CONTRIBUTION AGREEMENT

 

TABLE OF CONTENTS

				Page
ARTICLE 1		DEFINITIONS		2
1.1		Defined Terms		2
ARTICLE 2		CONTRIBUTION		12
2.1		LSB 2 Investment		12
2.2		Anticipated Payments of the Promissory Note		13
2.3		Closing Statement		13
2.4		Purchase Price Adjustment		14
2.5		Use of the LSB 2 Investment		17
ARTICLE 3		CLOSING		17
3.1		Closing Date		17
ARTICLE 4		DELIVERABLES		17
4.1		Items to Be Delivered by Tubos		17
4.2		Items to Be Delivered by LSB 2		18
4.3		Items to Be Delivered by the Company		19
ARTICLE 5		REPRESENTATIONS AND WARRANTIES OF TUBOS, THE COMPANY, GPC AND CIRRUS		19
5.1		Existence and Good Standing		20
5.2		Authorization of Agreement		20
5.3		Conflicts; Consents of Third Parties		21
5.4		No Undisclosed Liability		21
5.5		Real Property		22
5.6		Environmental Matters		23
5.7		Taxes		23
5.8		Intellectual Property		24
5.9		Ownership		25
5.10		Subsidiaries		25
5.11		Compliance with Law		25
5.12		Financial Statements		25
5.13		Material Adverse Effect		26
5.14		Material Contracts		26

 

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TABLE OF CONTENTS
(continued)

				Page
5.15		Employee Matters		28
5.16		Legal Proceeding		29
5.17		Insurance		29
5.18		Inventory		29
5.19		Accounts Receivable		30
5.20		Related Persons		30
5.21		Tubular Products Contracts		30
5.22		GPC, Cirrus or Tubos Legal Proceeding		30
ARTICLE 6		REPRESENTATIONS AND WARRANTIES OF LSB 2 AND LONE STAR		31
6.1		Existence and Good Standing		31
6.2		Authorization of Agreement		31
6.3		Conflicts; Consents of Third Parties		32
6.4		Ownership of Star Brazil Cayman		32
6.5		No Liabilities; Assets		32
6.6		Employee Matters		32
6.7		Legal Proceeding		32
6.8		Compliance with Law		33
6.9		Contracts		33
6.10		Taxes		33
ARTICLE 7		COVENANTS		34
7.1		No-Shop		34
7.2		Operations Prior to the Closing Date		34
7.3		Indebtedness		37
7.4		Employees		37
7.5		Transfer of Assets		37
7.6		Subsidiaries		38
7.7		PAT Registration		38
7.8		Antitrust Filing		39
7.9		Realization of Tax Receivables and Other Tax Assets/Credits		39

 

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TABLE OF CONTENTS
(continued)

				Page
7.10		Conversion of the Company		39
7.11		Special Oto Mills Production Line		39
7.12		Best Efforts		40
ARTICLE 8		CONDITIONS TO CLOSING		40
8.1		Conditions Precedent to Obligations of Tubos		40
8.2		Conditions Precedent to Obligations of LSB 2		40
ARTICLE 9		TERMINATION		42
9.1		Termination of Agreement		42
9.2		Procedure for Termination		43
9.3		Effect of Termination		43
ARTICLE 10		INDEMNIFICATION		43
10.1		Survival of Representations, Warranties and Covenants		43
10.2		Indemnification		44
10.3		Indemnification Procedures		45
10.4		Limitations on Indemnification for Breaches of Representations and Warranties		47
ARTICLE 11		MISCELLANEOUS		48
11.1		Waiver of Default		48
11.2		Amendment		48
11.3		No Third Party Rights		48
11.4		Severability		48
11.5		Binding Effect; Assignment		49
11.6		Headings		49
11.7		Word Meanings		49
11.8		Counterparts		49
11.9		Entire Agreement		49
11.10		Arbitration		49
11.11		Governing Law		50
11.12		Notices		50

 

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TABLE OF CONTENTS
(continued)

				Page
11.13		Guarantee of the Obligations of Tubos		54
11.14		Guarantee of the Obligations of LSB 2		54
11.15		Expenses		55
11.16		Further Assurances		55
11.17		Language		55

 

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TABLE OF CONTENTS
(continued)

EXHIBITS

EXHIBIT A		AMENDED AND RESTATED BY-LAWS
EXHIBIT B		LSS TRADEMARK CROSS LICENSE AGREEMENT
EXHIBIT C		PROMISSORY NOTE
EXHIBIT D		SALE, MARKETING AND SUPPLY AGREEMENT
EXHIBIT E		SHAREHOLDERS AGREEMENT
EXHIBIT F		TUBOS TRANSITION SERVICES AGREEMENT
EXHIBIT G		TUBOS TRADEMARK LICENSE AGREEMENT
EXHIBIT H		LSS TRANSITION SERVICES AGREEMENT
EXHIBIT I		MEMORANDUM AND ARTICLES OF ASSOCIATION OF STAR CAYMAN BRAZIL
EXHIBIT J		AA PURCHASE AGREEMENT

 

SCHEDULES

SCHEDULE 1.1		COMPANY ASSETS
SCHEDULE 2.3		AGREED PRINCIPLES
SCHEDULE 2.4(a)		AGREED PROCEDURES FOR PREPARATION OF CLOSING STATEMENT AND CLOSING BALANCE SHEET
SCHEDULE 2.5		USE OF THE LSB 2 INVESTMENT
SCHEDULE 5.2(b)		AUTHORIZATION OF AGREEMENT
SCHEDULE 5.3		CONFLICTS; CONSENTS OF THIRD PARTIES
SCHEDULE 5.5(a)		REAL PROPERTY LIENS
SCHEDULE 5.5(b)		REAL PROPERTY STRUCTURAL DEFECTS
SCHEDULE 5.5(c)		REAL PROPERTY CERTIFICATES OF OCCUPANCY AND OTHER PERMITS
SCHEDULE 5.6		ENVIRONMENTAL MATTERS
SCHEDULE 5.8		INTELLECTUAL PROPERTY
SCHEDULE 5.9(a)		OWNERSHIP OF THE COMPANY
SCHEDULE 5.9(b)		OWNERSHIP OF APOLO AMERICA
SCHEDULE 5.10		SUBSIDIARIES
SCHEDULE 5.14		MATERIAL CONTRACTS
SCHEDULE 5.15(a)		EMPLOYEES
SCHEDULE 5.15(b)		EMPLOYEE MATERIAL BENEFITS
SCHEDULE 5.16		LEGAL PROCEEDING
SCHEDULE 5.20		RELATED PERSONS
SCHEDULE 5.21		TUBULAR PRODUCTS CONTRACTS
SCHEDULE 5.22		GPC, CIRRUS OR TUBOS LEGAL PROCEEDING
SCHEDULE 6.2(b)		AUTHORIZATION OF AGREEMENT
SCHEDULE 6.3		CONFLICTS; CONSENTS OF THIRD PARTIES
SCHEDULE 6.6		EMPLOYEE MATTERS

 

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TABLE OF CONTENTS
(continued)

SCHEDULE 7.3(a)		AFFILIATE INDEBTEDNESS
SCHEDULE 7.3(b)		EXCLUDED INDEBTEDNESS
SCHEDULE 7.5(a)		TRANSFER OF ASSETS
SCHEDULE 7.5(c)		TRANSFER OF CALDERARIA ASSETS
SCHEDULE 7.9(a)		TAX RECEIVABLES
SCHEDULE 7.9(b)		FIS AND COFINS

 

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CONTRIBUTION AGREEMENT

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

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

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

 

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

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

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

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

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

ARTICLE 1

DEFINITIONS

1.1           Defined Terms .

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

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

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

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

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

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

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

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

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

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

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

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

“ BACEN ” means the Central Bank of Brazil.

“ Balance Sheet Date ” means December 31, 2005.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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“ E&Y ” means Ernst & Young LLP.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“ KPMG ” means KPMG International.

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

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

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

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

“ Line Pipe ” means finished or unfinished line pipe.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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ARTICLE 2

CONTRIBUTION

2.1           LSB 2 Investment .

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

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

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

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

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

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

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

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

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

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

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2.4              Purchase Price Adjustment .

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

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

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

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

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

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

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

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

ARTICLE 3

CLOSING

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

ARTICLE 4

DELIVERABLES

4.1           Items to Be Delivered by Tubos .

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

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

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

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

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

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

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

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

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

4.2           Items to Be Delivered by LSB 2 .

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

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

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

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

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

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

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

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

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

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

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

4.3           Items to Be Delivered by the Company .

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

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

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

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

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

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

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

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

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

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

(j)            a duly executed AA Purchase Agreement.

ARTICLE 5

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

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

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

5.2           Authorization of Agreement .

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

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

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

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

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

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