closing Balance Sheet will be prepared by E&Y
based upon the agreed-upon procedures set forth on Schedule 2.4(a), and shall be
prepared in accordance with Brazilian GAAP, utilizing Brazilian generally
accepted auditing standards.  The Company, and to the extent applicable, Tubos,
shall permit LSB 2 and E&Y to have full access to all books, records and working
papers of or relating to the Company, the Facility and the Business, and all
personnel (including KPMG personnel) who have knowledge of, or have participated
in, preparation of financial statements or audits of the Company prior to
Closing.  For greater clarity, Tubos acknowledges that prior to Closing, the
accounting and finance functions of the Company were conducted by Tubos
personnel on Tubos premises, and audits involving the Company have been
conducted by KPMG in its preparation of consolidated financial statements for
Tubos, and that, consequently, access to the relevant books, records, working
papers, facilities and personnel of Tubos and certain personnel of KPMG will be
necessary for the preparation of the Closing Balance Sheet and the Closing
Statement.  The preparation of the Closing Statement shall be for the purpose of
determining the difference between Estimated Closing Working Capital and Closing
Working Capital.

(b)           If Tubos disagrees with the amounts reflected on the Closing
Balance Sheet or LSB 2’s calculation of Closing Working Capital delivered
pursuant to Section 2.4(a), Tubos may, within thirty (30) days after delivery of
the Closing Statement, deliver a notice to LSB 2 disputing such amounts
reflected on the Closing Balance Sheet and/or disagreeing with such calculation
of Closing Working Capital and setting forth Tubos’ calculation of such
amounts.  If no dispute notice is so delivered, Tubos will be deemed to have
accepted the Closing Statement and LSB 2’s estimate of Closing Working Capital. 
Any such Tubos notice of dispute or disagreement shall specify those items or
amounts as to which Tubos disagrees, provide an explanation for such
disagreement, and Tubos shall be deemed to have agreed with all other items and
amounts contained in the Closing Balance Sheet and the Closing Statement,
including the calculation of Closing Working Capital delivered pursuant to
Section 2.4(a).

(c)           If a notice of disagreement shall be duly delivered pursuant to
Section 2.4(b), Tubos and LSB 2 shall, during the fifteen (15) days following
such delivery, use their commercially reasonable efforts to reach agreement on
the disputed items or amounts in order to determine, as may be required, the
proper amounts to be set forth on the Closing Balance Sheet and the amount of
actual Closing Working Capital, which amount shall not be less than the amount
thereof shown in LSB 2’s calculation delivered pursuant to Section 2.4(a) nor
more than the amount thereof shown in Tubos’ calculation delivered pursuant to
Section 2.4(b).  If the parties so resolve all disputes, the Closing Balance
Sheet and the computation of Closing Working Capital, as amended

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to the extent necessary to reflect the resolution of the dispute, shall be
conclusive and binding on the parties.  If during such period, Tubos and LSB 2
are unable to reach an agreement, they shall promptly thereafter cause
PriceWaterhouseCoopers (or if PriceWaterhouseCoopers is unable or unwilling to
accept its mandate, an independent internationally recognized accounting firm to
be mutually agreed upon by Tubos and LSB 2, in either such case, the
“Independent Accountant”) to review this Agreement and the disputed items or
amounts for the purpose of determining the proper amounts on the Closing Balance
Sheet and calculating Closing Working Capital (it being understood that in
making such determination and calculation, the Independent Accountant shall be
functioning as an expert and not as an arbitrator).  In making such
determination and calculation, the Independent Accountant shall consider only
those items or amounts in the Closing Balance Sheet, the Closing Statement and
LSB 2’s calculation of Closing Working Capital as to which Tubos has disagreed. 
The Independent Accountant shall deliver to Tubos and LSB 2, as promptly as
practicable (but in any case no later than thirty (30) days from the date of
engagement of the Independent Accountant), a report setting forth such
determination and calculation, which amount shall not be less than the amount
thereof shown in LSB 2’s calculation delivered pursuant to Section 2.4(a) nor
more than the amount thereof shown in Tubos’ calculation delivered pursuant to
Section 2.4(b).  Such report shall be final and binding upon Tubos and LSB 2. 
The fees, costs and expenses of the Independent Accountant’s review and report
shall be borne equally by Tubos and LSB 2.

(d)           The Company, Tubos and LSB 2 shall, and shall cause their
respective representatives to, cooperate and assist in the preparation of the
Closing Balance Sheet, the Closing Statement and the calculation of Closing
Working Capital and in the conduct of the review referred to in this
Section 2.4, including the making available to the extent necessary of books,
records, work papers and personnel.

(e)           If Estimated Closing Working Capital exceeds Final Working
Capital, Tubos shall pay to the Company, in the manner and with interest (if
applicable) as provided in Section 2.4(f), the amount of such excess as an
adjustment to the LSB 2 Investment.  If Final Working Capital exceeds Estimated
Closing Working Capital, LSB 2 shall pay to the Company, in the manner and with
interest (if applicable) as provided in Section 2.4(f), the amount of such
excess as an adjustment to the LSB 2 Investment.  “Final Closing Balance Sheet”
and “Final Working Capital” mean, respectively, the Closing Balance Sheet and
Closing Working Capital (i) as shown in LSB 2’s calculation delivered pursuant
to Section 2.4(a) if no notice of disagreement with respect thereto is duly
delivered pursuant to Section 2.4(b); or (ii) if such a notice of disagreement
is delivered, (A) as agreed by Tubos and LSB 2 pursuant to Section 2.4(c) or
(B) in the absence of such agreement, as shown in the Independent Accountant’s
calculation delivered pursuant to Section 2.4(c); provided, however, that in no
event shall Final Working Capital be more than Tubos’ calculation of Closing
Working Capital delivered pursuant to Section 2.4(b) or less than LSB 2’s
calculation of Closing Working Capital delivered pursuant to Section 2.4(a).

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(f)            Any payment made pursuant to Section 2.4(e) shall be made within
three (3) Business Days after Final Working Capital has been determined (the
“Working Capital Payment Date”) by wire transfer by Tubos or LSB 2, as the case
may be, of immediately available funds to the account of the Company as may be
designated in writing by the Company prior to such transfer.  In the event that
any payment made pursuant to Section 2.4(e) is not made by the Working Capital
Payment Date, the amount of any payment to be made pursuant to Section 2.4(e)
shall bear interest from but not including the Working Capital Payment Date to
but excluding the date of payment at a rate per annum equal to the SELIC rate
during the period from the date following the Working Capital Payment Date to
the date of payment.  Such interest shall be payable at the same time as the
payment to which it relates and shall be calculated daily on the basis of a year
of three-hundred and sixty-five (365) days and the actual number of days
elapsed.  To the extent that the Company has accumulated losses on its balance
sheet, any payment made pursuant to Section 2.4(e) will be made in the form of
an interest-free loan which shall be used to reduce such accumulated losses
dollar-for-dollar up to the full amount of the loan, resulting in the release
and discharge of such loan in an equivalent amount.  For the purposes of greater
clarity, any loan made pursuant to this Section 2.4(f) will not reduce the net
operating losses of the Company.

2.5           Use of the LSB 2 Investment.  Tubos and LSB 2 hereby agree that
they shall cause the Company to use the LSB 2 Investment in accordance with
Schedule 2.5.

ARTICLE 3

CLOSING

3.1           Closing Date.  The closing of the transactions contemplated by
this Agreement (the “Closing”) shall take place at the offices of Souza, Cescon
Avedissian, Barrieu e Flesch - Advogados, Rua Funchal, 263 11º andar, 04551-060,
São Paulo, SP, Brazil, at 10:00 a.m. (São Paulo, SP, Brazil time) on the third
(3rd) Business Day after the conditions set forth in Article 8 hereof have been
satisfied or waived by the party entitled to do so, or at such other date, time
and/or place as may mutually be agreed upon by the parties hereto.  The date on
which the Closing is held is referred to in this Agreement as the “Closing
Date.”

ARTICLE 4

DELIVERABLES

4.1           Items to Be Delivered by Tubos.

Simultaneously with the Closing, Tubos shall deliver or cause to be delivered:

(a)           to LSB 2 and the Company, a duly executed Shareholders Agreement;

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(b)           to LSB 2 and the Company, a letter from each administrator of the
Company, confirming his/her resignation from the position of administrator;

(c)           to LSB 2, a certified copy of its organizational documents,
confirming the powers of representation of the undersigned legal
representatives, and including any approvals required for the purposes of
executing this Agreement and implementing the transactions contemplated herein;

(d)           the Closing certificate referred to in Section 8.2(c);

(e)           to the Company, a duly executed Tubos Transition Services
Agreement;

(f)            to the Company, a duly executed Tubos Trademark License
Agreement;

(g)           to LSB 2, a duly executed termination agreement terminating the
agreement between Tubos and Lone Star Steel dated April 10, 2006, related to the
sale of Tubular Products in North America (the “Termination Agreement”); and

(h)           to the Company, a duly executed transfer form, transferring the
Apolo America Shares to the Company.

4.2           Items to Be Delivered by LSB 2.

Simultaneously with the Closing, LSB 2 shall deliver or cause to be delivered:

(a)           to Tubos and the Company, a duly executed Shareholders Agreement;

(b)           to Tubos, a certified copy of its organizational documents,
confirming the powers of representation of the undersigned legal
representatives, and including any approvals required for the purposes of
executing this Agreement and implementing the transactions contemplated herein;

(c)           the Closing certificate referred to in Section 8.1(c);

(d)           to the Company, a duly executed Sale, Marketing and Supply
Agreement;

(e)           to the Company, a duly executed LSS Trademark Cross License
Agreement;

(f)            to the Company, the amount in Reais (R$) equivalent to
US$23,550,000 in immediately available funds, wire transferred to such bank
account of the Company designated to LSB 2 in writing three (3) Business Days
prior to the Closing Date;

(g)           to the Company, a duly executed transfer form, transferring the
Cayman Shares to the Company;

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(h)           to the Company, a valuation report made by E&Y, pursuant to the
provisions of Article 8 of the Corporation Law, estimating the value of the
Cayman Shares;

(i)            to the Company, a duly executed LSS Transition Services
Agreement; and

(j)            to Tubos, a duly executed Termination Agreement.

4.3           Items to Be Delivered by the Company.

Simultaneously with the Closing, the Company shall deliver or cause to be
delivered:

(a)           to Tubos and LSB 2, duly executed minutes of its special
shareholders meeting approving (i) the increase of its corporate capital by the
amount in Reais (R$) equivalent to US$42,350,000, represented by 38,346,462 new
Common Shares and (ii) the issuance of the Common Shares to LSB 2;

(b)           to LSB 2, an appropriate receipt in connection to the pay in of
the 38,346,462 new Common Shares subscribed to by LSB 2;

(c)           to LSB 2, a duly executed Sale, Marketing and Supply Agreement;

(d)           to LSB 2, a duly executed LSS Trademark Cross License Agreement;

(e)           to Tubos and LSB 2, a duly executed Tubos Trademark License
Agreement;

(f)            to Tubos and LSB 2, a duly executed Amended and Restated By-Laws;

(g)           to Tubos and LSB 2, a duly executed Tubos Transition Services
Agreement;

(h)           to Tubos and LSB 2, a duly executed LSS Transition Services
Agreement;

(i)            to LSB 2, a certified copy of the Company’s books, confirming the
subscription of fifty percent (50%) of the Common Shares by LSB 2; and

(j)            a duly executed AA Purchase Agreement.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF TUBOS, THE COMPANY, GPC AND CIRRUS

Each of Tubos, the Company, GPC and Cirrus hereby represent and warrant to LSB 2
that:

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5.1           Existence and Good Standing.  Tubos is validly existing and in
good standing under the laws of Brazil and is duly qualified to do business in
all jurisdictions where it is so required to qualify.  The Company is validly
existing and in good standing under the laws of Brazil and is duly qualified to
do business in all jurisdictions where it is so required to qualify.  GPC is
validly existing and in good standing under the laws of Brazil and is duly
qualified to do business in all jurisdictions where it is so required to
qualify.  Cirrus is validly existing and in good standing under the laws of
Brazil and is duly qualified to do business in all jurisdictions where it is so
required to qualify.  Apolo America is validly existing and in good standing
under the laws of the State of Texas and is duly qualified to do business in all
jurisdictions where it is so required to qualify.

5.2           Authorization of Agreement.

(a)           Each of Tubos, the Company, GPC and Cirrus has all requisite power
and authority to enter into this Agreement and the Ancillary Agreements and each
of Tubos, the Company, GPC and Cirrus has all requisite power and authority to
perform all of its respective obligations under this Agreement and the Ancillary
Agreements to which it is a party.  Tubos has taken all corporate action,
including securing the requisite approval of its board of officers, necessary to
authorize the execution, delivery and performance of this Agreement and the
Ancillary Documents to which Tubos is a party.  The Company has taken all
corporate action, including securing the requisite approval of its board of
officers and general shareholders meeting, necessary to authorize the execution,
delivery and performance of this Agreement and the Ancillary Documents to which
the Company is a party.  GPC has taken all corporate action, including securing
the requisite approval of its board of directors, necessary to authorize the
execution, delivery and performance of this Agreement and the Ancillary
Documents to which GPC is a party.  Cirrus has taken all corporate action,
including securing the requisite approval of the general meeting of its
quotaholders, necessary to authorize the execution, delivery and performance of
this Agreement and the Ancillary Documents to which Cirrus is a party.  The
board of directors of Tubos has all requisite power and authority to cause Tubos
to enter into and perform all of its respective obligations under this Agreement
and the Ancillary Documents to which Tubos is a party, and has taken all action
necessary to authorize the execution, delivery and performance of this Agreement
and the Ancillary Documents by Tubos.  The board of directors of the Company has
all requisite power and authority to cause the Company to enter into and perform
all of its respective obligations under this Agreement and the Ancillary
Documents to which the Company is a party, and has taken all action necessary to
authorize the execution, delivery and performance of this Agreement and the
Ancillary Documents by the Company.  The board of directors of GPC has all
requisite power and authority to cause GPC to enter into and perform all of its
respective obligations under this Agreement and the Ancillary Documents to which
GPC is a party, and has taken all action necessary to authorize the execution,
delivery and performance of this Agreement and the Ancillary Documents by GPC. 
The board of directors of Cirrus has all requisite power and authority to cause
Cirrus to enter into and perform all of its respective obligations under this
Agreement and

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the Ancillary Documents to which Cirrus is a party, and have taken all action
necessary to authorize the execution, delivery and performance of this Agreement
and the Ancillary Documents by Cirrus.

(b)           The execution and delivery of this Agreement and the Ancillary
Agreements to which Tubos, the Company, GPC and/or Cirrus is a party do not
require Tubos, the Company, GPC or Cirrus, as the case may be, to obtain any
approval or consent of, or make any notice to or filing with, any Person or
Governmental Authority, other than approvals, consents, notices and filings
obtained or made prior to the date hereof or as listed on Schedule 5.2(b)
hereto.

(c)           Following execution and delivery by the parties hereto or thereto,
this Agreement and each of the Ancillary Agreements to which Tubos, the Company,
GPC and/or Cirrus is a party will constitute Tubos’, the Company’s, GPC’s and/or
Cirrus’ legal, valid and binding obligations, enforceable in accordance with
their terms, subject to (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar Laws relating to or affecting the
rights of creditors generally, or (ii) limitations imposed by applicable Law
upon the enforceability of any of the remedies, covenants or other provisions of
this Agreement or such Ancillary Agreements and upon the availability of
injunctive relief or other equitable remedies.

5.3              Conflicts; Consents of Third Parties.  Subject to obtaining any
consents or approvals or making any notice or filing referred to on Schedule 5.3
hereto and except for the Permits listed on Schedule 5.3, the execution,
delivery and performance of this Agreement or any of the Ancillary Agreements to
which Tubos, the Company, GPC and/or Cirrus is a party does not conflict with or
result in a violation of (a) the Charter Documents of Tubos, the Company, GPC or
Cirrus, (b) any Law or Order applicable to Tubos, the Company, GPC or Cirrus or
any of their respective assets and properties or, (c) currently or with the
passage of time, any Contract or Permit to which Tubos, the Company, GPC and/ or
Cirrus is a party or by which any of the properties or assets of Tubos, the
Company, GPC or Cirrus are bound.  There are no Actions pending or, to the
Knowledge of Tubos, the Company, GPC, Cirrus or Apolo America, threatened
against Tubos, the Company, GPC, Cirrus or Apolo America relating to or
affecting Tubos, the Company, GPC, Cirrus or Apolo America or any of their
respective assets and properties that could reasonably be expected to result in
the issuance of an Order (a) restraining, enjoining or otherwise prohibiting or
making illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Ancillary Agreements to which Tubos, the Company, GPC
and/or Cirrus is a party or (b) that would be likely to result in a Material
Adverse Effect.

5.4              No Undisclosed Liability.  The Company does not have any
Liabilities other than those (a) specifically reflected on and fully reserved
against in the Financial Statements, (b) incurred in the ordinary course of
business consistent with past practice since the Balance Sheet Date or (c) that
are immaterial to the Company.  Apolo America does not have any Liabilities
other than those (a) specifically reflected on and fully reserved against in the
Apolo America Financial Statements, (b) incurred in the

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ordinary course of business consistent with past practice since the Balance
Sheet Date or (c) that are immaterial to Apolo America.  No representation or
warranty of Tubos, the Company, GPC, Cirrus or Apolo America contained in this
Agreement and no written statement made by or on behalf of Tubos, the Company,
GPC, Cirrus or Apolo America to LSB 2 or any of its Affiliates pursuant to this
Agreement contains an untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading.  There are no facts which Tubos, the Company, GPC, Cirrus and/or
Apolo America have not disclosed to LSB 2 in writing which could, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company or Apolo America.

5.5           Real Property.

(a)           The Company has good and marketable fee title to all of the
Company Assets, including but not limited to the Facility, free and clear of all
Liens, except (i) those Liens set forth on Schedule 5.5(a) and (ii) Permitted
Exceptions.  The Company Assets constitute all of the assets and properties
necessary to operate the business of the Company.  The Company has delivered to
LSB 2 true, correct and complete copies of all deeds, title reports and surveys
for the Facility, together with all amendments, modifications or supplements, if
any, thereto.  The Facility is not subject to any leases, rights of first
refusal, options to purchase or rights of occupancy.

(b)           The Facility includes all interests in real property which are
necessary for the intended operation of the Business.  The Facility and
infrastructure, buildings, fixtures and improvements thereon (i) have been in
operation since 1974 and have been manufacturing and processing Tubular Products
since 2003 and (ii) except as set forth on Schedule 5.5(b), the Facility is in
good operating condition without structural defects, and all mechanical and
other systems (including, without limitation, any fire protection systems) are
in good operating condition, and no condition exists requiring material repairs,
alterations or corrections.  The Facility and the personal property thereon are
suitable, sufficient and appropriate in all respects for their contemplated uses
and the intended operation of the Business.

(c)           Schedule 5.5(c) sets forth the material certificates of occupancy
and other Permits currently held by the Company, and the Company has fully
complied with all conditions of the Permits applicable to them.  No default or
violation, or event that with the lapse of time or giving of notice or both
would become a default or violation, has occurred with respect to any such
Permit.

(d)           There does not exist any actual or, to the Knowledge of Tubos or
the Company, threatened or contemplated condemnation or eminent domain
proceedings that affect the Facility or any part thereof, and the Company has
not received any notice, oral or written, of the intention of any Governmental
Authority or other Person to take or use all or any part thereof.

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(e)           Both the Company and the Facility are in compliance with all Laws
applicable to the Facility.  The Company has not received any written or other
notice of or been charged with the violation of any Laws with respect to the
Facility.

5.6           Environmental Matters.  Except as set forth on Schedule 5.6
hereto:

(a)           the operations of the Company, to the Knowledge of Tubos or the
Company, are and have been in compliance with all applicable Environmental Laws,
which compliance includes obtaining, maintaining in good standing and complying
with all Environmental Permits necessary to own or operate the Facility and no
action or proceeding is pending or, to the Knowledge of Tubos or the Company,
threatened to revoke, modify or terminate any such Environmental Permit, and, to
the Knowledge of Tubos or the Company, no facts, circumstances or conditions
currently exist that could adversely affect such continued compliance with
Environmental Laws and Environmental Permits or require capital expenditures to
achieve or maintain such continued compliance with Environmental Laws and
Environmental Permits;

(b)           the Company is not the subject of any outstanding Order or
Contract with any Governmental Authority or Person respecting (i) Environmental
Laws, (ii) Remedial Action or (iii) any Release or threatened Release of a
Hazardous Material;

(c)           no claim has been made or is pending, or to the Knowledge of Tubos
or the Company, threatened against the Company, alleging that the Company may be
in violation of any Environmental Law or any Environmental Permit or may have
any Liability under any Environmental Law;

(d)           to the Knowledge of Tubos or the Company, no facts, circumstances
or conditions exist with respect to the Facility that could reasonably be
expected to result in the Facility incurring Environmental Costs or Liabilities
in connection with the operation of the Business;

(e)           to the Knowledge of Tubos or the Company, there are no
investigations of the Company pending, or to the Knowledge of Tubos or the
Company, threatened that could lead to the imposition of any Environmental Costs
or Liabilities or Liens under Environmental Law;

(f)            there is not located at the Facility any (i) underground storage
tanks, (ii) landfill, (iii) surface impoundment, (iv) asbestos-containing
material or (v) equipment containing polychlorinated biphenyls; and

(g)           the Company has provided to LSB 2 all environmentally related
audits, studies, reports, analyses and results of investigations that have been
performed with respect to the Facility.

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5.7           Taxes.

(a)           (i) All Tax Returns required to be filed by or on behalf of the
Company or Apolo America have been duly and timely filed with the appropriate
Taxing Authority in all jurisdictions in which such Tax Returns are required to
be filed, and all such Tax Returns are true, complete and correct in all
material respects and (ii) all such Taxes have been fully and timely paid.

(b)           All deficiencies asserted or assessments made in respect of the
Company or Apolo America as a result of any examinations by any Taxing Authority
of the Tax Returns have been fully paid, and there are no other audits or
investigations by any Taxing Authority in progress, nor has the Company or Apolo
America received any notice from any Taxing Authority that it intends to conduct
such an audit or investigation.

(c)           No agreement, waiver or other document or arrangement extending or
having the effect of extending the period for assessment or collection of Taxes
(including, but not limited to, any applicable statute of limitation) or the
period for filing any Tax Return has been executed or filed with any Taxing
Authority by or on behalf of the Company or Apolo America.  Neither the Company
nor Apolo America has requested any extension of time within which to file any
Tax Return, which Tax Return has since not been filed.

(d)           There are no Liens for Taxes upon the Company Assets or the assets
of Apolo America, except for Permitted Exceptions.

(e)           No power of attorney with respect to any Tax matter is currently
in force with respect to the Company or Apolo America.

(f)            Neither the Company nor Apolo America is a party to any Tax
sharing, allocation, indemnity or similar agreement or arrangement (whether or
not written) pursuant to which it will have any obligation to make any payments
after the Closing.

5.8           Intellectual Property.

(a)           Schedule 5.8 sets forth an accurate and complete list of all
Intellectual Property owned or used by the Company and sets forth the Person
that owns such Intellectual Property.  The Company and Tubos are the sole and
exclusive owners of, or have valid and continuing rights to use, sell or
license, as the case may be, all Intellectual Property used, sold or licensed by
the Company in its business as presently conducted and as currently proposed to
be conducted, free and clear of all Liens or obligations to others save for the
restrictions under the applicable Brazilian Law and the obligations provided in
the relevant Intellectual Property licensing agreements.

(b)           With respect to any Intellectual Property not identified on
Schedule 5.8 which is determined after Closing to be owned by Tubos or an
Affiliate thereof, but used primarily in the business of the Company, Tubos
shall transfer ownership of such Intellectual Property to the Company promptly
and without charge.  With respect to any Intellectual Property not identified on
Schedule 5.8 which is determined after Closing to

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be licensed to Tubos or an Affiliate thereof, but used primarily in the business
of the Company, Tubos or such Affiliate shall sublicense or arrange for an
assignment of the primary license to the Company, without charge.  If any such
Intellectual Property not identified on Schedule 5.8 that is used in the
business of the Company, but is determined after Closing to be owned by or
licensed to Tubos or an Affiliate, Tubos or such Affiliate, as applicable, shall
grant to the Company a license or sublicense, as appropriate, to use such
Intellectual Property.  Any such license shall be worldwide, perpetual,
non-exclusive and royalty free.

5.9           Ownership.

(a)           The shareholders of the Company are as set forth on Schedule
5.9(a).  The Common Shares in the Company are validly issued, fully paid and
non-assessable and are free and clear of any and all Liens, including any claims
by any third party, including any Governmental Authority, voting proxy
arrangement or voting right trust arrangement.  There are no agreements or
understandings that give any Person other than LSB 2 the right to acquire an
interest in the Company.  There are no agreements or understandings that require
the Company to repurchase the equity interests of any equity holder.  There are
no options, warrants or other rights to acquire Common Stock or any equity
interest in the Company.

(b)           The shareholders of Apolo America are as set forth on Schedule
5.9(b).  On the Closing Date, the Company shall own all of the issued and
outstanding Apolo America Shares.  The Apolo America Shares are validly issued,
fully paid and non-assessable and are free and clear of any and all Liens,
including any claims by any third party, including any Governmental Authority,
voting proxy arrangement or voting right trust arrangement.  There are no
agreements or understandings that give any Person other than the Company the
right to acquire an interest in the Apolo America Shares.  There are no
agreements or understandings that require Apolo America to repurchase the equity
interests of any equity holder.  There are no options, warrants or other rights
to acquire Apolo America Shares or any equity interest in Apolo America.

5.10           Subsidiaries.  Except as set forth on Schedule 5.10, the Company
has no subsidiaries and does not own any equity interests in another Person. 
Apolo America has no subsidiaries and does not own any equity interests in
another Person.

5.11            Compliance with Law.  The Company has complied with applicable
Law and product standards of Brazil whether in the design and manufacturing of
products or otherwise.  Apolo America has complied with applicable Law.  The
Company has all of the necessary manufacturing Permits for all of the products
manufactured by the Company that are subject to manufacturing Permit
requirements.

5.12            Financial Statements.  The Financial Statements and the Apolo
Financial Statements are complete and correct and present fairly the
consolidated financial position, results of operations and cash flows of the
Company and Apolo America, respectively, as at the dates and for the periods
indicated therein.  All books,

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records and accounts of the Company and Apolo America are accurate and complete
and are maintained in all material respects in accordance with good business
practice and all applicable Laws.  The Company and Apolo America maintain
systems of internal accounting controls sufficient to provide reasonable
assurances that: (a) transactions are executed in accordance with management’s
general or specific authorization; (b) transactions are recorded as necessary to
permit the preparation of financial statements and to maintain accountability
for assets; (c) access to assets is permitted only in accordance with
management’s general or specific authorization; and (d) the recorded
accountability for assets is compared with the actual levels at reasonable
intervals and appropriate action is taken with respect to any differences.

5.13            Material Adverse Effect.  Except as expressly contemplated by
this Agreement, since the Balance Sheet Date (a) the Company and Apolo America
have conducted its business only in the ordinary course of business consistent
with past practice and (b) there has not been any event, change, occurrence or
circumstance that, individually or in the aggregate with any such events,
changes, occurrences or circumstances, has had or could reasonably be expected
to have a Material Adverse Effect on the Company or Apolo America.

5.14         Material Contracts.

Schedule 5.14 sets forth, by reference to the applicable sub-article of this
Section 5.14, all of the following effective contracts, whether written or oral,
or understandings, to which the Company and/or Apolo America is a party or by
which the Company and/or Apolo America or the Company Assets or the assets of
Apolo America are bound (collectively, the “Material Contracts”):

(a)           Contracts with Tubos or any current or former officer, director,
shareholder, employee or Affiliate of the Company, Apolo America or Tubos;

(b)           Contracts with any labor union or association representing any
employee of the Company or Apolo America;

(c)           Contracts for joint ventures, strategic alliances, partnerships,
licensing arrangements, or sharing of profits or proprietary information;

(d)           Contracts containing covenants of the Company or Apolo America not
to compete in any line of business or with any Person in any geographical area
or not to solicit or hire any person with respect to employment or covenants of
any other Person not to compete with the Company or Apolo America in any line of
business or in any geographical area or not to solicit or hire any person with
respect to employment;

(e)           Contracts relating to the acquisition (by merger, purchase of
stock or assets or otherwise) by the Company or Apolo America of any operating
business or material assets or the equity of any other Person;

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(f)            Contracts relating to the incurrence, assumption or guarantee of
any Indebtedness or imposing a Lien on any of the assets of the Company or Apolo
America, including indentures, guarantees, loan or credit agreements, sale and
leaseback agreements, purchase money obligations incurred in connection with the
acquisition of property, mortgages, pledge agreements, security agreements,
conditional sale or title retention agreements, or outstanding Contracts of
surety or indemnification, direct or indirect, by the Company or Apolo America;

(g)           purchase Contracts giving rise to Liabilities of the Company or
Apolo America other than in the ordinary course of business in excess of the
amount equivalent in Reais to US$200,000, according to the Exchange Rate;

(h)           Contracts providing for payments by or to the Company or Apolo
America, other than in the ordinary course of business, in excess of the amount
equivalent in Reais to US$200,000, according to the Exchange Rate, in any fiscal
year or the amount equivalent in Reais to US$200,000, according to the Exchange
Rate in the aggregate during the term thereof;

(i)            Contracts obligating the Company or Apolo America to provide or
obtain products or services for a period of one (1) year or more or requiring
the Company or Apolo America to purchase or sell a stated portion of its
requirements or outputs;

(j)            Contracts under which the Company or Apolo America has made
advances or loans to any other Person;

(k)           Contracts providing for severance, retention, change in control or
other similar payments;

(l)            Contracts for the employment of any individual on a full-time,
part-time or consulting or other basis providing annual compensation in excess
of the amount equivalent in Reais to US$200,000, according to the Exchange Rate;

(m)          material management Contracts and Contracts with independent
contractors or consultants (or similar arrangements) that are not cancellable
without penalty or further payment and without more than thirty (30) days
notice;

(n)           Contracts (or group of related Contracts) which fall outside the
ordinary course of business and involve the expenditure of more than the amount
equivalent in Reais to US$200,000, according to the Exchange Rate annually, or
the amount equivalent in Reais to US$200,000, according to the Exchange Rate, in
the aggregate or require performance by any party more than six (6) months from
the date hereof; and

(o)           Contracts that are otherwise material to the Company or Apolo
America.

Each of the Material Contracts is in full force and effect and is the legal,
valid and binding obligation of the Company and/or Apolo America and of the
other parties

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thereto, enforceable against each of them in accordance with its terms and, upon
consummation of the transactions contemplated by this Agreement, shall, except
as otherwise stated in Schedule 5.14, continue in full force and effect without
penalty or other adverse consequence.  Neither the Company nor Apolo America is
in default under any Material Contract, nor, to the Knowledge of Tubos or the
Company, is any other party to any Material Contract in breach of or default
thereunder, and no event has occurred that with the lapse of time or the giving
of notice or both would constitute a breach or default by the Company or Apolo
America or any other party thereunder.  No party to any of the Material
Contracts has exercised any termination rights with respect thereto, and no
party has given notice of any significant dispute with respect to any Material
Contract.  The Company has delivered to LSB 2 true, correct and complete copies
of all of the Material Contracts, together with all amendments, modifications or
supplements thereto.

5.15         Employee Matters.

(a)           Schedule 5.15(a) sets forth the name, current title, current
monthly compensation amount and current employer of all officers and employees
of the Company and Apolo America or any Affiliate of the Company (including but
not limited to Tubos) involved in the Business or the operation of the Facility.

(b)           Schedule 5.15(b) sets forth all material benefits that the Company
will be required to provide to its employees on an ongoing basis in accordance
with Contracts entered into with such employees or in accordance with applicable
Brazilian Law.

(c)           The Company has complied with all applicable labor laws of Brazil,
including but not limited to making all required filings with the Governmental
Authorities.  The Company has properly accrued for or otherwise reflected in the
Financial Statements all obligations in respect of employees or independent
contractors providing services to the Company.

(d)           Each employee of the Company and each employee involved in the
Business and in the operation of the Facility is regularly registered as such in
the relevant books and records, jointly with its respective salary, all in
accordance with applicable Law.  The Company has obtained all registrations and
fillings and has taken all necessary actions required under all applicable Law
with respect to the employees of the Company and the employees of any Affiliates
involved with the Business and/or the operation of the Facility, including but
not limited to labor and social security laws and regulations.  The Company is
not a party to any labor dispute or litigation which could create a material
Liability for the Company, or which could otherwise have a Material Adverse
Affect on the assets of the Company, the Business or the Facility, except as
otherwise disclosed on Schedule 5.16.  To the Knowledge of the Company, Tubos,
GPC and Cirrus, there is no basis for any action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand, against the Company by any
person or any group of persons rendering services to the Company, other than
employees who are duly registered in the relevant books and records, which may
give rise, in the aggregate, to any material

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labor or social security Liability, including but not limited to claims seeking
recognition of an employment bond.

(e)           Since December 31, 2005, the Company has not changed in any
material way its employment policies, including those applicable to increase of
salary, deferred compensation, severance pay plans or retirement plans related
to its employees, directors and/or officers, other than in order to comply with
applicable regulations or collective bargaining agreements.  The Company has not
entered into any arrangement, other than those required in order to comply with
applicable regulations or collective bargaining agreements, with any of its
employees, directors and/or officers providing for special plans relating to
salary, deferred compensation, retirement and severance pay.

5.16            Legal Proceeding.  Except as set forth on Schedule 5.16, there
is no Legal Proceeding pending or, to the Knowledge of Tubos or the Company,
threatened against the Company or Apolo America (or to the Knowledge of Tubos or
the Company, pending or threatened against any of the officers, directors or
employees of the Company or Apolo America with respect to their business
activities on behalf of the Company or Apolo America, respectively), or to which
the Company or Apolo America is otherwise a party before any Governmental
Authority; nor to the Knowledge of Tubos or the Company is there any reasonable
basis for any such Legal Proceeding.  Except as set forth on Schedule 5.16,
neither the Company nor Apolo America is subject to any effective Order that has
not been fully performed, nor is it in breach or violation of such Order. 
Except as set forth on Schedule 5.16, neither the Company nor Apolo America is
engaged in any legal action to recover monies due it or for damages sustained by
it.  There are no Legal Proceedings pending or, to the Knowledge of Tubos or the
Company, threatened against the Company or Apolo America or to which the Company
or Apolo America is otherwise a party relating to this Agreement or the
transactions contemplated hereby.

5.17            Insurance.  The Company has insurance policies in full force and
effect (a) for such amounts as are sufficient for all requirements of applicable
Law and insurance related provisions of agreements requiring insurance policies
to be taken out to which the Company is a party or by which it is bound and (b)
which are in such amounts, with such deductibles and against such risks and
losses, as are reasonable for the Business and Company Assets.

5.18            Inventory.  The inventories of the Company and Apolo America are
in good and marketable condition and are usable and saleable in the ordinary
course of business.  The inventories of the Company and Apolo America set forth
in the Financial Statements and the Apolo America Financial Statement,
respectively, were properly stated therein in accordance with Brazilian GAAP. 
Adequate reserves have been reflected in the Financial Statements and the Apolo
Financial Statements for obsolete, damaged, unqualified, excess, slow-moving or
otherwise unusable inventory in accordance with Brazilian GAAP.  The inventories
of the Company constitute sufficient quantities for the normal operation of
business in accordance with past practice.

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5.19            Accounts Receivable.  All accounts and notes receivable of the
Company and Apolo America have arisen from bona fide transactions in the
ordinary course of business consistent with past practice and are payable on
ordinary trade terms.  All accounts and notes receivable of the Company and
Apolo America reflected in the Financial Statements and the Apolo America
Financial Statements, respectively, are good and collectible at the aggregate
recorded amounts thereof, or doubtful account reserves have been fully made in
accordance with Brazilian GAAP.  None of the accounts or the notes receivable of
the Company or Apolo America (a) are subject to any setoffs or counterclaims or
(b) represent obligations for goods sold on consignment, on approval or on a
sale-or-return basis or subject to any other repurchase arrangement.  All
accounts payable of the Company and Apolo America reflected in the Financial
Statements and the Apolo America Financial Statements, respectively, or arising
after the Balance Sheet Date are the result of bona fide transactions in the
ordinary course of business and have been paid or are not yet due and payable
and have been recorded in accordance with Brazilian GAAP.

5.20            Related Persons.  Except as set forth on Schedule 5.20, no
director or senior management personnel or equity holder of the Company, its
directors or senior management personnel, any member of his, her or their
immediate family or any of their respective Affiliates (“Related Persons”) (a)
owes any amount to the Company nor does the Company owe any amount to, or has
the Company committed to make any loan or extend or guarantee credit to or for
the benefit of, any Related Person, (b) is involved in any business arrangement
or other relationship with the Company (whether written or oral), (c) owns any
property or right, tangible or intangible, that is used by the Company, (d) has
any claim or cause of action against the Company or (e) owns any direct or
indirect interest of any kind in, or controls or is a director, officer,
employee or partner of, or consultant to, or lender to or borrower from or has
the right to participate in the profits of, any Person which is a competitor,
supplier, customer, landlord, tenant, creditor or debtor of the Company.

5.21            Tubular Products Contracts.  Except as set forth on Schedule
5.21, neither the Company nor Apolo America has entered into any Contracts,
whether written or oral, for the sale of Tubular Products.

5.22            GPC, Cirrus or Tubos Legal Proceeding.  Except as set forth on
Schedule 5.22, there is no Legal Proceeding pending or, to the Knowledge of GPC,
Cirrus or Tubos, threatened against GPC, Cirrus and/or Tubos and/or any of their
Affiliates with respect to the activities and businesses of the Company (or to
the Knowledge of GPC, Cirrus or Tubos, pending or threatened against any of the
officers, directors or employees of GPC, Cirrus and/or Tubos and/or any of their
Affiliates with respect to the activities and businesses of the Company), or to
which GPC, Cirrus and/or Tubos and/or their Affiliates are otherwise a party
before any Governmental Authority, with respect to the activities and businesses
of the Company; nor to the Knowledge of GPC, Cirrus and/or Tubos is there any
reasonable basis for any such Legal Proceeding.  Except as set forth on Schedule
5.22, none of GPC, Cirrus or Tubos or any of their Affiliates are subject to any
effective Order, related to the activities and businesses of

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the Company that has not been fully performed, nor is it in breach or violation
of such Order.  Except as set forth on Schedule 5.22, none of GPC, Cirrus or
Tubos or their Affiliates are engaged in any legal action to recover monies due
it or for damages sustained by it, related to the activities or businesses of
the Company.  There are no Legal Proceedings pending or, to the Knowledge of
GPC, Cirrus or Tubos, threatened against the GPC, Cirrus and/or Tubos or any of
their Affiliates related to the activities and businesses of the Company to
which any of them is otherwise a party relating to this Agreement or the
transactions contemplated hereby.

ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF LSB 2 AND LONE STAR

Each of LSB 2 and Lone Star hereby represents and warrants to the Company that:

6.1              Existence and Good Standing.  LSB 2 is validly existing and in
good standing under the Laws of Brazil and is duly qualified to do business in
all jurisdictions where it is so required to qualify.  Lone Star is validly
existing and in good standing under the Laws of the State of Delaware, United
States of America, and is duly qualified to do business in all jurisdictions
where it is so required to qualify.  Star Brazil Cayman is validly existing and
in good standing under the laws of the Cayman Islands and is duly qualified to
do business in all jurisdictions where it is so required to qualify.  The
memorandum and articles of association of Star Brazil Cayman are attached hereto
as Exhibit I.

6.2              Authorization of Agreement.

(a)           Each of LSB 2 and Lone Star has all requisite corporate power and
authority to enter into this Agreement and the Ancillary Agreements and has all
requisite corporate power and authority to perform all of their respective
obligations under this Agreement and the Ancillary Agreements to which LSB 2 or
Lone Star is a party.  LSB 2 has taken all corporate action necessary to
authorize the execution, delivery and performance of this Agreement and the
Ancillary Agreements to which LSB 2 is a party.  Lone Star has taken all
corporate action necessary to authorize the execution, delivery and performance
of this Agreement, and the Ancillary Agreements to which Lone Star is a party.

(b)           The execution and delivery of this Agreement and the Ancillary
Agreements to which LSB 2 and/or Lone Star is a party do not require LSB 2 or
Lone Star, as the case may be, to obtain any approval or consent of, or make any
notice to or filing with, any Person or Governmental Authority, other than
approvals, consents, notices and filings obtained or made prior to the date
hereof or as listed on Schedule 6.2(b) hereto.

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(c)           Following execution and delivery by the parties hereto or thereto,
this Agreement and each of the Ancillary Agreements to which LSB 2 and/or Lone
Star is a party will constitute LSB 2’s and/or the Lone Star’s legal, valid and
binding obligations, enforceable in accordance with their terms, subject to (i)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar Laws relating to or affecting the rights of creditors generally or
(ii) limitations imposed by applicable Law or equitable principles upon the
enforceability of any of the remedies, covenants or other provisions of this
Agreement or such Ancillary Agreements and upon the availability of injunctive
relief or other equitable remedies.

6.3              Conflicts; Consents of Third Parties.  Subject to obtaining any
consents or approvals or making any notice or filing referred to on Schedule 6.3
hereto, the execution, delivery and performance of this Agreement or any of the
Ancillary Agreements to which LSB 2 and/or Lone Star is a party does not
conflict with or result in a violation of (a) the Charter Documents of LSB 2
and/or Lone Star, (b) any Law or Order applicable to LSB 2 and/or Lone Star or
any of its assets and properties or (c) any Contract or Permit to which LSB 2
and/or Lone Star is a party or by which any of the properties or assets of LSB 2
and/or Lone Star are bound.  There are no Actions pending or, to the Knowledge
of LSB 2 and/or Lone Star, threatened against LSB 2 and/or Lone Star relating to
or affecting LSB 2’s or Lone Star’s assets and properties that could reasonably
be expected to result in the issuance of an Order (a) restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Ancillary Agreements
to which LSB 2 and/or Lone Star is a party or (b) that would be likely to result
in a Material Adverse Effect.

6.4              Ownership of Star Brazil Cayman.  LSB 2 owns all of the issued
and outstanding Cayman Shares. The Cayman Shares are validly issued, fully paid
and non-assessable and are free and clear of any and all Liens, including any
claims by any third party, including any Governmental Authority, voting proxy
arrangement or voting right trust arrangement.  There are no agreements or
understandings that give any Person other than the Company the right to acquire
an interest in Star Brazil Cayman.  There are no agreements or understandings
that require Star Brazil Cayman to repurchase the equity interests of any equity
holder in Star Brazil Cayman.  There are no options, warrants or other rights to
acquire Cayman Shares or any equity interest in Star Brazil Cayman.

6.5              No Liabilities; Assets.  Star Brazil Cayman does not have any
Liabilities and its only asset is the Promissory Note.

6.6              Employee Matters.  Schedule 6.6 sets forth the name, current
title, and current annual compensation amount of all directors, officers and
employees of Star Brazil Cayman.

6.7              Legal Proceeding.  There is no Legal Proceeding pending or, to
the Knowledge of LSB 2 or Lone Star, threatened against Star Brazil Cayman (or
to the

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Knowledge of LSB 2 or Lone Star, pending or threatened, against any of the
officers, directors or employees of Star Brazil Cayman with respect to their
business activities on behalf of Star Brazil Cayman), or to which Star Brazil
Cayman is otherwise a party before any Governmental Authority; nor to the
Knowledge LSB 2 or Lone Star is there any reasonable basis for any such Legal
Proceeding.  Star Brazil Cayman is not subject to any effective Order that has
not been fully performed, nor is it in breach or violation of such Order.  Star
Brazil Cayman is not engaged in any legal action to recover monies due it or for
damages sustained by it.

6.8              Compliance with Law.  Star Brazil Cayman has complied with
applicable Law.

6.9              Contracts.  Except for the Promissory Note, there are no
contracts, whether written or oral, to which Star Brazil Cayman is a party.

6.10            Taxes.

(a)           (i) All Tax Returns required to be filed by or on behalf of Star
Brazil Cayman have been duly and timely filed with the appropriate Taxing
Authority in all jurisdictions in which such Tax Returns are required to be
filed, and all such Tax Returns are true, complete and correct in all material
respects and (ii) all such Taxes have been fully and timely paid.

(b)           All deficiencies asserted or assessments made in respect of Star
Brazil Cayman as a result of any examinations by any Taxing Authority of the Tax
Returns have been fully paid, and there are no other audits or investigations by
any Taxing Authority in progress, nor has Star Brazil Cayman received any notice
from any Taxing Authority that it intends to conduct such an audit or
investigation.

(c)           No agreement, waiver or other document or arrangement extending or
having the effect of extending the period for assessment or collection of Taxes
(including, but not limited to, any applicable statute of limitation) or the
period for filing any Tax Return has been executed or filed with any Taxing
Authority by or on behalf of Star Brazil Cayman.  Star Brazil Cayman has not
requested any extension of time within which to file any Tax Return, which Tax
Return has since not been filed.

(d)           There are no Liens for Taxes upon the assets of Star Brazil
Cayman.

(e)           No power of attorney with respect to any Tax matter is currently
in force with respect to Star Brazil Cayman.

(f)            Star Brazil Cayman is not a party to any Tax sharing, allocation,
indemnity or similar agreement or arrangement (whether or not written) pursuant
to which it will have any obligation to make any payments after the Closing.

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ARTICLE 7

COVENANTS

7.1              No-Shop.  From the date of this Agreement until the Closing
Date or the earlier termination of this Agreement, Tubos and the Company shall
not, and shall cause their respective Affiliates and each of their respective
officers, directors, employees, representatives and agents not to, directly or
indirectly, initiate, solicit, encourage or otherwise facilitate any inquiry,
proposal, offer or discussion, or engage in any discussions or negotiations,
with any party (other than Lone Star) concerning any business transaction
involving the sale of the Company, any equity interest in the Company, or any
subsidiaries of the Company, or the sale of all or substantially all of the
assets of the Company or any of its subsidiaries.  Tubos shall notify Lone Star
within three (3) Business Days of receipt by Tubos, the Company or any Affiliate
thereof of an unsolicited offer or indication of interest received from any
party (other than Lone Star) concerning any business transaction involving the
sale of the Company, any equity interest in the Company, or any subsidiaries of
the Company, or the sale of all or substantially all of the assets of the
Company or any of its subsidiaries.

7.2              Operations Prior to the Closing Date.

(a)           Between the execution of this Agreement and the Closing Date,
unless otherwise consented to in writing by LSB 2 or expressly permitted or
required under this Agreement, each of Tubos and the Company shall ensure that
each of the Company and Apolo America shall not:

(i)            make any material change in its business or its operations,
except such changes as may be required to comply with any applicable Law;

(ii)           enter into any Contract or commitment to make a capital
expenditure in excess of the amount equivalent in Reais to US$500,000, according
to the Exchange Rate;

(iii)          enter into any material transaction or enter into, modify,
terminate or renew any material Contract, in each case, other than in the
ordinary course of business;

(iv)          enter into any Contract for the purchase of real property;

(v)           sell, lease (as lessor), transfer or otherwise dispose of
(including any transfers to any of its Affiliates), or mortgage or pledge, or
impose or suffer to be imposed any Lien on, any of the Company Assets or the
assets of Apolo America, other than inventory and personal property sold or
otherwise disposed of in the ordinary course of business and other than
Permitted Exceptions;

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(vi)          cancel any Indebtedness owed to or claims held by the Company or
Apolo America (including the settlement of any claims or litigation) other than
in the ordinary course of business, except as provided for in Section 7.3;

(vii)         create, incur or assume, or agree to create, incur or assume, any
Indebtedness, other than in the ordinary course of business (which shall
expressly exclude the creation, incurrence or assumption of Indebtedness on
behalf of an Affiliate);

(viii)        declare, set aside, make, or agree to make, any distribution of
Company Assets or the assets of Apolo America or dividend to Tubos or any of its
Affiliates, or repurchase, redeem or otherwise acquire any Common Shares or
Apolo America Shares;

(ix)           effect any recapitalization, reclassification, share split or
like change in the capitalization of the Company or Apolo America, except for
the capitalization of the Company in the total aggregate amount of
R$84,868,094.12 and related issuance of Common Shares, in connection with the
transfer of the Special Oto Mills production line (R$40,688,948.74), the payment
in Common Shares of outstanding Indebtedness of the Company for inter-company
loans (R$11,491,839.90) and the capitalization of the monetary correction
reserve (R$32,687,305.48);

(x)            institute any material increase in any benefit provided under any
profit-sharing, bonus, incentive, deferred compensation, insurance, pension,
retirement, medical, hospital, disability, welfare or other employee benefit
plan maintained for the Company’s and Apolo America’s employees, other than as
required by applicable Law;

(xi)           make any material change in the compensation of the Company’s or
Apolo America’s employees, other than changes made in accordance with normal
compensation practices or pursuant to existing Contractual commitments and
consistent with past compensation practices;

(xii)          enter into, modify or terminate any labor or collective
bargaining agreement of the Company or Apolo America or, through negotiation or
otherwise, make any commitment or incur any Liability to any labor organization
with respect to the Company or Apolo America;

(xiii)         make or rescind any election relating to Taxes, change the
Company’s or Apolo America’s method of Tax accounting or change the Tax
accounting treatment of any item, settle or compromise any claim or proceedings
relating to Taxes;

(xiv)        make any material change in the accounting policies applied in the
preparation of the Financial Statements or the Apolo Americas Financial
Statements, unless such change is required by Brazilian GAAP;

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(xv)         enter into any Contract, understanding or commitment that
restrains, restricts, limits or impedes the ability of the Company or Apolo
America to compete or conduct any business or line of business in any geographic
area;

(xvi)        terminate, amend, restate, supplement or waive any material rights
under any Material Contract;

(xvii)       make any change in the Company’s or Apolo America’s Charter
Documents or issue any Common Shares or Apolo America Shares or other equity
securities (or securities exchangeable, convertible or exercisable for Common
Shares, Apolo America Shares or other equity securities of the Company or Apolo
America); or

(xviii)      agree in writing or otherwise to take any of the prohibited actions
described in this Section 7.2(a).

(b)           Between the execution of this Agreement and the Closing Date,
unless otherwise consented to in writing by Tubos or expressly permitted or
required under this Agreement, each of LSB 2 and Lone Star shall ensure that
Star Brazil Cayman shall not:

(i)            make any material change in its business or its operations,
except such changes as may be required to comply with any applicable Law;

(ii)           except for the Promissory Note, enter into any Contract in excess
of US$10,000;

(iii)          except for the Promissory Note, enter into any material
transaction or enter into, modify, terminate or renew any material Contract, in
each case, other than in the ordinary course of business;

(iv)          enter into any Contract for the purchase of real property;

(v)           sell, lease (as lessor), transfer or otherwise dispose of
(including any transfers to any of its Affiliates), or mortgage or pledge, or
impose or suffer to be imposed any Lien on, any of the assets of Star Brazil
Cayman;

(vi)          cancel any Indebtedness owed to or claims held by Star Brazil
Cayman (including the settlement of any claims or litigation) other than in the
ordinary course of business;

(vii)         create, incur or assume, or agree to create, incur or assume, any
Indebtedness, other than in the ordinary course of business (which shall
expressly exclude the creation, incurrence or assumption of Indebtedness on
behalf of an Affiliate);

(viii)        declare, set aside, make, or agree to make, any distribution of
the assets of Star Brazil Cayman or dividend to LSB 2 or any of its Affiliates,
or repurchase, redeem or otherwise acquire any Cayman Shares;

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(ix)           effect any recapitalization, reclassification, share split or
like change in the capitalization of Star Brazil Cayman;

(x)            make or rescind any election relating to Taxes, change Star
Brazil Cayman’s method of Tax accounting or change the Tax accounting treatment
of any item, settle or compromise any claim or proceedings relating to Taxes;

(xi)           make any change in Star Cayman Brazil’s Charter Documents or
issue any Cayman Shares or other equity securities, except in exchange for the
Promissory Note (or securities exchangeable, convertible or exercisable for
Cayman Shares or other equity securities); or

(xii)          agree in writing or otherwise to take any of the prohibited
actions described in this Section 7.2(b).

7.3              Indebtedness.

(a)           On or before the Closing Date, the Company shall have fully paid
all Indebtedness owed by the Company to GPC, Cirrus, Tubos, Syntecko Produtos
Quimicos S.A., Syntax Comercio Importacao and any other Affiliates of the
Company, except for the Indebtedness set forth on Schedule 7.3(a) and any
accounts receivable owed by the Company to an Affiliate of the Company which
arose in the ordinary course of business.  On or before the Closing Date, all
Indebtedness owed to the Company by GPC, Cirrus, Tubos, Syntecko Produtos
Quimicos S.A., Syntax Comercio Importacao and any other Affiliate of the Company
shall have been fully paid, except for the Indebtedness set forth on Schedule
7.3(a) and any accounts payable owed by an Affiliate of the Company to the
Company which arose in the ordinary course of business for goods and services.

(b)           On or before the Closing Date, the Company shall have fully paid
all Indebtedness owed by the Company and all Indebtedness related to the
Business or the Facility, except for (i) the Indebtedness set forth on Schedule
7.3(b) and (ii) any accounts payable owed by the Company which arose in the
ordinary course of business for goods and services.

7.4              Employees.  On, before or immediately after the Closing Date,
all employees of any Affiliate of the Company involved in the Business and/or in
the operation of the Facility shall have been transferred to and registered with
the Company and shall not be engaged in the business of Tubos or its Affiliates
(other than the Company).

7.5              Transfer of Assets.

(a)           On or before the Closing Date, all assets necessary for the
intended operation of the Business and the Facility that are owned by Affiliates
of the Company, including but not limited to the assets set forth on Schedule
7.5(a), shall be transferred to the Company free and clear of all Liens.

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(b)           On or before the Closing Date, the Company shall transfer
ownership of the mechanical lathe purchased by the Company with the proceeds of
the FINAME Loan to Tubos.  Tubos hereby agrees to (i) assume all Liabilities and
obligations of the Company under the FINAME Loan, including but not limited to
the obligation to make all payments as they become due under the FINAME Loan and
(ii) fully indemnify and hold harmless the Company from any and all Liabilities
based upon, attributable to or resulting from the FINAME Loan.

(c)           On or before one (1) year from the Closing Date, the Company shall
sell the assets currently owned by the Company related to the Calderaria
business line in exchange for R$4,697,000 in cash.  A list of such assets is set
forth on Schedule 7.5(c) (the “Calderaria Assets”).  If, during such one (1)
year period, the Company sells the Calderaria Assets for an amount that is less
than R$4,697,000, Tubos shall pay to the Company the difference between
R$4,697,000 and the sales price of the Calderaria Assets.  If, during such one
(1) year period, the Company sells the Calderaria Assets for an amount that is
more than R$4,697,000, the Company shall pay to Tubos the difference between the
sales price of the Calderaria Assets and R$4,697,000, less any applicable
Taxes.  Tubos shall indemnify and hold harmless the Company for any Losses
arising out of or resulting from any sale of the Calderaria Assets.  In the
event that the Company has not sold the Calderaria Assets on or before one (1)
year from the Closing Date, Tubos shall be required to purchase the Calderaria
Assets from the Company in exchange for R$4,697,000 in cash no later than
fifteen (15) Business Days after one (1) year from the Closing Date.

7.6              Subsidiaries.

(a)           On or before the Closing Date, the Company shall purchase all of
the outstanding common shares in Apolo America (the “Apolo America Shares”)
pursuant to the terms of the AA Purchase Agreement.

(b)           On or before the Closing Date, the Company shall transfer all of
the outstanding securities of MYTHRA S/A, a stock corporation organized under
the laws of Uruguay and a wholly-owned subsidiary of the Company, to Tubos or an
Affiliate of Tubos (excluding the Company).

7.7           PAT Registration.  Prior to the Closing Date, Tubos shall use its
reasonable efforts to cause the Company to register with PAT, including all
types of benefits granted by the Company with respect to meals (including cesta
básica,  vale alimentação,  vale refeição, provision of meals to employees and
any other, as applicable) for all of the employees of the Company (the “PAT
Registration”).  In the event that the PAT Registration is not completed on or
before the Closing Date, Tubos and LSB 2 shall use their best efforts to cause
the Company to complete the PAT Registration as soon as reasonably possible
after the Closing Date.  As an exception to Section 10.2(a) hereof, Tubos hereby
agrees to fully indemnify and hold harmless the Company from any and all
Liabilities (including but not limited to Taxes) based upon, attributable to or
resulting from the provision of meals (including cesta básica,  vale

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alimentação,  vale refeição) for any of the employees of the Company prior to
the date the PAT Registration is completed.

7.8              Antitrust Filing.

(a)           Tubos and LSB 2 expressly agree that they shall jointly submit the
transactions provided for herein and in the Ancillary Agreements to the approval
of the Brazilian Antitrust Authority, the Administrative Counsel of Economic
Defense (“CADE”) and that they shall jointly share any filing fees in connection
with such submission.  LSB 2 will take the lead relating to such submission, and
Tubos and GPC expressly undertake to fully cooperate in a timely manner with LSB
2 in order to file the relevant applications, supply the necessary information
and obtain CADE’s approval.

(b)           Tubos and LSB 2 further agree that the closing of the transactions
provided for herein shall not be delayed by the absence of CADE’s approval. 
Therefore, Tubos and LSB 2 jointly assume all the risks relating to such
approval, including the non-granting of such approval or the granting of the
approval with restrictions.

7.9              Realization of Tax Receivables and Other Tax Assets/Credits. 

(a)              Tubos hereby agrees that, to the extent that the tax
receivables and other tax assets/credits listed on Schedule 7.9(a) have not been
fully realized by the Company within three (3) years from the Closing Date (the
“Realization Date”), Tubos shall reimburse the Company the amount of such
shortfall within thirty (30) Business Days after the Realization Date by wire
transfer of immediately available funds to the account of the Company as may be
designated in writing by the Company prior to such transfer.  Schedule 7.9(a)
sets forth the manner in which the realization of the tax receivables and other
tax assets/credits will be calculated.

(b)           Tubos and LSB 2 hereby agree that they shall use their
commercially reasonable efforts to cause the Company to file a suit against the
Brazilian Federal Government to recover the excess PIS and Cofins paid by the
Company on account of the inclusion of the ICMS in the tax base of those taxes,
an estimate of which is set forth as Schedule 7.9(b) (the “Contingent Tax
Credit/Asset”).  The Contingent Tax Credit/Asset does not include the tax
credits and tax assets identified on Schedule 7.9(a). 

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7.10            Conversion of the Company.  Prior to the Closing Date, the
Company shall have completed its conversion from a limited liability company
(sociedade empresaria limitada) to a corporation (sociedade anonima/stock
corporation).

7.11            Special Oto Mills Production Line.  Prior to the Closing Date,
Tubos shall transfer the Special Oto Mills production line to the Company at its
net book value of R$40,689,000, which includes R$1,225,000 of ICMS tax paid by
Tubos on the purchase of the Special Oto Mills production line, which shall be
capitalized as part of its historical cost.  Tubos has submitted a request to
the Brazilian Taxing Authority seeking to offset this ICMS tax paid against
future ICMS tax payables of Tubos.  In the event that the Brazilian Taxing
Authority authorizes the use of these ICMS tax credits for offset against future
ICMS tax payables, the use of such ICMS tax credits will result in a reduction
of the value of the net book value of the Special Oto Mills production line and
therefore Tubos shall reimburse the Company for the value of the ICMS tax
credits used.

7.12            Best Efforts.  Tubos and LSB 2 shall use their best efforts to
cause the conditions in Article 8 to be satisfied.

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ARTICLE 8

CONDITIONS TO CLOSING

8.1              Conditions Precedent to Obligations of Tubos.

The obligations of Tubos to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, prior to or on the Closing Date, of
each of the following conditions (any or all of which may be waived expressly in
writing by the Company in whole or in part to the extent permitted by applicable
Law):

(a)           each of the representations and warranties of LSB 2 and/or Lone
Star contained herein qualified as to materiality shall be true and correct, and
all representations and warranties of LSB 2 and/or Lone Star contained herein
not qualified as to materiality shall be true and correct in all material
respects, at and as of the Closing Date with the same effect as though those
representations and warranties had been made again at and as of that date; it
being understood that, to the extent any such representation or warranty was
made as of a specified date, the same shall continue on the Closing Date to be
true and correct as of the specified date;

(b)           LSB 2 and/or Lone Star shall have performed and complied in all
material respects with all obligations and covenants required by this Agreement
to be performed or complied with by LSB 2 and/or Lone Star on or prior to the
Closing Date;

(c)           Tubos shall have been furnished with a certificate (dated the
Closing Date and in form and substance reasonably satisfactory to the Company)
executed by an officer of each of LSB 2 and Lone Star certifying as to the
fulfillment of the conditions specified in Sections 8.1(a) and 8.1(b);

(d)           LSB 2 shall have executed and/or delivered to Tubos and the
Company at the Closing all of the documents required to be executed and/or
delivered by it pursuant to Section 4.2; and

(e)           no Legal Proceedings shall have been instituted or threatened or
claim or demand made against LSB 2, Lone Star, GPC, Cirrus, the Company or Tubos
seeking to restrain or prohibit or obtain substantial damages with respect to
the consummation of the transactions contemplated hereby, and there shall not be
in effect any Order by a Governmental Authority of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby.

8.2              Conditions Precedent to Obligations of LSB 2.

The obligations of LSB 2 to consummate the transactions contemplated by this
Agreement, including but not limited to the LSB 2 Investment, are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions (any or all of which may be waived expressly in writing by LSB 2 in
whole or in part to the extent permitted by applicable Law):

(a)           each of the representations and warranties of Tubos, the Company,
GPC and/or Cirrus contained herein qualified as to materiality shall be true and
correct, and each of the representations and warranties of Tubos, the Company,
GPC and/or Cirrus contained herein not qualified as to materiality shall be true
and correct in all material

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respects, at and as of the Closing Date with the same effect as though those
representations and warranties had been made again at and as of that date; it
being understood that, to the extent any such representation or warranty was
made as of a specified date, the same shall continue on the Closing Date to be
true and correct as of the specified date;

(b)           Tubos, the Company, GPC and/or Cirrus shall have performed and
complied in all material respects with all obligations and covenants required by
this Agreement to be performed or complied with by Tubos, the Company, GPC
and/or Cirrus, as the case may be, on or prior to the Closing Date;

(c)           LSB 2 shall have been furnished with a certificate (dated the
Closing Date and in form and substance reasonably satisfactory to LSB 2)
executed by an officer of Tubos certifying as to the fulfillment of the
conditions specified in Sections 8.2(a) and 8.2(b);

(d)           Tubos shall have executed and/or delivered to LSB 2 and the
Company at the Closing all of the documents required to be executed and/or
delivered by Tubos pursuant to Section 4.1;

(e)           the Company shall have executed and/or delivered to LSB 2 and
Tubos at the Closing all of the documents required to be executed and/or
delivered by the Company pursuant to Section 4.3;

(f)            no Legal Proceedings shall have been instituted or threatened or
claim or demand made against LSB 2, Lone Star, GPC, Cirrus, the Company or Tubos
seeking to restrain or prohibit or obtain substantial damages with respect to
the consummation of the transactions contemplated hereby, and there shall not be
in effect any Order by a Governmental Authority of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby; and

(g)           Tubos shall have obtained the consent of the International Finance
Corporation (the “IFC”), pursuant to which the IFC shall have consented to the
transactions contemplated by this Agreement and the Ancillary Agreements, in a
form reasonably satisfactory to LSB 2, and Tubos shall have delivered a copy of
such consent to LSB 2.

ARTICLE 9

TERMINATION

9.1              Termination of Agreement.

This Agreement may only be terminated prior to the Closing as follows:

(a)           by the written agreement of LSB 2 and Tubos;

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(b)           by either LSB 2 or Tubos if there shall be in effect a final
nonappealable Order restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated hereby;

(c)           by LSB 2 if, prior to the Closing Date, Tubos, the Company, GPC or
Cirrus is in material breach of any representation, warranty, covenant or
agreement herein contained and such breach shall not have been cured within ten
(10) days after the date a Notice of default is delivered to Tubos and the
Company by LSB 2; provided, that the right to terminate this Agreement pursuant
to this Section 9.1(c) shall not be available to LSB 2 if LSB 2 is in material
breach of this Agreement at the time Notice of termination is delivered;

(d)           by Tubos if, prior to the Closing Date, LSB 2 or Lone Star is in
material breach of any representation, warranty, covenant or agreement herein
contained and such breach shall not have been cured within ten (10) days after
the date a Notice of default is delivered to LSB 2 by Tubos; provided, that the
right to terminate this Agreement pursuant to this Section 9.1(d) shall not be
available to Tubos if any of Tubos, the Company, GPC or Cirrus is in material
breach of this Agreement at the time Notice of termination is delivered;

(e)           by LSB 2, if Tubos, the Company, GPC or Cirrus becomes insolvent,
makes a general assignment for the benefit of creditors, suffers or permits the
appointment of a receiver for its business or assets, becomes subject to any
proceeding under any bankruptcy or insolvency Law, or winds up or liquidates,
voluntarily or otherwise;

(f)            by Tubos, if either of LSB 2 or Lone Star becomes insolvent,
makes a general assignment for the benefit of creditors, suffers or permits the
appointment of a receiver for its business or assets, becomes subject to any
proceeding under any bankruptcy or insolvency Law, or winds up or liquidates,
voluntarily or otherwise;

(g)           by LSB 2, if a Material Adverse Effect shall have occurred;
provided, however, that LSB 2 may not terminate if LSB 2’s or Lone Star’s
willful actions have caused the Material Adverse Effect; and

(h)           by Tubos, if a Material Adverse Effect shall have occurred;
provided, however, that Tubos may not terminate if any of Tubos’, the Company’s,
GPC’s or Cirrus’ willful actions have caused the Material Adverse Effect.

9.2              Procedure for Termination.  The termination of this Agreement
pursuant to Section 9.1(b) - 9.1(h) shall be effectuated by the delivery of a
written Notice of such termination from the party terminating this Agreement to
the other party.

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9.3              Effect of Termination.

If this Agreement is terminated in accordance with Section 9.1 and the
transactions contemplated hereby are not consummated:

(a)           Each party shall redeliver all documents and other materials of
the other parties hereto, and all copies of any such materials, relating to the
transactions contemplated hereby, whether obtained before or after the execution
hereof, to the party furnishing the same.

(b)           No party hereto shall have any Liability or further obligation to
the other parties to this Agreement resulting from such termination except that:
(i) this Section 9.3 and Section 11.10 shall remain in full force and effect and
the parties shall have the obligations stated therein, and (ii) no party waives
any claim or right for damages against a breaching party to the extent that such
termination results from the breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth herein.

ARTICLE 10

INDEMNIFICATION

10.1            Survival of Representations, Warranties and Covenants.  The
representations and warranties of the parties contained in this Agreement or any
certificate delivered pursuant hereto shall survive the Closing through and
including the second anniversary of the Closing Date; provided, however, that
the representations and warranties (a) of Tubos, the Company, GPC and/or Cirrus
set forth in Section 5.1 (existence and good standing), Section 5.2
(authorization of agreement) and Section 5.5(a) (title) shall survive the
Closing until thirty (30) days following the expiration of the applicable laches
or statute of limitations with respect to the particular matter that is the
subject matter thereof, (b) of Tubos, the Company, GPC and/or Cirrus set forth
in Section 5.7 (taxes), Section 5.6 (environmental matters) Section 5.9
(ownership) and Section 5.15 (employee matters) shall survive the Closing until
ninety (90) days following the expiration of the applicable laches or statute of
limitations with respect to the particular matter that is the subject matter
thereof, (c) of LSB 2 and/or Lone Star set forth in Section 6.1 (existence and
good standing) and Section 6.2 (authorization of agreement) shall survive the
Closing until thirty (30) days following the expiration of the applicable laches
or statute of limitations with respect to the particular matter that is the
subject matter thereof and (d) of LSB 2 and/or Lone Star set forth in Section
6.4 (ownership), Section 6.6 (employee matters) and Section 6.10 (taxes) shall
survive the Closing until ninety (90) days following the expiration of the
applicable laches or statute of limitations with respect to the particular
matter that is the subject matter thereof (in each case, the “Survival Period”);
provided, however, that any obligations under Sections 10.2(a)(i) and 10.2(b)(i)
shall not terminate with respect to any Losses as to which the Person to be
indemnified shall have given Notice (stating in reasonable detail the basis of
the claim for indemnification) to the indemnifying party in accordance with
Section 10.3(a) before the termination of the applicable Survival Period.

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10.2            Indemnification.

(a)           Subject to Sections 10.1 and 10.4, Tubos hereby agrees to
indemnify and hold LSB 2 and its Affiliates (other than the Company) and their
respective directors, officers, employees, stockholders, agents, attorneys,
representatives, successors and assigns (collectively, the “LSB 2 Indemnified
Parties”) harmless from and against, and pay to the applicable LSB 2 Indemnified
Parties the amount of, any and all losses, liabilities, claims, obligations,
deficiencies, demands, judgments, damages (including incidental and
consequential damages), interest, fines, penalties, claims, suits, Actions,
causes of action, assessments, awards, costs and expenses (including costs of
investigation and defense and attorneys’ and other professionals’ fees), or any
diminution in value, whether or not involving a Third Party Claim (individually,
a “Loss” and, collectively, “Losses”):

(i)            based upon, attributable to or resulting from the failure of any
of the representations or warranties made by Tubos, the Company, GPC or Cirrus
in this Agreement to be true and correct in all respects at and as of the date
hereof and at and as of the Closing Date;

(ii)           based upon, attributable to or resulting from the breach of any
covenant or other agreement on the part of Tubos, the Company, GPC or Cirrus
under this Agreement;

(iii)          imposed under or pursuant to any Environmental Laws (including
any loss of use of the Company Assets) arising from or related to any condition,
act or omission, by Tubos, the Company or any predecessor thereof or related to
the operations of the Company or any predecessor thereof on or relating to the
Facility, whether known or unknown, accrued or contingent, to the extent
existing on or prior to the Closing Date, including any Environmental Costs and
Liabilities imposed associated with a Release of Hazardous Materials;

(iv)          based upon, attributable to or resulting from any acts, facts,
omissions, activities, events or transactions of Tubos, Apolo America, the
Company or an Affiliate of Tubos which occurred on or before the Closing Date;

(v)           based upon, attributable to or resulting from any Liabilities
arising out of, relating to or otherwise in respect of Tubos, Apolo America, the
Company or an Affiliate of Tubos before the Closing Date; and/or

(vi)          based upon, attributable to or resulting from any Taxes for
taxable periods (or portions thereof) ending on or before the Closing Date.

(b)           Subject to Section 10.1 and 10.4, LSB 2 hereby agrees to indemnify
and hold Tubos, the Company and their Affiliates and their respective directors,
officers, employees, stockholders, partners, members, agents, attorneys,
representatives, successors and permitted assigns (collectively, the “Tubos
Indemnified Parties”) harmless from and against, and pay to the applicable Tubos
Indemnified Parties the amount of, any and all Losses:

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(i)            based upon, attributable to or resulting from the failure of any
of the representations or warranties made by LSB 2 and/or Lone Star in this
Agreement to be true and correct in all respects at the date hereof and as of
the Closing Date; and

(ii)           based upon, attributable to or resulting from the breach of any
covenant or other agreement on the part of LSB 2 and/or Lone Star under this
Agreement.

(c)           The right to indemnification or any other remedy based on
representations, warranties, covenants and agreements in this Agreement shall
not be affected by any investigation conducted at any time, or any Knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or agreement.  The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any such covenant or agreements, will not affect the right to
indemnification or any other remedy based on such representations, warranties,
covenants and agreements.

10.3            Indemnification Procedures.

(a)           A claim for indemnification for any matter not involving a Third
Party Claim may be asserted by Notice to the party from whom indemnification is
sought; provided, however, that failure to so notify the indemnifying party
shall not preclude the indemnified party from any indemnification which it may
claim in accordance with this Article 10.

(b)           In the event that any Legal Proceedings shall be instituted or
that any claim or demand shall be asserted by any third party in respect of
which indemnification may be sought under Section 10.2 hereof (regardless of the
limitations set forth in Section 10.4) (“Third Party Claim”), the indemnified
party shall promptly cause written Notice of the assertion of any Third Party
Claim which is covered by this indemnity to be forwarded to the indemnifying
party.  The failure of the indemnified party to give reasonably prompt Notice of
any Third Party Claim shall not release, waive or otherwise affect the
indemnifying party’s obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.  Subject to the provisions of this Section 10.3(b), the
indemnifying party shall have the right, at its sole expense, to be represented
by counsel of its choice, which must be reasonably satisfactory to the
indemnified party, and to defend against, negotiate, settle or otherwise deal
with any Third Party Claim which relates to any Losses indemnified against by it
hereunder; provided that the indemnifying party shall have acknowledged in
writing to the indemnified party its unqualified obligation to indemnify the
indemnified party as provided hereunder.  If the indemnifying party elects to
defend against, negotiate, settle or otherwise deal with any Third Party Claim
which relates to any Losses indemnified against by it hereunder, it shall within
five (5) days of the indemnified party’s written Notice of the assertion of such
Third Party Claim (or sooner, if the nature of the Third Party Claim so
requires) notify the indemnified party of its

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intent to do so; provided that the indemnifying party must conduct its defense
of the Third Party Claim actively and diligently thereafter in order to preserve
its rights in this regard.  If the indemnifying party elects not to defend
against, negotiate, settle or otherwise deal with any Third Party Claim which
relates to any Losses indemnified against by it hereunder, fails to notify the
indemnified party of its election as herein provided or contests its obligation
to indemnify the indemnified party for such Losses under this Agreement, the
indemnified party may defend against, negotiate, settle or otherwise deal with
such Third Party Claim.  If the indemnified party defends any Third Party Claim,
then the indemnifying party shall reimburse the indemnified party for the
expenses of defending such Third Party Claim upon submission of periodic bills. 
If the indemnifying party shall assume the defense of any Third Party Claim, the
indemnified party may participate, at its own expense, in the defense of such
Third Party Claim; provided, however, that such indemnified party shall be
entitled to participate in any such defense with separate counsel at the expense
of the indemnifying party if (i) so requested by the indemnifying party to
participate or (ii) in the reasonable opinion of counsel to the indemnified
party a conflict or potential conflict exists between the indemnified party and
the indemnifying party that would make such separate representation advisable;
and provided, further, that the indemnifying party shall not be required to pay
for more than one such counsel (plus any appropriate local counsel) for all
indemnified parties in connection with any Third Party Claim.  Each party hereto
agrees to provide reasonable access to each other party to such documents,
personnel and information as may reasonably by requested in connection with the
defense, negotiation or settlement of any such Third Party Claim. 
Notwithstanding anything in this Section 10.3(b) to the contrary, neither the
indemnifying party nor the indemnified party shall, without the written consent
of the other party, settle or compromise any Third Party Claim or permit a
default or consent to entry of any judgment unless the claimant (or claimants)
and such party provide to such other party an unqualified release from all
Liability in respect of the Third Party Claim.  If the indemnifying party makes
any payment on any Third Party Claim, the indemnifying party shall be
subrogated, to the extent of such payment, to all rights and remedies of the
indemnified party to any insurance benefits or other claims of the indemnified
party with respect to such Third Party Claim.

(c)           After any final decision, judgment or award shall have been
rendered by a Governmental Authority of competent jurisdiction and the
expiration of the time in which to appeal therefrom, or a settlement shall have
been consummated, or the indemnified party and the indemnifying party shall have
arrived at a mutually binding agreement, in each case with respect to a Third
Party Claim hereunder, the indemnified party shall forward to the indemnifying
party Notice of any sums due and owing by the indemnifying party pursuant to
this Agreement with respect to such matter and the indemnifying party shall pay
all of such remaining sums so due and owing to the indemnified party by wire
transfer of immediately available funds within five (5) Business Days after the
date of such Notice.  The non-payment of all of such remaining sums so due and
owing to the indemnified party within the five (5) Business Days after the date
of such Notice shall subject the indemnifying Party to the payment of a penalty
equivalent to ten percent (10%) annually, plus interest at the SELIC rate of the
amount of

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such sums due and owing through the date of payment of such amount, plus the
costs of collection.

(d)           At the sole discretion of LSB 2 or Tubos, as the case may be, if
it is the indemnified party, it may elect to recover all or any portion of such
sums that are due and owing from dividends distributed to either Tubos or LSB 2,
as the case may be, under Section 4.1 of the Shareholders Agreement or cash
distributions upon dissolution under Section 9.3 of the Shareholders Agreement;
provided, however, that such sums due shall be adjusted according to the
variation of SELIC, from the date on which the sum was due until the date on
which it is effectively paid, accrued proportionally on a daily basis.

(e)           The Shareholders shall keep a notional account of Losses (the
“Notional Account”) related to this Agreement, both in Reais and US Dollars,
(the amount in US Dollars to be calculated in accordance with the applicable
Exchange Rate on the date on which payment of any such amount is made), which
will allow the Shareholders to keep track of the payments due or made by Tubos
to LSB 2 in order to ascertain whether or not the Basket threshold set forth
below is met. There shall be entered in the Notional Account, within five (5)
Business Days as of the date on which the Loss is effectively incurred by LSB 2,
the amounts of any Loss to determine if and when the sum of the amounts
corresponding to Losses incurred by LSB 2 have exceeded the Basket as provided
below.  Any amounts in Reais included in the Notional Account shall be adjusted,
from time to time, at any given time that the Shareholders decide to confirm
whether the Basket was met, according to the variation of the IGP-M/FGV, from
the date on which the sum was included in the Notional Account, accrued on a
pro-rata basis.

10.4            Limitations on Indemnification for Breaches of Representations
and Warranties.

(a)           Tubos shall not have any Liability under Section 10.2(a)(i) with
respect to Losses related to the breach of the representations and warranties
set forth in Section 5.5(b) (good operating condition and sufficiency) unless
and until the aggregate amount of Losses incurred by LSB 2 and indemnifiable
thereunder based upon, attributable to or resulting from the failure of any of
such representations or warranties to be true and correct exceeds US$1,000,000
(the “Basket”) and, in such event, Tubos and/or the Company shall be required to
pay only the amount that exceeds the Basket.

(b)           Neither Tubos, on the one hand, nor LSB 2, on the other hand,
shall be required to indemnify any Person under Sections 10.2(a)(i) or
10.2 (b)(i) for an aggregate amount of Losses exceeding US$40,000,000 (the
“Cap”) in connection with Losses related to the failure to be true and correct
of any of the representations or warranties of Tubos, the Company or LSB 2,
respectively; provided, that there shall be no Cap with respect to Losses
related to the failure to be true and correct of any of the representations or
warranties contained in Section 5.1 (existence and good standing), Section 5.2
(authorization of agreement), Section 5.5(a) (title), Section 5.7 (taxes),
Section 5.9 (ownership), Section 6.1 (existence and good standing) and Section
6.2 (authorization of agreement) and Section 6.4 (ownership of Star Brazil
Cayman) of this Agreement.

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(c)           For purposes of determining the failure of any representations or
warranties to be true and correct, the breach of any covenants or agreements,
and calculating Losses hereunder any materiality or Material Adverse Effect
qualifications in the representations, warranties, covenants and agreements
shall be disregarded.

ARTICLE 11

MISCELLANEOUS

11.1            Waiver of Default.  No consent or waiver, express or implied, by
any party hereto with respect to any breach or default by another party
hereunder shall be deemed or construed to be a consent or waiver with respect to
any other breach or default by any party of the same provision or any other
provision of this Agreement.  Failure on the part of a party to complain of any
act or failure to act of another party or to declare such party in default shall
not be deemed or constitute a waiver by a party of any rights hereunder.

11.2            Amendment.  This Agreement shall not be altered, modified or
changed except by an amendment approved in writing by Tubos, the Company, LSB 2,
Lone Star, GPC and Cirrus.

11.3            No Third Party Rights.  None of the provisions contained in this
Agreement shall be for the benefit of or enforceable by any third parties,
including creditors of the Company.  The parties hereto expressly retain any and
all rights to amend this Agreement as herein provided.

11.4            Severability.  In the event any provision of this Agreement is
held to be illegal, invalid or unenforceable to any extent, the legality,
validity and enforceability of the remainder of this Agreement shall not be
affected thereby and shall remain in full force and effect and shall be enforced
to the greatest extent permitted by law.

11.5            Binding Effect; Assignment.  This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns.  No assignment of this Agreement or of any rights or
obligations hereunder may be made by any of the parties hereto without the prior
written consent of the other parties hereto and any attempted assignment without
the required consents shall be void.  The parties hereby agree that upon the
merger of LSB 2 with and into the Company, LSB 1 shall succeed to all of the
rights and obligations of LSB 2 under this Agreement.

11.6            Headings.  The headings of the articles and sections of this
Agreement are for convenience only and shall not be considered in construing or
interpreting any of the terms or provisions hereof.

11.7            Word Meanings.  The words such as “herein,” “hereinafter,”
“hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a
subdivision in

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which such words appear unless the context otherwise requires.  The singular
shall include the plural, and vice versa, unless the context otherwise requires.

11.8            Counterparts.  This Agreement may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.

11.9            Entire Agreement.  This Agreement, together with all schedules
and exhibits hereto, contains the entire agreement between the parties and
supersedes all prior writings or agreements with respect to the subject matter
hereof.

11.10          Arbitration.  The parties shall make every effort to settle
amicably any and all disputes, controversies and conflicts arising out of or
relating to or in connection with this Agreement, the performance or
non-performance of the obligations set forth herein (including any questions
regarding its existence, validity or termination) (a “Dispute”).  Except as
provided in this Section 11.10, Disputes or claims, if any, which cannot be
settled amicably between the parties, within thirty (30) days after written
Notice of such Dispute has been given by one or more party(ies) to the other
party(ies), shall be referred to and finally resolved by arbitration in Sao
Paulo, Brazil under the Rules of Arbitration of the International Chamber of
Commerce (“ICC Rules”) for the time being in force.  The ICC Rules shall be
deemed to be incorporated by reference into this Section 11.10.  Each of Tubos
and LSB 2 shall appoint one (1) arbitrator and the arbitrators appointed by
Tubos and LSB 2 shall appoint the third arbitrator.  The costs of the
arbitration, including administrative and arbitrator’s fees, shall be shared
equally by the parties.  Each party shall bear the costs of its own attorney’s
fees and expert witness fees.  The arbitration proceedings shall be in English
and Portuguese and all pleadings and written evidence shall be in English and
Portuguese.  The parties agree that the arbitration shall be kept confidential
and that the existence of the proceeding and any element of it (including but
not limited to any pleadings, briefs or other documents submitted or exchanged,
any testimony or other oral submissions, and any awards) shall not be disclosed
beyond the tribunal, the ICC, the parties, their counsel and any person
necessary to the conduct of the proceeding, except as may be lawfully required
in judicial proceedings relating to the arbitration or otherwise, or as required
by applicable Law.  The decision of the tribunal shall be final, binding and
enforceable upon the parties and judgment upon any award rendered by the
tribunal may be entered in any court having jurisdiction thereof.  In the event
that the failure of a party or parties to this Agreement to comply with the
decision of the tribunal requires the other party or parties to apply to any
court for enforcement of such award, the non-complying party or parties shall be
liable to the other for all cost of such litigation including attorneys’ fees. 
The parties may apply to any court of competent jurisdiction in accordance with
this Section 11.10 for temporary or permanent injunctive or preliminary relief,
without breach of this Section 11.10 or abridgement of the powers of the
tribunal.  For the purposes of obtaining temporary or permanent injunctive or
preliminary relief and without abridgement of the powers of the tribunal, the
parties elect the courts of the City of Sao Paulo, State of Sao Paulo, with the
express waiver of any other courts, no matter how privileged they may be. 
Except for applications

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regarding preliminary or injunctive relief, no party shall be entitled to
commence or maintain any action in any court of law upon any matter in dispute
until such matter shall have been submitted to, and finally determined under,
the dispute resolution and arbitration procedures in this Section 11.10. 
Process may be served on any party in the manner set forth in this Agreement or
by such other method authorized by applicable Law or court rule.

11.11          Governing Law.  This Agreement shall be construed according to
and governed by the laws of Brazil.

11.12          Notices.  Any notice or other communication provided for in this
Agreement shall be in writing in the Portuguese and English languages and shall
be deemed to have been duly given if (a) delivered personally, (b)  sent by
commercial courier services or overnight mail or delivery or (c) sent by
facsimile with confirmation by personal delivery or overnight mail, as follows:

If to Tubos, to:

Apolo Tubos e Equipamentos Ltda.

Av. Chrisóstomo Pimentel de Oliveira nº. 2.651, Pavuna

CEP 21650-000 Rio de Janeiro, RJ

Brasil

telefax: 21 – 3452-9139

at. Diretoria

with a copy to:

Luciano de Souza Leão Jr.

Bulhões Pedreira, Bulhões Carvalho, Piva, Rosman e Souza Leão Advogados

Rua da Assembléia 10, 38º andar

CEP 20011-901 Rio de Janeiro, RJ

Brasil

telefax: 21 – 2531 2665

If to LSB 2, to:

Lone Star Technologies, Inc.

15660 N. Dallas Pkwy., Suite 500

Dallas, TX 75248

United States of America

Telefax:  972-770-6474

Attn:  General Counsel

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with a copy to:

Mary R. Korby

Weil, Gotshal & Manges LLP

200 Crescent Court, Suite 300

Dallas, Texas  75201

Telefax:  214-746-7777

with a copy to:

Marcos Flesch/Fabíola C.L. Cammarota de Abreu

Souza, Cescon Avedissian, Barrieu e Flesch - Advogados

Rua Funchal, 263 11º andar

04551-060   São Paulo, SP

Telefax:  (55 11) 3089 6565

If to the Company, to:

Apolo Mecânica e Estruturas Ltda.

Av. Dr. Leo de Affonseca Neto, 750 Mondesire

CEP 12600-970 Lorena, São Paulo

Brasil

at. Diretoria

telefax: 21 – 3153 2290

with a copy to:

Apolo Tubos e Equipamentos Ltda.

Av. Chrisóstomo Pimentel de Oliveira nº. 2.651, Pavuna

CEP 21650-000 Rio de Janeiro, RJ

Brasil

telefax: 21 – 3452-9139

at. Diretoria

 

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with a copy to:

Lone Star Technologies, Inc.

15660 N. Dallas Pkwy., Suite 500

Dallas, TX 75248

United States of America

Telefax:  972-770-6474

Attn:  General Counsel

with a copy to:

Luciano de Souza Leão Jr.

Bulhões Pedreira, Bulhões Carvalho, Piva, Rosman e Souza Leão Advogados

Rua da Assembléia 10, 38º andar

CEP 20011-901 Rio de Janeiro, RJ

Brasil

telefax: 21 – 2531 2665

If to Lone Star, to:

Lone Star Technologies, Inc.

15660 N. Dallas Pkwy., Suite 500

Dallas, TX 75248

United States of America

Telefax:  972-770-6474

Attn:  General Counsel

with a copy to:

Mary R. Korby

Weil, Gotshal & Manges LLP

200 Crescent Court, Suite 300

Dallas, Texas  75201

Telefax:  214-746-7777

with a copy to:

Marcos Flesch/Fabíola C.L. Cammarota de Abreu

Souza, Cescon Avedissian, Barrieu e Flesch - Advogados

Rua Funchal, 263 11º andar

04551-060   São Paulo, SP

Telefax:  (55 11) 3089 6565

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If to GPC, to:

GPC Participações S.A.

Rua do Passeio nº 70, 13º andar

CEP 20021-290 Rio de Janeiro, RJ

Brasil

telefax: 21 – 3814-0741

at. Diretoria

with a copy to:

Luciano de Souza Leão Jr.

Bulhões Pedreira, Bulhões Carvalho, Piva, Rosman e Souza Leão Advogados

Rua da Assembléia 10, 38º andar

CEP 20011-901 Rio de Janeiro, RJ

Brasil

telefax: 21 – 2531 2665

If to Cirrus, to:

Cirrus Participações Ltda..

Rua do Passeio nº 70, 10º andar

CEP 20021-290 Rio de Janeiro, RJ

Brasil

telefax: 21 – 3814-0709

at. Diretoria

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with a copy to:

Luciano de Souza Leão Jr.

Bulhões Pedreira, Bulhões Carvalho, Piva, Rosman e Souza Leão Advogados

Rua da Assembléia 10, 38º andar

CEP 20011-901 Rio de Janeiro, RJ

Brasil

telefax: 21 – 2531 2665

or to such other person, address or telefax number as any party may specify by
notice in writing to the other.  All such notices, shall be deemed to have been
received (a) if by personal delivery on the day after such delivery, (b)  if by
courier services or overnight mail or delivery, on the day delivered, and (c) if
by facsimile, on the next day following the day on which such facsimile was
sent, provided that it is followed immediately by confirmation by personal
delivery or overnight mail that is received pursuant to subclause (a) or (b),
provided that if the date of receipt is not a Business Day at the place of the
principal office of the Shareholder receiving the notice, or if the receipt is
after 5:00 p.m. on a Business Day, the notice or other communication shall be
deemed given, received, and effective on the next Business Day at the place of
the principal office of the addressee.

11.13          Guarantee of the Obligations of Tubos.  Subject to the terms,
limitations and conditions set forth herein, GPC and Cirrus (the “Tubos
Guarantors”), jointly and severally, hereby unconditionally, irrevocably and
absolutely guarantee to LSB 2 (and its successors and assigns) the due and
punctual performance and discharge of all of Tubos’ obligations under this
Agreement and the transactions contemplated hereby, existing on the date hereof
or hereafter of any kind or nature whatsoever, including, without limitation,
any amount that Tubos or any of its Affiliates is or may become obligated to pay
pursuant to this Agreement and the transactions contemplated hereby
(collectively, the “Tubos Obligations”).  The guarantee under this Section 11.13
is a guarantee of timely payment and performance of the Tubos Obligations by the
Tubos Guarantors as primary obligor and not merely of collection.  The Tubos
Guarantors unconditionally waive: (a) any right to receive demands, protests, or
other notices of any kind or character whatsoever, as the same may pertain to
Tubos, including the “benefício de ordem”, in accordance with Art. 828 of the
Brazilian Civil Code, (b) any right to require LSB 2 to proceed first against
Tubos or to pursue any other remedy and (c) all suretyship and other defenses of
every kind and nature.

11.14          Guarantee of the Obligations of LSB 2.  Subject to the terms,
limitations and conditions set forth herein, Lone Star hereby unconditionally,
irrevocably and absolutely guarantees to Tubos (and its successors and assigns)
the due and punctual performance and discharge of all of LSB 2’s obligations
under this Agreement and the transactions contemplated hereby, existing on the
date hereof or hereafter of any kind or nature whatsoever, including, without
limitation, any amount that LSB 2 or any of its

55

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Affiliates is or may become obligated to pay pursuant to this Agreement and the
transactions contemplated hereby (collectively, the “LSB 2 Obligations”).  The
guarantee under this Section 11.14 is a guarantee of timely payment and
performance of the LSB 2 Obligations by Lone Star as primary obligor and not
merely of collection.  Lone Star unconditionally waives: (a) any right to
receive demands, protests, or other notices of any kind or character whatsoever,
as the same may pertain to LSB 2, including the “benefício de ordem”, in
accordance with Art. 828 of the Brazilian Civil Code, (b) any right to require
Tubos to proceed first against LSB 2 or to pursue any other remedy and (c) all
suretyship and other defenses of every kind and nature.

11.15          Expenses.  Except as otherwise expressly provided in this
Agreement, each party will bear and be responsible for costs and expenses
incurred by it in connection with the negotiation, execution and performance of
this Agreement and the transactions contemplated hereby.

11.16          Further Assurances.  LSB 2, Tubos and the Company each agree to
execute and deliver such other documents or agreements and to take such other
action as may be reasonably necessary or desirable for the implementation of
this Agreement and the consummation of the transactions contemplated hereby.

11.17          Language.  This Agreement is written and executed in Portuguese
and English and the two (2) versions shall have equal validity. In the event of
any inconsistency between both versions, the English version shall prevail.

[The Remainder of This Page Is Intentionally Left Blank.]

56

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
written above.

APOLO TUBOS E EQUIPAMENTOS S.A.

 

 

 

 

 

 

 

By:

/s/ Antonio Joaquim Peixoto de Castro Palhares

 

 

Name: Antonio Joaquim Peixoto de Castro Palhares

 

 

Title: Presidente

 

 

 

 

 

 

 

By:

/s/ Carlos Eduardo de Sá Baptista

 

 

Name: Carlos Eduardo de Sá Baptista

 

 

Title: Diretor Superintendente

 

 

 

 

 

 

 

LONE STAR BRAZIL HOLDINGS 2
LTDA.

 

 

 

 

 

 

 

By:

/s/ Marcos Flesch

 

 

Name: Marcos Flesch

 

 

Title: Manager

 

 

 

 

 

 

 

APOLO MECANICA E ESTRUTURAS
LTDA.

 

 

 

 

 

 

 

By:

/s/ Paulo Cesar Peixoto de Castro Palhares

 

 

Name: Paulo Cesar Peixoto de Castro Palhares

 

 

Title: Presidente

 

 

 

 

 

 

 

By:

/s/ Alcides Morales Filho

 

 

Name: Alcides Morales Filho

 

 

Title: Vice-Presidente

 

SIGNATURE PAGE TO
CONTRIBUTION AGREEMENT

--------------------------------------------------------------------------------

 

GPC PARTICIPACOES S.A.

 

 

 

 

 

 

 

By:

/s/ Paulo Cesar Peixoto de Castro Palhares

 

 

Name: Paulo Cesar Peixoto de Castro Palhares

 

 

Title: Presidente

 

 

 

 

 

 

 

By:

/s/ Alcides Morales Filho

 

 

Name: Alcides Morales Filho

 

 

Title: Vice-Presidente Corporativo

 

 

 

 

 

 

 

CIRRUS PARTICIPACOES LTDA

 

 

 

 

 

 

 

By:

/s/ Antonio Joaquim Peixoto de Castro Palhares

 

 

Name: Antonio Joaquim Peixoto de Castro Palhares

 

 

Title: Presidente

 

 

 

 

 

 

 

By:

/s/ Paulo Cesar Peixoto de Castro Palhares

 

 

Name: Paulo Cesar Peixoto de Castro Palhares

 

 

Title: Vice-Presidente

 

 

 

 

 

 

 

LONE STAR TECHNOLOGIES, INC.

 

 

 

 

 

 

 

By:

/s/ Rhys Best

 

 

Name: Rhys Best

 

 

Title: Chief Executive Officer

 

 

 

 

 

 

Witnesses:

 

 

 

 

 

1.

/s/ Mario Cristiano Benford Leal

 

 

 

Name: Mario Cristiano Benford Leal

 

 

ID#: 04637448-4 IFP-RJ

 

 

 

 

 

2.

/s/ Emanuel Alberto Nunes de Almeida

 

 

 

Name: Emanuel Alberto Nunes de Almeida

 

 

ID#: 14075 CRC-BA

 

 

 

SIGNATURE PAGE TO
CONTRIBUTION AGREEMENT

--------------------------------------------------------------------------------

EXHIBIT A

AMENDED AND RESTATED BY-LAWS

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EXHIBIT B

LSS TRADEMARK CROSS LICENSE AGREEMENT

--------------------------------------------------------------------------------

EXHIBIT C

PROMISSORY NOTE

--------------------------------------------------------------------------------

EXHIBIT D

SALE, MARKETING AND SUPPLY AGREEMENT

--------------------------------------------------------------------------------

EXHIBIT E

SHAREHOLDERS AGREEMENT

--------------------------------------------------------------------------------

EXHIBIT F

TUBOS TRANSITION SERVICES AGREEMENT

--------------------------------------------------------------------------------

EXHIBIT G

TUBOS TRADEMARK LICENSE AGREEMENT

--------------------------------------------------------------------------------

EXHIBIT H

LSS TRANSITION SERVICES AGREEMENT

--------------------------------------------------------------------------------

EXHIBIT I

MEMORANDUM AND ARTICLES OF ASSOCIATION OF STAR CAYMAN BRAZIL

--------------------------------------------------------------------------------

EXHIBIT J
AA PURCHASE AGREEMENT

--------------------------------------------------------------------------------