Document:

<PAGE>   1

                                    GUARANTY

                  GUARANTY dated as of April 14, 2000 (this "Guaranty") made by
Grant Prideco, Inc. ("GPI") and each of its direct and indirect subsidiaries
specified in Schedule 1 (each a "Guarantor," and collectively, the "Guarantors")
in favor of Transamerica Business Credit Corporation, as agent for the Lenders
referred to below (in such capacity, the "Agent").

                              W I T N E S S E T H :

                  WHEREAS, the subsidiaries of GPI specified in Schedule 2 (the
"Borrowers"), the lenders party thereto (the "Lenders") and the Agent are
parties to the Loan and Security Agreement dated as of even date herewith (as
amended, supplemented or otherwise modified from time to time, the "Loan
Agreement"; capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Loan Agreement) pursuant to
which the Lenders have agreed to make Loans to, and to provide for the issuance
of Letters of Credit for the account of, the Borrowers, subject to the terms and
conditions set forth in the Loan Agreement;

                  WHEREAS, each Guarantor is an Affiliate of each Borrower, has
an interest in the financial affairs and well being of each Borrower and will
benefit from the Loan Agreement; and

                  WHEREAS, it is a condition precedent to the effectiveness of
the Loan Agreement that the Guarantors shall have executed and delivered this
Guaranty in favor of the Agent for the benefit of the Lenders.

                  NOW, THEREFORE, in consideration of the promises contained
herein and to induce the Agent and the Lenders to enter into the Loan Agreement,
and to make Loans to, and to provide for the issuance of Letters of Credit for
the account of, the Borrowers thereunder, the Guarantors hereby agree as
follows:

<PAGE>   2

                  SECTION 1. GUARANTY.

                           (a) Each Guarantor, jointly and severally, hereby
unconditionally and irrevocably (i) guarantees to the Agent for the benefit of
the Lenders the prompt and complete payment and performance when due (whether at
stated maturity, by acceleration or otherwise) of all of the Obligations and
(ii) agrees to pay all costs and expenses incurred by the Agent (including the
fees and disbursements of counsel and other professionals) in connection with
(a) enforcing or defending its rights under or in respect of this Guaranty or
any other document or instrument now or hereafter executed and delivered in
connection herewith, or (b) collecting the Obligations or otherwise
administering this Guaranty.

                           (b) Each Guarantor hereby agrees that all payments
hereunder will be paid to the Agent for the benefit of the Lenders without
setoff, deduction or counterclaim at the office of the Agent located at the
address specified in Section 9 in U.S. Dollars, in the case of the U.S. Loans
and the other Obligations of the U.S. Borrowers, and in the same currency as the
currency in which the Cdn. Loans were made (U.S. Dollars or Cdn. Dollars), in
the case of the Cdn. Loans and the other Obligations of the Cdn. Borrower, in
each case in immediately available funds.

                           (c) Anything contained in this Guaranty to the
contrary notwithstanding, the amount of the obligations payable by any of the
Guarantors under this Guaranty shall be the aggregate amount of the Obligations
unless a court of competent jurisdiction adjudicates such Guarantor's
obligations to be invalid or unenforceable for any reason (including, without
limitation, because of any applicable state or federal law relating to
fraudulent conveyances or transfers), in which case the amount of the
obligations payable by such Guarantor hereunder shall be limited to the maximum
amount that could be guaranteed by such Guarantor without rendering such
Guarantor's obligations under this Guaranty invalid or unenforceable under such
applicable law.

                  SECTION 2. GUARANTY ABSOLUTE. Each Guarantor, jointly and
severally, guarantees that the Obligations will be paid strictly in accordance
with the terms of the Loan Agreement, the Notes and the other Loan Documents
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Agent or any of
the Lenders with respect thereto. The liability of each of the Guarantors under
this Guaranty shall be absolute and unconditional irrespective of:

                                       -2-

<PAGE>   3

                           (a) any lack of validity, regularity or
enforceability of the Loan Agreement or any other Loan Document;

                           (b) any lack of validity, regularity or
enforceability of this Guaranty;

                           (c) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from the Loan Agreement or
any other Loan Document;

                           (d) any exchange, release or non-perfection of any
security interest in any collateral, or any release or amendment or waiver of or
consent to departure from any other guaranty, for all or any of the Obligations;

                           (e) any failure on the part of the Agent, any Lender
or any other Person to exercise, or any delay in exercising, any right under the
Loan Agreement or any other Loan Document; or

                           (f) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, any of the Borrowers, any
Guarantor or any other guarantor with respect to the Obligations (including,
without limitation, all defenses based on suretyship or impairment of
collateral, and all defenses that the Borrowers may assert to the repayment of
the Obligations, including, without limitation, failure of consideration, breach
of warranty, payment, statute of frauds, bankruptcy, lack of legal capacity,
statute of limitations, lender liability, accord and satisfaction, and usury),
this Guaranty and the obligations of the Guarantors under this Guaranty.

Each Guarantor hereby agrees that if any Borrower or any other guarantor of all
or a portion of the Obligations is the subject of a bankruptcy proceeding under
the Bankruptcy Code, it will not assert the pendency of such proceeding or any
order entered therein as a defense to the timely payment of the Obligations.
Each Guarantor hereby waives notice of or proof of reliance by the Agent or the
Lenders upon this Guaranty, and the Obligations shall conclusively be deemed to
have been created, contracted, incurred, renewed, extended, amended or reduced
(as to the Borrowers only) in reliance upon this Guaranty.

                  SECTION 3. WAIVER. Each Guarantor hereby waives (a)
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Obligations and any of the amounts payable under Section 1(a)(ii) and
(b) any requirement that the Agent or any Lender protect, secure, perfect or
insure any Lien or any property subject thereto or exhaust any right to

                                       -3-

<PAGE>   4

take any action against the Borrowers or any other Person or any
collateral.

                  SECTION 4. SUBROGATION. Each Guarantor hereby agrees that it
will not exercise or assert any rights or claims which it may acquire against
the Borrowers or any other guarantor of all or part of the Obligations that
arise from the existence, payment, performance or enforcement of its obligations
hereunder (including, without limitation, any rights or claims of subrogation,
reimbursement or contribution), until the termination of the Commitments, the
indefeasible payment in full in cash of the Obligations and the termination,
Collateralization or expiration of all Letters of Credit. If any amount shall be
paid to any Guarantor in violation of the immediately preceding sentence, such
amount shall be held in trust for the benefit of the Agent and shall forthwith
be paid to the Agent for the benefit of the Lenders to be credited and applied
against the Obligations and all other amounts payable under Section 1(a)(ii),
whether matured or unmatured, in such order as the Agent may determine. Nothing
contained herein shall prohibit, limit or restrict intercompany loan repayments
and prepayments, intercompany dividends and other intercompany transfers to the
extent not prohibited under the Loan Agreement and this Guaranty.

                  SECTION 5. REPRESENTATIONS AND WARRANTIES.

                           (a) The representations and warranties made by the
Borrowers in the Loan Agreement are true and correct insofar as such
representations and warranties relate to such Guarantor in its capacity as a
Loan Party or a Designated Affiliate.

                           (b) Each Guarantor has, independently and without
reliance upon the Agent or any of the Lenders and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Guaranty.

                  SECTION 6. COVENANTS. Each Guarantor covenants and agrees
that, until the termination of the Commitments, the payment in full of the
Obligations and the termination, Collateralization or expiration of all Letters
of Credit, such Guarantor will perform, observe and otherwise comply with all of
the terms, covenants and agreements contained in the Loan Agreement insofar as
such terms, covenants and agreements relate to such Guarantor in its capacity as
a Loan Party or a Designated Affiliate.

                                       -4-

<PAGE>   5

                  SECTION 7. RIGHT OF SETOFF. In addition to and not in
limitation of all rights of offset that the Agent, any Lender or any of their
respective Affiliates may have under applicable law, and whether or not the
Agent has made any demand or the obligations of the Guarantors have matured, the
Agent, the Lenders and their respective Affiliates shall have the right to set
off and apply any and all deposits (general or special, time or demand,
provisional or final, or any other type) at any time held and any other
Indebtedness at any time owing by the Agent, any of the Lenders or any of their
Affiliates to or for the credit or the account of any Guarantor or any
Guarantor's Affiliate against any and all of the Obligations. In the event that
the Agent or any Lender exercises any of its rights under this Section 7, the
Agent or such Lender shall provide notice to the Administrative Borrower of such
exercise, provided that the failure to give such notice shall not affect the
validity of the exercise of such rights.

                  SECTION 8. SURVIVAL OF PROVISIONS. All representations,
warranties and covenants made by each Guarantor in this Guaranty shall survive
the execution and delivery hereof and the closing of the transactions
contemplated hereby.

                  SECTION 9. NOTICES. All notices and other communications
hereunder shall be in writing and sent by certified or registered mail, return
receipt requested, by overnight delivery service, with all charges prepaid, or
by telecopier followed by a hard copy sent by regular mail, if to the Agent,
then to Transamerica Business Credit Corporation, 555 Theodore Fremd Avenue,
Suite C-301, Rye, New York 10580, Telecopy: (914) 921-0110, Attn.: Mr. Steven R.
Fischer, Executive Vice President, with a copy to Transamerica Business Credit
Corporation, 9399 West Higgins Road, Suite 600, Rosemont, Illinois 60018,
Telecopy: (847) 685-1143, Attn.: General Counsel, and if to a Guarantor, then to
such Guarantor at Grant Prideco, Inc., 1450 Lake Robbins Drive, Suite 600, The
Woodlands, Texas 77380, Telecopy: (281) 297-8688, Attn.: Ms. Frances R. Powell
and Philip A. Choyce, Esq., with a copy to Fulbright & Jaworski, L.L.P., 1301
McKinney, Suite 5100, Houston, Texas 77010-3095, Telecopy: (713) 651-5246, Attn:
Joshua P. Agrons, Esq., or in each case, to such other address as the Guarantors
or the Agent may specify to the other party in the manner required hereunder.
All such notices and correspondence shall be deemed given (i) if sent by
certified or registered mail, three Business Days after being postmarked, (ii)
if sent by overnight delivery service, when received at the above stated
addresses or when delivery is refused and (iii) if sent by telecopier
transmission, when such transmission is confirmed.

                                       -5-

<PAGE>   6

                  SECTION 10. AMENDMENTS, WAIVERS AND CONSENTS. No amendment or
waiver of any provision of this Guaranty, or consent to any departure by any
Guarantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Agent, and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.

                  SECTION 11. DELAYS; PARTIAL EXERCISE OF REMEDIES. No delay or
omission of the Agent to exercise any right or remedy hereunder shall impair any
such right or operate as a waiver thereof. No single or partial exercise by the
Agent of any right or remedy shall preclude any other or further exercise
thereof, or preclude any other right or remedy.

                  SECTION 12. COUNTERPARTS; TELECOPIED SIGNATURES. This Guaranty
and any waiver or amendment hereto may be executed in counterparts and by the
Guarantors in separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument. This Guaranty may be executed and delivered by
telecopier or other facsimile transmission all with the same force and effect as
if the same was a fully executed and delivered original manual counterpart.

                  SECTION 13. SEVERABILITY. In case any provision in or
obligation under this Guaranty shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

                  SECTION 14. INTERPRETATION. All terms not defined herein or in
the Loan Agreement shall have the meaning set forth in the Code, except where
the context otherwise requires. To the extent a term or provision of this
Guaranty conflicts with the Loan Agreement and is not addressed herein with more
specificity, the Loan Agreement shall control with respect to the subject matter
of such term or provision.

                  SECTION 15. CONTINUING GUARANTY; ASSIGNMENTS OF GUARANTEED
DEBT. This Guaranty is a continuing guaranty and shall (a) remain in full force
and effect until released in accordance herewith, (b) be binding upon each
Guarantor and its successors and assigns, and (c) inure, together with the
rights and remedies of the Agent hereunder, to the benefit of the Agent and its
successors and assigns. Without limiting the generality of the foregoing clause
(c), the Agent may, in accordance with the terms of the Loan Agreement, assign
or otherwise transfer all or any portion of its rights and obligations under the
Loan Agreement to any other Person, and such other Person shall

                                       -6-

<PAGE>   7

thereupon become vested with all the benefits in respect hereof granted to the
Agent herein or otherwise, in each case as provided in the Loan Agreement.

                  SECTION 16. REINSTATEMENT. To the extent permitted by law,
this Guaranty shall continue to be effective or be reinstated if at any time any
amount received by the Agent in respect of the Obligations is rescinded or must
otherwise be restored or returned by the Agent upon the occurrence or during the
pendency of any bankruptcy, reorganization or other similar proceeding
applicable to a Guarantor, or upon or during the occurrence of any dissolution,
liquidation or winding up of a Guarantor, all as though such payments had not
been made.

                  SECTION 17. ADDITIONAL GUARANTORS. Under (and subject to all
the terms and restrictions set forth in) Section 7.2(l) of the Loan Agreement,
certain Subsidiaries of the Borrowers that are not in existence or otherwise are
not Guarantors on the date of the Loan Agreement are required to become
borrowers under the Loan Agreement or to enter into this Guaranty, all as more
specifically set forth therein. Upon execution and delivery by the Agent and
such a Subsidiary of an instrument substantially in the form of Annex 1 hereto,
such Subsidiary shall become a Guarantor hereunder with the same force and
effect as any other Guarantor herein and such Subsidiary shall automatically be
deemed to be added to the Guaranty without any further action. The execution and
delivery of any such instruments shall not require the consent of the Borrowers
or any then existing Guarantor hereunder. The rights and obligations of each
then existing Guarantor shall remain in full force and effect notwithstanding
the addition of any new Guarantor as a party to this Guaranty.

                  SECTION 18. ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This
Guaranty constitutes the entire agreement among the parties, supersedes any
prior written and verbal agreements among them, and shall bind and benefit the
parties and their respective successors and permitted assigns.

                  SECTION 19. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS GUARANTY AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION
WITH THIS GUARANTY, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW
PROVISIONS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW)
AND DECISIONS OF THE STATE OF NEW YORK.

                                       -7-

<PAGE>   8

                  SECTION 20. SUBMISSION TO JURISDICTION. ALL DISPUTES BETWEEN
ANY GUARANTOR AND THE AGENT, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR
OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED IN NEW
YORK, NEW YORK, AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN;
PROVIDED, HOWEVER, THAT THE AGENT ON BEHALF OF THE LENDERS SHALL HAVE THE RIGHT,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST ANY GUARANTOR IN
ANY LOCATION REASONABLY SELECTED BY THE AGENT TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF THE AGENT. EACH GUARANTOR AGREES THAT IT WILL NOT ASSERT
ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT
BY THE AGENT. EACH GUARANTOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT IN WHICH THE AGENT HAS COMMENCED A PROCEEDING, INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON
CONVENIENS.

                  SECTION 21. SERVICE OF PROCESS. EACH GUARANTOR HEREBY
IRREVOCABLY DESIGNATES CSC UNITED STATES CORPORATION, 80 STATE STREET, 6TH
FLOOR, ALBANY, NEW YORK 12207, AS THE DESIGNEE AND AGENT OF SUCH GUARANTOR TO
RECEIVE, FOR AND ON BEHALF OF SUCH GUARANTOR, SERVICE OF PROCESS IN ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY. IT IS UNDERSTOOD THAT A COPY
OF SUCH PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY FORWARDED
BY MAIL TO THE GUARANTORS, BUT THE FAILURE OF THE GUARANTORS TO RECEIVE SUCH
COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS. NOTHING HEREIN
SHALL AFFECT THE RIGHT OF THE AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.

                  SECTION 22. JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO
(I) THIS GUARANTY OR (II) ANY CONDUCT, ACTS OR OMISSIONS OF A GUARANTOR, THE
AGENT OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS,
ATTORNEYS OR OTHER AFFILIATES, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT
OR OTHERWISE.

                  SECTION 23. LIMITATION OF LIABILITY. THE AGENT SHALL HAVE NO
LIABILITY TO ANY GUARANTOR (WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE)
FOR LOSSES SUFFERED BY SUCH GUARANTOR IN CONNECTION WITH, ARISING OUT OF, OR IN
ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS
GUARANTY, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER
BINDING ON THE AGENT THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS
CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT. THE GUARANTORS
HEREBY WAIVE ALL FUTURE CLAIMS AGAINST THE AGENT FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR PUNITIVE DAMAGES UNLESS RESULTING FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE AGENT.

                                       -8-

<PAGE>   9

                  IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be executed by its (or its managing member's) proper and duly authorized officer
as of the date first set forth above.

                                   GRANT PRIDECO, INC.

                                   By:/s/ PHILIP A. CHOYCE
                                      ------------------------------------------
                                      Philip A. Choyce
                                      Vice President

                                   CHANNELVIEW REAL PROPERTY, INC.

                                   By:/s/ PHILIP A. CHOYCE
                                      ------------------------------------------
                                      Philip A. Choyce
                                      Vice President

                                   XL SYSTEMS INTERNATIONAL, INC.

                                   By:/s/ PHILIP A. CHOYCE
                                      ------------------------------------------
                                      Philip A. Choyce
                                      Vice President

                                   XLS HOLDING, INC.

                                   By:/s/ PHILIP A. CHOYCE
                                      ------------------------------------------
                                      Philip A. Choyce
                                      Vice President

                                   TA INDUSTRIES, INC.

                                   By:/s/ PHILIP A. CHOYCE
                                      ------------------------------------------
                                      Philip A. Choyce
                                      Vice President

                                       -9-

<PAGE>   10

                                   TUBE-ALLOY CAPITAL CORPORATION

                                   By:/s/ PHILIP A. CHOYCE
                                      ------------------------------------------
                                      Philip A. Choyce
                                      Vice President

                                   TUBE-ALLOY CORPORATION INTERNATIONAL

                                   By:/s/ PHILIP A. CHOYCE
                                      ------------------------------------------
                                      Philip A. Choyce
                                      Vice President

                                   PETROLEUM EQUIPMENT SUPPLY COMPANY

                                   By:/s/ PHILIP A. CHOYCE
                                      ------------------------------------------
                                      Philip A. Choyce
                                      Vice President

                                   GRANT AUSTRIA, INC.

                                   By:/s/ PHILIP A. CHOYCE
                                      ------------------------------------------
                                      Philip A. Choyce
                                      Vice President

                                   GRANT PRIDECO HOLDING, LLC

                                   By:/s/ PHILIP A. CHOYCE
                                      ------------------------------------------
                                      Philip A. Choyce
                                      Vice President

                                      -10-

<PAGE>   11

                                   GRANT PRIDECO USA, LLC

                                   By:/s/ LINDA S. BUBACZ
                                      ------------------------------------------
                                      Name: Linda S. Bubacz
                                      Title: Vice President

                                   GRANT PRIDECO TECHNOLOGY, INC.

                                   By:/s/ LINDA S. BUBACZ
                                      ------------------------------------------
                                      Name: Linda S. Bubacz
                                      Title: Vice President

                                      -11-<PAGE>   1

                                PLEDGE AGREEMENT

     PLEDGE AGREEMENT dated as of April 14, 2000 (this "Agreement") made by
Grant Prideco, Inc. ("GPI") and each of its direct and indirect subsidiaries
specified as a "pledgor" in Schedules 1 and 2 (each a "Pledgor," and
collectively, the "Pledgors"), in favor of Transamerica Business Credit
Corporation, as agent for the Lenders referred to below (the "Pledgee").

                              W I T N E S S E T H :

     WHEREAS, the subsidiaries of GPI specified in Schedule 3 (the "Borrowers"),
the lenders party thereto (the "Lenders") and the Pledgee are parties to the
Loan and Security Agreement dated as of even date herewith (as amended,
supplemented or otherwise modified from time to time, the "Loan Agreement";
capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Loan Agreement) pursuant to which the
Lenders have agreed to make Loans to, and to provide for the issuance of Letters
of Credit for the account of, the Borrowers, subject to the terms and conditions
set forth in the Loan Agreement;

     WHEREAS, the Pledgors are, collectively, the legal and beneficial owners of
all of the Pledged Interests (as defined below) and of all of the Pledged Debt
(as defined below);

     WHEREAS, it is a condition precedent to the effectiveness of the Loan
Agreement that the Pledgors shall have executed and delivered this Agreement and
made the pledge in favor of the Pledgee contemplated hereby.

     NOW, THEREFORE, in consideration of the promises contained herein and to
induce the Pledgee and the Lenders to enter into the Loan Agreement and to make
Loans to, and to provide for the issuance of Letters of Credit for the account
of, the Borrowers thereunder, the Pledgors hereby agree as follows:

<PAGE>   2

     SECTION 1. PLEDGE; PLEDGE DOCUMENTATION.

         (a) The Pledgors hereby pledge and grant to the Pledgee for the benefit
of the Lenders a lien on and security interest in the following, whether now
owned or at any time hereafter acquired by any of the Pledgors (collectively,
the "Collateral"):

             (i) all of the issued and outstanding shares of capital stock,
         partnership interests and limited liability company interests set forth
         on Schedule 1 (the "Pledged Interests") of the Subsidiaries of the
         Pledgors set forth on Schedule 1 (the "Issuers") and the certificates
         representing the Pledged Interests, and all dividends, distributions,
         cash, instruments and other property from time to time received,
         receivable or otherwise distributed in respect of or in exchange for
         any or all of the Pledged Interests, and all or, in the case of Issuers
         that are Foreign Subsidiaries, 65% (less any additional interest
         consisting of one share of any such Subsidiary held to meet the
         Requirements of Law of the jurisdiction of organization of such
         Subsidiary) of all additional shares of capital stock, partnership
         interests and limited liability company interests of or in the Issuers
         from time to time acquired in any manner by any of the Pledgors, and
         the certificates, if any, representing such additional shares of
         capital stock, partnership interests and limited liability company
         interests, and all dividends, distributions, cash, instruments and
         other property from time to time received, receivable or otherwise
         distributed in respect of or in exchange for any or all of such
         additional shares of capital stock, partnership interests and limited
         liability company interests (all of the foregoing being the "Interest
         Collateral");

             (ii) all loans, liabilities and indebtedness, whether now or
         hereafter incurred, owed to a Pledgor (collectively, the "Pledged
         Debt") and evidenced by each of the promissory notes payable to a
         Pledgor set forth on Schedule 2 (as amended, supplemented or otherwise
         modified from time to time, copies of which are annexed hereto
         collectively as Annex I (collectively, the "Pledged Notes")), all other
         instruments evidencing the Pledged Debt, and all interest, cash,
         instruments, rights, and other property from time to time received,
         receivable or otherwise distributed in respect of or in exchange for
         any or all of the Pledged Debt;

                                      -2-

<PAGE>   3

             (iii) all additional indebtedness, loans and liabilities from time
         to time owed to the Pledgors, whether now or hereafter incurred, and
         the instruments evidencing such indebtedness, loans and liabilities,
         and all interest, cash, instruments, rights and other property from
         time to time received, receivable or otherwise distributed in respect
         of or in exchange for any or all of such indebtedness, loans and
         liabilities; and

             (iv) all proceeds of any of the foregoing (including, without
         limitation, proceeds constituting any property of the types described
         above).

         (b) Each Pledgor has delivered to the Pledgee each of the Pledged Notes
and (except for the certificates to be delivered under Section 7.1(s)(ii) of the
Loan Agreement) the certificates evidencing the Pledged Interests pledged by it
hereunder, accompanied by an undated note power or a stock or other transfer
power, respectively (executed in blank), with respect thereto.

     SECTION 2. SECURITY FOR OBLIGATIONS. The pledge and assignment of the
Collateral hereunder secures the prompt and complete payment and performance
when due (whether at the stated maturity, by acceleration or otherwise) of all
of the Obligations.

     SECTION 3. REPRESENTATIONS AND WARRANTIES. Each Pledgor represents and
warrants as follows:

         (a) It is a corporation, limited partnership or limited liability
company duly organized or formed, as the case may be, validly existing and in
good standing under the laws of the state of its incorporation or formation, as
the case may be, is duly qualified to do business and is in good standing as a
foreign corporation, limited partnership or limited liability company, as the
case may be, in all other states where such qualification is required, except to
the extent that the failure to so qualify or be in good standing could not
reasonably be expected to have a Material Adverse Effect, and has all necessary
corporate, partnership or limited liability company power and authority, as the
case may be, to enter into this Agreement.

         (b) It or its general partner or managing member, as the case may be,
has taken all requisite corporate or other action through its board of directors
or otherwise to authorize the execution and delivery of, and the performance of
its obligations under, this Agreement, and this Agreement constitutes the legal,
valid and binding obligation of such Pledgor enforceable against it in
accordance with its terms, except as enforceability may be limited by (i)
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
(ii) equitable principles.

                                      -3-

<PAGE>   4

         (c) It is the legal and beneficial owner of record of the Pledged
Interests set forth opposite its name on Schedule 1 and the legal and beneficial
owner of record of each Pledged Note set forth opposite its name on Schedule 2,
free and clear of any Lien, except for the Lien created by this Agreement. On
the date hereof, no effective financing statement or other instrument similar in
effect covering all or any part of the Collateral (other than in favor of the
Pledgee) is on file in any filing or recording office.

         (d) The pledge of the Collateral under this Agreement, together with
(i) the delivery to the Pledgee of the Pledged Notes and the related note powers
and the certificates evidencing the Pledged Interests and the related stock and
other transfer powers and (ii) the filing of Uniform Commercial Code financing
statements or financing statements under the PPSA, as the case may be, in the
appropriate filing offices covering all of the Pledged Interests, create (or, in
the case of clause (ii), upon the making of each such filing will create) a
valid and perfected first priority Lien on the Collateral, securing the payment
and performance of the Obligations, and all filing and other actions necessary
or desirable to perfect and protect such Lien have been duly made or taken.

         (e) No authorization, approval or other action by, and no notice to or
filing with (other than, in each case, any authorization, approval, action,
notice or filing that has been obtained, taken, given or made including, without
limitation, the consent of the board of directors of Grant Prideco Canada Ltd.
to a transfer of its share capital under or in connection with this Agreement),
any Person is required for (i) the pledge by the Pledgors of the Collateral
pursuant to this Agreement, the grant by the Pledgors of the Lien granted hereby
or the execution, delivery or performance of this Agreement by the Pledgors,
(ii) the perfection of the Lien granted under this Agreement, except for
appropriate filings of Uniform Commercial Code financing statements, or (iii)
the exercise by the Pledgee of the rights or remedies provided for in this
Agreement.

         (f) The execution, delivery and performance by each Pledgor of this
Agreement, the granting of the Lien hereunder and the exercise by the Pledgee of
any or all of the remedies hereunder do not and will not breach or violate (i)
any of the Governing Documents of such Pledgor, (ii) any Requirement of Law or
(iii) any Material Contract and will not result in the imposition of any Liens
on any of its assets except in favor of the Pledgee.

                                      -4-

<PAGE>   5

         (g) The Pledged Interests, other than Pledged Interests consisting of
Capital Stock issued by Foreign Subsidiaries, constitute all of the issued and
outstanding shares of capital stock, partnership interests and limited liability
company interests of the Issuers.

         (h) The Pledged Debt constitutes all of the outstanding indebtedness of
any Person owing to GPI or any of its Subsidiaries (other than a Foreign
Subsidiary) that is evidenced by a promissory note or other instrument and the
Pledged Notes include all of the promissory notes or other instruments
evidencing such indebtedness.

         (i) All of the Pledged Interests are duly authorized, fully paid and
nonassessable (or the equivalent under the law of any jurisdiction other than
the United States or any state thereof). All of the Pledged Interests are
evidenced by certificates.

        SECTION 4.  FURTHER ASSURANCES; COVENANTS.

         (a) Each Pledgor covenants and agrees that at any time and from time to
time, at the expense of the Pledgors, such Pledgor will promptly execute and
deliver all further instruments and documents including, without limitation,
financing or continuation statements, or similar instruments or documents, and
amendments thereto, and take all further action, that may be necessary or
desirable to establish and maintain the Lien granted or purported to be granted
hereby and the priority and perfection thereof or to enable the Pledgee to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.

         (b) Each Pledgor hereby authorizes the Pledgee to file one or more
financing or continuation statements, and amendments thereto, relating to all or
any part of the Collateral, without the signature of such Pledgor. The Pledgee
may file a carbon, photographic or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof (or any
financing statement related hereto) as a financing statement.

         (c) Each Pledgor covenants and agrees that it will not (i) except as
expressly permitted under Sections 7.1(a), 7.2(c) and 7.2(e) of the Loan
Agreement, sell, assign (by operation of law or otherwise) or otherwise dispose
of, or grant any option with respect to, any of the Collateral, (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral, except
for the Lien under this Agreement and other Permitted Liens, (iii) vote to
enable, or take any other action to permit, the Issuers to issue any other
shares of stock, partnership interests or limited liability company interests of
any nature or to issue any other securities convertible into or

                                      -5-

<PAGE>   6

granting the right to purchase or exchange for any shares of stock, partnership
interests or limited liability company interests of any nature of the Issuers,
except for such shares of stock, partnership interests or limited liability
company interests all (or the appropriate percentage) of which shares or
interests have been pledged to the Agent under a Supplement hereto in the form
of Annex II, (iv) enter into any agreement or undertaking (other than in favor
of the Pledgee) restricting the right or ability of the Pledgee to sell, assign
or transfer any of the Collateral, (v) except as expressly permitted under
Section 7.2(g) of the Loan Agreement, to the extent applicable, cancel (other
than due to any payment in whole or in part), or forgive any of the Pledged Debt
except upon the payment in full to the holder of any Pledged Note or (vi) amend
or waive any terms or provisions of any Pledged Note in any manner that is
adverse in any way to the Agent. Each Pledgor covenants and agrees that, if any
of the Pledged Interests pledged by it becomes evidenced by one or more stock,
partnership or membership certificates, as the case may be, such Pledgor shall
promptly deliver to the Pledgee each such certificate issued to such Pledgor,
accompanied by an undated stock or other transfer power with respect thereto,
executed in blank by such Pledgor.

     SECTION 5. VOTING; DISTRIBUTIONS.

         (a) So long as no Default or Event of Default shall have occurred and
be continuing, each Pledgor shall be entitled to exercise any and all voting and
other consensual rights pertaining to the Collateral or any part thereof for any
purpose not inconsistent with the terms of this Agreement and in a manner which
does not impair the value or transferability of any of the Collateral.

         (b) Except as provided in Section 5(c), each Pledgor shall be entitled
to receive and retain cash distributions (and to disburse any of the foregoing
subject to such restrictions as are set forth in the Loan Agreement) paid in
respect of the Interest Collateral and any and all interest on and principal of
the Pledged Debt; provided, however, that any and all instruments and other
property received or receivable by a Pledgor or otherwise distributed to a
Pledgor in exchange for any Interest Collateral shall, if received by such
Pledgor, be received in trust for the benefit of the Pledgee and be forthwith
delivered to the Pledgee as Interest Collateral in the same form as so received
(with any necessary endorsement).

         (c) Upon the occurrence and during the continuance of an Event of
Default:

             (i) All rights of each Pledgor to receive the principal, interest
         and other cash distributions that it would otherwise be authorized to
         receive and

                                      -6-

<PAGE>   7

         retain under Section 5(b) shall cease, and all such rights shall
         thereupon become vested in the Pledgee who shall thereupon have the
         sole right to receive and hold as Collateral such principal, interest
         and other distributions.

             (ii) Any and all principal, interest and other distributions
         payable to any Pledgor in respect of the Collateral shall be received
         by such Pledgor in trust for the benefit of the Pledgee, shall be
         segregated from other funds of such Pledgor and shall, upon the written
         request of the Pledgee, be forthwith paid over to the Pledgee as
         Collateral in the same form as so received (with any necessary
         endorsement).

     SECTION 6. PLACE OF PERFECTION; RECORDS. Each Pledgor shall (a) maintain
books and records pertaining to the Collateral pledged by it hereunder in such
form and scope as is consistent with good business practice, (b) maintain such
books and records at the address specified for such Pledgor in Section 16 or
such other address (so long as thirty days' prior written notice thereof has
been delivered to the Pledgee) and (c) provide the Pledgee and its agents access
to the premises of such Pledgor at any time and from time to time, during normal
business hours and upon reasonable notice under the circumstances, and at any
time after the occurrence and during the continuance of a Default or Event of
Default, for the purposes of (i) inspecting and verifying the documents and
instruments evidencing or pertaining to the Collateral and (ii) inspecting and
copying (at the Pledgors' expense) any and all records pertaining thereto.

     SECTION 7. PLEDGEE APPOINTED ATTORNEY-IN-FACT; IRREVOCABLE AUTHORIZATION
AND INSTRUCTION TO ISSUERS. Each Pledgor hereby appoints the Pledgee on behalf
of the Lenders such Pledgor's attorney-in-fact, with full authority in the place
and stead of such Pledgor and in the name of such Pledgor or otherwise, from
time to time in the Pledgee's discretion, (a) to take any action and to execute
any instrument in each case permitted to be taken or executed by the Pledgee
under Section 4(b), and (b) upon the occurrence and during the continuance of an
Event of Default, (i) to exercise the voting and other consensual rights which
such Pledgor would be entitled to exercise under Section 5(a) (whereupon all
rights of such Pledgor to exercise such rights shall cease) and (ii) to receive,
endorse and collect all instruments made payable to such Pledgor representing
any distribution in respect of the Collateral or any part thereof and to give
full discharge for the same. Each Pledgor hereby authorizes and instructs the
Issuers to comply with any instruction received by them from the Pledgee in
writing that (a) states that an Event of Default has occurred and is continuing
and (b) is otherwise in accordance with the terms of this Agreement, without any
other or further instructions from

                                      -7-

<PAGE>   8

such Pledgor, and each Pledgor agrees that the Issuers shall be fully protected
in so complying. The Pledgors hereby ratify all that such attorney shall
lawfully do or cause to be done by virtue hereof. This power of attorney is
coupled with an interest and is irrevocable.

     SECTION 8. PLEDGEE MAY PERFORM. If any Pledgor fails to perform any
agreement contained herein, the Pledgee may perform, or cause performance of,
such agreement, and the reasonable expenses of the Pledgee incurred in
connection therewith shall be jointly and severally payable by the Pledgors
provided that, if such Pledgor's failure to perform any such agreement could not
reasonably be expected to affect the Pledgee's rights hereunder in any material
respect, the Pledgee shall give such Pledgor five Business Days' notice and an
opportunity to cure before making or causing such performance.

     SECTION 9. REASONABLE CARE; RETURN OF COLLATERAL.

         (a) Prior to the exercise of its remedies hereunder, the Pledgee shall
be deemed to have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Pledgee accords its own property, it being
understood that the Pledgee shall not have the responsibility under this
Agreement for taking any necessary steps to preserve rights against any parties
with respect to any Collateral except as set forth in subsection (b) below.

         (b) Upon the termination of the Commitments, the payment and
satisfaction of all Obligations in full and the termination, Collateralization
or expiration of all Letters of Credit, the Pledgors shall be entitled to the
return of all of the Collateral (including all Pledged Notes and note powers
therefor and all certificates representing Pledged Interests and stock or other
transfer powers therefor) and all other cash held by the Pledgee as additional
collateral hereunder which have not been used or applied toward the payment of
the Obligations.

     SECTION 10. REMEDIES UPON DEFAULT. If any Event of Default shall have
occurred and be continuing, the Pledgee may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party under
the Uniform Commercial Code (the "Code"), the PPSA and other applicable law, and
the Pledgee may also, without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or private sale,
at any exchange, broker's board or at any of the Pledgee's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as the
Pledgee may deem commercially reasonable. The Pledgors agree that, to the extent
notice of sale shall be

                                      -8-

<PAGE>   9

required by law, at least five Business Days' notice to the Pledgors of the time
and place of any public or private sale shall constitute reasonable
notification. The Pledgee shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Pledgee may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. If an Event of Default shall have
occurred and be continuing, the Pledgee may, under the power of attorney granted
herein, transfer the Collateral on the books of the Pledgors and the Issuers, as
the case may be, in whole or in part, to the name of the Pledgee or such other
Person or Persons as the Pledgee may designate.

     SECTION 11. RESTRICTED STOCK. The Pledgee may be unable to effect a public
sale of all or a part of the Collateral by reason of certain prohibitions
contained in the Securities Act of 1933, as amended from time to time (the
"Securities Act"), or in applicable Blue Sky or other state or foreign
securities laws applicable to the Collateral, as now or hereafter in effect, but
may be compelled to resort to one or more private sales to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire such
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Each Pledgor agrees that private sales may be
made upon five days' notice to the applicable Pledgor and may be at prices and
other terms less favorable to the seller than if the Collateral were sold at
public sales.

     SECTION 12. APPLICATION OF PROCEEDS. All money held by the Pledgee as
Collateral and all cash proceeds received by the Pledgee in respect of any sale
of, collection from, or other realization upon, all or any part of the
Collateral, shall be (a) held by the Pledgee as Collateral hereunder if no Event
of Default has occurred and is continuing or would result therefrom or (b)
applied to the Obligations in accordance with Section 9.5 of the Loan Agreement
if an Event of Default has occurred and is continuing or would result therefrom.
Nothing contained in this Section is intended to prohibit, limit or restrict any
transaction or Investment permitted under the Loan Agreement.

     SECTION 13. INDEMNITY AND EXPENSES. The Pledgors jointly and severally
agree to indemnify and hereby indemnify the Pledgee and its successors and
assigns and their respective directors, officers, agents, employees, advisors,
shareholders, attorneys and Affiliates (each, an "Indemnified Party") from and
against any and all Claims (except, in the case of each Indemnified Party, to
the extent that any Claim is determined in a final and non-appealable judgment
by a court of competent jurisdiction to have directly resulted from such
Indemnified Party's gross negligence or willful misconduct) arising out of or by
reason of (i) any litigation, investigation, claim or

                                      -9-

<PAGE>   10

proceeding related to (A) this Agreement or the transactions contemplated hereby
or (B) the Pledgee's entering into this Agreement or any other agreements and
documents relating hereto (other than consequential damages and loss of
anticipated profits or earnings), including, without limitation, amounts paid in
settlement, court costs and the fees and disbursements of counsel incurred in
connection with any such litigation, investigation, claim or proceeding and (ii)
any pending, threatened or actual action, claim, proceeding or suit by any
shareholder or director of a Pledgor or any actual or purported violation of a
Pledgor's Governing Documents or any other agreement or instrument to which a
Pledgor is a party or by which any of its properties is bound. In addition, the
Pledgors shall, upon demand, pay to the Pledgee all costs and expenses incurred
by the Pledgee (including the fees and disbursements of counsel and other
professionals) in connection with (a) enforcing or defending its rights under or
in respect of this Agreement or any other document or instrument now or
hereafter executed and delivered in connection herewith, (b) collecting the
Obligations or otherwise administering this Agreement and (c) foreclosing or
otherwise realizing upon the Collateral or any part thereof. If and to the
extent that the obligations of the Pledgors hereunder are unenforceable for any
reason, the Pledgors hereby agree to make the maximum contribution to the
payment and satisfaction of such obligations that is permissible under
applicable law. The Pledgors' obligations under this Section 13 shall survive
any termination of this Agreement, the termination, expiration or
Collateralization of all Letters of Credit and the payment in full of the
Obligations, and are in addition to, and not in substitution of, any of the
other Obligations.

     SECTION 14. SECURITY INTEREST ABSOLUTE. All rights of the Pledgee and the
Lien granted to it hereunder, and all obligations of the Pledgors hereunder,
shall be absolute and unconditional irrespective of:

         (a) any lack of enforceability of the Loan Agreement or any of the
other Loan Documents or any other agreement or instrument relating thereto;

         (b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations, or any other amendment or waiver
of or any consent to departure from the Loan Agreement or any of the other Loan
Documents;

         (c) any taking and holding of collateral or guarantees for all or any
of the Obligations, or any amendment, alteration, exchange, substitution,
transfer, enforcement, waiver, subordination, termination or release of any
collateral or such guarantees, or any non-perfection of any collateral, or any
consent to departure from any such guaranty;

                                      -10-

<PAGE>   11

         (d) any manner of application of collateral, or proceeds thereof, to
all or any of the Obligations, or the manner of sale of any collateral;

         (e) any consent by the Pledgee or the Lenders to the restructuring of
the Obligations, or any other restructuring or refinancing of the Obligations or
any portion thereof;

         (f) any modification, compromise, settlement or release by the Pledgee
or the Lenders, by operation of law or otherwise, collection or other
liquidation of the Obligations or the liability of any guarantor, or of any
collateral, in whole or in part, and any refusal by the Pledgee or the Lenders
to accept any payment, in whole or in part, from any obligor or guarantor in
connection with any of the Obligations, whether or not with notice to, further
assent by, or any reservation of rights against, the Pledgors except a
settlement or release, duly executed by the Pledgee, which specifically
terminates the security interest hereunder; or

         (g) any other circumstance (including, without limitation, any statute
of limitations) which might otherwise constitute a defense available to, or a
discharge of, any third party pledgor or guarantor.

     SECTION 15. SURVIVAL OF PROVISIONS. All representations, warranties and
covenants made by each Pledgor in this Agreement shall survive the execution and
delivery hereof and the closing of the transactions contemplated hereby.

     SECTION 16. NOTICES. All notices and other communications hereunder shall
be in writing and sent by certified or registered mail, return receipt
requested, by overnight delivery service, with all charges prepaid, or by
telecopier followed by a hard copy sent by regular mail, if to the Pledgee, then
to Transamerica Business Credit Corporation, 555 Theodore Fremd Avenue, Suite
C_301, Rye, New York 10580, Telecopy: (914) 921_0110, Attn.: Mr. Steven R.
Fischer, Executive Vice President, with a copy to Transamerica Business Credit
Corporation, 9399 West Higgins Road, Suite 600, Rosemont, Illinois 60018,
Telecopy: (847) 685-1143, Attn.: General Counsel, and if to a Pledgor, then to
such Pledgor at Grant Prideco, Inc., 1450 Lake Robbins Drive, Suite 600, The
Woodlands, Texas 77380, Telecopy: (281) 297-8688, Attn.: Ms. Frances R. Powell
and Philip A. Choyce, Esq., with a copy to Fulbright & Jaworski, L.L.P., 1301
McKinney, Suite 5100, Houston, Texas 77010-3095, Telecopy: (713) 651-5246, Attn:
Joshua P. Agrons, Esq., or in each case, to such other address as the Pledgors
or the Pledgee may specify to the other party in the manner required hereunder.
All such notices and correspondence shall be deemed given (i) if sent by
certified or registered mail, three Business

                                      -11-

<PAGE>   12

Days after being postmarked, (ii) if sent by overnight delivery service, when
received at the above stated addresses or when delivery is refused and (iii) if
sent by telecopier transmission, when such transmission is confirmed.

     SECTION 17. AMENDMENTS, WAIVERS AND CONSENTS. No amendment or waiver of
any provision of this Agreement, or consent to any departure by any Pledgor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Pledgee, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

     SECTION 18. DELAYS; PARTIAL EXERCISE OF REMEDIES. No delay or omission of
the Pledgee to exercise any right or remedy hereunder shall impair any such
right or operate as a waiver thereof. No single or partial exercise by the
Pledgee of any right or remedy shall preclude any other or further exercise
thereof, or preclude any other right or remedy.

     SECTION 19. COUNTERPARTS; TELECOPIED SIGNATURES. This Agreement and any
waiver or amendment hereto may be executed in counterparts and by the Pledgors
in separate counterparts, each of which when so executed and delivered shall be
an original, but all of which shall together constitute one and the same
instrument. This Agreement may be executed and delivered by telecopier or other
facsimile transmission all with the same force and effect as if the same was a
fully executed and delivered original manual counterpart.

     SECTION 20. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

     SECTION 21. INTERPRETATION. All terms not defined herein or in the Loan
Agreement shall have the meaning set forth in the Code or the PPSA, as the case
may be, except where the context otherwise requires. To the extent a term or
provision of this Agreement conflicts with the Loan Agreement and is not
addressed herein with more specificity, the Loan Agreement shall control with
respect to the subject matter of such term or provision.

                                      -12-

<PAGE>   13

     SECTION 22. CONTINUING SECURITY INTEREST; ASSIGNMENTS OF SECURED DEBT.
This Agreement shall create a continuing security interest in and Lien on the
Collateral and shall (a) remain in full force and effect until released in
accordance herewith, (b) be binding upon each Pledgor and its successors and
assigns, and (c) inure, together with the rights and remedies of the Pledgee
hereunder, to the benefit of the Pledgee and its successors and assigns. Without
limiting the generality of the foregoing clause (c), the Pledgee may, in
accordance with the terms of the Loan Agreement, assign or otherwise transfer
all or any portion of its rights and obligations under the Loan Agreement to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect hereof granted to the Pledgee herein or otherwise, in each
case as provided in the Loan Agreement.

     SECTION 23. REINSTATEMENT. To the extent permitted by law, this Agreement
shall continue to be effective or be reinstated if at any time any amount
received by the Pledgee in respect of the Obligations is rescinded or must
otherwise be restored or returned by the Pledgee upon the occurrence or during
the pendency of any bankruptcy, reorganization or other similar proceeding
applicable to a Pledgor, or upon or during the occurrence of any dissolution,
liquidation or winding up of a Pledgor, all as though such payments had not been
made.

     SECTION 24. PLEDGE OF ADDITIONAL CAPITAL STOCK. Under (and subject to all
the terms and restrictions set forth in) Section 7.2(l) of the Loan Agreement,
all the Capital Stock of each Subsidiary of GPI (or, subject to Section 7.1(s)
of the Loan Agreement, 65% (excluding Qualified Stock issued to directors of
such Subsidiary and immaterial interests consisting of one share of Capital
Stock of a Foreign Subsidiary to comply with Requirements of Law applicable to
such Subsidiary) of the Capital Stock of each Foreign Subsidiary) owned by a
Loan Party (other than a Cdn. Subsidiary) shall, unless the owner of the Capital
Stock of such Subsidiary is a Foreign Subsidiary, be pledged hereunder within
ten Business Days of the acquisition or formation of such Subsidiary other than
the Capital Stock of any Subsidiary with a net worth of less than US$250,000,
provided that the Capital Stock of any Subsidiary owned by a Cdn. Subsidiary
shall be pledged to the Cdn. Agent under a pledge agreement in form and
substance satisfactory to the Cdn. Agent to secure the Obligations of the Cdn.
Borrower. An owner of such Capital Stock that is not theretofore a Pledgor
shall, at such time, execute and deliver to the Pledgee a Supplement in the form
of Annex II hereto, whereupon such Capital Stock shall become subject to the
Lien hereunder and such owner shall become a Pledgor hereunder with the same
force and effect as if originally named as a Pledgor herein. Each such new
Subsidiary shall thereupon be deemed an Issuer hereunder and shall execute and

                                      -13-

<PAGE>   14

deliver to the Pledgee an acknowledgment and consent in the form attached
hereto. The execution and delivery of any such instruments shall not require the
consent of the Borrowers or any then existing Pledgor hereunder. The rights and
obligations of each then existing Pledgor shall remain in full force and effect
notwithstanding the addition of any new Pledgor as a party to this Agreement.

     SECTION 25. ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement
constitutes the entire agreement among the parties, supersedes any prior written
and verbal agreements among them, and shall bind and benefit the parties and
their respective successors and permitted assigns.

     SECTION 26. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF
THIS AGREEMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS
OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW) AND DECISIONS
OF THE STATE OF NEW YORK.

     SECTION 27. SUBMISSION TO JURISDICTION. ALL DISPUTES BETWEEN ANY PLEDGOR
AND THE PLEDGEE, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL
BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, AND
THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT
THE PLEDGEE ON BEHALF OF THE LENDERS SHALL HAVE THE RIGHT, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST ANY PLEDGOR OR ANY COLLATERAL IN
ANY LOCATION REASONABLY SELECTED BY THE PLEDGEE TO ENABLE THE PLEDGEE TO REALIZE
ON SUCH COLLATERAL, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
THE PLEDGEE. EACH PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE PLEDGEE.
EACH PLEDGOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
IN WHICH THE PLEDGEE HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.

     SECTION 28. SERVICE OF PROCESS. EACH PLEDGOR HEREBY IRREVOCABLY DESIGNATES
CSC UNITED STATES CORPORATION, 80 STATE STREET, 6TH FLOOR, ALBANY, NEW YORK
12207, AS THE DESIGNEE AND AGENT OF SUCH PLEDGOR TO RECEIVE, FOR AND ON BEHALF
OF SUCH PLEDGOR, SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED
ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY FORWARDED BY MAIL TO THE PLEDGORS,
BUT THE FAILURE OF THE PLEDGORS TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY
THE SERVICE OF SUCH PROCESS. NOTHING HEREIN SHALL AFFECT THE RIGHT

                                      -14-

<PAGE>   15

OF THE PLEDGEE TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

     SECTION 29. JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE
FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO (I) THIS
AGREEMENT OR (II) ANY CONDUCT, ACTS OR OMISSIONS OF A PLEDGOR, THE PLEDGEE OR
ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR
OTHER AFFILIATES, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.

     SECTION 30. LIMITATION OF LIABILITY. THE PLEDGEE SHALL HAVE NO LIABILITY
TO ANY PLEDGOR (WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) FOR LOSSES
SUFFERED BY SUCH PLEDGOR IN CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY
RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS AGREEMENT, OR
ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS
DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER BINDING ON THE
PLEDGEE THAT THE LOSSES WERE THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PLEDGEE. THE PLEDGORS HEREBY WAIVE ALL
FUTURE CLAIMS AGAINST THE PLEDGEE FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES UNLESS RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE PLEDGEE.

                                      -15-

<PAGE>   16

     IN WITNESS WHEREOF, each Pledgor has caused this Agreement to be executed
by its (or its managing member's) proper and duly authorized officer as of the
date first set forth above.

                                       GRANT PRIDECO, INC.

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                       GRANT PRIDECO USA, LLC

                                       By:/s/ LINDA S. BUBACZ
                                          --------------------------------------
                                       Name: Linda S. Bubacz
                                       Title: Vice President

                                       XLS HOLDING, INC.

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                       TA INDUSTRIES, INC.

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                       TUBE-ALLOY CORPORATION

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                      -16-

<PAGE>   17

                                       TUBE-ALLOY CAPITAL CORPORATION

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                       GRANT PRIDECO HOLDING, LLC

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                      -17-

<PAGE>   18

                           ACKNOWLEDGMENT AND CONSENT

     Each of the undersigned hereby acknowledges receipt of a copy of the Pledge
Agreement, dated as of April 14, 2000 (as amended, supplemented or otherwise
modified from time to time, the "Pledge Agreement"), made by Grant Prideco, Inc.
and its Subsidiaries listed as "pledgors" on Schedules 1 and 2 thereto in favor
of Transamerica Business Credit Corporation, as agent. Each of the undersigned
shall be bound by and comply with the terms of the Pledge Agreement insofar as
such terms are applicable to such undersigned.

                                       CHANNELVIEW REAL PROPERTY, INC.

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                       XL SYSTEMS INTERNATIONAL, INC.

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                       XL SYSTEMS, INC.

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                       TEXAS ARAI, INC.

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

<PAGE>   19

                                       TUBE-ALLOY CORPORATION INTERNATIONAL

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                       PETROLEUM EQUIPMENT SUPPLY COMPANY

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                       DRILL TUBE INTERNATIONAL, INC.

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                       GRANT AUSTRIA, INC.

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                       PETRO-DRIVE, INC.

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                      -2-

<PAGE>   20

                                       GRANT PRIDECO HOLDING, LLC

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                       GRANT PRIDECO USA, LLC

                                       By:/s/ LINDA S. BUBACZ
                                          --------------------------------------
                                       Name: Linda S. Bubacz
                                       Title: Vice President

                                       GRANT PRIDECO TECHNOLOGY, INC.

                                       By:/s/ LINDA S. BUBACZ
                                          --------------------------------------
                                       Name: Linda S. Bubacz
                                       Title: Vice President

                                       CITRA GRANT PRIDECO LIMITED

                                       By:/s/ JOHN C. COBLE
                                          --------------------------------------
                                          Name: John C. Coble
                                          Title: Director

                                       GRANT PRIDECO, S.A. DE C.V.

                                       By:/s/ CURTIS W. HUFF
                                          --------------------------------------
                                          Name: Curtis W. Huff
                                          Title: Attorney-in-Fact

                                      -3-

<PAGE>   21

                                       PRIDECOMEX HOLDING, S.A. DE C.V.

                                       By:/s/ CURTIS W. HUFF
                                          --------------------------------------
                                          Name: Curtis W. Huff
                                          Title: Attorney-in-Fact

                                       GRANT PRIDECO (SINGAPORE) PTE. LTD.

                                       By:/s/ JOHN C. COBLE
                                          --------------------------------------
                                          Name: John C. Coble
                                          Title: Director

                                       XL SYSTEMS ANTILLES N.V.

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Name: Philip A. Choyce
                                          Title: Attorney-in-Fact

                                       GRANT PRIDECO CANADA LTD.

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Secretary

                                       GRANT PRIDECO, LP

                                       By:  Grant Prideco Holding, LLC,
                                            its general partner

                                       By:/s/ PHILIP A. CHOYCE
                                          --------------------------------------
                                          Philip A. Choyce
                                          Vice President

                                      -4-

<PAGE>   22

                                       ENERPRO DE MEXICO, S.A. DE C.V.

                                       By:/s/ CURTIS W. HUFF
                                          --------------------------------------
                                          Name: Curtis W. Huff
                                          Title: Attorney-in-Fact

                                       GRANT PRIDECO LIMITED

                                       By:/s/ CURTIS W. HUFF
                                          --------------------------------------
                                          Name: Curtis W. Huff
                                          Title: Director

                                       GRANT PRIDECO DE VENEZUELA, S.A.

                                       By:/s/ JOHN C. COBLE
                                          --------------------------------------
                                          Name: John C. Coble
                                          Title: President

                                       WEATHERFORD MAURITIUS LIMITED

                                       By:/s/ JOHN C. COBLE
                                          --------------------------------------
                                          Name: John C. Coble
                                          Title: Director

                                      -5-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00008-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00008-of-00352.parquet"}]]