exv10w1



 






EXECUTION




Morgan Stanley & Co. International Limited

c/o Morgan Stanley Bank, as agent

c/o Morgan Stanley

One New York Plaza

New York, NY 10004




November 9, 2005




	 	 	 
	To: Maverick Tube Corporation
	16401 Swingley Ridge Road, Ste 700
	Chesterfield, Missouri 63017
	Attention: Chief Financial Officer
	Telephone No.:

	 	(636) 733-1600
	Facsimile No.:

	 	(636) 733-5570






Re: Call Option Transaction




Reference:




     The purpose of this letter agreement is to confirm the terms and conditions of the Transaction
entered into between Morgan Stanley & Co. International Limited (“MSIL”), represented by Morgan
Stanley Bank (“MSB”), as its agent, and Maverick Tube Corporation, a Delaware corporation
(“Counterparty”), on the Trade Date specified below (the “Transaction”). This letter agreement
constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. This
Confirmation shall replace any previous letter and serve as the final documentation for this
Transaction.



     The definitions and provisions contained in the 1996 ISDA Equity Derivatives Definitions (the
“Equity Definitions”), as published by the International Swaps and Derivatives Association, Inc.,
are incorporated into this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern. Certain defined terms used
herein have the meanings assigned to them in the Offering Memorandum dated November 9, 2005 (the
“Offering Memorandum”) relating to the USD 220,000,000 principal amount of Convertible Notes due
November 15, 2025 (the “Convertible Notes” and each USD 1,000 principal amount of Convertible
Notes, a “Convertible Note”) issued by Counterparty pursuant to an Indenture to be dated on or
about November 15, 2005 between Counterparty and The Bank of New York, as trustee (the
“Indenture”). In the event of any inconsistency between the terms defined in the Offering
Memorandum and this Confirmation, the Confirmation shall govern.



     Each party is hereby advised, and each such party acknowledges, that the other party has
engaged in, or refrained from engaging in, substantial financial transactions and has taken other
material actions in reliance upon the parties’ entry into the Transaction to which this
Confirmation relates on the terms and conditions set forth below.


1. This Confirmation evidences a complete and binding agreement between MSIL and Counterparty as to
the terms of the Transaction to which this Confirmation relates. This Confirmation shall
supplement, form a part of, and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the “Agreement”) as if MSIL and Counterparty had executed an agreement in such form (but
without any Schedule except for (i) the election of the laws of the State of New York as the
governing law, (ii) the identification of Morgan Stanley as a Credit Support Provider with respect
to MSIL and (iii) the identification of the Guarantee of Morgan Stanley attached hereto as a Credit
Support Document with respect to MSIL) on the Trade Date. In the event of any inconsistency
between provisions of that Agreement and this Confirmation, this Confirmation will prevail for the
purpose of the Transaction to which this Confirmation relates. The parties hereby agree that no
Transaction other than the Transaction to which this Confirmation relates shall be governed by the
Agreement.



2. The terms of the particular Transaction to which this Confirmation relates are as follows:



 









 









	 	 	 
	General Terms:
	 	 
	 
	 	 
	     Trade Date:

	 	November 9, 2005
	 
	 	 
	     Option Style:

	 	modified American, as described in the “Exercise and Valuation” provisions set forth below
	 
	 	 
	     Option Type:

	 	Call
	 
	 	 
	     Buyer:

	 	Counterparty
	 
	 	 
	     Seller:

	 	MSIL
	 
	 	 
	     Shares:

	 	The common stock of Counterparty, par value USD 0.01 per Share (Exchange symbol “MVK”)
	 
	 	 
	     Number of Options:

	 	220,000 
	 
	 	 
	     Option Entitlement:

	 	As of any date, a number equal to the Conversion Rate as of such date (as
defined in the Indenture, but without regard to any adjustments to the Conversion Rate
pursuant to Sections 15.01(e) and 15.04(g) of the Indenture), for each Convertible Note.
	 
	 	 
	     Premium:

	 	USD 77,033,642.00 
	 
	 	 
	     Premium Payment Date:

	 	November 15, 2005
	 
	 	 
	     Exchange:

	 	The New York Stock Exchange
	 
	 	 
	     Related Exchange(s):

	 	The principal exchange(s) for options contracts or futures contracts, if
any, with respect to the Shares
	 
	 	 
	Exercise and Valuation:
	 	 
	 
	 	 
	     Exercise Periods:

	 	Notwithstanding the Equity Definitions, in respect of Exercisable Options
with a particular Conversion Date (each as defined below), the Exercise Period shall be
the period commencing on and including the Conversion Date for such Exercisable Options
to and including the Exchange Business Day immediately following such Conversion Date.
	 
	 	 
	     Exercisable Options:

	 	In respect of any date on which one or more holders of Convertible Notes
properly surrenders to Counterparty a Convertible Note for conversion (a “Conversion
Date”), a number of Options equal to the lesser of (i) the remaining Number of Options as
of the relevant Exercise Date and (ii) the number of Convertible Notes properly
surrendered to Counterparty for conversion on the relevant Conversion Date.
	 
	 	 
	     Expiration Time:

	 	At the close of trading of the regular trading session on the Exchange
	 
	 	 
	     Expiration Date:

	 	For any Exercisable Option, the earlier of (i) the final day of the Exercise
Period applicable to such Exercisable Options and (ii) the Final Expiration Date.






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	     Final Expiration Date:

	 	November 15, 2013
	 
	 	 
	     Multiple Exercise:

	 	Applicable, as described under Exercisable Options above.
	 
	 	 
	     Automatic Exercise:

	 	Not Applicable
	 
	 	 
	     Notice of Exercise:

	 	Notwithstanding anything to the contrary in the Equity Definitions, in
order to exercise any Options, Counterparty must notify MSIL in writing on or prior to
the last day of the relevant Exercise Period of (i) the number of Exercisable Options
for such Exercise Period being exercised, (ii) the Conversion Date that triggered such
Exercise Period and (iii) the scheduled settlement date for the Convertible Notes
relating to such Exercisable Options.
	 
	 	 
	Settlement Terms:
	 	 
	 
	 	 
	     Settlement Method:

	 	Net Share Settlement
	 
	 	 
	     Settlement Date:

	 	In respect of a Conversion Date, the settlement date for the Shares to be
delivered under the related Convertible Note(s) under the terms of the Indenture.
	 
	 	 
	     Net Share Settlement:

	 	In respect of a Conversion Date, MSIL will deliver to
Counterparty, on the related Settlement Date, a number of Shares equal to the aggregate
number of Shares that Counterparty is obligated to deliver to the holders of the
Convertible Note(s) relating to such Exercisable Options, provided, however, that such
obligation shall be determined excluding any Shares that Counterparty is obligated to
deliver to holders of the Convertible Note(s) as a result of any adjustments to the
Conversion Rate pursuant to Sections 15.01(e) and 15.04(g) of the Indenture.
	 
	 	 
	     Other Applicable Provisions:

	 	The provisions of Sections 6.6, 6.7, 6.8, 6.9 and 6.10 of
the Equity Definitions will be applicable, except that all references in such provisions
to “Physically-Settled” shall be read as references to “Net Share Settled”. “Net Share
Settled” in relation to any Option means that Net Share Settlement is applicable to such
Option.
	 
	 	 
	     Failure to Deliver:

	 	Applicable
	 
	 	 
	3. Additional Terms applicable
to the Transaction:
	 	 
	 
	 	 
	Adjustments applicable to the
Transaction:
	 	 
	 
	 	 
	     Method of Adjustment:

	 	Not applicable.
	 
	 	 
	Extraordinary Events applicable
to the Transaction:
	 	 
	 
	 	 
	     Merger Events:

	 	Notwithstanding Section 9.2(a) of the Equity Definitions, a “Merger Event”
means the occurrence of any event or condition set forth in Section 15.06 of the
Indenture.
	 
	 	 
	     Consequence of Merger Events:

	 	Notwithstanding Section 9.3 of the Equity Definitions, upon the
occurrence of a Merger Event, the Calculation Agent shall make a






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	 	corresponding adjustment in respect of any adjustment
under the Indenture to any one or more of the nature of
the Shares and any other variable relevant to the
exercise, settlement or payment for the Transaction;
provided, however, that such adjustment shall be made
without regard to any adjustment to the Conversion Rate
for the issuance of additional shares as set forth in
Section 15.01(e) of the Indenture.
	 
	 	 
	Additional Termination Events:

	 	If Counterparty’s obligations under the Indenture or the Convertible
Notes are accelerated following the occurrence of any event of default under the terms of the
Convertible Notes, as set forth in Section 7.01 of the Indenture, then such event shall
constitute an Additional Termination Event applicable to this Transaction with respect to
which (i) Counterparty shall be deemed to be the sole Affected Party and this Transaction
shall be the sole Affected Transaction and (ii) MSIL shall be the party entitled to designate
an Early Termination Date pursuant to Section 6(b) of the Agreement.
	 
	 	 
	 

	 	If any provision of the Indenture or the Convertible
Notes is amended, modified, supplemented or waived such
that there is a material effect, as determined by the
Calculation Agent in its sole discretion, on this
Transaction or MSIL’s ability to hedge all or a portion
of this Transaction, then such event (an “Amendment
Event”) shall constitute an Additional Termination Event
applicable to this Transaction with respect to which (i)
Counterparty shall be deemed to be the sole Affected
Party and this Transaction shall be the sole Affected
Transaction and (ii) MSIL shall be the party entitled to
designate an Early Termination Date pursuant to Section
6(b) of the Agreement. For the avoidance of doubt, an
election by Counterparty to increase the conversion rate
pursuant to Section 15.04(g) of the Indenture shall not
constitute an Amendment Event.






	 	 	 
	4. Calculation Agent:

	 	MSIL






5. Account Details:





	 	(a)	 	Account for payments to Counterparty:




Bank Name: JPMorgan Chase Bank

ABA No.: 021 000 021

Account Name: Maverick Tube Corporation

Account No.: 323-326641




	 	 	 	Account for delivery of Shares to Counterparty:




To be advised.




	 	(b)	 	Account for payments to MSIL:




Citibank, N.A.

ABA# 021-000-089

A/C Morgan Stanley Bank

A/C No. 30440939

For further credit to Customer Account 33AC0030



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	 	 	 	Account for delivery of Shares from MSIL:




To be advised.


6. Offices:



The Office of Counterparty for the Transaction is: Inapplicable, Counterparty is not a Multibranch
Party.



The Office of MSIL for the Transaction is:



Morgan Stanley & Co. International Limited

c/o Morgan Stanley Bank

c/o Morgan Stanley

One New York Plaza

4th Floor

New York, NY 10004


7. Notices: For purposes of this Confirmation:





	 	(a)	 	Address for notices or communications to Counterparty:




Maverick Tube Corporation

16401 Swingley Ridge Road, Ste 700

Chesterfield, Missouri 63017

Attention: Chief Financial Officer

Telephone No.: (636) 733-1600

Facsimile: (636) 733-5570




	 	(b)	 	Address for notices or communications to MSIL:




Morgan Stanley & Co. International Limited

c/o Morgan Stanley Bank

c/o Morgan Stanley

One New York Plaza

4th Floor

New York, NY 10004

Attn: Fred Gonfiantini

Telephone No: (212) 276-2427

Facsimile No: (212) 507-0724


With a copy to:


Legal Department

Morgan Stanley & Co. Incorporated

1585 Broadway

38th Floor

New York, NY 10036

Attn: Anthony Cicia

Telephone No: (212) 761-3452

Facsimile No: (212) 507-4338



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8. Representations and Warranties of Counterparty



The representations and warranties of Counterparty set forth in Section 3 of the Agreement and
Section 1 of the Purchase Agreement (the “Purchase Agreement”) dated as of the Trade Date between
Counterparty and Morgan Stanley & Co. Incorporated (“MS&Co.”) are true and correct and are hereby
deemed to be repeated to MSIL as if set forth herein. Counterparty hereby further represents and
warrants to MSIL that:





	 	(a)	 	Counterparty has all necessary corporate power and authority to execute,
deliver and perform its obligations in respect of this Transaction; such execution,
delivery and performance have been duly authorized by all necessary corporate action on
Counterparty’s part; and this Confirmation has been duly and validly executed and
delivered by Counterparty and constitutes its valid and binding obligation, enforceable
against Counterparty in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally, and subject, as to enforceability,
to general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except that rights to indemnification and
contribution hereunder may be limited by federal or state securities laws or public
policy relating thereto.
	 
	 	(b)	 	Neither the execution and delivery of this Confirmation nor the incurrence or
performance of obligations of Counterparty hereunder will conflict with or result in a
breach of the certificate of incorporation or by-laws (or any equivalent documents) of
Counterparty, or any applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any agreement or instrument
to which Counterparty or any of its subsidiaries is a party or by which Counterparty or
any of its subsidiaries is bound or to which Counterparty or any of its subsidiaries is
subject, or constitute a default under, or result in the creation of any lien under,
any such agreement or instrument, or breach or constitute a default under any
agreements and contracts of Counterparty or its significant subsidiaries filed as
exhibits to Counterparty’s Annual Report on Form 10-K for the year ended December 31,
2004, incorporated by reference in the Offering Memorandum, as updated by any
subsequent filings.
	 
	 	(c)	 	No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required in connection with the execution,
delivery or performance by Counterparty of this Confirmation, except such as have been
obtained or made and such as may be required under the Securities Act of 1933, as
amended (the “Securities Act”) or state securities laws.
	 
	 	(d)	 	Counterparty is an “eligible contract participant” (as such term is defined in
Section 1(a)(12) of the Commodity Exchange Act, as amended (the “CEA”) because one or
more of the following is true:
	 
	 	 	 	Counterparty is a corporation, partnership, proprietorship, organization, trust or
other entity and:






	 	(A)	 	Counterparty has total assets in excess of USD 10,000,000;
	 
	 	(B)	 	the obligations of Counterparty hereunder are guaranteed, or
otherwise supported by a letter of credit or keepwell, support or other
agreement, by an entity of the type described in Section 1a(12)(A)(i) through
(iv), 1a(12)(A)(v)(I), 1a(12)(A)(vii) or 1a(12)(C) of the CEA; or
	 
	 	(C)	 	Counterparty has a net worth in excess of USD 1,000,000 and has
entered into this Agreement in connection with the conduct of Counterparty’s
business or to manage the risk associated with an asset or liability owned or
incurred or reasonably likely to be owned or incurred by Counterparty in the
conduct of Counterparty’s business.





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	 	(e)	 	Each of Counterparty and its affiliates is not, on the date hereof, in
possession of any material non-public information with respect to Counterparty.
	 
	 	(f)	 	Counterparty is an “accredited investor” (as such term is defined in Section
2(a)(15)(ii) of the Securities Act).
	 
	 	(g)	 	Counterparty’s financial condition is such that it has no need for liquidity
with respect to its investment in the Transaction and no need to dispose of any portion
thereof to satisfy any existing or contemplated undertaking or indebtedness.
	 
	 	(h)	 	Counterparty’s investments in and liabilities in respect of the Transaction,
which it understands are not readily marketable, are not disproportionate to its net
worth, and it is able to bear any loss in connection with the Transaction, including
the loss of its entire investment in the Transaction.
	 
	 	(i)	 	Counterparty hereby agrees and acknowledges that the Transaction has not been
registered with the Securities and Exchange Commission or any state securities
commission and that the Options are being written by MSIL to Counterparty in reliance
upon exemptions from any such registration requirements. Counterparty acknowledges
that all Options acquired from MSIL will be acquired for investment purposes only and
not for the purpose of resale or other transfer except in compliance with the
requirements of the Securities Act. Counterparty will not sell or otherwise transfer
any Option or any interest therein except in compliance with the requirements of the
Securities Act and any subsequent offer or sale of the Options will be solely for
Counterparty’s account and not as part of a distribution that would be in violation of
the Securities Act.
	 
	 	(j)	 	Counterparty understands no obligations of MSIL to it hereunder will be
entitled to the benefit of deposit insurance and that such obligations will not be
guaranteed by any affiliate of MSIL or any governmental agency.
	 
	 	(k)	 	Counterparty is capable of assessing the merits of and understanding (on its
own behalf or through independent professional advice), and understands and accepts,
the terms, conditions and risks of the Transaction.




9. Other Provisions:





	 	(a)	 	Opinions. Counterparty shall deliver to MSIL an opinion of counsel,
dated as of the Trade Date, with respect to the matters set forth in Sections 8(a)
through (c) of this Confirmation.
	 
	 	(b)	 	Amendment. If the Initial Purchasers party to the Purchase Agreement
exercise their right to purchase additional Convertible Notes as set forth therein,
then, at the discretion of Counterparty, MSIL and Counterparty will either enter into a
new confirmation or amend this Confirmation to provide for such increase in Convertible
Notes (but on pricing terms acceptable to MSIL and Counterparty) (such additional
confirmation or amendment to this Confirmation to provide for the payment by
Counterparty to MSIL of the additional premium related thereto).
	 
	 	(c)	 	No Reliance, etc. Each party represents that (i) it is entering into
the Transaction evidenced hereby as principal (and not as agent or in any other
capacity); (ii) neither the other party nor any of its agents are acting as a fiduciary
for it; (iii) it is not relying upon any representations except those expressly set
forth in the Agreement or this Confirmation; (iv) it has not relied on the other party
for any legal, regulatory, tax, business, investment, financial, and accounting advice,
and it has made its own investment, hedging, and trading decisions based upon its own
judgment and not upon any view expressed by the other party or any of its agents; and
(v) it is entering into this Transaction with a full understanding of the terms,
conditions and risks thereof and it is capable of and willing to assume those risks.





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	 	(d)	 	Share De-listing Event. If at any time during the period from and
including the Trade Date, to and including the later of the Final Expiration Date and
the final day of the last “Observation Period” (as defined in the Indenture) for
Convertible Notes relating to any Exercisable Option, the Shares cease to be listed or
quoted on the Exchange for any reason (other than a Merger Event as a result of which
the shares of common stock underlying the Options are listed or quoted on The New York
Stock Exchange, The American Stock Exchange or the NASDAQ National Market (or their
respective successors) (the “Successor Exchange”)) and are not immediately re-listed or
quoted as of the date of such de-listing on the Successor Exchange (a “Share
De-listing”), then Cancellation and Payment (as defined in Section 9.6 of the Equity
Definitions, treating the “Announcement Date” as the date of first public announcement
that the Share De-listing, will occur and the “Merger Date” as the date of the Share
De-listing) shall apply, and the date of the de-listing shall be deemed the date of
termination for purposes of calculating any payment due from one party to the other in
connection with the cancellation of this Transaction. If the Shares are immediately
re-listed on a Successor Exchange upon their de-listing from the Exchange, this
Transaction shall continue in full force and effect, provided that the Successor
Exchange shall be deemed to be the Exchange for all purposes hereunder. In addition,
the Calculation Agent shall make any adjustments it deems necessary to the terms of the
Transaction in accordance with Calculation Agent Adjustment method as defined under
Section 9.1(c) of the Equity Definitions. For the avoidance of doubt, in no event will
a Share De-listing result in an obligation of Counterparty to make a payment to MSIL.
	 
	 	(e)	 	Repurchase Notices. Counterparty shall, on any day on which
Counterparty effects any repurchase of Shares (other than any repurchase of Shares
effected through MS&Co. during the 30 days immediately following the Trade Date),
promptly give MSIL a written notice of such repurchase (a “Repurchase Notice”) on such
day if, following such repurchase, the “Share Ratio” (as defined herein) as determined
on such day exceeds by 1% or more the Share Ratio specified in the immediately
preceding Repurchase Notice (or, in the case of the first Repurchase Notice, the Share
Ratio as of the Trade Date, adjusted to account for any repurchase of Shares effected
through MS&Co. during the 30 days immediately following the Trade Date). The “Share
Ratio” as of any day is equal to (x) the number of outstanding Options on such day
multiplied by the Option Entitlement divided by (y) the number of outstanding Shares on
such day. Counterparty agrees to indemnify and hold harmless MSIL and its affiliates
and their respective officers, directors, employees, affiliates, advisors, agents and
controlling persons (each, an “Indemnified Person”) from and against any and all losses
(including losses relating to MSIL’s hedging activities as a consequence of becoming,
or of the risk of becoming, a Section 16 “insider”, including without limitation, any
forbearance from hedging activities or cessation of hedging activities and any losses
in connection therewith with respect to this Transaction), claims, damages, judgments,
liabilities and expenses (including reasonable attorney’s fees), joint or several,
which an Indemnified Person may become subject to, as a result of Counterparty’s
failure to provide MSIL with a Repurchase Notice on the day and in the manner specified
in this Section 9(e), and to reimburse, within 30 days, upon written request, each of
such Indemnified Persons for any reasonable legal or other expenses incurred in
connection with investigating, preparing for, providing testimony or other evidence in
connection with or defending any of the foregoing. If any suit, action, proceeding
(including any governmental or regulatory investigation), claim or demand shall be
brought or asserted against the Indemnified Person, such Indemnified Person shall
promptly notify Counterparty in writing, and Counterparty, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified
Person to represent the Indemnified Person and any others Counterparty may designate in
such proceeding and shall pay the fees and expenses of such counsel related to such
proceeding. Counterparty shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, Counterparty agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or judgment.
Counterparty shall not, without the prior written consent of the Indemnified Person,
effect any settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified




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	 	 	 	Person from all liability on claims that are the subject matter of such proceeding
on terms reasonably satisfactory to such Indemnified Person. If the indemnification
provided for in this paragraph (e) is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred to
therein, then Counterparty under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or liabilities.
The remedies provided for in this paragraph (e) are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any Indemnified
Person at law or in equity. The indemnity and contribution agreements contained in
this paragraph (e) shall remain operative and in full force and effect regardless of
the termination of this Transaction.






	 	(f)	 	Regulation M. Counterparty was not on the Trade Date and is not on the
date hereof engaged in a distribution, as such term is used in Regulation M under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), of any securities of
Counterparty, other than a distribution meeting the requirements of the exception set
forth in Rules 101(b)(10) and 102(b)(7) of Regulation M. Counterparty shall not, until
the fifth Exchange Business Day immediately following the Trade Date, engage in any
such distribution.
	 
	 	(g)	 	No Manipulation. Counterparty is not entering into this Transaction to
create actual or apparent trading activity in the Shares (or any security convertible
into or exchangeable for the Shares) or to raise or depress or otherwise manipulate the
price of the Shares (or any security convertible into or exchangeable for the Shares).
	 
	 	(h)	 	Number of Repurchased Shares. Counterparty represents that it could
have purchased Shares, in an amount equal to the product of the Number of Options and
the Option Entitlement, on the Exchange or otherwise, in compliance with applicable
law, its organizational documents and any orders, decrees, contractual agreements
binding upon Counterparty, on the Trade Date.
	 
	 	(i)	 	Board Authorization. Each of this Transaction and the issuance of the
Convertible Notes was approved by its board of directors and publicly announced, solely
for the purposes stated in such board resolution and public disclosure and
Counterparty’s board of directors will have duly authorized any repurchase of Shares
pursuant to this Transaction. Counterparty further represents that there is no
internal policy, whether written or oral, of Counterparty that would prohibit
Counterparty from entering into any aspect of this Transaction, including, but not
limited to, the purchase of Shares to be made pursuant hereto.
	 
	 	(j)	 	Transfer or Assignment. Neither party may transfer any of its rights
or obligations under this Transaction without the prior written consent of the
non-transferring party; provided that if, as determined at MSIL’s sole discretion, its
“beneficial ownership” (within the meaning of Section 16 of the Exchange Act and rules
promulgated thereunder) exceeds 8% of Counterparty’s outstanding Shares, MSIL may
transfer or assign a number of Options sufficient to reduce such “beneficial ownership”
to 7.5%, to any third party with a rating (or whose guarantor has a rating) for its
long term, unsecured and unsubordinated indebtedness of A+ or better by Standard &
Poor’s Ratings Services or its successor (“S&P”), or A1 or better by Moody’s Investors
Service (“Moody’s”) or, if either S&P or Moody’s ceases to rate such debt, at least an
equivalent rating or better by a substitute agency rating mutually agreed by
Counterparty and MSIL, and MSIL shall promptly notify Counterparty of any such transfer
or assignment. If (x) MSIL in its sole discretion determines that its “beneficial
ownership” exceeds 9% of Counterparty’s outstanding Shares, (y) in its sole discretion,
MSIL is unable after its commercially reasonable efforts to effect a transfer or
assignment on pricing terms and within a time period reasonably acceptable to MSIL that
would reduce its “beneficial ownership” to 7.5% or less and (z) the number of
outstanding Shares is less than 30,000,000 (adjusted by the Calculation Agent as
appropriate for any Potential Adjustment Event or Merger Event), MSIL may designate any
Exchange Business Day as an Early Termination Date with respect to a portion (the
“Terminated Portion”) of this Transaction, such that its “beneficial ownership”
following such partial termination will be equal to or less than 9%. In the event that
MSIL so designates an Early Termination Date with respect to a portion of




9









 






	 	 	 	this Transaction, a payment shall be made pursuant to Section 6 of the Agreement as
if (i) an Early Termination Date had been designated in respect of a Transaction
having terms identical to this Transaction and a Number of Options equal to the
Terminated Portion, (ii) Counterparty shall be the sole Affected Party with respect
to such partial termination and (iii) such Transaction shall be the only Terminated
Transaction. Notwithstanding any other provision in this Confirmation to the
contrary requiring or allowing MSIL to purchase, sell, receive or deliver any shares
or other securities to or from Counterparty, MSIL may designate any of its
affiliates to purchase, sell, receive or deliver such shares or other securities and
otherwise to perform MSIL’s obligations in respect of this Transaction and any such
designee may assume such obligations. MSIL shall be discharged of its obligations
to Counterparty to the extent of any such performance.






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






	 	(a)	 	in such notice, MSIL will specify to Counterparty the related
Staggered Settlement Dates (each of which will be on or prior to such Nominal
Settlement Date) and how it will allocate the Shares it is required to deliver
under “Net Share Settlement” (above) among the Staggered Settlement Dates; and
	 
	 	(b)	 	the aggregate number of Shares that MSIL will deliver to
Counterparty hereunder on all such Staggered Settlement Dates will equal the
number of Shares that MSIL would otherwise be required to deliver on such
Nominal Settlement Date.






	 	(l)	 	Damages. Neither party shall be liable under Section 6.10 of the
Equity Definitions for special, indirect or consequential damages, even if informed of
the possibility thereof.
	 
	 	(m)	 	Early Unwind. In the event the sale of Convertible Notes is not
consummated with the initial purchasers for any reason by the close of business in New
York on November 15, 2005 or such later date as agreed upon by the parties (November
15, 2005 or such later date as agreed upon being the “Early Unwind Date”), this
Transaction shall automatically terminate (the “Early Unwind”), on the Early Unwind
Date and (i) the Transaction and all of the respective rights and obligations of MSIL
and Counterparty under the Transaction shall be cancelled and terminated and (ii) each
party shall be released and discharged by the other party from and agrees not to make
any claim against the other party with respect to any obligations or liabilities of the
other party arising out of and to be performed in connection with the Transaction
either prior to or after the Early Unwind Date; provided that if the failure to
consummate the sale of the Convertible Notes results from a failure of any condition
set forth in Section 5 of the Purchase Agreement, Counterparty shall reimburse MSIL for
any costs or expenses (including market losses) relating to the unwinding of its
hedging activities in connection with the Transaction (including any loss or cost
incurred as a result of its terminating, liquidating, obtaining or reestablishing any
hedge or related trading position). The amount of any such reimbursement shall be
determined by MSIL in its sole good faith discretion. MSIL shall notify Counterparty
of such amount, including reasonable detail regarding its determination of such amount,
and Counterparty shall pay such amount in immediately available funds on the Early
Unwind Date. MSIL and Counterparty represent and acknowledge to the other that,
subject to the proviso included in this Section, upon an Early Unwind, all obligations
with respect to the Transaction shall be deemed fully and finally discharged.
	 
	 	(n)	 	Role of Agent. Each party agrees and acknowledges that:
	 
	 	 	 	(i) MSB is acting as agent for both parties but does not guarantee the performance
of either party. Neither MSIL nor Counterparty shall contact the other with respect
to any matter relating to the Transaction without the direct involvement of MSB,
(ii) MSIL is not a member of the Securities Investor Protection Corporation, (iii)
MSB, MSIL and Counterparty each hereby acknowledges that any transactions by MSIL or
MSB in the Shares will be undertaken by MSIL as principal for




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	 	 	 	its own account; and (iv) all of the actions to be taken by MSIL and MSB in
connection with the Transaction, including but not limited to any exercise of any
rights with respect to the Options, shall be taken by MSIL or MSB independently and
without any advance or subsequent consultation with Counterparty; and (v) MSB is
hereby authorized to act as agent for Counterparty only to the extent required to
satisfy the requirements of Rule 15a-6 under the Exchange Act in respect of the
Options described hereunder.






	 	(o)	 	Additional Provisions.
	 
	 	 	 	(i) Section 9.6(a)(ii) of the Equity Definitions is hereby amended by (1) deleting
from the third line thereof the word “or” after the word “official” and inserting a
comma therefor, and (2) deleting the period at the end of subsection (ii) thereof
and inserting the following words therefor “or (C) at MSIL’s option, the occurrence
of any of the events specified in Section 5(a)(vii) (1) through (9) of the ISDA
Master Agreement with respect to that Issuer.”
	 
	 	 	 	(ii) Notwithstanding Section 9.7 of the Equity Definitions, everything in the first
paragraph of Section 9.7(b) of the Equity Definitions after the words “Calculation
Agent” in the third line through the remainder of such Section 9.7 shall be deleted
and replaced with the following:
	 
	 	 	 	“based on an amount representing the Calculation Agent’s determination of the fair
value to Buyer of an option with terms that would preserve for Buyer the economic
equivalent of any payment or delivery (assuming satisfaction of each applicable
condition precedent) by the parties in respect of the relevant Transaction that
would have been required after that date but for the occurrence of the Share
De-listing.”
	 
	 	(p)	 	Setoff. In addition to and without limiting any rights of set-off that
a party hereto may have as a matter of law, pursuant to contract or otherwise, upon the
occurrence of an Early Termination Date as a result of an Event of Default with respect
to which Counterparty is the Defaulting Party or a Termination Event with respect to
which Counterparty is the sole Affected Party, MSIL shall have the right to set off any
obligation that it may have to Counterparty under this Confirmation, including without
limitation any obligation to make any payment of cash or delivery of Shares to
Counterparty, against any obligation Counterparty may have to MSIL under any other
agreement between MSIL and Counterparty relating to Shares (each such contract or
agreement, a “Separate Agreement”), including without limitation any obligation to make
a payment of cash or a delivery of Shares or any other property or securities. For
this purpose, MSIL shall be entitled to convert any obligation (or the relevant portion
of such obligation) denominated in one currency into another currency at the rate of
exchange at which it would be able to purchase the relevant amount of such currency,
and to convert any obligation to deliver any non-cash property into an obligation to
deliver cash in an amount calculated by reference to the market value of such property
as of the Early Termination Date, as determined by the Calculation Agent in its sole
discretion; provided that in the case of a set-off of any obligation to release or
deliver assets against any right to receive fungible assets, such obligation and right
shall be set off in kind and; provided further that in determining the value of any
obligation to deliver Shares, the value at any time of such obligation shall be
determined by reference to the market value of the Shares at such time, as determined
in good faith by the Calculation Agent. If an obligation is unascertained at the time
of any such set-off, the Calculation Agent may in good faith estimate the amount or
value of such obligation, in which case set-off will be effected in respect of that
estimate, and the relevant party shall account to the other party at the time such
obligation or right is ascertained.
	 
	 	(q)	 	Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If, in respect of this Transaction, an amount is payable by
MSIL to Counterparty (i) pursuant to Section 9.7 of the Equity Definitions or this
Confirmation (except in the event of a Merger Event in which the consideration to be
paid to holders of Shares consists solely of cash) or (ii) pursuant to Section 6(d)(ii)
of the Agreement (except in the event of an Event of Default in which Counterparty is
the Defaulting Party or a Termination Event in which Counterparty is the Affected
Party, other than an Event of Default of the type described in Section 5(a)(iii), (v),
(vi), (vii) or




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	 	 	 	(viii) of the Agreement or a Termination Event of the type described in Section
5(b)(i), (ii), (iii), (iv), (v) or (vi) of the Agreement, in each case resulting
from an event or events outside Counterparty’s control) (a “Payment Obligation”),
Counterparty may, in its sole discretion, request that MSIL satisfy such Payment
Obligation by the Share Termination Alternative (as defined below) and shall give
irrevocable telephonic notice to MSIL, confirmed in writing within one Currency
Business Day, no later than 12:00 p.m. New York local time on the Merger Date, the
date of the Share De-listing or the Early Termination Date, as applicable. In
calculating any amounts under Section 6(e) of the Agreement, notwithstanding
anything to the contrary in the Agreement, (1) separate amounts shall be calculated
as set forth in Section 6(e) with respect to (i) this Transaction and (ii) all other
Transactions, and (2) such separate amounts shall be payable pursuant to Section
6(d)(ii) of the Agreement, subject to, in the case of clause (1)(i), the Share
Termination Alternative right hereunder.





	 	 	 
	Share Termination Alternative:

	 	If applicable, MSIL shall deliver to
Counterparty the Share Termination Delivery Property on the date when the
Payment Obligation would otherwise be due pursuant to Section 9.7 of the Equity
Definitions, this Confirmation or Section 6(d)(ii) and 6(e) of the Agreement,
as applicable (the “Share Termination Payment Date”), in satisfaction of the
Payment Obligation in the manner reasonably requested by Counterparty free of
payment.
	 
	 	 
	Share Termination Delivery Property:

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

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

	 	One Share or, if a Merger Event has
occurred and a corresponding adjustment to this Transaction has been made, a
unit consisting of the number or amount of each type of property received by a
holder of one Share (without consideration of any requirement to pay cash or
other consideration in lieu of fractional amounts of any securities) in such
Merger Event, as determined by the Calculation Agent.
	 
	 	 
	Failure to Deliver:

	 	Applicable
	 
	 	 
	Other applicable provisions:

	 	If the Share Termination Alternative is
applicable, the provisions of Sections 6.6, 6.7, 6.8, 6.9 and 6.10 (as modified
above) of the Equity Definitions will be






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	 	applicable, except that all references in such
provisions to “Physically-Settled” shall be
read as references to “Share Termination
Settled” and all references to “Shares” shall
be read as references to “Share Termination
Delivery Units”. “Share Termination Settled”
in relation to this Transaction means that the
Share Termination Alternative is applicable to
this Transaction.







	 	(r)	 	Governing Law. New York law.
	 
	 	(s)	 	Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury in respect of any
suit, action or proceeding relating to this Transaction. Each party (i) certifies that
no representative, agent or attorney of the other party has represented, expressly or
otherwise, that such other party would not, in the event of such a suit, action or
proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that it and the
other party have been induced to enter into this Transaction, as applicable, by, among
other things, the mutual waivers and certifications provided herein.
	 
	 	(t)	 	Right to Extend. MSIL may extend any Settlement Date or any other date
of delivery by MSIL, with respect to some or all of the Exercisable Options hereunder,
if MSIL determines, in its discretion, that such extension is reasonably necessary to
enable MSIL to effect purchases of Shares in connection with its hedging activity
hereunder in a manner that would, if MSIL were Counterparty or an affiliated purchaser
of Counterparty, be in compliance with applicable legal and regulatory requirements.
	 
	 	(u)	 	Registration. Counterparty hereby agrees that if, in the good faith
reasonable judgment of MSIL, the Shares (the “Hedge Shares”) acquired by MSIL for the
purpose of hedging its obligations pursuant to this Transaction cannot be sold in the
U.S. public market by MSIL without registration under the Securities Act, Counterparty
shall, at its election: (i) in order to allow MSIL to sell the Hedge Shares in a
registered offering, make available to MSIL an effective registration statement under
the Securities Act to cover the resale of such Hedge Shares and (A) enter into an
agreement, in form and substance satisfactory to MSIL, substantially in the form of an
underwriting agreement for a registered secondary offering, (B) provide accountant’s
“comfort” letters in customary form for registered offerings of equity securities, (C)
provide disclosure opinions of nationally recognized outside counsel to Counterparty
reasonably acceptable to MSIL, (D) provide other customary opinions, certificates and
closing documents customary in form for registered offerings of equity securities and
(E) afford MSIL a reasonable opportunity to conduct a “due diligence” investigation
with respect to Counterparty customary in scope for underwritten offerings of equity
securities; provided, however, that if MSIL, in its sole reasonable discretion, is not
satisfied with access to due diligence materials, the results of its due diligence
investigation, or the procedures and documentation for the registered offering referred
to above, then clause (ii) or clause (iii) of this Section 9(u) shall apply at the
election of Counterparty; (ii) in order to allow MSIL to sell the Hedge Shares in a
private placement, enter into a private placement agreement substantially similar to
private placement purchase agreements customary for private placements of equity
securities, in form and substance satisfactory to MSIL, including customary
representations, covenants, blue sky and other governmental filings and/or
registrations, indemnities to MSIL, due diligence rights (for MSIL or any designated
buyer of the Hedge Shares from MSIL), opinions and certificates and such other
documentation as is customary for private placements agreements, all reasonably
acceptable to MSIL (in which case, the Calculation Agent shall make any adjustments to
the terms of this Transaction which are necessary, in its reasonable judgment, to
compensate MSIL for any discount from the public market price of the Shares incurred on
the sale of Hedge Shares in a private placement); or (iii) purchase the Hedge Shares
from MSIL at the “Relevant Price” (as defined herein) on the relevant Exchange Business
Days, and in the amounts, requested by MSIL. “Relevant Price” means, on any Exchange
Business Day, the per Share volume-weighted average price as displayed under the
heading “Bloomberg




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	 	 	 	VWAP” on Bloomberg page MVK <equity> AQR (or any successor thereto) in respect
of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such Exchange
Business Day (or if such volume-weighted average price is unavailable, the market
value of one Share on such Exchange Business Day, as determined by the Calculation
Agent using a volume-weighted method).






	 	(v)	 	Notices. Counterparty hereby agrees to promptly deliver to MSIL a copy
of all notices and other communications required or permitted to be given to the
holders of the Convertible Notes pursuant to the terms of the Indenture on the dates so
required or permitted in the Indenture.




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     Please confirm that the foregoing correctly sets forth the terms of our agreement by executing
this Confirmation and returning it by facsimile to the address provided in the Notices section of
this Confirmation.



	 	 	 	 	 	 	 	 	 
	 	 	 	 	Very truly yours,
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Morgan Stanley & Co. International Limited
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Authorized Signatory
	 	 	 	 	 	 	Name:
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Morgan Stanley Bank, as agent
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Authorized Signatory
	 	 	 	 	 	 	Name:
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Accepted and confirmed	 	 	 	 	 	 
	as of the Trade Date:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Maverick Tube Corporation	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Authorized Signatory	 	 	 	 	 	 
	Name:	 	 	 	 	 	 






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[FORM OF MORGAN STANLEY GUARANTEE]





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