exv10w1



 





Exhibit 10.1




PURCHASE AND SALE AGREEMENT




By and among




GRANT PRIDECO, INC.

(“Seller”)




and




VALLOUREC S.A.




and




VALLOUREC & MANNESMANN HOLDINGS, INC.

(collectively, “Buyer”)




October 29, 2007




 









 








Table of Contents




	 	 	 	 	 
	Article 1 Certain Definitions
	 	 	1	 
	1.1 Certain Defined Terms
	 	 	1	 
	1.2 References, Gender, Number
	 	 	2	 
	Article 2 Purchase and Sale
	 	 	2	 
	2.1 Purchase and Sale
	 	 	2	 
	2.2 Assumed and Excluded Liabilities
	 	 	2	 
	2.3 Conveyance of Certain Assets to Tubular Business LP
	 	 	2	 
	2.4 Conveyance of Tube-Alloy Corporation
	 	 	3	 
	2.5 Conveyance of Canadian Assets
	 	 	3	 
	Article 3 Purchase Price and Payment
	 	 	3	 
	3.1 Purchase Price
	 	 	3	 
	3.2 Closing Statement
	 	 	4	 
	3.3 Payment
	 	 	4	 
	3.4 Post-Closing Adjustment to the Purchase Price
	 	 	4	 
	3.5 Allocation of Purchase Price
	 	 	6	 
	Article 4 Representations and Warranties
	 	 	7	 
	4.1 Representations and Warranties of Seller
	 	 	7	 
	4.2 Representations and Warranties of Buyer
	 	 	19	 
	Article 5 Access and Confidentiality
	 	 	21	 
	5.1 General Access
	 	 	21	 
	5.2 Confidential Information
	 	 	21	 
	Article 6 Taxes and Employee Benefits
	 	 	22	 
	6.1 Tax Matters
	 	 	22	 
	6.2 Employee Matters
	 	 	25	 
	Article 7 Covenants of Seller and Buyer
	 	 	28	 
	7.1 Conduct of Business Pending Closing
	 	 	28	 
	7.2 Qualifications on Conduct
	 	 	31	 
	7.3 Public Announcements
	 	 	31	 
	7.4 Actions by Parties
	 	 	32	 
	7.5 Notice of Developments; Schedules
	 	 	32	 
	7.6 Further Assurances
	 	 	32	 






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	7.7 Records
	 	 	32	 
	7.8 Obligations of the Acquired Entity
	 	 	33	 
	7.9 Use of Names; Removal
	 	 	33	 
	7.10 Governmental Filings
	 	 	34	 
	7.11 Computer Hardware and Software
	 	 	34	 
	7.12 Seller Obligations
	 	 	35	 
	7.13 Cooperation
	 	 	36	 
	7.14 Noncompetition
	 	 	36	 
	7.15 License Back of Intellectual Property
	 	 	37	 
	7.16 Certain Insurance Matters
	 	 	38	 
	7.17 Intercompany Accounts
	 	 	39	 
	7.18 Non-Solicitation of Transferred Employees
	 	 	39	 
	7.19 Fulfillment of Certain Contractual Commitments
	 	 	39	 
	Article 8 Closing Conditions
	 	 	39	 
	8.1 Seller’s Closing Conditions
	 	 	39	 
	8.2 Buyer’s Closing Conditions
	 	 	40	 
	Article 9 Closing
	 	 	41	 
	9.1 Closing
	 	 	41	 
	9.2 Seller’s Closing Obligations
	 	 	41	 
	9.3 Buyer’s Closing Obligations
	 	 	42	 
	Article 10 Indemnification
	 	 	43	 
	10.1 Indemnification By Seller
	 	 	43	 
	10.2 Indemnification By Buyer
	 	 	43	 
	10.3 Third Party Claims
	 	 	44	 
	10.4 Limitation of Seller’s Liability
	 	 	45	 
	10.5 Mitigation
	 	 	45	 
	10.6 Survival and Time Limitation
	 	 	45	 
	10.7 Sole and Exclusive Remedy
	 	 	46	 
	10.8 Releases, Disclaimers, and Limitations on Liability
	 	 	46	 
	10.9 Disclaimer of Warranties
	 	 	46	 
	10.10 Waiver of Certain Damages
	 	 	47	 
	10.11 Tax Indemnity
	 	 	47	 
	Article 11 Termination; Remedies; Limitations
	 	 	48	 






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	11.1 Termination
	 	 	48	 
	11.2 Effect of Termination
	 	 	48	 
	Article 12 Other Provisions
	 	 	48	 
	12.1 Counterparts
	 	 	48	 
	12.2 Governing Law; Jurisdiction; Process
	 	 	48	 
	12.3 Entire Agreement
	 	 	49	 
	12.4 Expenses
	 	 	49	 
	12.5 Notices
	 	 	49	 
	12.6 Successors and Assigns
	 	 	50	 
	12.7 Amendments and Waivers
	 	 	51	 
	12.8 Appendices, Annexes, Schedules and Exhibits
	 	 	51	 
	12.9 Interpretation and Rules of Construction
	 	 	51	 
	12.10 Agreement for the Parties’ Benefit Only
	 	 	51	 
	12.11 Severability
	 	 	52	 
	12.12 Time of Essence
	 	 	52	 






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	Appendix A

	 	Definitions
	Annex A

	 	Acquired Assets and Assets Owned by Acquired Entity
	Annex A-1

	 	Real Estate
	Annex A-2

	 	Acquired Intellectual Property
	Annex A-3

	 	Contracts
	Annex A-4

	 	Transferred Bank Accounts
	Annex B

	 	Working Capital Calculation Guideline
	Schedule 2.1(c)

	 	Excluded Assets
	Schedule 2.2

	 	Assumed and Excluded Liabilities
	Schedule 4.1(a)

	 	Sufficiency of Material Assets
	Schedule 4.1(b)

	 	Financial Statements
	Schedule 4.1(c)

	 	Jurisdictions
	Schedule 4.1(d)

	 	Subsidiaries
	Schedule 4.1(g)

	 	Seller’s Ownership of Acquired Entity
	Schedule 4.1(h)

	 	Capitalization
	Schedule 4.1(i)

	 	Violations or Breaches
	Schedule 4.1(k)

	 	Tax Matters
	Schedule 4.1(l)

	 	Governmental Permits
	Schedule 4.1(m)

	 	Significant Contracts
	Schedule 4.1(n)

	 	Environmental Matters
	Schedule 4.1(o)

	 	Liens on Acquired Personal Property
	Schedule 4.1(p)

	 	Liens on Real Property
	Schedule 4.1(q)

	 	Leases
	Schedule 4.1(r)

	 	Intellectual Property Matters
	Schedule 4.1(s)

	 	Consents
	Schedule 4.1(t)

	 	Known Litigation
	Schedule 4.1(v)

	 	Events Subsequent to Balance Sheet Date
	Schedule 4.1(w)(i)

	 	Business Employees
	Schedule 4.1(w)(ii)

	 	Benefit Plans
	Schedule 4.1(w)(iii)

	 	Employee Benefit Plans – Title IV of ERISA, COBRA,
Excess Parachute Payments
	Schedule 4.1(w)(vi)

	 	Contributions to Benefit Plans
	Schedule 4.1(w)(vii)

	 	Employee Benefit Events Triggered
	Schedule 4.1(x)

	 	Insurance
	Schedule 4.1(y)

	 	Labor Agreements
	Schedule 4.1(bb)

	 	Condition of Equipment
	Schedule 4.1(ee)

	 	Warranties
	Schedule 4.1(ff)

	 	Compliance with Laws
	Schedule 4.1(hh)

	 	Health and Safety Matters
	Schedule 4.1(jj)

	 	Arm’s-Length Transactions
	Schedule 4.1(mm)

	 	Licenses to Tenaris
	Schedule 6.2(c)

	 	Severance Policy
	Schedule 6.2(g)

	 	Lab Technicians
	Schedule 7.1

	 	Conduct of Business Pending Closing
	Schedule 7.11

	 	Computer Hardware and Software
	Schedule 7.12

	 	Selling Obligations






iv 









 






	 	 	 
	Schedule 7.14

	 	Noncompetition
	Schedule 7.15

	 	Licensed Back Intellectual Property
	Schedule 8.2(h)

	 	Required Consents
	Exhibit 7.15(d)

	 	Form of MTLA Letter Agreement
	Exhibit 9.2(d)

	 	Form of Transition Services Agreement
	Exhibit 9.2(e)

	 	Form of Heat Treat Supply Agreement







v 









 








PURCHASE AND SALE AGREEMENT




     THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of October 29, 2007, is by and
among Grant Prideco, Inc., a Delaware corporation (“Seller”), Vallourec S.A., a corporation
organized under the laws of France, and Vallourec & Mannesmann Holdings, Inc., a Delaware
corporation (collectively, “Buyer”).



Recital




     WHEREAS, Seller’s tubular technology and services division is engaged through certain of its
Subsidiaries, in the business of manufacturing and supplying high performance tubular products and
services;



     WHEREAS, on the terms and subject to the conditions herein, Seller desires to sell or cause to
be sold to Buyer and Buyer desires to purchase or cause to be purchased from Seller, Seller’s
tubular technology and services division, including the following business lines within such
division: premium threading, semi-premium threading, all Atlas Bradford product lines regardless of
size, Tubular Corporation of America (“TCA”), and Tube-Alloy Corporation, but excluding the
Seller’s and Seller’s Affiliates’ XL Systems Business and other Excluded Assets (collectively, the
“Business”); and



     WHEREAS, in order to effect the sale of the Business to Buyer, subject to the terms and
conditions described herein, Seller, individually or by an Affiliate of Seller designated by Seller
(“Affiliated Seller”), will sell or cause to be sold to Buyer and Buyer, individually or by one or
more Affiliates of Buyer designated by Buyer (“Affiliated Buyer”), will purchase or cause to be
purchased from Seller or an Affiliated Seller:



     (i) 100% of the issued and outstanding equity interests of Tube-Alloy Corporation, a Louisiana
corporation (the “Acquired Entity”) pursuant to the structure described in Section 2.4; and



     (ii) substantially all of the assets of the Business owned by Seller and its Affiliates (to
the extent such assets are not owned by the Acquired Entity), either by conveyance of such assets
directly to Buyer or one or more Affiliated Buyers or by conveyance to Buyer or one or more
Affiliated Buyers of all of the general and limited partner interests of Tubular Business LP in
accordance with Section 2.3.



     NOW, THEREFORE, in consideration of the mutual covenants and agreements described in this
Agreement, the parties hereto agree as follows:



Article 1

Certain Definitions




     1.1 Certain Defined Terms. Unless the context otherwise requires, the respective
terms defined in Appendix A attached hereto and incorporated herein shall, when used herein, have
the respective meanings therein specified, with each such definition to be equally applicable both
to the singular and the plural forms of the term so defined.



1









 





     1.2 References, Gender, Number. All references in this Agreement to an “Article,”
“Section” or “subsection” shall be to an Article, Section, or subsection of this Agreement, unless
the context requires otherwise. Unless the context otherwise requires, the words “this Agreement,”
“hereof,” “hereunder,” “herein,” “hereby” or words of similar import shall refer to this Agreement
as a whole and not to a particular Article, Section, subsection, clause or other subdivision
hereof. Whenever the context requires, the words used herein shall include the masculine, feminine
and neuter gender, and the singular and the plural.



Article 2

Purchase and Sale




     2.1 Purchase and Sale. On the terms and subject to conditions described in this Agreement,
at the Closing, but effective as of the Effective Time, Seller agrees to, and to cause the
Affiliated Sellers to, sell, convey, assign, transfer and deliver, or cause to be sold, conveyed,
assigned, transferred and delivered, to Buyer or Affiliated Buyers, and Buyer agrees to, or to
cause the Affiliated Buyers to, purchase and acquire, or cause to be purchased and acquired, from
Seller and the Affiliated Sellers, the assets and equity interests described in this Section 2.1:




     (a) Purchase of Acquired Assets. With respect to the Business, all of Seller’s and
Affiliated Sellers’ right, title and interest in the assets set forth on Annex A hereto to
the extent such assets are not owned by the Acquired Entity (the “Acquired Assets”), by
conveyance of such assets directly to Buyer or one or more of the Affiliated Buyers and by
conveyance to Buyer or one or more Affiliated Buyers of all of the general and limited
partner interests of each Tubular Business LP in accordance with Section 2.3.




     (b) Purchase of Equity Interests. 100% of the equity interests of the Acquired
Entity, in accordance with Section 2.4.




     (c) Excluded Assets. Notwithstanding anything contained in this Agreement or any
schedule or any other document executed in connection with the transactions contemplated
hereby, Seller and its Affiliates shall retain and shall not convey to Buyer, any of
Seller’s or its Affiliates’ right, title and interest to the assets listed on Schedule
2.1(c) (collectively, the “Excluded Assets”), and to the extent any such assets are owned
by the Acquired Entity, such Excluded Assets shall be transferred from the Acquired Entity
prior to Closing.



     2.2 Assumed and Excluded Liabilities. Effective as of the Effective Time, Buyer or
Affiliated Buyers shall assume all Assumed Liabilities for the Business and no other.
Notwithstanding any other provision of this Agreement, Buyer shall not (nor shall the Acquired
Entity following the Closing) assume or otherwise be responsible for any Excluded Liabilities.



     2.3 Conveyance of Certain Assets to Tubular Business LP. On or prior to the Closing
Date, Seller shall convey or cause to be conveyed all of the Acquired Assets and Assumed
Liabilities (other than the Acquired Assets and Assumed Liabilities associated with the Canadian
operations of the Business, which are addressed in Section 2.5 below) to two newly formed Delaware
limited partnerships (collectively, “Tubular Business LP”), each of which shall be jointly owned by
Seller and an Affiliated Seller and each of which shall be disregarded as a



2









 







separate entity for federal income tax purposes. The division of such Acquired Assets and
Assumed Liabilities between the two limited partnerships shall be at the direction of Buyer. At
Closing, Seller and any applicable Affiliated Seller shall sell, convey, assign, transfer and
deliver to Buyer, or one or more Buyer Affiliates designated by Buyer, all outstanding general and
limited partner interests of each Tubular Business LP. Each Tubular Business LP shall be
considered an Acquired Entity for purposes of this Agreement.



     2.4 Conveyance of Tube-Alloy Corporation. 




     (a) Conversion of Tube-Alloy Corporation to Tube-Alloy LP. If requested by Buyer in
writing within 30 days after the date hereof, Seller shall cause Tube-Alloy Corporation to
be merged into a newly formed Delaware limited partnership (“Tube-Alloy LP”), in a form
that meets Buyer’s reasonable approval, which shall be jointly owned by Seller or
Affiliated Sellers and which shall be treated as a partnership for federal income Tax
purposes. One hundred percent (100%) of the partnership interests in Tube-Alloy LP shall
be conveyed by Seller and its Affiliated Sellers to Buyer at Closing and shall be
considered an Acquired Entity.




     (b) Code Section 338(h)(10) Election. Notwithstanding Section 2.4(a) above, if
requested by Buyer, Buyer and Seller shall join in making an election under Code Section
338(h)(10) (and any corresponding election under state, local, or foreign Tax Law)
(collectively, a “338(h)(10) Election”) with respect to any purchase and sale of the stock
of Tube-Alloy Corporation and any of its subsidiaries hereunder.



     2.5 Conveyance of Canadian Assets. All of the Acquired Assets and Assumed Liabilities
related to the Canadian operations of the Business shall be conveyed directly by Seller or its
Affiliates to an Affiliate of Buyer designated by Buyer.



Article 3

Purchase Price and Payment




     3.1 Purchase Price.




     (a) Purchase Price. The purchase price for the sale of the Acquired Assets and the
Acquired Entity to Buyer and Affiliated Buyers is eight hundred million U.S. dollars
(US$800,000,000.00) (the “Purchase Price”), subject to adjustment in accordance with the
terms of this Agreement, plus the assumption by Buyer of the Assumed Liabilities.




     (b) Adjustment Amount. The “Adjusted Purchase Price” shall be the Purchase Price
increased or decreased, as the case may be, by an amount equal to the Adjustment Amount.
The “Adjustment Amount” shall be equal to: (i) the net increase to, or net decrease from,
the Working Capital between the Balance Sheet Date and the Closing Date; minus (ii) the
actual amount of Net Debt at Closing Date. For purposes of clarity, an increase in Working
Capital under the preceding sentence shall be represented by a positive number and a
decrease in Working Capital shall be represented by a negative number, and a positive Net
Debt would reduce the Purchase Price and a negative Net Debt position would result in an
increase of the Purchase Price.



3









 







“Working Capital” shall be the arithmetic sum of (i) a positive amount equal to the
total current assets of the Business (including inventory and accounts receivable), and
(ii) a negative amount equal to the total current liabilities of the Business, in each case
as such assets and liabilities are included on the Balance Sheet, or would be included on a
pro forma balance sheet of the Business (as of the Closing Date) prepared in accordance
with GAAP applied on a basis consistent with the Balance Sheet of the Business. Buyer and
Seller each acknowledge and agree that, for purposes of this calculation the amount of the
Working Capital as of the Balance Sheet Date is US$62,000,000.00. A schedule and guideline
for calculating Working Capital at the Closing Date is set forth on Annex B. The Balance
Sheet as of the Closing Date is referred to as the “Closing Balance Sheet.” In addition,
Buyer and Seller each acknowledge and agree that, for purposes of the calculation of the
Working Capital on the Closing Date, the following principles shall apply:




     (i) Excluded Assets and any assets not purchased by Buyer shall not be
reflected in the Closing Balance Sheet;




     (ii) Excluded Liabilities and any liabilities not assumed by Buyer or
extinguished by Seller and its Affiliates prior to the Closing Date shall not be
reflected in the Closing Balance Sheet;




     (iii) prepaid intercompany corporate and divisional allocations and
intercompany accounts between the Business and Seller and its Affiliates shall not
be reflected in the Closing Balance Sheet, and all such balances shall be released
in connection with the Closing pursuant to Section 7.17; and




     (iv) Accrued Vacation (Section 6.2(e)), Health Care Costs (Section 6.2(d)),
federal and state income taxes (Sections 6.1(a) and (b)) and prepaid insurance
premiums shall not be included in Working Capital on the Balance Sheet or the
Closing Balance Sheet. For the avoidance of doubt, the Parties agree that any Taxes
relating to a pre-closing period that will be the responsibility of Buyer or its
Affiliates shall be accrued as a current liability on the Closing Balance Sheet and
shall reduce the Purchase Price.



     3.2 Closing Statement. Not later than three Business Days prior to the Closing Date,
Seller shall prepare and deliver to Buyer a detailed statement (the “Closing Statement”) of the
estimated purchase price adjustments and the estimated Adjusted Purchase Price (the “Estimated
Adjusted Purchase Price”) for each of the Acquired Assets and for the Acquired Entity.



     3.3 Payment. At the Closing, Buyer shall, or shall cause its Affiliated Buyer(s) to, wire
transfer the Estimated Adjusted Purchase Price, in immediately available funds for the account of
Seller or one or more Affiliates of Seller, as specified by Seller to Buyer at least five Business
Days preceding the Closing Date.



     3.4 Post-Closing Adjustment to the Purchase Price.




     (a) Revised Closing Statement. After the Closing, Buyer (or Buyer’s external auditors
(at Buyer’s cost and expense), if it so desires) shall determine the Adjustment



4









 







Amount. On or before the date that is 30 days after the Closing Date, Buyer shall
deliver to Seller a Closing Balance Sheet and revised Closing Statement setting forth the
actual Adjustment Amount and such supporting documentation reasonably necessary to support
the Adjustment Amount. To the extent reasonably requested by Buyer, Seller shall assist in
the preparation of the revised Closing Statement. Buyer shall provide to Seller such data
and information as Seller may reasonably request supporting the amounts reflected on the
revised Closing Statement to permit Seller (or Seller’s external auditors (at Seller’s cost
and expense), if it so desires) to perform or cause to be performed a review of the revised
Closing Statement. Seller and Buyer shall conduct or cause to be conducted a physical
inventory of the inventory reflected on the Closing Statement in a manner mutually agreed
upon between Buyer and Seller immediately following the Closing Date, which inventory must
be completed no later than fourteen days after the Closing Date. Buyer and Seller may
each, at their respective options and own expense, have one or more representatives
(including outside auditors, if it so desires) present at such physical inventory. The
results of the physical inventory will be taken into account in the Closing Statement. The
revised Closing Statement shall become final and binding upon the parties on the date (the
“Final Settlement Date”) that is 30 days following receipt thereof by Seller unless Seller
gives written notice of its disagreement (“Notice of Disagreement”) to Buyer prior to such
date. Any Notice of Disagreement shall specify in reasonable detail the dollar amount,
nature and basis of any disagreement so asserted and Seller’s alternative calculations of
each amount. If a Notice of Disagreement is received by Buyer in a timely manner, then the
Closing Statement (as revised in accordance with paragraph (b) or (c) below) shall become
final and binding on the parties on, and the Final Settlement Date shall be, the earlier of
(i) the date upon which Seller and Buyer agree in writing with respect to all matters
specified in the Notice of Disagreement or (ii) the date upon which the Final Closing
Statement is issued by the Closing Statement Arbitrator.




     (b) Final Closing Statement. During the 30 days following the date upon which Buyer
receives the Notice of Disagreement, Seller and Buyer shall attempt to resolve in writing
any differences that they may have with respect to all matters specified in the Notice of
Disagreement. If at the end of such 30-day period (or earlier by mutual agreement to
arbitrate) Buyer and Seller have not reached agreement on such matters, the matters that
remain in dispute (and only such matters) shall be submitted to an arbitrator (the “Closing
Statement Arbitrator”) for review and final and binding resolution conducted in Houston,
Texas. The Closing Statement Arbitrator shall be PricewaterhouseCoopers L.L.P. (Houston
office), or if such firm is unable or unwilling to act, such other nationally recognized
independent public accounting firm as shall be agreed upon by Buyer and Seller in writing.
If the parties have not agreed upon an accounting firm by the date that is 30 days after
the date upon which Buyer received the Notice of Disagreement, then the Closing Statement
Arbitrator shall be selected, upon application of Buyer and Seller, by the accounting firm
of PricewaterhouseCoopers L.L.P. (Houston office) within ten days of receipt of such
application. Each party shall, not later than seven days prior to the hearing date set by
the Closing Statement Arbitrator (which hearing shall take place within 30 days after
selection of the Closing Statement Arbitrator, unless otherwise agreed to in writing by the
Parties), submit a brief with dollar figures for settlement of the disputes as to the
amount of the Adjusted



5









 







Purchase Price (together with a proposed Closing Statement that reflects such
figures). The hearing shall be conducted on a confidential basis. The Closing Statement
Arbitrator shall render a decision resolving the matters in dispute (which decision shall
include a written statement of findings and conclusions) within ten days after the
conclusion of the hearing, unless the parties reach agreement prior thereto and withdraw
the dispute from arbitration. The Closing Statement Arbitrator shall provide to the
parties explanations in writing of the reasons for its decisions regarding the Adjusted
Purchase Price (including a worksheet setting forth all material calculations) and shall
issue the Final Closing Statement of the Closing Statement Arbitrator reflecting such
decisions (the “Arbitrator’s Closing Statement”). The decision of the Closing Statement
Arbitrator shall be final and binding on the parties. The cost of any arbitration
(including the fees and expenses of the Closing Statement Arbitrator) pursuant to this
Section 3.4(b) shall be borne equally by Buyer and Seller. The fees and disbursements of
Buyer’s independent auditors incurred in connection with the services performed with
respect to the Closing Statement shall be borne by Buyer and the fees and disbursements of
Seller’s independent auditors incurred in connection with their preparation of the Notice
of Disagreement shall be borne by Seller. As used in this Agreement, the term “Final
Closing Statement” shall mean the revised Closing Statement described in this Section
3.4(b), as prepared by Buyer and as may be subsequently adjusted to reflect any subsequent
written agreement between the parties with respect thereto, or if submitted to the Closing
Statement Arbitrator, the Arbitrator’s Closing Statement as described in this Section
3.4(b).




     (c) Final Settlement. If the amount of the Adjusted Purchase Price as described on
the Final Closing Statement exceeds the amount paid by Buyer pursuant to Section 3.3, then
Buyer shall pay to Seller, within five Business Days after the Final Settlement Date, the
amount by which the Adjusted Purchase Price as described on the Final Closing Statement
exceeds the amount paid by Buyer pursuant to Section 3.3, together with interest at the
Agreed Rate on such excess amount from the Closing Date until paid. If the amount of the
Adjusted Purchase Price as described on the Final Closing Statement is less than the amount
paid by Buyer pursuant to Section 3.3, then Seller shall pay to Buyer, within five Business
Days after the Final Settlement Date, the amount by which the Adjusted Purchase Price as
described on the Final Closing Statement is less than the amount paid by Buyer pursuant to
Section 3.3, together with interest at the Agreed Rate on such deficiency amount from the
Closing Date until paid. Any post-Closing payment made pursuant to this Section 3.4(c)
shall be made by means of a wire transfer of immediately available funds to a bank account
designated by the party receiving the funds.



     3.5 Allocation of Purchase Price. Buyer shall cause an independent appraiser selected by
Buyer and at Buyer’s expense and reasonably acceptable to Seller (the “Appraiser”) to conduct and
deliver to Buyer and Seller a preliminary allocation of the Purchase Price at least 10 Business
Days prior to the Closing Date. Each party shall bear the fees, costs and expenses of its own
accountants and shall permit each other and each other’s accountants and the Appraiser reasonable
access to the books and records necessary to perform the analysis contemplated by this Section.
Based upon the Appraiser’s preliminary allocation and three Business days prior to the Closing, the
Buyer and Seller shall mutually agree upon a preliminary allocation of the



6









 







Purchase Price among the Acquired Assets and among the assets of the Acquired Entity in accordance
with the relative fair market value of such assets in a manner which shall comply with Sections
1060 and 338 of the Code and the regulations thereunder. No later than thirty days after the date
of the Final Closing Statement, the Seller and the Buyer shall mutually agree upon the final
allocation of the Purchase Price (the “Final Purchase Price Allocation”) among the Acquired Assets
and among the assets of the Acquired Entity to reflect any adjustment in the Purchase Price
provided by Section 3.4. The Final Purchase Price Allocation shall be made in a manner which shall
comply with Sections 1060 and 338 of the Code and the regulations thereunder, and the Purchase
Price shall be allocated among the Acquired Assets and among the assets of the Acquired Entity in
accordance with the relative fair market value of such assets. The parties shall each report the
federal, state, local and other Tax consequences of the purchase and sale contemplated hereby in a
manner consistent with such allocation. Each of the Seller and the Buyer warrant and agree that
such allocation has been determined through arm’s-length negotiations. If the Buyer and the Seller
are unable to agree upon the Final Purchase Price Allocation within the thirty-day period set forth
above, the parties shall resolve such dispute pursuant to the mechanism set forth in Section
3.4(b).



Article 4

Representations and Warranties




     4.1 Representations and Warranties of Seller. As of the date of this Agreement,
Seller on behalf of itself and each Affiliated Seller, represents and warrants to Buyer (as
qualified by the appropriate schedule with respect to the Business, as applicable) as follows:




     (a) Transfer of Assets. Except as described in Schedule 4.1(a), and except for the
Excluded Assets and such assets that would not be material in the operation of the
Business, the Acquired Assets and the assets owned by the Acquired Entity constitute all of
the assets, real and personal, tangible and intangible, including, but not limited to,
Intellectual Property, necessary or held for use to operate the Business in the manner
presently conducted.




     (b) Financial Statements. Attached hereto as Schedule 4.1(b) is (i) an unaudited
balance sheet and statement of income as of and for the year ended December 31, 2006 and an
unaudited statement of income for the six months ended June 30, 2007, for the Business and
(ii) an unaudited balance sheet, as of June 30, 2007 (the “Balance Sheet Date”), for the
Business (the “Balance Sheet”). Such financial statements have been, in the opinion of the
management of Seller, prepared in accordance with GAAP applied on a consistent basis during
the periods involved, and present fairly, in all material respects, the financial position
and results of operations of the Business taken as a whole as of such date, except for the
matters disclosed in Schedule 4.1(b). Except as disclosed on Schedule 4.1(b), the Business
has no liabilities except for liabilities reflected or reserved against in the Balance
Sheet and current liabilities incurred in the ordinary course of business of the Business
since the Balance Sheet Date and liabilities that, in the aggregate, would not constitute a
Material Adverse Effect.




     (c) Organization. The Seller, each Affiliated Seller and the Acquired Entity (which,
for the avoidance of doubt, includes each entity listed on Schedule 4.1(d)) are



7









 







each duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization (if such concept of existence and good standing exists in
such jurisdiction). The Acquired Entity has all requisite corporate or other entity power
and authority to carry on its business as currently conducted. The Acquired Entity is duly
qualified or licensed to do business and in good standing, in each case, in the
jurisdictions listed on Schedule 4.1(c), which jurisdictions constitute each jurisdiction
where the ownership, lease or operation of its property or the conduct of its business
requires such license or qualification, except where the failure to be so licensed or
qualified would not result in a liability to the Business of more than $100,000
individually or in the aggregate. The Seller has delivered or will, prior to the Closing
Date, deliver to Buyer a true and correct copy of the certificate of incorporation and
bylaws (or other applicable governing documents) of the Acquired Entity (collectively, the
“Charter Documents”), in each case as amended to the date hereof, and each of such
documents is in full force and effect.




     (d) Subsidiaries. Schedule 4.1(d) sets forth a list of each Acquired Entity that is a
Subsidiary of the Acquired Entity and the ownership thereof. Except as set forth on
Schedule 4.1(d), the Acquired Entity does not own or hold, directly or indirectly, any
equity interest or other ownership interest in any corporation, limited liability company,
partnership, joint venture or other entity or Person.




     (e) Authority. Seller has all requisite corporate power and authority to execute and
deliver this Agreement and the Seller Related Agreements, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby and
thereby. The execution, delivery, and performance of this Agreement and the Seller Related
Agreements and the transactions contemplated hereby and thereby have been duly and validly
authorized by all requisite corporate action on the part of Seller. As of the Closing
Date, the performance by each Affiliated Seller of the transactions contemplated by this
Agreement and the Seller Related Agreements will have been duly and validly authorized by
all requisite corporate or other action on the part of such Affiliated Seller.




     (f) Enforceability. Each of this Agreement and the Seller Related Agreements has been
duly and validly executed and delivered by Seller and constitutes a valid, legal and
binding agreement of Seller enforceable against it in accordance with its terms, subject to
(i) applicable bankruptcy, insolvency, reorganization, moratorium, and other similar U.S.
or non-U.S. laws of general application from time to time in effect that affect creditors’
rights generally, (ii) general principles of equity, and (iii) the power of a court to deny
enforcement of remedies generally based upon public policy.




     (g) Seller’s Ownership of the Acquired Entity. Seller or its Affiliates owns,
directly or indirectly, all outstanding equity interests of the Acquired Entity, free and
clear of any Liens (except as created by this Agreement or Liens that will be extinguished
on or prior to the Closing). Upon the purchase of the equity interests of the Acquired
Entity as contemplated by this Agreement, the Buyer or Affiliated Buyer will obtain good
and valid title to such equity interests, free and clear of any Liens (other than those
created by, through or under Buyer). There are no options, warrants,



8









 







purchase rights, or other contracts or commitments (other than this Agreement) that
would require Seller or its Affiliates to sell, transfer, or otherwise dispose of any
equity interests of the Acquired Entity. Except as disclosed on Schedule 4.1(g), Seller or
its Affiliates is not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of the equity interests of the Acquired Entity.




     (h) Capitalization. Schedule 4.1(h) sets forth the authorized equity interests of the
Acquired Entity. All of the issued and outstanding equity interests of the Acquired Entity
have been duly authorized and are validly issued and are fully paid and nonassessable to
the extent applicable to and were not issued in violation of the preemptive rights of any
Person. Except as described on Schedule 4.1(h), the Acquired Entity has no outstanding
convertible security, call, preemptive right, option, warrant, purchase right, or other
contract or commitment that would, directly or indirectly, require the Acquired Entity to
sell, issue, or otherwise dispose of any of its equity interests.




     (i) No Violation or Breach. Except as described in Schedule 4.1(i), neither the
execution and delivery of this Agreement or the Seller Related Agreements nor the
consummation of the transactions contemplated hereby or thereby and performance of its
obligations hereof or thereof by Seller or Affiliated Seller will (i) result in a violation
or breach of any provision of the governing documents of Seller or the Charter Documents of
the Acquired Entity, (ii) result in a violation or breach of any of the terms and
provisions of, or constitute a default under, or conflict with, or give any party thereto a
right to terminate or modify any material agreement, indenture or other instrument under
which Seller or the Acquired Entity is bound, other than the third-party consents to
assignment as described herein and such breaches or violations of, defaults under, or
conflicts with, agreements, indentures, or other instruments as would not reasonably be
expected to have a Material Adverse Effect or (iii) violate any material Law applicable to
Seller, the Business, the Acquired Entity or the Acquired Assets, except for violations
that would not reasonably be expected to have a Material Adverse Effect.




     (j) Bankruptcy. There are no bankruptcy or reorganization proceedings pending, or to
the knowledge of Seller threatened, against Seller or the Acquired Entity.




     (k) Tax Matters. Except as described in Schedule 4.1(k) or as would not have a
Material Adverse Effect:




     (i) All Tax Returns required to be filed by or with respect to the Acquired
Entity or the Acquired Assets on or before the Closing Date have been or will be
timely filed with the appropriate taxing authorities in all jurisdictions in which
such Tax Returns are required to be filed; and all Taxes owed (whether or not shown
on any Tax Return) have been paid on or before their due date (including any
extensions);




     (ii) The Acquired Entity has not, and Seller has not with respect to the
Acquired Entity or Acquired Assets, extended or waived the application of any



9









 







statute of limitations of any jurisdiction regarding the assessment or
collection of any Tax nor entered into any closing agreement or other agreement
related to Taxes;




     (iii) There are no audits, claims, assessments, levies, administrative
proceedings or lawsuits pending or threatened against or with respect to the
Acquired Entity or the Acquired Assets by any taxing authority and no deficiency for
any Taxes has been proposed, asserted or assessed against the Acquired Entity or the
Acquired Assets that has not been resolved and paid in full;




     (iv) The Acquired Entity is not a party to any Tax allocation, sharing or
indemnity agreement or arrangement and Seller is not a party to any Tax allocation,
sharing or indemnity agreement or arrangement with respect to the Acquired Assets;
and




     (v) Seller is not a foreign person within the meaning of Section 1445 of the
Code.




     (l) Governmental Permits. Each of Seller and the Acquired Entity has all material
permits, franchises, approvals, consents, licenses, concessions, certificates or other
authorizations (“Governmental Permits”) of Governmental Authorities required to own, lease
or operate the Acquired Assets and to conduct and operate its Business as currently
conducted and operated. Each of Seller and the Acquired Entity has, and as of the Closing
Date will have, fulfilled and performed in all material respects all its obligations with
respect to such Governmental Permits relating to the Business which are or will be due to
have been fulfilled and performed by such date. Each such Governmental Permit is in full
force and effect and, to the knowledge of Seller, no event has occurred that would prevent
any such Governmental Permit from being renewed or reissued or which permits, or with or
without the giving of notice or the passage of time or both would permit, the revocation or
termination thereof, or results or would result in any material impairment of the rights of
the holder of any such material Governmental Permit. Schedule 4.1(l) lists each material
Governmental Permit reasonably necessary to operate the Business as currently conducted,
and (i) each such Governmental Permit is in full force and effect and, to the knowledge of
Seller, no event has occurred that would prevent any such Governmental Permit from being
renewed or reissued or which permits, or with or without the giving of notice or the
passage of time or both would permit, the revocation or termination thereof, or results or
would result in any material impairment of the rights of the holder and (ii) except as set
forth on Schedule 4.1(l) and except for Governmental Permits that will be available to or
obtainable by Buyer at little or no cost in the ordinary course without any interruption of
the operation of the Business following the Effective Time, assuming timely application
therefor, and reasonable diligence in pursuit thereof, by Buyer, such material Governmental
Permits are transferable without the consent of any Governmental Authority.




     (m) Significant Contracts. Annex A-3 sets forth a list of all Significant Contracts
for the Business. Except as described in Schedule 4.1(m), all the Significant Contracts
are being assigned or transferred to and assumed by Buyer, and are assignable



10









 







by Seller or Seller’s Affiliate, as applicable, to Buyer without the consent of any
other Person. Except as set forth on Schedule 4.1(m), (i) none of the Seller or Seller’s
Affiliates that is a party to the Significant Contracts is in material breach or default
under any Significant Contract, (ii) each Significant Contract is in full force and effect,
and is a valid binding agreement of Seller or Seller’s Affiliates, enforceable against
Seller or Seller’s Affiliates in accordance with its terms, and to Seller’s knowledge, is a
valid agreement, arrangement or commitment of each other party thereto, enforceable against
such party in accordance with its terms, and (iii) to Seller’s knowledge, no other Person
that is a party to any Significant Contract is in material breach or default under any such
Significant Contract and no event has occurred which with the notice or lapse of time or
both would constitute a material breach or default, or permit termination, modification or
acceleration under any Significant Contract, and (iv) those Significant Contracts that
represent licenses do not conflict with any other license or agreement that is being
retained by Seller or its Affiliates following the Closing or that is granted by Buyer to
Seller. Seller has made available to Buyer copies of each Significant Contract and all
amendments thereto.




     (n) Environmental Matters. Except as described in Schedule 4.1(n) or as would not
reasonably be expected to have a Material Adverse Effect, there is and has been no
violation of any Environmental Law or other grounds for Environmental Liability at any site
or facility owned or operated by the Acquired Entity or included in the Acquired Assets or
otherwise relating to the Business. Except as described on Schedule 4.1(n) and other than
those matters that would not reasonably be expected to have a Material Adverse Effect,
during the last three years, to Seller’s knowledge, there have been no written notices
received by the Seller or its Affiliates with respect to a violation of an Environmental
Law at any site or facility owned or operated by the Acquired Entity, the Acquired Assets
or otherwise relating to the Business. To Seller’s knowledge, there is no fact,
circumstance or condition related to the Acquired Entity, the Acquired Assets or the
Business that could reasonably be expected to impose an Environmental Liability having a
Material Adverse Effect. To Seller’s knowledge, the environmental reports previously
provided or made available to Buyer that relate to the Business contain all material
information (or summaries thereof) regarding the Acquired Entity, the Acquired Assets and
the Business and their respective compliance with or liability under any Environmental Law
that are in the Seller’s possession, custody, or control.




     (o) Personal Property. Each of the Acquired Entity, Seller or an Affiliate of Seller
owns good and transferable title to and, upon execution and delivery of the applicable
bills of sale or other transfer documents at Closing, Buyer or its Affiliates (including
the Acquired Entity) will own good and transferable title to, the Acquired Assets (other
than such of the Acquired Assets constituting Real Estate which are addressed in 4.1(p)
below) free and clear of all Liens except: (a) Liens described on Schedule 4.1(o), (b)
Liens arising by operation of Law for Taxes not yet due and payable; (c) the rights of
customers, suppliers and subcontractors in the ordinary course of business under general
principles of commercial law; and (d) Liens the aggregate value of which does not exceed
$250,000.



11









 






     (p) Real Property. The real property described as owned on Annex A-1 describes as of
the date of this Agreement all real property owned by Seller and its Affiliates that is
used primarily in the operation of the Business, and upon execution and delivery of the
applicable deeds and other transfer documents at Closing, Buyer or its Affiliates
(including the Acquired Entity) will own such real property free and clear of all Liens,
except: (a) as described on Schedule 4.1(p); (b) Liens arising by operation of Law for
Taxes not yet due and payable; (c) zoning, planning, and other restrictions of record and
(d) imperfections or irregularities of title that would not reasonably be expected to
materially affect the use of such property as currently utilized in the Business.




     (q) Leases. Annex A-1 describes all real property that is used in the operation of
the Business referred to therein that is leased by Seller or its Affiliates and primarily
used in the operation of the Business (the “Significant Leases”). Except as described on
Schedule 4.1(q), (i) none of the Acquired Entity, Seller or Seller’s Affiliates that is a
party to any Significant Lease is in material breach or default under any Significant
Lease, (ii) to Seller’s knowledge, no other Person that is a party to a Significant Lease
is in material breach or default under any Significant Lease and no event has occurred
which with the notice or lapse of time or both would constitute a material breach or
default, or permit termination, modification or acceleration under any Significant Lease
and (iii) such Significant Leases to which the Acquired Entity is not a party are
assignable to Buyer without the consent of a third party.




     (r) Patents and Other Intellectual Property.




     (i) Annex A-2 describes all issued, pending and subsisting patents, trademarks
and copyrights owned by Seller and its Affiliates and used in the operation of the
Business referred to therein. Except as otherwise indicated on Annex A-2 or in the
ordinary course of business, neither the Seller nor any Affiliate has granted to any
other Person or entity any license to use any such Intellectual Property that would
interfere with Buyer’s ability to conduct the business of the Business as currently
conducted.




     (ii) Except as described in Schedules 4.1(r) or 4.1(t), or otherwise disclosed
in writing by Seller to Buyer, there is no Action pending, or to the knowledge of
Seller, threatened in writing against, Seller or its Affiliates by a third party
claiming that any product sold or marketed by the Business during the past three
years violates the intellectual property rights of such third party. Except as
described on Schedule 4.1(t), to Seller’s knowledge, no third party is currently
infringing on any of Seller’s Intellectual Property.




     (iii) The Seller and the Acquired Entity possess all right, title and interest
in the patents, trademark registrations (together with the goodwill associated with
such trademarks and tradenames), and copyright rights listed on Annex A-2, free and
clear of any Lien, license or other restriction, except as set forth on Annex A-2.



12









 






     (iv) Except for licenses set forth on Annex A-2 (the “Material Licenses”),
there are no licenses of Intellectual Property by a third party to Seller or its
Affiliates that are material to the operation of the Business referred to therein as
currently conducted by Seller and its Affiliates. Except as described on Annex A-2,
(i) none of the Seller or Seller’s Affiliates that is a party to a Material License
is in material breach or default under any such Material License, (ii) to Seller’s
knowledge, no other party to a Material License is in material breach or default
under any Material License and no event has occurred which with notice or lapse of
time would constitute a breach or default, or permit termination, modification or
acceleration under any Material License and (iii) such Material Licenses to which
the Acquired Entity is not a party are assignable to Buyer without the consent of a
third party.




     (v) Neither Seller, nor any of its Affiliates has received any written, or to
the knowledge of the Seller, oral notice of invalidity of any of the Intellectual
Property owned by Seller and its Affiliates and listed on Annex A-2. Seller
represents that, to Seller’s knowledge, all Intellectual Property owned by, or
licensed to Seller and its Affiliates that will be transferred to Buyer at the
Closing is valid and enforceable.




     (s) Consents. Except (a) for consents to assignments described in Sections 4.1(l),
4.1(m), 4.1(q), and 4.1(r) (and the annexes and schedules referred to in such Sections),
(b) for Customary Post-Closing Consents, (c) compliance with any applicable requirements
under the HSR Act or as described on Schedule 4.1(s) and (d) for consents, filings, or
notices that, if not obtained or made, will not have a material effect on the Business or
the Acquired Assets, no consent, approval, authorization or permit of, or filing with or
notification to, any Person is required for or in connection with the execution and
delivery of the Seller Related Agreements or for or in connection with the consummation of
the transactions and performance of Seller’s obligations contemplated hereby by Seller and
under the Seller Related Agreements.




     (t) Actions. Except as described on Schedule 4.1(t), there is no Action pending or,
to Seller’s knowledge, threatened in writing, against (i) the Acquired Entity, or (ii) the
Seller or any of its Affiliates with respect to the Business, except for Actions that are
not reasonably expected to have a Material Adverse Effect (any such Actions collectively,
the “Known Litigation”).




     (u) Brokerage Fees and Commissions. Neither Seller nor any Affiliate of Seller has
incurred any obligation or entered into any agreement for any investment banking, brokerage
or finder’s fee or commission in respect of the transactions contemplated by this Agreement
or the Seller Related Agreements for which Buyer or the Acquired Entity or any Affiliated
Buyer will incur any liability.




     (v) Events Subsequent to Balance Sheet Date. Except in each case as described in
Schedule 4.1(v) or as otherwise disclosed in the Balance Sheet or any Schedule to Section
4.1, since the Balance Sheet Date, to the knowledge of Seller there has not been any of the
following events related to the Business:



13









 






     (i) destruction, damage to, or loss of any properties of the Acquired Entity or
any Acquired Assets that (after giving effect to any insurance coverage with regard
thereto) is reasonably expected to have a Material Adverse Effect;




     (ii) change in material accounting policies or practices (including, without
limitation, any change in depreciation or amortization policies) used with respect
to the Business, except as required under GAAP;




     (iii) sale or other disposition of the Acquired Assets or the properties or
assets of the Acquired Entity, except (a) assets sold, leased, or otherwise
transferred in the ordinary course of business or (b) the sale or disposition of any
item of personal property or equipment having a value of less than $100,000
individually or $250,000 in the aggregate or otherwise not prohibited under Section
7.1;




     (iv) dividend or other distribution in respect of, or issuance of, any equity
interests of the Acquired Entity, other than a dividend to Seller or its Affiliates
of any or all of the cash held by the Acquired Entity;




     (v) settlement entered into or consent made to any order, decree, or judgment
relating to or arising out of any Action (other than an Action included as an
Excluded Liability) relating to the Business which is reasonably expected to have a
Material Adverse Effect; or




     (vi) sale, exclusive licensing or other disposition of any Intellectual
Property, except for Intellectual Property licensed to customers on a nonexclusive
basis in the ordinary course of business.




     (w) Employee Benefit Plans.




     (i) Schedule 4.1(w)(i) lists each Business Employee (including the laboratory
technicians who will remain with Seller pursuant to Section 6.2(g)). Seller has
separately provided to Buyer the current annual salary for each Business Employee.




     (ii) Schedule 4.1(w)(ii) lists and describes each of Seller’s and the Acquired
Entity’s Benefit Plans applicable to the Business Employees that are written, and a
written description of all such Benefit Plans that are not in written form. The
Acquired Entity does not serve as the “administrator” or “plan sponsor” (within the
meaning of Section 3(16) of ERISA) of any Benefit Plan.




     (iii) Except as disclosed on Schedule 4.1(w)(iii), neither Seller, its
Affiliates nor the Acquired Entity sponsors, maintains or contributes to any Benefit
Plan that (A) is subject to Title IV of ERISA (including for this purpose only, any
Benefit Plan that was so sponsored, maintained or contributed to during the past and
with respect to which Seller, its Affiliates or the Acquired Entity may have any
liability, contingent or otherwise); (B) provides medical, health, or life insurance
to retired or terminated Business Employees (or any spouse or other



14









 







dependent thereof) other than in accordance with Part 6 of Subtitle B of Title
I of ERISA and Section 4980B of the Code (“COBRA”) or other applicable Law or at the
sole expense of such Business Employees; or (C) would entitle any Business Employee
to any amount that is or can be construed as an “excess parachute payment” under
Section 280G of the Code as a result of this transaction.




     (iv) All of the Benefit Plans of Seller, its Affiliates and the Acquired Entity
have complied in both form and operation with their terms and all applicable Laws in
all material respects.




     (v) All Benefit Plans sponsored, maintained or contributed to by Seller, any of
its Affiliates, or the Acquired Entity or in which any Business Employee
participates that are intended to qualify under Section 401(a) of the Code are so
qualified in both form and operation. The trusts maintained pursuant thereto are
exempt from federal income taxation under Section 501 of the Code. To the knowledge
of Seller, nothing has occurred with respect to such Benefit Plans that would cause
the loss of such qualification or exemption or the imposition of any liability,
penalty or tax under ERISA or the Code, except to the extent that such loss or
imposition would not reasonably be expected to have a Material Adverse Effect.




     (vi) Except as described in Schedule 4.1(w)(vi), with respect to each Benefit
Plan that is subject to Title IV of ERISA or Section 412 of the Code, there was not
an accumulated funding deficiency (within the meaning of Section 302 of ERISA or
Section 412 of the Code), whether or not waived, as of the most recently ended plan
year. Except as otherwise described in Section 3.1(b), all accrued obligations of
the Acquired Entity, whether arising by operation of Law, by contract, or by past
custom, for compensation and employee benefits, including, but not limited to,
bonuses, accrued vacation, and contributions to or benefits payable under Benefit
Plans, have been paid, or adequate accruals for such obligations have been and are
being made, and will be reflected on the Closing Balance Sheet.




     (vii) Except as described in Schedule 4.1(w)(vii) or as contemplated in Section
6.2(c), neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will (either alone or in conjunction with any
other event, such as termination of employment): (A) result in any payment
(including, without limitation, severance, unemployment compensation, parachute or
otherwise) becoming due by Buyer or Buyer’s Affiliate (or Seller, its Affiliates or
the Acquired Entity after the Closing) to any Transferred Employee under the terms
of any Benefit Plan, (B) increase any benefits otherwise payable under any Benefit
Plan or (C) result in any acceleration of the time of payment or vesting of benefits
under the terms of any Benefit Plan.



15









 






     (viii) There have been no “prohibited transactions” (as described in Section
406 of ERISA or Section 4975 of the Code with respect to any Benefit Plan that could
result in any liability to the Acquired Entity or Buyer.




     (ix) The Acquired Entity has not used the services of third party contract
labor suppliers, temporary or leased employees, independent contractors or other
contingent workers to an extent that could result in the disqualification of any
Benefit Plan or the imposition of any penalty or Tax with respect thereto by any
Governmental Authority.




     (x) Insurance. With respect to the Business, Seller and Seller’s Affiliates
(including the Acquired Entity), have the fire, liability, casualty and other insurance
coverage described on Schedule 4.1(x). Seller shall maintain or cause to be maintained in
full force and effect all such insurance policies until the Closing (other than renewals of
such insurance in the ordinary course, with such changes in carriers, deductibles and
coverage limits that would not be material). Schedule 4.1(x) sets forth all material
claims of Seller pending under any of such policies, none of which coverage has been denied
or disputed in writing to Seller by the underwriters of such policies or in respect of
which such underwriters have reserved their rights. Seller and its Affiliates, the
Business and the Acquired Assets, have at all times been and are adequately insured with
reputable insurers or self-insurance practices that are reasonable with respect to the
Business against accident, damage, injury, third party loss, loss of profits and any other
risk normally insured against by a prudent person operating the types of business similar
to the Business and have at all times effected such insurances as required by Law and any
Significant Contract. No policy limits for the Seller and its Affiliates have been
exhausted or materially reduced. There have been no gaps in insurance coverage since
January 1, 2002.




     (y) Labor Agreements. Except as described on Schedule 4.1(y), (i) there are no
collective bargaining agreements or other labor union contracts related to the Business
Employees; (ii) during the past three years, there has not been, there is not presently
pending or existing, and, to Seller’s knowledge there is not threatened (x) any strike or
work stoppage relating to the operation of the Business, (y) any Action against or
affecting Seller or its Affiliates pertaining to labor relations or employment matters that
relates to the Business that would not reasonably be expected to have a Material Adverse
Effect or (z) any application for certification of a collective bargaining agent with
respect to any of the Business Employees; (iii) there is no lockout of any Business
Employees by Seller or its Affiliates and no such action is contemplated by Seller or its
Affiliates; (iv) to Seller’s knowledge, during the past three years, there has been no
charge of discrimination filed against or threatened in writing against Seller or its
Affiliates with the Equal Employment Opportunity Commission or similar Governmental
Authority that relates to the operation of the Business; (iv) with respect to the operation
of the Business during the past three years, Seller and its Affiliates have complied in all
material respects with all Laws relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining, occupational
safety and health, and plant closing laws; and (v) neither Seller nor its Affiliates has
incurred any liability or obligation under the Workers



16









 







Adjustment and Retraining Notification Act of 1988, as amended (“WARN”) or any similar
state or local law within the last six months with respect to the Business which remains
unsatisfied.




     (z) Books and Records. The books, accounts, ledgers, records and files of Seller and
its Affiliates related to the Business are true and complete in all material respects and
have been maintained in accordance with good business and bookkeeping practices in all
material respects. The minute books and other similar records of the Acquired Entity are
true and complete in all material respects.




     (aa) No Material Adverse Change. Since the Balance Sheet Date, there has not been any
material adverse change in the business, operations, properties, assets or financial
condition of the Business, taken as a whole, and no event has occurred or circumstance
exists that is reasonably likely to result in such a material adverse change; provided,
however, that in no event shall any of the following constitute a material adverse change
in the business, operations, properties, assets or financial condition of the Business: (i)
any change resulting from conditions affecting the industry in which the Business operates
or from changes in general business or economic conditions unless such change materially
disproportionately impacts the Business; (ii) any change resulting from the announcement or
pendency of any of the transactions contemplated by this Agreement; (iii) any change
resulting from compliance by Seller and its Affiliates with the terms of, or the taking of
any action required by, this Agreement; or (iv) any change resulting from fluctuations in
exchange rates.




     (bb) Condition of Assets. Except as set forth on Schedule 4.1(bb), all equipment,
vehicles or other tangible assets owned by the Acquired Entity or used in the Business are
in good operating condition and in a good state of maintenance and repair, ordinary wear
and tear excepted, and are usable in the ordinary course of business.




     (cc) Accounts Receivable. All accounts and notes receivable shown on the Balance
Sheet or otherwise relating to the Business, and the accounts receivable outstanding on the
Closing Date, represent sales actually made or services actually performed in the ordinary
course of business in bona fide transactions completed in accordance with the terms and
provisions contained in any agreement relating thereto. Except as will be accrued for on
the Closing Balance Sheet and result in a reduction of the Purchase Price, Seller does not
have knowledge of any fact or circumstance (including, but not limited to, the existence of
any valid counterclaim or set-off) that would lead it to believe that any material account
receivable or any material note receivable relating to the Business is not collectible in
the ordinary course of business, without any set-off or counterclaim.




     (dd) Suppliers. No Material Supplier has canceled in writing or otherwise terminated
in writing, or threatened in writing to cancel or otherwise terminate, its relationship
with the Business during the six months immediately preceding the date hereof or the six
months immediately preceding the Closing Date or has, during such period, materially
decreased, or threatened in writing to materially decrease or materially limit, its
services, supplies or materials to the Business, except for such



17









 







reductions relating to (i) decreased orders by the Business attributable to changes in
Business volumes in the ordinary course or (ii) the Business electing to use alternative
vendors.




     (ee) Warranties. Seller has not given or made any material warranties or guarantees
in connection with the sale of its products or maintenance services, including without
limitation, warranties covering customer losses, except as set forth in Schedule 4.1(ee).
Except as set forth on Schedule 4.1(ee), Seller has not received written notification from
any customers of any claim (except claims that have been resolved or that will be accrued
for on the Closing Balance Sheet) that would reasonably be expected to exceed $100,000
against Seller with respect to warranties relating to the Business.




     (ff) Compliance with Laws. Except as set forth in Schedule 4.1(ff), none of Seller,
its Affiliates or the Acquired Entity is in violation of, or during the last three years
has violated, any applicable Law in any material respect with respect to the ownership or
operation of the Acquired Assets or the Acquired Entity or the Business.




     (gg) Product Liability. Neither Seller nor any Affiliate of Seller has any liability
or obligation, whether known or unknown, asserted or unasserted, absolute or contingent,
matured or unmatured, conditional or unconditional, latent or patent, accrued or unaccrued,
liquidated or unliquidated, or due or to become due (and there is no basis for any present
or future Action against Seller or any of its Affiliates giving rise to any such liability
or obligation) arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any product designed, manufactured, sold, leased or
delivered by any of Seller or its Affiliates with respect to the Business, the Acquired
Entity or the Acquired Assets.




     (hh) Health and Safety Requirements. Except as set forth on Schedule 4.1(hh) and
except as would not reasonably be expected to have a Material Adverse Effect, (a) each of
Seller and its Affiliates is in compliance with all Health and Safety Requirements in
connection with owning, using, maintaining or operating the Business, the Acquired Assets
and the Acquired Entity; (b) each location at which each of Seller and its Affiliates
operates, or has operated, the Business, the Acquired Assets or the Acquired Entity is in
compliance with all Health and Safety Requirements; and (c) there are no pending, or to
Seller’s knowledge, threatened, allegations by any Person that any of the Acquired Assets
or the Acquired Entity is not, or that the Business has not been, conducted in compliance
with all Health and Safety Requirements.




     (ii) Inventory. Each of Seller’s and its Affiliates’ inventory with respect to the
Business, whether reflected on the financial statements provided pursuant to Section 4.1(b)
hereof or not, consists of raw materials and supplies, manufactured and processed parts,
goods-in-process and finished goods, all of which is merchantable and fit for the purpose
for which it was procured or manufactured and, except as has been written down on the face
of the Balance Sheet, none of which is slow-moving, obsolete, damaged or defective. Any
inventory that has been written down has either been written off or written down to its net
realizable value. There has been no change in



18









 







inventory valuation standards or methods with respect to the inventory of the Business
in the prior three years. The quantities of inventory are not materially in excess of the
current needs of the Business in the current operating environment. With respect to third
party inventories on consignment at the Business’ locations, or inventory of the Business
on consignment at third party locations, the Business maintains reasonable and customary
records and follows reasonable and customary identification methods so that such inventory
can be properly identified and accounted for.




     (jj) Arm’s-Length Transactions. Except as set forth on Schedule 4.1(jj), neither
Seller nor any of its Affiliates is a party to any transaction, including the sale, lease
or change of property, the rendering of any service or the payment of any fee, in each
case, with respect to the Business, the Acquired Assets, or the Acquired Entity, other than
upon fair and reasonable terms no less favorable to Seller or its Affiliates, as the case
may be, than it would obtain in a comparable arm’s-length transaction with a Person that is
not an Affiliate.




     (kk) Master Technology License Agreement. Schedule 4.1(mm) identifies (i) the
connections that are currently licensed to Tenaris under the MTLA, (ii) trademarks
currently licensed to Tenaris and (iii) the connections that are currently marketed and
sold or under development by Seller or its Affiliates that are not required to be licensed
to Tenaris under the MTLA.




     (ll) Information True and Correct. No representation, statement or information
relating to Seller or the Business contained in this Agreement (including the Schedules
hereto) nor in any contract or document executed by Seller in connection herewith or
delivered pursuant hereto, contains any untrue statement of a material fact, or omits any
material fact, necessary to make the information contained therein not misleading. Seller
has made available to Buyer correct and complete copies of all documents listed or
described in the Schedules. Notwithstanding the foregoing or anything else in this
Agreement to the contrary, Seller makes no representations or warranties regarding any
forward-looking information provided by Seller or any of its Affiliates or advisors to
Buyer or any of its Affiliates or advisors. As used herein, “forward-looking information”
means prospective information relating to periods after the date hereof, and includes, but
is not limited to, financial and operational forecasts, projections, trends, budgets and
assumptions regarding any forward-looking information.



     4.2 Representations and Warranties of Buyer.



     Buyer on behalf of itself and each Affiliated Buyer represents and warrants to Seller as
follows:




     (a) Organization and Qualification. Vallourec S.A. is a corporation duly organized
and validly existing under the laws of France, Vallourec & Mannesmann Holdings, Inc. is a
corporation duly organized, validly existing, and in good standing under the laws of the
State of Delaware, and each has the requisite corporate power to carry on its business as
now being conducted.



19









 






     (b) Authority. Buyer has all requisite corporate power and authority to execute and
deliver this Agreement and to perform its obligations under this Agreement. The execution,
delivery, and performance of this Agreement and the transactions contemplated hereby have
been duly and validly authorized by all requisite corporate action on the part of Buyer.
As of the Closing Date, the performance by each Affiliated Buyer of the transactions
contemplated by this Agreement will have been duly and validly authorized by all requisite
corporate or other action on the part of such Affiliated Buyer.




     (c) Enforceability. This Agreement has been duly and validly executed and delivered
by Buyer and constitutes a valid, legal and binding agreement of Buyer enforceable against
it in accordance with its terms, subject to (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar U.S. or non-U.S. laws of general application
from time to time in effect that affect creditors’ rights generally, (ii) general
principles of equity, and (iii) the power of a court to deny enforcement of remedies
generally based upon public policy.




     (d) No Violation or Breach. Neither the execution and delivery of this Agreement nor
the consummation of the transactions and performance of its terms and conditions hereof by
Buyer will (i) result in a violation or breach of any provision of the certificate of
incorporation, bylaws or other similar governing documents of Buyer or any material
agreement, indenture or other instrument under which Buyer is bound or (ii) violate any
material Law applicable to Buyer or the properties or assets of Buyer.




     (e) Consents. Except for Customary Post-Closing Consents and any applicable
requirements under the HSR Act, no consent, approval, authorization, or permit of, or
filing with or notification to, any Person is required for or in connection with the
execution and delivery of this Agreement by Buyer or for or in connection with the
consummation of the transactions and performance of Buyer’s obligations contemplated hereby
by Buyer.




     (f) Actions. There is no action pending or threatened in writing against Buyer that
could reasonably be expected to have a material adverse effect on Buyer’s ability to
consummate the transactions contemplated hereby.




     (g) Brokerage Fees and Commissions. Neither Buyer nor any Affiliate of Buyer has
incurred any obligation or entered into any agreement for any investment banking,
brokerage, or finder’s fee or commission in respect of the transactions contemplated by
this Agreement for which Seller or its Affiliates will incur any liability.




     (h) Funds. Buyer has, and at all times prior to Closing will have, sufficient funds
available to enable Buyer to consummate the transactions contemplated hereby and to pay the
Purchase Price and all related fees and expenses incurred by Buyer.




     (i) No Distribution. Buyer is an experienced and knowledgeable investor. Prior to
entering into this Agreement, Buyer was advised by its counsel and such other Persons it
has deemed appropriate concerning this Agreement and has relied solely on



20









 







an independent investigation and evaluation of, and appraisal and judgment with
respect to, the Business and the financial, price and expense assumptions applicable
thereto. Buyer is an “accredited investor,” as such term is defined in Regulation D of the
Securities Act of 1933, as amended, and will acquire the equity interests of the Acquired
Entity for its own account and not with a view to a sale or distribution thereof in
violation of the Securities Act of 1933, as amended, and the rules and regulations
thereunder, any applicable state blue sky laws or any other applicable securities laws.




     (j) Bankruptcy. There are no bankruptcy or reorganization proceedings pending, or to
the knowledge of Buyer threatened, against Buyer.



Article 5

Access and Confidentiality




     5.1 General Access. Promptly following the execution of this Agreement and until the
Closing Date (or earlier termination of this Agreement), Seller shall permit (and with respect to
the Acquired Entity, Seller shall cause the Acquired Entity to permit) Buyer and its
representatives:




     (a) to have reasonable access, at reasonable times in the offices of Seller, its
Affiliates and the Acquired Entity and in a manner so as not to interfere unduly with the
business operations of Seller, its Affiliates or the Acquired Entity, to the books,
records, contracts, and documents of Seller and its Affiliates, with respect to the
Business, and the Acquired Entity relating to its assets and operations insofar as the same
are in the possession of Seller, its Affiliates or the Acquired Entity and insofar as the
same may be disclosed without (i) violating any legal constraints or any legal obligation
or (ii) waiving any attorney/client, work product, or other privilege; and




     (b) subject to any required consent of any third Person, to conduct at reasonable
times and at Buyer’s sole risk, cost, and expense, in the presence of representatives of
Seller, reasonable inspections of the Acquired Assets and the Acquired Entity’s assets.


Buyer agrees to indemnify and hold harmless, release, and defend the Seller Indemnified Parties and
the Acquired Entity from and against any and all Losses arising, in whole or in part, from Buyer’s
inspection of the assets and records of Seller or the Acquired Entity, including claims for
personal injuries, property damage, and reasonable attorneys’ fees and expenses. Nothing in this
Agreement shall be construed to permit Buyer or its representatives to have access to any files,
records, contracts, or documents of Seller or its Affiliates relating to this transaction,
including any bids or offers received by Seller or its Affiliates for the sale of the Business, it
being agreed that all such bids or offers shall be the sole property of Seller.




     5.2 Confidential Information. Unless and until the Closing occurs, Buyer agrees to
maintain all information made available to it pursuant to this Agreement confidential and to cause
its officers, employees, representatives, consultants, and advisors to maintain all information
made available to them pursuant to this Agreement confidential, all as provided in that certain
confidentiality agreement dated August 17, 2007 (the “Confidentiality Agreement”),



21









 







by and between Seller and Buyer (the terms of which are incorporated herein by reference and made a
part of this Agreement). In addition, Buyer agrees that the term “Information” as used in the
Confidentiality Agreement includes the information described in the Confidentiality Agreement
provided or disclosed by Seller, the Acquired Entity, or any Affiliate of Seller.



Article 6

Taxes and Employee Benefits




     6.1 Tax Matters.




     (a) Allocation of Tax Liabilities with respect to the Acquired Entity.




     (i) Except to the extent accrued for on the Closing Balance Sheet, Seller shall
be responsible for all Taxes of the Acquired Entity regardless of when due and
payable:




     (A) with respect to all Tax periods ending on or before the Closing
Date; and




     (B) with respect to all Tax periods beginning before the Closing Date
and ending after the Closing Date, but only with respect to the portion of
such period up to the Closing Date.




     (ii) Buyer shall be responsible for all Taxes of the Acquired Entity,
regardless of when due and payable:




     (A) with respect to all Tax periods beginning after the Closing Date;
and




     (B) with respect to all Tax Periods beginning before the Closing Date
and ending after the Closing Date, but only with respect to the portion of
such period commencing after the Closing Date; and




     (C) accrued on the Closing Balance Sheet.




     (b) Allocation of Tax Liabilities with respect to Acquired Assets.




     (i) Except to the extent accrued for on the Closing Balance Sheet, all Taxes
levied or assessed against the Acquired Assets for the Tax period prior to the Tax
period in which the Closing Date falls and all previous Tax periods, regardless of
when due and payable, shall be paid by Seller.




     (ii) Except to the extent accrued for on the Closing Balance Sheet, all Taxes
levied or assessed against the Acquired Assets for the Tax period in which the
Closing Date falls, regardless of when due and payable, shall be prorated on a daily
basis between Buyer and Seller as of the Closing Date.



22









 






     (iii) All Taxes levied or assessed against the Acquired Assets for the Tax
periods following the Tax period in which the Closing Date falls, shall be paid by
the Buyer.




     (iv) If the amount of such Taxes are not known at the Closing, the proration
shall be based on the Taxes of the Tax period prior to the Tax period in which the
Closing Date falls with an appropriate adjustment to be made between the parties
upon receipt of the Tax bill for the Tax period in which the Closing Date falls.




     (v) All Taxes accrued on the Closing Balance Sheet as a liability shall be paid
by Buyer.




     (c) Tax Returns.




     (i) To the extent the Acquired Entity is included in the Seller’s Consolidated
Tax Return for United States federal income tax purposes for the Tax period in which
the Closing Date falls, Seller shall include the income or loss for the Acquired
Entity for all Tax periods ending on or before the Closing Date on the timely filed
Seller’s Consolidated Tax Returns when due (including extensions).




     (ii) Seller shall cause to be prepared, and Buyer shall cause to be filed when
due (including any extensions), all other Tax Returns of the Acquired Entity for all
Tax periods ending on or before the Closing Date, for which Tax Returns have not
been filed as of such date. Tax Returns prepared by Seller shall be prepared and
filed in a manner consistent with past practice, including positions or elections on
deferring income or accelerating deductions consistent with Tax rules and the Tax
Law and in compliance with the Laws of each respective jurisdiction, except for
changes required by changes in Laws or facts.




     (iii) Buyer shall prepare and file when due (including any extensions) all Tax
Returns of the Acquired Entity for Tax periods ending after the Closing Date;
provided, however, Seller shall have the right to review prior to filing all Tax
Returns for any Tax period which includes the Closing Date or any period prior to
the Closing Date. Tax Returns prepared by Buyer and which include the Closing Date
or any period prior to the Closing Date shall be prepared and filed in a manner
consistent with past practice, including positions or elections on deferring income
or accelerating deductions consistent with Tax rules and the Tax Law and in
compliance with the Laws of each respective jurisdiction, except for changes
required by changes in Laws or facts.




     (d) Income And Loss Allocation. For purposes of this Section 6.1, the income or loss
of the Acquired Entity shall be apportioned to the period up to and including the Closing
Date and the period after the Closing Date by closing the books of the Acquired Entity as
of the end of the Closing Date.



23









 






     (e) Cooperation.




     (i) After the Closing Date, Buyer and Seller shall make available to the other,
as reasonably requested, and to any Tax authority, all information, records or
documents (including state apportionment information) relating to Tax liabilities or
potential Tax liabilities of the Acquired Entity and Acquired Assets with respect
to:




     (A) Tax periods ending on or prior to the Closing Date; and




     (B) Tax periods beginning before the Closing Date and ending after the
Closing Date.




     (ii) Buyer and Seller shall preserve all such information, records and
documents until the expiration of any applicable statute of limitations thereof.




     (iii) Buyer and Seller shall prepare and provide to the other party any
information or documents requested by Buyer or Seller for the other party’s use in
preparation or review of the Tax Returns referred to in Section 6.1(c).




     (iv) Notwithstanding any other provision hereof, each party shall bear its own
expenses in complying with the foregoing provisions.




     (f) Audits.




     (i) Buyer shall promptly notify Seller in writing upon receipt by Buyer or any
Affiliates, or the Acquired Entity or any Affiliates, of notice of any pending or
threatened Tax liabilities of the Acquired Entity for any:




     (A) Tax period ending on or before the Closing Date; or




     (B) Tax period ending after the Closing Date but which includes the
Closing Date (to the extent it covers a Tax liability that Seller is
responsible for under Section 10.11).




     (ii) Seller and Buyer shall jointly have the right to represent the Acquired
Entity’s interests in any Tax audit or administrative or court proceeding for such
Tax periods and to employ counsel of their choosing at their own expense.




     (iii) Buyer agrees that it will cooperate fully with Seller and its counsel in
the defense against or compromise of any claim in any said proceeding.




     (iv) Seller shall not settle any claim for Taxes which could adversely affect
Buyer’s Tax liability for any period after the Closing Date (unless Sellers have
indemnified Buyer against such effects), without the prior written consent of Buyer,
which shall not be unreasonably withheld. Buyer shall not settle any claim for
Taxes which could adversely affect Seller’s Tax liability for any period prior



24









 







to the Closing Date (unless Buyer has indemnified Seller against such effects),
without the prior written consent of Seller, which shall not be unreasonably
withheld.




     (g) Tax Refunds.




     (i) All refunds of Taxes of the Acquired Entity shall be for the account of
Seller:




     (A) with respect to Tax periods ending on or before the Closing Date;
and




     (B) with respect to any Tax period beginning before the Closing Date
and ending after the Closing Date, but only with respect to the portion of
such period up to the Closing Date.




     (ii) Buyer shall take such action as reasonably requested by Seller to obtain
such refunds and shall cause the Acquired Entity to pay over to Seller any such
refunds immediately upon receipt thereof.




     (h) Tax Sharing Agreements. Except for the Tax sharing agreement included in the
definition of Excluded Liabilities, all Tax sharing agreements, if any, between Seller or
Affiliate of Seller and the Acquired Entity shall be terminated prior to the Closing Date
and no payments shall be made under such agreements on or after the Closing Date.




     (i) Transfer Taxes. All Transfer Taxes, owed as a result of the transactions
contemplated by this Agreement shall be paid half by Seller and half by Buyer.



     6.2 Employee Matters.




     (a) Employees. Prior to the Effective Time, Buyer or its Affiliate shall offer
employment to the Business Employees and such offers shall be communicated to such Business
Employees within a reasonable time prior to the Closing Date (the “Offered Employees”),
except for such Business Employees who will automatically transfer to Buyer as of the
Effective Time as employees of the Acquired Entity or under applicable Law (each an
“Automatically Transferred Employee”). Each offer of employment shall (i) be for an
employment position similar to the employment position the individual had immediately prior
to the Closing Date at a geographic location not further than 50 miles from the
individual’s principal place of employment immediately prior to the Closing Date, (ii) be
conditioned on Closing, (iii) be made in writing and (iv) shall remain open and unchanged
until the fifth Business Day prior to the Effective Time. Each Offered Employee who (i)
(A) accepts Buyer’s offer of employment and (B) commences employment with Buyer or its
Affiliates immediately after the Closing and (ii) each Automatically Transferred Employee,
shall be referred to herein as a “Transferred Employee.” The employment of each
Transferred Employee shall commence immediately upon the Effective Time and shall be
deemed, for all purposes, consistent with applicable Law and except as otherwise expressly
provided herein, to have



25









 







occurred with no interruption or break in service. Seller shall encourage all Offered
Employees to accept employment with Buyer, and Seller and its Affiliates shall not directly
or indirectly solicit the employment of or seek to retain the services of any such Offered
Employees. Each Business Employee who terminates employment with Seller or its Affiliates,
or who ceases to be assigned to work principally in the Business prior to the Effective
Time shall hereinafter be referred to as a “Terminated Employee.” Except as may otherwise
be provided in the Transition Services Agreement, if any, Seller or its Affiliates shall
terminate or shall cause to be terminated the employment of all Transferred Employees
effective as of the Effective Time.




     (b) Assumption of Employer Responsibilities. Buyer or Buyer’s Affiliate shall (i)
hire each Transferred Employee at the same initial level of base salary or wages that such
Transferred Employee was entitled to receive immediately prior to the Effective Time, and
(ii) to the extent such Transferred Employees remain employed with Buyer or Buyer’s
Affiliate, provide such Transferred Employees with tax qualified pension and welfare
benefits that are substantially comparable in the aggregate to those provided to such
Transferred Employees immediately prior to the Effective Time for a one-year period
commencing on the date on which the Closing Date occurs. Except as specifically required
by applicable Law, Buyer and its Affiliates shall not be obligated to continue any
employment relationship with or continue to provide any employee benefits to any
Transferred Employee for any specific period of time from and after the Effective Time.




     (c) Employee Benefit Plans. All Transferred Employees shall cease to participate in
any Benefit Plans maintained, sponsored by or contributed to by Seller or Seller’s
Affiliates as of the Effective Time. Effective on or prior to the Closing Date the
Acquired Entity shall have terminated its participation in any Benefit Plan maintained by
Seller or its Affiliate. Seller or its Affiliates shall cause each Transferred Employee
who was participating in Seller’s or its Affiliates’ Benefit Plans immediately prior to the
Effective Time to be fully vested in his or her benefits (other than severance benefits)
thereunder as at the Effective Time (including without limitation, the vesting of any
unvested stock options or other equity-based awards and the vesting of account balances
under Seller’s Executive Deferred Compensation Plan). Seller or its Affiliates shall take
necessary steps to effectuate the prior sentence, including without limitation amending or
causing to be amended Seller’s or its Affiliates’ Benefit Plans. As of the Effective Time,
Buyer shall allow all Transferred Employees and their eligible dependents to participate in
Buyer’s benefit plans (excluding any defined benefit and cash balance plans) as necessary
to comply with the terms of this Agreement and any applicable Law, without any gap or loss
of benefits or coverage. The Transferred Employees and their eligible dependents shall not
be subject to any pre-existing condition limitations, and Buyer shall recognize all service
credited to any Transferred Employee on the Seller’s books and records for purposes of
eligibility and vesting (but not benefit accrual) in the Buyer’s benefit plans. Buyer or
Buyer’s Affiliate shall adopt for the benefit of the Transferred Employees the severance
policy set forth on Schedule 6.2(c). Prior to the Closing Date, and to the extent
necessary to implement this sentence, Seller shall amend any Benefit Plan and take or cause
to be taken all other action as may be required to provide that severance or separation
payments shall not be payable to any Transferred



26









 







Employee on account of such employee’s termination of employment with Seller. Should
any severance or separation obligations or liabilities arise with respect to the
termination of employment of any Business Employees prior to or as of the Closing Date,
then such obligations and liabilities shall be borne by Seller. On or prior to the Closing
Date, Seller or its Affiliate shall cause the Transferred Employees to be paid annual
incentive compensation bonuses to the extent a liability has been accrued therefor on
Seller’s or its Affiliate’s balance sheet.




     (d) Retained and Assumed Liabilities. Except as otherwise provided in Section 6.2(e)
below, Seller shall retain responsibility for all benefits accrued or claims made or (with
respect to claims for workers’ compensation, group life, accidental death and
dismemberment, disability or health plan benefits) incurred prior to the Effective Time
under Seller’s Benefit Plans. Claims will be deemed to be incurred on the date that the
event or service giving rise to such claim occurs or is performed. Seller shall retain
responsibility for any continuation coverage obligations under COBRA to any Terminated
Employees and Offered Employees who do not become Transferred Employees, and their
respective covered dependents, who incur a COBRA qualifying event or loss of coverage under
any of Seller’s group health plans at any time on or prior to the Effective Time.
Following the Effective Time, Buyer shall or shall cause its Affiliate to provide COBRA
continuation coverage to all Transferred Employees and their qualified beneficiaries who
incur or incurred a qualifying event or loss at any time with respect to claims incurred on
or after the Effective Time. Except as specifically retained by Seller, Buyer or Buyer’s
Affiliate shall assume responsibility for all expenses and benefits for claims made or
incurred by any Transferred Employee or such Transferred Employee’s eligible dependents on
or after the Effective Time.




     From and after the Effective Time, Buyer shall assume responsibility for compliance
with, as well as any liability which may exist or arise out of WARN on account of any
Transferred Employee terminated after the Effective Time. No later than five business days
prior to the Closing Date, Seller shall provide Buyer with a list setting forth the number
of Business Employees terminated from each site of employment of the Business during the
90-day period ending on the Closing Date for reasons qualifying the termination as
“employment losses” under WARN and the date of each such termination with respect to each
termination; provided, that this sentence shall not apply with respect to any site of
employment at which sufficient employees have not been employed at any time in such 90-day
period for terminations of employment at such site to be subject to WARN.




     Seller or its Affiliates shall retain all responsibility for any transaction bonus,
retention, incentive or similar payments established by Seller in connection with the
transactions contemplated by this Agreement. Except as specifically provided in this
Section 6.2 or as is accrued as a current liability on the Closing Balance Sheet thereby
resulting in a reduction in Purchase Price, Buyer shall not assume any Benefit Plan or any
agreements that become effective following a change in control of Seller or its Affiliates
(“Change in Control Agreements”) maintained, sponsored or contributed to by Seller or
Seller’s Affiliates, and Buyer shall not be obligated to pay, perform or otherwise



27









 







discharge any liabilities of the Seller or any of Seller’s Affiliates relating to any
Benefit Plan or Change in Control Agreement.




     (e) Vacation. Buyer shall assume all liabilities for the Transferred Employees with
respect to accrued unused vacation and paid time off (“PTO”) immediately prior to the
Effective Time. Buyer shall allow each Transferred Employee either to (i) take in the
calendar year in which the Effective Time occurs, all PTO to which such Transferred
Employee is entitled in such year, less any PTO taken by such Transferred Employee as of
the Effective Time or (ii) receive vacation pay in lieu of any accrued unused PTO for such
calendar year as of the Effective Time.




     (f) Payroll Taxes. Seller and Buyer shall (i) treat Buyer and its Affiliate thereof
as applicable, as a “successor employer” and Seller as a “predecessor” within the meaning
of Sections 3121(a)(1) and 3306(b)(1) of the Code, with respect to Transferred Employees
who are employed by Buyer or such Affiliate for purposes of Taxes imposed in the United
States Federal Unemployment Tax Act (“FUTA”) or the United States Federal Insurance
Contributions Act (“FICA”) and (ii) cooperate with each other to avoid, to the extent
possible, the filing of more than one United States Internal Revenue Service Form W-2 with
respect to each such Transferred Employee for the calendar year in which the Effective time
occurs.




     (g) Laboratory Technicians. The current laboratory personnel are listed on Schedule
6.2(g). Prior to Closing, Buyer and Seller shall work together to determine in good faith
those laboratory technicians that will be transferred with the Business to Buyer and those
laboratory technicians that will remain with Seller and will not be transferred. Such
division will permit Buyer to take the laboratory manager, all test engineers and up to
nine laboratory technicians, and will permit Seller to retain the remaining laboratory
technicians (it being understood that the test engineers for the Business are already
included in the definition of Business Employees). The laboratory technicians that are
allocated to Buyer shall be considered Business Employees. The laboratory technicians who
are allocated to Seller shall not be considered Business Employees.



Article 7

Covenants of Seller and Buyer




     7.1 Conduct of Business Pending Closing. Subject to Section 7.2 and the constraints of
existing agreements from the date hereof through the Closing Date, except as disclosed in Schedule
7.1 or as otherwise consented to or approved by Buyer (which consent or approval shall not be
unreasonably withheld or delayed), Seller covenants and agrees that:




     (a) Changes in Business. Seller shall, and shall cause its Affiliates (including the
Acquired Entity) to, comply with the following:




     (i) neither Seller nor any of its Affiliates shall make any material change in
the operation of the Business;



28









 






     (ii) except in the ordinary course of business and consistent with past
practices or in connection with obtaining any consent in accordance with Section
7.13(b), neither Seller nor any of its Affiliates shall enter into, assign,
terminate, or amend, in any material respect, any Significant Contract;




     (iii) not reduce its insurance coverage limits or make any material adverse
changes to the insurance programs currently in effect with respect to the Business;




     (iv) not hire, fire, reassign, promote or demote any Business Employee (so long
as such Business Employee is reasonably performing his or her job function and is
complying with Seller’s employment policies), except in the ordinary course of
business and consistent with past practices, nor increase the compensation or
benefits of any Business Employee, except in the ordinary course of the Business and
at an overall percentage that is not greater than increases granted to the employees
of the Retained Businesses;




     (v) Seller will promptly notify Buyer if (A) any Tier I Employee gives notice
to Seller or any of its Affiliates of such employee’s resignation from Seller or any
of its Affiliates, (B) Seller intends to terminate the employment of any Tier I
Employee or (C) Seller grants across-the-board pay increases to the Business
Employees, which, if so granted, shall be at an overall percentage that is not
greater than increases granted to the employees of the Retained Businesses;




     (vi) the Acquired Entity shall not:




     (A) declare or pay any dividends or make any distributions in respect
of, or issue any of, its equity interests or securities convertible into its
equity interests, or repurchase, redeem, or otherwise acquire any such
equity interests or securities or make or propose to make any other change
in its capitalization; provided, however, that on or before the Closing
Date, Seller shall have the right to cause the Acquired Entity to dividend
to Seller or its Affiliates any or all of the cash held by the Acquired
Entity;




     (B) merge into or with or consolidate with any other corporation or
acquire all or substantially all of the business or assets of any
corporation or other Person, except as contemplated by Section 2.1(b); or




     (C) make any change in its Charter Documents;




     (vii) other than pursuant to the requirements of existing contracts or
commitments or contracts and commitments entered into in accordance with (ii) above,
(A) Seller shall not sell, lease, or otherwise dispose of any Acquired Assets and
(B) the Acquired Entity shall not sell, lease, or otherwise dispose of any of its
assets, except, in each case, for (a) assets sold, leased, or otherwise disposed of
in the ordinary course of business, (b) the sale or disposition of any item of
personal property or equipment (other than Intellectual Property) having a value of
less



29









 







than $100,000 individually or $250,000 in the aggregate, (c) the sale,
disposition or transfer of any Excluded Assets and (d) the transfer or other
disposition of the accounts receivable or advances due or owing to the Acquired
Entity from any Affiliate of Seller as of the Effective Time;




     (viii) neither Seller nor any of its Affiliates shall take any action or enter
into any commitment with respect to or in contemplation of any liquidation,
dissolution, recapitalization, reorganization, or other winding up of its business
or operations;




     (ix) neither Seller nor any of its Affiliates shall change any material
accounting policies or practices (including, without limitation, any change in
depreciation or amortization policies) of the Business, except as required under
GAAP;




     (x) neither Seller nor any of its Affiliates shall create any benefit plans
(within the meaning of Section 3(3) of ERISA) or any other Benefit Plan relating to
any Business Employee, except as required by Law and except for pay increases made
in the ordinary course of business and consistent with past practice;




     (xi) except as will not result in any increase in liability to Buyer or that
does not relate to the Acquired Entity or the Business, neither Seller nor any of
its Affiliates shall make or change any material election in respect of Taxes, file
any Tax Return (other than a Tax Return that is due and cannot be extended) or any
amendment to a Tax Return, enter into any closing agreement, settle any claim or
assessment in respect of Taxes, consent to any extension or waiver of the limitation
period applicable to any claim or assessment in respect of Taxes or file for any
ruling request;




     (xii) use reasonable efforts to preserve intact its current business
organization as related to the Business;




     (xiii) use reasonable efforts to maintain Seller’s present relationships with
customers, service providers, landlords, suppliers, creditors, agents and others
having business relationships related to the Business;




     (xiv) notify Buyer promptly, and in any event prior to Closing, of (i) any
written notice of a material violation or written threatened notice of a material
violation received from any Governmental Authority after the date of this Agreement
relating to the Business or (ii) any other matter that could reasonably be expected
to have a Material Adverse Effect.




     (xv) not cancel, compromise, waive or release any material claim or right as
against any third party which Buyer would otherwise have as owner of the Acquired
Entity or any of the Acquired Assets for or in respect of any period after the
Closing Date; provided, however, that, without limiting the foregoing, Seller shall
not amend in any material respect the MTLA prior to the Closing Date and



30









 







shall not waive any of Seller’s material rights under the MTLA with respect to
breaches occurring after the date hereof;




     (xvi) comply in all material respects with all Laws and contractual obligations
applicable to the operation of the Business;




     (xvii) cooperate with Buyer and assist Buyer in identifying the Governmental
Permits required by Buyer to operate the Business from and after the Closing Date
and either transferring existing Governmental Permits to Buyer, where permissible,
or working with Buyer to obtain new Governmental Permits for Buyer; and




     (xviii) maintain all books and Records relating to the Business in the ordinary
course of business.




     (b) Liens. Seller and its Affiliates shall not, and will cause the Acquired Entity
not to, grant any Lien on any Acquired Assets or assets of the Acquired Entity, except to
the extent (i) required or permitted incident to the operation of the Acquired Assets or
assets of the Acquired Entity and the Business, (ii) required by Law or any Significant
Contract, in each case to the extent such Liens are not material to the Business as a
whole.




     (c) Operation of Assets. Seller shall cause the Acquired Assets and assets of the
Acquired Entity to be maintained and operated in the ordinary course of business in
accordance with past practices, maintain insurance now in force with respect to such
assets, and pay or cause to be paid all costs and expenses in connection with such
insurance when due.



     7.2 Qualifications on Conduct. Seller and the Acquired Entity may take (or not take, as
the case may be) any of the actions described in Section 7.1 above if reasonably necessary under
emergency circumstances (or if required or prohibited pursuant to Law) and provided Buyer is
notified as soon thereafter as practicable. In addition, notwithstanding anything contained in
Section 7.1, no such limitations shall restrict Seller or any of its Affiliates or otherwise affect
in any way (i) the conduct and operations of the Retained Businesses or any other business or
operation not directly related to the Business; (ii) the ability of Seller and its Affiliates to
settle, dispose of or defend the Known Litigation or any Excluded Liability; or (iii) the
operation, utilization, sale or disposition of any Excluded Asset, so long as, in each case, it
has no adverse impact on the Acquired Assets, the Acquired Entity, the Business or Seller’s ability
to consummate the transactions contemplated hereby.



     7.3 Public Announcements. Prior to the Closing Date, without the prior written approval of
the other parties hereto (which approval shall not be unreasonably withheld), no party hereto will
issue, or permit any agent or Affiliate of it to issue, any press releases or otherwise make, or
cause any agent or Affiliate of it to make, any public statements with respect to this Agreement
and the transactions contemplated hereby, except where such release or statement is deemed in good
faith by the releasing party to be required by Law or under the rules and regulations of the New
York Stock Exchange or other applicable securities exchange or



31









 







market or the French and European Workers’ Councils. In each case to which such exception applies,
the releasing party will use its reasonable efforts to provide a copy of such release or statement
to the other party prior to releasing or making the statement. After the Closing Date, the parties
will confer with each other regarding their initial public announcement of the transactions
contemplated by this Agreement.



     7.4 Actions by Parties. Each party agrees to use commercially reasonable efforts to
satisfy the conditions to Closing described in Article 8 and to refrain from taking any action
within its control which would cause a breach of a representation or warranty described in Article
4. Neither Seller, nor any Affiliate of Seller, shall be required to expend any funds or incur any
costs to prevent or cure a breach of the representations and warranties described in Section 4.1.



     7.5 Notice of Developments; Schedules.




     (a) Seller will give prompt written notice to Buyer of any development occurring after
the date of this Agreement and prior to Closing that reasonably could be expected to result
in a Material Adverse Effect or would cause Seller not to be able to deliver the officer’s
certificate contemplated by Section 8.2(b).




     (b) Buyer and Seller agree that no disclosure by either party in any Schedule attached
hereto shall be deemed to indicate that such disclosure is material or required to be
disclosed on such Schedule.



     7.6 Further Assurances. Seller and Buyer each agree that from time to time after the
Closing Date, it will execute and deliver or cause its respective Affiliates (including the
Acquired Entity, the Affiliated Sellers and the Affiliated Buyers, as applicable) to execute and
deliver such further instruments, and take (or cause its respective Affiliates, including the
Acquired Entity, to take) such other action, as may be reasonably necessary to carry out the
purposes and intents of this Agreement.



     7.7 Records. On and after the date hereof and until the Closing Date or the date of
termination of this Agreement, Seller shall make the Records (including employment records relating
to the Transferred Employees) of the Business reasonably available to Buyer. On the Closing Date
or as soon as practicable thereafter, Seller shall deliver the Records to a location designated in
writing by Buyer. Buyer agrees to maintain, and cause the Acquired Entity and its Affiliates to
maintain, the Records until the seventh anniversary of the Closing Date (or for such longer period
of time as Seller shall advise Buyer is necessary to have Records available with respect to open
years for Tax audit purposes), or if any of the Records pertain to any claim or dispute pending on
the seventh anniversary of the Closing Date, Buyer shall maintain any of the Records designated by
Seller until such claim or dispute is finally resolved and the time for all appeals has been
exhausted. Buyer shall provide or cause the Acquired Entity and its Affiliates to provide Seller
and its representatives reasonable access to and the right to copy the Records for the purposes of:



32









 






     (i) preparing and delivering any accounting provided for under this Agreement
and adjusting, prorating, and settling the charges and credits provided for in this
Agreement;




     (ii) complying with any Law affecting Seller’s interest in the Acquired Assets
or the Acquired Entity’s interest in its assets prior to the Closing Date;




     (iii) preparing any audit relating to Seller’s interest in the equity interests
of the Acquired Entity, Seller’s interest in each Acquired Assets or the Acquired
Entity’s interest in its assets prior to the Closing Date, or responding to any
audit prepared by a third party;




     (iv) preparing Tax Returns;




     (v) responding to or disputing any Tax audit; or




     (vi) asserting, defending, or otherwise dealing with any claim or dispute under
this Agreement or with respect to the Business, the Acquired Assets or the assets of
the Acquired Entity.


In no event shall Buyer, the Acquired Entity or any of their Affiliates destroy any Records without
giving Seller at least 10 days’ advance written notice thereof and the opportunity, at Seller’s
expense, for Seller to obtain such Records prior to their destruction. In addition, from and after
the Closing Date, upon the written request of Buyer, Seller shall provide Buyer reasonable access
to any Records retained by Seller.




     7.8 Obligations of the Acquired Entity. From and after Closing, Buyer agrees to cause the
Acquired Entity to perform and comply with each of the actions and obligations required or
stipulated in this Agreement to be performed or complied with by the Acquired Entity and not to
take any action which would prevent such performance and compliance by the Acquired Entity.



     7.9 Use of Names; Removal. Buyer acknowledges that following the Closing, it will not nor
will the Acquired Entity be entitled to use the names “Grant Prideco” or “Grant” or any variations
and derivations thereof, including any logo, trademark, or design containing such name (the
“Prohibited Names and Marks”). Accordingly, Buyer shall use all reasonable efforts to, within 90
days after the Closing, cause the destruction, disposal, or replacement of stationery, business
cards, and similar assets of the Acquired Entity or any Acquired Assets so to avoid the use of the
Prohibited Names and Marks.



     In addition, as soon as reasonably practicable, but not later than six months following the
Closing, Buyer shall cause to be removed the Prohibited Names and Marks from all of the Acquired
Assets and assets of the Acquired Entity (including signage at all real property locations), and
will not thereafter make any use whatsoever of the Prohibited Names and Marks. Buyer shall
indemnify Seller for any failure by Buyer to cause the removal of such names or marks after the
Closing or any other violation of this Section 7.9.



33









 





     For purposes of marketing, advertising and customer relations, for a period of six months
following the Closing, Buyer shall have the right to refer to this acquisition of Seller’s
trademarks or other Intellectual Property in a manner not likely to cause confusion in the
marketplace, such as by reference to the effect that Buyer is the successor to certain trademarks
and tradenames of Seller, registered or unregistered.



     7.10 Governmental Filings. Seller and Buyer shall fully cooperate and coordinate with one
another and assist each other:




     (a) in determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals, or waivers are
required to be obtained from any Governmental Authority in connection with the consummation
of the transactions contemplated by this Agreement; and




     (b) in taking such actions or making any such filings, furnishing information required
in connection therewith and seeking timely to obtain any such actions, consents, approvals,
or waivers.


Seller and Buyer agree to file as soon as practicable, but in any event within ten Business Days
after the date of this Agreement, the Notification and Report Form and any information and
documents required to be filed under the HSR Act and to request early termination in connection
with such filings. Buyer agrees to make its best efforts to obtain approval of the proposed
transaction from any U.S. or state government authority pursuant to the HSR Act, or under any
similar foreign competition statutes or regulations, provided however that nothing herein shall
require Buyer to take or agree to take any actions that would result in a Material Adverse Effect
(as defined in Appendix A to this Agreement) on the Business or a material adverse effect on Buyer.




     7.11 Computer Hardware and Software.




     (a) Identification and Transfer. Schedule 7.11 sets forth a preliminary list of
computer hardware, third party software, and Inhouse Software that will be transferred to
Buyer. Buyer and Seller will cooperate with each other to:




     (i) identify at least 14 days prior to the anticipated Closing Date those
computer software systems currently being used by the Business that will be needed
by Buyer to continue the existing operations of the Business following the Closing;
and




     (ii) use their reasonable efforts to obtain all necessary third party consents,
additional licenses, and other documentation necessary for Buyer to obtain the right
to use the third party software identified on Schedule 7.11, through either a
transfer, assignment, or license by Seller or other Affiliates where legally
permissible in the judgment of Seller, or a direct purchase by Buyer.


If and to the extent that Seller or its Affiliates do not or are unable to transfer, assign, or
license any particular third party software to Buyer, Buyer shall purchase its own license and make
such modifications or enhancements as may be necessary to carry on the Business as currently





34











 




conducted. At or as soon as is commercially reasonable following the Closing, Seller shall or
shall cause its Subsidiaries to undertake to transfer, assign, or license (as appropriate) all
computer software systems necessary to operate the Business, if such transfer, assignment, or
license is, in the judgment of Seller, legally possible and commercially reasonable. Buyer
acknowledges that it may not be possible for Seller to transfer, assign, or license all such
software systems. In addition to the payment of the Purchase Price, Buyer shall promptly reimburse
Seller, upon receipt of a statement from Seller, for the amount of any fees, royalties, or charges
of third parties incurred by Seller or its Affiliates to take the action specified in clause (ii)
above to the extent approved by Buyer in advance.





     (b) Inhouse Software. “Inhouse Software” is software developed solely by employees of
Seller and owned in right, title and interest by Seller. For Inhouse Software, Buyer shall
obtain a perpetual, non-exclusive, paid-up license in and to the source code and
documentation (if any) to the programs and applications developed internally by Seller and
described in Section 2 of Schedule 7.11 (the “Inhouse Software”). Buyer shall be free to
disassemble, decompile, reverse engineer, or otherwise manipulate, develop, change,
enhance, expand, commercialize, sell, license, or abandon any of the Inhouse Software and
shall be under no obligation to account therefor to Seller. Inhouse Software is provided
“as is” without any warranty or representation whatsoever. Seller and its Affiliates
disclaim any and all warranties with respect to the Inhouse Software, including any implied
warranties of merchantability or fitness for a particular purpose, and shall not be liable
for any direct, indirect, consequential, third party, or any other damages relating to the
use, misuse, or reliance upon the Inhouse Software. Seller shall have no obligation
whatsoever with respect to Inhouse Software including any obligation to support, update,
upgrade, or maintain it. Seller shall retain all rights in and to the Inhouse Software
that are not explicitly granted to Buyer in this paragraph, including the right to
independently develop, change, enhance, expand, commercialize, sell, license or abandon the
Inhouse Software, and shall be under no obligation to account therefor or to provide copies
thereof to Buyer.




     (c) Regarding any software developed under contract by third parties for use by
Seller, Seller warrants that it has all right, title and interest to such software, and
that it will assign all such right, title and interest to such software to Buyer.



     7.12 Seller Obligations. Seller and its Affiliates have contingent liability under certain
agreements, instruments, obligations and guaranties in the respective amounts under the agreements
or instruments described in Schedule 7.12, as well as letters of credit, bonds, guarantees and
similar instruments entered into after signing of this Agreement and prior to Closing
(collectively, the “Seller Obligations”). On or before the Closing Date, Buyer shall provide or
cause to be provided substitute guaranties, letters of credit, bonds, or other assurances to the
beneficiaries of the Seller Obligations and will cause the Seller Obligations (and all liability of
the Seller or Seller’s Affiliates, as the case may be, in connection therewith) to be fully and
unconditionally released on the Closing Date, by documents in form and substance reasonably
satisfactory to Seller.



35









 





     7.13 Cooperation.




     (a) Governmental Permits. Buyer and Seller shall cooperate in using their
commercially reasonable efforts to obtain any Governmental Permits required for Buyer to
operate the Business in any jurisdictions (i) where Seller or one of its Affiliates is
currently operating the Business through an entity that is not the Acquired Entity or (ii)
where a change of control of the Acquired Entity would require consent or a transfer of a
Governmental Permit to Buyer or an Affiliated Buyer.




     (b) Consents to Transfer. The Seller shall use all reasonable efforts to obtain any
consents to assignment of any Lease or Governmental Permit or Significant Contract (or a
sublease or sublicense reasonably satisfactory to Buyer that transfers to Buyer
substantially the same economic rights without an adverse effect on the Business). Except
with respect to any Significant Lease, Governmental Permit or Significant Contract, to the
extent that (i) any of the Acquired Assets (and any contracts, leases, property (real or
personal) or other assets of the Business to be assigned to Buyer) are not assignable by
the terms thereof, (ii) the assignment of any Acquired Assets (and any contracts, leases,
property (real or personal) or other assets of the Business to be assigned to a Buyer)
would constitute a violation of any law, judgment, decree, order, writ, injunction, rule or
regulation of any Governmental Authority or (iii) any Acquired Asset (and any contract,
lease, property (real or personal) or other asset of the Business to be assigned to Buyer)
is not assigned by Seller or its Affiliates at the Closing without a breach by such Person
of its obligations hereunder, such Acquired Assets (and any contracts, leases, property
(real or personal) or other assets of the Business to be assigned to the Buyer) shall be
held by Seller or an Affiliate of the Seller in accordance with a Nominee Agreement in form
and substance reasonably satisfactory to Buyer and Seller (the “Nominee Agreement”), or
shall otherwise be held under another arrangement that transfers to Buyer substantially the
same economic benefits as would be associated with an assignment of such Acquired Assets
(or any contracts, leases, property (real or personal) or other assets of the Business to
be assigned to a Buyer. Buyer shall cooperate with Seller and use its commercially
reasonable efforts to obtain such consents described herein or with Seller in creating an
arrangement or agreement that transfers the economic benefits of any Acquired Asset that is
not assigned.



     7.14 Noncompetition. Seller agrees that, for a period of three years following the
Closing, it will not and will cause its Affiliates not to, engage in any Prohibited Activity (it
being understood that any Person that becomes an Affiliate of Seller by virtue of a change of
control of Seller shall not be considered an Affiliate of Seller for purposes of this Section
7.14). A “Prohibited Activity” shall mean the engagement, directly or indirectly, in the
manufacture or sale of premium threaded connections for use on oil country tubular goods with
diameters of 16 inches or less, heat treatment and field services for oil country tubular goods
with diameters of 16 inches or less, accessory threading services relating to the same and testing
of such accessories relating to premium connections; provided, however, notwithstanding anything in
this Agreement to the contrary, nothing herein shall apply or prevent Seller or its Affiliates in
any way from competing in the businesses, and engaging in the activities, described on Schedule
7.14 (the “Permitted Activities”).



36









 





     7.15 License Back of Intellectual Property.




     (a) Effective as of the Closing Date, Buyer hereby grants, and agrees to cause Buyer’s
Affiliates to grant, to Seller and its Affiliates, a worldwide, perpetual, royalty free
exclusive license (with right to sublicense) in the Grant Fields of Use, to make, have
made, sell, distribute, or utilize in any way the Buyer Licensed Intellectual Property
under the Intellectual Property included in the Acquired Assets (including any Intellectual
Property underlying licenses) in the Retained Businesses and Permitted Activities. Buyer
shall, and shall cause its Affiliates to, execute any documents reasonably requested by
Seller in this regard. Nothing in this Section 7.15 shall be interpreted as granting any
license to Seller and its Affiliates of any intellectual property owned by the Buyer, in
any field, before the Closing Date or developed after the Closing Date.




     (b) Effective as of the Closing Date, Seller hereby grants, and agrees to cause
Seller’s Affiliates to grant, to Buyer and its Affiliates, a worldwide, perpetual, royalty
free exclusive license (with right to sublicense) in the VAM Fields of Use, to make, have
made, sell, distribute, or utilize in any way the Seller Licensed Intellectual Property.
Seller shall, and shall cause its Affiliates to, execute any documents reasonably requested
by Buyer in this regard. Nothing in this Section 7.15 shall be interpreted as granting any
license to Buyer and its Affiliates of any intellectual property that relates to any of the
existing drill pipe or large-bore connections of the Retained Businesses, including without
limitation XT, HT, Turbo-Torque, GPDS, Viper, XLC, XLF, or XLW.




     (c) For purposes of the licenses granted pursuant to this Section 7.15, the following
definitions and principles shall apply:




     (1) “Buyer Licensed Intellectual Property” means that Intellectual Property
identified as such on Schedule 7.15 and any Buyer Non-Published Intellectual
Property.




     (2) “Seller Licensed Intellectual Property” means that Intellectual Property
identified as such on Schedule 7.15 and any Seller Non-Published Intellectual
Property.




     (3) “VAM Fields of Use” means the (i) manufacture or sale of threaded
connections for use on tubular goods with diameters of less than 20 inches (but
excluding drill pipe, drill collars, heavy weight drill pipe and related drill stem
products or other products utilizing a welded-on tool joint), (ii) heat treatment
and field services for tubular goods with diameters of less than 20 inches (but
excluding drill pipe, drill collars, heavy weight drill pipe and related drill
string products or other products utilizing a welded-on tool joint), (iii) casing
for drilling with a casing technique, (iv) tubing for drilling with a tubing
technique, (v) accessory threading products and services relating to (i) through
(iv) and testing of such accessories relating thereto (but excluding drill pipe,
drill collars, heavy weight drill pipe and related drill string products or other
products utilizing a



37









 







welded-on tool joint); but in all respects excluding any connections for any
size tubulars that are attached by welding.




     (4) “Grant Fields of Use” means the (i) manufacture or sale of drill pipe and
drill stem products (including drill collars, heavy weight drill pipe and related
drill string products or other products utilizing a welded-on tool joint) and
threaded connections related thereto, (ii) the manufacture or sale of threaded
connections for tubular goods with diameters of 20 inches or greater (18 5/8 inches
or greater with respect to welded-on connections) for use on tubular goods with
diameters of 20 inches or greater (18 5/8 inches or greater with respect to
welded-on connections), and field services relating to the same.




     (5) “Seller Non-Published Intellectual Property” means intellectual property of
the Seller not transferred to Buyer on the Closing Date that (i) exists on the
Closing Date, (ii) is not publicly available as of the date hereof (for example,
unpublished patent applications or invention disclosures (and any patents that are
issued as a result thereof) or patents or patent applications that have not been,
but are under obligation by law or contract to be transferred into the name of
Seller or its Affiliates prior to Closing Date), (iii) is not required to be
transferred to Buyer on the Closing Date pursuant to the terms of this Agreement and
(iv) reasonably could have some application in the VAM Field of Use. In the event
of any disagreement between Buyer and Seller regarding whether any such Intellectual
Property should be considered Seller Non-Published IP, the parties shall follow the
dispute resolution procedures set forth in this Agreement.




     (6) “Buyer Non-Published Intellectual Property” means Intellectual Property of
the Buyer that is not transferred to Seller at the Closing Date pursuant to this
Agreement that (i) is not listed on Annex A to this Agreement, and (ii) reasonably
could have some application in the Grant Fields of Use, but not including Buyer’s
intellectual property existing prior to the Closing Date or developed after the
Closing Date. In the event of any disagreement between Buyer and Seller regarding
whether any such Intellectual Property should be considered Buyer Non-Published IP,
the parties shall follow the dispute resolution procedures set forth in this
Agreement.




     (d) On the Closing Date, Buyer and Seller further agree to enter into the letter
agreement in substantially the form set forth in Exhibit 7.15(d) (the “MTLA Letter
Agreement”).



     7.16 Certain Insurance Matters. Seller agrees, at Buyer’s request, to provide access to
Seller’s occurrence-based insurance coverage and workers’ compensation coverage for pre-closing
occurrences and to fully cooperate with Buyer with respect to any such pre-Closing claims,
including making claims under such coverage and to provide Buyer with any insurance proceeds
received with respect to such claims.



38









 





     7.17 Intercompany Accounts. At or prior to Closing, Seller shall cause all
intercompany account balances between the Business and Seller and its Affiliates to be
extinguished.



     7.18 Non-Solicitation of Transferred Employees. Seller agrees, on behalf of itself
and its Affiliates, that without the prior written consent of Buyer, it will not (i) solicit for
employment any Tier II or Tier III Transferred Employees (as such terms are used in the severance
policy attached as Schedule 6.2(c)) for a period of one year from the Closing Date or (ii) hire any
Tier I Transferred Employees for a period of two years from the Closing Date; provided that these
restrictions shall not apply to general advertisements or similar solicitations that are not
targeted to the Transferred Employees or to Transferred Employees who are no longer employed by
Buyer or its Affiliates.



     7.19 Fulfillment of Certain Contractual Commitments. In the ordinary course of business,
the Business provides threading services to XL Systems, a Retained Business. Schedule 4.1(jj)
(Arms-Length Transactions) summarizes outstanding contractual commitments of XL Systems pursuant to
which the Business will sell threads to XL Systems. Buyer agrees to cause the Business to complete
any such orders that are outstanding as of the Closing Date, as well as any such contracts that are
entered into in the ordinary course of business consistent with past practice between the date of
this Agreement and Closing. The prices for such threading services performed by the Business after
Closing shall be at fair market value prices, consistent with prices that the Business sells
premium threading services to other third parties. Except as specifically provided herein, Buyer
shall be under no obligation to enter into any agreements to provide threading services to Seller
after the Closing.



Article 8

Closing Conditions




     8.1 Seller’s Closing Conditions. The obligation of Seller to proceed with the Closing
contemplated hereby is subject, at the option of Seller, to the satisfaction on or prior to the
Closing Date of all of the following conditions:




     (a) Representations, Warranties and Covenants. The representations and warranties of
Buyer contained in Section 4.2 of this Agreement shall be true and correct in all material
respects on and as of the Closing Date (except for representations and warranties qualified
by materiality, which shall be true and correct in all respects on and as of the Closing
Date), and the covenants and agreements and other obligations of Buyer to be performed or
complied with on or before the Closing Date shall have been duly performed in all material
respects in accordance with this Agreement (except for covenants and agreements qualified
by materiality, which shall have been duly performed in all respects in accordance with
this Agreement).




     (b) Officer’s Certificate. Seller shall have received a certificate dated as of the
Closing Date, executed by a duly authorized officer of Buyer, to the effect that the
conditions described in Section 8.1(a) have been satisfied.



39









 






     (c) Closing Documents. On or prior to the Closing Date, Buyer shall have delivered,
or be standing ready to deliver at Closing, all agreements, instruments and other documents
required to be delivered by Buyer pursuant to Section 9.3, including applicable tax
documents and certificates.




     (d) No Action. On the Closing Date, (i) no Action shall be pending seeking to enjoin
or restrain the consummation of the Closing and (ii) no order of any court or
administrative agency shall be in effect that enjoins, restrains, conditions, makes illegal
or otherwise prohibits consummation of the Closing or the transactions contemplated hereby.




     (e) Waiting Period. The waiting period under the HSR Act shall have expired or been
terminated.




     (f) Seller’s Obligations. The actions required by Buyer under Section 7.12 with
respect to the Seller Obligations shall have occurred.




     (g) MTLA Letter Agreement. Seller and Buyer shall have entered into the MTLA Letter
Agreement.



     8.2 Buyer’s Closing Conditions. The obligation of Buyer to proceed with the Closing
contemplated hereby is subject, at the option of Buyer, to the satisfaction on or prior to the
Closing Date of all of the following conditions:




     (a) Representations, Warranties and Covenants. The representations and warranties of
Seller in Section 4.1 of this Agreement shall be true and correct in all material respects
on and as of the Closing Date (except for representations and warranties qualified by
materiality, which shall be true and correct in all respects on and as of the Closing
Date), and the covenants and agreements and other obligations of Seller to be performed or
complied with on or before the Closing Date shall have been duly performed in all material
respects in accordance with this Agreement (except for covenants and agreements qualified
by materiality, which shall have been duly performed in all respects in accordance with
this Agreement), except, in each case, for such inaccuracies of representations or
warranties or failures to perform covenants as would not have a Material Adverse Effect.




     (b) Officer’s Certificate. Buyer shall have received a certificate dated as of the
Closing Date, executed by a duly authorized officer of Seller, to the effect that to the
conditions described in Section 8.2(a) have been satisfied.




     (c) Closing Documents. On or prior to the Closing Date, Seller shall have delivered,
or be standing ready to deliver at the Closing, all agreements, instruments and documents
required to be delivered by Seller pursuant to Section 9.2, including applicable tax
documents and certificates.




     (d) No Action. On the Closing Date, (i) no Action shall be pending seeking to enjoin
or restrain the consummation of the Closing and (ii) no order of any court or
administrative agency shall be in effect that enjoins, restrains, conditions, makes illegal



40









 







or otherwise prohibits consummation of the Closing or the transactions contemplated
hereby.




     (e) Waiting Period. The waiting period under the HSR Act shall have expired or been
terminated.




     (f) Liens. Buyer shall have received evidence reasonably satisfactory to it that all
Liens listed on Schedule 4.1(o) with respect to personal property and Schedule 4.1(p) with
respect to real property shall have been discharged (unless Buyer provides written notice
to Seller that Buyer desires to assume the financial obligations related thereto).




     (g) Guarantees. All documents reasonably necessary to release the Acquired Entity
from (i) any guaranty of Seller’s outstanding high-yield notes shall have been executed and
delivered in accordance with the appropriate indenture and (ii) any guaranty or liability
(including as a party to) under any existing credit facility of Seller and its Affiliates
shall have been executed and delivered.




     (h) Required Consents. Seller shall have received and delivered to Buyer all Required
Consents (or a sublease or sublicense reasonably satisfactory to Buyer that transfers to
Buyer substantially the same economic benefits without an adverse effect on the Business),
in form and substance reasonably satisfactory to Buyer, each of which shall be in full
force and effect.




     (i) MTLA Letter Agreement. Seller and Buyer shall have entered into the MTLA Letter
Agreement.



Article 9

Closing




     9.1 Closing. The Closing shall be held on the Closing Date at 9:00 a.m., Houston time, at
the offices of Fulbright & Jaworski LLP, Houston, Texas, or at such other time or place as Seller
and Buyer may otherwise agree in writing.



     9.2 Seller’s Closing Obligations. At Closing, Seller shall execute and deliver, or cause
to be executed and delivered, to Buyer the following:




     (a) the stock certificates or comparable documentation representing the equity
interests in the Acquired Entity being transferred to Buyer, endorsed by Seller in blank or
accompanied by duly executed assignment documents;




     (b) the officer’s certificate referred to in Section 8.2(b);




     (c) resignations or terminations of the officers and directors of the Acquired Entity
from their status as officers or directors effective as of the Closing that are requested
by Buyer at least four days prior to the Closing Date;



41









 






     (d) the Transition Services Agreement substantially in the form of Exhibit 9.2(d);




     (e) the Transition Services Heat Treat Supply Agreement substantially in the form of
Exhibit 9.2(e), unless the Closing occurs after March 31, 2008 or April 30 or May 30, 2008
(if Seller makes the election to extend the period thereof as provided for in Exhibit
9.2(e));




     (f) the Nominee Agreement, if applicable;




     (g) the MTLA Letter Agreement; and




     (h) bills of sale, deeds, Intellectual Property assignments by Seller to Buyer or
other transfer agreements or conveyance documents in proper form for the Acquired Assets in
each country or other jurisdiction of sale.



     9.3 Buyer’s Closing Obligations. At Closing, Buyer shall deliver, or cause to be
delivered, the Estimated Adjusted Purchase Price to Seller in immediately available funds to the
bank account as provided in Section 3.3, and Buyer shall execute and deliver, or cause to be
executed and delivered, to Seller the following:




     (a) the officer’s certificate of Buyer referred to in Section 8.1(b);




     (b) releases of the Seller Obligations as required by Section 7.12, together with
written evidence satisfactory to Seller that substitute guaranties have been provided as
required by Section 7.12;




     (c) the Transition Services Agreement substantially in the form of Exhibit 9.2(d);




     (d) the Transition Services Heat Treat Supply Agreement substantially in the form of
Exhibit 9.2(e), unless the Closing occurs after March 31, 2008 or April 30 or May 30, 2008
(if Seller makes the election to extend the period thereof as provided for in Exhibit
9.2(e));




     (e) the Nominee Agreement, if applicable;




     (f) the MTLA Letter Agreement; and




     (g) bills of sale, deeds, Intellectual Property assignments by Seller to Buyer or
other transfer agreements or conveyance documents in proper form for the Acquired Assets in
each country or other jurisdiction of sale.



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Article 10

Indemnification




     10.1 Indemnification By Seller.




     (a) Subject to the provisions of this Article 10, from and after the Closing Date,
Seller shall indemnify and hold harmless Buyer, the Affiliated Buyers and each of their
directors, officers, employees, successors, and assigns (collectively, the “Buyer
Indemnified Parties”) from and against any and all Losses (other than to the extent accrued
for on the Closing Balance Sheet) actually incurred, directly or indirectly, by any of the
Buyer Indemnified Parties (i) for any breach of Seller’s representations or warranties
made, as of the Closing Date, in this Agreement, (ii) for any breach of the covenants or
obligations of Seller and its Affiliates (other than any post-Closing covenants or
obligations of the Acquired Entity) under this Agreement, (iii) for any breach of the MTLA
caused by Seller or its Affiliates or by the consummation of the transactions contemplated
by this Agreement (except for such breaches that are the result of Buyer not timely
performing its obligations under the MTLA Letter Agreement) (collectively, “MTLA
Breaches”), (iv) in connection with any Known Litigation and (v) in connection with any
Excluded Liabilities.




     (b) Regarding the Watts et al v. XL Systems, L.P. and Grant Prideco patent
infringement litigation, CA 1:06-cv-00653-LY (“Watts Litigation”), Seller agrees to
indemnify and hold harmless Buyer and its Affiliates from any claims of damages (including
damages for willful infringement) or attorneys’ fees arising out of Buyer’s continued use
of TC II or other Seller’s products found to infringe, or features of such products found
to infringe in the Watts Litigation, after Closing. Additionally, should any injunction be
issued against continued manufacture, use or sale of TC II or other products found to
infringe in the Watts Litigation, Seller agrees to indemnify and hold harmless Buyer for
loss or impairment of its right to manufacture, use or sell TC II, including but not
limited to actual and consequential damages (including damages for willful infringement) to
Buyer, and attorneys’ fees. Buyer agrees to reasonably cooperate with Seller, at Seller’s
expense, in the defense of the Watts Litigation and the other Known Litigation, by making
the Transferred Employees and Records available to Seller to assist Seller in the defense
of such actions.



     10.2 Indemnification By Buyer. Subject to the provisions of this Article 10, from and
after the Closing Date, Buyer shall indemnify and hold harmless the Seller, its Affiliates (other
than the Acquired Entity), each of their past, present and future directors, officers, employees,
successors, and assigns, the Acquired Entity’s past and present (and, from the date hereof through
the Closing, future) directors, officers, employees, successors and assigns), and each of the
directors, officers, heirs, executors, successors and assigns of any of the foregoing
(collectively, the “Seller Indemnified Parties”) from and against any and all Losses actually
incurred, directly or indirectly, by any of the Seller Indemnified Parties (i) for any breach of
Buyer’s representations or warranties made, as of the Closing Date, in this Agreement, (ii) for any
breach of the covenants or obligations of Buyer and its Affiliates under this Agreement and (iii)
in connection with any Assumed Liabilities or operation of the Business following the Closing.



43









 





     10.3 Third Party Claims. Except as set forth in Section 10.2, if a claim by a third party
is made against a Seller Indemnified Party or a Buyer Indemnified Party (an “Indemnified Party”)
after Closing, and if such party intends to seek indemnity with respect thereto under Section 5.1,
7.11, 10.1 or 10.2, such Indemnified Party shall promptly furnish written notice to the
indemnifying party (the “Indemnitor”) of such claims. Such notice shall specify in reasonable
detail, the facts and circumstances surrounding such claim and the basis under this Agreement for
indemnification (it being understood that the 30 day period pursuant to which an indemnifying party
may elect to assume defense is not triggered until and unless sufficient facts and circumstances
and details are alleged or provided, to the extent known by the Indemnified Party, to form a basis
for indemnification), but failure to give such notice shall not relieve the Indemnitor of any
liability hereunder unless and only to the extent the Indemnitor has suffered prejudice by such
failure. The Indemnitor, at its sole option, shall be entitled to participate in the defense and
to the extent that it wishes, shall have 30 days after receipt of such notice to so notify the
Indemnified Party and to undertake, conduct and control (at its sole expense and through counsel of
its own choosing that is reasonably acceptable to the Indemnified Party) the settlement or defense
thereof, and the Indemnified Party, if so requested, shall reasonably cooperate with it in
connection therewith; provided that the Indemnitor shall permit the Indemnified Party to
participate in, be continuously informed and monitor (but not control or conduct) such settlement
or defense through counsel chosen by such Indemnified Party (however, the fees and expenses of such
counsel shall be borne by such Indemnified Party). After notice from the Indemnitor to the
Indemnified Party of its election to assume the defense of such claim or action, the Indemnitor
shall not be liable to the Indemnified Party under this Article 10 for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense thereof other than
reasonable out-of-pocket costs of investigation and shall be entitled to settle any such claim
provided the Indemnitor pays all monetary costs of such settlement and such settlement (i) does not
in any material way restrict the ability of Buyer and its Affiliates to operate the Business in
substantially the same manner as conducted by Seller and its Affiliates, (ii) does not commit the
Indemnified Party to take, or forbear to take, any action or admit to any wrongdoing of any kind
and (iii) provides for a full and complete release by the third party of the Indemnified Party. In
addition, the Indemnitor shall not consent to the entry of any judgment that does not relate solely
to monetary damages without the prior written consent of the Indemnified Party, which consent may
not be unreasonably withheld. So long as the Indemnitor, at Indemnitor’s cost and expense, (i) has
undertaken the defense of such claim, (ii) is diligently contesting such claim in good faith, by
appropriate proceedings, and (iii) has taken such action as may be necessary to prevent any action
to foreclose a lien against or attachment of the property of the Indemnified Party for payment of
such claim, the Indemnified Party shall not pay or settle any such claim. Notwithstanding
compliance by the Indemnitor with the preceding sentence, the Indemnified Party shall have the
right to pay or settle any such claim after advance notice to the Indemnitor, provided that in such
event it shall waive any right to indemnity therefor by the Indemnitor for such claim and
unconditionally releases the Indemnitor from all liability arising out of such claim. If within 30
days after the receipt of the Indemnified Party’s notice of a claim of indemnity hereunder, the
Indemnitor does not notify the Indemnified Party in writing that it elects (at Indemnitor’s cost
and expense) to undertake the defense thereof, or gives such notice and thereafter fails to contest
diligently such claim in good faith or to prevent action to foreclose a lien against or attachment
of the Indemnified Party’s property as contemplated above, the Indemnitor shall be deemed a waiver
of its right to control and



44









 







participate in such matter and the Indemnified Party shall have the right to contest, settle and/or
compromise the claim without thereby waiving any right to indemnity therefor pursuant to this
Agreement. Notwithstanding anything contained in this Agreement to the contrary, the Indemnitor
shall not be liable for the fees and expenses of more than one separate firm (in addition to any
local counsel required in any other jurisdiction) for all the Indemnified Parties.



     10.4 Limitation of Seller’s Liability.




     (a) Individual Threshold. Seller and its Affiliates shall have no liability to Buyer
or any other Buyer Indemnified Party pursuant to Section 10.1 with respect to a particular
breach or nonfulfillment of a representation, warranty, covenant, or agreement on the part
of Seller or Affiliated Seller under this Agreement if the Losses resulting from such
breach or nonfulfillment do not exceed a per item threshold of $25,000. For the avoidance
of doubt, the individual threshold shall not apply to Losses associated with Known
Litigation, Excluded Liabilities, MTLA Breaches or the Watts Litigation. Additionally,
this Section 10.4(a) shall not apply to Section 4.1(m)(iv), any Losses under Section 10.11
(taxes) or breaches of representations or warranties that constitute fraud.




     (b) Aggregate Threshold. Seller shall have no liability to Buyer or any other Buyer
Indemnified Party with respect to Losses described in Section 10.1, unless and until the
aggregate of such Losses (each exceeding the per item threshold described in Section
10.4(a) above) exceeds an aggregate threshold equal to $16,000,000, and then from the first
dollar of such Losses. For the avoidance of doubt, the aggregate threshold shall not apply
to Losses associated with Known Litigation, Excluded Liabilities, MTLA Breaches or the
Watts Litigation. Additionally, this Section 10.4(b) shall not apply to Section
4.1(m)(iv), any Losses under Section 10.11 (taxes) or breaches of representations or
warranties that constitute fraud.




     (c) Aggregate Limit on Liability. Seller shall have no liability to Buyer or any
other Buyer Indemnified Party with respect to Losses described in Section 10.1, or to pay
any other amount in connection with or with respect to the Business, this Agreement or any
of the transactions contemplated by this Agreement, in any amount exceeding, in the
aggregate, 30 percent of the Adjusted Purchase Price. For the avoidance of doubt, the
aggregate limit on liability shall not apply to Losses associated with Known Litigation,
Excluded Liabilities, MTLA Breaches or the Watts Litigation. Additionally, this Section
10.4(c) shall not apply to Section 4.1(m)(iv), any Losses under Section 10.11 (taxes) or
breaches of representations or warranties that constitute fraud.



     10.5 Mitigation. Buyer shall have a duty to mitigate any Loss as to which an indemnity
applies under this Article 10.



     10.6 Survival and Time Limitation. The representations, warranties, covenants, and
agreements made herein shall survive the Closing, but (a) the representations and warranties of the
parties in Article 4 of this Agreement (other than Sections 4.1(c), 4.1(e), 4.1(f), 4.1(g), 4.1(h),
4.1(j), 4.1(k), 4.1(m)(iv), 4.1(n), 4.1(w), 4.2(a), 4.2(b), 4.2(c), 4.2(i) and 4.2(j)) shall
terminate



45









 







on the 18-month anniversary of the Closing Date, (b) the representations and warranties described
in Section 4.1(n) (environmental), Section 4.1(w) (employee benefit plans) and Section 4.1(y)
(labor agreements) shall terminate on the date that is three years after the Closing Date, (c) the
representations, warranties, covenants and agreements described in Sections 4.1(k) (tax) and 6.1
(tax) shall terminate on the date that is 60 days after the expiration of all applicable statutes
of limitations (including extensions) with respect to the matters covered thereby and (d) the
representations and warranties described in Sections 4.1(c) (organization), 4.1(e) (authority),
4.1(f) (enforceability), 4.1(g) (Sellers’ Ownership), 4.1(h) (capitalization), 4.1(j) (bankruptcy),
4.1(m)(iv), 4.2(a) (organization), 4.2(b) (authority), 4.2(c) (enforceability), 4.2(i) (no
distribution) and 4.2(j) (bankruptcy), shall survive indefinitely. After Closing, any assertion by
a party that another party is liable for indemnification under the terms of this Agreement or
otherwise in connection with the Business or the transactions contemplated in this Agreement must
be made in writing and must be given to the other party on or prior to the 18-month anniversary of
the Closing Date (or not at all), except for (i) any assertions for breach of any representation or
warranty described in Section 4.1(n), Section 4.1(w) or Section 4.1(y), which must be given on or
prior to the date that is three years after the Closing Date (or not at all), (ii) any assertions
for breach of any representation, warranty, covenant or agreement described in Sections 4.1(k) or
6.1, which must be given to the other party on or prior to the date that is 60 days after the
expiration of all applicable statutes of limitations with respect to the matters covered thereby
(or not at all) and (iii) any assertions for breach of any representation or warranty described in
Sections 4.1(c), 4.1(e), 4.1(f), 4.1(g), 4.1(h), 4.1(j), 4.1(m)(iv), 4.2(a), 4.2(b), 4.2(c), 4.2(i)
and 4.2(j), which shall survive indefinitely.



     10.7 Sole and Exclusive Remedy. From and after the Closing Date, the indemnification
provisions of Section 5.1, Section 7.9 and this Article 10 shall be the sole and exclusive remedy
of each party (including the Seller Indemnified Parties and the Buyer Indemnified Parties) (i) for
any breach of the other party’s representations, warranties, covenants, or agreements contained in
this Agreement or (ii) otherwise with respect to the Business, this Agreement, or any of the
transactions contemplated by this Agreement.



     10.8 Releases, Disclaimers, and Limitations on Liability. ALL RELEASES, DISCLAIMERS,
LIMITATIONS ON LIABILITY, AND INDEMNITIES IN SECTIONS 10.1, 10.2 AND IN SECTION 5.1 SHALL APPLY
EVEN IN THE EVENT OF THE SOLE, JOINT, AND/OR CONCURRENT NEGLIGENCE, STRICT LIABILITY, OR OTHER
FAULT OF SELLER, THE SELLER INDEMNIFIED PARTIES, BUYER OR THE BUYER INDEMNIFIED PARTIES.



     10.9 Disclaimer of Warranties. NOTWITHSTANDING ANYTHING CONTAINED TO THE CONTRARY IN ANY
OTHER PROVISION OF THIS AGREEMENT, IT IS THE EXPLICIT INTENT OF EACH PARTY HERETO THAT SELLER OR
ITS AFFILIATES ARE NOT MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS, IMPLIED,
STATUTORY OR OTHERWISE, BEYOND THOSE REPRESENTATIONS OR WARRANTIES GIVEN IN THIS AGREEMENT, AND IT
IS UNDERSTOOD THAT OTHER THAN SUCH EXPRESS REPRESENTATIONS AND WARRANTIES, BUYER TAKES THE ACQUIRED
ENTITY, AND ALL EQUITY INTERESTS IN THE ACQUIRED ENTITY AND THE ACQUIRED ASSETS AND ASSETS OF THE
ACQUIRED ENTITY “AS IS” AND “WHERE IS” AND IS NOT RELYING UPON ANY REPRESENTATION OR WARRANTY



46









 







OR UNDERSTANDING EXCEPT THOSE EXPRESSLY CONTAINED HEREIN. WITHOUT LIMITING THE GENERALITY OF THE
IMMEDIATELY PRECEDING SENTENCE AND EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, (I) SELLER
HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT COMMON LAW, BY
STATUTE OR OTHERWISE, RELATING TO (A) THE CONDITION OR SUFFICIENCY OF THE ACQUIRED ASSETS OR ASSETS
OF THE ACQUIRED ENTITY (INCLUDING ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, OR OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, OR THE PRESENCE OR
ABSENCE OF ANY HAZARDOUS MATERIALS IN OR ON, OR DISPOSED OR DISCHARGED FROM, THE ACQUIRED ASSETS OR
ASSETS OF THE ACQUIRED ENTITY), (B) ANY INFRINGEMENT BY SELLER, THE ACQUIRED ENTITY OR ANY OF THEIR
AFFILIATES OF ANY INTELLECTUAL PROPERTY RIGHT OF ANY THIRD PARTY OR (C) THE ACCURACY OR
COMPLETENESS OF THE INFORMATION, RECORDS, AND DATA NOW, HERETOFORE, OR HEREAFTER MADE AVAILABLE TO
BUYER IN CONNECTION WITH THIS AGREEMENT (INCLUDING ANY DESCRIPTION OF THE BUSINESS, ACQUIRED
ASSETS, ACQUIRED ENTITY, ANY FINANCIAL OR PRICING ASSUMPTIONS, SALES FORECASTS, OR FINANCIAL OR
ENVIRONMENTAL INFORMATION, OR ANY OTHER MATERIAL FURNISHED TO BUYER BY SELLER OR ANY AFFILIATE OF
SELLER OR ANY DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, AGENT, OR ADVISOR THEREOF), (II) BUYER HEREBY
WAIVES ANY RIGHTS UNDER STATUTES TO CLAIM DIMINUTION OF CONSIDERATION AND ANY CLAIMS BY BUYER FOR
DAMAGES BECAUSE OF REDHIBITORY VICES OR DEFECTS, WHETHER KNOWN OR UNKNOWN AND (III) SELLER AND
BUYER AGREE THAT THE ACQUIRED ASSETS AND ASSETS OF THE ACQUIRED ENTITY ARE TO BE ACCEPTED BY BUYER
IN THEIR PRESENT CONDITION AND STATE OF REPAIR.



     10.10 Waiver of Certain Damages. In no event shall either party be liable to the other for
any indirect, consequential, special, exemplary, or punitive damages (including any damages on
account of lost profits or opportunities or lost or delayed production) suffered or incurred by
such other party hereunder, except (i) to the extent that such other party is found liable for such
damages to a third party and (ii) for indemnification by Seller under Section 10.1(b) hereof.



     10.11 Tax Indemnity. Notwithstanding any of the above, Seller shall indemnify and
hold harmless the Buyer Indemnified Parties from and against all Losses attributable to all Taxes
(or the non-payment thereof) of the Acquired Entity and Acquired Assets for all taxable periods
that are the responsibility of the Seller under Section 6.1 (a)(i), (b)(i) and (b)(ii) (including
all Taxes of any member of an affiliated, consolidated, combined or unitary group of which the
Acquired Entity is or was a member on or prior to the Closing Date, including pursuant to Treasury
Regulation § 1.1502-6 or any analogous or similar state, local, or foreign law or regulation); and
Buyer shall indemnify and hold harmless the Seller Indemnified Parties from and against all Losses
attributable to all Taxes (or the non-payment thereof) of the Acquired Entity and Acquired Assets
for all taxable periods that are the responsibility of the Buyer under Section 6.1 (a)(ii), (b)(ii)
and (b)(iii).



47









 





Article 11

Termination; Remedies; Limitations




     11.1 Termination. This Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing:



     (a) by the mutual consent of Seller and Buyer; or



     (b) (i) if the Closing has not occurred before the close of business 365 days after the date
of this Agreement, then by Seller if any condition specified in Section 8.1 has not been satisfied
on or before such close of business, and shall not theretofore have been waived by Seller, or (ii)
if the Closing has not occurred before the close of business 365 days after the date of this
Agreement, then by Buyer if any condition specified in Section 8.2 has not been satisfied on or
before such close of business, and shall not theretofore have been waived by Buyer; provided, in
each case, that the failure to consummate the transactions contemplated hereby on or before such
date did not result from the failure by the party or parties seeking termination of this Agreement
to fulfill any undertaking or commitment provided for herein on the part of such party or parties
that is required to be fulfilled on or prior to Closing.



     11.2 Effect of Termination. In the event of termination of this Agreement by Seller or
Buyer pursuant to Section 11.1, written notice thereof shall forthwith be given by the terminating
party or parties to the other party or parties hereto, and this Agreement shall thereupon terminate
(except for the provisions of Section 12.4 and 12.10, which shall survive such termination);
provided, however, that following such termination Buyer will continue to be bound by its
obligations described in Sections 5.1 and 5.2. If this Agreement is terminated as provided herein,
all filings, applications and other submissions made to any Governmental Authority shall, to the
extent practicable, be withdrawn from the Governmental Authority to which they were made.
Notwithstanding anything to the contrary contained herein, termination of this Agreement for any
reason shall not release any party from any liability for any breach by such party of the terms and
provisions of this Agreement prior to such termination.



Article 12

Other Provisions




     12.1 Counterparts. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other party.



     12.2 Governing Law; Jurisdiction; Process.




     (a) Governing Law. This Agreement and the rights and obligations of the parties
hereunder and the transactions contemplated hereby shall be governed by, enforced, and
interpreted in accordance with the laws of the State of New York applicable to contracts
entered into and to be performed entirely within the State of New York, without regard to
conflict of law principles thereof.




     (b) Arbitration. In the event any dispute (“Dispute”) arises regarding or pertaining
to the validity, intention or interpretation, execution or compliance of this



48









 







Agreement, the parties to this Agreement will, in good faith, use their reasonable
best efforts to settle such Dispute. If, within the 60 calendar days following the date in
which one of the parties gives notice to the other of the existence of a Dispute, such
Dispute has not been finally resolved in writing to the mutual satisfaction of the parties
to this Agreement, each of the parties hereto hereby irrevocably and unconditionally agrees
to submit such Dispute, for itself and its property, to be fully and finally resolved by
arbitration. Such arbitration shall be conducted in New York, New York, in English,
pursuant to the Arbitration Rules of the International Chamber of Commerce then in effect
(the “ICC Rules”) by a panel of three arbitrators, one designated by Seller, one designated
by Buyer, and the third, who shall act as chairman, designated by the other two arbitrators
so appointed and who shall have no relation to Buyer or Seller. In the event that the first
two arbitrators fail to appoint the third arbitrator within 30 days after their selection,
such third arbitrator shall be appointed pursuant to the ICC Rules. The arbitration panel
shall, in respect of any Dispute submitted thereto, grant an award, strictly grounded in
law, not later than the end of the ninth calendar month after the month in which such
Dispute is submitted to arbitration. The award of the arbitration panel will be final and
binding on the parties to this Agreement and such award may be entered in any court having
jurisdiction for its enforcement, and the parties to this Agreement hereby expressly submit
to the jurisdiction of said court. The fees and expenses of the arbitration panel shall be
borne equally by the parties to this Agreement; provided, however, each such party shall be
solely responsible for all fees and expenses of counsel retained by such party in
connection with any such arbitration.



     12.3 Entire Agreement. This Agreement (including the Confidentiality Agreement) and the
Appendices, Schedules, Annexes and Exhibits hereto contain the entire agreement between the parties
with respect to the subject matter hereof and there are no agreements, understandings,
representations or warranties between the parties other than those described or expressly referred
to herein.



     12.4 Expenses. Buyer shall be responsible for all recording, filing or registration fees
for any assignment or conveyance delivered to Buyer under or pursuant to this Agreement. All other
costs and expenses incurred by each party hereto in connection with all things required to be done
by it hereunder, including attorneys’ fees, accountant fees and the expense of environmental and
title examination, shall be borne by the party incurring same.



     12.5 Notices. All notices hereunder shall be sufficiently given for all purposes hereunder
if in writing and delivered personally, sent by documented overnight delivery service or, to the
extent receipt is confirmed, by United States Mail, telecopy, or other electronic transmission
service to the appropriate address or number as described below. Notices to Seller shall be
addressed as follows:


Grant Prideco, Inc.

400 North Sam Houston Pkwy East, Suite 900

Houston, Texas 77050

Attention: General Counsel

Telecopy No.: (281) 878-5732




49









 







with copies to:



Fulbright & Jaworski L.L.P.

Fulbright Tower

1301 McKinney, Suite 5100

Houston, Texas 77010

Attention: Charles L. Strauss

Telecopy No.: (713) 651-5246



or at such other address and to the attention of such other Person as Seller may designate by
written notice to Buyer.



Notices to Buyer shall be addressed to:



Vallourec S.A. and

Vallourec & Mannesmann Holdings, Inc.

1990 Post Oak Blvd., Suite 1400

Houston, Texas 77056-3813

Attention: Didier Hornet

Telecopy No.: (713) 479-3234



with copies to:



The Vallourec Group

27, avenue du General Leclerc

92660 Boulogne Billancourt Cedex

France

Attention: Philippe Dupeyré, Group General Counsel

Telecopy No.: 011-331-49 09 3785



and



Akin Gump Strauss Hauer & Feld LLP

1700 Pacific Avenue, Suite 4100

Dallas, Texas 75201



Attn: Richard C. Levin and Jennifer De la Rosa

Telecopy No.: (214) 969-4343



or at such other address and to the attention of such other Person as Buyer may designate by
written notice to Seller.




     12.6 Successors and Assigns. Any of the rights and obligations of the parties hereto shall
be assignable or delegable, in whole or in part, by either party hereto to one or more Affiliates
of such party upon written notice to the other party and without the express written consent of
such other party; provided, however, that any such assignment or delegation shall not cause the
assigning party to be released from its obligations hereunder. Subject to the preceding



50









 







sentence, this Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.



     12.7 Amendments and Waivers. This Agreement may not be modified or amended except by an
instrument or instruments in writing signed by the party against whom enforcement of any such
modification or amendment is sought. Any party hereto may, only by an instrument in writing, waive
compliance by another party hereto with any term or provision of this Agreement on the part of such
other party hereto to be performed or complied with. The waiver by any party hereto of a breach of
any term or provision of this Agreement shall not be construed as a waiver of any subsequent
breach.



     12.8 Appendices, Annexes, Schedules and Exhibits. All Appendices, Annexes, Schedules and
Exhibits hereto which are referred to herein are hereby made a part hereof and incorporated herein
by such reference.



     12.9 Interpretation and Rules of Construction. It is expressly agreed that this Agreement
shall not be construed against any party, and no consideration shall be given or presumption made,
on the basis of who drafted this Agreement or any particular provision hereof or who supplied the
form of Agreement. In construing this Agreement:




     (i) examples shall not be construed to limit, expressly or by implication, the
matter they illustrate;




     (ii) the word “includes” and its derivatives means “includes, but is not
limited to” and corresponding derivative expressions;




     (iii) a defined term has its defined meaning throughout this Agreement and each
Appendix, Annex, Exhibit and Schedule to this Agreement, regardless of whether it
appears before or after the place where it is defined;




     (iv) each Exhibit, Annex and Schedule to this Agreement is a part of this
Agreement, but if there is any conflict or inconsistency between the main body of
this Agreement (including Appendix A which shall be considered part of the main body
of this Agreement) and any Exhibit, Annex or Schedule, the provisions of the main
body of this Agreement shall prevail; and




     (v) the headings and titles herein are for convenience only and shall have no
significance in the interpretation hereof.



     12.10 Agreement for the Parties’ Benefit Only. Except as specified in Section 5.1 and
Article 10, which are also intended to benefit and to be enforceable by any of the indemnified
parties thereunder, this Agreement is not intended to confer upon any Person not a party hereto any
rights or remedies hereunder, and no Person, other than the parties hereto or the indemnified
parties, is entitled to rely on any representation, warranty, covenant or agreement contained
herein. In each case, such third party beneficiary may only bring suit against the defaulting
party or parties.



51









 





     12.11 Severability. If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of Law or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not affected in any adverse
manner to any party. Upon such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent
possible.



     12.12 Time of Essence. Time is of the essence in this Agreement. If the date specified in
this Agreement for giving any notice or taking any action is not a Business Day (or if the period
during which any notice is required to be given or any action taken expires on a date which is not
a Business Day), then the date for giving such notice or taking such action (and the expiration
date of such period during which notice is required to be given or action taken) shall be the next
day that is a Business Day.




52









 








     IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of the parties as
of the day first above written.



	 	 	 	 	 
	 	Seller:



GRANT PRIDECO, INC.

 	 
	 	By:  	/s/ Michael McShane
 	 
	 	 	Michael McSHANE 	 
	 	 	Chairman, President and
Chief Executive Officer 	 
	 



	 	 	 	 	 
	 	Buyer:



VALLOUREC S.A.

 	 
	 	By:  	/s/ Pierre Verluca
 	 
	 	 	Pierre VERLUCA 	 
	 	 	Chairman of the Management Board 	 
	 



	 	 	 	 	 
	 	VALLOUREC & MANNESMANN HOLDINGS, INC.

 	 
	 	By:  	/s/ Jean-Pierre Michel
 	 
	 	 	Jean-Pierre MICHEL 	 
	 	 	Director 	 



1









 






	 	 	 	 	 



APPENDIX A

TO

PURCHASE AND SALE AGREEMENT

Definitions





     “338(h)(10) Election” has the meaning given in Section 2.4(b).



     “Acquired Assets” has the meaning given in Section 2.1(a).



     “Acquired Entity” has the meaning given in the recitals.



     “Acquired Personal Property” means the assets described on Item 3 of Annex A.



     “Action” means any action, suit, claim, investigation, inquiry or proceeding by or before any
court or other Governmental Authority or any arbitration proceeding.



     “Adjusted Purchase Price” has the meaning given in Section 3.1(b).



     “Adjustment Amount” has the meaning given in Section 3.1(b).



     “Affiliate” means, as to the Person specified, any Person controlling, controlled by or under
common control with such specified Person. The concept of control, controlling or controlled as
used in the aforesaid context means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of another, whether through the ownership of
voting securities, by contract or otherwise. No Person shall be deemed an Affiliate of any Person
by reason of the exercise or existence of rights, interests, or remedies under this Agreement.
Notwithstanding anything contained in the Agreement or this Appendix A to the contrary, Voest
Alpine Tubulars shall not be considered an Affiliate of Seller.



     “Affiliated Buyer” has the meaning given in the recitals.



     “Affiliated Seller” has the meaning given in the recitals.



     “Agreed Rate” means an annual rate of interest equal to the lesser of (i) the prime rate per
annum as reported from time to time by The Wall Street Journal and (ii) the maximum rate of
interest allowed by Law.



     “Agreement” has the meaning given in the preamble.



     “Appraiser” has the meaning given in Section 3.5.



     “Arbitrator’s Closing Statement” has the meaning given in Section 3.4(b).



     “Assumed Liabilities” means any of Seller’s or its Subsidiaries’ liabilities, debts and
obligations pertaining to the Business, whether known or unknown, now existing or hereafter
arising, absolute or contingent, liquidated or unliquidated, whether or not required to be accrued
under GAAP, that are not expressly included in the definition of Excluded Liabilities. Without



Appendix A - Page 1









 




limiting the generality of the foregoing, the Assumed Liabilities shall include: (a) the
liabilities specifically accrued for in the Closing Balance Sheet, as determined pursuant to the
terms of this Agreement, (b) the liabilities and obligations of the Seller and its Subsidiaries and
the Business under the contracts and other agreements constituting part of the Acquired Assets or
to which the Acquired Entity is a party but only to the extent such liabilities and obligations
relate to the Business and (c) the liabilities and obligations of the Seller and its Subsidiaries
and the Business under warranty claims relating to goods manufactured or sold or services provided
by the Business prior to the Closing Date.




     “Automatically Transferred Employee” has the meaning given in Section 6.2(a).



     “Balance Sheet” has the meaning given in Section 4.1(b).



     “Balance Sheet Date” has the meaning given in Section 4.1(b).



     “Benefit Plans” means (a) any employee welfare benefit plan or employee pension benefit plan
as defined in sections 3(1) and 3(2) of ERISA, including, but not limited to, a plan that provides
retirement income or results in deferrals of income by employees for periods extending to their
terminations of employment or beyond, and a plan that provides medical, surgical or hospital care
benefits or benefits in the event of sickness, accident, disability, death or unemployment
(including any such coverage after retirement) and (b) any other material employee benefit
agreement or arrangement that is not an ERISA plan, including but not limited to, any deferred
compensation plan, stock option plan, stock purchase plan, stock award plan, bonus program, golden
parachute agreement, severance pay plan, dependent care assistance plan, cafeteria plan, employee
assistance program, scholarship program, vacation policy, sick leave policy, retiree health care
benefit program, disability program or other similar plan or agreement or arrangements that is
sponsored or maintained for the benefit of directors, Business Employees or former Business
Employees (or their dependents or beneficiaries).



     “Business” has the meaning given in the recitals.



     “Business Day” means any day which is not a Saturday, Sunday, or legal holiday recognized by
the United States of America.



     “Business Employees” means (i) all employees of the Acquired Entity and (ii) all employees of
Seller and its affiliates who work primarily in connection with the Business, including employees
who are not actively at work by reason of layoff, sick leave, vacation, disability or other
approved leave of absence, except for any persons who are receiving long term disability benefits.
“Business Employees” shall also mean such lab technicians as Buyer and Seller shall mutually agree
in accordance with Section 6.2(g).



     “Buyer” has the meaning given in the preamble.



     “Buyer Indemnified Parties” has the meaning given in Section 10.1(a).



     “Change in Control Agreements” has the meaning given in Section 6.2(d).



     “Charter Documents” has the meaning given in Section 4.1(c).



Appendix A - Page 2









 





     “Closing” means the consummation of the transaction contemplated by Article 9.



     “Closing Balance Sheet” has the meaning given in Section 3.1(b).



     “Closing Date” means the fifth Business Day immediately following the day on which the last to
be fulfilled or waived of the conditions set forth in Article 8 (other than the conditions that by
their terms are capable of being satisfied only on the Closing Date) shall have been fulfilled or
waived, or such other date as may be mutually agreed to by Seller and Buyer.



     “Closing Statement” has the meaning given in Section 3.2.



     “Closing Statement Arbitrator” has the meaning given in Section 3.4(b).



     “COBRA” has the meaning given in Section 4.1(w)(iii).



     “Code” means the Internal Revenue Code of 1986, as amended and revised from time to time, and
any substitute or successor provisions thereto, and the rules and regulations promulgated
thereunder.



     “Confidentiality Agreement” has the meaning given in Section 5.2.



     “Contract” includes any agreement to which Seller is a party, including but not limited to
license agreements involving Intellectual Property.



     “Customary Post-Closing Consents” means consents and approvals from Governmental Authorities
or third parties that are customarily obtained after closing in connection with transactions
similar in nature to the transactions contemplated hereby.



     “Dispute” has the meaning given in Section 12.2(b).



     “Effective Time” means 11:59 p.m., Houston time, on the Closing Date.



     “Environmental Laws” means all Laws, as existing as of the Closing Date, relating to (a) the
control of or liability for any pollutant, or protection of the air, water or land or other
environmental media, (b) waste generation, handling, treatment, storage, disposal or
transportation, (c) exposure to hazardous or toxic substances, and (d) Environmental Liabilities.
“Environmental Laws” shall include without limitation the Clean Air Act, 42 U.S.C. § 7401 et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Federal Water Pollution
Control Act, 33 U.S.C. § 1251 et seq., the Safe Drinking Water Act, 42 U.S.C. § 300f et seq., and
the Comprehensive Environmental Response, Compensation, and Liability Act, as amended by the
Superfund Amendments and Reauthorization Act, 42 U.S.C. § 9601 et seq. or comparable state, federal
or non-United States Law and regulations promulgated thereunder.



     “Environmental Liabilities” means any and all costs, damages, settlements, expenses,
penalties, fines, taxes, prejudgment and post-judgment interest, court costs and attorneys’ fees
(a) incurred or imposed (i) pursuant to any order, notice of responsibility, directive (including
requirements embodied in Environmental Laws), injunction, judgment or similar act (including
settlements) by any Governmental Authority to the extent arising out of or under Environmental



Appendix A - Page 3









 







Laws or (ii) pursuant to any claim or cause of action by a Governmental Authority or other
third Person for personal injury, property damage, damage to natural resources, remediation or
response costs to the extent arising out of or attributable to any violation of, or any remedial
obligation under, any Environmental Law, or (b) otherwise arising under or related to Environmental
Laws.



     “equity interests” means any capital stock, partnership interests, membership interests or
other units of equity ownership.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations promulgated and rulings issued thereunder.



     “Estimated Adjusted Purchase Price” has the meaning given in Section 3.2.



     “Excluded Assets” has the meaning given in Section 2.1(c).



     “Excluded Liabilities” means (a) any of Seller’s or its Subsidiaries’ liabilities, debts and
obligations, whether known or unknown, now existing or hereafter arising, absolute or contingent,
liquidated or unliquidated, whether or not required to be accrued under GAAP (collectively,
“Liabilities”), arising from the Excluded Assets or relating to the Retained Business, (b) Known
Litigation, (c) litigation attributable to a criminal activity of Seller or its Affiliates, (d)
liabilities listed on Schedule 2.2 or liabilities of Seller or its Affiliates arising under this
Agreement or the Seller Related Agreements, (e) liabilities for severance obligations to
Transferred Employees under the Change in Control Agreements or otherwise in excess of that set
forth in Schedule 6.2(c), (f) Liabilities relating to claims by Persons related to alleged exposure
to hazardous materials (including asbestos) prior to Closing, and (g) Liabilities arising from or
relating to sites or facilities formerly owned or operated by the Acquired Entity or in the
Business.



     “Final Closing Statement” has the meaning given in Section 3.4(b).



     “Final Purchase Price Allocation” has the meaning given in Section 3.5.



     “Final Settlement Date” has the meaning given in Section 3.4(a).



     “GAAP” means United States generally accepted accounting principles as in effect on the date
hereof.



     “Governmental Authority” means any United States or non-U.S. federal, state, provincial or
municipal entity, and any political subdivision or other governmental authority, department,
commission, court, board, bureau, agency or instrumentality, or other entity, U.S. domestic or
non-U.S., exercising executive, legislative, judicial, quasi-judicial, regulatory or administrative
functions of or pertaining to government.



     “Governmental Permits” has the meaning given in Section 4.1(l).



     “Health and Safety Requirements” means all orders, contracts, Laws, and programs (including
those promulgated or sponsored by industry associations, insurance companies, and



Appendix A - Page 4









 







risk management companies) concerning or relating to public health and safety and
worker/occupational health and safety, including those relating to the presence, use,
manufacturing, refining, production, generation, handling, transportation, treatment, recycling,
transfer, storage, disposal, distribution, importing, labeling, testing, processing, discharge,
release, threatened release, control, or other action or failure to act involving cleanup of any
hazardous materials, substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise, or radiation, each as amended and as now or hereafter in effect.



     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules and
regulations adopted pursuant thereto.



     “HSR Act Approval” means any approval of a Governmental Authority required under the HSR Act.



     “ICC Rules” has the meaning given in Section 12.2(b).



     “income tax” means federal, state, local, or foreign income or franchise taxes or other taxes
measured in whole or in part by income and any interest and penalties or additions thereon.



     “Indemnified Party” has the meaning given in Section 10.3.



     “Indemnitor” has the meaning given in Section 10.3.



     “Inhouse Software” has the meaning given in Section 7.11(b).



     “Intellectual Property” means patents, trademarks, trade names, service marks, logos, trade
secrets, copyrights and all applications and registrations therefor that are used primarily in the
Business.



     “Knowledge” or “knowledge” means the actual knowledge of any fact, circumstance, event or
condition after due inquiry of the relevant persons by (a) an officer, with respect to Buyer and
(b) the Business officers and general managers or an officer, with respect to Seller.



     “Known Litigation” has the meaning given in Section 4.1(t).



     “Law” means any applicable statute, law (including common law), ordinance, regulation, rule,
ruling, order, writ, injunction, decree or other official act of or by or requirement of any
Governmental Authority as interpreted and in existence on the date of this Agreement.



     “Lien” means any lien, security interest, charge, claim, mortgage, deed of trust, option,
warrant, purchase right, lease or other encumbrance.



     “Losses” means any and all claims, liabilities (including further liability claims), losses,
causes of action, fines, penalties, litigation, lawsuits, administrative proceedings,
administrative investigations, costs, and expenses, including reasonable attorneys’ fees, court
costs, and other costs of suit. Losses will not include any amounts accrued or reflected on the
Closing Balance Sheet.



Appendix A - Page 5









 





     “Material Adverse Effect” means a material adverse effect on (i) the business, operations,
properties, assets or financial condition of the Business, taken as a whole, excluding any effect
directly or indirectly resulting from (a) any change in economic, industry, or market conditions,
unless such change materially disproportionately impacts the Business, (b) any change in Law or
regulatory policy, (c) any change in accounting rules or requirements, (d) taking any action
required by this Agreement or (e) this Agreement or the consummation of the transactions
contemplated by this Agreement, or (ii) Seller’s ability to consummate the transactions
contemplated hereby.



     “Material Licenses” has the meaning given in Section 4.1(r)(iv).



     “Material Suppliers” means the five suppliers that accounted for the largest dollar volume of
purchases for the Business during the last fiscal year (but excluding US Steel Corporation).



     “MTLA” means that certain Master Technology License Agreement dated June 19, 1998, between
Seller and DST Distributors of Steel Tubes Limited, including any amendments thereto.



     “MTLA Breaches” has the meaning given in Section 10.1(a).



     “MTLA Letter Agreement” has the meaning given in Section 7.15(d).



     “Net Debt” means the aggregate amount for the Business of any financial debt defined as the
aggregate amount (to the extent not included in Working Capital on the Closing Balance Sheet and to
the extent it is a liability of the Buyer or Acquired Entity on the Closing Date) of:




     (a) all long term and short term indebtedness for borrowed monies (including
loans, facilities, overdrafts, unpaid interest and intercompany debt);




     (b) all penalties or costs to be paid in connection with the early repayment,
reimbursement or refinancing of any of the above mentioned items, if any;




     (c) that portion of obligations with respect to capital leases that is properly
classified as a liability on a balance sheet in accordance with GAAP applied on a
basis consistent with the Balance Sheet.



     “Nominee Agreement” has the meaning given in Section 7.13(b).



     “Notice of Disagreement” has the meaning given in Section 3.4(a).



     “Offered Employees” has the meaning given in Section 6.2(a).



     “Permitted Activities” has the meaning given in Section 7.14.



     “Person” means any Governmental Authority or any individual, firm, partnership, corporation,
limited liability company, joint venture, trust, unincorporated organization or other entity or
organization.



Appendix A - Page 6









 





     “Prohibited Names and Marks” has the meaning given in Section 7.9.



     “PTO” has the meaning given in Section 6.2(e).



     “Prohibited Activity” has the meaning given in Section 7.14.



     “Purchase Price” has the meaning given in Section 3.1(a).



     “Real Estate” has the meaning given in Annex A.



     “Records” means any and all of the books, records, contracts, agreements and files of Seller
and its Affiliates related to the Business, as applicable, and existing on the Closing Date
(including, but not limited to, personnel files of the Business Employees) and all increases and
additions thereto after the Closing Date, including computer records and electronic copies of such
information whether maintained by the Seller or the Buyer or their respective Affiliates.



     “Required Consents” means (a) all of the consents and approvals set forth on Schedule 8.2(h)
hereto and (b) any other consent that, if not obtained, or such consent requirement cannot be
satisfied in accordance with Section 7.13(b), could reasonably be expected to have a Material
Adverse Effect.



     “Retained Business” means all business and operations of Seller and its Affiliates other than
the Business, including, without limitation, Seller’s drill stem operations, drill bit operations,
XL Systems operations and Intelliserv operations.



     “Seller” has the meaning given in the preamble.



     “Seller Indemnified Parties” has the meaning given in Section 10.2.



     “Seller Obligations” has the meaning given in Section 7.12.



     “Seller Related Agreements” means the Transition Services Agreement, the Transition Services
Heat Treat Supply Agreement (if applicable) and the MTLA Letter Agreement.



     “Seller’s Consolidated Tax Returns” mean the federal consolidated income tax returns filed
pursuant to Section 1502 of the Code, which includes the Acquired Entity as a member of the
affiliated group of companies as defined in Section 1504 of the Code, and any similar combined,
consolidated or unitary state, or local or foreign tax returns.



     “Severance Plan” means the Severance Plan of Seller with substantially the terms summarized in
Schedule 6.2(c).



     “Significant Contracts” means the following contracts, agreements or understandings to which
Seller and its Affiliates (including the Acquired Entity) are party and relating primarily to the
ownership and operation of the Business:



Appendix A - Page 7









 






     (i) indentures, mortgages, loan agreements, security agreements, guarantees or
other agreements or commitments for the borrowing of money, or the deferred purchase
price of assets;




     (ii) all employment agreements, real property leases and material technology
license agreements;




     (iii) royalty, distributorship, agency or similar agreements requiring the
expenditure or series of related expenditures of funds in excess of $100,000 per
annum;




     (iv) agreements, contracts or commitments, or orders, writs, injunctions,
decrees, judgments or awards by any court, arbitration panel or Governmental
Authority, that restrict in any manner the business activity of the Acquired Entity
or owner of the Acquired Assets and Assumed Liabilities or restrict any of them from
competing with any other Person or entity or from conducting any line of business in
any geographic area;




     (v) all master service agreements, distributor contracts, field service
representative agreements and repair and maintenance agreements, which cannot be
terminated without penalty with notice of 90 days or less;




     (vi) all contracts and agreements providing for receipt or payment, contingent
or otherwise, of $100,000 or more annually and which may not be terminated without
payment or penalty with notice of 90 days or less;




     (vii) any contract requiring a capital expenditure or known commitment after
the Closing in excess of $100,000 in any calendar year;




     (viii) any contract or agreement to buy, sell, lease (as lessor or as lessee)
or otherwise convey or obtain an interest in real or personal property having a
value in excess of $100,000;




     (ix) any contract or agreement establishing any joint venture, strategic
alliance or other collaboration relating to the Business; and




     (x) any other contract that is material to the Business or the Acquired Entity.



     “Significant Leases” has the meaning given in Section 4.1(q).



     “Subsidiary” means any corporation, limited liability company, limited partnership or other
entity, at least a majority of the voting equity interests (i.e. equity interests entitled to vote
for the election of directors, but excluding equity interests entitled so to vote only upon the
happening of some contingency unless such contingency will have occurred) of which are owned
directly or indirectly by the Seller or the Acquired Entity.



Appendix A - Page 8









 





     “Tax” or “Taxes” means all federal, national, state, local, municipal, foreign, net income,
gross income, gross receipts, windfall profit, severance, property, production, sales, use,
license, excise, franchise, employment, payroll, withholding, alternative or add-on minimum, ad
valorem, value-added, transfer, stamp or environmental tax (including taxes under Internal Revenue
Code Section 59A), escheat payments or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or penalty, addition to tax
or additional amount imposed by any governmental authority.



     “Tax Returns” means all returns, declarations, reports, estimates, statements and other
documents required to be filed with respect to Taxes and the term “Tax Return” means any one of the
foregoing Tax Returns.



     “Tenaris” means DST Distributors of Steel Tubes Limited, Siderca, S.A., Tubos de Acero Mexico,
Dalmine S.p.a. or any Affiliates thereof.



     “TCA” has the meaning given in the Recitals.



     “Terminated Employee” has the meaning given in Section 6.2(a).



     “Tier I Employee” has the meaning given in Schedule 4.1(w)(i).



     “Transfer Taxes” means all transfer Taxes, including without limitation sales, use, value
added, excise (including excise Taxes on petroleum, products of petroleum, petrochemicals and other
taxable substances), stock, stamp, documentary, filing, recording, permit, license, authorization
and similar Taxes, filing fees and similar charges.



     “Transferred Bank Accounts” has the meaning given in Annex A.



     “Transferred Employee” has the meaning given in Section 6.2(a).



     “Transition Services Agreement” means the Transition Services Agreement dated as of the
Closing Date between Seller and Buyer, or their designated Affiliates, substantially in the form of
Exhibit 9.2(d).



     “Tubular Business LP” has the meaning given in Section 2.3.



     “Watts Litigation” has the meaning given in Section 10.1(b).



     “WARN” has the meaning given in Section 4.1(y).



     “Working Capital” has the meaning given in Section 3.1(b).



     “XL Systems Business” means Seller’s XL Systems business but excluding any interest in any
Atlas Bradford product lines or Intellectual Property.




Appendix A - Page 9









 








Annex A

Acquired Assets and Assets Owned by Acquired Entity





	1.	 	Owned Real Property. All of Seller’s and its Affiliates’ right, title and interest
in the real property more specifically described as owned on Annex A-1 (collectively, the
“Real Estate”) and all buildings, improvements, other constructions, construction-in-progress
and fixtures now or hereafter located on the Real Estate, together with as they relate to the
Real Estate, all right, title and interest of Seller and its Affiliates in all options,
easements, servitudes, rights-of-way and other rights associated therewith.
	 
	2.	 	Leased Real Property. All of Seller’s and its Affiliates’ right, title and interest
to the leases of real property more specifically described as leased on Annex A-1.
	 
	3.	 	Personal Property. All tangible personal property of every kind and nature owned by
Seller or Affiliates of Seller as of the date of this Agreement that is used in the Business,
including all furniture, fixtures, machinery, equipment, vehicles, laboratory equipment and
assets (other than the R&D excluded assets set forth on Attachment 1 to Schedule 2.1(c)) and
personal computers, as such may be reduced through sale or consumption thereof or increased
through additions thereto through the Closing Date (collectively, the “Acquired Personal
Property”).
	 
	4.	 	Inventory. All inventory that is used in connection with the operation of the
Business and owned by Seller or its Affiliates as of the date of this Agreement, as such
inventory may be reduced through consumption thereof, or increased through addition thereto
through the Closing Date.
	 
	5.	 	Receivables. All accounts, notes, receivables and other rights to receive money
owned by Seller or Affiliates of Seller on the date of this Agreement arising out of or
relating to the operations of the Business, as such may be reduced by payments received or
increased through replacement thereof or additional thereto.
	 
	6.	 	Intellectual Property. All Intellectual Property owned by Seller and Affiliates of
Seller and used in the Business, including the patents, patent applications, trademarks,
tradenames and copyrights (registered or unregistered) listed on Annex A-2 as being owned by
Seller or an Affiliate of Seller and all contracts to which Seller or an Affiliate of Seller
is party pursuant to which Intellectual Property used primarily in the Business is licensed to
Seller or an Affiliate of Seller, including the licenses listed on Annex A-2. Also included
in this Intellectual Property that is part of the Acquired Assets, to the extent that it may
not be listed on Annex A-2, are all patent applications filed or patents obtained by or on
behalf of Seller or Affiliates of Seller relating primarily to the Business, including those
which, by law or by contract are to be assigned to Seller and Affiliates of Seller; all trade
secrets, including disclosures by employees or others not listed on Annex A-2 that by law or
by contract are owned or obligated to be owned by Seller or Affiliates of Seller. If any
Intellectual Property within the Acquired Assets also cover Seller’s Retained Business, Buyer
will license back to Seller the rights pursuant to Section 7.15 hereof. If Buyer needs, in
order to conduct the Business, any intellectual property of Seller that is not included in the
Intellectual Property of these Acquired




Annex A - Page 1









 






	 	 	Assets, but which Seller has rights to grant licenses, then Seller will grant a license to
Buyer under such intellectual property pursuant to Section 7.15 hereof.
	 
	7.	 	Contracts. The benefit and obligation to perform subsequent to the Closing Date of
all contracts and agreements and understandings to which the Seller or any of the Seller’s
Affiliates is a party (including leases) relating to the ownership, maintenance and operation
of the Business existing on the Closing Date, as listed on Annex A-3.
	 
	8.	 	Records, Insurance Proceeds and Permits. All the right, title and interest of the
Seller and its Affiliates in the following tangible and intangible assets used or held for use
primarily in connection with the ownership, maintenance and operation of the Business, to the
extent assignable by law and to the extent the Seller or its Affiliates have the right to
assign and transfer such assets:






     (i) all Records to be delivered to Buyer pursuant to Section 7.7;




     (ii) all insurance proceeds or rights to insurance proceeds relating to any
damage, destruction or other loss relating to the Business, other than proceeds
relating to the Known Litigation; and




     (iii) all certificates, licenses, permits, consents, operating authorities,
orders, exemptions, franchises, approvals, registration filings, accreditations and
other authorizations and applications therefore related to the operation of the
Business as presently being conducted.




     (iv) All deposits held by Seller or its Affiliates in connection with future
services to be rendered in connection with the Business.




     (v) All warranties, guarantees and covenants not to compete with respect to the
Business.




	9.	 	Cash and Bank Accounts. The cash and cash equivalents on deposit on the Closing Date
in the bank or savings and loan accounts listed on Annex A-4 (the “Transferred Bank
Accounts”).
	 
	10.	 	Other Property. All other or additional privileges, rights, interests, properties
and assets owned by the Seller and its Affiliates of every kind and description and wherever
located that are used or intended for use primarily in connection with, or that are necessary
to the continued conduct of, the operation of the Business as presently being conducted,
including (unless expressly excluded from sale herein or on a schedule attached hereto) all
such assets of Seller and its Subsidiaries as are included on the Balance Sheet (after giving
effect to changes resulting from the operation of the Business through the Closing Date).




Annex A - Page 2









 











Annex B

Guideline of the Content of the Working Capital Definition




     A guideline for the content of the Working Capital is set forth below:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A/C Group	 	Name	 	Premium	 	TCA	 	Tube Alloy US	 	Saint Johns	 	Total
	 	111000	 	 	AR TRADE
	 	 	9,493	 	 	 	13,665	 	 	 	9,577	 	 	 	 	 	 	 	32,736	 
	 	111001	 	 	US GAAP ACCOUNT
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	111010	 	 	AR TRADE CONTRA
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	111050	 	 	US GAAP AR ACCR
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	111099	 	 	COLLECTS IN TRA
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	117000	 	 	AR — OTHER
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 
	 	118000	 	 	AR AP OFFSET
	 	 	0	 	 	 	0	 	 	 	-38	 	 	 	 	 	 	 	(38	)
	 	119000	 	 	ALLOW DOUBTFUL
	 	 	-6	 	 	 	0	 	 	 	-36	 	 	 	 	 	 	 	(43	)
	 	 	 	 	A/R Trade, Net / DSO
	 	 	9,487	 	 	 	13,665	 	 	 	9,503	 	 	 	292	 	 	 	32,947	 
	 	121000	 	 	INV RM INTRAN
	 	 	44	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	44	 
	 	121020	 	 	USGP INV RAW MA
	 	 	370	 	 	 	24,808	 	 	 	2,108	 	 	 	 	 	 	 	27,286	 
	 	121040	 	 	INV FINISH PART
	 	 	41	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	41	 
	 	121990	 	 	INV RAW MAT OTH
	 	 	0	 	 	 	4,867	 	 	 	42	 	 	 	 	 	 	 	4,910	 
	 	122010	 	 	WIP LEGACY
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	122020	 	 	WORK IN PROCESS
	 	 	163	 	 	 	5,920	 	 	 	1,132	 	 	 	 	 	 	 	7,215	 
	 	122040	 	 	WIP-Finished Pa
	 	 	0	 	 	 	1,688	 	 	 	0	 	 	 	 	 	 	 	1,688	 
	 	122990	 	 	WIP OTHER
	 	 	-144	 	 	 	0	 	 	 	-142	 	 	 	 	 	 	 	(286	)
	 	123000	 	 	INV FG INTRAN
	 	 	0	 	 	 	0	 	 	 	44	 	 	 	 	 	 	 	44	 
	 	123020	 	 	INV FINISH GOOD
	 	 	0	 	 	 	3,751	 	 	 	2,606	 	 	 	 	 	 	 	6,357	 
	 	123090	 	 	INV CUST MATERL
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	123990	 	 	USGP INV F G-OT
	 	 	0	 	 	 	5	 	 	 	142	 	 	 	 	 	 	 	147	 
	 	127000	 	 	USGP INV MODEL
	 	 	0	 	 	 	-1,296	 	 	 	215	 	 	 	 	 	 	 	(1,081	)
	 	127092	 	 	STAND CST REVAL
	 	 	0	 	 	 	-121	 	 	 	22	 	 	 	 	 	 	 	(99	)
	 	128000	 	 	INV RESERVE
	 	 	-255	 	 	 	-848	 	 	 	-134	 	 	 	 	 	 	 	(1,237	)
	 	129020	 	 	US GAAP MFG SUP
	 	 	305	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	305	 
	 	 	 	 	Inventory &
Supplies / DOI
	 	 	523	 	 	 	38,774	 	 	 	6,035	 	 	 	7	 	 	 	45,340	 
	 	130000	 	 	Def Chrgs
	 	 	0	 	 	 	0	 	 	 	207	 	 	 	 	 	 	 	207	 
	 	 	 	 	Deferred Charges
	 	 	—	 	 	 	—	 	 	 	207	 	 	 	—	 	 	 	207	 
	 	131000	 	 	PREPAID INSURAN
	 	 	212	 	 	 	321	 	 	 	108	 	 	 	 	 	 	 	641	 
	 	131001	 	 	AMORT PPD INS
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	132000	 	 	PREPAID RENT
	 	 	0	 	 	 	0	 	 	 	1	 	 	 	 	 	 	 	1	 
	 	133000	 	 	PREPAID SOFTWAR
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	136000	 	 	PPD ROYALTY CUR
	 	 	0	 	 	 	0	 	 	 	4	 	 	 	 	 	 	 	4	 
	 	137500	 	 	ASSETS FOR RESL
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	139000	 	 	PREPAID OTHER
	 	 	0	 	 	 	0	 	 	 	13	 	 	 	 	 	 	 	13	 
	 	139500	 	 	OTHER ASSETS
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	116000	 	 	EMPLOYEE RECEIV
	 	 	0	 	 	 	8	 	 	 	0	 	 	 	 	 	 	 	8	 
	 	 	 	 	Other Current Assets
	 	 	212	 	 	 	329	 	 	 	126	 	 	 	14	 	 	 	681	 
	 	201000	 	 	AP TRADE
	 	 	-2,039	 	 	 	-3,312	 	 	 	-2,196	 	 	 	 	 	 	 	(7,547	)
	 	201001	 	 	AP TRADE HFA
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	201003	 	 	AP SUSPENSE
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	201004	 	 	AP INV NOT REC
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 
	 	203000	 	 	AP ACCRUAL
	 	 	-48	 	 	 	-5,154	 	 	 	-128	 	 	 	 	 	 	 	(5,330	)
	 	204000	 	 	RNV HFA
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	204001	 	 	RECVD NVCH OOB
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	204100	 	 	RNV MOVEX
	 	 	-159	 	 	 	-256	 	 	 	-1,388	 	 	 	 	 	 	 	(1,804	)






Annex B - Page 1









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A/C Group	 	Name	 	Premium	 	TCA	 	Tube Alloy US	 	Saint Johns	 	Total
	 	205000	 	 	BANK OVERDRAFTS
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	205001	 	 	BANK OVRDRFT PR
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	209000	 	 	AP OTHER
	 	 	0	 	 	 	0	 	 	 	9	 	 	 	 	 	 	 	9	 
	 	 	 	 	A/P Trade / DPO
	 	 	(2,246	)	 	 	(8,722	)	 	 	(3,704	)	 	 	(30	)	 	 	(14,702	)
	 	221001	 	 	ACC SAL & WAGES
	 	 	-432	 	 	 	-288	 	 	 	-423	 	 	 	 	 	 	 	(1,143	)
	 	221003	 	 	ACCRUED BONUSES
	 	 	-325	 	 	 	-40	 	 	 	-50	 	 	 	 	 	 	 	(415	)
	 	222001	 	 	GROUP HEALTH AC
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	222005	 	 	GROUP HLTH CHGS
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	222101	 	 	WRK COMP ACCRL
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	222105	 	 	WRK COMP CHRGES
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	222201	 	 	MED FLEX W/H
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	222206	 	 	CHILD FLEX W/H
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	223202	 	 	ACC VACATION PA
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	223501	 	 	ACC COURT W/H
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	223701	 	 	Accrued ESPP
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	223751	 	 	ACC 401K CONTRI
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 
	 	223755	 	 	ACC 401K MATCH
	 	 	0	 	 	 	0	 	 	 	-10	 	 	 	 	 	 	 	(10	)
	 	223756	 	 	ACC 401K LN RPY
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	(0	)
	 	223800	 	 	Acc NonQual Def
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	223811	 	 	ACCRUED EDC
	 	 	-4	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	(5	)
	 	223871	 	 	ACC FICA TAX WH
	 	 	-23	 	 	 	-17	 	 	 	-25	 	 	 	 	 	 	 	(64	)
	 	223872	 	 	ACC MEDI TAX WH
	 	 	-6	 	 	 	-4	 	 	 	-6	 	 	 	 	 	 	 	(16	)
	 	223881	 	 	ACC FED INC TAX
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	223882	 	 	ACC ST W/H TAX
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	(0	)
	 	223890	 	 	EMPLOYEE W/H
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	223900	 	 	ACC UNEMPL TAX
	 	 	-4	 	 	 	-1	 	 	 	-4	 	 	 	 	 	 	 	(8	)
	 	224001	 	 	OTH BENEFIT PAY
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	231000	 	 	ACC PROPERTY TX
	 	 	-202	 	 	 	-110	 	 	 	-168	 	 	 	 	 	 	 	(480	)
	 	232000	 	 	SALES TAX PAYAB
	 	 	0	 	 	 	0	 	 	 	16	 	 	 	 	 	 	 	16	 
	 	232010	 	 	DIRECT PAY TAX
	 	 	0	 	 	 	0	 	 	 	-10	 	 	 	 	 	 	 	(10	)
	 	234000	 	 	ACC FRANCH TAX
	 	 	0	 	 	 	0	 	 	 	40	 	 	 	 	 	 	 	40	 
	 	251000	 	 	ACC WARRANTY
	 	 	-10	 	 	 	-65	 	 	 	-82	 	 	 	 	 	 	 	(157	)
	 	253000	 	 	ACCR ENVIRONMNT
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	254002	 	 	ACC ROYALTIES
	 	 	-15	 	 	 	0	 	 	 	-411	 	 	 	 	 	 	 	(426	)
	 	259000	 	 	ACC LIABIL OTH
	 	 	-2	 	 	 	-94	 	 	 	-46	 	 	 	 	 	 	 	(143	)
	 	 	 	 	Accrued Liabilities
	 	 	(1,022	)	 	 	(619	)	 	 	(1,180	)	 	 	(42	)	 	 	(2,864	)
	 	257100	 	 	DEFERRED REVENU
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	257200	 	 	Dfrd Rev. Rec
	 	 	0	 	 	 	0	 	 	 	-308	 	 	 	 	 	 	 	(308	)
	 	 	 	 	Deferred Revenue
	 	 	—	 	 	 	—	 	 	 	(308	)	 	 	—	 	 	 	(308	)
	Assets	 	 	10,222	 	 	 	52,768	 	 	 	15,871	 	 	 	313	 	 	 	79,174	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Liabilities	 	 	3,268	 	 	 	9,341	 	 	 	5,192	 	 	 	72	 	 	 	17,873	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	NET WORKING CAPITAL	 	 	6,954	 	 	 	43,427	 	 	 	10,679	 	 	 	241	 	 	 	61,301	 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A/C group	 	Name	 	Premium	 	TCA	 	Tube Alloy US	 	Saint Johns	 	Total
	 	111000	 	 	AR TRADE
	 	 	9,493	 	 	 	13,665	 	 	 	9,577	 	 	 	 	 	 	 	32,736	 
	 	111001	 	 	US GAAP ACCOUNT
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	111010	 	 	AR TRADE CONTRA
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	111050	 	 	US GAAP AR ACCR
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	111099	 	 	COLLECTS IN TRA
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	117000	 	 	AR — OTHER
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 






Annex B - Page 2









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A/C group	 	Name	 	Premium	 	TCA	 	Tube Alloy US	 	Saint Johns	 	Total
	 	118000	 	 	AR AP OFFSET
	 	 	0	 	 	 	0	 	 	 	-38	 	 	 	 	 	 	 	(38	)
	 	119000	 	 	ALLOW DOUBTFUL
	 	 	-6	 	 	 	0	 	 	 	-36	 	 	 	 	 	 	 	(43	)
	 	 	 	 	A/R Trade, Net / DSO
	 	 	9,487	 	 	 	13,665	 	 	 	9,503	 	 	 	292	 	 	 	32,947	 
	 	121000	 	 	INV RM INTRAN
	 	 	44	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	44	 
	 	121020	 	 	USGP INV RAW MA
	 	 	370	 	 	 	24,808	 	 	 	2,108	 	 	 	 	 	 	 	27,286	 
	 	121040	 	 	INV FINISH PART
	 	 	41	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	41	 
	 	121990	 	 	INV RAW MAT OTH
	 	 	0	 	 	 	4,867	 	 	 	42	 	 	 	 	 	 	 	4,910	 
	 	122010	 	 	WIP LEGACY
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	122020	 	 	WORK IN PROCESS
	 	 	163	 	 	 	5,920	 	 	 	1,132	 	 	 	 	 	 	 	7,215	 
	 	122040	 	 	WIP-Finished Pa
	 	 	0	 	 	 	1,688	 	 	 	0	 	 	 	 	 	 	 	1,688	 
	 	122990	 	 	WIP OTHER
	 	 	-144	 	 	 	0	 	 	 	-142	 	 	 	 	 	 	 	(286	)
	 	123000	 	 	INV FG INTRAN
	 	 	0	 	 	 	0	 	 	 	44	 	 	 	 	 	 	 	44	 
	 	123020	 	 	INV FINISH GOOD
	 	 	0	 	 	 	3,751	 	 	 	2,606	 	 	 	 	 	 	 	6,357	 
	 	123090	 	 	INV CUST MATERL
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	123990	 	 	USGP INV F G-OT
	 	 	0	 	 	 	5	 	 	 	142	 	 	 	 	 	 	 	147	 
	 	127000	 	 	USGP INV MODEL
	 	 	0	 	 	 	-1,296	 	 	 	215	 	 	 	 	 	 	 	(1,081	)
	 	127092	 	 	STAND CST REVAL
	 	 	0	 	 	 	-121	 	 	 	22	 	 	 	 	 	 	 	(99	)
	 	128000	 	 	INV RESERVE
	 	 	-255	 	 	 	-848	 	 	 	-134	 	 	 	 	 	 	 	(1,237	)
	 	129020	 	 	US GAAP MFG SUP
	 	 	305	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	305	 
	 	 	 	 	Inventory &
Supplies / DOI
	 	 	523	 	 	 	38,774	 	 	 	6,035	 	 	 	7	 	 	 	45,340	 
	 	130000	 	 	Def Chrgs
	 	 	0	 	 	 	0	 	 	 	207	 	 	 	 	 	 	 	207	 
	 	 	 	 	Deferred Charges
	 	 	—	 	 	 	—	 	 	 	207	 	 	 	—	 	 	 	207	 
	 	131000	 	 	PREPAID INSURAN
	 	 	212	 	 	 	321	 	 	 	108	 	 	 	 	 	 	 	641	 
	 	131001	 	 	AMORT PPD INS
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	132000	 	 	PREPAID RENT
	 	 	0	 	 	 	0	 	 	 	1	 	 	 	 	 	 	 	1	 
	 	133000	 	 	PREPAID SOFTWAR
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	136000	 	 	PPD ROYALTY CUR
	 	 	0	 	 	 	0	 	 	 	4	 	 	 	 	 	 	 	4	 
	 	137500	 	 	ASSETS FOR RESL
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	139000	 	 	PREPAID OTHER
	 	 	0	 	 	 	0	 	 	 	13	 	 	 	 	 	 	 	13	 
	 	139500	 	 	OTHER ASSETS
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	116000	 	 	EMPLOYEE RECEIV
	 	 	0	 	 	 	8	 	 	 	0	 	 	 	 	 	 	 	8	 
	 	 	 	 	Other Current Assets
	 	 	212	 	 	 	329	 	 	 	126	 	 	 	14	 	 	 	681	 
	 	201000	 	 	AP TRADE
	 	 	-2,039	 	 	 	-3,312	 	 	 	-2,196	 	 	 	 	 	 	 	(7,547	)
	 	201001	 	 	AP TRADE HFA
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	201003	 	 	AP SUSPENSE
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	201004	 	 	AP INV NOT REC
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 
	 	203000	 	 	AP ACCRUAL
	 	 	-48	 	 	 	-5,154	 	 	 	-128	 	 	 	 	 	 	 	(5,330	)
	 	204000	 	 	RNV HFA
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	204001	 	 	RECVD NVCH OOB
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	204100	 	 	RNV MOVEX
	 	 	-159	 	 	 	-256	 	 	 	-1,388	 	 	 	 	 	 	 	(1,804	)
	 	205000	 	 	BANK OVERDRAFTS
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	205001	 	 	BANK OVRDRFT PR
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	209000	 	 	AP OTHER
	 	 	0	 	 	 	0	 	 	 	9	 	 	 	 	 	 	 	9	 
	 	 	 	 	A/P Trade / DPO
	 	 	(2,246	)	 	 	(8,722	)	 	 	(3,704	)	 	 	(30	)	 	 	(14,702	)
	 	221001	 	 	ACC SAL & WAGES
	 	 	-432	 	 	 	-288	 	 	 	-423	 	 	 	 	 	 	 	(1,143	)
	 	221003	 	 	ACCRUED BONUSES
	 	 	-325	 	 	 	-40	 	 	 	-50	 	 	 	 	 	 	 	(415	)
	 	222001	 	 	GROUP HEALTH AC
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	222005	 	 	GROUP HLTH CHGS
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	222101	 	 	WRK COMP ACCRL
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	222105	 	 	WRK COMP CHRGES
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	222201	 	 	MED FLEX W/H
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	222206	 	 	CHILD FLEX W/H
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 






Annex B - Page 3









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	A/C group	 	Name	 	Premium	 	TCA	 	Tube Alloy US	 	Saint Johns	 	Total
	 	223202	 	 	ACC VACATION PA
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	223501	 	 	ACC COURT W/H
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	223701	 	 	Accrued ESPP
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	223751	 	 	ACC 401K CONTRI
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 
	 	223755	 	 	ACC 401K MATCH
	 	 	0	 	 	 	0	 	 	 	-10	 	 	 	 	 	 	 	(10	)
	 	223756	 	 	ACC 401K LN RPY
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	(0	)
	 	223800	 	 	Acc NonQual Def
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	223811	 	 	ACCRUED EDC
	 	 	-4	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	(5	)
	 	223871	 	 	ACC FICA TAX WH
	 	 	-23	 	 	 	-17	 	 	 	-25	 	 	 	 	 	 	 	(64	)
	 	223872	 	 	ACC MEDI TAX WH
	 	 	-6	 	 	 	-4	 	 	 	-6	 	 	 	 	 	 	 	(16	)
	 	223881	 	 	ACC FED INC TAX
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	223882	 	 	ACC ST W/H TAX
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	(0	)
	 	223890	 	 	EMPLOYEE W/H
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	223900	 	 	ACC UNEMPL TAX
	 	 	-4	 	 	 	-1	 	 	 	-4	 	 	 	 	 	 	 	(8	)
	 	224001	 	 	OTH BENEFIT PAY
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	231000	 	 	ACC PROPERTY TX
	 	 	-202	 	 	 	-110	 	 	 	-168	 	 	 	 	 	 	 	(480	)
	 	232000	 	 	SALES TAX PAYAB
	 	 	0	 	 	 	0	 	 	 	16	 	 	 	 	 	 	 	16	 
	 	232010	 	 	DIRECT PAY TAX
	 	 	0	 	 	 	0	 	 	 	-10	 	 	 	 	 	 	 	(10	)
	 	234000	 	 	ACC FRANCH TAX
	 	 	0	 	 	 	0	 	 	 	40	 	 	 	 	 	 	 	40	 
	 	251000	 	 	ACC WARRANTY
	 	 	-10	 	 	 	-65	 	 	 	-82	 	 	 	 	 	 	 	(157	)
	 	253000	 	 	ACCR ENVIRONMNT
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	254002	 	 	ACC ROYALTIES
	 	 	-15	 	 	 	0	 	 	 	-411	 	 	 	 	 	 	 	(426	)
	 	259000	 	 	ACC LIABIL OTH
	 	 	-2	 	 	 	-94	 	 	 	-46	 	 	 	 	 	 	 	(143	)
	 	 	 	 	Accrued Liabilities
	 	 	(1,022	)	 	 	(619	)	 	 	(1,180	)	 	 	(42	)	 	 	(2,864	)
	 	257100	 	 	DEFERRED REVENU
	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	—	 
	 	257200	 	 	Dfrd Rev. Rec
	 	 	0	 	 	 	0	 	 	 	-308	 	 	 	 	 	 	 	(308	)
	 	 	 	 	Deferred Revenue
	 	 	—	 	 	 	—	 	 	 	(308	)	 	 	—	 	 	 	(308	)
	Assets	 	 	10,222	 	 	 	52,768	 	 	 	15,871	 	 	 	313	 	 	 	79,174	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Liabilities	 	 	3,268	 	 	 	9,341	 	 	 	5,192	 	 	 	72	 	 	 	17,873	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	NET WORKING CAPITAL	 	 	6,954	 	 	 	43,427	 	 	 	10,679	 	 	 	241	 	 	 	61,301	 







Annex B - Page 4