English ethics manual

CORPORATE COMPLIANCE
AND
BUSINESS ETHICS MANUAL

MANUAL DE CUMPLIMIENTO
Y
´
ETICA DE NEGOCIOS CORPORATIVOS

GRANT PRIDECO, INC.

CORPORATE COMPLIANCE
AND
BUSINESS ETHICS MANUAL

Additional copies of this manual can be obtained from the
Human Resources or Legal Department of
Grant Prideco's corporate office in Houston, Texas

Version Date: 06/2005

Table of ConTenTs
Foreword ....................................................................................................................3

Definitions ..................................................................................................................4

Company Policies
Compliance and Ethics Resources..........................................................................4

Reporting Policy Violations.....................................................................................5

Accurate Records ......................................................................................................7

Antitrust Issues .........................................................................................................8

Bribery and Illegal or Unethical Business Practices ..........................................10

Business Gifts...........................................................................................................11

Charitable Contributions .......................................................................................13

Confidential Information .......................................................................................14

Conflicts of Interest.................................................................................................15

Delivery of Materials ..............................................................................................17

Environmental, Health, and Safety ......................................................................18

Equal Opportunity ..................................................................................................19

Financial Control and Reporting ..........................................................................20

Information and Data Security and Appropriate Computer Use ...................21

Intellectual Property ...............................................................................................24

International Business ............................................................................................26

Political Contributions ...........................................................................................27

Records Retention ...................................................................................................28

Securities Transactions ...........................................................................................29

Sexual Harassment .................................................................................................30

Certificate of Compliance ................................................(back inside of manual)

forward
Grant Prideco's reputation for integrity is very important to us and is what provides the
Company an opportunity to serve its customers. Integrity is never to be sacrificed for the
sake of results. There is no more important issue than the lawful and ethical conduct of
employees in their relationships with customers, industry, government and others. This is
true in all countries and communities where the Company operates.

The policies set forth in this Manual are applicable to every employee of Grant Prideco
regardless of level, seniority or authority. We all share responsibility for maintaining a high
standard of business conduct at Grant Prideco.

This Manual summarizes the Grant Prideco business ethics policies and the code of conduct
with which all employees are expected to comply. Read this Manual carefully and
understand it fully. In some instances, the Company's entire policy may be set forth in this
Manual. In other instances, this Manual only summarizes the applicable policy. The full
text of any summarized policies are set forth in the Company's Management Manual as well
as any division-specific policies that have been published. Contact your supervisor to obtain
the full text of the Management Manual or any division policy. It also is available
electronically on the Company's Intranet. Should a question arise as to the proper
interpretation of a policy, ask your supervisor or a member of the Legal Department for
clarification.

A single employee's misconduct can do much to damage a hard-earned reputation. All
employees should be aware that conduct that violates the policies set forth in this Manual is
always considered outside the scope of their employment. Violation of these policies may
expose both the Company and the individual employee to fines, imprisonment, and lawsuits
for damages. In addition, individuals who violate these policies are subject to appropriate
disciplinary action by the Company, including possible termination of employment.

Persons who have employees reporting to them should also take all necessary steps to ensure
their employees know and follow these policies. In this connection, all managers should
periodically consult with their staff members to determine that appropriate procedures for
implementation of Company policies have been developed and are being followed.

Michael McShane
President and Chief Executive Officer

definiTions
Company - Grant Prideco and all its subsidiaries.

Division President - The Officer of Grant Prideco designated as the President of an
operating segment. Operating segments of Grant Prideco are described in the
Company's Annual Report to Stockholders.

Ethics Website - Website located on the company’s intranet by clicking on “Legal”.

President - The person who holds the titles of President and Chief Executive Officer
of the Company.

Management Manual - The Company's Management Manual containing the full
text of many of the policies summarized in this Manual. Cross references to many of
the most important sections of the Management Manual are set forth in this Manual.
Divisions of the Company also may have published applicable policies. The
Management Manual is available on the company’s intranet site by clicking on
“Human Resources”.

ComplianCe and eThiCs resourCes
There are numerous resources available to Company employees so that questions
can be an answered and ethical issues can be reported. Company resources include
the following:

Ethics Website
The Company maintains a Legal and Corporate Compliance Website on its intranet.
The Ethics Website contains links to many of the Company’s policies that are
summarized in this Ethics Manual, as well as other resources to help employees of
the Company understand and solve ethical and compliance problems. The Website
also contains links to the Company’s ethics hotline for reporting ethics and
compliance concerns as well as the Company’s ethics help line for asking questions
when trying to solve a compliance or ethics issue.

The Ethics Website can be accessed by any Company employee by clicking on the
“legal” page of the Grant Prideco Intranet site. If any employee has difficulty
accessing this site, he or she should contact their Human Resources representative or
call the Legal Department.

Management Manual
The Company’s Management Manual contains many of the Company’s policies and
procedures relating to ethics and compliance issues, in particular, employee related
matters. Copies of the Company’s Management Manual are available from your HR
representative as well as on the Company’s Intranet site under the “Human
Resources Page”.

Company Employees and Services
When in doubt regarding an ethics or compliance issue, it is always best to discuss
the matter with your supervisor or local human resources representative. In
addition, employees should always feel free to discuss ethics or compliance issues
with their applicable division president, corporate officer or financial officer. Finally,
employees can always contact the Company’s legal or internal audit departments.

Training
The Company provides training on ethics and compliance issues. Training can take
the form of Computer Based Ethics or QHSE training as well as presentations and
classroom sessions on ethics and compliance matters. To schedule training, please
contact your applicable HR or QHSE representative or the legal department.

reporTing poliCy ViolaTions

Policy
An employee who becomes aware of an apparent violation of the Company's
policies regarding legal or ethical business conduct must report the violation. This
includes violations of policies set forth in this handbook, or other manuals or guides
distributed by the Company.

How to Report an Apparent Violation
The method in which to report an apparent violation of Company policies regarding
legal or ethical business conduct often depends upon the nature of the apparent
violation. The following summarizes appropriate methods of reporting violations for
certain broad categories of issues:

Human Resource Concerns. Human resource concerns, such as discrimination or
harassment, can be appropriately reported to an employee’s supervisor or local
human resource representative.

Financial and Accounting Matters. Financial and accounting concerns can be
appropriately reported to an employee’s applicable financial manager, the Division
Vice President of Finance, Corporate Controller or the Internal Audit Department.

Environmental, Health and Safety. Environmental, health and safety matters can be
appropriately reported to your local QHSE representative or the Company’s
corporate QHSE department.

Legal and Other Matters. Many policies and concerns relate to potential violations
of laws or conflicts of interests. These can be appropriately reported to the legal
department.

In addition, if an employee is not comfortable for any reason with reporting
concerns through one of the suggested methods above, or if an employee does not

believe that appropriate action was taken by the individual to whom the concern
was initially reported, the employee should feel free to contact their appropriate
regional manager, division president or corporate officer. In addition, employee’s
can always report concerns of any nature to the Company’s legal or internal audit
departments.

Finally, the Company maintains an employee hotline. This hotline is monitored by
both the Company’s General Counsel and Director of Internal Audit and permits
employees to report concerns anonymously. Information regarding the Company’s
hotline (as of the date of this manual) is as follows:

Telephone: 1-800-932-5378
Grant Prideco, Inc.
PO BOX 62082
Houston, Texas 77205-2082

How to Report a Financial Concern to the Audit Committee
If an employee desires to report a financial concern to the Audit Committee of the
Company’s Board of Directors, including matters relating to accounting, financial
reporting, internal controls or any audit, employees should utilize the hotline
discussed above or directly contact the Company’s Director of Internal Audit or Vice
President and General Counsel.

Safeguards Against Retaliation
No employee will be adversely affected in employment with the Company as a
result of reporting a violation of Company policy or providing further information
during an investigation. This includes those who report a violation of the policy
against discrimination and sexual harassment.

When appropriate, safeguards will be applied in an effort to keep the matter
confidential.

Penalties
Departure from the required standards of conduct according to Company policy and
the law will result in appropriate disciplinary action by Company management. This
may include termination of employment.

Employees who violate the law may be subject to criminal prosecution and may be
held liable for damages incurred by the Company as a result of such violation.

Any employee who fails to report violations or provide further information about
a violation will be appropriately disciplined. Disciplinary actions include possible
termination of employment.

Any employee who makes false allegations of violations in bad faith shall be subject
to the same disciplinary action as one who fails to report or provide information
about a violation.

a CCuraTe r eCords

Policy
The Company's records should be kept in a manner that accurately reflects its
transactions. No employee of the Company shall falsify records in any way.

Legislation Regarding Accurate Record Keeping
There are a number of U.S. criminal statutes requiring companies to maintain
accurate books and records, including:
• The Foreign Corrupt Practices Act
• The Federal False Claims Act
• Environmental reporting laws
• Export control laws
• Federal mail fraud statutes
• Federal sentencing guidelines
• Sarbanes-Oxley Act of 2002

International personnel are expected to be knowledgeable of and comply with local
laws and record keeping requirements.

Guidelines
The Company's books and records should be kept in a manner that:
• fully represents the Company's:
◊ receipts,
◊ expenditures,
◊ assets,
◊ liabilities;
• records transactions in accordance with U.S. federal law and the laws of
any countries or territories in which the Company does business;
• complies with the Company's U.S. and international operating, safety and
environmental, human resource, accounting and financial reporting and
other policies;
• each division and operating location should maintain a record retention
policy applicable to such location that is consistent in all respects with the
company’s corporate record retention policy.

Applicable Cross References
The company’s corporate record retention policy is available on the ethics website.
In addition, each employee is encouraged to contact the Finance and Accounting
Department for the Company's detailed accounting policies and read the policies on
the ethics website and in the Management Manual, including the following policies:
• HSE-01 – QHSE Management System
• HSE-03 – Environmental protection
• L-01 – Conflicts of Interest
• L-05 – Foreign Corrupt Practices Act Compliance Policy
• L-06 – Sanction and Export Compliance Policy
• L-07 – Anti-Boycott Policy

a nTiTrusT i ssues

Policy
The U.S. Federal Government, most state governments, and many other countries
have adopted antitrust laws. In broad terms, these antitrust laws make it illegal and
criminal to engage in activities that reduce competition or restrain free trade.

In the U.S., these laws are enforced by the Department of Justice, the Federal Trade
Commission, state Attorneys General, and by private individuals seeking treble
damages.

The Company firmly supports these laws, and it is strict company policy that all
antitrust statutes are complied with in every respect.

Laws Enforcing Antitrust Policies in the U.S.
The laws enforcing antitrust policies in the U.S. are:
• The Sherman Act of 1890
• The Clayton Act of 1914
• The Robinson-Patman Act of 1936
• The Federal Trade Commission Act of 1914

The Sherman Act
The Sherman Act prohibits:
• attempts to monopolize;
• price-fixing or price-stabilizing agreements among competitors or
between suppliers and customers;
• agreements among competitors or between suppliers and customers to:
◊ divide markets or customers,
◊ limit production,
◊ boycott third parties;
• tying agreements (forcing customers to buy a less desired product or
service from you in order to obtain the item they really want);
• reciprocity (coercing a company to purchase products or services from
your company based on the volume of your company's purchases of
products or services from that company).

The Clayton Act
The Clayton Act supplements the Sherman Act and also prohibits acquisitions or
joint ventures that may substantially reduce competition.

The Robinson-Patman Act
The Robinson-Patman Act generally forbids price discrimination; that is, selling an
item of like grade and quantity at different prices to competing customers that may
substantially lessen competition.

The Federal Trade Commission Act Of 1914
The Federal Trade Commission Act of 1914 gave authority to the FTC to determine
that certain conduct constitutes unfair competition. In many instances, violations
of the antitrust laws also are considered unfair competition in violation of the
Federal Trade Commission Act.

Laws Enforcing Antitrust Policies in Europe
The antitrust laws of the European Union (EU) apply to transactions that occur in
the EU.

The two principal EU provisions governing antitrust policies are Articles 85 and 86
of the Treaty of Rome, which established the EU. Never assume that just because a
practice is legal (or illegal) under U.S. law that it is necessarily legal under the EU
rules.

Questions about activities in Europe that appear to be inconsistent with U.S. law or
which involve substantial amounts of money should be reviewed with Company
Counsel.

Price Fixing
Price fixing is an area in which employees may be susceptible to violation of
antitrust laws.

Price fixing occurs when two or more competitors agree on how they will charge
customers for products or services. For purposes of the antitrust laws, “price”
includes all terms and conditions of sale.

It does not matter that a price was decreased rather than increased, that no exact
price was fixed, or that the price involved was reasonable. Nor does it matter
whether the agreement to fix prices was in writing or even discussed orally. Courts
and juries can infer a conspiracy to fix prices through certain actions or failure to
take action.

In order to ensure that you do not violate the law, do not discuss any of the
following with your competitors:
• Past, present or future pricing
• Production capacity
• Production allocation
• Mutual customers
• Bidding
• Marketing

For example, you could be found guilty of price fixing if you were at a meeting
where competitors were present and an unscheduled discussion of industry prices
developed. In a situation like this, you must excuse yourself and report the matter to
the Company's Legal Department.

Except for bona fide purchase and sale agreements where Grant Prideco is selling a
product to or purchasing a product from a competitor, it is against Company policy
to accept price lists from competitors or to give them copies of our price lists.

Penalties
The penalties for breaking the law or acting against Company policy are severe.
Employees could lose their job, face heavy fines, go to prison or otherwise cause
employee and thier family substantial anguish. In addition, employee’s improper
actions could cost the Company heavy fines or expose it to lawsuits for treble
damages.

Applicable Cross-Reference
For additional information on the policies described, each employee is encouraged
to contact the Legal Department and read the policies on the ethics website.

b ribery and i llegal or u neThiCal b usiness p raCTiCes

Policy
No employee or representative of the Company shall, directly or through an
intermediary, offer or give anything of value to foreign government officials,
employees or representatives.

Employees of the Company shall refrain from illegal or unethical actions that might
injure the Company's business reputation.

Bribery of Government Officials
Payment of money or gifts that could be construed as an attempt to induce a
government official or political party to assist the Company in obtaining or retaining
business or secure any improper advantage is prohibited.

Although bribing government officials is an accepted practice in some countries,
such activity is in violation of Company policy and is also outlawed by state and
federal laws, including the U.S. Foreign Corrupt Practices Act.

Small payments to government officials whose duties are ministerial or clerical in
order to expedite services to which the Company is otherwise entitled are not
prohibited if they conform to local practice. For example, these payments would
never be permitted in the U.S. Any such payment in excess of $250 must be reported
to the Internal Audit Department or attorney in the legal department.

Other Commercial Bribery
Payment of money or gifts that could be construed as an attempt to induce a person
to use his or her influence to do the following is prohibited:
• Assist the Company in obtaining or retaining business
• Benefit the Company
• Benefit an individual

0

Offering nominal business gifts is acceptable provided the gifts conform to the
guidelines described in the “Business Gifts” section of this handbook.

Questions
Employees with questions about the legal or ethical nature of a transaction should
contact the Company’s Legal Department.

Penalties
The Company may be fined up to $2.5 million for failure to comply with state and
federal regulations regarding bribery and other corrupt business practices.

In addition, any employee or Company representative who willingly violates state
or federal regulations may be personally fined up to $10,000 and imprisoned up to
five years. U.S. law extends these penalties to non-U.S. citizens.

Applicable Cross-References
to contact the Legal Department and read the policies on the ethics website.

b usiness g ifTs

Policy
If an organization, person, or group is:
• doing business with,
• seeking to do business with or
• competing against the Company,

then Company employees shall not seek, solicit or accept any of the following from
that organization, person, or group:
• Gifts
• Payments
• Fees
• Services
• Opportunities
• Favors

Exception: Employees may accept nominal gifts as stipulated below.

Purpose and Scope of Policy
The purpose of this policy is to avoid any misunderstanding with third parties that
gifts, contributions or donations are required or will aid in gaining or continuing
business with the Company. It applies to all individual employee activities.
However, solicitation of gifts, door prizes, etc. for Company-sponsored events such
as golf tournaments shall not be prohibited by this policy, to the extent approved by
a Division President.

Unacceptable Business Gifts
Gifts of cash, stocks, bonds or similar items shall not be given or accepted,
regardless of amount.

Acceptable Business Gifts From Outside Companies
It is acknowledged that certain gifts of nominal value are widely offered as common
business practice and may be accepted as such. In no instance, however, should
gifts, contributions or donations be requested or in any way solicited by a Company
employee.

Acceptable Business Gifts To Outside Companies
All gifts, favors and entertainment offered to others by employees of the Company
will be in accordance with widely accepted good business practices and will be of
such a nature that public disclosure of all related facts would not embarrass the
employee or the Company.

Such gifts are never to be offered in such a way as to imply that they are a kickback,
bribe or payoff.

Reporting Business Gifts
Report any of the following to the appropriate Division President and the Legal
Department:
• Any gift given or received with a value in excess of $200
• Any gift that can be construed as a violation of Company policy,
regardless of amount

If you have any questions regarding the propriety of any entertainment or gifts,
especially if you have dealings with government employees who may not be
allowed to accept such items, consult the Company's Legal Department.

to contact such employee's HR Representative or the Legal Department and read the
policies in the Management Manual and on the ethics website, including the
following policies:

• L-05 – Anti bribery and FCPA compliance policy

C hariTable C onTribuTions

Policy
Charitable contributions up to $250 can be made at the local office level consistent
with this policy. Charitable contributions over $250 must be approved by the
Division President or Corporate Vice President. Charitable contributions over $1,000
must also have the approval of the President of the Company and Vice President of
Marketing and Communications.

Employees of the Company's operations outside the U.S. should follow the
charitable contribution policies or rules in effect in their country or region.

Expenses incurred on behalf of local organizations to facilitate delivery of services
(such as donations to communities to build roads or schools) are not charitable
contributions for purposes of this policy and should not be categorized as such in
the Company’s records. Such payments may only be made if they comply with the
Company’s policy on Bribery and Illegal or Unethical Business Practices.

Receipts
Receipts should be obtained for all charitable contributions.

Receipts for contributions made in the U.S. should list Grant Prideco, L.P. as the
contributor. All such receipts should be forwarded to the Tax Department at the
Houston Corporate Office.

Receipts for contributions made outside the U.S. should list the local Grant Prideco
entity as the contributor.

Acceptable Contributions
Charitable contributions permitted by this policy can be made to Federal (national),
state (provincial) or local government units that use the contribution exclusively for
public purposes. This does not include contributions to political candidates, officials
or parties.

Gifts to entities organized and operated exclusively for religious, charitable
educational and similar purposes also qualify.

C onfidenTial i nformaTion

Policy
No employee or former employee shall disclose Company trade secrets or other
confidential information.

Trade Secret Agreement
Each Grant Prideco employee may be required to sign an agreement not to reveal
the Company’s trade secrets to others or use such trade secrets for his or her
personal benefit.

This agreement applies for as long as an employee is employed at Grant Prideco and
also after his or her employment has terminated.

Definition of Confidential Information
For the purposes of this policy, the Company defines confidential information as
including:
• Prices paid or charged for equipment, products and labor marketing
strategies
• Non-public financial information
• Financing plans
• Arrangements with suppliers (including transportation companies)
• Potential acquisitions
• Divestitures or organizational changes
• Information about the Company’s products and technology, unless the
information has been specifically published

Confidential Technological Information
The Company helps to maintain its business position through technological
innovations that improve products and lower costs. These innovations are
developed at great cost to the Company and represent valuable business trade
secrets.

Disclosing any of the Company’s confidential technological information may
seriously harm the Company’s competitive position.

Questions Regarding Confidentiality
Employees who have questions regarding what constitutes confidential information
should discuss the matter with their Regional Manager, Division President or Legal
Department.

to read the policies set forth in the Company's Management Manual and the ethics
website, including the following:

• L-02 – Protection of Confidential Information/Inventions
• L-08 – Disclosure of Company Information
• L-09 – News Release Clearance Procedures

C onfliCTs of i nTeresT

Policy
No employee shall have any investment in or relationship with an outside
organization that might put that employee in a position that conflicts with the best
interest of the Company.

Possible Conflicts of Interest
The following are situations or transactions that might involve conflicts of interest:

• An employee or an associate of an employee has or may have a direct or
indirect interest in a Company transaction
• An employee is involved in legal proceedings in which the employee or
any associate of the employee is an adverse party to the Company or has
an adverse interest to the Company
• An employee or an associate of an employee has any financial interest or
position of responsibility (officer, director, principal stockholder, partner
or owner) with any third party who:
◊ does business with the Company
◊ seeks to do business with the Company
◊ competes with the Company

For the purposes of this policy, the Company defines an associate as:

• Any member of an employee's family, including:
◊ Spouse
◊ Father
◊ Mother
◊ Brother
◊ Sister
◊ Aunts
◊ Uncles
◊ Nieces
◊ Nephews
◊ Grandparents
◊ In-laws

• Any organization not associated with the Company in which the
employee or family member is a/an:
◊ Officer
◊ Owner
◊ Partner
◊ Beneficial owner of ten percent or more of any class of equity
securities
• Any trust or estate in which such person has a substantial beneficial
interest or for which they serve as a trustee or in a similar capacity
• Any person who has a business relationship with an employee of the
Company

Violation: Ownership of A Business Affiliated with the Company
It is a violation of this policy if an employee owns a financial interest in a company
that seeks to do business with the Company, especially if that employee can have an
effect on decisions regarding the Company’s business with such organization.

Violation: Use of Company Assets
It is a violation of this policy for an employee to use a Company asset for his or her
personal advantage. Also, it is a violation to allow a third party to use a Company
asset without prior agreement by and fair payment to the Company.

Violation: Acquisition of Assets
It is a violation of this policy for an employee to acquire property or other assets if
the value of the assets is likely to be affected by an action of the Company. This is
especially true if the employee can make a decision or recommendation that could
affect the Company’s action regarding the employee's property or other assets.

Violation: Employment
It is a violation of this policy for an employee to serve on the board of directors or to
work for, or have contracts with, any:
• Supplier
• Competitor
• Customer of the Company

The President of the Company may approve exceptions to the policy in appropriate
cases.

Reporting Conflicts of Interest or Possible Violations
All employees are required to disclose to the appropriate Division President and the
Legal Department any proposed transaction or existing situation in which a conflict
of interest could arise.

Employees of Grant Prideco International Operations should report any conflicts of
interest to the appropriate Region Manager and the Legal Department in Houston.

Periodically, employees will be asked to complete a form or certificate on which they
will list details about their relationships or holdings that might be deemed conflicts

of interest. Failure to complete the form truthfully will be a basis for appropriate
disciplinary action including possible termination of employment.

Division Presidents or Corporate Vice Presidents in consultation with the Legal
Department will determine if a conflict could adversely effect an employee's
judgment or performance of job duties.

to read the policies set forth in the Company's Management Manual or ethics
website, including the following:
• HR-7 – Outside Employment

d eliVery of m aTerials

Policy
It is the policy of the Company to deliver the quality of service and quantity of
materials requested by customers.

Guidelines
The Company has established the following guidelines to ensure proper delivery of
materials. It is the responsibility of each country or district manager to ensure that
the guidelines are followed.

• Any deviation in quality or quantity will only be made with the
knowledge and approval of customers
• Customers will be accurately invoiced for all materials and services
provided
• Accurate inventory records will be kept. These records should be
complete enough to support amounts billed to customers

Reporting Violations
Any deviation from this policy should be reported to a Division President or other
Divisional Officer or Corporate Officer or the Legal Department.

e nVironmenTal , h ealTh and s afeTy

Policy
All employees must comply with laws and regulations of the jurisdictions they are
operating in concerning the protection of the environment and the safety of
Company personnel.

Compliance
It is essential that all Company employees become familiar with and comply with
the environmental, health, and safety laws and regulations to which they are subject.
This includes compliance with:
• the Company’s document retention policy relating to environmental,
safety, and health matters and
• all other guidelines and procedures described in manuals issued by
the Company

Each Company Division must utilize appropriate management practices and sound
pollution control mechanisms to prevent risks to:
• Employees
• Public health
• The environment

Questions
Any employee who has questions regarding any environmental, health or safety
matter should consult his or her supervisor or applicable QHSPE representative.

Penalties
Substantial fines and other penalties can be assessed against the Company for
violation of environmental and workplace safety laws. Managers and employees
who knowingly violate the law and fail to correct any such violation may be held
criminally liable.

Any employee who delays or fails to notify his or her supervisor of violations or
who knowingly makes false statements or falsifies documents relating to these
matters can create substantial liability for the Company and may also be found
personally liable.

to contact the QHSE Department and read the policies set forth in the Company’s
Management Manual, including the following:

• HSE-01 – QHSE Management System
• HSE-02 – Health System
• HSE-03 – Environmental Protection
• HSE-04 – Employee Security

• HSE-05 – Employee Requiring Medical Attention
• HSE-06 – Temporary Duty Assignment
• HSE-07 – Smoking in the Work Place
• HSE-08 – Substance Abuse
• HSE-09 – Contraband
• HSE-10 – PPE – Prescription Safety Glass Reimbursement

e qual o pporTuniTy

Policy
The Company will provide equal opportunity for employment to all individuals
regardless of:

• Race
• Color
• Religion
• Sex
• National origin
• Age
• Marital status
• Veteran status
• Disability

The Company makes an exception to this policy only when hiring for a position that
requires specific physical abilities to perform the primary functions of the job.

Purpose
The Company’s continued success depends on its ability to:
• attract, develop, and retain a highly competent work force and
• make creative, effective, and productive use of all of its human resources.

The Company believes that talent exists across all population groups. The Company
is also committed to conducting business with due regard to the human dignity and
self-worth of each individual.

to contact the Human Resources Department and read the policies in the Company's
Management Manual, including the following:

• HSE-03 – Equal Employment Opportunity

f inanCial C onTrol r eporTing

Policy
All employees must follow appropriate internal accounting control procedures. All
financial and accounting transactions will be accurately and fully reported in the
Company's financial records and financial reports.

Internal Accounting Controls
Operating units and divisions are responsible for implementing control procedures
that provide reasonable assurance that:

• transactions are executed in accordance with management authorization;
• transactions are recorded in a way that allows accurate preparation of
financial reports and statements that comply with federal, state, and local
accounting regulations;
• transactions between the Company and its subsidiaries or management
are properly accounted for and, if required, appropriately disclosed;
• there are no undisclosed transactions, which include:
◊ receipts from or payments to government officials or employees;
◊ receipt of amounts with an understanding that rebates or refunds
will be made in contravention of the laws of any jurisdiction;
• all misappropriations and irregularities of any nature that are identified
are immediately reported to the:
◊ Corporate Controller,
◊ Internal Audit Department, and
◊ General Counsel.

Statement of Integrity
Division Management is required to submit periodic statements to the Company’s
Chief Financial Officer acknowledging their responsibility for the preparation and
integrity of financial information submitted for inclusion in the Company’s
consolidated financial statements.

The statement will also acknowledge responsibility for fostering a strong ethical
climate and maintaining adequate internal accounting controls systems in that
region.

Reporting Policy Violations
Any employee who becomes aware of any possible policy violation should report it
to his or her Division President, Manager or Controller or Corporate Officer, who
will investigate and take appropriate action, including reporting to the Legal
Department and Internal Audit Department as appropriate.

For more information, see the Reporting Policy Violations section in this Manual.

0

informaTion daTa seCuriTy a ppropriaTe CompuTer use

Policy
Each employee must take responsibility for protecting the security of the:

• confidentiality of information regarding the Company and our customers,
and
• the security and integrity of the Company’s computers and information
systems.

Purpose and Scope
The Company has a significant responsibility to our customers and shareholders to
protect the security and integrity of our systems and customers’ data. Therefore,
employees should be aware that third parties who may wish to do damage to the
Company or its employees might intercept any of the following:

• Conversations that an employee conducts either in person or over the
telephone
• Documents carried by an employee
• Information that an employee receives or transmits via the Internet

This policy is intended to protect the security of confidential information and to
safeguard against embarrassment or legal ramifications arising from improper use
of the Company’s network.

Business While Traveling
When traveling on business, employees should consider whether it is possible their
conversations, either in person or over the phone, could be overheard, either
electronically or otherwise.

In some places, cellular phone conversations are monitored. Also, in some places
electronic bugs or eavesdropping devices may monitor conversations. Employees
should be aware of these possibilities and take precaution to ensure that
confidential information important to the Company's business cannot be learned
this way. Employees should always be sensitive to situations where their
conversations can be overheard, such as airplanes.

Employees should also be certain not to leave any sensitive documents unattended
at any time. For example, employees should never leave a briefcase containing
confidential information in a hotel room where security may not be adequate or
throw away sensitive documents without ensuring that they are unreadable.

Definition: Network
A network connects the various worldwide computer systems of the Company and
includes all of the following:

• Computers
• Software
• Communications equipment
• Communication lines
• Cabling

Computer Use
Computing equipment and software issued by the Company are the property of
Grant Prideco and are provided for authorized business use only. Likewise, access
to the Internet or other outside networks using Company equipment, phone lines or
network is provided for authorized business use only.

Copyright/Licensing
The Company’s employees are responsible for properly handling copyrighted and
licensed materials and software. Unless explicitly authorized or when in doubt, do
not copy.

Before installing any software not provided by the Company's Information
Technology Department, employees must obtain the approval of the IT Department.

Electronic Mail
Electronic mail (e-mail) is subject to being disclosed to third parties in litigation and
can be subpoenaed.

Keep the following in mind when using e-mail:

• Managers will have access to subordinates' e-mail messages
• E-mail should be used only for business purposes
• Guidelines regarding interoffice memoranda or letters also apply to e-mail
• E-mail records should be maintained no longer than necessary
• Deleting an e-mail message from the “in box” does not mean that the
message has been deleted from back-up files

Internet Use
Employee use of the Internet is limited to business-related purposes such as:

• Communicating with customers and suppliers
• Researching relevant topics
• Obtaining useful business information

All existing Company policies apply to conduct on the Internet, including - but not
limited to - those that deal with intellectual property, privacy, misuse of company
resources, sexual harassment and confidentiality.

Sensitive Information
Confidential, classified, or proprietary information of the Company or its customers
shall not be transmitted over the Internet or to other outside networks without prior
management approval and reasonable security measures. In addition, export-
controlled information or technical data shall not be posted to public groups on the
Internet.

Inappropriate Internet Use
The following are examples of inappropriate employee Internet use:

• Accessing or downloading pornographic material
• Gambling
• Soliciting for personal gain or profit
• Making or posting indecent remarks or proposals
• Uploading or downloading commercial software in violation of its
copyright or without Company authorization
• Downloading any software or electronic files without reasonable virus
protection measures in place
• Intentionally interfering with the normal operation of any Company
Internet gateway
• Transmitting inappropriate jokes or material that may be offensive
to others

Monitoring Internet Use
Use of the Company network to access the Internet is subject to monitoring. The
Company may implement and maintain an audit log of every Internet transaction
including:

• World Wide Web site visits;
• chat, newsgroup or e-mail messages; and
• file transfers into or out of the Company's internal network.

Penalties
Using the Company's facilities or equipment for abusive, unethical, or
“inappropriate” use of the Internet may be grounds for disciplinary action or
termination.

The Company has installed firewalls and other security systems to assure the safety
and security of its network. Any employee who attempts to disable, defeat or
circumvent any company security facility will be subject to disciplinary action up to
and including termination.

to contact the IT Department and read the policies in the Company’s Management
Manual, including the following:

• IT-01 – Internet Policies
• IT-02 – Use of Computer and Telecommunications Resources
• IT-03 – Software Duplication
• IT-04 – Telephone Voice Mail and Electronic Mail Use

i nTelleCTual p roperTy

Policy
Employees shall protect the Company’s intellectual property and no employee shall
infringe upon the rights of third parties with respect to their intellectual property.

Definitions
For the purpose of this policy, intellectual property means any idea, process, identity
mark, invention, or improvement conceived by an employee that relates to a
company's business or was developed or acquired with the resources of that
company. Intellectual property includes, but is not limited to, trade secrets, patents,
trademarks, service marks, domain names and copyrights.

For the purpose of this policy, a trade secret is any information that has economic
value to a company because of its secrecy - something that gives a company an
advantage or head start over its competitors. It does not have to be covered by a
patent or copyright able, although it may be. It includes, but is not limited to,
technology (RD information for new or improved products, invention disclosures,
pending patent applications, lab results, drawings), business methods, lists
(customer, supplier, vendor), manufacturing (processes, sources of materials,
inventories) and business knowledge (business risks, business opportunities,
budgets).

Property of Others
No employee shall knowingly appropriate, infringe, disparage, or otherwise make
improper use of a valid trademark, patent, trade secret, or proprietary technology
belonging to another.

Employees shall not disclose any trade secret or confidential information of their
former employer(s), including but not limited to:

• Customer lists
• Marketing plans
• Sales data
• Products or services under development
• Technical or performance data

Property of the Company
All employees shall safeguard the Company’s intellectual property and implement
the necessary precautions, which include, but are not limited to, the following
procedures for trade secret information:

• Physically secure all proprietary information when unattended - do not
leave computer disks or papers on desks and do not leave computers
logged on to password-protected files, especially during lunch and
after hours
• Remove flip-charts and erase blackboards/whiteboards at the end of
meetings
• Mark all, and only, proprietary information with a suitable confidentiality
legend to notify anyone handling the information that the material is
confidential and requires special protection
• Shred documents before disposal
• Limit employee access to only those with a need to know
• Limit third party access to only those with written authorization
• Report all unauthorized access by employees or third parties
• Use e-mail and voice mail only for transfer of non-proprietary information
• Use computer passwords and maintain their secrecy

Computing equipment and software issued by the Company are the property of
Grant Prideco and are provided for authorized business use only.

Each employee shall promptly disclose any new idea or invention of which the
employee becomes aware to enable the Company to timely protect the asset.

Any employee receiving unsolicited information that may contain trade secrets or
proprietary information of a third party shall promptly forward the material to the
Company's General Counsel before reading or analyzing such information.

Reporting Infringements and Violations
Employees must report all opportunities, instances, or situations that might infringe
upon or violate the Company’s policy regarding intellectual property to the
appropriate Division President and the Legal Department.

Management Manual Cross-References
to contact the Legal Department and read the policies in the Company’s
Management Manual and ethics web site, including the following:

• L-02 – Protection of Confidential Information/Inventions

i nTernaTional b usiness

Policy
Company employees must comply with U.S. and non-U.S. laws that regulate
international business, including:

• Export control laws
• Economic sanctions laws
• Anti-boycott laws
• The Foreign Corrupt Practices Act

These laws also apply to tile Company’s non-U.S. business units and individually to
Company employees regardless of whether or not the employee resides in the U.S.

No employee shall attempt to evade such laws either directly or indirectly.

Export Control Laws
The U.S. government regulates the export of commodities, technical data, and
software developed, produced or owned by U.S-based companies. Government
controls also extend to the re-export of items from one foreign destination to
another.

Economic Sanctions Laws
At times the U.S. government imposes economic sanctions against specific countries,
companies and individuals. Economic sanctions laws prohibit U.S. citizens and
companies from conducting business, including export and re-export activities, with
the specified countries, companies or individuals.

Anti-Boycott Laws
U.S. anti-boycott laws prohibit actions that could be construed as participation in an
unsanctioned international boycott such as the economic boycott of Israel by some
Arab nations.

Foreign Corrupt Practices Act
The Foreign Corrupt Practices Act (FCPA) prohibits the offering or payment of
bribes to a foreign government official or political party as a means of obtaining or
retaining business. For more information on the FCPA, see the “Bribery and Illegal
or Unethical Business Practices” section of this manual.

Potential Violations
Employees concerned about whether or not a proposed transaction complies with
U.S. law or Company policy should contact the Company’s Legal Department.

Any potential violation of applicable laws must be immediately reported to the
Company's General Counsel and activities regarding the transaction in question
must be ceased until the General Counsel provides written guidance that the
transaction does not violate U.S. law.

Penalties
Violation of any of these laws could result in severe criminal and civil penalties
against the Company and its individual employees. Penalties may include
substantial fines and imprisonment. In some circumstances, the Company could lose
its right to export or re-export its products or to perform government contracts.

to contact the Legal Department and read the policies on the ethics website and in
the Company’s Management Manual, including the following:

• L-05 – Antibribery and FCPA Compliance Policy
• L-06 – Sanction and Export Compliance Policy
• L-07 – Anti-Boycott Policy

p oliTiCal C onTribuTions

Policy
No Company employee shall, either directly or through an intermediary, use
Company funds or resources to make contributions to political parties, party
officials, or candidates for U.S. federal office.

This policy applies to all U.S. locations and personnel. International personnel are
expected to be knowledgeable of and comply with local laws.

Personal Contributions and Political Activities
An employee may make personal political contributions as long as that employee
makes it clear that he/she is acting in his or her own behalf and not as a
representative of the Company.

An employee may also engage in personal political activities as long as:

• the activities do not infringe upon his or her responsibilities to the
Company;
• the activities are carried out on the employee's personal time, and
• the employee makes it clear that he or she is acting in his or her own
behalf and not as a representative of the Company.

Company Contributions
It is illegal for the Company to make contributions to a candidate for U.S. federal
office. Some states permit companies to contribute to political candidates. However,
the Company's President and General Counsel must approve every contribution of
this kind.

The Company may authorize political contributions through Political Action
Committees (PACs), with approval from the Company President and General
Counsel.

r eCords r eTenTion

Policy
All U.S. and international locations shall establish procedures to meet the following
record retention objectives:
• Maintain active and inactive records in appropriate storage facilities or
approved commercial locations
• Identify and protect vital and historical records
• Microfilm and electronic imaging systems may be used for appropriate
applications
• Comply with prevailing state, federal, and international legal guidelines,
including legal requirements related to litigation, government
investigation, and regulatory audits
• Retain records for the specified period of time according to the Company’s
Records Retention Schedule (international locations should develop record
retention schedules to comply with local conditions or legal requirements)
• Encourage the routine destruction of records that are no longer necessary
for operational purposes if retention is not required by law or the Records
Retention Schedule

Implementation
Department Managers are responsible for maintaining an up-to-date records listing
for their area and for ensuring compliance with the Company’s Corporate record
retention policy.

Vital Records
To ensure continuation of operations in case of disaster, it is essential to protect and
secure vital records and documents, including computerized records.

Vital records contain information essential to the:
• company's continued operations during a disaster,
• resumption of Company operations after a disaster, and
• re-establishment of the Company’s legal, financial, and/or functional
status.

s eCuriTies T ransaCTions

Policy
It is against federal law, Company policy, and the rules established by the New York
Stock Exchange for an employee to buy or sell Company securities when the
employee is in the possession of material inside information.

It is also unlawful and against Company Policy for an employee, officer or director
to give material inside information to any other person who may then trade on the
basis of that information.

Definition of Material Inside Information
Material information includes any information that a reasonable investor is likely to
consider important when determining whether to buy, sell, or hold the Company’s
securities.

Examples of material information include:

• Joint venture, merger with, or acquisition of another company
• New major products, services, or patents
• Change in control of the Company
• A positive or negative change in actual or projected sales or earnings of
the Company
• Significant capital expenditures and borrowings
• Stock split or dividend
• Public or private offering of a significant amount of additional securities
• Establishment of a stock repurchase program

Such information is considered inside information when it has not been generally
disclosed to the public in a press release or a filing with the Securities and Exchange
Commission (such as a form 10-K or form 10-Q).

Definition of an Insider
Insiders include all employees of the Company who have access to or possess
material inside information. They are not limited to officers and directors.

Possible Sanctions
Fines and penalties for violating U.S. insider trading laws include:

• A fine up to $1,000,000
• A fine up to $2,500,000 for a corporation or other such entity
• A fine up to three times the profits made or the losses avoided
• Imprisonment up to 10 years

Questions Regarding Transactions
Employees who are unsure whether a trade is proper should consult with the
Company’s General Counsel before engaging in the transaction.

to contact the Legal Department and read the policies in the Company’s ethics
website.

s exual h arassmenT
Policy
The Company does not condone or tolerate the sexual harassment of employees,
whether committed by supervisory or non-supervisory personnel.

Definition: Sexual Harassment
Unwelcome sexual advances, requests for sexual favors and other verbal or physical
conduct of a sexual nature can be interpreted as sexual harassment when:

• submission is an explicit or implicit condition of an individual’s
employment opportunities, including promotional or monetary
advancement;
• an individual's consent or rejection of such conduct is the basis for any
employment decision affecting that individual; and
• such conduct has the purpose or effect of unreasonable interference with
an individual's work performance or creates an intimidating, hostile or
offensive work environment.

Reporting Sexual Harassment
All complaints of possible sexual harassment must be reported to and investigated
by the Human Resources Department.

Employees experiencing or witnessing sexual harassment should contact their
immediate supervisor or manager. If the complaint involves the immediate
supervisor or manager, then the employee should contact a Human Resources
Representative.

Employees who in good faith report alleged incidents of sexual harassment will
under no circumstances be subject to reprisal or retaliation of any kind. Any
employee who feels that he or she has been subject to reprisal or retaliation should
contact a Human Resources Representative.

0

Penalties
When an investigation of a sexual harassment complaint results in verification of the
allegations, prompt corrective and disciplinary action will be taken, up to and
including termination.

Any employee who is found to have knowingly made a false accusation of sexual
harassment or retaliation will also be subject to disciplinary action.

to contact such employee's HR Representative or the legal Department and read the
policies in the Management Manual, including the following policies:

• HR-27 – Standards of Conduct
• HR-28 – Workplace Harassment
• HR-29 – Open Door Policy
• HR-30 – Grievance Procedures

CertifiCate as to ComplianCe with Corporate Business ethiC poliCies
I have read, understand, and will comply with the following 2005 Grant
Prideco Corporate Compliance and Business Ethics policy statements.

• Accurate Records
• Antitrust Issues
• Bribery and Illegal or Unethical Business Practices
• Business Gifts
• Charitable Contributions
• Confidential Information
• Conflicts of Interest
• Definition of Associate
• Delivery of Materials
• Environmental, Health, and Safety
• Equal Opportunity
• Financial Control and Reporting
• Information and Data Security and Appropriate Computer Use
• Intellectual Property
• International Business
• Political Contributions
• Records Retention
• Securities Transactions
• Sexual Harassment

Name (printed):

Signature:

Date: Location:

White Copy – Retained by: Human Resources Department
Corporate Office
®
Houston, Texas

Yellow Copy: Remains in Handbook

English ethics manual

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