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English ethics manual

  2. 2. GRANT PRIDECO, INC. CORPORATE COMPLIANCE AND BUSINESS ETHICS MANUALAdditional copies of this manual can be obtained from the Human Resources or Legal Department of Grant Pridecos corporate office in Houston, Texas Version Date: 06/2005
  3. 3. Table of ConTenTsForeword ....................................................................................................................3Definitions ..................................................................................................................4 Company PoliciesCompliance and Ethics Resources..........................................................................4Reporting Policy Violations.....................................................................................5Accurate Records ......................................................................................................7Antitrust Issues .........................................................................................................8Bribery and Illegal or Unethical Business Practices ..........................................10Business Gifts...........................................................................................................11Charitable Contributions .......................................................................................13Confidential Information .......................................................................................14Conflicts of Interest.................................................................................................15Delivery of Materials ..............................................................................................17Environmental, Health, and Safety ......................................................................18Equal Opportunity ..................................................................................................19Financial Control and Reporting ..........................................................................20Information and Data Security and Appropriate Computer Use ...................21Intellectual Property ...............................................................................................24International Business ............................................................................................26Political Contributions ...........................................................................................27Records Retention ...................................................................................................28Securities Transactions ...........................................................................................29Sexual Harassment .................................................................................................30Certificate of Compliance ................................................(back inside of manual)
  4. 4. forwardGrant Pridecos reputation for integrity is very important to us and is what provides theCompany an opportunity to serve its customers. Integrity is never to be sacrificed for thesake of results. There is no more important issue than the lawful and ethical conduct ofemployees in their relationships with customers, industry, government and others. This istrue in all countries and communities where the Company operates.The policies set forth in this Manual are applicable to every employee of Grant Pridecoregardless of level, seniority or authority. We all share responsibility for maintaining a highstandard of business conduct at Grant Prideco.This Manual summarizes the Grant Prideco business ethics policies and the code of conductwith which all employees are expected to comply. Read this Manual carefully andunderstand it fully. In some instances, the Companys entire policy may be set forth in thisManual. In other instances, this Manual only summarizes the applicable policy. The fulltext of any summarized policies are set forth in the Companys Management Manual as wellas any division-specific policies that have been published. Contact your supervisor to obtainthe full text of the Management Manual or any division policy. It also is availableelectronically on the Companys Intranet. Should a question arise as to the properinterpretation of a policy, ask your supervisor or a member of the Legal Department forclarification.A single employees misconduct can do much to damage a hard-earned reputation. Allemployees should be aware that conduct that violates the policies set forth in this Manual isalways considered outside the scope of their employment. Violation of these policies mayexpose both the Company and the individual employee to fines, imprisonment, and lawsuitsfor damages. In addition, individuals who violate these policies are subject to appropriatedisciplinary action by the Company, including possible termination of employment.Persons who have employees reporting to them should also take all necessary steps to ensuretheir employees know and follow these policies. In this connection, all managers shouldperiodically consult with their staff members to determine that appropriate procedures forimplementation of Company policies have been developed and are being followed. Michael McShane President and Chief Executive Officer
  5. 5. definiTionsCompany - Grant Prideco and all its subsidiaries.Division President - The Officer of Grant Prideco designated as the President of anoperating segment. Operating segments of Grant Prideco are described in theCompanys 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 Officerof the Company.Management Manual - The Companys Management Manual containing the fulltext of many of the policies summarized in this Manual. Cross references to many ofthe most important sections of the Management Manual are set forth in this Manual.Divisions of the Company also may have published applicable policies. TheManagement Manual is available on the company’s intranet site by clicking on“Human Resources”. ComplianCe and eThiCs resourCesThere are numerous resources available to Company employees so that questionscan be an answered and ethical issues can be reported. Company resources includethe following: Ethics WebsiteThe Company maintains a Legal and Corporate Compliance Website on its intranet.The Ethics Website contains links to many of the Company’s policies that aresummarized in this Ethics Manual, as well as other resources to help employees ofthe Company understand and solve ethical and compliance problems. The Websitealso contains links to the Company’s ethics hotline for reporting ethics andcompliance concerns as well as the Company’s ethics help line for asking questionswhen 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 difficultyaccessing this site, he or she should contact their Human Resources representative orcall the Legal Department. Management ManualThe Company’s Management Manual contains many of the Company’s policies andprocedures relating to ethics and compliance issues, in particular, employee relatedmatters. Copies of the Company’s Management Manual are available from your HRrepresentative as well as on the Company’s Intranet site under the “HumanResources Page”.
  6. 6. Company Employees and ServicesWhen in doubt regarding an ethics or compliance issue, it is always best to discussthe matter with your supervisor or local human resources representative. Inaddition, employees should always feel free to discuss ethics or compliance issueswith their applicable division president, corporate officer or financial officer. Finally,employees can always contact the Company’s legal or internal audit departments. TrainingThe Company provides training on ethics and compliance issues. Training can takethe form of Computer Based Ethics or QHSE training as well as presentations andclassroom sessions on ethics and compliance matters. To schedule training, pleasecontact your applicable HR or QHSE representative or the legal department. reporTing poliCy ViolaTions PolicyAn employee who becomes aware of an apparent violation of the Companyspolicies regarding legal or ethical business conduct must report the violation. Thisincludes violations of policies set forth in this handbook, or other manuals or guidesdistributed by the Company. How to Report an Apparent ViolationThe method in which to report an apparent violation of Company policies regardinglegal or ethical business conduct often depends upon the nature of the apparentviolation. The following summarizes appropriate methods of reporting violations forcertain broad categories of issues:Human Resource Concerns. Human resource concerns, such as discrimination orharassment, can be appropriately reported to an employee’s supervisor or localhuman resource representative.Financial and Accounting Matters. Financial and accounting concerns can beappropriately reported to an employee’s applicable financial manager, the DivisionVice President of Finance, Corporate Controller or the Internal Audit Department.Environmental, Health and Safety. Environmental, health and safety matters can beappropriately reported to your local QHSE representative or the Company’scorporate QHSE department.Legal and Other Matters. Many policies and concerns relate to potential violationsof laws or conflicts of interests. These can be appropriately reported to the legaldepartment.In addition, if an employee is not comfortable for any reason with reportingconcerns through one of the suggested methods above, or if an employee does not
  7. 7. believe that appropriate action was taken by the individual to whom the concernwas initially reported, the employee should feel free to contact their appropriateregional manager, division president or corporate officer. In addition, employee’scan always report concerns of any nature to the Company’s legal or internal auditdepartments.Finally, the Company maintains an employee hotline. This hotline is monitored byboth the Company’s General Counsel and Director of Internal Audit and permitsemployees to report concerns anonymously. Information regarding the Company’shotline (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 CommitteeIf an employee desires to report a financial concern to the Audit Committee of theCompany’s Board of Directors, including matters relating to accounting, financialreporting, internal controls or any audit, employees should utilize the hotlinediscussed above or directly contact the Company’s Director of Internal Audit or VicePresident and General Counsel. Safeguards Against RetaliationNo employee will be adversely affected in employment with the Company as aresult of reporting a violation of Company policy or providing further informationduring an investigation. This includes those who report a violation of the policyagainst discrimination and sexual harassment.When appropriate, safeguards will be applied in an effort to keep the matterconfidential. PenaltiesDeparture from the required standards of conduct according to Company policy andthe law will result in appropriate disciplinary action by Company management. Thismay include termination of employment.Employees who violate the law may be subject to criminal prosecution and may beheld liable for damages incurred by the Company as a result of such violation.Any employee who fails to report violations or provide further information abouta violation will be appropriately disciplined. Disciplinary actions include possibletermination of employment.Any employee who makes false allegations of violations in bad faith shall be subjectto the same disciplinary action as one who fails to report or provide informationabout a violation.
  8. 8. a CCuraTe r eCords PolicyThe Companys records should be kept in a manner that accurately reflects itstransactions. No employee of the Company shall falsify records in any way. Legislation Regarding Accurate Record KeepingThere are a number of U.S. criminal statutes requiring companies to maintainaccurate 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 2002International personnel are expected to be knowledgeable of and comply with locallaws and record keeping requirements. GuidelinesThe Companys books and records should be kept in a manner that: • fully represents the Companys: ◊ 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 Companys 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 ReferencesThe company’s corporate record retention policy is available on the ethics website.In addition, each employee is encouraged to contact the Finance and AccountingDepartment for the Companys detailed accounting policies and read the policies onthe 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
  9. 9. a nTiTrusT i ssues PolicyThe U.S. Federal Government, most state governments, and many other countrieshave adopted antitrust laws. In broad terms, these antitrust laws make it illegal andcriminal 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 TradeCommission, state Attorneys General, and by private individuals seeking trebledamages.The Company firmly supports these laws, and it is strict company policy that allantitrust 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 ActThe 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 companys purchases of products or services from that company). The Clayton ActThe Clayton Act supplements the Sherman Act and also prohibits acquisitions orjoint ventures that may substantially reduce competition. The Robinson-Patman ActThe Robinson-Patman Act generally forbids price discrimination; that is, selling an item of like grade and quantity at different prices to competing customers that maysubstantially lessen competition.
  10. 10. The Federal Trade Commission Act Of 1914The Federal Trade Commission Act of 1914 gave authority to the FTC to determinethat certain conduct constitutes unfair competition. In many instances, violationsof the antitrust laws also are considered unfair competition in violation of theFederal Trade Commission Act. Laws Enforcing Antitrust Policies in EuropeThe antitrust laws of the European Union (EU) apply to transactions that occur inthe EU.The two principal EU provisions governing antitrust policies are Articles 85 and 86of the Treaty of Rome, which established the EU. Never assume that just because apractice is legal (or illegal) under U.S. law that it is necessarily legal under the EUrules.Questions about activities in Europe that appear to be inconsistent with U.S. law orwhich involve substantial amounts of money should be reviewed with CompanyCounsel. Price FixingPrice fixing is an area in which employees may be susceptible to violation ofantitrust laws.Price fixing occurs when two or more competitors agree on how they will chargecustomers 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 exactprice was fixed, or that the price involved was reasonable. Nor does it matterwhether the agreement to fix prices was in writing or even discussed orally. Courtsand juries can infer a conspiracy to fix prices through certain actions or failure totake action.In order to ensure that you do not violate the law, do not discuss any of thefollowing with your competitors: • Past, present or future pricing • Production capacity • Production allocation • Mutual customers • Bidding • MarketingFor example, you could be found guilty of price fixing if you were at a meetingwhere competitors were present and an unscheduled discussion of industry pricesdeveloped. In a situation like this, you must excuse yourself and report the matter tothe Companys Legal Department.
  11. 11. Except for bona fide purchase and sale agreements where Grant Prideco is selling aproduct to or purchasing a product from a competitor, it is against Company policyto accept price lists from competitors or to give them copies of our price lists. PenaltiesThe 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 causeemployee and thier family substantial anguish. In addition, employee’s improperactions could cost the Company heavy fines or expose it to lawsuits for trebledamages. Applicable Cross-ReferenceFor additional information on the policies described, each employee is encouragedto contact the Legal Department and read the policies on the ethics website. b ribery and i llegal or u neThiCal b usiness p raCTiCes PolicyNo employee or representative of the Company shall, directly or through anintermediary, 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 mightinjure the Companys business reputation. Bribery of Government OfficialsPayment of money or gifts that could be construed as an attempt to induce agovernment official or political party to assist the Company in obtaining or retainingbusiness 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 andfederal laws, including the U.S. Foreign Corrupt Practices Act.Small payments to government officials whose duties are ministerial or clerical inorder to expedite services to which the Company is otherwise entitled are notprohibited if they conform to local practice. For example, these payments wouldnever be permitted in the U.S. Any such payment in excess of $250 must be reportedto the Internal Audit Department or attorney in the legal department. Other Commercial BriberyPayment of money or gifts that could be construed as an attempt to induce a personto 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
  12. 12. Offering nominal business gifts is acceptable provided the gifts conform to theguidelines described in the “Business Gifts” section of this handbook. QuestionsEmployees with questions about the legal or ethical nature of a transaction shouldcontact the Company’s Legal Department. PenaltiesThe Company may be fined up to $2.5 million for failure to comply with state andfederal regulations regarding bribery and other corrupt business practices.In addition, any employee or Company representative who willingly violates stateor federal regulations may be personally fined up to $10,000 and imprisoned up tofive years. U.S. law extends these penalties to non-U.S. citizens. Applicable Cross-ReferencesFor additional information on the policies described, each employee is encouragedto contact the Legal Department and read the policies on the ethics website. b usiness g ifTs PolicyIf 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 fromthat organization, person, or group: • Gifts • Payments • Fees • Services • Opportunities • FavorsException: Employees may accept nominal gifts as stipulated below. Purpose and Scope of PolicyThe purpose of this policy is to avoid any misunderstanding with third parties thatgifts, contributions or donations are required or will aid in gaining or continuingbusiness with the Company. It applies to all individual employee activities.However, solicitation of gifts, door prizes, etc. for Company-sponsored events suchas golf tournaments shall not be prohibited by this policy, to the extent approved bya Division President.
  13. 13. Unacceptable Business GiftsGifts of cash, stocks, bonds or similar items shall not be given or accepted,regardless of amount. Acceptable Business Gifts From Outside CompaniesIt is acknowledged that certain gifts of nominal value are widely offered as commonbusiness practice and may be accepted as such. In no instance, however, shouldgifts, contributions or donations be requested or in any way solicited by a Companyemployee. Acceptable Business Gifts To Outside CompaniesAll gifts, favors and entertainment offered to others by employees of the Companywill be in accordance with widely accepted good business practices and will be ofsuch a nature that public disclosure of all related facts would not embarrass theemployee 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 GiftsReport any of the following to the appropriate Division President and the LegalDepartment: • 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 amountIf you have any questions regarding the propriety of any entertainment or gifts,especially if you have dealings with government employees who may not beallowed to accept such items, consult the Companys Legal Department. Applicable Cross-ReferencesFor additional information on the policies described, each employee is encouragedto contact such employees HR Representative or the Legal Department and read thepolicies in the Management Manual and on the ethics website, including thefollowing policies: • L-01 – Conflicts of Interest • L-05 – Anti bribery and FCPA compliance policy
  14. 14. C hariTable C onTribuTions PolicyCharitable contributions up to $250 can be made at the local office level consistentwith this policy. Charitable contributions over $250 must be approved by theDivision President or Corporate Vice President. Charitable contributions over $1,000must also have the approval of the President of the Company and Vice President ofMarketing and Communications.Employees of the Companys operations outside the U.S. should follow thecharitable 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 charitablecontributions for purposes of this policy and should not be categorized as such inthe Company’s records. Such payments may only be made if they comply with theCompany’s policy on Bribery and Illegal or Unethical Business Practices. ReceiptsReceipts should be obtained for all charitable contributions.Receipts for contributions made in the U.S. should list Grant Prideco, L.P. as thecontributor. All such receipts should be forwarded to the Tax Department at theHouston Corporate Office.Receipts for contributions made outside the U.S. should list the local Grant Pridecoentity as the contributor. Acceptable ContributionsCharitable contributions permitted by this policy can be made to Federal (national),state (provincial) or local government units that use the contribution exclusively forpublic purposes. This does not include contributions to political candidates, officialsor parties.Gifts to entities organized and operated exclusively for religious, charitableeducational and similar purposes also qualify.
  15. 15. C onfidenTial i nformaTion PolicyNo employee or former employee shall disclose Company trade secrets or otherconfidential information. Trade Secret AgreementEach Grant Prideco employee may be required to sign an agreement not to revealthe Company’s trade secrets to others or use such trade secrets for his or herpersonal benefit.This agreement applies for as long as an employee is employed at Grant Prideco andalso after his or her employment has terminated. Definition of Confidential InformationFor the purposes of this policy, the Company defines confidential information asincluding: • 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 InformationThe Company helps to maintain its business position through technologicalinnovations that improve products and lower costs. These innovations aredeveloped at great cost to the Company and represent valuable business tradesecrets.Disclosing any of the Company’s confidential technological information mayseriously harm the Company’s competitive position. Questions Regarding ConfidentialityEmployees who have questions regarding what constitutes confidential informationshould discuss the matter with their Regional Manager, Division President or LegalDepartment.
  16. 16. Applicable Cross-ReferencesFor additional information on the policies described, each employee is encouragedto read the policies set forth in the Companys Management Manual and the ethicswebsite, including the following: • L-01 – Conflicts of Interest • L-02 – Protection of Confidential Information/Inventions • L-08 – Disclosure of Company Information • L-09 – News Release Clearance Procedures C onfliCTs of i nTeresT PolicyNo employee shall have any investment in or relationship with an outsideorganization that might put that employee in a position that conflicts with the bestinterest of the Company. Possible Conflicts of InterestThe 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 CompanyFor the purposes of this policy, the Company defines an associate as: • Any member of an employees family, including: ◊ Spouse ◊ Father ◊ Mother ◊ Brother ◊ Sister ◊ Aunts ◊ Uncles ◊ Nieces ◊ Nephews ◊ Grandparents ◊ In-laws
  17. 17. • 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 CompanyIt is a violation of this policy if an employee owns a financial interest in a companythat seeks to do business with the Company, especially if that employee can have aneffect on decisions regarding the Company’s business with such organization. Violation: Use of Company AssetsIt is a violation of this policy for an employee to use a Company asset for his or herpersonal advantage. Also, it is a violation to allow a third party to use a Companyasset without prior agreement by and fair payment to the Company. Violation: Acquisition of AssetsIt is a violation of this policy for an employee to acquire property or other assets ifthe value of the assets is likely to be affected by an action of the Company. This isespecially true if the employee can make a decision or recommendation that couldaffect the Company’s action regarding the employees property or other assets. Violation: EmploymentIt is a violation of this policy for an employee to serve on the board of directors or towork for, or have contracts with, any: • Supplier • Competitor • Customer of the CompanyThe President of the Company may approve exceptions to the policy in appropriatecases. Reporting Conflicts of Interest or Possible ViolationsAll employees are required to disclose to the appropriate Division President and theLegal Department any proposed transaction or existing situation in which a conflictof interest could arise.Employees of Grant Prideco International Operations should report any conflicts ofinterest to the appropriate Region Manager and the Legal Department in Houston.Periodically, employees will be asked to complete a form or certificate on which theywill list details about their relationships or holdings that might be deemed conflicts
  18. 18. of interest. Failure to complete the form truthfully will be a basis for appropriatedisciplinary action including possible termination of employment.Division Presidents or Corporate Vice Presidents in consultation with the LegalDepartment will determine if a conflict could adversely effect an employeesjudgment or performance of job duties. Applicable Cross-ReferencesFor additional information on the policies described, each employee is encouragedto read the policies set forth in the Companys Management Manual or ethicswebsite, including the following: • L-01 – Conflicts of Interest • HR-7 – Outside Employment d eliVery of m aTerials PolicyIt is the policy of the Company to deliver the quality of service and quantity ofmaterials requested by customers. GuidelinesThe Company has established the following guidelines to ensure proper delivery ofmaterials. It is the responsibility of each country or district manager to ensure thatthe 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 ViolationsAny deviation from this policy should be reported to a Division President or otherDivisional Officer or Corporate Officer or the Legal Department.
  19. 19. e nVironmenTal , h ealTh and s afeTy PolicyAll employees must comply with laws and regulations of the jurisdictions they areoperating in concerning the protection of the environment and the safety ofCompany personnel. ComplianceIt is essential that all Company employees become familiar with and comply withthe 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 CompanyEach Company Division must utilize appropriate management practices and soundpollution control mechanisms to prevent risks to: • Employees • Public health • The environment QuestionsAny employee who has questions regarding any environmental, health or safetymatter should consult his or her supervisor or applicable QHSPE representative. PenaltiesSubstantial fines and other penalties can be assessed against the Company forviolation of environmental and workplace safety laws. Managers and employeeswho knowingly violate the law and fail to correct any such violation may be heldcriminally liable.Any employee who delays or fails to notify his or her supervisor of violations orwho knowingly makes false statements or falsifies documents relating to thesematters can create substantial liability for the Company and may also be foundpersonally liable. Applicable Cross-ReferencesFor additional information on the policies described, each employee is encouragedto contact the QHSE Department and read the policies set forth in the Company’sManagement Manual, including the following: • HSE-01 – QHSE Management System • HSE-02 – Health System • HSE-03 – Environmental Protection • HSE-04 – Employee Security
  20. 20. • 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 PolicyThe Company will provide equal opportunity for employment to all individualsregardless of: • Race • Color • Religion • Sex • National origin • Age • Marital status • Veteran status • DisabilityThe Company makes an exception to this policy only when hiring for a position thatrequires specific physical abilities to perform the primary functions of the job. PurposeThe 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 Companyis also committed to conducting business with due regard to the human dignity andself-worth of each individual. Applicable Cross-ReferencesFor additional information on the policies described, each employee is encouragedto contact the Human Resources Department and read the policies in the CompanysManagement Manual, including the following: • HSE-03 – Equal Employment Opportunity
  21. 21. f inanCial C onTrol r eporTing PolicyAll employees must follow appropriate internal accounting control procedures. Allfinancial and accounting transactions will be accurately and fully reported in theCompanys financial records and financial reports. Internal Accounting ControlsOperating units and divisions are responsible for implementing control proceduresthat 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 IntegrityDivision Management is required to submit periodic statements to the Company’sChief Financial Officer acknowledging their responsibility for the preparation andintegrity of financial information submitted for inclusion in the Company’sconsolidated financial statements.The statement will also acknowledge responsibility for fostering a strong ethicalclimate and maintaining adequate internal accounting controls systems in thatregion. Reporting Policy ViolationsAny employee who becomes aware of any possible policy violation should report itto his or her Division President, Manager or Controller or Corporate Officer, whowill investigate and take appropriate action, including reporting to the LegalDepartment and Internal Audit Department as appropriate.For more information, see the Reporting Policy Violations section in this Manual. 0
  22. 22. informaTion daTa seCuriTy a ppropriaTe CompuTer use PolicyEach 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 ScopeThe Company has a significant responsibility to our customers and shareholders toprotect 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 theCompany 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 InternetThis policy is intended to protect the security of confidential information and tosafeguard against embarrassment or legal ramifications arising from improper useof the Company’s network. Business While TravelingWhen traveling on business, employees should consider whether it is possible theirconversations, either in person or over the phone, could be overheard, eitherelectronically or otherwise.In some places, cellular phone conversations are monitored. Also, in some placeselectronic bugs or eavesdropping devices may monitor conversations. Employeesshould be aware of these possibilities and take precaution to ensure thatconfidential information important to the Companys business cannot be learnedthis way. Employees should always be sensitive to situations where theirconversations can be overheard, such as airplanes.Employees should also be certain not to leave any sensitive documents unattendedat any time. For example, employees should never leave a briefcase containingconfidential information in a hotel room where security may not be adequate orthrow away sensitive documents without ensuring that they are unreadable.
  23. 23. Definition: NetworkA network connects the various worldwide computer systems of the Company andincludes all of the following: • Computers • Software • Communications equipment • Communication lines • Cabling Computer UseComputing equipment and software issued by the Company are the property ofGrant Prideco and are provided for authorized business use only. Likewise, accessto the Internet or other outside networks using Company equipment, phone lines ornetwork is provided for authorized business use only. Copyright/LicensingThe Company’s employees are responsible for properly handling copyrighted andlicensed materials and software. Unless explicitly authorized or when in doubt, donot copy.Before installing any software not provided by the Companys InformationTechnology Department, employees must obtain the approval of the IT Department. Electronic MailElectronic mail (e-mail) is subject to being disclosed to third parties in litigation andcan 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 UseEmployee use of the Internet is limited to business-related purposes such as: • Communicating with customers and suppliers • Researching relevant topics • Obtaining useful business information
  24. 24. All existing Company policies apply to conduct on the Internet, including - but notlimited to - those that deal with intellectual property, privacy, misuse of companyresources, sexual harassment and confidentiality. Sensitive InformationConfidential, classified, or proprietary information of the Company or its customersshall not be transmitted over the Internet or to other outside networks without priormanagement approval and reasonable security measures. In addition, export-controlled information or technical data shall not be posted to public groups on theInternet. Inappropriate Internet UseThe 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 UseUse of the Company network to access the Internet is subject to monitoring. TheCompany may implement and maintain an audit log of every Internet transactionincluding: • World Wide Web site visits; • chat, newsgroup or e-mail messages; and • file transfers into or out of the Companys internal network. PenaltiesUsing the Companys facilities or equipment for abusive, unethical, or“inappropriate” use of the Internet may be grounds for disciplinary action ortermination.The Company has installed firewalls and other security systems to assure the safetyand security of its network. Any employee who attempts to disable, defeat orcircumvent any company security facility will be subject to disciplinary action up toand including termination.
  25. 25. Applicable Cross-ReferencesFor additional information on the policies described, each employee is encouragedto contact the IT Department and read the policies in the Company’s ManagementManual, 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 PolicyEmployees shall protect the Company’s intellectual property and no employee shallinfringe upon the rights of third parties with respect to their intellectual property. DefinitionsFor the purpose of this policy, intellectual property means any idea, process, identitymark, invention, or improvement conceived by an employee that relates to acompanys business or was developed or acquired with the resources of thatcompany. 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 economicvalue to a company because of its secrecy - something that gives a company anadvantage or head start over its competitors. It does not have to be covered by apatent 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 OthersNo employee shall knowingly appropriate, infringe, disparage, or otherwise makeimproper use of a valid trademark, patent, trade secret, or proprietary technologybelonging to another.Employees shall not disclose any trade secret or confidential information of theirformer employer(s), including but not limited to: • Customer lists • Marketing plans • Sales data • Products or services under development • Technical or performance data
  26. 26. Property of the CompanyAll employees shall safeguard the Company’s intellectual property and implementthe necessary precautions, which include, but are not limited to, the followingprocedures 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 secrecyComputing equipment and software issued by the Company are the property ofGrant Prideco and are provided for authorized business use only.Each employee shall promptly disclose any new idea or invention of which theemployee becomes aware to enable the Company to timely protect the asset.Any employee receiving unsolicited information that may contain trade secrets orproprietary information of a third party shall promptly forward the material to theCompanys General Counsel before reading or analyzing such information. Reporting Infringements and ViolationsEmployees must report all opportunities, instances, or situations that might infringeupon or violate the Company’s policy regarding intellectual property to theappropriate Division President and the Legal Department. Management Manual Cross-ReferencesFor additional information on the policies described, each employee is encouragedto contact the Legal Department and read the policies in the Company’sManagement Manual and ethics web site, including the following: • L-02 – Protection of Confidential Information/Inventions
  27. 27. i nTernaTional b usiness PolicyCompany employees must comply with U.S. and non-U.S. laws that regulateinternational business, including: • Export control laws • Economic sanctions laws • Anti-boycott laws • The Foreign Corrupt Practices ActThese laws also apply to tile Company’s non-U.S. business units and individually toCompany 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 LawsThe U.S. government regulates the export of commodities, technical data, andsoftware developed, produced or owned by U.S-based companies. Governmentcontrols also extend to the re-export of items from one foreign destination toanother. Economic Sanctions LawsAt times the U.S. government imposes economic sanctions against specific countries,companies and individuals. Economic sanctions laws prohibit U.S. citizens andcompanies from conducting business, including export and re-export activities, withthe specified countries, companies or individuals. Anti-Boycott LawsU.S. anti-boycott laws prohibit actions that could be construed as participation in anunsanctioned international boycott such as the economic boycott of Israel by someArab nations. Foreign Corrupt Practices ActThe Foreign Corrupt Practices Act (FCPA) prohibits the offering or payment ofbribes to a foreign government official or political party as a means of obtaining orretaining business. For more information on the FCPA, see the “Bribery and Illegalor Unethical Business Practices” section of this manual. Potential ViolationsEmployees concerned about whether or not a proposed transaction complies withU.S. law or Company policy should contact the Company’s Legal Department.Any potential violation of applicable laws must be immediately reported to theCompanys General Counsel and activities regarding the transaction in questionmust be ceased until the General Counsel provides written guidance that thetransaction does not violate U.S. law.
  28. 28. PenaltiesViolation of any of these laws could result in severe criminal and civil penaltiesagainst the Company and its individual employees. Penalties may includesubstantial fines and imprisonment. In some circumstances, the Company could loseits right to export or re-export its products or to perform government contracts. Applicable Cross-ReferencesFor additional information on the policies described, each employee is encouragedto contact the Legal Department and read the policies on the ethics website and inthe 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 PolicyNo Company employee shall, either directly or through an intermediary, useCompany funds or resources to make contributions to political parties, partyofficials, or candidates for U.S. federal office.This policy applies to all U.S. locations and personnel. International personnel areexpected to be knowledgeable of and comply with local laws. Personal Contributions and Political ActivitiesAn employee may make personal political contributions as long as that employeemakes it clear that he/she is acting in his or her own behalf and not as arepresentative 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 employees 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 ContributionsIt is illegal for the Company to make contributions to a candidate for U.S. federaloffice. Some states permit companies to contribute to political candidates. However,the Companys President and General Counsel must approve every contribution ofthis kind.
  29. 29. The Company may authorize political contributions through Political ActionCommittees (PACs), with approval from the Company President and GeneralCounsel. r eCords r eTenTion PolicyAll U.S. and international locations shall establish procedures to meet the followingrecord 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 ImplementationDepartment Managers are responsible for maintaining an up-to-date records listingfor their area and for ensuring compliance with the Company’s Corporate recordretention policy. Vital RecordsTo ensure continuation of operations in case of disaster, it is essential to protect andsecure vital records and documents, including computerized records.Vital records contain information essential to the: • companys 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.
  30. 30. s eCuriTies T ransaCTions PolicyIt is against federal law, Company policy, and the rules established by the New YorkStock Exchange for an employee to buy or sell Company securities when theemployee is in the possession of material inside information.It is also unlawful and against Company Policy for an employee, officer or directorto give material inside information to any other person who may then trade on thebasis of that information. Definition of Material Inside InformationMaterial information includes any information that a reasonable investor is likely toconsider important when determining whether to buy, sell, or hold the Company’ssecurities.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 programSuch information is considered inside information when it has not been generallydisclosed to the public in a press release or a filing with the Securities and ExchangeCommission (such as a form 10-K or form 10-Q). Definition of an InsiderInsiders include all employees of the Company who have access to or possessmaterial inside information. They are not limited to officers and directors. Possible SanctionsFines 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
  31. 31. Questions Regarding TransactionsEmployees who are unsure whether a trade is proper should consult with theCompany’s General Counsel before engaging in the transaction. Applicable Cross-ReferencesFor additional information on the policies described, each employee is encouragedto contact the Legal Department and read the policies in the Company’s ethicswebsite. s exual h arassmenT PolicyThe Company does not condone or tolerate the sexual harassment of employees,whether committed by supervisory or non-supervisory personnel. Definition: Sexual HarassmentUnwelcome sexual advances, requests for sexual favors and other verbal or physicalconduct 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 individuals 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 individuals work performance or creates an intimidating, hostile or offensive work environment. Reporting Sexual HarassmentAll complaints of possible sexual harassment must be reported to and investigatedby the Human Resources Department.Employees experiencing or witnessing sexual harassment should contact theirimmediate supervisor or manager. If the complaint involves the immediatesupervisor or manager, then the employee should contact a Human ResourcesRepresentative.Employees who in good faith report alleged incidents of sexual harassment willunder no circumstances be subject to reprisal or retaliation of any kind. Anyemployee who feels that he or she has been subject to reprisal or retaliation shouldcontact a Human Resources Representative. 0
  32. 32. PenaltiesWhen an investigation of a sexual harassment complaint results in verification of theallegations, prompt corrective and disciplinary action will be taken, up to andincluding termination.Any employee who is found to have knowingly made a false accusation of sexualharassment or retaliation will also be subject to disciplinary action. Applicable Cross-ReferencesFor additional information on the policies described, each employee is encouragedto contact such employees HR Representative or the legal Department and read thepolicies 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
  33. 33. CertifiCate as to ComplianCe with Corporate Business ethiC poliCiesI have read, understand, and will comply with the following 2005 GrantPrideco 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 HarassmentName (printed):Signature:Date: Location:White Copy – Retained by: Human Resources Department Corporate Office ® Houston, TexasYellow Copy: Remains in Handbook