10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal year ended December 31, 2003

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-13884

COOPER CAMERON CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware	76-0451843
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1333 West Loop South
Suite 1700
Houston, Texas	77027
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (713) 513-3300

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, Par Value $0.01 Per Share	New York Stock Exchange
Junior Participating Preferred Stock	New York Stock Exchange
Purchase Rights
Par Value $0.01 Per Share

     Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act) Yes x No o

     The aggregate market value of the Common Stock, par value $0.01 per share, held by non-affiliates of Registrant as of June 30, 2003, our most recently completed second fiscal quarter, was approximately $1,967,302,022. For the purposes of the determination of the above statement amount only, all directors and executive officers of the Registrant are presumed to be affiliates. The number of shares of Common Stock, par value $.01 per share, outstanding as of February 23, 2004 was 53,927,516.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant’s Annual Report to Stockholders for 2003 — Part II.

TABLE OF CONTENTS

		Page
				2003
		2003		Annual
Item		Form 10-K		Report
Part I
1.	Business		1		—
	Markets and Products		1		—
	Market Issues		5		—
	Geographic Breakdown of Revenues		5		—
	New Product Development		5		—
	Competition		6		—
	Manufacturing		6		—
	Backlog		7		—
	Patents, Trademarks and Other Intellectual Property		7		—
	Employees		7		—
	Executive Officers of Registrant		8		—
	Available Information		8		—
	Glossary of Terms		8		—
2.	Properties		9		—
3.	Legal Proceedings		9		—
4.	Submission of Matters to a Vote of Security Holders		10		—
Part II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		11		—
6.	Selected Financial Data		11		61
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11		25-35
7A.	Quantitative and Qualitative Disclosures about Market Risk		11		35
8.	Financial Statements and Supplementary Data		11		36-60
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		12		—
9A.	Controls and Procedures		12		—
Part III
10.	Directors and Executive Officers of the Registrant		12		—
11.	Executive Compensation		15		—
	Directors’ Compensation		15		—
	Compensation and Governance Committee Report on Executive Compensation		15		—
	Executive Compensation Tables		19		—
	Employment, Termination and Change of Control Arrangements		21		—
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		23		—
	Security Ownership of Certain Beneficial Owners		23		—
	Security Ownership of Management		24		—
13.	Certain Relationships and Related Transactions		24		—
14.	Principal Accountant Fees and Services		24		—
	Principal Accounting Firm Fees		24		—
	Pre-approval Policies and Procedures		25		—
Part IV
15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K		25		—
	Signatures		30		—
Form of Change in Control Agreement
Credit Agreement
Form of Indemnification Agreement
Portions of the 2003 Annual Report
Subsidiaries of Registrant
Consent of Independent Auditors
Certification of CEO Pursuant to Section 302
Certification of CFO Pursuant to Section 302
Certification of CEO & CFO Pursuant to Section 906

PART I

ITEM 1. BUSINESS

     Cooper Cameron Corporation (“Cooper Cameron” or the “Company”) is a leading international manufacturer of oil and gas pressure control equipment, including valves, wellheads, controls, chokes, blowout preventers and assembled systems for oil and gas drilling, production and transmission used in onshore, offshore and subsea applications. Cooper Cameron is also a leading manufacturer of centrifugal air compressors, integral and separable gas compressors and turbochargers. See “Glossary of Terms” at the end of Item 1 for definitions of certain terms used in this section. Any reference to Cooper Cameron Corporation, its divisions or business units within this paragraph or elsewhere within this 10-K as being a leader, leading provider, leading manufacturer, or having a leading position is based on the amount of equipment installed worldwide and available industry data.

     Cooper Cameron’s origin dates back to the mid-1800s with the manufacture of steam engines that provided power for plants and textile or rolling mills. By 1900, with the discovery of oil and gas, Cooper Cameron’s predecessors moved into the production of internal combustion engines and gas compressors. Product offerings were added by the Company’s predecessors through various acquisitions, in particular the acquisitions of The Bessemer Gas Engine Company (gas engines and compressors); Pennsylvania Pump and Compressor (reciprocating air and gas compressors); Ajax Iron Works (compressors); Superior (engines and compressors); Joy Petroleum Equipment Group (valves, couplings and wellheads); Joy Industrial Compressor Group (compressors); and Cameron Iron Works (blowout preventers, ball valves, control equipment and McEvoy-Willis wellhead equipment and choke valves).

     Cooper Cameron, a Delaware corporation, was incorporated on November 10, 1994. The Company operated as a wholly-owned subsidiary of Cooper Industries, Inc. (“Cooper”) until June 30, 1995, the effective date of the completion of an exchange offer with Cooper’s stockholders resulting in the Company becoming a separate stand-alone company. The common stock of Cooper Cameron trades on the New York Stock Exchange under the symbol “CAM”.

     In 1998, the Company acquired Orbit Valve International, Inc. (“Orbit®”). Orbit became part of the Cooper Cameron Valves organization. Orbit manufactures and sells high-performance valves and actuators for the oil and gas and petrochemical industries. Orbit’s primary manufacturing facility is located in Little Rock, Arkansas.

     During 1999, the Company sold its rotating natural gas compressor business to Rolls-Royce plc for approximately $200 million. The operations that were sold had primary facilities in Liverpool, United Kingdom, Hengelo in the Netherlands and Mt. Vernon, Ohio.

     In January 2001, the Company decided to exit the market for new Superior brand natural gas engines and close its Springfield, Ohio manufacturing facility. Manufacturing operations at this facility were discontinued in the first half of 2001.

     In September 2002, the Company acquired certain assets of Stewart and Stevenson’s Petroleum Equipment Segment, providing a combination of product line additions and cost savings opportunities within the Cameron division. In December 2002, the Company acquired Nutron Industries, a valve manufacturer based in Edmonton, Canada. This acquisition expanded the product offerings of the Cooper Cameron Valves division, and provided opportunities to grow sales outside the United States, particularly in Canada.

     In January 2004, the Company reached an agreement to acquire Petreco International Inc., a Houston, Texas-headquartered supplier of oil and gas separation products, for approximately $90 million, net of cash acquired and debt assumed. Petreco’s 2003 revenues were approximately $117 million, and income before taxes was approximately $12 million. Petreco is a market leader in highly engineered custom processing products for the worldwide oil and gas industry. This acquisition will increase the Company’s presence in the oil and gas separation market and is expected to be complementary to existing businesses.

Business Segments

Markets and Products

     During 2003, the Company’s operations were organized into three separate business segments — Cameron, Cooper Cameron Valves and Cooper Compression, each of which conducts business as a division of the Company. In 2004, Petreco International will be added as a fourth division. For additional business segment information for each of the three years in the period ended December 31, 2003, see Note 13 of the Notes to Consolidated Financial Statements, which Notes are incorporated herein by reference in Part II, Item 8 hereof (“Notes to Consolidated Financial Statements”).

1

Cameron Division

     Cameron is one of the world’s leading providers of systems and equipment used to control pressures and direct flows of oil and gas wells. Its products are employed in a wide variety of operating environments including basic onshore fields, highly complex onshore and offshore environments, deepwater subsea applications and ultra-high temperature geothermal operations.

     Cameron’s products include surface and subsea production systems, blowout preventers, drilling and production control systems, gate valves, actuators, chokes, wellheads, drilling riser and aftermarket parts and services. Cameron’s products are marketed under the brand names Cameron®, W-K-M®, McEvoy® and Willis®. Additionally, Cameron manufactures elastomers, which are used in pressure and flow control equipment and other petroleum industry applications, as well as in the petroleum, petrochemical, rubber molding and plastics industries.

     Cameron’s aftermarket program, CAMSERV™, combines traditional aftermarket services and products, such as equipment maintenance and reconditioning, with Cameron’s information technology toolset. CAMSERV is designed to provide flexible, cost-effective solutions to customer aftermarket needs throughout the world. Cameron also provides an inventory of repair parts, service personnel, planning services and inventory and storage of customers’ idle equipment. During the last couple of years, Cameron has continued to enhance its aftermarket presence worldwide with new facilities in Saudi Arabia, Macae, Brazil and Malabo, Equatorial Guinea. In April 2003, a world-class aftermarket facility was opened in Luanda, Angola to service the growing business in West Africa. Additionally, a major expansion was completed in 2003 at Veracruz, Mexico, and construction has begun on a new offshore service center in Nigeria.

     As petroleum exploration activities have increasingly focused on subsea locations, Cameron directed much of its new product development efforts toward this market. Cameron’s patented SpoolTree™ horizontal subsea production system, which was introduced in 1993, is used in oil and gas fields with subsea completions that require frequent retrieval of downhole equipment. With the SpoolTree system, well completion and workover activities can be performed without a workover riser or removal of the Christmas tree and under conventional blowout preventer control, thereby reducing the time, equipment and expense needed to perform such activities. As a result of license agreements reached during 2003, the Company now receives royalties from two subsea tree manufacturers on their global production of horizontal subsea trees using Cooper Cameron’s patented technology. Cameron plans to add to its tradition of innovation with the introduction of an all-electric subsea production system that is expected to simplify installations, offer greater reliability and provide cost savings to customers. There will be a major offshore trial of the system in the U.K. North Sea during 2004. This electric system will be featured in Cooper Cameron’s display at the 2004 Offshore Technology Conference in Houston, Texas.

     The Cameron Willis Chokes business unit was formed to focus resources on the choke product line with the goal of enhancing Cameron’s performance in this product line. Cameron Willis manufactures Cameron and Willis brand chokes and Cameron brand actuators for the surface and subsea production markets. The Company’s primary choke manufacturing operations have now been consolidated into its Longford, Ireland facility with surface gate valve actuator manufacturing primarily performed at the Cameron Willis plant in Houston, Texas, which commenced operations in an expanded facility in March 2002.

     In 1998, Cameron opened a new research center in Houston, Texas that has ten specially designed test bays to test and evaluate Cameron’s products under realistic conditions. These include environmental test chambers to simulate extreme pressures and temperatures, high-strength fixtures for the application of multi-million pound tensile and bending loads, high pressure gas compressors and test enclosures, a hyperbaric chamber to simulate the external pressures of deep water environments, and two circulation loops for erosion and flow testing.

     During 2001, Cameron reorganized to address the growing market for system-level subsea projects, in which clients entrust their suppliers with more responsibility to deliver complete systems. The Offshore Systems organization was created expressly for such projects and provides concept design, systems engineering, and project management for offshore projects. The Offshore Systems organization has established multiple “Centers of Excellence” facilities, identifying the Company’s most efficient manufacturing and service locations. Using advanced communications technology, Offshore Systems has developed project management processes that allow global management across multiple sites. These processes include the coordination of Cameron’s own Centers of Excellence with the products and services that subcontractors provide to the systems. Centers of Excellence for specific areas include: project management, systems engineering and manifold and flowline connection engineering in Houston, Texas; subsea wellheads in Singapore; subsea trees in Leeds, England; subsea chokes in Longford, Ireland; and subsea production controls in Celle, Germany.

     During 2002, Cameron introduced the new Environmental Safe Guard (ESG™) system, which combines a traditional surface blowout preventer with a subsea device (the ESG unit) at the bottom of the drilling string. This allows operators to use the less expensive second- or third-generation semi submersible rigs, instead of fourth- or fifth-generation units, to drill in deepwater locales. During 2003, these systems were deployed offshore Brazil and Indonesia, as well as in the Mediterranean Sea.

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     Also in 2002, Cameron Controls was reorganized, with drilling controls merging with Cameron’s Drilling organization, and production and workover controls merging with the Offshore Systems organization. Cameron’s two primary controls manufacturing, assembly and testing facilities are located in Celle, Germany and Houston, Texas.

     Cameron primarily markets its products directly to end-users through a worldwide network of sales and marketing employees, supported by agents in some international locations. Due to the technical nature of many of the products, the marketing effort is further supported by a staff of engineering employees. The balance of Cameron’s products are sold through established independent distributors.

     Cameron’s primary customers include oil and gas majors, independent producers, engineering and construction companies, drilling contractors, rental companies and geothermal energy producers.

Cooper Cameron Valves Division

     Cooper Cameron Valves (CCV) is a leading provider of valves and related systems primarily used to control pressures and direct the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines and transmission systems to refineries, petrochemical plants and industrial centers for processing. Large diameter valves are used primarily in natural gas transmission lines. Smaller valves are used in oil and gas gathering and processing systems and in various types of industrial processes in refineries and petrochemical plants. Equipment used in these environments is generally required to meet demanding API 6D and American National Standards Institute (ANSI) standards.

     CCV’s products include gate valves, ball valves, butterfly valves, Orbit valves, rotary process valves, block & bleed valves, plug valves, globe valves, check valves, actuators, chokes and aftermarket parts and services. These products are marketed under the brand names Cameron®, W-K-M®, Orbit®, Demco®, Foster®, NAVCO®, Nutron®, Thornhill Craver™, and TruSeal®. During the first quarter of 2000, CCV expanded its field service capabilities with the acquisition of Valve Sales Inc., a Houston-based valve repair and manufacturing company. As described previously, Nutron, a Canadian valve manufacturer, was acquired in December 2002 in order to further expand CCV’s product offerings, particularly in Canada.

     A major focus during 2003 was rationalization of facilities and the related costs. These efforts include the restructuring of the Oklahoma City plant and the consolidation of CCV’s four Edmonton, Canada facilities into one location. Another area of focus in 2003 was the expansion of the aftermarket business. Six new facilities were added during 2003, including four outside the U.S., and three existing facilities were expanded. CCV now has a total of 15 aftermarket locations worldwide.

     CCV markets its equipment and services through a worldwide network of combined sales and marketing employees, distributors and agents in selected international locations. Due to the technical nature of many of the products, the marketing effort is further supported by a staff of engineering employees.

     CCV’s primary customers include oil and gas majors, independent producers, engineering and construction companies, pipeline operators, drilling contractors and major chemical, petrochemical and refining companies.

Cooper Compression Division

     Cooper Compression was created in 2002 through the combination of Cooper Energy Services (CES) and Cooper Turbocompressor (CTC). The business is divided into Reciprocating Technology, which encompasses the products and services historically provided by CES, and Centrifugal Technology, which encompasses the air and gas compression markets traditionally served by CTC.

     Cooper Compression is a leading provider of reciprocating and centrifugal technology. Cooper Compression’s products include aftermarket parts and services, integral reciprocating engine-compressors, reciprocating compressors, turbochargers, control systems, integrally geared centrifugal compressors, compressor systems and controls. Its aftermarket services include spare parts, technical services, repairs, overhauls and upgrades.

     Cooper Compression’s products and services are marketed under the Ajax®, Superior®, Cooper-Bessemer®, Penn™, Enterprise™, Texcentric®, Nickles Industrial™, Turbine Specialties™ (Reciprocating Products) and Turbo Air®, Genuine Joy® (aftermarket parts only), Dry Pak™, TA™ and MSG® (centrifugal products) brand names. Cooper Compression provides global support for its products and maintains sales and/or service offices in key international locations.

3

Reciprocating Technology

     Cooper Compression provides Ajax integral engine-compressors (140 to 880 horsepower), which combine the engine and compressor on a single drive shaft, and are used for gas re-injection and storage, as well as on smaller gathering and transmission lines. In addition, a line of 1,800 RPM separable compressors, featuring low vibration, couple free design features, was added in 2001. These compressors (100 to 280 horsepower) are sold in gas gathering, drilling and compression natural gas markets.

     Superior reciprocating compressors (100 to 9,000 horsepower) are used primarily for natural gas applications, including production, storage, withdrawal, processing and transmission, as well as petrochemical processing. The Superior WG compressor series was introduced in 2000 for large project applications up to 9,000 horsepower. These high-speed separable compressor units can be matched with either natural gas engine drivers or electric motors and provide a cost advantage over competitive equipment in the same power range.

     There is an installed base of Cooper-Bessemer, Penn, Enterprise, Superior, Ajax and Joy engines and compressors (up to 30,000 horsepower) for which Cooper Compression provides replacement parts and service on a worldwide basis.

     Cooper Compression’s channel to market utilizes a distributor network in North America for new reciprocating and plant air centrifugal compressors, and direct selling for most international customers. These channels are continually rationalized to provide maximum exposure for our products.

     In addition to the previously described sale of the rotating business, Cooper Compression has undergone a significant level of restructuring to enhance productivity and reduce costs. The closing of the Grove City, Pennsylvania plant and foundry was completed in 2000. Most of the activity previously conducted at that location was outsourced to third parties or relocated to other facilities. In 2001, the relocation of the central warehouse from Mt. Vernon, Ohio to Houston, Texas was completed. The 2001 acquisitions of Nickles Industrial and Turbine Specialties Inc. allowed Cooper Compression to expand its aftermarket business into servicing compression and power equipment from other manufacturers.

     As part of its restructuring, Cooper Compression constructed a Superior separable compressor plant and research and development center in Waller, Texas in 2000. Each manufacturing station in the plant is designed for short cycle, just-in-time machining and assembly to reduce inventory requirements and product lead times. The plant is designed to manufacture the division’s complete line of Superior compressor units to serve the natural gas market. The relocation of the former compressor plant in Mt. Vernon, Ohio to the new Waller facility was completed in the first half of 2001.

     In January 2001, the decision to exit the market for new Superior brand natural gas engines, including its 2400 engine line, and to close the Springfield, Ohio engine plant was announced. The project was substantially completed by the end of the second quarter of 2001.

     Cooper Compression continued its restructuring efforts in 2002 with the fourth quarter decision to close an additional 13 facilities worldwide in order to properly size the business to current market conditions. These actions were largely completed during 2003.

     Cooper Compression’s primary customers in reciprocating technology include gas transmission companies, compression leasing companies, oil and gas producers and processors and independent power producers.

Centrifugal Technology

     Cooper Compression also manufactures and supplies integrally geared centrifugal compressors, compressor systems and controls, as well as aftermarket services, to customers around the world. Centrifugal air compressors, used primarily in manufacturing processes, are sold under the trade name of Turbo Air, with specific models including the TA-2000, TAC-2000, TA-3000, TA-6000, TA-11000 and TA-20000. Engineered Compressors are used in the process air and gas markets and are identified by the trade names of Turbo Air and MSG.

     The process and plant air centrifugal compressors deliver oil-free compressed air and other gases to the customer, thus preventing oil contamination of the finished products. We believe our worldwide customers increasingly prefer oil-free air for quality, safety, operational and environmental reasons.

     Cooper Compression provides installation and maintenance service, parts, repairs, overhauls and upgrades to its worldwide customers for plant air and process gas compressors. It also provides aftermarket service and repairs on all equipment it produces through a worldwide network of distributors, service centers and field service technicians utilizing an extensive inventory of parts.

     Cooper Compression’s customers in centrifugal technology are petrochemical and refining companies, natural gas processing companies, durable goods manufacturers, utilities, air separation and chemical companies.

4

Market Issues

     Cooper Cameron, through its segments, is a leader in the global market for the supply of petroleum production equipment. Cooper Cameron believes that it is well positioned to serve these markets. Plant and service center facilities around the world in major oil- and gas-producing regions provide a broad, global breadth of market coverage.

     The international market continues to be a source of growth for Cooper Cameron. The desire to expand oil and gas resources and transmission capacity in developed and developing countries, for both economic and political reasons, continues to be a major factor affecting market demand. Additionally, establishment of industrial infrastructure in the developing countries will necessitate the growth of basic industries that require plant air and process compression equipment. Production and service facilities in North and South America, Europe, the Far and Middle East and West Africa provide the Company with the ability to serve the global marketplace.

     In each of Cooper Cameron’s business segments, a large population of installed engines, compression equipment, and oil and gas production equipment exists in both the U.S. and international market segments. The rugged, long-lived nature of the equipment provides a relatively stable repair parts and service business. However, with respect to Cooper Compression, approximately 39% of that segment’s revenues come from the sale of replacement parts for equipment that the Company no longer manufacturers. Many of these units have been in service for long periods of time, and are gradually being replaced. As this installed base of legacy equipment declines, the Company’s potential market for parts orders is also reduced. In recent years, the Company’s revenues from replacement parts associated with legacy equipment have declined nominally.

     In recent years, the Company’s Cameron Division has been expanding into the deepwater subsea systems market. This market is significantly different from the Company’s other markets since deepwater subsea systems projects are significantly larger in scope and complexity, in terms of both technical and logistical requirements. Deepwater subsea projects (i) typically involve long lead times, (ii) typically are larger in financial scope, (iii) typically require substantial engineering resources to meet the technical requirements of the project and (iv) often involve the application of existing technology to new environments and in some cases, new technology. These projects accounted for 10.8%, 4.3% and 0.6% of total revenues in 2003, 2002 and 2001, respectively.

Geographic Breakdown of Revenues

     Revenues for the years ended December 31, 2003 and 2002 were generated from shipments to the following regions of the world (dollars in thousands):

					Increase
Region	2003		2002		(Decrease)
North America	$	783,427	$	750,059	$	33,368
South America		79,114		75,992		3,122
Asia, including Middle East		261,481		264,063		(2,582	)
Africa		195,739		205,641		(9,902	)
Europe		299,011		226,676		72,335
Australia, New Zealand And Other		15,574		15,669		(95	)
	$	1,634,346	$	1,538,100	$	96,246

New Product Development

     Cameron has introduced several new drilling products during the last several years. These new products include the 3.5 million-pound load capacity LoadKing™ riser system, used for drilling in up to 10,000-foot water depths; a new lightweight and lower-cost locking mechanism for subsea BOPs; and a new generation of variable-bore ram packers. Additionally, Cameron’s Freestanding Drilling Riser, introduced in 1999, was a winner of the Petroleum Engineer International Special Meritorious Award for Engineering Innovation. During 2002, Cameron’s new Environmental Safe Guard system received World Oil® magazine’s prestigious “Next Generation” award as “Best Drilling/Completion Solution.”

     During 2002, Cameron marked the tenth anniversary of its introduction of the patented SpoolTree™ subsea production system, a tree design referred to generically as a horizontal subsea tree. The SpoolTree has received numerous awards for its advanced technology and innovation, was recognized for its contributions to the industry at the Offshore Technology Conference in Houston during May 2002, and resulted in Cameron receiving the prestigious Queen’s Award for Enterprise in the U.K. A Cameron SpoolTree was installed in 2002 at a depth of 7,209 feet in Marathon’s Camden Hill field in the Gulf of Mexico, a record depth at the time. As a result of license agreements reached during 2003, the Company now receives royalties from two subsea tree manufacturers on their global production of horizontal subsea trees using Cooper Cameron’s patented technology.

5

     Several new controls products have also been added. Cameron launched a new electro-hydraulic drilling control system in 1997 and a new subsea production control system in 1998. In 2001, the Company expanded the CAMTROL system to include all of Cameron’s controls capabilities, including production, drilling and workover. In May 2002, Cameron enhanced its production controls offering by upgrading the controllers and software. These improvements follow the CAMTROL design philosophies of modularity and redundancy. During 2004, the Company plans to introduce an all-electric subsea control system that is expected to simplify installation and offer greater reliability and cost savings to the customer.

     During 2003, Cameron began production of a new lower-cost compact wellhead system. Several of these systems were installed in fields in upstate New York. Additionally, a new valve was designed for extreme applications where manually operated valves would not be a preferred option. This product has been successful in large-bore, high-pressure gas applications or during well stimulation activity, particularly in the Gulf Coast region.

     In 2000, CCV completed the development of a range of 2” to 16” ball valves capable of performing at pressures of 10,000 psi and in water depths of 10,000 feet.

     Cooper Compression has focused product development resources to further expand its high-efficiency plant air compressor line and to provide engineered compressors matched to the requirements of its customers. The latter is being achieved by advances in aerodynamic and rotor dynamic analytical design capability. The year 2001 saw the addition of centrifugal gas applications.

     Through the introduction of its new compressor frames, Cooper Compression’s standard product range was extended up to 2,500 horsepower, positioning itself as a viable supplier of turbo plant air compressors in a wide range of horsepowers. One of the new products, the TAC-2000, won 2001’s Silver Award for Product of the Year from Plant Engineering magazine. In 2001, remote monitoring was added to the control system capabilities. The new Vantage controller is available as an upgrade kit for both proprietary and competitor compressors.

     Cooper Compression’s product range has been expanded through the addition of new compressor frames (TA-6000, TAC-2000, TA-11000 and TA-20000) and the addition of trademarked accessories such as Dry Pak heat of compression dryers and Turboblend, a hydro-cracked turbomachinery lubricating oil. In 2001, an active aftermarket effort was begun, leveraging off of the significant base of installed equipment, the Engineered Compressor product line was redefined and the MSG Renaissance program was introduced to update the MSG product line. Also in 2001, European packaging capability was established to better serve customers in the region. During 2003 and 2002, Cooper Compression continued to penetrate the large markets in Western and Eastern Europe via a newly established regional office in Milan, Italy.

Competition

     Cooper Cameron competes in all areas of its operations with a number of other companies, some of which have financial and other resources comparable to or greater than those of Cooper Cameron.

     Cooper Cameron has a leading position in the petroleum production equipment markets, particularly with respect to its high-pressure products. In these markets, Cooper Cameron competes principally with Balon Corporation, Circor, Dril-Quip, Inc., Dresser Valve, FMC Technologies, Inc., Hydril Company, Aker Kvaerner, Masterflo, Neles-Jamesbury, Varco International, Inc., Wood Group, ABB (Offshore Systems division) and Vetco Gray Inc. (a subsidiary of ABB).

     The principal competitive factors in the petroleum production equipment markets are technology, quality, service and price. Cooper Cameron believes several factors give it a strong competitive position in these markets. Most significant are Cooper Cameron’s broad product offering, its worldwide presence and reputation, its service and repair capabilities, its expertise in high-pressure technology and its experience in alliance and partnership arrangements with customers and other suppliers.

     Cooper Cameron also has a leading position in the compression equipment markets. In these markets, Cooper Cameron competes principally with the Dresser Rand Division of Ingersoll-Rand Company, Ingersoll-Rand Air Solutions Group, Demag, GHH/Borsig, Elliott Company, a division of Ebara, Ariel Corporation and Atlas-Copco AB. The principal competitive factors in the compression equipment markets are engineering and design capabilities, product performance, reliability and quality, service and price. Cooper Cameron has a competent engineering staff and skilled technical and service representatives, with service centers located throughout the world.

Manufacturing

     Cooper Cameron has manufacturing facilities worldwide that conduct a broad variety of processes, including machining, fabrication, assembly and testing using a variety of forged and cast alloyed steels and stainless steel as the primary raw materials. In recent years, Cooper Cameron has rationalized plants and products, closed various manufacturing facilities, moved product lines to achieve economies of scale, and upgraded the remaining facilities. This is an ongoing process as the Company seeks ways to improve delivery performance and reduce costs.

6

Cooper Cameron maintains advanced manufacturing, quality assurance and testing equipment geared to the specific products that it manufactures and uses extensive process automation in its manufacturing operations. The manufacturing facilities utilize computer-aided, numeric-controlled tools and manufacturing techniques that concentrate the equipment necessary to produce similar products in one area of the plant in a configuration commonly known as a manufacturing cell. One operator in a manufacturing cell can monitor and operate several machines, as well as assemble and test products made by such machines, thereby improving operating efficiency and product quality.

     Cooper Cameron’s test capabilities are critical to its overall processes. The Company has the capability to test most equipment at rated operating conditions, measuring all operating parameters, efficiency and emissions. All process compressors for air separation and all plant air compressors are given a mechanical and aerodynamic test in a dedicated test center prior to shipment.

     All of Cooper Cameron’s Asian, European and Latin American manufacturing plants are ISO certified and API licensed. Most of the U.S. plants are ISO certified and certification is planned for the remainder. ISO is an internationally recognized verification system for quality management.

Backlog

     Cooper Cameron’s backlog was approximately $946.6 million at December 31, 2003, (approximately 79% of which is expected to be shipped during 2004) as compared to $827.8 million at December 31, 2002 and $695.4 million at December 31, 2001. Backlog consists of customer orders for which a purchase order has been received, satisfactory credit or financing arrangements exist and delivery is scheduled.

Patents, Trademarks and Other Intellectual Property

     As part of its ongoing research, development and manufacturing activities, Cooper Cameron has a policy of seeking patents when appropriate on inventions involving new products and product improvements. Cooper Cameron owns 242 unexpired United States patents and 487 unexpired foreign patents. During 2003, 12 new U.S. and 30 new foreign patent applications were filed.

     Although in the aggregate these patents are of considerable importance to the manufacturing of many of its products, Cooper Cameron does not consider any single patent or group of patents to be material to its business as a whole.

     Trademarks are also of considerable importance to the marketing of Cooper Cameron’s products. Cooper Cameron considers the following trade names to be material to its business as a whole: Cameron, Cooper-Bessemer, Ajax, Willis and W-K-M. Other important trademarks used by Cooper Cameron include C-B Turbocharger™, Demco, DryPak, Dynacentric™, Dynaseal™, Enterprise, Foster, Genuine Joy, H & H™, McEvoy, MSG, NAVCO®, Nickles Industrial, Nutron®, Orbit, Penn, POW-R-SEAL™, Quad 2000™, SAF-T-SEAL™, Superior, TA, Texcentric, Thornhill Craver, TruSeal, Turbine Specialties (Reciprocating Products), Turbo Air and VANTAGE™. Cooper Cameron has the right to use the trademark Joy on aftermarket parts until November 2027. Cooper Cameron has registered its trademarks in the countries where such registration is deemed material.

     Cooper Cameron also relies on trade secret protection for its confidential and proprietary information. Cooper Cameron routinely enters into confidentiality agreements with its employees, partners and suppliers. There can be no assurance, however, that others will not independently obtain similar information or otherwise gain access to Cooper Cameron’s trade secrets.

Employees

     As of December 31, 2003, Cooper Cameron had approximately 7,700 employees, of which approximately 1,374 were represented by labor unions. Cooper Cameron believes its current relations with employees are good. On January 1, 2003, Cameron signed a new three-year agreement with the Amalgamated Engineering and Electrical Union (AEEU), representing 280 hourly employees in the Leeds, England facility. On July 28, 2003, CTC reached a three-year agreement with the International Association of Machinists (IAM), representing 160 hourly employees at the Buffalo, New York facility. The Company’s relations with the AEEU and IAM are excellent and the signing of these three-year agreements provides a stable environment for these important facilities. During 2004, the Company will have contracts expiring with the International Machinist Union in Brookshire, Texas, representing 46 employees, and the Marine and Ship Builders Union in Singapore, representing 240 employees. Relations with both organizations are excellent and the negotiations are expected to proceed in a timely and satisfactory manner.

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Executive Officers of the Registrant

Name and Age	Present Principal Position and Other Material Positions Held During Last Five Years
Sheldon R. Erikson (62)	President and Chief Executive Officer since January 1995. Chairman of the Board from 1988 to January 1995 and President and Chief Executive Officer from 1987 to January 1995 of The Western Company of North America.
Franklin Myers (51)	Senior Vice President of Finance and Chief Financial Officer since January 2003. Senior Vice President from July 2001 to January 2003, Senior Vice President and President of the Cooper Energy Services division from August 1998 to July 2001 and Senior Vice President, General Counsel and Secretary from April 1995 to July 1999.
John D. Carne (55)	Vice President since May 2003. President, Cooper Cameron Valves since April 2002. Director of Operations, Eastern Hemisphere, Cameron Division from 1999 to March 2002. Plant Manager, Leeds, England, Cameron Division from 1996 to 1999. Director of Operations, U.K. & Norway, Cooper Energy Services (U.K.) Ltd. from 1988 to 1996.
William C. Lemmer (59)	Vice President, General Counsel and Secretary since July 1999. Vice President, General Counsel and Secretary of Oryx Energy Company from 1994 to March 1999.
Jack B. Moore (50)	Vice President since May 2003. President, Cameron Division since July 2002. Vice President and General Manager, Cameron Western Hemisphere from July 1999 to July 2002. Vice President Western Hemisphere Operations, Vice President Eastern Hemisphere, Vice President Latin American Operations, Director Human Resources, Director Market Research and Director Materials of Baker Hughes Incorporated from 1976 to July 1999.
Robert J. Rajeski (58)	Vice President since July 2000. President, Cooper Compression since October 2002. President, Cooper Turbocompressor division from July 1999 to October 2002 and President, Cooper Energy Services division from July 2001 to October 2002. Vice President and General Manager of Ingersoll-Dresser Pump Co., Engineered Pump division from 1994 to July 1999.
Jane C. Schmitt (53)	Vice President, Human Resources since May 1999. Vice President, Compensation and Benefits from 1996 to 1999, and Director, Compensation and Benefits from 1995 to 1996. Vice President, Human Resources of the CES division from September 1998 to October 1999.
Charles M. Sledge (38)	Vice President and Corporate Controller since July 2001. Senior Vice President, Finance and Treasurer from 1999 to June 2001, and Vice President, Controller from 1996 to 1999, of Stage Stores, Inc., a chain of family apparel stores. Stage Stores, Inc. filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code in June 2000 and successfully emerged from bankruptcy protection in August 2001.

Available Information

     Our website is www.coopercameron.com. Information available free of charge on our website includes previously filed reports with the Securities and Exchange Commission (SEC), charters of the Company’s Audit and Compensation and Governance Committees of the Board, the Company’s Code of Ethics for Management Personnel and Code of Business Conduct and Ethics for Directors, The Company’s Corporate Governance Guidelines, press releases and other documents that may be required to be made available by the SEC or the New York Stock Exchange. The information on our website is updated as soon as reasonably practicable.

The information on our website is not, and shall not be deemed to be, a part of this Form 10-K or any other filing we make with the SEC. Additionally, our previously filed reports and statements are also available at the SEC’s website, www.sec.gov.

Glossary of Terms

Actuator. A hydraulic or electric motor used to open or close valves.

Blowout Preventer. A hydraulically operated system of safety valves installed at the wellhead during drilling and completion operations for the purpose of preventing an increase of high-pressure formation fluids — oil, gas or water — in the wellbore from turning into a “blowout” of the well.

Choke. A type of valve used to control the rate and pressure of the flow of production from a well or through flowlines.

Christmas tree. An assembly of valves, pipes and fittings used to control the flow of oil and gas from the well.

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Compressor. A device used to create a pressure differential in order to move or compress a vapor or a gas.

Centrifugal compressor. A compressor with an impeller or rotor, a rotor shaft and a casing which discharges gases under pressure by centrifugal force.

Integral reciprocating engine-compressor. A compressor in which the crankshaft is shared by the engine and compressor, each having its own piston rods driven by the shared crankshaft.

Integrally geared centrifugal compressor. A compressor in which the motor is geared so that the compressor runs at higher rpms than the motor itself to gain efficiency.

Reciprocating compressor. A compressor in which the compression effect is produced by the reciprocating motion of pistons and plungers operating in cylinders.

Controls. A device which allows the remote triggering of an actuator to open or close a valve.

Elastomer. A rubberized pressure control sealing element used in drilling and wellhead applications.

Riser. Pipe used to connect the wellbore of offshore wells to drilling or production equipment on the surface, and through which drilling fluids or hydrocarbons travel.

Valve. A device used to control the rate of flow in a line, to open or shut off a line completely, or to serve as an automatic or semi-automatic safety device.

Wellhead. The equipment installed at the surface of a wellbore to maintain control of a well and including equipment such as casing head, tubing head and Christmas tree.

ITEM 2. PROPERTIES

     The Company currently operates manufacturing plants ranging in size from approximately 21,000 square feet to approximately 447,000 square feet of manufacturing space. The Company also owns and leases warehouses, distribution centers, aftermarket and storage facilities, and sales offices. The Company leases its corporate headquarters office space and space for the Cameron division headquarters in Houston, Texas.

     The Company manufactures, markets and sells its products and provides services throughout the world, operating facilities in numerous countries. At December 31, 2003, the significant facilities used by Cooper Cameron throughout the world for manufacturing, distribution, aftermarket services, machining, storage and warehousing contained an aggregate of approximately 7,445,815 square feet of space, of which approximately 5,896,361 square feet (79%) was owned and 1,549,454 (21%) was leased. Of this total, approximately 5,171,919 square feet of space (69%) is located in the United States and Canada, 345,825 square feet of space (5%) is located in Mexico and South America, and 1,928,071 square feet of space (26%) is located in Europe, Africa and Asia. The table below shows the number of significant manufacturing, warehouse and distribution and aftermarket facilities by business segment and geographic area. Cameron and CCV share space in certain facilities and, thus, are being reported together.

					Asia/Pacific
	Western		Eastern		and		West
	Hemisphere		Hemisphere		Middle East		Africa		Total
Cameron and CCV		52		15		5		6		78
Cooper Compression		28		2		1		0		31

     Cooper Cameron believes its facilities are suitable for their present and intended purposes and are adequate for the Company’s current and anticipated level of operations.

ITEM 3. LEGAL PROCEEDINGS

     Cooper Cameron is a party to various legal proceedings and administrative actions, including certain environmental matters discussed below, all of which are of an ordinary or routine nature incidental to the operations of the Company. In the opinion of Cooper Cameron’s management, such proceedings and actions should not, individually or in the aggregate, have a material adverse effect on the Company’s results of operations or financial condition.

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Environmental Matters

     Cooper Cameron is subject to numerous U.S. federal, state, local and foreign laws and regulations relating to the storage, handling and discharge of materials into the environment. These include, in the United States, the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”), the Clean Water Act, the Clean Air Act (including the 1990 Amendments) and the Resource Conservation and Recovery Act (“RECRA”). Foreign laws include: in Canada, the Environmental Protection Act; in Europe, the EU Environmental Directives; and in Singapore, the Environmental Pollution Control Act. Cooper Cameron believes that its existing environmental control procedures are adequate and it has no current plans for substantial capital expenditures in this area. Cooper Cameron has an active environmental management program aimed at compliance with existing environmental regulations and elimination or significant reduction in the generation of pollutants in its manufacturing processes. Cooper Cameron management intends to continue these policies and programs.

     The cost of environmental remediation and compliance has not been a material expense for the Company during any of the periods presented in this Form 10-K. Cooper Cameron has been identified as a potentially responsible party (“PRP”) with respect to three sites designated for cleanup under CERCLA or similar state laws. The Company’s involvement at two of the sites is believed to be at a de minimis level. The third site is Osborne, Pennsylvania (a landfill into which the Cooper Compression operation in Grove City, Pennsylvania deposited waste), where remediation is complete and remaining costs relate to ongoing ground water treatment and monitoring. The Company is also engaged in site cleanup under the Voluntary Cleanup Plan of the Texas Commission on Environmental Quality at former manufacturing locations in Houston and Missouri City, Texas. The Company believes, based on its review and other factors, that the estimated costs related to these sites will not have a material adverse effect on the Company’s results of operations, financial condition or liquidity. Additionally, the Company has discontinued operations at a number of other sites which had previously been in existence for many years. The Company does not believe, based upon information currently available, that there are any material environmental liabilities existing at these locations. As of December 31, 2003, the Company’s consolidated financial statements included a liability balance of $9.9 million for environmental matters. See “Environmental Remediation” in Management’s Discussion and Analysis of Results of Operations and Financial Condition of Cooper Cameron for additional information.

     Cooper Cameron is a named defendant in three lawsuits regarding contaminated underground water in a residential area adjacent to a former manufacturing site of one of its predecessors. In Valice v. Cooper Cameron Corporation (80th Jud. Dist. Ct., Harris County, filed June 21, 2002), the plaintiffs claim that the contaminated underground water has reduced property values and threatens the health of the area residents and request class action status which, to date, has not been granted. The plaintiffs seek an analysis of the contamination, reclamation, and recovery of actual damages for the loss of property value. In Oxman vs. Meador, Marks, Heritage Texas Properties, and Cooper Cameron Corporation (80th Jud. Dist. Ct., Harris County, filed February 7, 2003), and Kramer v. Cooper Cameron, (190th Judicial District, Harris County, filed May 29, 2003), the plaintiffs purchased property in the area and allege a failure by the defendants to disclose the presence of contamination and seek to recover unspecified monetary damages. The Company has been and is currently working with the Texas Commission of Environmental Quality and continues to monitor the underground water in the area. The Company is of the opinion that there is no risk to area residents and that the lawsuits essentially reflect concerns over possible declines in property value. In an effort to mitigate homeowners' concerns and reduce potential exposure from any such decline in property values, the Company has entered into 20 agreements with residents that obligate the Company to either reimburse sellers in the area for the estimated decline in value due to a potential buyer's concerns related to the contamination or to purchase the property after an agreed marketing period. To date, the Company has 2 properties of the 20 which it has purchased that remain unsold, with an appraised value of $6,390,000, and has expended $201,000 on reimbursements and losses on the resale of 5 of the 20. Twelve of these agreements remain outstanding. The Company believes any potential exposure from these agreements, or, based on its review of the facts and law, any potential exposure from these, or similar, suits will not have a material adverse effect on its results of operations, financial condition or liquidity.

Other Matters

     Cooper Cameron is a named defendant in a number of multi-defendant, multi-plaintiff tort lawsuits. To date, the Company has been dismissed from a number of these suits and has settled a number of others for small sums. The Company believes, based on its review of the facts and law, that the potential exposure from the remaining suits will not have a material adverse effect on its results of operations, financial condition or liquidity.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There were no matters submitted to a vote of security holders during the fourth quarter of 2003.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

     The common stock of Cooper Cameron, par value $.01 per share (together with the associated Rights to Purchase Series A Junior Participating Preferred Stock), is traded on The New York Stock Exchange (“NYSE”). No dividends were paid during 2003.

     The following table indicates the range of trading prices on the NYSE for January 2, 2003 through December 31, 2003 and for January 2, 2002 through December 31, 2002.

	Price Range ($)
	High		Low		Last
2003
First Quarter	$	54.55	$	44.00	$	49.51
Second Quarter		55.60		44.80		50.38
Third Quarter		51.50		45.00		46.21
Fourth Quarter		48.66		40.98		46.60

	Price Range ($)
	High		Low		Last
2002
First Quarter	$	52.98	$	36.40	$	51.11
Second Quarter		59.60		47.99		48.42
Third Quarter		50.86		35.94		41.76
Fourth Quarter		53.31		38.56		49.82

     As of February 12, 2004, the approximate number of stockholders of record of Cooper Cameron common stock was 1,531.

     Information concerning securities authorized for issuance under equity compensation plans is included in Note 9 of the Notes to Consolidated Financial Statements, which notes are incorporated herein by reference in Part II, Item 8 hereof (“Notes to Consolidated Financial Statements”).

ITEM 6. SELECTED FINANCIAL DATA

     The information set forth under the caption “Selected Consolidated Historical Financial Data of Cooper Cameron Corporation” on page 61 in the 2003 Annual Report to Stockholders is incorporated herein by reference.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The information set forth under the caption “Management’s Discussion and Analysis of Results of Operations and Financial Condition of Cooper Cameron Corporation” on pages 25-35 in the 2003 Annual Report to Stockholders is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The information for this item is set forth in the section entitled “Market Risk Information” on page 35 in the 2003 Annual Report to Stockholders and is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The following consolidated financial statements of the Company and the independent auditors’ report set forth on pages 36-60 in the 2003 Annual Report to Stockholders are incorporated herein by reference:

     Report of Independent Auditors.

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     Consolidated Results of Operations for each of the three years in the period ended December 31, 2003.

     Consolidated Balance Sheets as of December 31, 2003 and 2002.

     Consolidated Cash Flows for each of the three years in the period ended December 31, 2003.

     Consolidated Changes in Stockholders’ Equity for each of the three years in the period ended December 31, 2003.

     Notes to Consolidated Financial Statements.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

ITEM 9A. CONTROLS AND PROCEDURES

     Within the 90-day period prior to the filing of this Annual Report on Form 10-K, the Company carried out an evaluation, under the supervision and with the participation of the Company’s Disclosure Committee and the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined by Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed by the Company is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Name and Age	Present Principal Position and Other Material Positions Held During Last Five Years
Nathan Avery (69)
Director since 1995	Chairman of the Board and Chief Executive Officer of Galveston-Houston Company, a company specializing in the manufacturing of products to serve the energy and mining industries, from 1972 to December 2000, when it was sold to Komatsu, Ltd. Prior to that he was Chairman of the Board of Directors of Bettis Corporation, an actuator company, until 1996, when Bettis Corporation merged with Daniel Industries Inc., and was a director and member of the Executive Committee of Daniel Industries until June 1999, when Daniel Industries merged with Emerson Electric Co.
C. Baker Cunningham (62)
Director since 1996	Chairman of the Board, President and Chief Executive Officer of Belden Inc., a wire, cable and fiber optic products manufacturing company, since 1993. He served in positions of increasing responsibility with Cooper Industries Inc., a diversified manufacturer, marketer and seller of electrical products, tools and hardware from 1970 to 1993, including Executive Vice President, Operations from 1982 to 1993.
Sheldon R. Erikson (62)
Director since 1995	Chairman of the Board of the Company since 1996. President and Chief Executive Officer and director since 1995. He was Chairman of the Board from 1988 to 1995, and President and Chief Executive Officer from 1987 to 1995, of the Western Company of North America, an international petroleum service company engaged in pressure pumping, well stimulating and cementing. Previously, he was President of the Joy Petroleum Equipment Group of Joy Manufacturing Company. He is a director of Spinnaker Exploration Company. He also serves on the board of directors of the National Petroleum Council, the American Petroleum Institute, and the Petroleum Equipment Suppliers Association.

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Name and Age	Present Principal Position and Other Material Positions Held During Last Five Years
Lamar Norsworthy (57)
Director since 2001	Chairman of the Board and Chief Executive Officer of Holly Corporation, an independent petroleum refiner, since 1988. He is a director of Zale Lipshy University Hospital and a member of the Board of Visitors of M.D. Anderson Cancer Center.
Michael E. Patrick (60)
Director since 1996	Vice President and Chief Investment Officer of Meadows Foundation Inc., a philanthropic association since 1995. He is a director of BJ Services Company and the RGK Foundation.
David Ross III (63)
Director since 1995	Adjunct professor and member of the Board of Overseers of the Jesse H. Jones Graduate School of Administration at Rice University since 1979. From 1987 until 1993, he was Chairman and Chief Executive Officer of the Sterling Consulting Group, a firm providing analytical research planning and evaluation services to companies in the oil and gas industry. Between 1984 and 1987, he was a principal in the Sterling Group, a firm engaged in leveraged buyouts, primarily in the chemical industry, and Camp, Ross, Santoski & Hanzlik Inc., which provided planning and consulting services to the oil and gas industry.
Bruce W. Wilkinson (59)
Director since 2002	Chairman of the Board and Chief Executive Officer since August 2000 and President and Chief Operating Officer from May 2000 to July 2000 of McDermott International, Inc., an energy services company. He was a Principal of Pinnacle Equity Partners, L.L.C. (a private equity group) from May 1999 to April 2000; Chairman and Chief Executive Officer of Chemical Logistics Corporation (a company formed to consolidate chemical distribution companies) from April 1998 to April 1999; President and Chief Executive Officer of Tyler Corporation (a diversified manufacturing and service company) from April 1997 to October 1997; Interim President and Chief Executive Officer of Proler International Inc. (a ferrous metals recycling company) from July 1996 to December 1996, and Chairman and Chief Executive Officer of CRSS Inc. (a global engineering and construction services company) from October 1989 to March 1996.

     The information under the heading “Executive Officers of the Registrant” in Part I, Item 1 of this Form 10-K is incorporated by reference in this section.

     There are no family relationships among the officers listed, and there are no arrangements or understandings pursuant to which any of them were elected as officers. Officers are appointed or elected annually by the Board of Directors at its first meeting following the Annual Meeting of Stockholders, each to hold office until the corresponding meeting of the Board in the next year or until a successor shall have been elected, appointed or shall have qualified.

     Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Exchange Act of 1934 requires directors and executive officers of the Company, and persons who own more than ten percent of the Company’s Common Stock, to file with the SEC and the New York Stock Exchange initial reports of beneficial ownership on Form 3 and changes in such ownership on Forms 4 and 5. Based on its review of the copies of such reports, or written representations from certain reporting persons that no Forms 5 were required for those persons, the Company believes that during 2003, its directors, executive officers and stockholders with holdings greater than ten percent complied with all applicable filing requirements.

     Audit Committee Financial Experts

     The Board of Directors has determined that Mr. Michael E. Patrick, Chairman of the Audit Committee, and Messrs. Lamar Norsworthy and Bruce W. Wilkinson, members of the Audit Committee are “audit committee financial experts” and “independent” as defined under applicable SEC and NYSE rules.

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     Code of Ethics

     The Company has adopted a code of ethics that applies to all of its directors, officers (including its chief executive officer, chief financial officer, chief accounting officer, controller and any person performing similar functions) and employees. The Company has made the Code of Ethics for Management Personnel, the Code of Business Conduct and Ethics for Directors and the Standards of Conduct available on its Internet website at www.coopercameron.com. In the event that the Company makes any amendment to, or grants any waivers of, a provision of the Code of Ethics for Management Personnel that applies to the chief executive officer, chief financial officer or chief accounting officer that requires disclosure under applicable rules of the SEC and New York Stock Exchange, the Company intends to disclose such amendment or waiver and the reasons therefor on its Internet website.

     Shareholder Nominating Procedures

     The Compensation and Governance Committee is the Board Committee responsible for developing the Company’s slate of director nominees for election by stockholders, which the Committee recommends to the Board for its consideration.

     The Committee has the authority to engage the services of a third party search firm to assist in the identification and evaluation of Board member candidates. The Committee has not, to date, utilized any such services.

     The Committee determines the required selection criteria and qualifications of Company director nominees based upon the needs of the Company at the time nominees are considered. A candidate, at a minimum, must possess the ability to apply good business judgment and must be in a position to properly exercise his or her duties of loyalty and care. Candidates should also exhibit proven leadership capabilities, high integrity and experience with a high level of responsibilities within their chosen fields, and have the ability to quickly grasp complex principles of business, finance, international transactions and the oilfield services industry. In general, candidates who hold an established executive level position in business, finance or education will be preferred. The Committee will consider these criteria for nominees identified by the Committee, by stockholders or through some other source. When current Board members are considered for nomination for reelection, the Committee also takes into consideration their prior Cooper Cameron Board contribution, performance and meeting attendance records.

     The Committee will consider qualified candidates for possible nomination that are submitted by our stockholders. Stockholders wishing to make such a submission may do so by sending the following information to the Compensation and Governance Committee c/o Corporate Secretary at 1333 West Loop South, Suite 1700, Houston, TX 77027: (1) name of the candidate and a brief biographical sketch and resume; (2) contact information for the candidate and a document evidencing the candidate’s willingness to serve as a director if elected; and (3) a signed statement as to the submitting stockholder’s current status as a stockholder and the number of shares currently held.

     The Committee conducts a process of making a preliminary assessment of each proposed nominee based upon the resume and biographical information, an indication of the individual’s willingness to serve and other background information. This information is evaluated against the criteria set forth above and the specific needs of the Company at that time. Based upon a preliminary assessment of the candidate(s), those who appear best suited to meet the needs of the Company may be invited to participate in a series of interviews, which are used as a further means of evaluating potential candidates. On the basis of information learned during this process, the Committee determines which nominee(s) to recommend to the Board to submit for election at the next annual meeting. The Committee uses the same process for evaluating all nominees, regardless of the original source of the nomination.

     No candidates for director nominations were submitted to the Committee by any stockholder in connection with the 2004 annual meeting.

     If a stockholder wishes to nominate a director candidate, the shareholder should follow the requirements set out below. In order for a stockholder to be eligible to submit a nomination to the 2005 Meeting, the stockholder must be a stockholder of record both when submitting the nomination as well as on the record date.

     If a stockholder wishes to submit a director nomination to the Compensation and Governance Committee for consideration as a Company director nominee, the stockholder should do so prior to September 1, 2004, in order to provide adequate time to duly consider the nominee and comply with our bylaws. If a stockholder wishes to submit a director nomination to the stockholders in opposition to the Company director nominees for inclusion in the Company’s 2005 proxy material, the notice must be in proper form and received at the Company’s corporate headquarters on or before November 15, 2004. If a stockholder wishes to submit such a nomination at the 2005 annual meeting, and does not want the Committee to consider such nominee as one of the Company’s nominees, and does not seek inclusion of the proposal in the Company’s proxy material, the notice must be in proper form and be received between February 13 and March 14, 2005.

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     To be in proper written form, a stockholder’s notice of a director nomination must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially and of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

ITEM 11. EXECUTIVE COMPENSATION

Directors’ Compensation

     The following table displays the components of outside director compensation. Employee directors receive no compensation for serving on the Board or its Committees.

COMPENSATION	AMOUNT/NUMBER
Annual Board Retainer	$	30,000
Annual Option Grant	6,000 shares
Annual Committee Chair Retainer	$	5,000
Board/Committee Meeting Fee	$	1,000

     Options granted to non-employee directors pursuant to the Annual Option Grant have an exercise price equal to the fair market value of the Company’s common stock on the date of grant, become fully exercisable on the first anniversary of the effective date of the grant, and expire five years after the effective date of the grant, subject to prior termination, all pursuant to the terms of the Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors (the “Directors’ Plan”), approved at the 1999 Annual Meeting of Stockholders. The effective date for the Annual Option Grant for 2003 and 2004 was and will be the date of the Annual Meeting of Stockholders for each of these years, respectively. The exercise price for the 2003 Annual Option Grant is $49.465. The maximum number of shares to be issued under the Directors’ Plan and the number of shares subject to option are subject to adjustment in the event of stock splits or other changes in the Company’s capital structure.

     Under the Directors’ Deferred Compensation Plan, each non-employee director serving on the board for five or more years and who (i) does not stand for reelection in accordance with the Company policy of not doing so after reaching age 70 or because he or she was not recommended by the Board, (ii) is not reelected by the stockholders, or (iii) dies while a director, will earn a benefit equal to five times the annual retainer in effect for directors at the time of termination of his or her board service. The benefit will be paid in a lump sum when he or she ceases to be a director.

     Outside directors are reimbursed by the Company for the cost, and the tax liability associated with the cost, of their spouse's or companion's travel to the Company's annual offsite Board meeting and are, from time to time, permitted to make use of Company-leased aircraft. The income attributed to outside directors in 2003 for these expenses together with the resulting income tax liability was $6,682 for Mr. Cunningham, $12,500 for Mr. Patrick, $19,541 for Mr. Avery, $24,380 for Mr. Ross, $9,696 for Mr. Norsworthy, and $6,094 for Mr. Wilkinson.

Compensation and Governance Committee Report On Executive Compensation

     General

     The Compensation and Governance Committee of the Board of Directors (the “Committee”) supervises and administers the compensation and benefits policies, practices and plans of the Company pursuant to a written charter which is available on the Company’s website. The Committee has been created by the Board to, among other things, assist the Board in the discharge of its responsibilities with respect to compensation of executive officers. The principal functions of the Committee with respect to executive compensation include:

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• establishing the Company’s overall compensation policy, including compensation philosophy and strategy, short- and long-term incentive plans and programs, stock ownership plans and employee benefit plans, and making recommendations to the Board regarding those plans and programs;

• reviewing and recommending to the Board the compensation and benefits to be paid or provided to the Board of Directors;

• reviewing and approving corporate goals and objectives relevant to the Chief Executive Officer’s compensation, and evaluating the performance of, and setting the compensation to be paid to, the Chief Executive Officer as well as that to be paid to the other executive officers; and

• reviewing and recommending to the Board employment agreements, termination agreements and severance policies and agreements.

     The Company’s primary objective is to increase stockholder value over time by developing executive compensation policies which are consistent with and linked to the Company’s strategic business objectives. It is the policy of the Committee to compensate executive officers based on their responsibilities and experience, the achievement of specific business objectives and established goals and the Company’s long-term performance. The Committee has received advice from a compensation consulting firm as to comparable compensation for executives similarly situated as part of the Committee’s analysis. The compensation of the Chief Executive Officer and the other executive officers consists of a base salary, an annual cash bonus opportunity and stock option awards.

     Base Salary and Annual Incentive Awards

     Each of the Company’s executive officers receives a base salary, and has an opportunity to earn an annual cash bonus under the Company’s Management Incentive Compensation Plan ( “MICP”). Decisions regarding base salaries are made based upon individual performance, job responsibilities, experience and competitive practice determined by compensation surveys. The Committee’s policy is to provide competitive base salaries, taking into account peer industry practices, and place a significant portion of targeted total annual compensation at risk tied to performance-based MICP objectives. The MICP is designed to motivate and reward key management employees whose efforts impact the performance of the Company and its divisions and subsidiaries through the achievement of financial performance targets and, in some instances, individual performance objectives. The Committee is responsible for approving the financial performance targets that are used to determine awards made under the MICP. Performance targets are based upon proposals submitted to the Committee by the Chief Executive Officer which, in turn, reflect the Company’s annual operating plan. The targets which may be used under the MICP by the Committee include: earnings before interest, taxes, depreciation and amortization (“EBITDA”); return on equity (“ROE”); return on sales; return on capital; cash flow; earnings; bookings; revenues; return on net capital employed (“RONCE”); stock price performance; and, economic value added (“EVA”). A target award percentage of base or peer industry median salary is established for each position eligible to participate in the MICP. Annual incentives were awarded to 195 of 237 eligible employees for 2003 performance. The Committee is mindful of the unusual variances that occur in today’s financial arena in running corporations such as the Company. The Committee may take into account unusual items when applying the MICP targets to the actual results. Such items would include acquisitions, divestitures, recapitalizations, restructurings and other similar unforeseeable events. The Committee also considers industry-wide market conditions and peer performance.

     Long-Term Incentives

     It is the policy of the Board to provide executives with incentives that are tied to the long-term performance of the Company. For this purpose, the Committee has granted stock options to the named executive officers and other executive officers pursuant to the Company’s Long-Term Incentive Plan. The Committee determined the number of options granted to each individual based on actual compensation and other factors, including individual performance. The stock options were granted with an exercise price equal to fair market value on the date of grant. The options have a ten-year term and generally vest, or become exercisable, in increments of one-third per year and are fully vested at the end of the first three years after the grant date. From time to time, stock options with a longer vesting period are awarded when retention is a key consideration. In addition, in 2002 and prior years, executive officers were permitted to elect to receive stock options in lieu of all or a portion of their annual salary. The options granted in lieu of salary vested and became fully exercisable at the end of the year for which they were awarded and had a four-year exercise period thereafter.

     The Committee determined that the Options in Lieu of Salary Program had fulfilled its intended purpose of encouraging the executive officers to substantially invest in the stock’s performance, thereby linking the executives’ personal interests to the interests of the Company and its stockholders, and recommended to the Board, which concurred, that the Options in Lieu of Salary Program be discontinued at the end of 2002.

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Compensation of the CEO

     Mr. Erikson currently has a base salary of $800,000 which the Committee, based on a review of the compensation levels of chief executive officers of companies of comparable size in similar businesses, believes to be at or below the median salary level of such executives. He received no bonus for 2003 because the Company did not meet the performance targets established by the Committee. For 2004, Mr. Erikson is eligible to receive a bonus based on a formula which targets 100 percent of his peer industry median salary and adjusts it to reflect Company performance, primarily against earnings per share, cash flow and ROE targets established by the Committee. Mr. Erikson elected to convert the equivalent of one year’s base salary to stock options under the Options in Lieu of Salary Program for each of the years from 1995 through 1999 and for the years 2001 and 2002. The number of options granted to Mr. Erikson under this program for 2002 was 95,455. These options became fully exercisable at the end of 2002.

     The Committee believes that the total options awarded to Mr. Erikson under the Long-Term Incentive Plan are competitive with options granted to CEOs of comparable companies. Through the stock option award, a large percentage of Mr. Erikson’s compensation is tied directly to corporate performance and return to stockholders.

Tax Deductibility of Executive Compensation

     Section 162(m) of the Internal Revenue Code of 1986, as amended, places a limit of $1 million on the amount of annual compensation that may be deducted by the Company in any year with respect to the Company’s Chief Executive Officer and each of its other four most highly compensated executive officers. Certain performance-based compensation approved by stockholders is not subject to this deduction limitation, and is, therefore, deductible.

     Options granted under the Company’s Long-Term Incentive Plan and bonuses paid pursuant to the Management Incentive Compensation Plan generally will qualify as performance-based compensation and should be deductible. The Company intends to maximize the deductibility of executive compensation while retaining the discretion necessary to compensate executive officers in a manner commensurate with performance and the competitive market for executive talent, and, therefore, the Committee and/or the Board may from time to time, in circumstances it deems appropriate, award compensation in addition to these option grants and bonus payments that may not be deductible.

Summary

     The Committee believes that the total executive compensation program should link compensation to corporate and individual performance. The Committee will continue to review the compensation of the CEO and other executive officers on an annual basis.

COMPENSATION AND GOVERNANCE COMMITTEE,

David Ross III, Chairman

Nathan M. Avery

C. Baker Cunningham

Five-Year Graph

     The line graph below shows the cumulative total stockholder return on the Company’s Common Stock from December 31, 1998 to December 31, 2003, and compares it, over the same period of time, with the cumulative total returns of the Standard & Poor’s Composite-500 Stock Index and of a Peer Group selected by the Company. The Peer Group includes Baker Hughes Incorporated, BJ Services Company, Halliburton Company, Schlumberger Limited, Smith International, Inc. and Weatherford International, Inc. In each case, cumulative total return is calculated assuming a fixed investment of $100 on December 31, 1998, and the returns on the graph represent the value that each of these investments would have had at the end of each year shown.

	Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,
	1998		1999		2000		2001		2002		2003
Cooper Cameron		100.00		199.74		269.64		164.73		203.35		190.20
S&P 500		100.00		121.00		110.00		97.00		75.50		97.20
Peer Group		100.00		140.50		192.10		130.40		119.00		143.50

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Life of Company Graph

     The line graph below shows the cumulative total stockholder return on the Company’s Common Stock from July 5, 1995, when trading in the Company’s Common Stock commenced following the Company becoming an independent, publicly traded entity, to December 31, 2003, and compares it, over the same period of time, with the cumulative total returns of the same two indices used for the Five-Year Graph, calculated in the same manner and representing the value that each of these investments would have had at the end of each year shown.

	July 5,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,		Dec. 31,
	1995		1995		1996		1997		1998		1999		2000		2001		2002		2003
Cooper Cameron		100.00		176.40		380.12		606.21		243.48		486.34		656.52		401.09		495.11		463.11
S&P 500		100.00		114.40		140.70		187.60		241.20		292.00		265.40		233.90		182.20		234.50
Peer Group		100.00		118.70		173.50		272.50		145.10		207.20		298.40		211.40		183.70		222.40

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Executive Compensation Tables

     The following table presents information for the last three years concerning compensation paid to, or accrued for, the Chief Executive Officer and the other four most highly compensated executive officers of the Company during the last year (such officers other than the Chief Executive Officer, collectively referred to as the “other named executive officers”).

SUMMARY COMPENSATION TABLE

											Long-Term Compensation
				Annual Compensation							Awards (1)
											Securities
											Underlying
				Salary $				Other Annual			Options/		All Other
Name and Principal Position	Year			(2)		Bonus $		Compensation $			SARs #		Compensation $ (3)
Sheldon R. Erikson		2003			720,000		0		157,011	(4)		343,865		68,935
Chairman, President and		2002			0		573,930		136,135	(4)		196,000		39,789
Chief Executive Officer		2001			0		672,146		*	(5)		353,594		33,941
Franklin Myers		2003			313,000		0		90,872	(4)		118,714		22,676
Senior Vice President		2002			0		118,107		75,246	(4)		96,551		2,853
of Finance and Chief		2001			0		132,390		*	(5)		106,293		1,032
Financial Officer
William Lemmer		2003			275,000		0		*	(5)		54,371		17,956
Vice President, General Counsel		2002			257,000		84,286		*	(5)		52,000		18,995
and Secretary		2001			145,000		114,430		*	(5)		35,000		12,860
Jack B. Moore		2003			260,000		0		*	(5)		60,000		16,862
Vice President		2002			229,000		88,649		*	(5)		75,000		17,194
		2001	(6)
Robert J. Rajeski		2003			255,000		53,289		*	(5)		40,000		15,301
Vice President		2002			243,000		48,600		*	(5)		52,000		15,765
		2001			221,539		60,000		*	(5)		35,000		48,166

(1) Columns dealing with “Restricted Stock Awards” and “LTIP Payouts” have been omitted since no restricted stock awards or LTIP payouts were awarded to the named executives.

(2) Under the Cooper Cameron Stock Options in Lieu of Salary Program, which was discontinued as of the end of 2002, certain named officers elected to receive a percentage of base pay in non-qualified stock options under the Company’s Long-Term Incentive Plan (“LTIP”) for 2001 and 2002. The 2002 salaries for the named executive officers who so elected were: Mr. Erikson, $630,000; and Mr. Myers, $288,000. The 2001 salaries for the named executive officers who so elected were Mr. Erikson, $600,000; Mr. Myers, $275,000; and Mr. Lemmer, $245,000.

(3) The figures in this column for 2003, 2002 and 2001 include the Company’s contributions to the Cooper Cameron Corporation Retirement Savings Plan and the Cooper Cameron Corporation Supplemental Excess Defined Contribution Plan, as well as amounts paid by the Company for excess life insurance and basic life premiums. For Mr. Rajeski, this figure includes $33,192 in relocation expenses in 2001.

(4) These figures include cash or deferred payments for loss of benefits due to participation in the Options in Lieu of Salary Program and income attributable to personal use of aircraft leased by the Company. For Mr. Erikson, this figure includes $83,563 and $78,059 in payments for lost benefits in 2003 and 2002, respectively, and $52,515 and $42,631 attributable to aircraft usage in 2003 and 2002, respectively.

(5) Perquisites and other personal benefits paid or distributed did not exceed the lesser of $50,000 or 10 percent of this individual’s total salary and bonus.

(6) Mr. Moore became an executive officer in May 2002.

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     The following table presents information concerning the grant of options during 2003 to the Chief Executive Officer and the other named executive officers.

OPTION/SAR GRANTS IN 2003

	Individual Grants
	Number of
	Securities
	Underlying			Percent of		Exercise
	Options/			Total		or Base
	SARs			Options		Price
	Granted			Granted to		Per				Grant Date
	(number of			Employees		Share		Expiration		Present
Name	shares)(1)			in 2003		($) (2)		Date		Value ($)(3)
Sheldon R. Erikson		28,280	(4)		1.69		47.24		10/9/08		441,253
		125,585	(4)		7.51		47.24		11/15/11		1,959,503
		190,000			11.37		42.93		11/12/13		2,694,086
Franklin Myers		75,000			4.49		42.93		11/12/13		1,063,455
		9,318	(4)		0.56		46.34		11/15/11		142,619
		34,396	(4)		2.06		46.34		1/1/07		500,582
William C. Lemmer		4,371	(4)		0.26		48.83		11/15/11		70,496
		50,000			2.99		42.93		11/12/13		708,970
Jack B. Moore		60,000			3.59		42.93		11/12/13		850,764
Robert J. Rajeski		40,000			2.39		42.93		11/12/13		567,176

(1) These shares were granted under the Company’s Long-Term Incentive Plan.

(2) The exercise price of each option is equal to the fair market value of the Company’s shares on the date of grant of the option. The exercise price may be paid in cash, or, in certain instances, by tendering already owned Cooper Cameron Common Stock having a fair market value on the date of exercise equal to the exercise price, except as noted in footnote (4).

(3) The grant date present value is determined using the Black-Scholes option pricing model assuming an expected stock price volatility of 41.8%, a risk-free interest rate of 2.6 percent, a weighted average expected option life of 3.4 years (or remaining time to expiration, if shorter) and no dividend yield. The actual value, if any, that may be realized will depend on the market price of the Company’s Common Stock on the date of exercise. The dollar amounts shown are not intended to forecast possible future appreciation in the Company’s stock price.

(4) These shares were granted under the reload feature of the Long-Term Incentive Plan and vested in full on the date of grant. The exercise price of each option is equal to the closing price on the New York Stock Exchange of the Company’s shares on the day preceding the date of grant.

     The following table presents information concerning exercises of stock options during 2003 and the unexercised options held at the end of 2003 by the Chief Executive Officer and the other named executive officers.

AGGREGATED OPTION/SAR EXERCISES IN 2003
AND 12/31/2003 OPTION/SAR VALUES

					Number of Securities
					Underlying Unexercised				Value of Unexercised
	Shares		Value		Options/SARs at				In-the-Money Options/SARs
	Acquired on		Realized		12/31/03 (#)				at 12/31/03 ($) (1)
Name	Exercise (#)		($)		Exercisable		Unexercisable		Exercisable		Unexercisable
Sheldon R. Erikson		203,455		3,279,071		993,676		385,332		1,433,090		1,576,758
Franklin Myers		55,458		739,810		139,505		141,666		256,027		501,908
William C. Lemmer		5,602		88,680		137,139		96,332		610,905		342,158
Jack B. Moore		3,000		48,270		123,467		123,333		627,170		401,529
Robert J. Rajeski		—		—		114,268		86,332		718,155		305,458

(1) Values are based on the difference between the exercise price and the closing price of $46.60 per share of Common Stock on the New York Stock Exchange on the last trading day of 2003.

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     The following table presents information concerning the estimated annual retirement benefits payable to the Chief Executive Officer and the other named executive officers under the Cooper Cameron Corporation Retirement Plan upon retirement at age 65.

PENSION PLAN TABLE

	Year		Annual
	Individual		Estimated
	Reaches		Benefit at
Name	Age 65		Age 65 ($)
Sheldon R. Erikson		2006		81,891
Franklin Myers		2017		78,289
William C. Lemmer		2009		24,482
Jack B. Moore		2018		60,138
Robert J. Rajeski		2010		23,785

     For each of the individuals shown in the Summary Compensation Table, the table above shows the year each attains age 65 and the projected annual pension benefit at age 65. The retirement benefit is based on a cash balance formula whereby the balance is increased each year by interest and salary credit. The salary credit is 3% of the executive’s annual compensation up to the Social Security Wage Base and 6% for compensation over the Wage Base. The annual pension benefit is the annuity which can be provided by the cash balance account at retirement. The calculation is based on the following assumptions: benefits paid on a straight-life annuity basis; the current mortality table and an interest rate of 5.51% used in the conversion from the account balance to an annuity; year 2003 compensation projected each year based on the age-weighted salary scale used in the actuarial valuations (ranging from 3.0% to 7.0% in these calculations); an assumed 2.5% per annum increase in the Social Security Wage Base; and the year 2003 interest crediting rate of 4.53%. Amounts under the Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan are included in the Annual Estimated Benefit. Projected annual benefits change each year to reflect actual compensation and, in some years, changes in assumptions.

Employment, Termination and Change of Control Arrangements

     The Company has employment agreements containing certain termination and/or severance provisions with Messrs. Erikson and Myers. The Company also has an Executive Severance Policy for and Change of Control Agreements with other executive officers including Messrs. Lemmer, Moore and Rajeski.

     The agreements with Messrs. Erikson and Myers provide for specific terms of employment, including base salary, bonus and benefits over specified periods of time and for severance benefits and certain benefits should a Change of Control, as defined below, occur. The agreements were unanimously approved by the independent members of the Board of Directors.

     The agreement between the Company and Mr. Erikson has a term of three years, which is automatically extended on a monthly basis. The agreement provides that Mr. Erikson will: continue to receive an annual salary of not less than his current salary, which is $800,000, and a bonus as provided under the Company’s Management Incentive Compensation Plan or any other bonus plan adopted by the Board of Directors for executive officers; participate in Cooper Cameron Corporation’s Retirement Plan (a defined benefit plan) and the Long-Term Incentive Plan; and be eligible to participate in the Cooper Cameron Corporation Retirement Savings Plan (a defined contribution plan), the Employee Stock Purchase Plan and any other plans generally available to employees of the Company during his employment. The agreement between the Company and Mr. Myers has substantially the same terms as those described above for Mr. Erikson, except that this agreement has a term of one year, which is automatically extended on a yearly basis. The agreement provides that Mr. Myers will continue to receive an annual salary of not less than his current salary, which is $340,000.

     If either of these executives terminates due to death, retirement, disability or without Good Reason, as defined below, or is terminated by the Company for cause, no salary or other benefits are payable under the agreements. However, if termination occurs by discharge without cause or by the executive with Good Reason, Mr. Erikson is entitled to an amount equal to three times the sum of: the highest base pay during any of the last three years (or its equivalent if paid in compensation other than cash); the higher of the maximum bonus award that he could earn during the current year or the highest bonus he received during any of the three preceding years; and, the value at the time of grant of the highest stock option award he received during any of the five preceding years. Mr. Myers is entitled to two times base salary and bonus calculated in the same manner as in Mr. Erikson’s agreement. They are also entitled to certain other payments relating to benefit plans applicable to all employees. “Good Reason” for termination includes any of the following events which occur without employee consent: a change in status, title(s) or position(s) as an officer of the Company which is not a promotion; a reduction in base salary; termination of

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participation in an ongoing compensation plan; relocation; failure of a successor of the Company to assume the agreement; termination by the Company other than as provided in the agreement; prohibition from engaging in outside activities permitted by the agreement; or any continuing material default by the Company in the performance of its obligations under the agreement.

     The agreements with Messrs. Erikson and Myers also provide for certain benefits in the event of a Change of Control. Each of these officers is entitled under the agreements to accelerated vesting of options granted under the Company’s Long-Term Incentive Plan and to tender shares of Common Stock to the Company, including those acquired by the exercise of stock options following an accelerated vesting, in proportion to the total number of shares actually tendered and at the tender offer price or fair market value of any exchange security. Each of these officers is also entitled under the agreements to tender to the Company options, including those accelerated, in exchange for an amount equal to the Black-Scholes value of such options using the highest such valuation during the one-year period prior to the Change of Control. If Mr. Myers is discharged without cause or resigns for Good Reason in conjunction with, and within two years of, a Change of Control, he is, in lieu of his termination benefits summarized above, entitled to a severance package which includes a payout equal to three times his base salary, bonus, and option grant, each calculated in accordance with the same provisions as found in Mr. Erikson’s agreement described above. These agreements also provide that if any payments made to the executive officer would cause the executive officer to be subject to an excise tax because the payment is a “parachute payment” (as defined in the Internal Revenue Code), then the Company will pay the executive officer an excise tax premium in a sufficient amount to make the executive officer whole with respect to any additional tax that would not have been payable but for the excise tax provision. A “Change of Control” of the Company will occur for purposes of these agreements if (i) any person is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s outstanding voting securities, other than through the purchase of voting securities directly from the Company through a private placement; (ii) the current members of the Board, or subsequent members approved by two-thirds of the current members, no longer comprise a majority of the Board; (iii) the Company is merged or consolidated with another corporation or entity and the Company’s stockholders own less than 80% of the outstanding voting securities of the surviving or resulting corporation or entity; (iv) a tender offer or exchange offer is made and consummated by a person other than the Company for the ownership of 20% or more of the Company’s voting securities; or (v) there has been a disposition of all or substantially all of the Company’s assets.

     The Executive Severance Policy for other senior level executives, including Messrs. Lemmer, Moore and Rajeski, sets forth certain salary and benefit rights in the event of the termination of employment. The Executive Severance Policy provides for salary and benefit continuation of 12 months for a covered executive if his or her employment with the Company is terminated by the Company for any reason other than cause.

     The Change of Control agreements with eight other officers, including Messrs. Lemmer and Rajeski, entitle the executive to substantially the same benefits provided to Mr. Myers under his employment agreement in the event of a Change of Control, except that under these agreements a Change of Control resulting from a merger or consolidation does not occur unless the Company’s stockholders own less than 60% of the outstanding voting securities of the surviving or resulting corporation or entity. The Change of Control Agreement with Mr. Moore and one other executive officer entitle the executive to substantially the same benefits provided to Messrs. Lemmer and Rajeski under their agreements in the event of a Change of Control, except that they are not entitled to tender to the Company options in exchange for an amount equal to the Black-Scholes value of such options.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership of Certain Beneficial Owners

     The following table lists the stockholders known by the Company to have been the beneficial owners of more than five percent of the Common Stock outstanding and entitled to be voted at the Meeting as of December 31, 2003:

	Shares of		Percent of
	Common		Common
Name and Address of Beneficial Owner	Stock		Stock
FMR Corp.(1)		6,764,563		12.528
82 Devonshire Street
Boston, MA 02109-3614
J.P. Morgan Chase & Co.(2)		3,294,695		6.1
270 Park Ave.
New York, NY 10017
Massachusetts Financial Services Company(3)		2,718,020		5.0
500 Boylston Street
Boston, MA 02116
Neuberger Berman, Inc.(4)		2,806,946		5.2
605 Third Ave.
New York, NY 10158
T. Rowe Price Associates, Inc.(5)		3,453,100		6.3
100 E. Pratt Street
Baltimore, Maryland 21202

(1)	According to a Schedule 13G/A filed with the Securities and Exchange Commission (the “SEC”) by FMR Corp., as of December 31, 2003, Fidelity Management & Research Company (Fidelity), a wholly-owned subsidiary of FMR Corp. and an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, is the beneficial owner of 6,545,837 shares or 12.123% of Common Stock. Edward C. Johnson 3d, FMR Corp., through its control of Fidelity, and the funds each has sole power to dispose of the 6,545,837 shares owned by the Funds, but neither FMR Corp nor Edward C. Johnson 3d has the sole power to vote or direct the voting of the shares owned directly by the Fidelity Funds, which power resides with the Funds’ Board of Trustees. Fidelity carries out the voting of the shares under written guidelines established by the Funds’ Boards of Trustees. Fidelity Management Trust Company, a wholly-owned subsidiary of FMR Corp., and a bank as defined in Section 3(a)(6) of the Securities Exchange Act of 1934, is the beneficial owner of 116,100 shares or 0.215% of Common Stock as a result of its serving as investment manager of the institutional account(s). Edward C. Johnson 3d and FMR Corp., through its control of Fidelity Management Trust Company, each has sole dispositive power over 116,100 shares and sole power to vote or to direct the voting of 116,100 shares of common stock owned by the institutional account(s). Strategic Advisers, Inc, a wholly-owned subsidiary of FMR Corp., is the beneficial owner of 26 shares or 0.000% of the outstanding common stock of the Company. Strategic Advisers, Inc. is an investment adviser registered under Section 203 of the Investment Advisers Act of 1940.
(2)	According to a Schedule 13G/A filed with the SEC by J.P. Morgan Chase & Co., dated February 12, 2004, J.P. Morgan Chase had sole voting power over 2,316,719 shares of Common Stock, shared voting power over 7,608 shares, sole dispositive power over 3,275,040 shares and shared dispositive power over 17,176 shares.
(3)	According to a Schedule 13G filed with the SEC by Massachusetts Financial Services Company (“MFS”), dated February 11, 2004, MFS had sole voting power over 2,562,340 shares of Common Stock and sole dispositive power over 2,718,020 shares of Common Stock.
(4)	According to a Schedule 13G/A filed with the SEC by Neuberger Berman, Inc., dated February 13, 2004, Neuberger Berman had sole voting power over 1,543,841 shares of Common Stock, shared voting power over 702,400 shares, sole dispositive power over zero shares and shared dispositive power over 2,806,946 shares. In addition, employee(s) of Neuberger Berman, LLC and Neuberger Berman Management, Inc. own 32,200 shares.
(5)	According to a Schedule 13G/ filed with the SEC by T. Rowe Price Associates, Inc., as of December 31, 2003, T. Rowe Price had sole voting power over 574,900 shares and sole dispositive power over 3,453,100 shares. T. Rowe Price is an Investment Advisor registered under Section 203 of the Investment Advisers Act of 1940. These securities are owned by various individual and institutional investors, which T. Rowe Price Associates, Inc. (Price Associates) serves as investment adviser with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price Associates is

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deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities.

Security Ownership of Management

     The following table sets forth, as of February 12, 2004, unless otherwise noted, the number of shares of Common Stock beneficially owned (as defined by the Securities and Exchange Commission (“SEC”)) by each current director, by each executive officer named in the Summary Compensation Table included herein who is not also a director, and by all directors and executive officers as a group. For information regarding the Company’s stock ownership guidelines for directors and executive officers, see “Information Concerning the Board of Directors-Stock Ownership Guidelines.”

				Number of Shares
	Number of			That May Be
	Shares of			Acquired By Options		Percent
	Common			Exercisable Within		of
Directors	Stock Owned			60 Days (1)(2)		Class
Nathan M. Avery		2,296	(3)		30,870		*
C. Baker Cunningham		12,846			36,870		*
Sheldon R. Erikson		608,154	(4)		993,676		3.0
Lamar Norsworthy		3,500			22,290		*
Michael E. Patrick		2,000			33,570		*
David Ross III		15,796			30,870		*
Bruce W. Wilkinson		0			12,000		*
Executive Officers Named in the Summary Compensation Table Other Than Those Listed Above:
Franklin Myers		51,419	(4)		240,756		*
Robert J. Rajeski		13,265	(4)		114,268		*
William C. Lemmer		9,109	(4)		135,778		*
Jack B. Moore		2,881	(4)		123,467		*
All directors and executive officers as a group (14 persons including those named above)		746,945	(4)		1,970,911		5.0

*	Indicates ownership of less than one percent of Common Stock outstanding.
(1)	As defined by the SEC, securities beneficially owned include securities that the above persons have the right to acquire at any time within 60 days after February 12, 2004.
(2)	Includes shares under options in lieu of fees or salaries that have been earned pursuant to either (i) waiver of directors’ fees by the directors or (ii) waiver of salary by executive officers. Such options are not forfeitable or cancelable, expire five years from the effective date and become exercisable one year from effective date.
(3)	Includes 2,170 shares owned by family members as to which beneficial ownership is disclaimed.
(4)	Includes shares held in the Cooper Cameron Corporation Retirement Savings Plan as of December 31, 2003.

     Information relating to the Company’s equity compensation plans is included in Note 9 of the Notes to Consolidated Financial Statements, which Notes are incorporated herein by reference in Part II, Item 8 hereof (“Notes to Consolidated Financial Statements”).

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     None

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Principal Accounting Firm Fees

     The following table sets forth the U.S. dollar equivalent fees billed or to be billed by the Company’s principal accounting firm, Ernst & Young LLP, for services rendered for the years ended December 31, 2003 and 2002.

24

	Year ended December 31,
	2003		2002
Audit Fees	$	1,108,400	$	865,600
Audit-Related Fees:
Internal audit services		—		74,200
Non-audit accounting consultations and other		53,100		52,900
		53,100		127,100
Tax Fees:
Tax compliance, consulting and advisory services		409,200		425,700
All Other Fees:
Other permitted advisory services		52,700		3,900
Total	$	1,623,400	$	1,422,300

     The Audit Committee performs an annual review and approves the scope of services and proposed fees of the Company’s principal accounting firm. Any projects not specifically included in this approval will be reviewed and approved in advance by the Chairman of the Audit Committee and will be reviewed by the full Audit Committee at the next regularly scheduled meeting.

     The Committee also considered whether the provision of services, other than audit services, is compatible with maintaining the accounting firm’s independence. Effective June 2002, the Company discontinued the use of Ernst & Young LLP for internal audit services and engaged PricewaterhouseCoopers LLP for these services.

Pre-approval Policies and Procedures

     The Audit Committee has adopted a policy that requires advance approval of all audit, audit-related, tax services, and other services performed by the independent auditor. The policy provides for pre-approval by the Audit Committee of specifically defined audit and non-audit services. Unless the specific service has been previously pre-approved with respect to that year, the Audit Committee must approve the permitted service before the independent auditor is engaged to perform it. The Audit Committee has delegated to the Chairman of the Audit Committee authority to approve permitted services provided that the Chairman reports any decisions to the Committee at its next scheduled meeting.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Report:

(1) Financial Statements:

   All financial statements of the Registrant as set forth under Item 8 of this Annual Report on Form 10-K.

(2) Financial Statement Schedules:

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Cooper Cameron Corporation

We have audited, in accordance with auditing standards generally accepted in the United States, the consolidated financial statements of Cooper Cameron Corporation (the “Company”) as of December 31, 2003 and 2002, and for each of the three years in the period ended December 31, 2003, and have issued our report thereon dated January 27, 2004 (incorporated by reference elsewhere in this Form 10-K). Our audits also included the financial statement schedule included in Item 15(a)(2) of this Form 10-K. This schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion based on our audits.

25

In our opinion, the financial statement schedule referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects the information set forth therein.

	/s/ Ernst & Young LLP
	ERNST & YOUNG LLP
Houston, Texas
January 27, 2004

Schedule II — Valuation and Qualifying Accounts
(dollars in thousands)

			Additions
	Balance at		Charged to		Charged								Balance at
	beginning		costs and		to other								end of
Description	of period		expenses		accounts		Deductions (a)			Translation			period
YEAR ENDED DECEMBER 31, 2003:
Allowance for doubtful accounts	$	2,170	$	15	$	—	$	(388	)	$	26		$	1,823
Allowance for obsolete and excess inventory	$	35,355	$	8,506	$	—	$	(6,784	)	$	240		$	37,317
YEAR ENDED DECEMBER 31, 2002:
Allowance for doubtful accounts	$	3,993	$	396	$	—	$	(2,268	)	$	49		$	2,170
Allowance for obsolete and excess inventory	$	24,732	$	17,950	$	—	$	(7,454	)	$	127		$	35,355
YEAR ENDED DECEMBER 31, 2001:
Allowance for doubtful accounts	$	3,080	$	1,747	$	—	$	(810	)	$	(24	)	$	3,993
Allowance for obsolete and excess inventory	$	24,364	$	6,041	$	—	$	(5,651	)	$	(22	)	$	24,732

(a) Write-offs of uncollectible receivables or obsolete inventory

(3) Exhibits:

3.1	Amended and Restated Certificate of Incorporation of Cooper Cameron Corporation, dated June 30, 1995, filed as Exhibit 4.2 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 33-94948), and incorporated herein by reference.
3.2	Certificate of Amendment to the Restated Certificate of Incorporation of Cooper Cameron Corporation, filed as Exhibit 4.3 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 333-57995), and incorporated herein by reference.
3.3	Second Amended and Restated Bylaws of Cooper Cameron Corporation, filed as Exhibit 3.3 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
4.1	Form of Rights Agreement, dated as of May 1, 1995, between Cooper Cameron Corporation and First Chicago Trust Company of New York, as Rights Agent, filed as Exhibit 4.1 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 33-94948), and incorporated herein by reference.
4.2	First Amendment to Rights Agreement between Cooper Cameron Corporation and First Chicago Trust Company of New York, as Rights Agent, dated November 1, 1997, filed as Exhibit 4.2 to the Annual Report on Form 10-K for 1997 of Cooper Cameron Corporation, and incorporated herein by reference.
4.3	Registration Statement on Form S-3 filed with the Securities and Exchange Commission on May 4, 1998 (Registration Statement No. 333-51705) incorporated herein by reference.

26

10.1	Cooper Cameron Corporation Long-Term Incentive Plan, as Amended and Restated as of November 2002, incorporated by reference to the Cooper Cameron Corporation Proxy Statement for the Annual Meeting of Stockholders held on May 8, 2003.
10.2	Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.6 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 333-46638), and incorporated herein by reference.
10.3	First Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.7 to the Registration Statement on Form S-8 filed with the SEC on May 29, 2001 (File No. 333-61820) and incorporated herein by reference.
10.4	Second Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.8 to the Registration Statement on Form S-8 filed with the SEC on February 4, 2002 (File No. 333-82082) and incorporated herein by reference.
10.5	Third Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.9 to the Registration Statement on Form S-8 filed with the SEC on February 4, 2002 (File No. 333-82082) and incorporated herein by reference.
10.6	Fourth Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 10.6 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.7	Cooper Cameron Corporation Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors (Registration Statement on Form S-8 No. 333-79787), incorporated herein by reference.
10.8	Cooper Cameron Corporation Retirement Savings Plan, as Amended and Restated, effective April 1, 1996, filed as Exhibit 10.10 to the Annual Report on Form 10-K for 1997 of Cooper Cameron Corporation, and incorporated herein by reference.
10.9	Cooper Cameron Corporation Employee Stock Purchase Plan (Registration Statement No. 33-94948), incorporated herein by reference.
10.10	Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan, filed as Exhibit 10.4 to the Registration Statement on Form S-4 of Cooper Cameron Corporation (Commission File No. 33-90288), and incorporated herein by reference.
10.11	First Amendment to Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan, effective as of January 1, 1996, filed as Exhibit 10.7 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.
10.12	Cooper Cameron Corporation 2003 Supplemental Excess Defined Contribution Plan, filed as Exhibit 4.13 to the Registration Statement on Form S-8 filed with the SEC on June 18, 2003 of Cooper Cameron Corporation (Commission File No. 333-106225), and incorporated herein by reference.
10.13	First Amendment to Cooper Cameron Corporation 2003 Supplemental Excess Defined Contribution Plan filed as Exhibit 4.14 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003, of Cooper Cameron Corporation (Commission File No. 333-106225), and incorporated herein by reference.
10.14	Cooper Cameron Corporation Compensation Deferral Plan (formerly the Cooper Cameron Corporation Management Incentive Compensation Deferral Plan), effective January 1, 1996, filed as Exhibit 10.10 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.
10.15	First Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, effective July 1, 1998, filed as Exhibit 10.12 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.16	Second Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, effective January 1, 1999, filed as Exhibit 10.13 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.17	Third Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, effective January 1, 2000, filed as Exhibit 10.14 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.18	Fourth Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, filed as Exhibit 4.10 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003 (Commission File No. 333-106225), and incorporated herein by reference.
10.19	Fifth Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, filed as Exhibit 4.11 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003 (Commission File No. 333-106225), and incorporated herein by reference.
10.20	Sixth Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, filed as Exhibit 4.12 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003 (Commission File No. 333-106225), and incorporated herein by reference.
10.21	Cooper Cameron Corporation Directors Deferred Compensation Plan, filed as Exhibit 10.7 to the Registration Statement on Form S-4 of Cooper Cameron Corporation (Commission File No. 33-90288), and incorporated herein by reference.
10.22	Employment Agreement by and between Sheldon R. Erikson and Cooper Cameron Corporation, effective as of August 13, 1999, filed as Exhibit 10.16 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.

27

10.23	Employment Agreement by and between Franklin Myers and Cooper Cameron Corporation, effective as of September 1, 1999, filed as Exhibit 10.18 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.24	Form of Change in Control Agreement, effective November 11, 1999, by and between Cooper Cameron Corporation and Scott Amann, Jane Crowder Schmitt, William Lemmer and Robert Rajeski, filed as Exhibit 10.19 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.25	Form of Change in Control Agreement, effective July 12, 2000, by and between Cooper Cameron Corporation and Michael C. Jennings, filed as Exhibit 10.22 to the Annual Report on Form 10-K for 2000 of Cooper Cameron Corporation and incorporated herein by reference.
10.26	Form of Change in Control Agreement, effective October 10, 2002, by and between Cooper Cameron Corporation and Charles M. Sledge, filed as Exhibit 10.23 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.27	Form of Change in Control Agreement, effective May 8, 2003, by and between Cooper Cameron Corporation and John Carne and Jack Moore.
10.28	Amended and Restated Management Incentive Compensation Plan of Cooper Cameron Corporation, incorporated herein by reference to the Cooper Cameron Corporation 2000 Proxy Statement for the Annual Meeting of Stockholders held on May 11, 2000.
10.29	Change in Control Policy of Cooper Cameron Corporation, approved February 19, 1996, filed as Exhibit 10.18 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.
10.30	Executive Severance Program of Cooper Cameron Corporation, approved July 20, 2000, filed as Exhibit 10.25 to the Annual Report on Form 10-K for 2000 of Cooper Cameron Corporation and incorporated herein by reference.
10.31	Credit Agreement, dated as of December 12, 2003, among Cooper Cameron Corporation and certain of its subsidiaries and the banks named therein and Bank One, as agent.
10.32	Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant, filed as Exhibit 4.6 to the Registration Statement on Form S-8 (Registration No. 333-57991), incorporated herein by reference.
10.33	Cooper Cameron Corporation Savings-Investment Plan for Hourly Employees, filed as Exhibit 4.7 to the Registration Statement on Form S-8 (Registration No. 333-77641), incorporated herein by reference.
10.34	Cooper Cameron Corporation Directors’ 2001 Deferred Compensation Plan dated February 7, 2001, filed as Exhibit 10.33 to the Annual Report on Form 10-K for 2001 of Cooper Cameron Corporation and incorporated herein by reference.
10.35	Form of Indemnification Agreement, effective February 20, 2003, by and between Cooper Cameron Corporation and Nathan M. Avery, C. Baker Cunningham, Sheldon R. Erikson, Lamar Norsworthy, Michael E. Patrick, David Ross and Bruce W. Wilkinson, filed as Exhibit 10.32 to the Annual Report on Form 10-K/A for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.36	Form of Indemnification Agreement, effective February 20, 2003, by and between Cooper Cameron Corporation and Mr. Jeff Altamari, Mr. Steve P. Beatty, Mr. John Carne, Ms. Jane Crowder Schmitt, Mr. Hal Goldie, Mr. Michael C. Jennings, Mr. William C. Lemmer, Mr. Jack B. Moore, Mr. Franklin Myers, Mr. Robert Rajeski, Mr. Charles M. Sledge, and Mr. Rick Steans.
13.1	Portions of the 2003 Annual Report to Stockholders are included as an exhibit to this report and have been specifically incorporated by reference elsewhere herein.
21.1	Subsidiaries of registrant.
23.1	Consent of Independent Auditors.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

28

32.1   Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

   The Company filed a Form 8-K dated October 28, 2003 incorporating therein, as an exhibit, a press release dated October 28, 2003 announcing the Company’s earnings for the three-and nine-month periods ended September 30, 2003.

   The Company filed a Form 8-K dated January 28, 2004 incorporating therein, as an exhibit, a press release dated January 28, 2004 announcing the Company’s earnings for the three-and twelve-month periods ended December 31, 2003.

29

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 5 day of March, 2004.

COOPER CAMERON CORPORATION
Registrant
By:	/s/ CHARLES M. SLEDGE
	(Charles M. Sledge)
	Vice President and Corporate Controller
	(Principal Accounting Officer)

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed on this 5 day of March, 2004, below by the following persons on behalf of the Registrant and in the capacities indicated.

Signature	Title
/s/ Nathan M. Avery (Nathan M. Avery)	Director
/s/ C. Baker Cunningham (C. Baker Cunningham)	Director
/s/ SHELDON R. ERIKSON (Sheldon R. Erikson)	Chairman, President and Chief Executive Officer (principal executive officer)
/s/ Lamar Norsworthy (Lamar Norsworthy)	Director
/s/ Michael E. Patrick (Michael E. Patrick)	Director
/s/ David Ross III (David Ross III)	Director
/s/ Bruce W. Wilkinson (Bruce W. Wilkinson)	Director
/s/ FRANKLIN MYERS (Franklin Myers)	Senior Vice President, Finance and Chief Financial Officer (principal financial officer)

30

EXHIBIT INDEX

Exhibit		Sequential
Number	Description	Page No.
3.1	Amended and Restated Certificate of Incorporation of Cooper Cameron Corporation, dated June 30, 1995, filed as Exhibit 4.2 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 33-94948), and incorporated herein by reference.
3.2	Certificate of Amendment to the Restated Certificate of Incorporation of Cooper Cameron Corporation, filed as Exhibit 4.3 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 333-57995), and incorporated herein by reference.
3.3	Second Amended and Restated Bylaws of Cooper Cameron Corporation, filed as Exhibit 3.3 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
4.1	Form of Rights Agreement, dated as of May 1, 1995, between Cooper Cameron Corporation and First Chicago Trust Company of New York, as Rights Agent, filed as Exhibit 4.1 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 33-94948), and incorporated herein by reference.
4.2	First Amendment to Rights Agreement between Cooper Cameron Corporation and First Chicago Trust Company of New York, as Rights Agent, dated November 1, 1997, filed as Exhibit 4.2 to the Annual Report on Form 10-K for 1997 of Cooper Cameron Corporation, and incorporated herein by reference.
4.3	Registration Statement on Form S-3 filed with the Securities and Exchange Commission on May 4, 1998 (Registration Statement No. 333-51705) incorporated herein by reference.
10.1	Cooper Cameron Corporation Long-Term Incentive Plan, as Amended and Restated as of November 2002, incorporated by reference to the Cooper Cameron Corporation Proxy Statement for the Annual Meeting of Stockholders held on May 8, 2003.
10.2	Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.6 to the Registration Statement on Form S-8 of Cooper Cameron Corporation (Commission File No. 333-46638), and incorporated herein by reference.
10.3	First Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.7 to the Registration Statement on Form S-8 filed with the SEC on May 29, 2001 (File No. 333-61820) and incorporated herein by reference.
10.4	Second Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.8 to the Registration Statement on Form S-8 filed with the SEC on February 4, 2002 (File No. 333-82082) and incorporated herein by reference.
10.5	Third Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 4.9 to the Registration Statement on Form S-8 filed with the SEC on February 4, 2002 (File No. 333-82082) and incorporated herein by reference.
10.6	Fourth Amendment to the Cooper Cameron Corporation Broad Based 2000 Incentive Plan, filed as Exhibit 10.6 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.7	Cooper Cameron Corporation Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors (Registration Statement on Form S-8 No. 333-79787), incorporated herein by reference.
10.8	Cooper Cameron Corporation Retirement Savings Plan, as Amended and Restated, effective April 1, 1996, filed as Exhibit 10.10 to the Annual Report on Form 10-K for 1997 of Cooper Cameron Corporation, and incorporated herein by reference.
10.9	Cooper Cameron Corporation Employee Stock Purchase Plan (Registration Statement No. 33-94948), incorporated herein by reference.
10.10	Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan, filed as Exhibit 10.4 to the Registration Statement on Form S-4 of Cooper Cameron Corporation (Commission File No. 33-90288), and incorporated herein by reference.
10.11	First Amendment to Cooper Cameron Corporation Supplemental Excess Defined Benefit Plan, effective as of January 1, 1996, filed as Exhibit 10.7 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.

Exhibit		Sequential
Number	Description	Page No.
10.12	Cooper Cameron Corporation 2003 Supplemental Excess Defined Contribution Plan, filed as Exhibit 4.13 to the Registration Statement on Form S-8 filed with the SEC on June 18, 2003 of Cooper Cameron Corporation (Commission File No. 333-106225), and incorporated herein by reference.
10.13	First Amendment to Cooper Cameron Corporation 2003 Supplemental Excess Defined Contribution Plan, filed as Exhibit 4.14 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003, of Cooper Cameron Corporation (Commission File No. 333-106225), and incorporated herein by reference.
10.14	Cooper Cameron Corporation Compensation Deferral Plan (formerly the Cooper Cameron Corporation Management Incentive Compensation Deferral Plan), effective January 1, 1996, filed as Exhibit 10.10 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.
10.15	First Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, effective July 1, 1998, filed as Exhibit 10.12 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.16	Second Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, effective January 1, 1999, filed as Exhibit 10.13 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.17	Third Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, effective January 1, 2000, filed as Exhibit 10.14 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.18	Fourth Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, filed as Exhibit 4.10 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003 (Commission File No. 333-106225), and incorporated herein by reference.
10.19	Fifth Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, filed as Exhibit 4.11 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003 (Commission File No. 333-106225), and incorporated herein by reference.
10.20	Sixth Amendment to the Cooper Cameron Corporation Compensation Deferral Plan, filed as Exhibit 4.12 to the Registration Statement on Form S-8, filed with the SEC on June 18, 2003 (Commission File No. 333-106225), and incorporated herein by reference.
10.21	Cooper Cameron Corporation Directors Deferred Compensation Plan, filed as Exhibit 10.7 to the Registration Statement on Form S-4 of Cooper Cameron Corporation (Commission File No. 33-90288), and incorporated herein by reference.
10.22	Employment Agreement by and between Sheldon R. Erikson and Cooper Cameron Corporation, effective as of August 13, 1999, filed as Exhibit 10.16 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.23	Employment Agreement by and between Franklin Myers and Cooper Cameron Corporation, effective as of September 1, 1999, filed as Exhibit 10.18 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.24	Form of Change in Control Agreement, effective November 11, 1999, by and between Cooper Cameron Corporation and Scott Amann, Jane Crowder Schmitt, William Lemmer and Robert Rajeski, filed as Exhibit 10.19 to the Annual Report on Form 10-K for 1999 of Cooper Cameron Corporation, and incorporated herein by reference.
10.25	Form of Change in Control Agreement, effective July 12, 2000, by and between Cooper Cameron Corporation and Michael C. Jennings, filed as Exhibit 10.22 to the Annual Report on Form 10-K for 2000 of Cooper Cameron Corporation and incorporated herein by reference.
10.26	Form of Change in Control Agreement, effective October 10, 2002, by and between Cooper Cameron Corporation and Charles M. Sledge, filed as Exhibit 10.23 to the Annual Report on Form 10-K for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.27	Form of Change in Control Agreement, effective May 8, 2003, by and between Cooper Cameron Corporation and John Carne and Jack Moore.
10.28	Amended and Restated Management Incentive Compensation Plan of Cooper Cameron Corporation, incorporated herein by reference to the Cooper Cameron Corporation 2000 Proxy Statement for the Annual Meeting of Stockholders held on May 11, 2000.
10.29	Change in Control Policy of Cooper Cameron Corporation, approved February 19, 1996, filed as Exhibit 10.18 to the Annual Report on Form 10-K for 1996 of Cooper Cameron Corporation, and incorporated herein by reference.
10.30	Executive Severance Program of Cooper Cameron Corporation, approved July 20, 2000, filed as Exhibit 10.25 to the Annual Report on Form 10-K for 2000 of Cooper Cameron Corporation and incorporated herein by reference.

Exhibit		Sequential
Number	Description	Page No.
10.31	Credit Agreement, dated as of December 12, 2003, among Cooper Cameron Corporation and certain of its subsidiaries and the banks named therein and Bank One, as agent.
10.32	Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant, filed as Exhibit 4.6 to the Registration Statement on Form S-8 (Registration No. 333-57991), incorporated herein by reference.
10.33	Cooper Cameron Corporation Savings-Investment Plan for Hourly Employees, filed as Exhibit 4.7 to the Registration Statement on Form S-8 (Registration No. 333-77641), incorporated herein by reference.
10.34	Cooper Cameron Corporation Directors’ 2001 Deferred Compensation Plan dated February 7, 2001, filed as Exhibit 10.33 to the Annual Report on Form 10-K for 2001 of Cooper Cameron Corporation and incorporated herein by reference.
10.35	Form of Indemnification Agreement, effective February 20, 2003, by and between Cooper Cameron Corporation and Nathan M. Avery, C. Baker Cunningham, Sheldon R. Erikson, Lamar Norsworthy, Michael E. Patrick, David Ross and Bruce W. Wilkinson, filed as Exhibit 10.32 to the Annual Report on Form 10-K/A for 2002 of Cooper Cameron Corporation, and incorporated herein by reference.
10.36	Form of Indemnification Agreement, effective February 20, 2003, by and between Cooper Cameron Corporation and Mr. Jeff Altamari, Mr. Steve P. Beatty, Mr. John Carne, Ms. Jane Crowder Schmitt, Mr. Hal Goldie, Mr. Michael C. Jennings, Mr. William C. Lemmer, Mr. Jack B. Moore, Mr. Franklin Myers, Mr. Robert Rajeski, Mr. Charles M. Sledge, and Mr. Rick Steans.
13.1	Portions of the 2003 Annual Report to Stockholders are included as an exhibit to this report and have been specifically incorporated by reference elsewhere herein.
21.1	Subsidiaries of registrant.
23.1	Consent of Independent Auditors.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

EX-10.27

EXHIBIT 10.27

May 8, 2003

Name
Title, Company
Address
City, State

Dear [Employee Name],

     Cooper Cameron Corporation (the “Company”) considers the establishment and maintenance of a sound and vital management to be essential for the protection and enhancement of the best interests of the Company and its shareholders. The Company recognizes that, as is the case with many publicly-held corporations, the possibility of a Change of Control¹ may arise and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders. Accordingly, the Board of Directors of the Company (the “Board”) has determined that appropriate steps should be taken to assure the Company of the continuation of your service and to reinforce and encourage the attention and dedication of members of the Company’s management to their assigned duties without distraction in circumstances arising from the possibility of a Change of Control. In particular the Board believes it important, should the Company or its shareholders receive a proposal for or notice of a Change of Control , or consider one itself, that you be able to assess and advise the Company whether such transaction would be or is in the best interests of the Company and its shareholders, and to take such other action regarding such transaction as the Board might determine to be appropriate without being influenced by the uncertainties of your own situation.

     In order to induce you to remain in the employ of the Company, this letter agreement (the “Agreement”), prepared pursuant to authority granted by the Board, sets forth the compensation and severance benefits which the Company agrees will be provided to you should your employment with the Company be terminated in connection with a Change of Control under the circumstances described below, as well as certain other benefits which will be made available to you should you be employed by the Company on the Effective Date of a Change of Control.

¹ Reference is made to Annex I hereto for definitions of certain terms used in this Agreement, and such definitions are incorporated herein by such reference with the same effect as if set forth herein. Certain capitalized terms used in this Agreement in connection with the description of various Plans are defined in the respective Plans, but if any conflicts with a definition herein contained, the latter shall prevail.

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     This Agreement shall remain in full force and effect for as long as you remain in your current position with the Company or any other position of equal or higher grade which has historically made its holder eligible for a Change of Control Agreement; provided, however, that this Agreement shall terminate and cease to be in full force and effect upon your giving notice of your intent to terminate your employment with the Company for any reason other than Good Reason, whether by retirement, early retirement, or otherwise. This Agreement supersedes any prior Agreement between you and the Company regarding the subject matter hereof.

     1. Termination in Connection with a Change of Control.

          (a) If there is a termination of your employment with the Company either by the Company without Cause or by you for Good Reason during the period between the Effective Date of a Change of Control and 2 years following the occurrence of the Change of Control (the “Effective Period”), and if such Effective Date occurs during the life of this Agreement, you shall be entitled to the following benefits , whether or not this Agreement has been cancelled prior to the time of your termination:

          (i) all benefits conferred upon you by the Severance Package, and

          (ii) in addition, all benefits payable under the provisions either of the Company’s employee and executive Plans in which you are a participant immediately prior to the Effective Date, or of those plans in existence at the time of your Termination Date, whichever are more favorable to you, in accordance with the terms and conditions of such Plans or plans, such benefits to be paid under such Plans or plans and not under this Agreement.

          (b) Notwithstanding the above, you shall not be entitled to any such benefits if your termination results from your death or disability, unless your death or disability occurs (i) during the Effective Period and (ii), with respect to the benefits conferred by the Severance Package only, after either it has been decided that you will be terminated without Cause during the Effective Period, or you have given notice of termination for Good Reason during the Effective Period.

          (c) You shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment, nor shall the amount of any payment provided for in this Agreement be reduced by any compensation earned by you as the result of employment by another employer after any Termination Date.

     2. Procedures for Termination.

          (a) If it is intended that your employment be terminated by you for Good Reason you shall transmit to the Company written notice setting forth the particulars upon which you base your determination that Good Reason exists and, only if the stated basis therefore is capable of being cured, requesting a cure within 10 days. Failing such a cure, a “final separation” shall then occur, and if such stated basis is not capable of cure by the Company, “final

Page 3

separation” shall occur co-extensive with delivery of the notice. For purposes of this Agreement, a “Termination Date” shall be deemed to have occurred upon the date of such “final separation”.

          (b) If it is intended that your employment be terminated by the Company without Cause, a “Termination Date” shall be deemed to have occurred upon the 30th day following the date of receipt of any notice so stating, or upon the date specified in the notice, whichever is later. If it is intended that your employment be terminated by the Company for Cause, if you contest such termination pursuant to any proceeding initiated pursuant to Section 6 hereof within 15 days of receipt of such notice, and it is ultimately determined that cause did not exist, then (anything else in the Agreement to the contrary notwithstanding) a “Termination Date” shall be deemed to have occurred upon the final resolution of such proceeding.

     3. LTIP Benefit Acceleration. Immediately upon an applicable Termination Date, all contingent compensation rights issued to you under the LTIP Plan, which are then (i) held by you, a member of your Immediate Family, or a partnership or limited liability company whose partners or shareholders are you and members of your Immediate Family, and (ii) outstanding, shall become vested, exercisable, distributable and unrestricted (any contrary provision in the LTIP Plan notwithstanding) whether or not you continue to be employed by the Company. You shall have the right immediately upon any written request by you to the Company, to (i) exercise all or any portion of all your options covered (including, at your sole election, any associated Tandem SAR) by the LTIP Plan and to have the underlying Shares issued to you, (ii) have issued to you on a non-forfeitable basis any or all Shares covered by Restricted Stock Awards held by you under the LTIP Plan, (iii) have issued to you any or all Performance Shares and/or Performance Units held by you in the LTIP Plan, (iv) exercise all or any portion of any LTIP Plan Freestanding SAR held by you, and (v) obtain the full benefit of any other contingent compensation rights to which you may be entitled under the LTIP Plan, in each case as though all applicable Performance Targets had been met or achieved at maximum levels for all Performance Periods (including those extending beyond the Effective Date) and any and all other LTIP Plan contingencies had been satisfied in full at the date of the Change of Control and the maximum possible benefits thereunder had been earned at the date of the Change of Control.

     4. Conditional Share Purchase Obligation.

          (a) If a Change of Control occurs as a consequence of a tender offer or exchange offer (the “Tender Offer”), the Company shall, if requested by you, purchase from you (whether a Termination Date has occurred following the Change of Control) for cash on any business day selected by you upon not less than ten days’ notice to the Company, which day shall not be less than ten days following consummation of the Tender Offer nor more than three years after the Effective Date, up to that number of Shares which shall be equal to the product of (x) the number of Shares acquired by you upon exercise or distribution of any benefit under the Bonus Plan or LTIP Plan prior to consummation of the Tender Offer, multiplied by (y) the decimal equivalent of (I) the number of Shares accepted for purchase or exchange in the Tender Offer, divided by (II) the number of Shares timely and validly tendered pursuant to the Tender Offer. In the event the above obligation to purchase Shares occurs by reason of a cash tender offer or a combination cash tender offer and exchange offer, the cash price per share to be paid to you hereunder shall be equal to the highest price paid in cash pursuant to the Tender Offer. In the

Page 4

event such obligation occurs by reason of an exchange offer, the cash price per share to be paid to you hereunder shall be equal to the closing price, if traded on a stock exchange, or the average bid and asked prices, if traded in the over-the-counter market, of the security of the person so exchanged for the Shares (the “Exchange Security”) on the first day on which the Exchange Security could have been sold by you on such exchange or in the over-the-counter market, as the case may be, in a regular broker’s transaction had your Shares been tendered and accepted, multiplied by the number of Exchange Securities (or fraction thereof) issued in the Tender Offer for each Company Share; and

          (b) If a Change of Control occurs pursuant to a Tender Offer and (i) a merger, consolidation, reorganization, sale, spin-off, or purchase of assets under which all remaining outstanding Shares will be converted into or become exchangeable for cash, or for securities (“Merger Security”) issued or to be issued by the Person who made the Tender Offer (or a subsidiary or affiliate of such Person) is thereafter proposed to the Company or its shareholders, and (ii) such merger, consolidation, reorganization or purchase of assets occurs less than three years after the Effective Date, and (iii) the amounts of cash into which each Share would be converted if the transaction is effected wholly for cash, or the Merger Security Value (as defined below) if such transaction is effected wholly for Merger Securities, or the sum of the cash and the Merger Security Value if the Transaction is effected partly for cash and partly for Merger Securities, as the case may be, is less than 95% of the per share price that would have been paid by the Company for such portion of your Shares had you exercised your option to require the Company to purchase such Shares under Section 4(a) above, the Company shall pay you (whether or not a Termination Date has occurred following a Change of Control), an amount in cash equal to the difference between the aggregate price you would have received from the number of Shares the Company would have been required to purchase from you had you exercised such option under Section 4(a) and the amount of cash and/or the Merger Security Value received for the same number of Shares in such merger, consolidation, reorganization or purchase of assets. Such cash payment shall be made to you on a business day selected by you upon no less than ten-calendar days’ notice to the Company or its Successor (as hereinafter defined). For purposes of this Section 4(b), “Merger Security Value” shall mean the closing price, if traded on a stock exchange, or the average bid and asked prices if traded in the over-the-counter market, of the Merger Security on the first day on which the Merger Security could have been sold by you on such exchange or in the over-the-counter market, as the case may be, in a regular broker’s transaction, multiplied by the number of Merger Securities (or fraction thereof) for which each Share was exchangeable or into which each Share was convertible. If no public market develops for the Merger Security within 30 days from the date of its issue, however, “Merger Security Value” shall mean the fair market value of such Merger Security (on a per unit basis in the written opinion of a nationally recognized investment banking firm acceptable to you) on the effective date of the merger, consolidation, reorganization or purchase of assets, as the case may be, multiplied by the number of Merger Securities (or fraction thereof) for which each Share was exchangeable or into which each Share was convertible.

Page 5

     5. Excise Tax.

          (a) Any other provision of this Agreement to the contrary notwithstanding, if any payment in the nature of compensation to be paid or provided to you under this Agreement or otherwise is considered to be a “parachute payment” within the meaning of Section 280G(b) of the Code, the Company shall pay to you an additional amount (hereinafter referred to as the “Excise Tax Premium”). The Excise Tax Premium shall be equal to the excise tax determined under Code Section 4999 attributable to the total amount of payments received by you. The Excise Tax Premium shall also include any amount attributable to excise tax on the Excise Tax Premium. The Company shall also pay to you an additional amount (the “Additional Amount”) such that the net amount received by you, after paying any applicable Excise Tax Premium and any federal or state income, excise or other tax on such additional amount, shall be equal to the amount that you would have received if such Excise Tax Premium were not applicable. You shall be deemed to pay income taxes at all relevant times at the highest marginal rate of income taxation in effect in your taxing jurisdiction. The Additional Amount shall include any amount attributable to income, excise or other tax on the Additional Amount.

          (b) Not later than 30 days following any payment in the nature of compensation described herein, the independent public accountants acting as auditors for the Company on the date of the transaction constituting the change of control within the meaning of Code Section 280G (or another accounting firm designated by you) shall determine whether the sum of the present value of any “parachute payments” payable under this Agreement or otherwise and the present value of any other “parachute payments” received by you upon or after any such change of control is in excess of the amount you can receive without causing you to be subject to an excise tax with respect to such amount on account of Code Section 4999, and shall determine the amount of any Excise Tax Premium and Additional Amount payable to you. The Excise Tax Premium and Additional Amount shall be paid to you as soon as practicable but in no event later than the time when the tax payment is due, including by way of withholding, and shall be net of any amounts required to be withheld for taxes.

          (c) For purposes of this Section, “present value” means the value determined in accordance with the principles of Section 1274 (b) (2) of the Code under the rules provided in Treasury Regulations under Section 280G of the Code.

          (d) To the extent Code Section 280G is amended prior to the termination of this Agreement, or is replaced by a successor statute, the provisions of this Section 5 shall be deemed modified without further action of the parties in a manner consistent with such amendments or successor statutes, as the case may be. In the event that Code Section 280G or any successor statute is repealed, this Section 5 shall cease to be effective on the effective date of such repeal. The parties recognize that Treasury Regulations under Code Sections 280G and 4999 may affect the amount that may be paid hereunder and agree that, upon the issuance of any such regulations, this Agreement may be modified as in good faith may be deemed necessary in light of the provisions of such regulations to achieve the purposes hereof, and that consent to such modifications shall not be unreasonably withheld.

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     6. Dispute Resolution.

          (a) This Agreement shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of Texas without regard to choice of law principles.

          (b) It is irrevocably agreed that if any dispute arises between us under this Agreement: (i) exclusive jurisdiction shall be in the lowest Texas state court of general jurisdiction sitting in Harris County, Texas, (ii) we are each at the time present in Texas for the purpose of conferring personal jurisdiction; (iii) any such action may be brought in such court, and any objection that the Company or you may now or hereafter have to the venue of such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court is waived, and we each agree not to plead or claim the same, (iv) service of process in any such proceeding or action may be effected by mailing a copy thereof by registered or certified mail, return receipt requested (or any substantially similar form of mail), postage prepaid, to such party at the address provided in Section 11 hereof, and (v) prior to any trial on the merits, we will submit to court supervised, non-binding mediation.

          (c) Notwithstanding any contrary provision of Texas law, the Company shall have the burden of proof with respect to any of the following: (i) that Cause existed at the time any notice was given to you under Section 2 (ii) that Good Reason did not exist at the time notice was given to the Company under Section 2; and (iii) that a Change of Control has not occurred.

     7. Successors; Binding Agreement.

          (a) In the event any Successor (as defined below) does not assume this Agreement by operation of law the Company will seek to have any Successor, by agreement in form and substance satisfactory to you, expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it. If there has been a Change of Control prior to, or a Change of Control will result from, any such succession, then failure of the Company to obtain at your request such agreement prior to or upon the effectiveness of any such succession (unless assumption occurs as a matter of law) shall constitute Good Reason for termination by you of your employment and, upon delivery of a notice of termination by you to the Company, you shall be entitled to the benefits provided for herein. “Successor” shall mean any Person that succeeds to, or has the ability to control, the Company’s business as a whole, directly by merger, consolidation, spin-off or similar transaction, or indirectly by purchase of the Company’s Voting Securities or acquisition of all or substantially all of the assets of the Company.

          (b) This Agreement shall inure to the benefit of and be enforceable by your personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

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     8. Fees and Expenses. The Company shall pay all legal fees and expenses incurred by you as a result of your seeking to interpret, obtain, assert or enforce any right or benefit conferred upon you by this Agreement to the extent you are the prevailing party.

     9. Notices. Any and all notices required or permitted to be given hereunder shall be in writing and shall be deemed to have been given when delivered in person to the persons specified below or deposited in the United States mail, certified or registered mail, postage prepaid and addressed as follows:

If to the Company:	Cooper Cameron Corporation
	1333 West Loop South, Suite 1700
	Houston, Texas 77027
	Attention: Chief Executive Officer
If to you:	[Employee Name
	[Address]

     Either party may change, by the giving of notice in accordance with this Section 10, the address to which notices are thereafter to be sent.

     10. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

     11. Survival. All obligations undertaken and benefits conferred pursuant to this Agreement, shall survive any termination of your employment and continue until performed in full.

     12. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such modification, waiver or discharge is agreed to in writing signed by you and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. The internal laws of the State of Texas shall govern the validity, interpretation, construction and performance of this Agreement.

     13. Duplicate Originals. This Agreement has been executed in duplicate originals, with one to be held by each of the parties hereto.

     If this letter correctly sets forth our understanding with respect to the subject matter hereof, please sign and return one copy of this letter to the Company.

Sincerely,

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COOPER CAMERON CORPORATION
BY:
	Sheldon R. Erikson Chairman, President and Chief Executive Officer

Agreed to as of the 8th
day of May, 2003

Employee Name

Annex I to Agreement dated May 8, 2003
between
Cooper Cameron Corporation
and
[Employee Name]

Definition of
Certain Terms

     “Agreement” means the letter agreement between [Employee Name] and the Company dated May 8, 2003.

     “Bonus Plan” means for each year, the Company’s Management Incentive Compensation Plan or any other Plan adopted by the Board which provides for the payment of additional compensation on an annual basis to senior executive officers contingent upon the Company’s results of operations for that specific year, in either case as such Plan shall be amended or modified to, but not on or after, any Effective Date.

     “Bylaws” means the bylaws of the Company as in effect at the date hereof and as the same shall be amended or otherwise modified to, but not on or after, any Effective Date.

     “Cause” means (i) your conviction by a court of competent jurisdiction, from which conviction no further appeal can be taken, of a felony-grade crime involving moral turpitude, or (ii) your willful failure to perform substantially your duties with the Company (other than a failure due to physical or mental illness) which is materially and demonstrably injurious to the Company. No act or failure to act on your part shall be considered “willful” unless done, or omitted to be done, by you in bad faith and without reasonable belief that your action or omission was in, or not opposed to, the best interests of the Company.

     “Change of Control” means the earliest date at which:

     (i) any Person is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s outstanding Voting Securities, other than through the purchase of Voting Securities directly from the Company through a private placement; or

     (ii) individuals who constitute the Board on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of the directors comprising the Incumbent Board shall from and after such election be deemed to be a member of the Incumbent Board; or

     (iii) the Company is merged or consolidated with another corporation or entity and as a result of such merger or consolidation less than 60% of the outstanding Voting Securities of the

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surviving or resulting corporation or entity shall then be owned by persons or entities not stockholders of the Company immediately prior to the merger or consolidation (in the event a stockholder owns shares of stock or other ownership interests in the corporation or entity with which the Company is merged or consolidated, such stockholder shall be considered not a stockholder of the Company immediately before the merger or consolidation with respect to its ownership interest in such other corporation or other entity); or

     (iv) a tender offer or exchange offer is made and consummated by a Person other than the Company for the ownership of 20% or more of the Voting Securities of the Company then outstanding; or

     (v) all or substantially all of the assets of the Company are sold or transferred to a Person as to which (A) the Incumbent Board does not have authority (whether by law or contract) to directly control the use or further disposition of such assets and (B) the financial results of the Company and such Person are not consolidated for financial reporting purposes.

     Anything else in this definition to the contrary notwithstanding, no Change of Control shall be deemed to have occurred by virtue of any transaction which results in you, or a group of Persons which includes you, acquiring more than 20% of either the combined voting power of the Company’s outstanding Voting Securities or the Voting Securities of any other corporation or entity which acquires all or substantially all of the assets of the Company, whether by way of merger, consolidation, sale of such assets or otherwise.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Defined Benefit Plan” means the Company’s Retirement Plan and Supplemental Excess Defined Benefit Plan, as the same shall be amended or modified to, but not on or after, any Effective Date.

     “Defined Contribution Plan” means the Company’s Retirement Savings Plan and Supplemental Excess Defined Contribution Plan, as the same shall be amended or modified to, but not on or after, any Effective Date.

     “Disability” means your continuing full-time absence from your duties with the Company for 180 days or longer as a result of physical or mental incapacity.

     “Effective Date” means the earliest date upon which (i) any of the events set forth under the definition of Change of Control shall have occurred, (ii) the receipt by the Company of a Schedule 13D stating the intention of any Person to take actions which, if accomplished, would constitute a Change of Control, (iii) the public announcement by any Person of its intention to take any such action, in each case without regard for any contingency or condition which has not been satisfied on such date, (iv) the agreement by the Company to enter into a transaction which, if consummated, would result in a Change of Control, or (v) consideration by the Board of a transaction which, if consummated, would result in a Change of Control.

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     If, however, an Effective Date occurs but the proposed transaction to which it relates ceases to be actively considered, the Effective Period will be deemed not to have commenced for purposes of this Agreement. If an Effective Date occurs with respect to a proposed transaction which ceases to be actively considered but for which active consideration is revived, the Effective Date with respect to the Change of Control that ultimately occurs shall be that date when consideration was revived and carried through to consummation.

     “Effective Period” means the period between the Effective Date of a Change of Control and 2 years following the occurrence of the Change of Control.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

     “Good Reason” means any of the following:

     (i) except as a result of your death or Retirement, or following the receipt by you of a Notice of Termination for Cause or due to Disability, a change in your status, title(s) or position(s) with the Company, including as an officer of the Company, which, in your reasonable judgment, does not represent a promotion, with commensurate adjustment of compensation, from your status, title(s) and position(s) immediately prior to the Effective Date; or the assignment to you of any duties or responsibilities which, in your reasonable judgment, are inconsistent with such status, title(s) or position(s); or the withdrawal from you of any duties or responsibilities which in your reasonable opinion are consistent with such status, title(s) or position(s); or any removal of you from or any failure to reappoint or reelect you to such position(s); or

     (ii) a reduction by the Company any time after the Effective Date in your then current base salary: or

     (iii) the failure by the Company to continue in effect any Plan in which you were participating immediately prior to the Effective Date other than as a result of the normal expiration or amendment of any such Plan in accordance with its terms, or the taking of any action, or the failure to act, by the Company which would adversely affect your continued participation in any such Plan on at least as favorable a basis to you as is the case immediately prior to the Effective Date or which would materially reduce your benefits under any of such Plans or deprive you of any material benefit enjoyed by you immediately prior to the Effective Date, except as consented to by you; or

     (iv) the relocation of the principal place of your employment to a location 25 miles further from your principal residence without your express written consent; or

     (v) the failure by the Company upon a Change of Control to obtain the assumption of this Agreement by any Successor (other than by operation of law); or

     (vi) any refusal by the Company to continue to allow you to attend to matters or engage in activities not directly related to the business of the Company which you

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attended to or were engaged in immediately prior to the Effective Date and which do not otherwise violate your obligations hereunder; or

     (vii) any continuing material default by the Company in the performance of its obligations under this Agreement, whether before or after a Change of Control.

     “LTIP Option” means any option granted under the LTIP Plan.

     “LTIP Plan” means the Company’s Long-Term Incentive Plan and/or its Broadbased 2000 Incentive Plan adopted as such plan may be amended, modified, or replaced, up to, but not on or after, an Effective Date.

     “Market Value” means, when used with respect to Shares or Voting Securities, the closing price therefore on the New York Stock Exchange on the date for which the market value is to be determined, or if not listed thereon, on such other exchange as shall at that time constitute the principal exchange for trading the Shares or Voting Securities.

     “Options In Lieu Of Salary Plan” means the Company’s plan which allows certain executive officers of the Company to receive stock options in lieu of all or any portion of their Base Salary as the same may be amended or modified up to, but not on or after, any Effective Date, or any successor plan which provides the same or substantially similar benefit.

     “Other Plans” means any thrift; bonus or incentive; stock option or stock accumulation; pension; medical, disability, accident or life insurance plan, program or policy of the Company which is intended to benefit employees of the Company that are similarly situated to you (other than the Bonus Plan, Defined Benefit Plan, Defined Contribution Plan, LTIP Plan or Purchase Plan). “Person” means any individual, corporation, partnership, group, association or other “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act, other than the Company or any Plans sponsored by the Company.

     “Perquisites” means individual perquisites benefits received by you immediately prior to the Effective Date, including, but not limited to, club membership dues and certain automobile expenses.

     “Plans” means the Bonus Plan, Defined Benefit Plan, Defined Contribution Plan, LTIP Plan, Purchase Plan, Compensation Deferral Plan and Other Plans.

     “Purchase Plan” means the Company’s Employee Stock Purchase Plan adopted as the same shall be amended or modified to, but not on or after, any Effective Date.

     “Retirement” means termination of your employment on the “normal retirement date” as set forth in the Defined Benefit Plan.

     “Severance Package” means your right to receive, and the Company’s obligation to pay and/or perform on, the following:

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     (a) on or within ten days following an applicable Termination Date, the Company shall pay to you a lump sum, cash amount equal to the sum of (i) three times the highest annual rate of base salary in effect during the current year or any of the three years preceding the Termination Date and (ii) three times the greater of (A) the maximum award you would have been eligible to receive under the Bonus Plan in respect of the current year, regardless of any limitations otherwise applicable to the Bonus Plan (i.e., the failure to have completed any vesting period or the current measurement period, or the failure to achieve any performance goal applicable to all or any portion of the measurement period) or (B) the largest award earned (whether or not paid) under the Bonus Plan in respect of any of the three years preceding the Termination Date, or (C) 100% of your Base Pay at the applicable Termination Date, and (iii) three times the Black-Scholes value at the time of grant of the most valuable one-year option grant (excluding any option you received at your election in lieu of salary or bonus award) you had received from the Company during the five years prior to your Termination Date with any such Black-Scholes valuation performed on a basis consistent with the methodology set forth on Exhibit A to the Agreement; and

     (b) in addition to your entitlement to the vested portion of your interest in the Defined Contribution Plan in accordance with the terms of that plan, the Company shall pay to you, on or within ten days following the applicable Termination Date, an amount in cash equal to the unvested portion of the Company’s contributions to your account, which unvested portion shall be valued as of your Termination Date at Market Value ; and

     (c) in addition to any vested retirement benefits to which you are entitled on the Termination Date under the Defined Benefit Plan, the Company shall pay to you, on or within ten days following an applicable Termination Date, an amount in cash equal to the product of (i) a number equal to your years of life expectancy beyond age 65 determined in accordance with the actuarial assumptions utilized under the Defined Benefit Plan immediately prior to the Termination Date, times (ii) an amount equal to the difference between (A) the annual benefit to which you would have been entitled under the “single life annuity” method of distribution under the Defined Benefit Plan if you were fully vested thereunder (without regard to (I) whether you shall actually have completed the period of Vesting Service required to qualify for benefits under the Defined Benefit Plan, (II) any limitation on the amount used in the calculation of the annual benefit thereunder, (III) any offset thereunder for severance allowances payable thereunder, or (IV) any amendment to the Defined Benefit Plan made in connection with a Change of Control and on or prior to the Termination Date, which amendment adversely affects in any manner the computation of retirement benefits under such plan) and had accumulated an additional three years of Vesting Service thereunder, and (B) the annual benefit, if any, to which you would be entitled under the single life annuity method of distribution under the Defined Benefit Plan as of the Termination Date; and

     (d) an amount in cash equal to three times the average annual cost incurred by the Company during the preceding three calendar years as a result of your participation in

A-5

all insured and self-insured employee welfare benefit Plans and Perquisites in which you were entitled to participate immediately prior to the Termination Date (or such fewer whole calendar years as you have so participated).

     Anything else in this Agreement to the contrary notwithstanding, if (i) you are terminated in connection with a Change of Control, and (ii) you are entitled to the Severance Package, and (iii) your Termination Date precedes or occurs on the date of the closing thereof, then unless otherwise agreed to by both parties in writing, all amounts to which you are or shall become entitled to under this Agreement, which are calculable as of the closing date, shall be accelerated to, and become immediately due and payable contemporaneously with such closing.

     “Shares” means shares of Common Stock, $.01 par value, of the Company at the date of this Agreement, as the same shall be subsequently amended, modified or changed.

     “Termination Date” shall have the meaning given it by Section 2 of the Agreement.

     “Voting Securities” means, with respect to any corporation or business enterprise, those securities, which under ordinary circumstances are entitled to vote for the election of directors or others charged with comparable duties under applicable law.

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EX-10.31

EXHIBIT 10.31

CREDIT AGREEMENT

AMONG

COOPER CAMERON CORPORATION,
AND THE OTHER BORROWERS NAMED HEREIN
AS BORROWERS,

THE LENDERS NAMED HEREIN,

BANK ONE, NA
AS AGENT,

BANC ONE CAPITAL MARKETS, INC.
AS LEAD ARRANGER AND SOLE BOOK RUNNER,

CREDIT LYONNAIS NEW YORK BRANCH
AS SYNDICATION AGENT,

AND

ABN AMRO BANK N.V., CITIBANK, N.A.,
AND THE ROYAL BANK OF SCOTLAND PLC
AS DOCUMENTATION AGENTS

DATED AS OF

DECEMBER 12, 2003

TABLE OF CONTENTS

	Page
ARTICLE I DEFINITIONS		1
ARTICLE II THE CREDITS		15
2.1 Commitment		15
2.2 Determination of Dollar Amounts; Required Payments; Termination		15
2.3 Ratable Loans		16
2.4 Types of Advances		16
2.5 Swing Line Loans		16
2.6 Facility Fee; Usage Fee; Reductions in Aggregate Commitment		19
2.7 Minimum Amount of Each Advance		20
2.8 Optional Principal Payments		20
2.9 Method of Selecting Types and Interest Periods for New Advances		20
2.10 Conversion and Continuation of Outstanding Advances		20
2.11 Method of Borrowing		21
2.12 Changes in Interest Rate, etc.		22
2.13 Rates Applicable After Default		22
2.14 Method of Payment		22
2.15 Advances to be Made in Euro		23
2.16 Noteless Agreement; Evidence of Indebtedness		23
2.17 Telephonic Notices		24
2.18 Interest Payment Dates; Interest and Fee Basis		24
2.19 Notification of Advances, Interest Rates, Prepayments and Commitment Reductions		24
2.20 Lending Installations		24
2.21 Non-Receipt of Funds by the Agent		25
2.22 Market Disruption		25
2.23 Judgment Currency		25
2.24 Additional Borrowing Subsidiaries		26
2.25 Lender Replacement		26
2.26 Facility LCs		26
2.27 Increase in Commitment		31
ARTICLE III YIELD PROTECTION; TAXES		32
3.1 Yield Protection		32
3.2 Changes in Capital Adequacy Regulations		33
3.3 Availability of Types of Advances		34
3.4 Funding Indemnification		34
3.5 Taxes		34
3.6 Lender Statements; Survival of Indemnity		36
ARTICLE IV CONDITIONS PRECEDENT		36
4.1 Initial Credit Extensions		36

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	Page
4.2 Each Credit Extension		38
ARTICLE V REPRESENTATIONS AND WARRANTIES		39
5.1 Existence and Standing		39
5.2 Authorization and Validity		39
5.3 No Conflict; Government Consent		39
5.4 Financial Statements		39
5.5 Taxes		40
5.6 Litigation and Contingent Obligations		40
5.7 Subsidiaries		40
5.8 ERISA		40
5.9 Accuracy of Information		40
5.10 Regulation U		41
5.11 Material Agreements		41
5.12 Compliance With Laws		41
5.13 Ownership of Properties		41
5.14 Plan Assets; Prohibited Transactions		41
5.15 Environmental Matters		41
5.16 Investment Company Act		41
5.17 Public Utility Holding Company Act		41
5.18 Reportable Transaction		42
ARTICLE VI COVENANTS		42
6.1 Financial Reporting		42
6.2 Use of Proceeds		43
6.3 Notice of Default		43
6.4 Conduct of Business		43
6.5 Taxes		43
6.6 Insurance		44
6.7 Compliance with Laws		44
6.8 Maintenance of Properties		44
6.9 Inspection		44
6.10 Capital Stock and Dividends		44
6.11 Indebtedness		44
6.12 Merger		45
6.13 Sale of Assets		45
6.14 Sale of Accounts		45
6.15 Liens		46
6.16 Affiliates		46
6.17 Environmental Matters		46
6.18 Restrictions on Subsidiary Payments		46
6.19 ERISA Compliance		47
6.20 Financial Covenants		47

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	Page
ARTICLE VII DEFAULTS		47
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES		49
8.1 Acceleration; Facility LC Collateral Account		49
8.2 Amendments		51
8.3 Preservation of Rights		51
ARTICLE IX GENERAL PROVISIONS		52
9.1 Survival of Representations		52
9.2 Governmental Regulation		52
9.3 Headings		52
9.4 Entire Agreement		52
9.5 Several Obligations; Benefits of this Agreement		52
9.6 Expenses; Indemnification		52
9.7 Numbers of Documents		53
9.8 Accounting		53
9.9 Severability of Provisions		54
9.10 Nonliability of Lenders		54
9.11 Confidentiality		54
9.12 Nonreliance		55
9.13 Disclosure		55
ARTICLE X THE AGENT		55
10.1 Appointment; Nature of Relationship		55
10.2 Powers		55
10.3 General Immunity		55
10.4 No Responsibility for Loans, Recitals, etc.		55
10.5 Action on Instructions of Lenders		56
10.6 Employment of Agents and Counsel		56
10.7 Reliance on Documents; Counsel		56
10.8 Agent’s Reimbursement and Indemnification		56
10.9 Notice of Default		57
10.10 Rights as a Lender		57
10.11 Lender Credit Decision		57
10.12 Successor Agent		57
10.13 Agent and Arranger Fees		58
10.14 Delegation to Affiliates		58
10.15 Co-Agents		58
ARTICLE XI SETOFF; RATABLE PAYMENTS		58
11.1 Setoff		58
11.2 Ratable Payments		58

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	Page
ARTICLE XII BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS		59
12.1 Successors and Assigns		59
12.2 Participations		59
12.3 Assignments		60
12.4 Dissemination of Information		61
12.5 Tax Treatment		61
ARTICLE XIII NOTICES		61
13.1 Notices		61
13.2 Change of Address		61
ARTICLE XIV COUNTERPARTS		61
ARTICLE XV CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL		62
15.1 CHOICE OF LAW		62
15.2 CONSENT TO JURISDICTION		62
15.3 WAIVER OF JURY TRIAL		62

SCHEDULES AND EXHIBITS

PRICING SCHEDULE
EXHIBIT A-1	FORM OF IN-HOUSE COUNSEL OPINION
EXHIBIT A-2	FORM OF OUTSIDE COUNSEL OPINION
EXHIBIT B	FORM OF COMPLIANCE CERTIFICATE
EXHIBIT C	FORM OF ASSIGNMENT AGREEMENT
EXHIBIT D	FORM OF LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION
EXHIBIT E	FORM OF NOTE
EXHIBIT F	FORM OF JOINDER AGREEMENT
SCHEDULE 1	SUBSIDIARIES
SCHEDULE 2	LIENS
SCHEDULE 3	EUROCURRENCY PAYMENT OFFICES OF THE AGENT

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CREDIT AGREEMENT

     This Agreement, dated as of December 12, 2003, is among Cooper Cameron Corporation, Cooper Cameron (U.K.) Limited, Cameron GmbH, Cooper Cameron (Singapore) Pte. Ltd., Cooper Cameron Canada Corp., Cooper Cameron (Luxembourg) SARL, the Lenders (defined below), Credit Lyonnais New York Branch, as Syndication Agent, ABN AMRO Bank N.V., Citibank, N.A., and The Royal Bank of Scotland plc, as Documentation Agents, and Bank One, NA, as L/C Issuer and Agent. The parties hereto agree as follows:

ARTICLE I

DEFINITIONS

     As used in this Agreement:

     “Additional Lender” is defined in Section 2.27(a).

     “Advance” means a borrowing hereunder, (a) made by some or all of the Lenders on the same Borrowing Date, or (b) converted or continued by the Lenders on the same date of conversion or continuation, consisting, in either case, of the aggregate amount of the several Loans of the same Type and, in the case of Eurocurrency Loans, in the same Agreed Currency and for the same Interest Period. The term “Advance” shall include Swing Line Loans unless otherwise expressly provided.

     “Affiliate” of any Person means any other Person directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person owns 15% or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock, by contract or otherwise.

     “Agent” means Bank One in its capacity as contractual representative of the Lenders pursuant to Article X, and not in its individual capacity as a Lender, and any successor Agent appointed pursuant to Article X.

     “Agreed Currencies” means (a) Dollars, (b) so long as such currencies remain Eligible Currencies, British Pounds Sterling, Canadian Dollars, and, the Euro, and (c) any other Eligible Currency which a Borrower requests the Agent to include as an Agreed Currency hereunder and which is acceptable to all of the Lenders.

     “Aggregate Commitment” means the aggregate of the Commitments of all the Lenders, as reduced or increased from time to time pursuant to the terms hereof.

     “Aggregate Outstanding Credit Exposure” means, at any time, the aggregate of the Outstanding Credit Exposure of all the Lenders.

     “Agreement” means this credit agreement, as it may be amended, restated, modified or supplemented and in effect from time to time.

     “Agreement Accounting Principles” means generally accepted accounting principles as in effect from time to time, applied in a manner consistent with that used in preparing the financial statements referred to in Section 5.4.

     “Alternate Base Rate” means, for any day, a rate of interest per annum equal to the higher of (a) the Prime Rate for such day and (b) the sum of the Federal Funds Effective Rate for such day plus 1/2% per annum.

     “Applicable Fee Rate” means, at any time, the percentage rate per annum at which Facility Fees or usage fees are accruing at such time as set out in the attached Pricing Schedule.

     “Applicable Margin” means, with respect to Advances of any Type or Facility LC’s of any Type, at any time, the percentage rate per annum which is applicable at such time with respect to Advances or Facility LC’s of such Type as set out in the attached Pricing Schedule.

     “Approximate Equivalent Amount” of any currency with respect to any amount of Dollars shall mean the Equivalent Amount of such currency with respect to such amount of Dollars on or as of such date, rounded up to the nearest amount of such currency as determined by the Agent from time to time.

     “Arranger” means Banc One Capital Markets, Inc., a Delaware corporation, and its successors, in its capacity as Lead Arranger and Sole Book Runner.

     “Article” means an article of this Agreement unless another document is specifically referenced.

     “Asset Disposition” means any sale, transfer, or other disposition of any asset of the Parent or any Subsidiary in a single transaction or in a series of related transactions (other than the sale of inventory in the ordinary course, the sale of obsolete or excess machinery, equipment, or furniture in the ordinary course, and the sale of accounts and notes receivable permitted by Section 6.14).

     “Attributable Debt” means as at the time of determination (a) with respect to a Synthetic Lease, the present value (discounted at the explicit or implicit interest rate applicable to such Synthetic Lease at such time) of the total obligations of the lessee for rental payments during the remaining term of such Synthetic Lease at such time and (b) with respect to an accounts or notes receivable financing or securitization program, the outstanding balance of amounts advanced in respect of the receivables and notes under such program.

     “Authorized Officer” means, with respect to any of the Borrowers, any of the chief executive officer, president, chief financial officer, treasurer, or controller, acting singly.

     “Availability” is defined in Section 7.2.

     “Available Aggregate Commitment” means, at any time, the Aggregate Commitment then in effect minus the Aggregate Outstanding Credit Exposure at such time.

     “Bank Guaranty” means a guaranty executed by a LC Issuer with respect to obligations of a Borrower and provided pursuant to this Agreement.

     “Bank One” means Bank One, NA, a national banking association having its principal office in Chicago, Illinois, in its individual capacity, and its successors.

     “Borrower” means any of the Parent and the Borrowing Subsidiaries and “Borrowers” means, collectively, the Parent and the Borrowing Subsidiaries.

     “Borrowing Date” means a date on which an Advance is made hereunder.

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     “Borrowing Notice” is defined in Section 2.9.

     “Borrowing Subsidiary” means each of Cooper Cameron (U.K.) Limited, Cameron GmbH, Cooper Cameron (Singapore) Pte. Ltd., Cooper Cameron Canada Corp., Cooper Cameron (Luxembourg) SARL and any other Subsidiary of the Parent which has entered into a Joinder Agreement.

     “Business Day” means (a) with respect to any borrowing, payment or rate selection of Eurocurrency Advances, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago and New York for the conduct of substantially all of their commercial lending activities, interbank wire transfers can be made on the Fedwire system and dealings in Dollars and the other Agreed Currencies are carried on in the London interbank market (and, if the Advances which are the subject of such borrowing, payment or rate selection are denominated in Euro, a day upon which such clearing system as is determined by the Agent to be suitable for clearing or settlement of the Euro is open for business) and (b) for all other purposes, a day (other than a Saturday or Sunday) on which banks generally are open in Chicago for the conduct of substantially all of their commercial lending activities and interbank wire transfers can be made on the Fedwire system.

     “Canadian Borrower” means any Borrowing Subsidiary which is incorporated under and operating in Canada or one of its provinces.

     “Canadian Dollars” shall mean the lawful currency of Canada.

     “Canadian Swing Line Borrowing Notice” is defined in Section 2.5.1(b).

     “Canadian Swing Line Election” means the agreement of the Canadian Swing Line Lenders to make, at their election, Canadian Swing Line Loans up to a maximum principal amount of $10,000,000 at any one time outstanding.

     “Canadian Swing Line Lender” means Bank One, NA, Canada Branch, and each other Lender which agrees at the request of the Parent to act as a Canadian Swing Line Lender hereunder, or any other Lender which may succeed to their rights and obligations as Canadian Swing Line Lender pursuant to the terms of this Agreement, and “Canadian Swing Line Lenders” means, collectively, all of such Canadian Swing Line Lenders. Each Canadian Swing Line Lender must be exempt from withholding taxes imposed by Canada on interest payments made by the Parent or any Canadian Borrower, but need not be located in Canada.

     “Canadian Swing Line Loan” means a Loan made available to the Parent or any Canadian Borrower by the Canadian Swing Line Lenders pursuant to Section 2.5.1.

     “Canadian Swing Line Share” means, with respect to a Canadian Swing Line Lender, a portion equal to a fraction the numerator of which is the Dollar Amount set out opposite its signature below under the heading “Canadian Swing Line Loan Amount” (as it may be modified as a result of any assignment that has become effective pursuant to Section 12.3.2 or as otherwise modified from time to time pursuant to the terms hereof) and the denominator of which is Dollar Amount of the Canadian Swing Line Election.

     “Capitalized Lease” of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.

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     “Capitalized Lease Obligations” of a Person means the amount of the obligations of such Person under Capitalized Leases which would be shown as a liability on a balance sheet of such Person prepared in accordance with Agreement Accounting Principles.

     “CERCLA” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, and all rules and regulations and requirements thereunder in each case as now or hereafter in effect.

     “Change in Control” means the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934) of 50% or more of the outstanding shares of voting stock of the Parent.

     “Closing Date” means the date on or after the date of this Agreement on which all conditions precedent set out in Section 4.1 hereof have been satisfied or waived by the party or parties entitled to performance thereof.

     “Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time.

     “Collateral Shortfall Amount” is defined in Section 8.1.

     “Commitment” means, for each Lender, the obligation of such Lender to make Revolving Loans to, and participate in Facility LCs issued upon the application of, the Borrowers in an aggregate amount not exceeding the amount set out opposite its signature below, as it may be modified as a result of any assignment that has become effective pursuant to Section 12.3.2 or as otherwise modified from time to time pursuant to the terms hereof.

     “Commitment Increase” is defined in Section 2.27(a).

     “Compliance Certificate” means a certificate substantially in the form of Exhibit B.

     “Computation Date” is defined in Section 2.2.

     “Consolidated EBITDA” means (a) Consolidated Net Income for any applicable period plus, to the extent deducted from revenues in determining Consolidated Net Income (a) Consolidated Interest Expense for such period, (ii) expenses for income and franchise taxes paid or accrued during such period, (iii) depreciation and amortization for such period, (iv) non-recurring, non-cash charges for such period, and (iv) extraordinary losses incurred during such period other than in the ordinary course of business minus, to the extent included in Consolidated Net Income, extraordinary gains realized in such period other than in the ordinary course of business, all calculated for the Parent and its Subsidiaries on a consolidated basis, and (b) includes, on a pro forma basis, Consolidated EBITDA of any Person acquired in accordance with Section 6.12 for the four fiscal quarters most recently ended prior to the date of such acquisition, provided that the Consolidated EBITDA of any such acquired Person may be included in the Consolidated EBITDA of the Parent only if the Parent provides to the Agent, prior to or simultaneously with the delivery of any Compliance Certificate including the Consolidated EBITDA of such Person, financial statements of such Person for the fiscal year of such Person most recently ended, audited by independent certified public accountants reasonably acceptable to the Agent and including, at a minimum, a balance sheet, income statement, and statement of cash flows.

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     “Consolidated Indebtedness” means at any time the Indebtedness of the Parent and its Subsidiaries calculated on a consolidated basis as of such time.

     “Consolidated Interest Expense” means, with reference to any period, the interest expense, whether paid or accrued, of the Parent and its Subsidiaries calculated on a consolidated basis for such period as determined in accordance with Agreement Accounting Principles.

     “Consolidated Net Income” means, for any period, the net income (or loss) of the Parent and its Subsidiaries calculated on a consolidated basis for such period in accordance with Agreement Accounting Principles.

     “Consolidated Net Worth” means at any time the consolidated stockholders’ equity of the Parent and its Subsidiaries calculated on a consolidated basis as of such time; provided that any changes in consolidated stockholders’ equity as a result of (a) foreign currency translation adjustments and (b) any change in the fair value of any Financial Contract pursuant to Financial Accounting Standards Board Bulletin No 133, in each case after the date hereof, shall be excluded when computing Consolidated Net Worth.

     “Contingent Obligation” of a Person means any agreement, undertaking or arrangement by which such Person assumes, guarantees, endorses, contingently agrees to purchase or provide funds for the payment of, or otherwise becomes or is contingently liable upon, the obligation or liability of any other Person, or agrees to maintain the net worth or working capital or other financial condition of any other Person, or otherwise assures any creditor of such other Person against loss, including, without limitation, any comfort letter, bank guaranties, operating agreement, take-or-pay contract, a standby letter of credit which supports a payment obligation, or the obligations of any such Person as general partner of a partnership with respect to the liabilities of the partnership, and specifically excluding commercial letters of credit and standby letters of credit which support performance obligations.

     “Conversion/Continuation Notice” is defined in Section 2.10.

     “Controlled Group” means all members of a controlled group of corporations or other business entities and all trades or businesses (whether or not incorporated) under common control which, together with the Parent or any of its Subsidiaries, are treated as a single employer under Section 414 of the Code.

     “Coverage Ratio” means, for any applicable computation period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for such period.

     “Credit Extension” means the making of an Advance or the issuance of a Facility LC hereunder.

     “Credit Extension Date” means the Borrowing Date for an Advance or the issuance date for a Facility LC.

     “Default” means an event described in Article VII.

     “Documentary Letter of Credit” means a commercial letter of credit qualifying as a trade-related contingency under 12 CFR Part 3, Appendix A, Section 3(b)(3) or any successor U.S. Comptroller of the Currency regulation.

     “Dollar Amount” of any currency at any date shall mean (a) the amount of such currency if such currency is Dollars or (b) the equivalent in such currency of such amount of Dollars if such currency is any currency other than Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot

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rates of exchange of the Agent for such currency on the London market at 11:00 a.m., London time, on or as of the most recent Computation Date provided for in Section 2.2.

     “Dollars” and “$” shall mean the lawful currency of the United States of America.

     “Eligible Assignee” means any commercial bank organized under the laws of the United States or any of the countries parties to the Organization for Economic Cooperation and Development or any political subdivision of any thereof which has primary capital (or its equivalent) of not less than $250,000,000, is approved by the Agent, and, so long as no Default exists, is approved by the Parent, in either case, such approval not to be unreasonably withheld.

     “Eligible Currency” means any currency other than Dollars (a) that is readily available, (b) that is freely traded, (c) in which deposits are customarily offered to banks in the London interbank market, (d) which is convertible into Dollars in the international interbank market and (e) as to which an Equivalent Amount may be readily calculated. If, after the designation by the Lenders of any currency as an Agreed Currency, (i) currency control or other exchange regulations are imposed in the country in which such currency is issued with the result that different types of such currency are introduced, (ii) such currency is, in the determination of the Agent, no longer readily available or freely traded or (iii) in the determination of the Agent, an Equivalent Amount of such currency is not readily calculable, the Agent shall promptly notify the Lenders and the Borrowers, and such currency shall no longer be an Agreed Currency until such time as all of the Lenders agree to reinstate such currency as an Agreed Currency and promptly, but in any event within five Business Days of receipt of such notice from the Agent, the Borrowers shall repay all Loans in such affected currency or convert such Loans into Loans in Dollars or another Agreed Currency, subject to the other terms set out in Article II.

     “Environmental Laws” means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and other governmental restrictions relating to (a) the protection of the environment, (b) the effect of the environment on human health, (c) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water or land, or (d) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof.

     “Equivalent Amount” of any currency with respect to any amount of Dollars at any date shall mean the equivalent in such currency of such amount of Dollars, calculated on the basis of the arithmetical mean of the buy and sell spot rates of exchange of the Agent for such other currency at 11:00 a.m., London time, on the date on or as of which such amount is to be determined.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any rule or regulation issued thereunder.

     “Euro”and/or “EUR” means the euro referred to in Council Regulation (EC) No. 1103/97 dated June 17, 1997 passed by the Council of the European Union, or, if different, the then lawful currency of the member states of the European Union that participate in the third stage of Economic and Monetary Union.

     “Euro Implementation Date” means January 1, 1999.

     “Eurocurrency” means any Agreed Currency.

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     “Eurocurrency Advance” means an Advance which, except as otherwise provided in Section 2.12, bears interest at the applicable Eurocurrency Rate.

     “Eurocurrency Loan” means a Loan which, except as otherwise provided in Section 2.12, bears interest at the applicable Eurocurrency Rate.

     “Eurocurrency Payment Office” of the Agent shall mean, for each of the Agreed Currencies, the office, branch, affiliate or correspondent bank of the Agent specified as the “Eurocurrency Payment Office” for such currency in Schedule 3 hereto or such other office, branch, affiliate or correspondent bank of the Agent as it may from time to time specify to the Borrowers and each Lender as its Eurocurrency Payment Office.

     “Eurocurrency Rate” means, with respect to a Eurocurrency Advance for the relevant Interest Period, the sum of (a) the quotient of (i) the Eurocurrency Reference Rate applicable to such Interest Period, divided by (ii) one minus the Reserve Requirement (expressed as a decimal) applicable to such Interest Period, plus (b) the Applicable Margin.

     “Eurocurrency Reference Rate” means, with respect to a Eurocurrency Advance for the relevant Interest Period, the applicable British Bankers’ Association Interest Settlement Rate for deposits in the applicable Agreed Currency appearing on Reuters Screen FRBD or the applicable Reuters Screen for such Agreed Currency as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, provided that, (a) if Reuters Screen FRBD or the applicable Reuters Screen for such Agreed Currency is not available to the Agent for any reason, the applicable Eurocurrency Reference Rate for the relevant Interest Period shall instead be the applicable British Bankers’ Association Interest Settlement Rate for deposits in the Applicable Agreed Currency as reported by any other generally recognized financial information service as of 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, and having a maturity equal to such Interest Period, and (b) if no such British Bankers’ Association Interest Settlement Rate is available, the applicable Eurocurrency Reference Rate for the relevant Interest Period shall instead be the rate determined by the Agent to be the arithmetic average of the rates reported to the Agent by each Reference Lender as the rate at which such Reference Lender offers to place deposits in the applicable Agreed Currency with first-class banks in the London interbank market at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period, in the approximate amount of such Reference Lender’s relevant Eurocurrency Loan and having a maturity equal to such Interest Period. If any Reference Lender fails to provide such quotation to the Agent, then the Agent shall determine the Eurocurrency Reference Rate on the basis of the quotations of the remaining Reference Lender(s).

     “Excess Obligations” is defined in Section 2.2(a).

     “Excluded Taxes” means, in the case of each Lender or applicable Lending Installation and the Agent, taxes imposed on its overall net income, and franchise taxes imposed on it, by (a) the jurisdiction under the laws of which such Lender or the Agent is incorporated or organized or (b) the jurisdiction in which the Agent’s or such Lender’s principal executive office or such Lender’s applicable Lending Installation is located.

     “Exhibit” refers to an exhibit to this Agreement, unless another document is specifically referenced.

     “Facility Fee” is defined in Section 2.6.1.

     “Facility LC” is defined in Section 2.26.1.

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     “Facility LC Application” is defined in Section 2.26.3.

     “Facility LC Collateral Account” is defined in Section 2.26.11.

     “Facility Termination Date” means December 12, 2007 or any earlier date on which the Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the terms hereof.

     “Federal Funds Effective Rate” means, for any day, an interest rate per annum equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations at approximately 10:00 a.m. (Central Time) on such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent in its sole discretion.

     “Fee Letter” means that certain fee letter dated November 5, 2003, among Agent, Arranger and the Parent, as amended from time to time.

     “Financial Contract” of a Person means (a) any exchange-traded or over-the-counter futures, forward, swap or option contract or other financial instrument with similar characteristics, or (b) any Rate Management Transaction.

     “Financial Letter of Credit” means a letter of credit other than a Performance Letter of Credit or a Documentary Letter of Credit, and shall include without limitation standby letters of credit issued to secure financial obligations.

     “Floating Rate” means, for any day, a rate per annum equal to the Alternate Base Rate for such day, in each case changing when and as the Alternate Base Rate changes.

     “Floating Rate Advance” means an Advance which, except as otherwise provided in Section 2.12, bears interest at the Floating Rate.

     “Floating Rate Loan” means a Loan which, except as otherwise provided in Section 2.12, bears interest at the Floating Rate.

     “Foreign Subsidiary” means a Subsidiary not organized under the laws of the United States or any state, possession, or territory thereof.

     “Guaranty” means that certain Guaranty by Parent dated as of December 12, 2003, executed by the Parent in favor of the Agent, for the ratable benefit of the Lenders, as it may be amended or modified and in effect from time to time.

     “Hazardous Materials” means the substances identified as such pursuant to CERCLA and any chemicals regulated under any other Environmental Law, including without limitation pollutants, contaminants, petroleum or petroleum products Released into the environment, radionuclides, radioactive materials, and medical and infectious waste.

     “Increasing Lender” is defined in Section 2.27(a).

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     “Indebtedness” of a Person means such Person’s (a) obligations for borrowed money, (b) obligations representing the deferred purchase price of Property or services (other than accounts payable arising in the ordinary course of such Person’s business payable on terms customary in the trade), (c) obligations, whether or not assumed, secured by Liens or payable out of the proceeds or production from Property now or hereafter owned or acquired by such Person, (d) obligations which are evidenced by notes, acceptances, or other instruments, (e) obligations of such Person to purchase securities or other Property arising out of or in connection with the sale of the same or substantially similar securities or Property, (f) Capitalized Lease Obligations, (g) Contingent Obligations, (h) reimbursement obligations of such Person in respect of letters of credit or acceptance financing, (i) Off-Balance Sheet Liabilities, (j) any other obligation for borrowed money which in accordance with Agreement Accounting Principles would be shown as a liability on the consolidated balance sheet of such Person.

     “Interest Period” means, with respect to a Eurocurrency Advance, a period of one, two, three or six months (or such other period as may be agreed by the Lenders with respect to a particular Agreed Currency) commencing on a Business Day selected by the applicable Borrower pursuant to this Agreement. Such Interest Period shall end on the day which corresponds numerically to such date one, two, three or six months (or such other applicable period) thereafter, provided that if there is no such numerically corresponding day in such next, second, third or sixth succeeding month (or such other applicable period), such Interest Period shall end on the last Business Day of such next, second, third or sixth succeeding month (or such other applicable period). If an Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end on the next succeeding Business Day, provided that if said next succeeding Business Day falls in a new calendar month, such Interest Period shall end on the immediately preceding Business Day.

     “Joinder Agreement” means an agreement substantially in the form of Exhibit F by which a Subsidiary of the Parent becomes a Borrower Subsidiary.

     “LC Fee” is defined in Section 2.26.4.

     “LC Issuer” means Bank One (or any Affiliate designated by Bank One) in its capacity as issuer of Facility LCs hereunder and, at any Borrower’s option, any Lender (or, in the case of a Bank Guaranty, its applicable foreign Affiliate) who agrees to act in the capacity as issuer of Facility LCs hereunder and “LC Issuers” means, collectively, all of such LC Issuers.

     “LC Obligations” means, at any time, the sum, without duplication, of (a) the aggregate undrawn stated amount under all Facility LCs outstanding at such time plus (b) the aggregate unpaid amount at such time of all Reimbursement Obligations.

     “LC Payment Date” is defined in Section 2.26.5.

     “Lenders” means the lending institutions listed on the signature pages of this Agreement and their respective successors and assigns. Unless otherwise specified, the term “Lenders” includes the Swing Line Lenders.

     “Lending Installation” means, with respect to a Lender or the Agent, the office, branch, subsidiary or affiliate of such Lender or the Agent with respect to each Agreed Currency listed on the administration information sheets provided to the Agent in connection herewith or otherwise selected by such Lender or the Agent pursuant to Section 2.20.

     “Lien” means any lien (statutory or other), mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security agreement or preferential arrangement

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of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, Capitalized Lease or other title retention agreement).

     “Loan” means a Revolving Loan or Swing Line Loan.

     “Loan Documents” means this Agreement, the Facility LC Applications, any Notes issued pursuant to Section 2.16, the Guaranty, any Joinder Agreement and any other documents and agreements contemplated hereby and executed by any Borrower with or in favor of the Agent or any Lender, as any such agreement, instrument or document may be amended, modified or supplemented from time-to-time.

     “Material Adverse Effect” means a material adverse effect on (a) the business, Property, condition (financial or otherwise), results of operations, or prospects of the Parent and its Subsidiaries taken as a whole, (b) the ability of any Borrower to perform its obligations under the Loan Documents to which it is a party, or (c) the validity or enforceability of this Agreement, any Notes, the Guaranty, or any of the other material Loan Documents or the rights or remedies of the Agent, the applicable LC Issuer, or the Lenders thereunder.

     “Material Indebtedness” is defined in Section 7.5.

     “Material Subsidiary” means any Subsidiary of the Parent, which Subsidiary holds or constitutes 10% or more of either the consolidated assets or Consolidated EBITDA of the Parent.

     “Modify” and “Modification” are defined in Section 2.26.1.

     “Moody’s” means Moody’s Investors Service, Inc., and any successor thereto which is a nationally recognized statistical rating organization.

     “Multiemployer Plan” means a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

     “National Currency Unit” means the unit of currency (other than a Euro unit) of each member state of the European Union that participates in the third stage of Economic and Monetary Union.

     “Non-U.S. Borrower” is defined in Section 3.1(b).

     “Non-U.S. Lender” is defined in Section 3.5(d).

     “Note” is defined in Section 2.16.

     “Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all Reimbursement Obligations, all accrued and unpaid fees and all expenses, reimbursements, indemnities, obligations under any Rate Management Transaction with any Lender in connection with Loans under this Agreement, and other obligations of the Borrowers (or any Borrower) to the Lenders or to any Lender, any LC Issuer, the Agent, or any indemnified party arising under the Loan Documents, including without limitation any such Obligations incurred or accrued during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, whether or not allowed or allowable in such proceeding.

     “Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (b) any liability under any Sale and Leaseback Transaction which is not a Capitalized Lease, (c) any liability under any Synthetic Lease transaction entered into by such Person, or (d) any obligation arising with respect to any other

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transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheets of such Person, but excluding from this clause (d) Operating Leases.

     “Offered Rate” is defined in Section 2.5.2(b).

     “Original Currency” is defined in Section 2.14(b).

     “Operating Lease” of a Person means any lease of Property (other than a Capitalized Lease) by such Person as lessee which has an original term (including any required renewals and any renewals effective at the option of the lessor) of one year or more.

     “Other Taxes” is defined in Section 3.5(b).

     “Outstanding Credit Exposure” means, as to any Lender at any time, the sum of (a) the aggregate principal amount of its Loans outstanding at such time, plus (b) an amount equal to its Pro Rata Share of the aggregate principal amount of Swing Line Loans outstanding at such time, plus (c) an amount equal to its Pro Rata Share of the LC Obligations (other than LC Obligations with respect to Bank Guaranties) at such time.

     “Parent” means Cooper Cameron Corporation and its successors and assigns.

     “Participants” is defined in Section 12.2.1.

     “Payment Date” means the last day of each March, June, September and December.

     “PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

     “Performance Letter of Credit” means a letter of credit qualifying as a “performance-based standby letter of credit” under 12 CFR Part 3, Appendix A, Section 3(b)(2)(i) or any successor U.S. Comptroller of the Currency regulation.

     “Person” means any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any government or political subdivision or any agency, department or instrumentality thereof.

     “Plan” means an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code as to which the Parent or any member of the Controlled Group may have any liability.

     “Pricing Schedule” means the Schedule attached hereto identified as such.

     “Prime Rate” means a rate per annum equal to the prime rate of interest announced from time to time by Bank One or its parent (which is not necessarily the lowest rate charged to any customer), changing when and as said prime rate changes.

     “Property” of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person.

     “Pro Rata Share” means, with respect to a Lender, a portion equal to a fraction the numerator of which is such Lender’s Commitment and the denominator of which is the Aggregate Commitment.

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     “Rate Management Transaction” means any transaction (including an agreement with respect thereto) now existing or hereafter entered into by the Parent or any of its Subsidiaries which is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap, equity or equity index option, bond option, interest rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction, forward transaction, currency swap transaction, cross-currency rate swap transaction, currency option or any other similar transaction (including any option with respect to any of these transactions) or any combination thereof, whether linked to one or more interest rates, foreign currencies, commodity prices, equity prices or other financial measures.

     “Reference Lenders” means Credit Lyonnais New York Branch, ABN Amro Bank N.V., Citibank, N.A., and The Royal Bank of Scotland plc.

     “Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor thereto or other regulation or official interpretation of said Board of Governors relating to reserve requirements applicable to member banks of the Federal Reserve System.

     “Regulation U” means Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor or other regulation or official interpretation of said Board of Governors relating to the extension of credit by banks for the purpose of purchasing or carrying margin stocks applicable to member banks of the Federal Reserve System.

     “Reimbursement Obligations” means, at any time, the aggregate of all obligations of the Borrowers then outstanding under Section 2.26 to reimburse the LC Issuers for amounts paid by any LC Issuer in respect of any one or more drawings under Facility LCs.

     “Release” shall have the meaning set forth in CERCLA or under any other Environmental Law.

     “Reportable Event” means a reportable event as defined in Section 4043 of ERISA and the regulations issued under such section, with respect to a Plan, excluding, however, such events as to which the PBGC has by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided that a failure to meet the minimum funding standard of Section 412 of the Code and of Section 302 of ERISA shall be a Reportable Event regardless of the issuance of any such waiver of the notice requirement in accordance with either Section 4043(a) of ERISA or Section 412(d) of the Code.

     “Reports” is defined in Section 9.6.

     “Required Lenders” means Lenders in the aggregate having at least 51% of the Aggregate Commitment or, if the Aggregate Commitment has been terminated, Lenders in the aggregate holding at least 51% of the Aggregate Outstanding Credit Exposure.

     “Reserve Requirement” means, with respect to an Interest Period, the maximum aggregate reserve requirement (including all basic, supplemental, marginal and other reserves) which is imposed under Regulation D on Eurocurrency liabilities.

     “Revolving Loan” means, with respect to a Lender, such Lender’s loan made pursuant to its commitment to lend set out in Section 2.1 (or any conversion or continuation thereof).

     “S&P” means Standard and Poor’s Ratings Services, a division of The McGraw Hill Companies, Inc., and any successor thereto which is a nationally recognized statistical rating organization.

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     “Sale and Leaseback Transaction” means any sale or other transfer of Property by any Person with the intent to lease such Property as lessee.

     “Schedule” refers to a specific schedule to this Agreement, unless another document is specifically referenced.

     “Section” means a numbered section of this Agreement, unless another document is specifically referenced.

     “Single Employer Plan” means a Plan, other than a Multiemployer Plan, maintained by the Parent or any member of the Controlled Group for employees of the Parent or any member of the Controlled Group.

     “Subsidiary” of a Person means (a) any corporation more than 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such Person and one or more of its Subsidiaries, or (b) any partnership, limited liability company, association, joint venture or similar business organization more than 50% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled. Unless otherwise expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of the Parent.

     “Substantial Portion” means, with respect to the Property of the Parent and its Subsidiaries, Property which represents more than the greater of (a) $300,000,000 and (b) 20% of the consolidated assets of the Parent and its Subsidiaries as would be shown in the consolidated financial statements of the Parent and its Subsidiaries as at the beginning of the quarter ending with the month in which such determination is made.

     “Swing Line Commitments” means the Canadian Swing Line Elections and the US Swing Line Commitment.

     “Swing Line Lenders” means the Canadian Swing Line Lenders and the US Swing Line Lender.

     “Swing Line Loans” means the Canadian Swing Line Loans and the US Swing Line Loans.

     “Synthetic Lease” means (a) any lease that is treated as an Operating Lease under Agreement Accounting Principles but for which the Parent or any of the Subsidiaries is viewed as the owner of the leased Property under the Code and (b) guaranties by the Parent or any of the Subsidiaries of the obligations of the lessor of such leased Property which are secured by the payments due under the lease of such Property.

     “Taxes” means any and all present or future taxes, duties, levies, imposts, deductions, charges or withholdings, and any and all liabilities with respect to the foregoing, but excluding Excluded Taxes and Other Taxes.

     “Termination Event” means, with respect to a Plan which is subject to Title IV of ERISA, (a) a Reportable Event, (b) the withdrawal of the Parent or any other member of a Controlled Group from such Plan during a plan year in which the Parent or any other member of a Controlled Group was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or was deemed such under Section 4068(f) of ERISA, (c) the termination of such Plan, the filing of a notice of intent to terminate such Plan or the treatment of an amendment of such Plan as a termination under Section 4041 of ERISA, (d) the institution by the PBGC of proceedings to terminate such Plan, or (e) any event or condition which might constitute

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grounds under Section 4042 of ERISA for the termination of, or appointment of a trustee to administer, such Plan.

     “Total Capitalization” means, at any time, the sum of Total Debt and Consolidated Net Worth at such time.

     “Total Debt” means, at any time, that part of the Consolidated Indebtedness of the Parent and the Subsidiaries at such time which would be reflected on a balance sheet prepared in accordance with Agreement Accounting Principles.

     “Transferee” is defined in Section 12.4.

     “Type” means, with respect to any Advance, its nature as a Floating Rate Advance or a Eurocurrency Advance, and with respect to any Facility LC, its nature as a Financial Letter of Credit, Performance Letter of Credit, Documentary Letter of Credit or Bank Guaranty.

     “US Swing Line Borrowing Notice” is defined in Section 2.5.2(b).

     “US Swing Line Commitment” means the obligation of the US Swing Line Lender to make US Swing Line Loans up to a maximum principal amount of $15,000,000 at any one time outstanding.

     “US Swing Line Lender” means Bank One or any other Lender which may succeed to its rights and obligations as US Swing Line Lender pursuant to the terms of this Agreement.

     “US Swing Line Loan” means a Loan made available to a Borrower by the US Swing Line Lender pursuant to Section 2.5.2.

     “Unfunded Liabilities” means the amount (if any) by which the actuarial present value of the benefit attributed by the pension benefit formula under all Single Employer Plans to employee service rendered prior to that date (based on current and past compensation levels) exceeds the fair value of all Plan assets, all determined as of the last day of the Borrowers’ fiscal year using a calculation methodology, discount rate, expected return on Plan assets, rate of compensation increase, and other gain or loss components required or permitted under Statement of Financial Accounting Standards No. 87 in presenting the projected benefit obligation.

     “Unmatured Default” means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default.

     “Wholly-Owned Subsidiary” of a Person means (a) any Subsidiary all of the outstanding voting securities of which shall at the time be owned or controlled, directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of such Person, or (b) any partnership, limited liability company, association, joint venture or similar business organization 100% of the ownership interests having ordinary voting power of which shall at the time be so owned or controlled.

     The foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms.

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ARTICLE II

THE CREDITS

     2.1 Commitment. From and including the date of this Agreement and prior to the Facility Termination Date, each Lender severally agrees, on the terms and conditions set out in this Agreement, to (a) make Revolving Loans to any Borrower in Agreed Currencies upon the request of any Borrower from time to time and (b) participate in Facility LCs issued upon the request of any Borrower, provided that, after giving effect to the making of each such Revolving Loan and the issuance of each such Facility LC, such Lender’s Dollar Amount of its Outstanding Credit Exposure shall not exceed its Commitment, provided that (i) at no time shall Revolving Loans be outstanding hereunder in more than three different Agreed Currencies, (ii) at no time shall the Dollar Amount of Revolving Loans made in Agreed Currencies other than Dollars exceed $100,000,000 and (iii) all Floating Rate Loans shall be made in Dollars, except as otherwise provided in Section 2.5.1(d). Subject to the terms of this Agreement, the Borrowers may borrow, repay and reborrow the Revolving Loans at any time prior to the Facility Termination Date. The Commitments to extend credit hereunder shall expire on the Facility Termination Date. The LC Issuers will issue Facility LCs hereunder on the terms and conditions set out in Section 2.26.

     2.2 Determination of Dollar Amounts; Required Payments; Termination.

          (a) The Agent will determine the Dollar Amount of

               (i) each Advance as of the date three Business Days prior to the Borrowing Date or, if applicable, date of conversion/continuation of such Advance,

               (ii) all outstanding Advances on and as of the last Business Day of each quarter and on any other Business Day elected by the Agent in its discretion or upon instruction by the Required Lenders,

               (iii) the face amount of or any drawing under each Facility LC on and as of the date three Business Days prior to the proposed date of issuance (or Modification) or drawing, and

               (iv) the LC Obligations with respect to all outstanding Facility LCs on and as of the last Business Day of each quarter and on any other Business Day elected by the Agent in its discretion or upon instruction by the Required Lenders.

Each day upon or as of which the Agent determines Dollar Amounts as described in the preceding clauses (i), (ii), (iii), and (iv) is herein described as a “Computation Date” with respect to each Advance or Facility LC for which a Dollar Amount is determined on or as of such day. If at any time the Dollar Amount of the sum of (y) the aggregate principal amount of all outstanding Advances (calculated, with respect to those Advances denominated in Agreed Currencies other than Dollars, as of the most recent Computation Date with respect to each such Advance) plus (z) the aggregate amount of all outstanding LC Obligations other than Bank Guaranties (calculated, with respect to those Facility LCs denominated in Agreed Currencies other than Dollars, as of the most recent Computation Date with respect to each such Facility LC) exceeds the Aggregate Commitment (the amount of such excess, the “Excess Obligations”), the Borrowers shall immediately repay Advances in an aggregate principal amount sufficient to eliminate any such Excess Obligations. If no Advances are then outstanding or if any Excess Obligations remain outstanding upon repayment of all outstanding Advances, and provided that the Excess Obligations exceed $500, the Borrowers shall immediately make deposits to the Facility LC Collateral Account at the

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Agent’s election either (i) in the applicable Agreed Currency or Currencies as determined by the Agent and in an amount equal to the amount of such Excess Obligations or (ii) in Dollars in an amount equal to 110% of the Dollar Amount (calculated as of the applicable Computation Date) of such Excess Obligations. If as of any Computation Date the amount of any such cash collateral held by the Agent on such date exceeds the amount required to be deposited by the Borrowers pursuant to preceding sentence by greater than $500, the Agent shall promptly release cash collateral to the Borrowers in the amount of such excess to the extent such cash collateral is not otherwise required under the terms of this Agreement.

          (b) Except as otherwise specifically provided in Section 2.26 with respect to Facility LCs, the Aggregate Outstanding Credit Exposure and all other unpaid Obligations shall be paid in full by the Borrowers on the Facility Termination Date.

     2.3 Ratable Loans. Each Advance hereunder (other than any Swing Line Loan) shall consist of Revolving Loans made from the several Lenders ratably according to their Pro Rata Shares.

     2.4 Types of Advances. The Advances may be (a) Floating Rate Advances or Eurocurrency Advances, or a combination thereof, selected by the applicable Borrower in accordance with Sections 2.9 and 2.10, (b) Canadian Swing Line Loans selected by the Parent or the applicable Canadian Borrower in accordance with Section 2.5.1, or (c) US Swing Line Loans selected by the applicable Borrower in accordance with Section 2.5.2.

     2.5 Swing Line Loans.

          2.5.1 Canadian Swing Line Loans.

          (a) Upon the satisfaction of the conditions precedent set out in Section 4.2 and, if such Canadian Swing Line Loan is to be made on the date of the initial Advance hereunder, the satisfaction of the conditions precedent set out in Section 4.1 as well, from and including the date of this Agreement and prior to the Facility Termination Date, each Canadian Swing Line Lender agrees, on the terms and conditions set out in this Agreement, to make Canadian Swing Line Loans in Dollars or Canadian Dollars to the Parent or any Canadian Borrower from time to time in an aggregate principal Dollar Amount not to exceed the Canadian Swing Line Election, provided that (a) the Aggregate Outstanding Credit Exposure shall not at any time exceed the Aggregate Commitment, and (b) at no time shall such Canadian Swing Line Lender’s Outstanding Credit Exposure exceed the Dollar Amount of such Canadian Swing Line Lender’s Commitment at such time. Subject to the terms of this Agreement, the Parent or the applicable Canadian Borrower may borrow, repay and reborrow Canadian Swing Line Loans at any time prior to the Facility Termination Date.

          (b) The Parent or the applicable Canadian Borrower shall deliver to the Agent and the Canadian Swing Line Lenders irrevocable notice (a “Canadian Swing Line Borrowing Notice”) not later than noon (Central Time) on the Borrowing Date of each Canadian Swing Line Loan denominated in Dollars and four Business Days before the Borrowing Date for each Canadian Swing Line Loan denominated in Canadian Dollars, specifying (a) the applicable Borrowing Date (which date shall be a Business Day), (b) the aggregate amount of the requested Canadian Swing Line Loan which shall be an amount not less than $100,000, (c) whether such Canadian Swing Line Loan shall be denominated in Dollars or Canadian Dollars, (d) the Interest Period applicable thereto, and (e) the applicable Canadian Borrower. The Canadian Swing Line Loans shall bear interest at the Eurocurrency Rate.

          (c) Promptly after receipt of a Canadian Swing Line Borrowing Notice, the Agent shall notify each Canadian Swing Line Lender by fax, or other similar form of transmission, of the requested Canadian Swing Line Loan. Not later than 2:00 p.m. (Central Time) on the applicable

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Borrowing Date, each Canadian Swing Line Lender shall make available its Canadian Swing Line Share of the Canadian Swing Line Loan, in funds immediately available in Chicago, to the Agent at its address specified pursuant to Article XIII. The Agent will promptly make the funds so received from the Canadian Swing Line Lenders available to the Parent or the applicable Canadian Borrower on the Borrowing Date at the Agent’s aforesaid address. Notwithstanding anything in this Agreement to the contrary, it is expressly agreed that no Canadian Swing Line Lender shall have an obligation whatsoever to make any Canadian Swing Line Loan, the making of any Canadian Swing Line Loan to be in the sole discretion of each Canadian Swing Line Lender determined at the time of any request for any Canadian Swing Line Loan by the Parent or any Canadian Borrower. Without limiting the foregoing sentence, each Canadian Swing Line Lender agrees to give the Parent, each Canadian Borrower and the Agent written notice of its decision to no longer make Canadian Swing Line Loans.

          (d) Repayment of Canadian Swing Line Loans:

               (i) Upon the occurrence of a Default, any Canadian Swing Line Lender may require each Lender (including such Canadian Swing Line Lender) to make a Revolving Loan in the amount of such Lender’s Pro Rata Share of such Canadian Swing Line Loan (including, without limitation, any interest accrued and unpaid thereon), for the purpose of repaying such Canadian Swing Line Loan. Not later than noon (Central Time) on the date of any notice received pursuant to this Section 2.5.1, each Lender shall make available its required Revolving Loan, in funds immediately available in Chicago to the Agent at its address specified pursuant to Article XIII. Revolving Loans made pursuant to this Section 2.5.1 shall be made in the currency in which the Canadian Swing Line Loan to be repaid is denominated, and shall initially be Floating Rate Loans and thereafter may be continued as Floating Rate Loans or converted into Eurocurrency Loans in the manner provided in Section 2.10 (and in the case of any such Loan denominated in Canadian Dollars shall be promptly converted into Eurocurrency Loans) and subject to the other conditions and limitations set out in this Article II. Unless a Lender shall have notified such Canadian Swing Line Lender, prior to its making any Canadian Swing Line Loan, that any applicable condition precedent set out in Sections 4.1 or 4.2 had not then been satisfied, such Lender’s obligation to make Revolving Loans pursuant to this Section 2.5.1 to repay Canadian Swing Line Loans shall be unconditional, continuing, irrevocable and absolute and shall not be affected by any circumstances, including, without limitation, (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Agent, any Canadian Swing Line Lender or any other Person, (B) the occurrence or continuance of a Default or Unmatured Default, (C) any adverse change in the condition (financial or otherwise) of the Parent or the applicable Canadian Borrower, or (D) any other circumstances, happening or event whatsoever. In the event that any Lender fails to make payment to the Agent of any amount due under this Section 2.5.1, the Agent shall be entitled to receive, retain and apply against such obligation the principal and interest otherwise payable to such Lender hereunder until the Agent receives such payment from such Lender or such obligation is otherwise fully satisfied. In addition to the foregoing, if for any reason any Lender fails to make payment to the Agent of any amount due under this Section 2.5.1, such Lender shall be deemed, at the option of the Agent, to have unconditionally and irrevocably purchased from such Canadian Swing Line Lender, without recourse or warranty, an undivided interest and participation in the applicable Canadian Swing Line Loan in the amount of such Revolving Loan, and such interest and participation may be recovered from such Lender together with interest thereon at the Federal Funds Effective Rate for each day during the period commencing on the date of demand and ending on the date such amount is received.

               (ii) All Canadian Swing Line Loans shall mature, and the principal amount thereof and the unpaid accrued interest thereon shall be due and payable on the last day of the

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Interest Period therefor (subject to Section 2.10(b)), on any date on which such Canadian Swing Line Loans are prepaid, whether due to acceleration or otherwise, and on the Facility Termination Date.

          2.5.2 US Swing Line Loans.

          (a) Upon the satisfaction of the conditions precedent set out in Section 4.2 and, if such US Swing Line Loan is to be made on the date of the initial Advance hereunder, the satisfaction of the conditions precedent set out in Section 4.1 as well, from and including the date of this Agreement and prior to the Facility Termination Date, the US Swing Line Lender agrees, on the terms and conditions set out in this Agreement, to make US Swing Line Loans in Dollars to any Borrower from time to time in an aggregate principal amount not to exceed the US Swing Line Commitment, provided that the Aggregate Outstanding Credit Exposure shall not at any time exceed the Aggregate Commitment. Subject to the terms of this Agreement, the Borrowers may borrow, repay and reborrow US Swing Line Loans at any time prior to the Facility Termination Date.

          (b) The applicable Borrower shall deliver to the Agent and the US Swing Line Lender irrevocable notice (a “US Swing Line Borrowing Notice”) not later than noon (Central Time) on the Borrowing Date of each US Swing Line Loan specifying (a) the applicable Borrowing Date (which date shall be a Business Day), (ii) the aggregate amount of the requested US Swing Line Loan which shall be an amount not less than $1,000,000 and in integral multiples of $100,000 in excess thereof and (iii) whether such US Swing Line Loan shall bear interest at the Floating Rate or at the rate offered by the US Swing Line Lender, upon request by the applicable Borrower, for US Swing Line Loans (the “Offered Rate”).

          (c) Promptly after receipt of a US Swing Line Borrowing Notice, the Agent shall notify the US Swing Line Lender by fax, or other similar form of transmission, of the requested US Swing Line Loan. Not later than 2:00 p.m. (Central Time) on the applicable Borrowing Date, the US Swing Line Lender shall make available the US Swing Line Loan, in funds immediately available in Chicago, to the Agent at its address specified pursuant to Article XIII. The Agent will promptly make the funds so received from the US Swing Line Lender available to the applicable Borrower on the Borrowing Date at the Agent’s aforesaid address.

          (d) Repayment of US Swing Line Loans:

               (i) Each US Swing Line Loan shall be paid in full by the applicable Borrower on or before the seventh day after the Borrowing Date for such US Swing Line Loan. In addition, US Swing Line Lender (A) may at any time in its sole discretion with respect to any outstanding US Swing Line Loan, or (B) shall on the seventh day after the Borrowing Date of any US Swing Line Loan, require each Lender (including the US Swing Line Lender) to make a Revolving Loan in the amount of such Lender’s Pro Rata Share of such US Swing Line Loan (including, without limitation, any interest accrued and unpaid thereon), for the purpose of repaying such US Swing Line Loan. Not later than noon (Central Time) on the date of any notice received pursuant to this Section 2.5.2(d), each Lender shall make available its required Revolving Loan, in funds immediately available in Chicago to the Agent at its address specified pursuant to Article XIII. Revolving Loans made pursuant to this Section 2.5.2(d) shall initially be Floating Rate Loans and thereafter may be continued as Floating Rate Loans or converted into Eurocurrency Loans in the manner provided in Section 2.10 and subject to the other conditions and limitations set out in this Article II. Unless a Lender shall have notified the US Swing Line Lender, prior to its making any US Swing Line Loan, that any applicable condition precedent set out in Sections 4.1 or 4.2 had not then been satisfied, such Lender’s obligation to make Revolving

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Loans pursuant to this Section 2.5.2(d) to repay Swing Line Loans shall be unconditional, continuing, irrevocable and absolute and shall not be affected by any circumstances, including, without limitation, (1) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Agent, the US Swing Line Lender or any other Person, (2) the occurrence or continuance of a Default or Unmatured Default, (3) any adverse change in the condition (financial or otherwise) of the Parent or the applicable Borrower, or (4) any other circumstances, happening or event whatsoever. In the event that any Lender fails to make payment to the Agent of any amount due under this Section 2.5.2(d), the Agent shall be entitled to receive, retain and apply against such obligation the principal and interest otherwise payable to such Lender hereunder until the Agent receives such payment from such Lender or such obligation is otherwise fully satisfied. In addition to the foregoing, if for any reason any Lender fails to make payment to the Agent of any amount due under this Section 2.5.2(d), such Lender shall be deemed, at the option of the Agent, to have unconditionally and irrevocably purchased from such US Swing Line Lender, without recourse or warranty, an undivided interest and participation in the applicable US Swing Line Loan in the amount of such Revolving Loan, and such interest and participation may be recovered from such Lender together with interest thereon at the Federal Funds Effective Rate for each day during the period commencing on the date of demand and ending on the date such amount is received.

               (ii) All US Swing Line Loans shall mature, and the principal amount thereof and the unpaid accrued interest thereon shall be due and payable as set out above in (i) above and on the Facility Termination Date. Interest accrued on US Swing Line Loans shall be payable on each Payment Date and on any date on which such US Swing Line Loans are prepaid, whether due to acceleration or otherwise, and at maturity.

     2.6 Facility Fee; Usage Fee; Reductions in Aggregate Commitment.

          2.6.1 Facility Fee. The Parent agrees to pay to the Agent for the account of each Lender according to its Pro Rata Share a facility fee (the “Facility Fee”) at a per annum rate equal to the Applicable Fee Rate on the Aggregate Commitment from the date hereof to and including the Facility Termination Date, payable on each Payment Date hereafter and on the Facility Termination Date.

          2.6.2 Usage Fee. For all days on which the Aggregate Outstanding Credit Exposure exceeds 33% of the Aggregate Commitment, the Parent agrees to pay to the Agent for the account of each Lender according to its Pro Rata Share a usage fee at a per annum rate equal to the Applicable Fee Rate on the amount of the Aggregate Outstanding Credit Exposure from the date hereof to and including the Facility Termination Date, payable on each Payment Date hereafter and on the Facility Termination Date.

          2.6.3 Reductions in Aggregate Commitment. The Parent may permanently reduce the Aggregate Commitment in whole, or in part ratably among the Lenders in integral multiples of $10,000,000 (or the Approximate Equivalent Amount if denominated in an Agreed Currency other than Dollars), upon at least three Business Days’ written notice to the Agent, which notice shall specify the amount of any such reduction, provided that the amount of the Aggregate Commitment may not be reduced below the Dollar Amount of the Aggregate Outstanding Credit Exposure unless the amount of the excess of the Dollar Amount of the Aggregate Outstanding Credit Exposure over the amount of the reduced Aggregate Commitment is repaid concurrently with the reduction of the Aggregate Commitment. All accrued facility fees shall be payable on the effective date of any termination of the obligations of the Lenders to make Credit Extensions hereunder.

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     2.7 Minimum Amount of Each Advance. Each Eurocurrency Advance shall be in a minimum amount of $5,000,000 and in multiples of $1,000,000 if in excess thereof (or the Approximate Equivalent Amounts if denominated in an Agreed Currency other than Dollars), and each Floating Rate Advance (other than an Advance to repay Swing Line Loans) shall be in the minimum amount of $1,000,000 and in multiples of $500,000 if in excess thereof, provided that any Floating Rate Advance may be in the amount of the Available Aggregate Commitment.

     2.8 Optional Principal Payments. Any Borrower may from time to time pay, without penalty or premium, all outstanding Floating Rate Advances (other than Swing Line Loans), or, in a minimum aggregate amount of $1,000,000 or any integral multiple of $500,000 in excess thereof, any portion of the outstanding Floating Rate Advances (other than Swing Line Loans) upon two Business Days’ prior notice to the Agent. The applicable Borrower may at any time pay, without penalty or premium, all outstanding Swing Line Loans that bear interest at the Floating Rate or the Offered Rate, or, in a minimum amount of $100,000 and increments of $50,000 in excess thereof, any portion of such outstanding Swing Line Loans, with notice to the Agent and the applicable Swing Line Lender(s) by 11:00 a.m. (Central Time) on the date of repayment. Any Borrower may from time to time pay, subject to the payment of any funding indemnification amounts required by Section 3.4 but without penalty or premium, all outstanding Eurocurrency Advances (other than Canadian Swing Line Loans), or, in a minimum aggregate amount of $5,000,000 or any integral multiple of $1,000,000 in excess thereof (or the Approximate Equivalent Amount if denominated in an Agreed Currency other than Dollars), any portion of the outstanding Eurocurrency Advances upon three Business Days’ prior notice to the Agent. The Parent or any Canadian Borrower may at any time pay, subject to the payment of any funding indemnification amounts required by Section 3.4 but without penalty or premium, all outstanding Canadian Swing Line Loans, or, in a minimum amount of $100,000 and increments of $50,000 in excess thereof (or the Approximate Equivalent Amount if denominated in Canadian Dollars), any portion of such outstanding Canadian Swing Line Loans, upon three Business Days’ prior notice to the Agent and the Canadian Swing Line Lenders.

     2.9 Method of Selecting Types and Interest Periods for New Advances. A Borrower shall select the Type of Advance and, in the case of each Eurocurrency Advance, the Interest Period and Agreed Currency applicable thereto from time to time. Such Borrower shall give the Agent irrevocable notice (a “Borrowing Notice”) not later than 10:00 a.m. (Central Time) on the Borrowing Date of each Floating Rate Advance (other than a Swing Line Loan), three Business Days before the Borrowing Date for each Eurocurrency Advance denominated in Dollars and four Business Days before the Borrowing Date for each Eurocurrency Advance denominated in an Agreed Currency other than Dollars, specifying (a) the Borrowing Date, which shall be a Business Day, of such Advance, (b) the aggregate amount of such Advance, (c) the Type of Advance selected, (d) in the case of each Eurocurrency Advance, the Interest Period and Agreed Currency applicable thereto, and (e) the applicable Borrower.

     2.10 Conversion and Continuation of Outstanding Advances. (a) Floating Rate Advances (other than Swing Line Loans which shall be continued as provided below) shall continue as Floating Rate Advances unless and until such Floating Rate Advances are converted into Eurocurrency Advances pursuant to this Section 2.10 or are repaid in accordance with Section 2.8. Each Eurocurrency Advance (other than Canadian Swing Line Loans which shall be continued and converted as provided below) shall continue as a Eurocurrency Advance until the end of the then applicable Interest Period therefor, at which time

               (i) each such Eurocurrency Advance denominated in Dollars shall be automatically converted into a Floating Rate Advance unless (A) such Eurocurrency Advance is or was repaid in accordance with Section 2.8 or (B) the applicable Borrower shall have given the Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such

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Interest Period, such Eurocurrency Advance either continue as a Eurocurrency Advance for the same or another Interest Period or be converted into a Floating Rate Advance; and

               (ii) each such Eurocurrency Advance denominated in an Agreed Currency other than Dollars shall automatically continue as a Eurocurrency Advance in the same Agreed Currency with an Interest Period of one month unless (A) such Eurocurrency Advance is or was repaid in accordance with Section 2.8 or (B) the applicable Borrower shall have given the Agent a Conversion/Continuation Notice (as defined below) requesting that, at the end of such Interest Period, such Eurocurrency Advance continue as a Eurocurrency Advance for the same or another Interest Period.

          (b) Each US Swing Line Loan shall, subject to Section 2.5.2(d), continue as such unless prepaid or repaid. Each Canadian Swing Line Loan shall continue as such until the end of the then applicable Interest Period therefor, at which time such Canadian Swing Line Loan shall, unless prepaid or repaid or any Canadian Swing Line Lender has given the Borrower and the Agent written notice under Section 2.5.1(c) that it will not continue making Canadian Swing Line Loans, automatically be deemed to be continued as a Canadian Swing Line Loan in the same amount and in the same currency with an Interest Period of one month (commencing on the last day of the expiring Interest Period) unless the Borrower shall have given the Agent a Conversion/Continuation Notice requesting that, at the end of such Interest Period, such Canadian Swing Line Loan continue for the same or another Interest Period and in the same currency.

          (c) Subject to the terms of Section 2.7, any Borrower may elect from time to time to convert all or any part of an Advance of any Type into any other Type or Types of Advances denominated in the same or any other Agreed Currency; provided that any conversion of any Eurocurrency Advance shall be made on, and only on, the last day of the Interest Period applicable thereto. Such Borrower shall give the Agent irrevocable notice (a “Conversion/Continuation Notice”) of each conversion of an Advance or continuation of a Eurocurrency Advance not later than 10:00 a.m. (Central Time) at least one Business Day, in the case of a conversion into a Floating Rate Advance, three Business Days, in the case of a conversion into or continuation of a Eurocurrency Advance denominated in Dollars, or four Business Days, in the case of a conversion into or continuation of a Eurocurrency Advance denominated in an Agreed Currency other than Dollars, prior to the date of the requested conversion or continuation, specifying (a) the requested date, which shall be a Business Day, of such conversion or continuation, and (ii) the Agreed Currency, amount and Type(s) of Advance(s) into which such Advance is to be converted or continued and, in the case of a conversion into or continuation of a Eurocurrency Advance, the duration of the Interest Period applicable thereto.

     2.11 Method of Borrowing. On each Borrowing Date, each Lender shall make available its Loan or Loans, if any, (a) if such Loan is denominated in Dollars, not later than noon, Central Time, in Federal or other funds immediately available to the Agent at its address specified in or pursuant to Article XIII and, (b) if such Loan is denominated in an Agreed Currency other than Dollars, not later than noon, local time, in the city of the Agent’s Eurocurrency Payment Office for such currency, in such funds as may then be customary for the settlement of international transactions in such currency in the city of and at the address of the Agent’s Eurocurrency Payment Office for such currency. Unless the Agent determines that any applicable condition specified in Article IV has not been satisfied, the Agent will make the funds so received from the Lenders available to the applicable Borrower at the Agent’s aforesaid address. Notwithstanding the foregoing provisions of this Section 2.11, to the extent that a Loan made by a Lender matures on the Borrowing Date of a requested Loan, such Lender shall apply the proceeds of the Loan it is then making to the repayment of principal of the maturing Loan.

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     2.12 Changes in Interest Rate, etc. Each Floating Rate Advance (other than a Swing Line Loan) shall bear interest on the outstanding principal amount thereof, for each day from and including the date such Advance is made or is converted from a Eurocurrency Advance into a Floating Rate Advance pursuant to Section 2.10 to but excluding the date it becomes due or is converted into a Eurocurrency Advance pursuant to Section 2.10 hereof, at a rate per annum equal to the Floating Rate for such day. Each Swing Line Loan that bears interest at the Floating Rate or the Offered Rate shall bear interest on the outstanding principal amount thereof, for each day from and including the day such Swing Line Loan is made to but excluding the date it is paid, at a rate per annum equal to the Floating Rate or the Offered Rate, as applicable, for such day. Changes in the rate of interest on that portion of any Advance maintained as a Floating Rate Advance or bearing interest at the Offered Rate will take effect simultaneously with each change in the Alternate Base Rate or Offered Rate, as applicable. Each Eurocurrency Advance shall bear interest on the outstanding principal amount thereof from and including the first day of the Interest Period applicable thereto to (but not including) the last day of such Interest Period at the interest rate determined by the Agent as applicable to such Eurocurrency Advance based upon the applicable Borrower’s selections under Sections 2.5.2 and 2.9, as applicable, and Section 2.10 and otherwise in accordance with the terms hereof. No Interest Period may end after the Facility Termination Date.

     2.13 Rates Applicable After Default. Notwithstanding anything to the contrary contained in Section 2.9 or 2.10, during the continuance of a Default or Unmatured Default the Required Lenders may, at their option, by notice to the Parent declare that no Advance may be made as, converted into or continued at the end of the applicable Interest Period as a Eurocurrency Advance. During the continuance of a Default the Required Lenders may, at their option, by notice to the Parent, declare that (a) each Eurocurrency Advance shall bear interest for the remainder of the applicable Interest Period at the rate otherwise applicable to such Interest Period plus 2% per annum, (b) each Floating Rate Advance shall bear interest at a rate per annum equal to the Floating Rate in effect from time to time plus 2% per annum, and (c) the LC Fee shall be increased by 2% per annum, provided that, during the continuance of a Default under Section 7.6 or 7.7, the interest rates set out in clauses (a) and (b) above, and the increase in the LC Fee set forth in clause (c) above, shall be applicable to all Credit Extensions without any election or action on the part of the Agent or any Lender. Any notice given by Required Lenders under this Section 2.13 may be revoked by Required Lenders notwithstanding any provision of Section 8.2 requiring unanimous consent of the Lenders to changes in interest rates.

     2.14 Method of Payment. (a) Each Advance shall be repaid, each payment of interest thereon shall be paid, and each reimbursement of any amounts payable upon a drawing under any Facility LC shall be made in the currency in which such Advance or payment was made or, where such currency has converted to the Euro, in the Euro. All payments of the Obligations hereunder shall be made, without setoff, deduction, or counterclaim, in immediately available funds to the Agent at (except as set out in the next sentence) the Agent’s address specified pursuant to Article XIII, or at any other Lending Installation of the Agent specified in writing by the Agent to the Borrowers, by noon (local time) on the date when due and shall (except in the case of Reimbursement Obligations for which any LC Issuer has not been fully indemnified by the Lenders, or as otherwise specifically required hereunder) be applied ratably by the Agent among the Lenders. All payments to be made by the Borrowers hereunder in any currency other than Dollars shall be made in such currency on the date due in such funds as may then be customary for the settlement of international transactions in such currency for the account of the Agent, at its Eurocurrency Payment Office for such currency and shall be applied ratably by the Agent among the Lenders. Each payment delivered to the Agent for the account of any Lender shall be delivered promptly by the Agent to such Lender in the same type of funds that the Agent received at, (a) with respect to Floating Rate Loans and Eurocurrency Loans denominated in Dollars, its address specified pursuant to Article XIII or at any Lending Installation specified in a notice received by the Agent from such Lender and (ii) with respect to Eurocurrency Loans denominated in an Agreed Currency other than Dollars, in the

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funds received from the applicable Borrower at the address of the Agent’s Eurocurrency Payment Office for such currency. The Agent is hereby authorized to charge any account of any Borrower maintained with Agent or any of its Affiliates for each payment of principal, interest, Reimbursement Obligations, and fees as it becomes due hereunder. Each reference to the Agent in this Section 2.14 shall also be deemed to refer, and shall apply equally, to the LC Issuers, in the case of payments required to be made by any Borrower to any LC Issuer pursuant to Section 2.26.6.

          (a) Notwithstanding the provisions of subsection (a) above, if, after the making of any Advance or the issuance of any Facility LC in any currency other than Dollars, currency control or exchange regulations are imposed in the country which issues such currency with the result that the type of currency in which the Advance was made or the Facility LC was issued (the “Original Currency”) no longer exists or the applicable Borrower is not able to make payment to the Agent for the account of the Lenders in such Original Currency, then all payments to be made by such Borrower hereunder in such currency (including any deposits required to be made to the Facility LC Collateral Account) shall instead be made when due in Dollars in an amount equal to the Dollar Amount (as of the date of repayment) of such payment due, it being the intention of the parties hereto that the Borrowers take all risks of the imposition of any such currency control or exchange regulations. For purposes of this Section 2.14(b), the commencement of the third stage of European Economic and Monetary Union and the occurrence of the Euro Implementation Date shall not constitute the imposition of currency control or exchange regulations.

     2.15 Advances to be Made in Euro. If any Advance made hereunder or any Facility LC issued hereunder would be capable of being made or issued in either the Euro or in a National Currency Unit, such Advance shall be made or such Facility LC shall be issued in the Euro.

     2.16 Noteless Agreement; Evidence of Indebtedness. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

          (b) The Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Agreed Currency and Type thereof and the Interest Period with respect thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder, (iii) the original stated amount of each Facility LC and the amount of LC Obligations outstanding at any time, and (iv) the amount of any sum received by the Agent hereunder from the Borrowers and each Lender’s share thereof.

          (c) The entries maintained in the accounts maintained pursuant to paragraphs (a) and (b) above shall be prima facie evidence of the existence and amounts of the Obligations therein recorded; provided that the failure of the Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to repay the Obligations in accordance with their terms.

          (d) Any Lender may request that its Loans be evidenced by a promissory note substantially in the form of Exhibit E (a “Note”). In such event, the Borrowers shall prepare, execute and deliver to such Lender a Note payable to the order of such Lender in a form supplied by the Agent. Thereafter, the Loans evidenced by such Note and interest thereon shall at all times (including after any assignment pursuant to Section 12.3) be represented by one or more Notes payable to the order of the payee named therein or any assignee pursuant to Section 12.3, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in paragraphs (a) and (b) above.

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     2.17 Telephonic Notices. Each Borrower hereby authorizes the Lenders and the Agent to extend, convert or continue Advances, effect selections of Agreed Currencies and Types of Advances and to transfer funds based on telephonic notices which the Agent or any Lender in good faith believes to be made by any person or persons that an Authorized Officer of the Parent has designated in writing to the Agent, which written authorization(s) may be relied upon by the Agent, in the case of any person so authorized, until such time as the Agent shall have received written notice from an Authorized Officer of the Borrower revoking such person’s authority to make such telephonic notices, it being understood that the foregoing authorization is specifically intended to allow Borrowing Notices and Conversion/Continuation Notices to be given telephonically. Each Borrower agrees to deliver promptly to the Agent a written confirmation, if such confirmation is requested by the Agent or any Lender, of each telephonic notice signed by an Authorized Officer. If the written confirmation differs in any material respect from the action taken by the Agent and the Lenders, the records of the Agent and the Lenders shall govern absent manifest error.

     2.18 Interest Payment Dates; Interest and Fee Basis. Interest accrued on each Floating Rate Advance shall be payable on each Payment Date, commencing with the first such date to occur after the date hereof, on any date on which the Floating Rate Advance is prepaid, whether due to acceleration or otherwise, and at maturity. Interest accrued on that portion of the outstanding principal amount of any Floating Rate Advance converted into a Eurocurrency Advance on a day other than a Payment Date shall be payable on the date of conversion. Interest accrued on each Eurocurrency Advance shall be payable on the last day of its applicable Interest Period, on any date on which the Eurocurrency Advance is prepaid, whether by acceleration or otherwise, and at maturity. Interest accrued on each Eurocurrency Advance having an Interest Period longer than three months shall also be payable on the last day of each three-month interval during such Interest Period. Interest, LC Fees, and other fees (except as provided in the following sentence) shall be calculated for actual days elapsed on the basis of a 360-day year, except for interest on Loans denominated in British Pounds Sterling and Loans comprised of Floating Rate Advances, which shall be calculated for actual days elapsed on the basis of a 365-day year. Facility Fees and utilization fees shall be calculated for actual days elapsed on the basis of a 365-day year. Interest shall be payable for the day an Advance is made but not for the day of any payment on the amount paid if payment is received prior to noon (local time) at the place of payment specified in Section 2.14. If any payment of principal or interest on an Advance shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and, in the case of a principal payment, such extension of time shall be included in computing interest in connection with such payment.

     2.19 Notification of Advances, Interest Rates, Prepayments and Commitment Reductions. Promptly after receipt thereof, the Agent will notify each Lender of the contents of each Aggregate Commitment reduction notice, Borrowing Notice, Swing Line Borrowing Notice, Conversion/Continuation Notice, and repayment notice received by it hereunder. Promptly after notice from an LC Issuer, the Agent will notify each Lender of the contents of each request for issuance of a Facility LC hereunder. The Agent will notify each Lender of the interest rate applicable to each Eurocurrency Advance promptly upon determination of such interest rate and will give each Lender prompt notice of each change in the Alternate Base Rate. Each Reference Lender agrees to furnish upon request timely information for the purpose of determining the Eurocurrency Rate.

     2.20 Lending Installations. Each Lender may book its Loans and its participation in any LC Obligations and each LC Issuer may book the Facility LCs at any Lending Installation selected by such Lender or such LC Issuer, as the case may be, and may change its Lending Installation from time to time. All terms of this Agreement shall apply to any such Lending Installation and the Loans, Facility LCs, participations in LC Obligations and any Notes issued hereunder shall be deemed held by each Lender or each LC Issuer, as the case may be, for the benefit of any such Lending Installation. Each Lender and each LC Issuer may, by written notice to the Agent and the Borrowers in accordance with Article XIII,

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designate replacement or additional Lending Installations through which Loans will be made by it or Facility LCs will be issued by it and for whose account Loan payments or payments with respect to Facility LCs are to be made.

     2.21 Non-Receipt of Funds by the Agent. Unless the applicable Borrower or a Lender, as the case may be, notifies the Agent prior to the date on which it is scheduled to make payment to the Agent of (a) in the case of a Lender, the proceeds of a Loan or (b) in the case of any Borrower, a payment of principal, interest or fees to the Agent for the account of the Lenders, that it does not intend to make such payment, the Agent may assume that such payment has been made. The Agent may, but shall not be obligated to, make the amount of such payment available to the intended recipient in reliance upon such assumption. If such Lender or such Borrower, as the case may be, has not in fact made such payment to the Agent, the recipient of such payment shall, on demand by the Agent, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate per annum equal to (a) in the case of payment by a Lender, the Federal Funds Effective Rate for such day for the first three days and, thereafter, the interest rate applicable to the relevant Loan or (ii) in the case of payment by any Borrower, the interest rate applicable to the relevant Loan.

     2.22 Market Disruption. Notwithstanding the satisfaction of all conditions referred to in Article II and Article IV with respect to any Advance in any Agreed Currency other than Dollars, if there shall occur on or prior to the date of such Advance any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which would in the reasonable opinion of the Agent or the Required Lenders make it impracticable for the Eurocurrency Loans comprising such Advance to be denominated in the Agreed Currency specified by the applicable Borrower, then the Agent shall forthwith give notice thereof to the Borrowers and the Lenders, and such Loans shall not be denominated in such Agreed Currency but shall, except as otherwise set out in Section 2.15, be made on such Borrowing Date in Dollars, in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Borrowing Notice or Conversion/Continuation Notice, as the case may be, as Floating Rate Loans, unless the applicable Borrower notifies the Agent at least one Business Day before such date that (a) it elects not to borrow on such date or (b) it elects to borrow on such date in a different Agreed Currency, as the case may be, in which the denomination of such Loans would in the opinion of the Agent and the Required Lenders be practicable and in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount specified in the related Borrowing Notice or Conversion/Continuation Notice, as the case may be.

     2.23 Judgment Currency. If for the purposes of obtaining judgment in any court it is necessary to convert a sum due from any Borrower hereunder in the currency expressed to be payable herein (the “specified currency”) into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Agent could purchase the specified currency with such other currency at the Agent’s main office on the Business Day preceding that on which final, non-appealable judgment is given. The obligations of the Borrowers in respect of any sum due to any Lender or the Agent hereunder shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day following receipt by such Lender or the Agent (as the case may be) of any sum adjudged to be so due in such other currency such Lender or the Agent (as the case may be) may in accordance with normal, reasonable banking procedures purchase the specified currency with such other currency. If the amount of the specified currency so purchased is less than the sum originally due to such Lender or the Agent, as the case may be, in the specified currency, each of the Borrowers agrees, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Lender or the Agent, as the case may be, against such loss, and if the amount of the specified currency so purchased exceeds (a) the sum originally due to any Lender or the Agent, as

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the case may be, in the specified currency and (b) any amounts shared with other Lenders as a result of allocations of such excess as a disproportionate payment to such Lender under Section 12.2, such Lender or the Agent, as the case may be, agrees to remit such excess to the Borrowers.

     2.24 Additional Borrowing Subsidiaries. Upon the request by the Parent and approval by the Agent, any Subsidiary of the Parent may become a Borrowing Subsidiary hereunder provided that such Borrowing Subsidiary shall execute and deliver to the Agent a Joinder Agreement, together with such evidence of corporate authority to enter into such Joinder Agreement as the Agent may reasonably request, including without limitation, opinions of legal counsel regarding such corporate authority and the enforceability of such Joinder Agreement and such other documents, governmental certificates, agreement as the Agent may reasonably request.

     2.25 Lender Replacement. The Parent shall be permitted to replace with an Eligible Assignee any Lender which (a) makes an assertion of the type described in Section 3.3 or requests reimbursement for amounts owing pursuant to Section 3.1 or 3.2 (either for its own account or for the account of any of its participants), (b) requires any Borrower to pay Taxes in respect of such Lender or (c) fails to make any Advance requested by it if the Required Lenders have made the Advances requested of them pursuant to the same Borrowing Notice; provided that (a) such replacement does not conflict with any applicable law, rule, regulation, or directive, (ii) no Default or Unmatured Default shall have occurred and be continuing at the time of such replacement, (iii) prior to any such replacement, such Lender being replaced shall not have eliminated the continued need for repayment of amounts owing pursuant to Section 3.1 or 3.2, as applicable; and (iv) the Parent shall repay (or cause to be repaid) or the Eligible Assignee shall pay to the Lender being replaced, the amount of the Obligations owing to such Lender on the date of replacement (including any amounts owing under Sections 3.1, 3.2 and 3.4).

     2.26 Facility LCs.2.26.1 Issuance. Each LC Issuer hereby agrees, on the terms and conditions set out in this Agreement, to issue Financial Letters of Credit, Performance Letters of Credit, Documentary Letters of Credit and Bank Guaranties (each, a “Facility LC”) and to renew, extend, increase, decrease or otherwise modify each Facility LC (“Modify,” and each such action a “Modification”), from time to time from and including the date of this Agreement and prior to the Facility Termination Date upon the request of any Borrower; provided that (a) each Facility LC shall be issued in an Agreed Currency and (b) immediately after each such Facility LC is issued or Modified, the Aggregate Outstanding Credit Exposure may not exceed the Aggregate Commitment. No Facility LC shall have an expiry date later than four years after its issuance. Any Bank Guaranty issued under this Agreement shall be subject to the additional requirements of Section 2.26.13 hereof.

          2.26.2 Participations. Upon the issuance or Modification by any LC Issuer of a Facility LC (other than a Bank Guaranty) in accordance with this Section 2.26, such LC Issuer shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably sold to each Lender, and each Lender shall be deemed, without further action by any party hereto, to have unconditionally and irrevocably purchased from such LC Issuer, a participation in such Facility LC (and each Modification thereof) and the related LC Obligations in proportion to its Pro Rata Share.

          2.26.3 Notice. Subject to Section 2.26.1, the applicable Borrower shall give the applicable LC Issuer notice prior to 10:00 a.m. (Central time) at least three Business Days prior to the proposed date of issuance or Modification of each Facility LC, specifying the beneficiary, the applicable currency, the proposed date of issuance (or Modification) and the expiry date of such Facility LC, and describing the proposed terms of such Facility LC and the nature of the transactions proposed to be supported thereby. Upon receipt of such notice, such LC Issuer shall

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     promptly notify the Agent, and the Agent shall promptly notify each Lender, of the contents thereof and of the amount of such Lender’s participation in such proposed Facility LC (if applicable). The issuance or Modification by any LC Issuer of any Facility LC shall, in addition to the conditions precedent set out in Article IV (the satisfaction of which such LC Issuer shall have no duty to ascertain), be subject to the conditions precedent that such Facility LC shall be satisfactory to such LC Issuer and that the applicable Borrower shall have executed and delivered such application agreement and/or such other instruments and agreements relating to such Facility LC as such LC Issuer shall have reasonably requested (each, a “Facility LC Application”). In the event of any conflict between the terms of this Agreement and the terms of any Facility LC Application, the terms of this Agreement shall control.

          2.26.4 LC Fees. The applicable Borrower shall pay to the Agent, for the account of the Lenders ratably in accordance with their respective Pro Rata Shares, with respect to each Financial Letter of Credit, Performance Letter of Credit and Documentary Letter of Credit, a letter of credit fee at a per annum rate equal to the Applicable Margin for such Type of Facility LC in effect from time to time on the average daily undrawn stated amount under such Facility LC, such fee to be payable in arrears on each Payment Date (or, with respect to a Modification of any such Facility LC which increases the stated amount thereof, such increase in the stated amount) thereof, such fee to be payable on the date of such issuance or increase (each such fee described in this sentence an “LC Fee”). The applicable Borrower shall also pay to the applicable LC Issuer for its own account (i) at the time of issuance of each Facility LC, a fronting fee of 0.125% per annum of the initial stated amount (or, with respect to a Modification of any such Facility LC which increases the stated amount thereof, such increase in the stated amount), and (ii) documentary and processing charges in connection with the issuance or Modification of and draws under Facility LCs in accordance with such LC Issuer’s standard schedule for such charges as in effect from time to time.

          2.26.5 Administration; Reimbursement by Lenders. Upon receipt from the beneficiary of any Facility LC of any demand for payment under such Facility LC, the applicable LC Issuer shall notify the Agent and the applicable Borrower as to the amount demanded to be paid by such LC Issuer and the proposed payment date. Upon its determination to honor any such demand for payment, the applicable LC Issuer shall promptly notify the Agent and the applicable Borrower and the Agent shall promptly notify each other Lender of such determination and of the LC Issuer’s intended payment date therefor (the “LC Payment Date”). The responsibility of such LC Issuer to the Borrowers and each Lender shall be only to determine that the documents (including each demand for payment) delivered under each Facility LC in connection with such presentment shall be in conformity in all material respects with such Facility LC. Each LC Issuer shall endeavor to exercise the same care in the issuance and administration of the Facility LCs as it does with respect to letters of credit in which no participations are granted (or with respect to bank guaranties which are not backed by letters of credit, as applicable), it being understood that in the absence of any gross negligence or willful misconduct by such LC Issuer, each Lender shall be unconditionally and irrevocably liable without regard to the occurrence of any Default or any condition precedent whatsoever, to reimburse such LC Issuer on demand for (a) such Lender’s Pro Rata Share of the amount of each payment made by such LC Issuer under each Facility LC (other than any Bank Guaranty), in the currency of such Facility LC, to the extent such amount is not reimbursed by the applicable Borrower pursuant to Section 2.26.6 below, plus (b) interest on the foregoing amount to be reimbursed by such Lender, for each day from the date of such LC Issuer’s demand for such reimbursement (or, if such demand is made after 11:00 a.m. (Central Time) on such date, from the next succeeding Business Day) to the date on which such Lender pays the amount to be reimbursed by it, at a rate of interest per annum equal to the Federal

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Funds Effective Rate for the first three days and, thereafter, at a rate of interest equal to the rate applicable to Floating Rate Advances.

          2.26.6 Reimbursement by Borrower. Each Borrower shall be irrevocably and unconditionally obligated to reimburse each LC Issuer on or before the applicable LC Payment Date for any amounts to be paid by such LC Issuer upon any drawing under any Facility LC, in the currency of such Facility LC, without presentment, demand, protest or other formalities of any kind; provided that no Borrower nor any Lender shall hereby be precluded from asserting any claim for direct (but not consequential) damages suffered by such Borrower or such Lender to the extent, but only to the extent, caused by (a) the willful misconduct or gross negligence of any LC Issuer in determining whether a request presented under any Facility LC issued by it complied with the terms of such Facility LC or (b) any LC Issuer’s failure to pay under any Facility LC issued by it after the presentation to it of a request strictly complying with the terms and conditions of such Facility LC. All such amounts paid by any LC Issuer and remaining unpaid by such Borrower shall bear interest, payable on demand, for each day until paid at a rate per annum equal to (i) the rate applicable to Floating Rate Advances for such day if such day falls on or before the applicable LC Payment Date and (ii) the sum of 2% plus the rate applicable to Floating Rate Advances for such day if such day falls after such LC Payment Date. Each LC Issuer will pay to each Lender ratably in accordance with its Pro Rata Share all amounts received by it from any Borrower for application in payment, in whole or in part, of the Reimbursement Obligation in respect of any Facility LC (other than any Bank Guaranty) issued by such LC Issuer, but only to the extent such Lender has made payment to such LC Issuer in respect of such Facility LC pursuant to Section 2.26.5. Subject to the terms and conditions of this Agreement (including without limitation the submission of a Borrowing Notice in compliance with Section 2.8 and the satisfaction of the applicable conditions precedent set out in Article IV), any Borrower may request an Advance hereunder for the purpose of satisfying any Reimbursement Obligation.

          2.26.7 Obligations Absolute. The Borrowers’ obligations under this Section 2.26 shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which any Borrower may have or have had against any LC Issuer, any Lender or any beneficiary of a Facility LC. The Borrowers further agree with the LC Issuers and the Lenders that the LC Issuers and the Lenders shall not be responsible for, and the Borrowers’ Reimbursement Obligation in respect of any Facility LC shall not be affected by, among other things, (a) the validity or genuineness of documents or of any endorsements thereon, even if such documents should in fact prove to be in any or all respects invalid, fraudulent or forged, or (b) any dispute between or among any Borrowers, any of their Affiliates, the beneficiary of any Facility LC or any financing institution or other party to whom any Facility LC may be transferred, or (c) any claims or defenses whatsoever of any Borrower or of any of its Affiliates against the beneficiary of any Facility LC or any such transferee. The LC Issuers shall not be liable for any error, omission, interruption or delay in transmission, dispatch or delivery of any message or advice, however transmitted, in connection with any Facility LC. The Borrowers agree that any action taken or omitted by any LC Issuer or any Lender under or in connection with each Facility LC and the related drafts and documents, if done without gross negligence or willful misconduct, shall be binding upon the Borrowers and shall not put any LC Issuer or any Lender under any liability to any Borrower. Nothing in this Section 2.26.7 is intended to limit the right of any Borrower to make a claim against any LC Issuer for damages as contemplated by the proviso to the first sentence of Section 2.26.6.

          2.26.8 Actions of LC Issuers. Each LC Issuer shall be entitled to rely, and shall be fully protected in relying, upon any Facility LC, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or

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other document believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by such LC Issuer. Each LC Issuer shall be fully justified in failing or refusing to take any action under this Agreement unless it shall first have received such advice or concurrence of the Required Lenders as it reasonably deems appropriate or it shall first be indemnified to its reasonable satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Notwithstanding any other provision of this Section 2.26, each LC Issuer shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and any future holders of a participation in any Facility LC.

          2.26.9 Indemnification. Each Borrower hereby agrees to indemnify and hold harmless each Lender, each LC Issuer and the Agent, and their respective directors, officers, agents and employees from and against any and all claims and damages, losses, liabilities, costs or expenses which such Lender, such LC Issuer or the Agent may incur (or which may be claimed against such Lender, such LC Issuer or the Agent by any Person whatsoever) by reason of or in connection with the issuance, execution and delivery or transfer of or payment or failure to pay under any Facility LC or any actual or proposed use of any Facility LC, including, without limitation, any claims, damages, losses, liabilities, costs or expenses which any LC Issuer may incur by reason of or in connection with (a) the failure of any other Lender to fulfill or comply with its obligations to such LC Issuer hereunder (but nothing herein contained shall affect any rights any Borrower may have against any defaulting Lender) or (b) by reason of or on account of such LC Issuer issuing any Facility LC which specifies that the term “Beneficiary” included therein includes any successor by operation of law of the named Beneficiary, but which Facility LC does not require that any drawing by any such successor Beneficiary be accompanied by a copy of a legal document, satisfactory to such LC Issuer, evidencing the appointment of such successor Beneficiary; provided that no Borrower shall be required to indemnify any Lender, any LC Issuer or the Agent for any claims, damages, losses, liabilities, costs or expenses to the extent, but only to the extent, caused by (x) the willful misconduct or gross negligence of such LC Issuer in determining whether a request presented under any Facility LC complied with the terms of such Facility LC or (y) such LC Issuer’s failure to pay under any Facility LC after the presentation to it of a request strictly complying with the terms and conditions of such Facility LC. Nothing in this Section 2.26.9 is intended to limit the obligations of any Borrower under any other provision of this Agreement.

          2.26.10 Lenders’ Indemnification. Each Lender shall, ratably in accordance with its Pro Rata Share, indemnify each LC Issuer, its affiliates and their respective directors, officers, agents and employees (to the extent not reimbursed by the Borrowers) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except such as result from such indemnitees’ gross negligence or willful misconduct or such LC Issuer’s failure to pay under any Facility LC after the presentation to it of a request strictly complying with the terms and conditions of the Facility LC) that such indemnitees may suffer or incur in connection with this Section 2.26 or any action taken or omitted by such indemnitees hereunder.

          2.26.11 Facility LC Collateral Account. (a) Each Borrower agrees that it will, as provided in clause (b) below, as provided in Section 2.2(a), upon the occurrence of any Default described in Section 7.6 or Section 7.7, or upon the request of the Required Lenders (or the Agent with the consent of the Required Lenders) upon a Default, and until the final expiration date of

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any Facility LC (other than a Bank Guaranty) and thereafter as long as any amount is payable to the LC Issuer or the Lenders in respect of any Facility LC (other than a Bank Guaranty), maintain a special collateral account (the “Facility LC Collateral Account”) at the Agent’s office at the address specified pursuant to Article XIII, in the name of such Borrower but under the sole dominion and control of the Agent, for the ratable benefit of the Lenders and the LC Issuers and in which such Borrower shall have no interest other than as set out in Section 2.2(a) and Section 8.1. Each Borrower hereby pledges, assigns and grants to the Agent, on behalf of and for the ratable benefit of the Lenders and the LC Issuers, a security interest in all of such Borrower’s right, title and interest in and to all funds which may from time to time be on deposit in the Facility LC Collateral Account to secure the prompt and complete payment and performance of the LC Obligations and LC Fees. The Agent will invest any funds on deposit from time to time in the Facility LC Collateral Account in certificates of deposit or other time deposits of Bank One having a maturity not exceeding 30 days. The Parent may select the maturities of such certificates of deposit upon reasonable prior notice to the Agent; however, if the Parent fails to provide such notice, the Agent shall select the applicable maturities in its sole discretion. Nothing in this Section 2.26.11 shall either obligate the Agent to require any Borrower to deposit any funds in the Facility LC Collateral Account or limit the right of the Agent to release any funds held in the Facility LC Collateral Account in each case other than as required by Section 2.2(a), Section 8.1, or clause (b) below.

          (b) Each Borrower agrees that, if 45 days prior to the then-applicable Facility Termination Date, the Facility Termination Date has not been extended, then, with respect to each Facility LC (other than Bank Guaranties) with an expiry date later than 5 Business Days prior to the then-applicable Facility Termination Date, the Borrowers shall either (i) deposit cash collateral in the Facility LC Collateral Account or (ii) provide the applicable LC Issuer with a letter of credit, issued by an issuing bank reasonably acceptable to such LC Issuer, naming such LC Issuer as beneficiary, and otherwise reasonably acceptable to such LC Issuer (each, such letter of credit a “Back-Up LC”), in each case, in the currency of such Letter of Credit and in an amount equal to 100% of the outstanding LC Obligations (other than LC Obligations with respect to Bank Guaranties) plus the amount of all LC Fees scheduled to be paid through the expiration date of the Facility LCs issued by such LC Issuer. Neither the Borrowers nor any Person claiming on behalf of or through the Borrowers shall have any right to withdraw any of the funds held in the Facility LC Collateral Account. Upon the extension of the Facility Termination Date, the Agent shall promptly release to the Borrowers all cash collateral provided by the Borrowers, or the applicable LC Issuers shall return all Back-Up LCs to the issuing banks for cancellation, as applicable. Upon the cancellation, surrender, or payment of each Facility LC for which cash collateral or a Back-Up LC was provided pursuant to this Section 2.26.11(b), the Agent shall promptly release cash collateral to the Borrowers, or the applicable LC Issuer shall instruct the applicable Back-Up LC issuer to reduce the amount available to be drawn under any applicable Back-Up LC, as applicable, in the amount of the LC Obligations (other than Bank Guaranties) which are no longer outstanding as a result thereof, together with the amount of all corresponding LC Fees which will no longer become payable excluding in each case, the amounts applied by Agent under Section 8.1(c) to satisfy any LC Fees that have become due and payable by any Borrower.

          (c) The obligations of each of the Borrowers under this Agreement and the other Loan Documents regarding Facility LC’s, including without limitation obligations under Section 2.26, shall survive after the Facility Termination Date and termination of this Agreement for so long as any LC Obligations remain outstanding. Each Borrower further agrees that if cash collateral is required to be deposited or any Back-up LCs are required to be provided pursuant to Section 2.26.11(b), it will, promptly upon request of the Agent or any LC Issuer, as applicable,

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enter into such agreements, in form and substance reasonably acceptable to the Agent or such LC Issuer, as applicable, and such Borrower as the Agent or such LC Issuer may reasonably require to effectuate the provisions of Section 2.26.11(b) and otherwise govern the administration of the outstanding Facility LC’s and the Facility LC Collateral Account or Back-Up LC requirements, as applicable, the Borrowers’ Reimbursement Obligations and other obligations with respect thereto, and such other provisions as the Agent or such LC Issuer may reasonably require, in each case, to become effective on the Facility Termination Date if the same is not extended.

          2.26.12 Rights as a Lender. In its capacity as a Lender, each LC Issuer shall have the same rights and obligations as any other Lender.

          2.26.13 Bank Guaranties. Each LC Issuer’s agreement to issue Bank Guaranties hereunder is conditioned upon (a) such LC Issuer’s determination, in its sole discretion, that it is able to issue a Bank Guaranty in the applicable jurisdiction and (b) the simultaneous issuance by a LC Issuer of a Facility LC (other than a Bank Guaranty) supporting the applicable Borrower’s obligations under such Bank Guaranty for the entire term thereof. Any Modification which increases or extends the amount or term of a Bank Guaranty shall be conditioned upon a simultaneous corresponding Modification of the Facility LC supporting such Bank Guaranty. The applicable Borrower shall provide notice requesting the issuance or Modification, as applicable, of any such supporting Facility LC at the same time at which such Borrower provides notice requesting the issuance or Modification, as applicable, of the Bank Guaranty which such Facility LC supports, all in accordance with Section 2.26.3.

          2.27 Increase in Aggregate Commitment.

          (a) Provided no Default or Unmatured Default exists, upon notice to the Agent, the Parent may request one or more increases (the amount of any such increase being a “Commitment Increase”) in the Aggregate Commitment which in the aggregate do not exceed $100,000,000 and do not cause the Aggregate Commitment to exceed $300,000,000. The Agent shall promptly give the Lenders (each of which, in its sole discretion, may determine whether and to what degree to participate in such Commitment Increase) notice of such request. In its notice to the Agent, the Parent shall specify the time period within which each Lender is requested to respond (which shall not be less than 10 Business Days from the date of delivery of such notice to the Agent). Each Lender shall notify the Agent within such time period whether or not it agrees to increase its Commitment and, if so, whether by an amount equal to, greater than, or less than its Pro Rata Share of such requested increase (any such Lender that agrees to increase its Commitment hereunder, an “Increasing Lender”). Any Lender not responding within such time period shall be deemed to have declined to increase its Commitment. No Lender’s Commitment amount shall be increased without the consent of such Lender. The Agent shall notify the Parent of the Lenders’ responses to each request made hereunder. If the Increasing Lenders agree to increase their respective Commitments by an aggregate amount in excess of the requested Commitment Increase, the requested Commitment Increase shall be allocated among such Increasing Lenders in proportion to their respective Commitments immediately prior to the Increase Date. To achieve the full amount of a requested increase, the Borrowers may also invite additional Eligible Assignees to become Lenders (any such Lender, an “Additional Lender”). The sum of the increases in the Commitments of the Increasing Lenders plus the Commitments of the Additional Lenders upon giving effect to the Commitment Increase shall not in the aggregate exceed the amount of the Commitment Increase.

          (b) Any Commitment Increase shall become effective upon (i) the receipt by the Agent of (A) an agreement in form and substance satisfactory to the Agent signed by the Borrowers, each Increasing Lender and each Additional Lender, setting forth the new Commitments of each such Lender and setting forth the agreement of each Additional Lender to become a party to this Agreement and to be

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bound by all the terms and provisions hereof binding upon each Lender, and (B) such evidence of appropriate authorization on the part of the Borrowers with respect to the Commitment Increase and such opinions of counsel for the Borrowers with respect to the Commitment Increase as the Agent may reasonably request, (ii) the funding by each Increasing Lender and Additional Lender of the Revolving Loans to be made by each such Lender described in subsection (c) below, if applicable, and (iii) receipt by the Agent of a certificate (the statements contained in which shall be true) of a Responsible Officer of each Borrower certifying and attaching the resolutions adopted by such Borrower approving or consenting to such Commitment Increase, and stating that both before and after giving effect to such Commitment Increase (A) no Default has occurred and is continuing, and (B) all representations and warranties in this Agreement are true and correct in all material respects, unless such representation or warranty relates to an earlier date, in which case they are true and correct as of such earlier date. The Agent shall promptly notify the Borrowers and the Lenders of the final allocation of any Commitment Increase and the effective date thereof.

          (c) Upon the effective date of any Commitment Increase, if any Advances (other than Swing Line Loans) are then outstanding, each Increasing Lender and each Additional Lender shall provide funds to the Agent in the manner described in Section 2.2. The funds so provided by any Lender shall be deemed to be a Revolving Loan made by such Lender on the date of such Commitment Increase, an in an amount such that after giving effect to such Commitment Increase and the Revolving Loans made on the date of such Commitment Increase, each Advance outstanding hereunder shall consist of Revolving Loans made by the Lenders ratably in accordance with each Lender’s Pro Rata Share. Also upon giving effect to any Commitment Increase, each Lender shall participate in any outstanding Facility LC’s (other than any Bank Guaranties) and Swing Line Loans ratably in accordance with its Pro Rata Share.

          (d) Notwithstanding any provision contained herein to the contrary, from and after the date of any Commitment Increase and the making of any Revolving Loans on such date pursuant to subsection (c) above, all calculations and payments of interest on the Advances shall take into account the actual Commitment of each Lender and the principal amount outstanding of each Revolving Loan made by such Lender during the relevant period of time.

          (e) The Aggregate Commitments may be increased in accordance with, and to the extent permitted by, this Section 2.27, without the consent of the requisite Lenders otherwise required under Section 8.2.

ARTICLE III

YIELD PROTECTION; TAXES

     3.1 Yield Protection. (a) If, on or after the date of this Agreement, the adoption of any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law), or any change in the interpretation or administration thereof by any governmental or quasi-governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender or applicable Lending Installation or any LC Issuer with any request or directive (whether or not having the force of law) of any such authority, central bank or comparable agency:

               (i) subjects any Lender or any applicable Lending Installation or any LC Issuer to any Taxes, or changes the basis of taxation of payments (other than with respect to Excluded Taxes) to any Lender or any LC Issuer in respect of its Eurocurrency Loans, Facility LCs or participations therein, or

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               (ii) imposes or increases or deems applicable any reserve, assessment, insurance charge, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation or any LC Issuer (other than reserves and assessments taken into account in determining the interest rate applicable to Eurocurrency Advances), or

               (iii) imposes any other condition the result of which is to increase the cost to any Lender or any applicable Lending Installation or any LC Issuer of making, funding or maintaining its Eurocurrency Loans or Commitment, or of issuing or participating in Facility LCs, (including, without limitation, any conversion of any Loan denominated in an Agreed Currency other than Euro into a Loan denominated in Euro), or reduces any amount receivable by any Lender or any applicable Lending Installation or any LC Issuer in connection with its Eurocurrency Loans, Facility LCs or participations therein, or requires any Lender or any applicable Lending Installation or any LC Issuer to make any payment calculated by reference to the amount of Eurocurrency Loans, Facility LCs or participations therein held or interest or LCs Fees received by it, by an amount deemed material by such Lender or such LC Issuer as the case may be,

and the result of any of the foregoing is to increase the cost to such Lender or applicable Lending Installation or such LC Issuer, as the case may be, of making or maintaining its Eurocurrency Loans (including, without limitation, any conversion of any Loan denominated in an Agreed Currency other than Euro into a Loan denominated in Euro) or Commitment or of issuing or participating in Facility LCs or to reduce the return received by such Lender or applicable Lending Installation or such LC Issuer, as the case may be, in connection with such Eurocurrency Loans, Commitment, Facility Fees or participations therein, then, within 15 days of demand by such Lender or such LC Issuer, as the case may be, the Borrowers shall pay such Lender or such LC Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or such LC Issuer, as the case may be, for the actual increased cost or reduction in amount received.

          (b) If any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive of any jurisdiction outside of the United States of America or any subdivision thereof (whether or not having the force of law), imposes or deems applicable any reserve requirement against or fee with respect to assets of, deposits with or for the account of, or credit extended by, any Lender or any applicable Lending Installation, or any LC Issuer, and the result of the foregoing is to increase the cost to such Lender or applicable Lending Installation or such LC Issuer of making or maintaining its Eurocurrency Loans to, or of issuing or participating in Facility LCs upon the request of, or of making or maintaining its Commitment to, any Borrower that is not incorporated under the laws of the United States of America or a state thereof (each a “Non-U.S. Borrower”) or to reduce the return received by such Lender or applicable Lending Installation or such LC Issuer in connection with such Eurocurrency Loans to, Facility LCs applied for by, or Commitment to any Non-U.S. Borrower, then, within 15 days of demand by such Lender, or such LC Issuer, as the case may be, such Non-U.S. Borrower shall pay such Lender, or such LC Issuer, as the case may be, such additional amount or amounts as will compensate it for such increased cost or reduction in amount received, provided that such Non-U.S. Borrower shall not be required to compensate any Lender for such non-U.S. reserve costs or fees to the extent that an amount equal to such reserve costs or fees is received by such Lender as a result of the calculation of the interest rate applicable to Eurocurrency Advances pursuant to clause (a)(ii) of the definition of “Eurocurrency Rate.”

     3.2 Changes in Capital Adequacy Regulations. If a Lender or LC Issuer determines the amount of capital required or expected to be maintained by such Lender or such LC Issuer, any Lending Installation of such Lender or such LC Issuer or any corporation controlling such Lender or such LC

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Issuer is increased as a result of a Change (as hereinafter defined), then, within 15 days of demand by such Lender or such LC Issuer, the Borrowers shall pay such Lender or such LC Issuer the amount necessary to compensate for any shortfall in the rate of return on the portion of such increased capital which such Lender or such LC Issuer determines is attributable to this Agreement, its Outstanding Credit Exposure or its Commitment to make Loans and issue or participate in Facility LCs, as the case may be, hereunder (after taking into account such Lender or such LC Issuer’s policies as to capital adequacy). “Change” means (a) any change after the date of this Agreement in the Risk-Based Capital Guidelines or (b) any adoption of or change in any other law, governmental or quasi-governmental rule, regulation, policy, guideline, interpretation, or directive (whether or not having the force of law) after the date of this Agreement which affects the amount of capital required or expected to be maintained by any Lender or any LC Issuer or any Lending Installation or any corporation controlling any Lender or any LC Issuer. “Risk-Based Capital Guidelines” means (a) the risk-based capital guidelines in effect in the United States on the date of this Agreement, including transition rules, and (b) the corresponding capital regulations promulgated by regulatory authorities outside the United States implementing the July 1988 report of the Basle Committee on Banking Regulation and Supervisory Practices Entitled “International Convergence of Capital Measurements and Capital Standards,” including transition rules, and any amendments to such regulations adopted prior to the date of this Agreement.

     3.3 Availability of Types of Advances. If any Lender determines that maintenance of its Eurocurrency Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, whether or not having the force of law, or if the Required Lenders determine that (a) deposits of a type, currency and maturity appropriate to match fund Eurocurrency Advances are not available or (b) the interest rate applicable to Eurocurrency Advances does not accurately reflect the cost of making or maintaining Eurocurrency Advances, then the Agent shall suspend the availability of Eurocurrency Advances and require any affected Eurocurrency Advances to be repaid or converted to Floating Rate Advances, subject to the payment of any funding indemnification amounts required by Section 3.4. If the Agent suspends the availability of Eurocurrency Advances under this Section 3.3, the availability of Eurocurrency Advances shall be reinstated upon, as applicable (i) the replacement of the Lender (or Lenders) which determined that maintenance of its Eurocurrency Loans at a suitable Lending Installation would violate any applicable law, rule, regulation, or directive, or (ii) the Required Lenders determine that (A) deposits of a type, currency and maturity appropriate to match fund Eurocurrency Advances are once again available or (B) the interest rate applicable to Eurocurrency Advances once again accurately reflects the cost of making or maintaining Eurocurrency Advances.

     3.4 Funding Indemnification. If any payment of a Eurocurrency Advance occurs on a date which is not the last day of the applicable Interest Period, whether because of acceleration, prepayment or otherwise, or a Eurocurrency Advance or prepayment of a Eurocurrency Advance is not made on the date specified by the applicable Borrower for any reason other than default by the Lenders, each of the Borrowers will indemnify each Lender for any loss or cost incurred by it resulting therefrom, including, without limitation, any actual loss or cost in liquidating or employing deposits acquired to fund or maintain such Eurocurrency Advance.

     3.5 Taxes. (a) All payments by the Borrowers to or for the account of any Lender, any LC Issuer, or the Agent hereunder or under any Note or LC Application shall be made free and clear of and without deduction for any and all Taxes. If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender, any LC Issuer or the Agent, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.5) such Lender, such LC Issuer or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions, (iii) such Borrower shall pay the full amount deducted to the relevant authority in accordance with applicable law and (iv) such Borrower shall furnish

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to the Agent the original copy of a receipt evidencing payment thereof within 30 days after such payment is made. Each Lender, or each LC Issuer, as applicable agrees to use reasonable efforts to obtain the benefit of any tax or other credit or allowance which may be available to it as a consequence of any such deduction made by a Borrower in accordance herewith and will pay to such Borrower an amount equal to all or such portion of the net benefit actually received by such Lender (or such LC Issuer) as it reasonably allocate to this Agreement. Notwithstanding the foregoing, a Lender (or a LC Issuer) shall not be required to apply for any tax credit or allowance or to make a payment to a Borrower under this Section 3.5(a) if such Lender (or such LC Issuer) determines in good faith that to do so would be prejudicial to its own interests. Should it later develop because of loss carrybacks, tax credit carrybacks, or otherwise that a Lender or a LC Issuer in fact did not receive the net benefits so paid to such Borrower, such Borrower shall promptly reimburse such Lender or such LC Issuer for the amount by which the payment theretofore made to any Borrower exceeds the net benefit actually so received and reasonably allocated to this Agreement by such Lender or such LC Issuer, as reasonably determined in good faith by such Lender or such LC Issuer.

          (b) In addition, each Borrower hereby agrees to pay any present or future stamp or documentary taxes and any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under any Note or Facility LC Application or from the execution or delivery of, or otherwise with respect to, this Agreement or any Note or Facility LC Application (“Other Taxes”).

          (c) Each Borrower hereby agrees to indemnify the Agent, each Lender, and each LC Issuer for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed on amounts payable under this Section 3.5) paid by the Agent, such Lender, or such LC Issuer and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto. Payments due under this indemnification shall be made within 30 days of the date the Agent, such Lender, or such LC Issuer makes demand therefor pursuant to Section 3.6.

          (d) Each Lender that is not incorporated under the laws of the United States of America or a state thereof (each a “Non-U.S. Lender”) agrees that it will, not more than ten Business Days after the date of this Agreement, (i) deliver to each of the Borrowers and the Agent two duly completed copies of United States Internal Revenue Service Form W-8BEN or W-8ECI, certifying in either case that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, and (ii) deliver to each of the Borrowers and the Agent a United States Internal Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to an exemption from United States backup withholding tax. Each Non-U.S. Lender further undertakes to deliver to each of the Borrowers and the Agent (A) renewals or additional copies of such form (or any successor form) on or before the date that such form expires or becomes obsolete, and (B) after the occurrence of any event requiring a change in the most recent forms so delivered by it, such additional forms or amendments thereto as may be reasonably requested by any Borrower or the Agent. All forms or amendments described in the preceding sentence shall certify that such Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form or amendment with respect to it and such Lender advises the Borrowers and the Agent that it is not capable of receiving payments without any deduction or withholding of United States federal income tax.

          (e) For any period during which a Non-U.S. Lender has failed to provide the Borrowers with an appropriate form pursuant to clause (d), above (unless such failure is due to a change in treaty, law or regulation, or any change in the interpretation or administration thereof by any governmental authority, occurring subsequent to the date on which a form originally was required to be

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provided), such Non-U.S. Lender shall not be entitled to indemnification under this Section 3.5 with respect to Taxes imposed by the United States; provided that, should a Non-U.S. Lender which is otherwise exempt from or subject to a reduced rate of withholding tax become subject to Taxes because of its failure to deliver a form required under clause (iv), above, the Borrowers shall take such steps as such Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to recover such Taxes.

          (f) Any Lender or any LC Issuer entitled to an exemption from or reduction of withholding tax with respect to payments under this Agreement or any Note or LC Application pursuant to the law of any relevant jurisdiction or any treaty shall deliver to the Borrowers (with a copy to the Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate.

          (g) If the U.S. Internal Revenue Service or any other governmental authority of the United States or any other country or any political subdivision thereof asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered or properly completed, because such Lender failed to notify the Agent of a change in circumstances which rendered its exemption from withholding ineffective, or for any other reason), such Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax, withholding therefor, or otherwise, including penalties and interest, and including taxes imposed by any jurisdiction on amounts payable to the Agent under this subsection, together with all costs and expenses related thereto (including attorneys fees and time charges of attorneys for the Agent, which attorneys may be employees of the Agent). The obligations of the Lenders under this Section 3.5(g) shall survive the payment of the Obligations and termination of this Agreement.

     3.6 Lender Statements; Survival of Indemnity. To the extent reasonably possible, each Lender shall designate an alternate Lending Installation with respect to its Eurocurrency Loans to reduce any liability of any Borrower to such Lender under Sections 3.1, 3.2 and 3.5 or to avoid the unavailability of Eurocurrency Advances under Section 3.3, so long as such designation is not, in the judgment of such Lender, disadvantageous to such Lender. Each Lender shall deliver a written statement of such Lender to the Borrowers (with a copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4 or 3.5. Such written statement shall set out in reasonable detail the calculations upon which such Lender determined such amount and shall be final, conclusive and binding on the Borrowers in the absence of manifest error. Determination of amounts payable under such Sections in connection with a Eurocurrency Loan shall be calculated as though each Lender funded its Eurocurrency Loan through the purchase of a deposit of the type, currency and maturity corresponding to the deposit used as a reference in determining the Eurocurrency Rate applicable to such Loan, whether in fact that is the case or not. Unless otherwise provided herein, the amount specified in the written statement of any Lender shall be payable on demand after receipt by the Borrowers of such written statement. The obligations of each of the Borrowers under Sections 3.1, 3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination of this Agreement.

ARTICLE IV

CONDITIONS PRECEDENT

     4.1 Initial Credit Extensions. The Lenders shall not be required to make the initial Credit Extensions hereunder unless, prior to or concurrently with the making of such initial Credit Extensions, the following conditions precedent have been satisfied:

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          4.1.1 Closing Documents. The Agent shall have received on or before the Closing Date the following, each dated such date (unless otherwise specified) and duly executed by the respective party or parties thereto, in form and substance satisfactory to the Agent and the Lenders, and (except for the Notes) with sufficient copies for the Agent and each Lender:

          (a) Copies of the Parent’s (i) certificate of incorporation, together with all amendments, and a certificate of good standing, each certified by the appropriate governmental officer in its jurisdiction of incorporation, (ii) bylaws, certified by the Secretary or Assistant Secretary of the Parent, (iii) Board of Directors’ resolutions and of resolutions or actions of any other body authorizing the execution of the Loan Documents to which the Parent is a party, (iv) an incumbency certificate, executed by the Secretary or Assistant Secretary of the Parent, which shall identify by name and title and bear the signatures of the Authorized Officers and any other officers of the Parent authorized to sign the Loan Documents to which the Parent is a party, upon which certificate the Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Parent, and (v) any other information required by Section 326 of the USA Patriot Act or deemed necessary for the Agent or any Lender to verify the identity of Parent as required by Section 326 of the USA Patriot Act.

          (b) Copies of each Borrowing Subsidiary’s (i) organizational documents, together with all amendments, and a certificate of good standing (if applicable), each certified by the appropriate governmental officer in its jurisdiction of incorporation, (ii) bylaws, certified by the Secretary, Assistant Secretary, director or other appropriate official of such Borrowing Subsidiary, (iii) resolutions or actions authorizing the execution of the Loan Documents to which such Borrowing Subsidiary is a party, (iv) an incumbency certificate, executed by the Secretary or Assistant Secretary, director or other appropriate official of each Borrowing Subsidiary, which shall identify by name and title and bear the signatures of the Authorized Officers and any other officers of each such Borrowing Subsidiary authorized to sign the Loan Documents to which such Borrowing Subsidiary is a party, upon which certificate the Agent and the Lenders shall be entitled to rely until informed of any change in writing by the applicable Borrowing Subsidiary, and (v) any other information required by Section 326 of the USA Patriot Act or deemed necessary for the Agent or any Lender to verify the identity of Borrowing Subsidiary as required by Section 326 of the USA Patriot Act.

          (c) A certificate, signed by the chief financial officer of the Parent, stating that on the Closing Date (i) no Default or Unmatured Default has occurred and is continuing, (ii) each of the representations and warranties set out in Article V of this Agreement is true and correct on and as of the Closing Date, (iii) there has occurred no material adverse change in the consolidated financial condition of the Parent from that reflected in the Parent’s consolidated financial statements as of December 31, 2002, and (iv) since December 31, 2002, there has been no change in the business, Property, prospects, condition (financial or otherwise) or results of operations of the Parent and its Subsidiaries which could reasonably be expected to have a Material Adverse Effect.

          (d) A written opinion of William C. Lemmer, general counsel of the Parent, addressed to the Agent and the Lenders in substantially the form of Exhibit A-1.

          (e) A written opinion of the outside counsel to the Parent and the Borrowing Subsidiaries, addressed to the Agent and the Lenders in substantially the form of Exhibit A-2.

          (f) Any Notes requested by a Lender pursuant to Section 2.16 payable to the order of each such requesting Lender.

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          (g) Written money transfer instructions, in substantially the form of Exhibit D, addressed to the Agent and signed by an Authorized Officer, together with such other related money transfer authorizations as the Agent may have reasonably requested.

          (h) This Agreement, and all its attached Exhibits and Schedules.

          (i) The Guaranty.

          (j) If the initial Credit Extension will be the issuance of a Facility LC, a properly completed Facility LC Application.

          (k) Such other documents as any Lender or its counsel may have reasonably requested.

          4.1.2 Fees.

          (a) All fees, costs, and expenses of Bank One and its affiliates (including, without limitation, legal fees and expenses of counsel to the Agent) to be paid on the Closing Date shall have been paid, or arrangements acceptable to Bank One shall have been made for the payment thereof.

          (b) The Parent shall have paid to the Agent and the Arranger, for their respective accounts, the fees agreed to pursuant to the terms of that certain letter agreement dated November 5, 2003, among the Parent, the Agent and the Arranger, or as otherwise agreed from time to time.

     4.2 Each Credit Extension. The Lenders shall not (except as otherwise set out in Section 2.5.1 and Section 2.5.2 with respect to Revolving Loans for the purpose of repaying Swing Line Loans) be required to make any Credit Extension unless on the applicable Credit Extension Date:

          (a) There exists no Default or Unmatured Default.

          (b) The representations and warranties contained in Article V are true and correct as of such Credit Extension Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date.

     With respect to any Borrower that is not a Material Subsidiary, the Lenders shall not (except as otherwise set out in Section 2.5.1 and Section 2.5.2 with respect to Revolving Loans for the purpose of repaying Swing Line Loans) be required to make any Credit Extension with respect to such Borrower if, on the applicable Credit Extension Date, a Default or Unmatured Default would exist if such Borrower were a Material Subsidiary; provided that any such circumstance that would not otherwise constitute a Default or Unmatured Default under this Agreement shall not be deemed to be a Default or Unmatured Default or affect the Lenders’ Commitment to make Credit Extensions to the other Borrowers under this Agreement solely as a result of this paragraph.

     Each Borrowing Notice, Swing Line Borrowing Notice, or request for issuance of a Facility LC, as the case may be, with respect to each such Credit Extension shall constitute a representation and warranty by the Borrowers that the conditions contained in the preceding paragraph and Sections 4.2(a) and (b) have been satisfied. As a condition to making a Credit Extension, the Agent may require the applicable Borrower to deliver a certificate from an Authorized Officer of the Parent, certifying that such officer (a) has reviewed the terms of this Agreement and (b) has no knowledge of the existence of any

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condition or event which constitutes (or would constitute, if the applicable Borrower were a Material Subisidary) a Default or Unmatured Default as of the date of such certificate.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

     The Borrowers represent and warrant to the Lenders that:

     5.1 Existence and Standing. Each of the Borrowers is a corporation, partnership or limited liability company duly and properly incorporated or organized, as the case may be, validly existing and (to the extent such concept applies to such entity) in good standing under the laws of its jurisdiction of incorporation or organization and has all requisite authority to conduct its business in each jurisdiction in which its business is conducted. Each of the Borrowers and each of the Subsidiaries is duly qualified and in good standing (to the extent applicable) as a foreign corporation or other business entity and is duly authorized to conduct its business in each jurisdiction in which its business is conducted or proposed to be conducted except where the failure to qualify may not reasonably be expected to have a Material Adverse Effect.

     5.2 Authorization and Validity. Each of the Borrowers has the power and authority and legal right to execute and deliver the Loan Documents to which it is a party and to perform its obligations thereunder. The execution and delivery by the Borrowers of the Loan Documents to which it is a party and the performance of its obligations thereunder have been duly authorized by proper corporate proceedings, and the Loan Documents to which each of the Borrowers is a party constitute legal, valid and binding obligations of each of the Borrowers enforceable against each of such Borrowers in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.

     5.3 No Conflict; Government Consent. Neither the execution and delivery by each of the Borrowers of the Loan Documents to which it is a party, nor the consummation of the transactions therein contemplated, nor compliance with the provisions thereof will violate (a) any law, rule, regulation, order, writ, judgment, injunction, decree or award binding on any Borrower or any of their respective Subsidiaries or (b) any Borrower’s or any of their Subsidiaries’ articles or certificate of incorporation, partnership agreement, certificate of partnership, articles or certificate of organization, by-laws, or operating or other management agreement, as the case may be, or (c) the provisions of any indenture, instrument or agreement to which any of the Borrowers or any of their respective Subsidiaries is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder, or result in, or require, the creation or imposition of any Lien in, of or on the Property of any Borrower or a Subsidiary pursuant to the terms of any such indenture, instrument or agreement. No order, consent, adjudication, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any governmental or public body or authority, or any subdivision thereof, which has not been obtained by the Borrowers or any of their Subsidiaries, is required to be obtained by any Borrower or any of their Subsidiaries in connection with the execution and delivery of the Loan Documents, the borrowings under this Agreement, the payment and performance by the Borrowers of the Obligations or the legality, validity, binding effect or enforceability of any of the Loan Documents.

     5.4 Financial Statements. The December 31, 2002 consolidated financial statements of the Parent and its Subsidiaries heretofore delivered to the Lenders were prepared in accordance with generally accepted accounting principles in effect on the date such statements were prepared and fairly

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present the consolidated financial condition and operations of the Parent and its Subsidiaries at such date and the consolidated results of their operations for the period then ended.

     5.5 Taxes. The Parent and its Subsidiaries have filed all United States federal tax returns and all other tax returns which are required to be filed and have paid all taxes due pursuant to said returns or pursuant to any assessment received by the Parent or any of its Subsidiaries, except such taxes, if any, as are being contested in good faith and as to which adequate reserves have been provided in accordance with Agreement Accounting Principles and as to which no Lien exists. The United States income tax returns of the Parent and its Subsidiaries have been audited by the Internal Revenue Service (or the applicable statute of limitations has expired) through the years ending December 31, 1999. No tax liens have been filed and no claims are being asserted with respect to any such taxes. The charges, accruals and reserves on the books of the Parent and its Subsidiaries in respect of any taxes or other governmental charges are adequate.

     5.6 Litigation and Contingent Obligations. There is no litigation, arbitration, governmental investigation, proceeding or inquiry pending or, to the knowledge of any of their officers, threatened against or affecting the Parent or any of its Subsidiaries which could reasonably be expected to have a Material Adverse Effect or which seeks to prevent, enjoin or delay the making of any Credit Extensions. Other than any liability incident to any litigation, arbitration or proceeding which could not reasonably be expected to have a Material Adverse Effect, the Parent has no material contingent obligations not provided for or disclosed in the financial statements referred to in Section 5.4.

     5.7 Subsidiaries. Schedule 1 contains an accurate list of all Subsidiaries of the Parent as of the date of this Agreement, setting forth their respective jurisdictions of organization and the percentage of their respective capital stock or other ownership interests owned by the Parent or other Subsidiaries. Each Borrowing Subsidiary is a Wholly-Owned Subsidiary, all of the issued and outstanding shares of capital stock of which is owned by the Parent or one of its Wholly-Owned Subsidiaries. All of the issued and outstanding shares of capital stock of each Subsidiary or other ownership interests of such Subsidiaries have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and issued and are fully paid and non-assessable, and are free and clear of all Liens. No authorized but unissued or treasury shares of capital stock of any Subsidiary are subject to any option, warrant, right to call, or commitment of any kind or character. Except as set out on Schedule 1, no Subsidiary has any outstanding stock or securities convertible into or exchangeable for any shares of its capital stock, or any right issued to any Person (either preemptive or other) to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance (contingent or otherwise) of, or any calls, commitments, or claims of any character relating to any of its capital stock or any stock or securities convertible into or exchangeable for any of its capital stock other than as expressly set out in the certificate or articles of incorporation or other charter document of the Parent or such Subsidiary.

     5.8 ERISA. The Unfunded Liabilities of all Single Employer Plans do not in the aggregate exceed $50,000,000. Neither the Parent nor any other member of the Controlled Group has incurred, or is reasonably expected by the Parent to incur, any withdrawal liability to Multiemployer Plans. Each Plan complies in all material respects with all applicable requirements of law and regulations, no material Reportable Event has occurred with respect to any Plan, neither the Parent nor any other member of the Controlled Group has withdrawn from any Multiemployer Plan or initiated steps to do so, and no steps have been taken to reorganize or terminate any Single Employer Plan.

     5.9 Accuracy of Information. No information, exhibit or report furnished by the Parent or any of its Subsidiaries to the Agent or to any Lender in connection with the negotiation of, or compliance

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with, the Loan Documents contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statements contained therein not misleading.

     5.10 Regulation U. Margin stock (as defined in Regulation U) constitutes less than 25% of the value of those assets of the Parent and its Subsidiaries which are subject to any limitation on sale, pledge, or other restriction hereunder.

     5.11 Material Agreements. Neither the Parent nor any Subsidiary is a party to any agreement or instrument or subject to any charter or other corporate restriction which could reasonably be expected to have a Material Adverse Effect. Neither the Parent nor any Subsidiary is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (a) any agreement to which it is a party, which default could reasonably be expected to have a Material Adverse Effect or (b) any agreement or instrument evidencing or governing Material Indebtedness.

     5.12 Compliance With Laws. The Parent and its Subsidiaries have complied with all applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government or any instrumentality or agency thereof having jurisdiction over the conduct of their respective businesses or the ownership of their respective Property except for any failure to comply with any of the foregoing which could not reasonably be expected to have a Material Adverse Effect.

     5.13 Ownership of Properties. The Parent and its Subsidiaries have good title, free of all Liens other than those permitted by Section 6.15, to all of the Property and assets reflected in the Parent’s most recent consolidated financial statements provided to the Agent as owned by the Parent and its Subsidiaries.

     5.14 Plan Assets; Prohibited Transactions. None of the Borrowers is an entity deemed to hold “plan assets” within the meaning of 29 C.F.R. § 2510.3-101 of an employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to Title I of ERISA or any plan (within the meaning of Section 4975 of the Code), and neither the execution of this Agreement nor the making of Credit Extensions hereunder gives rise to a prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code.

     5.15 Environmental Matters. In the ordinary course of its business, the officers of the Parent consider the effect of Environmental Laws on the business of the Parent and its Subsidiaries, in the course of which they identify and evaluate potential risks and liabilities accruing to the Parent and its Subsidiaries due to Environmental Laws. On the basis of this consideration, the Parent has concluded that Environmental Laws cannot reasonably be expected to have a Material Adverse Effect. None of the Parent or any of its Subsidiaries has received any notice to the effect that its operations are not in material compliance with any of the requirements of applicable Environmental Laws or are the subject of any federal or state investigation evaluating whether any remedial action is needed to respond to a release of any toxic or hazardous waste or substance into the environment, which non-compliance or remedial action is reasonably expected by the Parent to have a Material Adverse Effect.

     5.16 Investment Company Act. None of the Parent or any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company”, within the meaning of the Investment Company Act of 1940, as amended.

     5.17 Public Utility Holding Company Act. None of the Parent or any of its Subsidiaries is a “holding company” or a “subsidiary company” of a “holding company”, or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company”, within the meaning of the Public Utility Holding Company Act of 1935, as amended.

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     5.18 Reportable Transaction. The Borrowers do not intend to treat the Advances and related transactions as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4). In the event the Borrowers determine to take any action inconsistent with such intention, it will promptly notify the Agent of such intent.

ARTICLE VI

COVENANTS

     During the term of this Agreement, unless the Required Lenders shall otherwise consent in writing:

     6.1 Financial Reporting. The Parent will maintain, for itself and each Subsidiary, a system of accounting established and administered in accordance with generally accepted accounting principles, and furnish to the Lenders:

          (a) Within 90 days after the close of each of its fiscal years, an unqualified audit report certified by Ernst & Young, L.L.P., or any other independent certified public accountants reasonably acceptable to the Lenders, prepared in accordance with Agreement Accounting Principles on a consolidated basis for itself and its Subsidiaries, including a balance sheet as of the end of such period, related profit and loss and statement of change of shareholders’ equity, and a statement of cash flows, accompanied by a certificate of said accountants that, in the course of their examination necessary for their certification of the foregoing, they have obtained no knowledge of any Default or Unmatured Default, or if, in the opinion of such accountants, any Default or Unmatured Default shall exist, stating the nature and status thereof; provided that, if any financial statement referred to in this Section 6.1(a) is readily available on-line through EDGAR as of the date on which such financial statement is required to be delivered hereunder and Parent shall have notified the Lenders in its Compliance Certificate that such financial statement is so available, Parent shall not be obligated to furnish copies of such financial statements. The 90-day period referenced above shall be extended for up to 15 days for any fiscal year as to which the Parent has received an extension from the SEC for the filing of its annual report on SEC Form 10K.

          (b) Within 45 days after the close of the first three quarterly periods of each of its fiscal years, for itself and its Subsidiaries, a consolidated unaudited balance sheet as at the close of each such period and consolidated profit and loss and statement of change of shareholders’ equity and a statement of cash flows for the period from the beginning of such fiscal year to the end of such quarter, all certified by an Authorized Officer of the Parent; provided that, if any financial statement referred to in this Section 6.1(b) is readily available on-line through EDGAR as of the date on which such financial statement is required to be delivered hereunder and Parent shall have notified the Lenders in its Compliance Certificate that such financial statement is so available, Parent shall not be obligated to furnish copies of such financial statements. The 45-day period referenced above shall be extended for up to 15 days for any fiscal quarter as to which the Parent has received an extension from the SEC for the filing of its quarterly report on SEC Form 10Q.

          (c) Together with the financial statements required under Sections 6.1(a) and (b), a Compliance Certificate signed by an Authorized Officer of the Parent showing the calculations necessary to determine compliance with this Agreement and stating that no Default or Unmatured Default exists, or if any Default or Unmatured Default exists, stating the nature and status thereof.

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          (d) As soon as possible and in any event (i) within 30 days after the Parent knows that any Termination Event described in clause (a) of the definition of Termination Event with respect to any Plan has occurred, and (ii) within 10 Business Days after the Parent knows that any other Termination Event with respect to any Plan has occurred, a statement, signed by an Authorized Officer of the Parent, describing such Termination Event and the action which the Parent proposes to take with respect thereto.

          (e) As soon as possible and in any event within 30 days after receipt by the Parent, a copy of (i) any notice or claim to the effect that the Parent or any of its Subsidiaries is or may be liable to any Person as a result of the release by the Parent, any of its Subsidiaries, or any other Person of any toxic or hazardous waste or substance into the environment, and (ii) any notice alleging any violation of any federal, state or local environmental, health or safety law or regulation by the Parent or any of its Subsidiaries, which, in either case, could reasonably be expected to exceed $5,000,000.

          (f) Promptly upon the furnishing thereof to the shareholders of the Parent, copies of all financial statements, reports and proxy statements so furnished.

          (g) Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which the Parent or any of its Subsidiaries files with the Securities and Exchange Commission, provided that, if such registration statements and reports are readily available on-line through EDGAR and Parent shall have notified the Lenders in writing that such registration statements or reports are so available, Parent shall not be obligated to furnish copies of such documents.

          (h) Such other information (including non-financial information) as the Agent or any Lender may from time to time reasonably request.

     6.2 Use of Proceeds. The Parent will, and will cause each Subsidiary to, use the proceeds of the Credit Extensions for working capital and other general corporate purposes. Each Borrower will not, nor will it permit any Subsidiary to, use any of the proceeds of the Advances to purchase or carry any “margin stock” (as defined in Regulation U).

     6.3 Notice of Default. The Parent will, and will cause each Subsidiary to, give prompt notice in writing to the Lenders of the occurrence of any Default or Unmatured Default and of any other development, financial or otherwise, which could reasonably be expected to have a Material Adverse Effect.

     6.4 Conduct of Business. The Parent will, and will cause each Subsidiary to, continue to operate its core business in the oil field service industry and carry on and conduct its business in substantially the same manner as it is presently conducted and do all things necessary to remain duly incorporated or organized, validly existing and (to the extent such concept applies to such entity) in good standing as a corporation, partnership or limited liability company in its jurisdiction of incorporation or organization, as the case may be, and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted where the failure to so maintain its authority could reasonably be expected to cause a Material Adverse Effect; provided that Subsidiaries may enter into mergers permitted by Section 6.12 and may (other than in the case of Borrowing Subsidiaries) be liquidated if such liquidation may not reasonably be expected to have a Material Adverse Effect.

     6.5 Taxes. The Parent will, and will cause each Subsidiary to, timely file complete and correct United States federal and applicable foreign, state and local tax returns required by law and pay when due all taxes, assessments and governmental charges and levies upon it or its income, profits or Property, except those which are being contested in good faith by appropriate proceedings and with

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respect to which adequate reserves have been set aside in accordance with Agreement Accounting Principles.

     6.6 Insurance. The Parent will, and will cause each Subsidiary to, maintain with financially sound and reputable insurance companies insurance on all their Property in such amounts and covering such risks as is consistent with sound business practice, and the Parent will furnish to any Lender upon request a summary of the insurance carried.

     6.7 Compliance with Laws. The Parent will, and will cause each Subsidiary to, comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject including, without limitation, all Environmental Laws, the failure to comply with which could reasonably be expected to have a Material Adverse Effect or for which the compliance is being contested in good faith by appropriate proceedings.

     6.8 Maintenance of Properties. The Parent will, and will cause each Subsidiary to, do all things necessary to maintain, preserve, protect and keep its Property in good repair, working order and condition, and make all necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times.

     6.9 Inspection. The Parent will, and will cause each Subsidiary to, permit the Agent, by its representatives and agents, to inspect any of the Property, books and financial records of the Parent and each Subsidiary, to examine and make copies of the books of accounts and other financial records of the Parent and each Subsidiary, and to discuss the affairs, finances and accounts of the Parent and each Subsidiary with, and to be advised as to the same by, their respective officers at such reasonable times and intervals as the Agent may designate The Agent shall give the Parent three (3) Business Days’ notice of each such inspection, shall schedule such inspections during normal business hours, shall conduct the inspection in a manner that does not unreasonably and materially interfere with the business operations of the Parent and its Subsidiaries, and if no Default has occurred and is continuing, shall conduct no more than one inspection during each calendar year. When no Default has occurred and is continuing, any such inspection or examination shall be at the Agent’s cost and expense. When a Default has occurred and is continuing, any such inspection or examination shall be at the Parent’s cost and expense.

     6.10 Capital Stock and Dividends. If a Default or Unmatured Default exists before or after giving effect thereto, the Parent will not, nor will it permit any Subsidiary to, (a) issue (except by a Subsidiary to the Parent or any Wholly-Owned Subsidiary) any preferred stock, other capital stock or any equity securities of any kind, in each case, subject to sinking fund payments or other mandatory redemptions or payments prior to the Facility Termination Date or (b) declare or pay any dividends or make any distributions on its capital stock (other than dividends payable in its own capital stock and dividends payable in cash to the Parent or a Wholly-Owned Subsidiary of the Parent) or redeem, repurchase or otherwise acquire or retire any of its capital stock at any time outstanding.

     6.11 Indebtedness.

          (a) The Parent will not, nor will it permit any Subsidiary to, create, incur or suffer to exist any Indebtedness, except (i) the Obligations (including the Reimbursement Obligations), (ii) Indebtedness which, in accordance with Agreement Accounting Principles is required to be shown on the balance sheet of such Person (other than Indebtedness owed by one of the Parent’s Wholly-Owned Subsidiaries to the Parent or to another Wholly-Owned Subsidiary), (iii) in an aggregate amount outstanding at any time not in excess of $100,000,000 constituting (A) Contingent Obligations in respect of a Person other than the Parent or another Subsidiary and (B) Attributable Debt as lessor or guarantor under Synthetic Leases or, without duplication, other Off-Balance Sheet Liabilities, and (iv) Attributable

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Debt as seller, originator, or guarantor under accounts or notes receivable financing or securitization programs in an aggregate amount outstanding at any time not in excess of $150,000,000.

          (b) Notwithstanding the foregoing, the Parent will not permit the Subsidiaries to create, incur or suffer to exist any Indebtedness (exclusive of any Indebtedness in the form of the Obligations and any Indebtedness owed to the Parent or to a Subsidiary) in an aggregate amount outstanding at any time in excess of the greater of (i) $200,000,000 and (ii) 15% of Consolidated Net Worth at such time; provided that, with respect to any Subsidiary acquired by the Parent (or by any Subsidiary) after the date of this Agreement, for purposes of calculating compliance with this Section 6.11(b), there shall be excluded from such calculation the amount of Indebtedness owed by any such Subsidiary prior to its acquisition, other than any Indebtedness created in anticipation of such acquisition, if the Parent provides to the Agent a balance sheet of such acquired Subsidiary as of a recent date evidencing the amount of such Indebtedness. To satisfy the foregoing requirement, any such balance sheet must be (A) audited by independent certified public accountants reasonably acceptable to the Agent or (B) if the Parent provides to the Agent the balance sheet of such acquired Subsidiary for the fiscal year of such Subsidiary then most recently ended, but such year end balance sheet is either (1) audited by independent certified public accountants not reasonably acceptable to the Agent or (2) audited by independent certified public accountants reasonably acceptable to the Agent, but not relating to a recent date as reasonably determined by the Agent, then reviewed by independent certified public accountants reasonably acceptable to the Agent.

     6.12 Merger. The Parent will not, nor will it permit any Subsidiary to, merge or consolidate with or into any other Person, except that (a) a Wholly-Owned Subsidiary may merge into the Parent or any Wholly-Owned Subsidiary of the Parent and (b) the Parent or any Subsidiary may merge or consolidate with any other Person, so long as immediately thereafter (and after giving effect thereto), (i) no Default or Unmatured Default exists, (ii) in the case of a merger or a consolidation involving the Parent, the Parent is the continuing or surviving corporation, and (iii) in the case of a merger or a consolidation involving a Borrowing Subsidiary, if such Subsidiary is not the continuing or surviving entity, then the continuing or surviving entity has agreed in writing to assume the obligations of such Subsidiary under the Loan Documents.

     6.13 Sale of Assets. The Parent will not, nor will it permit any Subsidiary to enter into any Asset Disposition from on and after the date of this Agreement, except for Asset Dispositions that in the aggregate do not constitute a Substantial Portion of the Property of the Parent and the Subsidiaries. Notwithstanding the foregoing, the Parent (or its Subsidiaries) may enter into and consummate an Asset Disposition that individually, or when aggregated with prior Asset Dispositions made after the date of this Agreement, would constitute a Substantial Portion of the Property of the Parent and its Subsidiaries if: (a) concurrently with its entering into such Asset Disposition, the Parent gives notice of its intent to (i) use the net cash proceeds from such Asset Disposition to replace the assets which are the subject of such disposition or (ii) otherwise reinvest such net cash proceeds in capital assets, (b) such replacement or reinvestment is completed within 180 days after the date the Parent (or its applicable Subsidiary) receives the net cash proceeds from the applicable Asset Disposition, and (c) the net proceeds received from such Asset Disposition equal or exceed (in the reasonable opinion of two Authorized Officers of the Parent) the fair market value of the Property transferred.

     6.14 Sale of Accounts. The Parent will not, nor will it permit any Subsidiary to, sell or otherwise dispose of any notes receivable or accounts receivable arising in the ordinary course of business on terms customary in the trade and which are due within 120 days after the invoice date, with or without recourse, other than in connection with accounts or notes receivable financing or securitization programs permitted under Section 6.11(a)(iv).

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     6.15 Liens. The Parent will not, nor will it permit any Subsidiary to, create, incur, or suffer to exist any Lien in, of or on the Property of the Parent or any of its Subsidiaries, except:

          (a) Liens for taxes, assessments or governmental charges or levies on its Property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings and for which adequate reserves in accordance with Agreement Accounting Principles shall have been set aside on its books.

          (b) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 60 days past due or which are being contested in good faith by appropriate proceedings and for which adequate reserves shall have been set aside on its books.

          (c) Liens arising out of pledges or deposits under worker’s compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation.

          (d) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of any Borrower or its Subsidiaries.

          (e) Liens existing on the date hereof and described in Schedule 2.

          (f) Liens other than those permitted by subsections (a) through (e) above securing Indebtedness not at any time exceeding in the aggregate 10% of Consolidated Net Worth.

     6.16 Affiliates. The Parent will not, and will not permit any Subsidiary to, enter into any transaction (including, without limitation, the purchase or sale of any Property or service) with, or make any payment or transfer to, any Affiliate except in the ordinary course of business and pursuant to the reasonable requirements of the Parent’s or such Subsidiary’s business and upon fair and reasonable terms no less favorable to the Parent or such Subsidiary than any Borrower or such Subsidiary would obtain in a comparable arms-length transaction.

     6.17 Environmental Matters. The Parent will, and will cause each Subsidiary to, (a) conduct its business so as to comply with all applicable material Environmental Laws and shall promptly take corrective action to remedy any non-compliance with any applicable material Environmental Law, except where failure to comply or take action could not reasonably be expected to have a Material Adverse Effect and (b) establish and maintain a management system designed to ensure compliance with applicable material Environmental Laws and minimize financial and other risks to the Parent and each Subsidiary arising under applicable material Environmental Laws or as the result of environmentally related injuries to Persons or Property. If the Agent or any Lender at any time has a reasonable basis to believe that there may be a material violation of any Environmental Law by the Parent or any of the Subsidiaries, or any material liability arising thereunder or related to a Release of Hazardous Materials on any real property owned, leased, or operated by any Borrower or any of the Subsidiaries or a Release on real property adjacent to such real property, then the Parent shall, upon the request of the Agent or such Lender, provide the Agent and each Lender with all such reports, certificates, engineering studies, and other written material or data relating thereto as the Agent or any Lender may reasonably require.

     6.18 Restrictions on Subsidiary Payments. The Parent shall not, nor shall it permit any Subsidiary to, enter into any indenture, agreement, instrument or other arrangement which, directly or

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indirectly, prohibits or restrains, or has the effect of prohibiting or restraining, or imposes materially adverse conditions upon the ability of any Subsidiary to (a) pay dividends or make other distributions on its capital stock, (b) make loans or advances to the Parent, or (c) repay loans or advances from the Parent.

     6.19 ERISA Compliance. With respect to any Plan, neither the Parent nor any Subsidiary shall (a) incur any “accumulated funding deficiency” (as such term is defined in Section 302 of ERISA) in excess of $25,000,000, whether or not waived; (b) permit the occurrence of any Termination Event which could result in a liability to any Borrower or any other member of the Controlled Group in excess of $25,000,000; (c) become an “employer” (as such term is defined in Section 3(5) of ERISA) required to contribute to any Multiemployer Plan or a “substantial employer” (as such term in defined in Section 4001(a)(2) of ERISA) required to contribute to any Multiemployer Plan under circumstances such that withdrawal from such Multiemployer Plan could reasonably be expected to have a Material Adverse Effect or a material adverse effect on the Parent or its ability to perform its obligations under this Agreement, the Guaranty or any other material Loan Document; or (d) permit the establishment or amendment of any Plan or fail to comply with the applicable provisions of ERISA and the Code with respect to any Plan, in each case, which could result in liability to any Borrower or any other member of a Controlled Group which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

     6.20 Financial Covenants. The Parent on a consolidated basis with the Subsidiaries:

          6.20.1 Coverage Ratio. As of the end of each fiscal quarter for the four fiscal quarters then ended, shall not permit the Coverage Ratio to be less than 3.00 to 1.0.

          6.20.2 Total Debt to Total Capitalization Ratio. Shall not permit the ratio of Total Debt to Total Capitalization to be greater than 60% at any time.

ARTICLE VII

DEFAULTS

     The occurrence of any one or more of the following events shall constitute a Default:

     7.1 Any representation or warranty made or deemed made by or on behalf of the Parent or any Material Subsidiary to the Lenders or the Agent under or in connection with this Agreement, any Credit Extension, or any certificate or information delivered in connection with this Agreement or any other Loan Document shall be materially false on the date as of which made.

     7.2 Nonpayment of (a) principal of any Loan (other than a Swing Line Loan) when due, (b) principal of any Swing Line Loan (i) within five Business Days of when due if the Aggregate Commitments minus the Aggregate Outstanding Credit Exposure (the “Availability”) on the date such principal payment is due is greater than or equal to the principal amount so due or (ii) when due if the Availability is less than the principal amount so due, (c) nonpayment of interest upon any Loan or of any Facility fee or usage fee, LC Fee, or other obligations under any of the Loan Documents within five days after the same becomes due, or (d) nonpayment of any Reimbursement Obligation within one Business Day after the same becomes due.

     7.3 The breach by any of the Borrowers of any of the terms or provisions of Sections 6.2, 6.3, 6.10 through 6.20.

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     7.4 The breach by any of the Borrowers (other than a breach which constitutes a Default under another Section of this Article VII) of any of the terms or provisions of this Agreement which is not remedied within 30 days after written notice from the Agent or any Lender.

     7.5 Failure of the Parent or any Material Subsidiary to pay when due any Indebtedness aggregating in excess of $75,000,000 (“Material Indebtedness”); or the default by the Parent or any Material Subsidiary in the performance (beyond the applicable grace period with respect thereto, if any) of any term, provision or condition contained in any agreement under which any such Material Indebtedness was created or is governed, or any other event shall occur or condition exist, the effect of which default or event or condition is to cause, or to permit the holder or holders of such Material Indebtedness to cause, such Material Indebtedness to become due prior to its stated maturity; or any Material Indebtedness of the Parent or any Material Subsidiary shall be declared to be due and payable or required to be prepaid or repurchased (other than by a regularly scheduled payment) prior to the stated maturity thereof; or the Parent or any Material Subsidiary shall not pay, or admit in writing its inability to pay, its debts generally as they become due.

     7.6 The Parent or any Material Subsidiary shall (a) have an order for relief entered with respect to it under the Federal bankruptcy laws (or comparable foreign laws) as now or hereafter in effect, (b) make an assignment for the benefit of creditors, (c) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any Substantial Portion of its Property, (d) institute any proceeding seeking an order for relief under the Federal bankruptcy laws (or comparable foreign laws) as now or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, (e) take any corporate or partnership action to authorize or effect any of the foregoing actions set out in this Section 7.6 or (f) fail to contest in good faith any appointment or proceeding described in Section 7.7.

     7.7 Without the application, approval or consent of the Parent or any Material Subsidiary a receiver, trustee, examiner, liquidator or similar official shall be appointed for the Parent or any Material Subsidiary or any Substantial Portion of its Property, or a proceeding described in Section 7.6(d) shall be instituted against the Parent or any Material Subsidiary and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of 60 consecutive days.

     7.8 Any court, government or governmental agency shall condemn, seize or otherwise appropriate, or take custody or control of, all or any portion of the Property of the Parent and its Material Subsidiaries which, when taken together with all other Property of the Parent and its Material Subsidiaries so condemned, seized, appropriated, or taken custody or control of, during the twelve-month period ending with the month in which any such action occurs, constitutes a Substantial Portion.

     7.9 The Parent or any Material Subsidiary shall fail within 30 days to pay, bond or otherwise discharge one or more (a) judgments or orders for the payment of money in excess of $25,000,000 (or multiple judgments or orders for the payment of an aggregate amount in excess of $50,000,000) (or the equivalent thereof in currencies other than U.S. Dollars) in the aggregate, or (b) nonmonetary judgments or orders which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect, which judgment(s), in any such case, is/are not stayed on appeal or otherwise being appropriately contested in good faith.

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     7.10 The Unfunded Liabilities of all Single Employer Plans shall exceed in the aggregate $50,000,000 or any Reportable Event that could reasonably be expected to have a Material Adverse Effect shall occur in connection with any Plan.

     7.11 The Parent or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer Plan that it has incurred withdrawal liability to such Multiemployer Plan in an amount which, when aggregated with all other amounts required to be paid to Multiemployer Plans by the Parent or any other member of the Controlled Group as withdrawal liability (determined as of the date of such notification), exceeds $25,000,000 or requires payments exceeding $10,000,000 per annum.

     7.12 The Parent or any other member of the Controlled Group shall have been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or is being terminated, within the meaning of Title IV of ERISA, if as a result of such reorganization or termination the aggregate annual contributions of any Borrower and the other members of the Controlled Group (taken as a whole) to all Multiemployer Plans which are then in reorganization or being terminated have been or will be increased over the amounts contributed to such Multiemployer Plans for the respective plan years of each such Multiemployer Plan immediately preceding the plan year in which the reorganization or termination occurs by an amount exceeding $25,000,000.

     7.13 The Parent or any of its Subsidiaries shall (a) be the subject of any proceeding or investigation pertaining to the release by the Borrower, any of its Subsidiaries or any other Person of any toxic or hazardous waste or substance into the environment, or (b) violate any Environmental Law, which, in the case of an event described in clause (a) or clause (b), could reasonably be expected to have a Material Adverse Effect.

     7.14 Any Change in Control shall occur.

     7.15 The occurrence of any “default” under any Loan Document (other than this Agreement) or the breach of any of the terms or provisions of any Loan Document (other than this Agreement), which default or breach continues beyond any period of grace therein provided.

     7.16 The Guaranty shall fail to remain in full force or effect or any action shall be taken to discontinue or to assert the invalidity or unenforceability of the Guaranty, or the Parent shall fail to comply with any of the material terms or provisions of the Guaranty to which it is a party, or the Guarantor shall deny that it has any further liability under the Guaranty, or shall give notice to such effect.

ARTICLE VIII

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

     8.1 Acceleration; Facility LC Collateral Account. (a) If any Default described in Section 7.6 or Section 7.7 occurs with respect to any Borrower, the obligations of the Lenders to make Loans hereunder and the obligation and power of the LC Issuers to issue Facility LCs shall automatically terminate and the Obligations shall immediately become due and payable without any election or action on the part of the Agent, any LC Issuer, or any Lender and the Borrowers will be and become thereby unconditionally obligated, without any further notice, act or demand, to pay to the Agent an amount determined as set forth below in immediately available funds, which funds shall be held in the Facility LC Collateral Account. The Agent shall determine the difference of (i) the amount of LC Obligations at such time (other than LC Obligations with respect to Bank Guaranties), less (ii) the amount on deposit in the Facility LC Collateral Account at such time which is free and clear of all rights and claims of third parties and has not been applied against the Obligations (such difference, the “Collateral Shortfall Amount”).

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The Borrowers will pay to the Agent, for deposit in the Facility LC Collateral Account, either (y) the Collateral Shortfall Amount in the applicable Agreed Currency or Currencies or (z) an amount equal to 110% of the Dollar Amount of the Collateral Shortfall Amount (calculated as of the applicable Computation Date) in Dollars, as elected by the Parent. If any Default other than a Default under Section 7.6 or Section 7.7 exists, the Required Lenders (or the Agent with the consent of the Required Lenders) may (A) terminate or suspend the obligations of the Lenders to make Loans hereunder and the obligation and power of the LC Issuers to issue Facility LCs, or declare the Obligations to be due and payable, or both, whereupon the Obligations shall become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which each of the Borrowers hereby expressly waives, and (B) upon notice to the Borrowers and in addition to the continuing right to demand payment of all amounts payable under this Agreement, make demand on the Borrowers to pay, and the Borrowers will, forthwith upon demand (and without any further notice or act), pay to the Agent either (y) the Collateral Shortfall Amount in the applicable Agreed Currency or Currencies or (z) an amount equal to 110% of the Dollar Amount of the Collateral Shortfall Amount (calculated as of the applicable Computation Date) in Dollars, as elected by the Parent, which funds shall be deposited in the Facility LC Collateral Account.

          (b) If at any time while any Default is continuing, the Agent determines that the Collateral Shortfall Amount at such time is greater than zero, the Agent may make demand on the Borrowers to pay, and the Borrowers will, forthwith upon such demand and without any further notice or act, pay to the Agent either (y) the Collateral Shortfall Amount in the applicable (as determined by the Agent) Agreed Currency or Currencies or (z) an amount equal to 110% of the Dollar Amount of the Collateral Shortfall Amount (calculated as of the applicable Computation Date) in Dollars, as elected by the Parent, which funds shall be deposited in the Facility LC Collateral Account.

          (c) So long as any Facility LC is outstanding, amounts deposited in the Facility LC Collateral Account, if any, shall only be applied by the Agent to the payment of Reimbursement Obligations and LC Fees that are due and payable. If no Facility LC remains outstanding, and the Facility Termination Date has occurred or a Default is continuing, the Agent may apply the remaining amounts deposited in the Facility LC Collateral Account, if any, to the payment of the Obligations and any other amounts as shall from time to time have become due and payable by the Borrowers to the Lenders or the LC Issuers under the Loan Documents. If, following the deposit of cash collateral pursuant to this Section 8.1, all Defaults are cured or waived and no Default is continuing, the remaining amounts deposited in the Facility LC Collateral Account, if any, shall be returned to the Borrowers to the extent such cash collateral is not otherwise expressly required under the terms of this Agreement.

          (d) At any time while any Default is continuing, neither the Borrowers nor any Person claiming on behalf of or through the Borrowers shall have any right to withdraw any of the funds held in the Facility LC Collateral Account. After all of the Obligations have been indefeasibly paid in full and the Aggregate Commitment has been terminated, any funds remaining in the Facility LC Collateral Account shall be returned by the Agent to the Borrowers or paid to whomever may be legally entitled thereto at such time.

          (e) If, within 30 days after acceleration of the maturity of the Obligations or termination of the obligations of the Lenders to make Loans and the obligation and the power of LC Issuers to issue Facility LCs hereunder as a result of any Default (other than any Default as described in Section 7.6 or 7.7 with respect to any Borrower) and before any judgment or decree for the payment of the Obligations due have been obtained or entered, the Required Lenders (in their sole discretion) so direct, the Agent shall, by notice to the Borrowers, rescind and annul such acceleration and/or termination and the Agent shall promptly release all or part of the cash collateral, as applicable, to the Borrowers to the extent such cash collateral is not otherwise required under the terms of this Agreement.

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     8.2 Amendments. Subject to the provisions of this Article VIII, the Required Lenders (or the Agent with the consent in writing of the Required Lenders) and the Borrowers may enter into agreements supplemental hereto for the purpose of adding or modifying any provisions to the Loan Documents or changing in any manner the rights of the Lenders or any Borrower hereunder or waiving any Default hereunder; provided that no such supplemental agreement shall, without the consent of all of the Lenders:

          (a) Extend the final maturity of any Loan, or forgive all or any portion of any Reimbursement Obligation or the principal amount of any Loan, or reduce the rate or extend the time of payment of interest or fees on any Loan or any Reimbursement Obligations.

          (b) Reduce the percentage specified in the definition of Required Lenders or otherwise change the percentage of Lenders which shall be required for the Lenders or any of them to take any action hereunder or under any other Loan Document, or amend the definition of Pro Rata Share or the provisions of Section 11.2.

          (c) Extend the Facility Termination Date, permit any Facility LC to have an expiration date later than 4 years from its date of issuance, or reduce the amount or extend the payment date for, the mandatory payments required under Section 2.2.

          (d) Increase the amount of the Aggregate Commitment, the Commitment of any Lender hereunder or the commitment to issue Facility LCs, other than as expressly permitted under Section 2.27.

          (e) Amend this Section 8.2.

          (f) Release, in whole or in part, the Parent under the Guaranty.

          (g) Permit any assignment by any of the Borrowers of their respective Obligations or their rights hereunder.

          (h) Release all or any substantial portion of any cash collateral provided pursuant to this Agreement (other than in accordance with the terms of this Agreement), or waive the Borrowers’ obligation to provide cash collateral pursuant to Section 2.26.11.

No amendment of any provision of this Agreement relating to the Agent shall be effective without the written consent of the Agent, and no amendment or any provision relating to the LC Issuers shall be effective without the written consent of each of the LC Issuers. No amendment of any provision of this Agreement relating to any Swing Line Lender or any Swing Line Loans shall be effective without the written consent of the applicable Swing Line Lender(s). The Agent may waive payment of the fee required under Section 12.3.2 without obtaining the consent of any other party to this Agreement.

     8.3 Preservation of Rights. No delay or omission of the Lenders, the LC Issuers, or the Agent to exercise any right under the Loan Documents shall impair such right or be construed to be a waiver of any Default or an acquiescence therein, and the making of a Credit Extension notwithstanding the existence of a Default or the inability of any Borrower to satisfy the conditions precedent to such Credit Extension shall not constitute any waiver or acquiescence. Any single or partial exercise of any such right shall not preclude other or further exercise thereof or the exercise of any other right, and no waiver, amendment or other variation of the terms, conditions or provisions of the Loan Documents whatsoever shall be valid unless in writing signed by the Lenders required pursuant to Section 8.2, and then only to the extent in such writing specifically set out. All remedies contained in the Loan

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Documents or by law afforded shall be cumulative and all shall be available to the Agent, the LC Issuers, and the Lenders until the Obligations have been paid in full.

ARTICLE IX

GENERAL PROVISIONS

     9.1 Survival of Representations. All claims arising out of or relating to the representations and warranties of the Borrowers contained in this Agreement (and the bases giving rise to such claims) shall survive the making of the Credit Extensions herein contemplated.

     9.2 Governmental Regulation. Anything contained in this Agreement to the contrary notwithstanding, neither any LC Issuer nor any Lender shall be obligated to extend credit to any Borrower in violation of any limitation or prohibition provided by any applicable statute or regulation.

     9.3 Headings. Section headings in the Loan Documents are for convenience of reference only, and shall not govern the interpretation of any of the provisions of the Loan Documents.

     9.4 Entire Agreement. The Loan Documents embody the entire agreement and understanding among the Borrowers, the Agent, the LC Issuers, and the Lenders and supersede all prior agreements and understandings among the Borrowers, the Agent, the LC Issuers, and the Lenders relating to the subject matter thereof other than the Fee Letter.

     9.5 Several Obligations; Benefits of this Agreement. The respective obligations of the Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which the Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns, provided, however, that the parties hereto expressly agree that the Arranger shall enjoy the benefits of the provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set forth therein and shall have the right to enforce such provisions on its own behalf and in its own name to the same extent as if it were a party to this Agreement.

     9.6 Expenses; Indemnification. (a) The Parent shall reimburse the Agent and the Arranger for any costs and reasonable out-of-pocket expenses (including attorneys’ fees of such Persons) paid or incurred by the Agent or the Arranger in connection with the preparation, negotiation, execution, delivery, syndication, distribution (including, without limitation, via the internet), review, amendment, modification, and administration of the Loan Documents. The Parent also agrees to reimburse the Agent, the Arranger, the LC Issuers, and the Lenders for any costs and out-of-pocket expenses (including attorneys’ fees of such Persons) paid or incurred by the Agent, the Arranger, any LC Issuer, or any Lender in connection with the collection and enforcement of the Loan Documents. Expenses being reimbursed by the Parent under this Section 9.6 include, without limitation, costs and expenses incurred in connection with the Reports described in the following sentence. The Parent acknowledges that from time to time Agent may prepare and may distribute to the Lenders (but shall have no obligation or duty to prepare or to distribute to the Lenders) certain audit reports (the “Reports”) pertaining to the Parent’s and its Subsidiaries’ assets for internal use by Agent from information furnished to it by or on behalf of the Parent, after Agent has exercised its rights of inspection pursuant to this Agreement.

          (b) Each of the Borrowers hereby further agrees to indemnify the Agent, the Arranger, each LC Issuer, each Lender, their respective affiliates, and each of their directors, officers and

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employees against all losses, claims, damages, penalties, judgments, liabilities and expenses (including, without limitation, all expenses of litigation or preparation therefor whether or not the Agent, the Arranger, any LC Issuer, any Lender or any affiliate is a party thereto) which any of them may pay or incur arising out of or relating to this Agreement, the other Loan Documents, the transactions contemplated hereby or the direct or indirect application or proposed application of the proceeds of any Loan hereunder except to the extent that they are determined in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the party seeking indemnification. The obligations of the Borrowers under this Section 9.6 shall survive the termination of this Agreement.

          (c) Each Person claiming a right to indemnification under this Section 9.6 shall promptly give the Parent written notice of receipt by such Person of notice of the commencement of any action, suit or proceeding and the Parent (or any applicable Borrower) shall have the right, but not the obligation to participate in the defense of such action. Notwithstanding the foregoing, the failure of any such Person to so notify the Parent promptly of any such action, suit, or proceeding shall not relieve the indemnifying party from any liability that it may have to the indemnified party hereunder, except to the extent that such failure has a material adverse effect on the indemnifying party’s ability to defend such claim. The Parent (or applicable Borrower) may participate in a reasonable manner at its own expense and with its own counsel in any proceeding conducted by any Borrower in accordance with the foregoing.

               (i) The indemnified party shall consult in good faith with the indemnifying party and its counsel with respect to the defense and shall keep the indemnifying party reasonably informed as to the progress of the defense. The Agent shall supply the Parent (or applicable Borrower) with such information and documents reasonably requested by the Parent (or applicable Borrower) as are necessary or advisable for the Parent (or applicable Borrower) to participate in any action, suit or proceeding.

               (ii) Except during the existence of a Default, no indemnified party shall enter into any settlement or other compromise with respect to any claim which is entitled to be indemnified under this Agreement if such settlement or compromise would result in any payment hereunder without the prior written consent of the Parent (or applicable Borrower), which consent shall not be unreasonably withheld.

               (iii) Upon payment in full of any claim by the Parent (or applicable Borrower) pursuant to this Agreement, to or on behalf of the Agent, the Arranger, the LC Issuer, any Lender or their respective Affiliates, the Parent (or applicable Borrower), without any further action, shall be subrogated to any and all claims that such indemnified party may have relating thereto (other than claims in respect of insurance policies maintained by such indemnified party at its own expense) and such indemnified party shall execute at its own expense such instruments of assignment and conveyance, evidence of claims and payment and such other documents, instruments and agreements as may be necessary to preserve any such claims and otherwise cooperate with the Parent (or applicable Borrower) and give such further assurances as are necessary or advisable to enable the Parent (or applicable Borrower) to vigorously pursue such claims.

     9.7 Numbers of Documents. All statements, notices, closing documents, and requests hereunder shall be furnished to the Agent with sufficient counterparts so that the Agent may furnish one to each of the Lenders.

     9.8 Accounting. Except as provided to the contrary herein, all accounting terms used herein shall be interpreted and all accounting determinations hereunder shall be made in accordance with

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Agreement Accounting Principles, except that any calculation or determination which is to be made on a consolidated basis shall be made for the Parent and all its Subsidiaries, including those Subsidiaries, if any, which are unconsolidated on the Borrower’s audited financial statements. If at any time any change in generally accepted accounting principles would affect the computation of any financial ratio or requirement set out in any Loan Document, and Borrowers shall so request, Agent, Lenders and Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in generally accepted accounting principles (subject to the approval of the Required Lenders); provided that, until so amended, such ratio or requirement shall continue to be computed in the same manner as it was computed prior to such change.

     9.9 Severability of Provisions. Any provision in any Loan Document that is held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions in that jurisdiction or the operation, enforceability, or validity of that provision in any other jurisdiction, and to this end the provisions of all Loan Documents are declared to be severable.

     9.10 Nonliability of Lenders. The relationship between each of the Borrowers on the one hand and the Lenders, the LC Issuers, and the Agent on the other hand shall be solely that of borrower and lender. Neither the Agent, the Arranger, any LC Issuer, nor any Lender shall have any fiduciary responsibilities to any Borrower. None of the Agent, the Arranger, any LC Issuer, or any Lender undertakes any responsibility to any Borrower to review or inform any Borrower of any matter in connection with any phase of any Borrower’s business or operations. Each of the Borrowers agrees that none of the Agent, the Arranger, any LC Issuer, or any Lender shall have liability to any Borrower (whether sounding in tort, contract or otherwise) for losses suffered by any Borrower in connection with, arising out of, or in any way related to, the transactions contemplated and the relationship established by the Loan Documents, or any act, omission or event occurring in connection therewith, unless it is determined in a final non-appealable judgment by a court of competent jurisdiction that such losses resulted from the gross negligence or willful misconduct of the party from which recovery is sought. None of the Agent, the Arranger, any LC Issuer, or any Lender shall have any liability with respect to, and each of the Borrowers hereby waives, releases and agrees not to sue for, any special, indirect, consequential or punitive damages suffered by any Borrower in connection with, arising out of, or in any way related to the Loan Documents or the transactions contemplated thereby.

     9.11 Confidentiality. Each Lender agrees that any confidential information which it may receive from any Borrower pursuant to this Agreement will be used only for purposes of this Agreement and will not be disclosed to any of its directors, officers or employees, or to any other Person except for disclosure (which, in the case of any disclosure pursuant to (d), (e), (f), or (g) shall be accompanied by a written notice that such information is subject to this Section 9.11) (a) to its Affiliates and to other Lenders and their respective Affiliates, (b) to legal counsel, accountants, and other professional advisors to such Lender or to a Transferee, (c) to regulatory officials, (d) to any Person as requested pursuant to or as required by law, regulation, or legal process, (e) to any Person in connection with any legal proceeding to which such Lender is a party, (f) to such Lender’s direct or indirect contractual counterparties in swap agreements or to legal counsel, accountants and other professional advisors to such counterparties, and (g) permitted by Section 12.4. Notwithstanding anything herein to the contrary, confidential information shall not include, and each Lender (and each employee, representative or other agent of any Lender) may disclose to any and all Persons, without limitation of any kind, the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are or have been provided to such Lender relating to such tax treatment or tax structure; provided that with respect to any document or similar item that in either case contains information concerning such tax treatment or tax

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structure of the transactions contemplated hereby as well as other information, this sentence shall only apply to such portions of the document or similar item that relate to such tax treatment or tax structure.

     9.12 Nonreliance. Each Lender hereby represents that it is not relying on or looking to any margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System) for the repayment of the Credit Extensions provided for herein.

     9.13 Disclosure. Each of the Borrowers and each Lender hereby (a) acknowledge and agree that Agent and/or its Affiliates from time to time may hold investments in, make other loans to or have other relationships with any Borrower and its Affiliates and (b) waive any liability of Agent or such Affiliate to any Borrower or any Lender, respectively, arising out of resulting from such investments, loans or relationships other than liabilities arising out of the gross negligence or willful misconduct of Agent or its Affiliates.

ARTICLE X

THE AGENT

     10.1 Appointment; Nature of Relationship. Bank One, NA is hereby appointed by each of the Lenders as its contractual representative (herein referred to as the “Agent”) hereunder and under each other Loan Document, and each of the Lenders irrevocably authorizes the Agent to act as the contractual representative of such Lender with the rights and duties expressly set out herein and in the other Loan Documents. The Agent agrees to act as such contractual representative upon the express conditions contained in this Article X. Notwithstanding the use of the defined term “Agent,” it is expressly understood and agreed that the Agent shall not have any fiduciary responsibilities to any Lender by reason of this Agreement or any other Loan Document and that the Agent is merely acting as the contractual representative of the Lenders with only those duties as are expressly set out in this Agreement and the other Loan Documents. In its capacity as the Lenders’ contractual representative, the Agent (a) does not hereby assume any fiduciary duties to any of the Lenders, (b) is a “representative” of the Lenders within the meaning of Section 9-105 of the Uniform Commercial Code and (c) is acting as an independent contractor, the rights and duties of which are limited to those expressly set out in this Agreement and the other Loan Documents. Each of the Lenders hereby agrees to assert no claim against the Agent on any agency theory or any other theory of liability for breach of fiduciary duty, all of which claims each Lender hereby waives.

     10.2 Powers. The Agent shall have and may exercise such powers under the Loan Documents as are specifically delegated to the Agent by the terms of each thereof, together with such powers as are reasonably incidental thereto. The Agent shall have no implied duties to the Lenders, or any obligation to the Lenders to take any action thereunder except any action specifically provided by the Loan Documents to be taken by the Agent.

     10.3 General Immunity. Neither the Agent nor any of its directors, officers, agents or employees shall be liable to the Borrower, the Lenders or any Lender for any action taken or omitted to be taken by it or them hereunder or under any other Loan Document or in connection herewith or therewith except to the extent such action or inaction is determined in a final non-appealable judgment by a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Person.

     10.4 No Responsibility for Loans, Recitals, etc. Neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into, or verify

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(a) any statement, warranty or representation made in connection with any Loan Document or any borrowing hereunder; (b) the performance or observance of any of the covenants or agreements of any obligor under any Loan Document, including, without limitation, any agreement by an obligor to furnish information directly to each Lender; (c) the satisfaction of any condition specified in Article IV, except receipt of items required to be delivered solely to the Agent; (d) the existence or possible existence of any Default or Unmatured Default; (e) the validity, enforceability, effectiveness, sufficiency or genuineness of any Loan Document or any other instrument or writing furnished in connection therewith; (f) the value, sufficiency, creation, perfection or priority of any Lien in any collateral security; or (g) the financial condition of any Borrower or any guarantor of any of the Obligations or of any of the Borrower’s or any such guarantor’s respective Subsidiaries. The Agent shall have no duty to disclose to the Lenders information that is not required to be furnished by any Borrower to the Agent at such time, but is voluntarily furnished by any Borrower to the Agent (either in its capacity as Agent or in its individual capacity).

     10.5 Action on Instructions of Lenders. The Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder and under any other Loan Document in accordance with written instructions signed by the Required Lenders, and such instructions and any action taken or failure to act pursuant thereto shall be binding on all of the Lenders. The Lenders hereby acknowledge that the Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement or any other Loan Document unless it shall be requested in writing to do so by the Required Lenders. The Agent shall be fully justified in failing or refusing to take any action hereunder and under any other Loan Document unless it shall first be indemnified to its satisfaction by the Lenders pro rata against any and all liability, cost and expense that it may incur by reason of taking or continuing to take any such action.

     10.6 Employment of Agents and Counsel. The Agent may execute any of its duties as Agent hereunder and under any other Loan Document by or through employees, agents, and attorneys-in-fact and shall not be answerable to the Lenders, except as to money or securities received by it or its authorized agents, for the default or misconduct of any such agents or attorneys-in-fact selected by it with reasonable care. The Agent shall be entitled to advice of counsel concerning the contractual arrangement between the Agent and the Lenders and all matters pertaining to the Agent’s duties hereunder and under any other Loan Document.

     10.7 Reliance on Documents; Counsel. The Agent shall be entitled to rely upon any Note, notice, consent, certificate, affidavit, letter, telegram, statement, paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and, in respect to legal matters, upon the opinion of counsel selected by the Agent, which counsel may be employees of the Agent.

     10.8 Agent’s Reimbursement and Indemnification. The Lenders agree to reimburse and indemnify the Agent ratably in proportion to their respective Commitments (or, if the Commitments have been terminated, in proportion to their Commitments immediately prior to such termination) (a) for any amounts not reimbursed by the Borrowers for which the Agent is entitled to reimbursement by the Borrowers under the Loan Documents, (b) for any other expenses incurred by the Agent on behalf of the Lenders, in connection with the preparation, execution, delivery, administration and enforcement of the Loan Documents (including, without limitation, for any expenses incurred by the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders) and (c) for any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of the Loan Documents or any other document delivered in connection therewith or the transactions contemplated thereby (including, without limitation,

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for any such amounts incurred by or asserted against the Agent in connection with any dispute between the Agent and any Lender or between two or more of the Lenders), or the enforcement of any of the terms of the Loan Documents or of any such other documents, provided that (i) no Lender shall be liable for any of the foregoing to the extent any of the foregoing is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Agent and (ii) any indemnification required pursuant to Section 3.5(g) shall, notwithstanding the provisions of this Section 10.8, be paid by the relevant Lender in accordance with the provisions thereof. The obligations of the Lenders under this Section 10.8 shall survive payment of the Obligations and termination of this Agreement.

     10.9 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Unmatured Default hereunder unless the Agent has received written notice from a Lender or any Borrower referring to this Agreement describing such Default or Unmatured Default and stating that such notice is a “notice of default”. In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Lenders.

     10.10 Rights as a Lender. In the event the Agent is a Lender, the Agent shall have the same rights and powers hereunder and under any other Loan Document with respect to its Commitment and its Loans as any Lender and may exercise the same as though it were not the Agent, and the term “Lender” or “Lenders” shall, at any time when the Agent is a Lender, unless the context otherwise indicates, include the Agent in its individual capacity. The Agent and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of trust, debt, equity or other transaction, in addition to those contemplated by this Agreement or any other Loan Document, with any Borrower or any of their respective Subsidiaries in which any Borrower or such Subsidiary is not restricted hereby from engaging with any other Person. The Agent, in its individual capacity, is not obligated to remain a Lender.

     10.11 Lender Credit Decision. Each Lender acknowledges that it has, independently and without reliance upon the Agent, the Arranger or any other Lender and based on the financial statements prepared by the Parent and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement and the other Loan Documents. Each Lender also acknowledges that it will, independently and without reliance upon the Agent, the Arranger or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement and the other Loan Documents.

     10.12 Successor Agent. The Agent may resign at any time by giving written notice thereof to the Lenders and the Borrowers, such resignation to be effective upon the appointment of a successor Agent or, if no successor Agent has been appointed, forty-five days after the retiring Agent gives notice of its intention to resign. The Agent may be removed at any time with or without cause by written notice received by the Agent from the Required Lenders, such removal to be effective on the date specified by the Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right to appoint, on behalf of the Borrowers and the Lenders, a successor Agent (with the consent of the Parent which shall not be unreasonably withheld). If no successor Agent shall have been so appointed by the Required Lenders within thirty days after the resigning Agent’s giving notice of its intention to resign, then the resigning Agent may appoint, on behalf of the Borrowers and the Lenders, a successor Agent. Notwithstanding the previous sentence, the Agent may at any time without the consent of any Borrower or any Lender, appoint any of its Affiliates which is a commercial bank as a successor Agent hereunder. If the Agent has resigned or been removed and no successor Agent has been appointed, the Lenders may perform all the duties of the Agent hereunder and the Borrowers shall make all payments in respect of the Obligations to the applicable Lender and for all other purposes shall deal directly with the Lenders. No successor Agent shall be deemed to be appointed hereunder until such successor Agent has accepted the

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appointment. Any such successor Agent shall be a commercial bank having capital and retained earnings of at least $100,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the resigning or removed Agent. Upon the effectiveness of the resignation or removal of the Agent, the resigning or removed Agent shall be discharged from its duties and obligations hereunder and under the Loan Documents. After the effectiveness of the resignation or removal of an Agent, the provisions of this Article X shall continue in effect for the benefit of such Agent in respect of any actions taken or omitted to be taken by it while it was acting as the Agent hereunder and under the other Loan Documents. In the event that there is a successor to the Agent by merger, or the Agent assigns its duties and obligations to an Affiliate pursuant to this Section 10.12, then the term “Prime Rate” as used in this Agreement shall mean the prime rate, base rate or other analogous rate of the new Agent.

     10.13 Agent and Arranger Fees. The Parent agrees to pay to the Agent and the Arranger, for their respective accounts, the fees agreed to by any Borrower, the Agent and the Arranger pursuant to the Fee Letter, or as otherwise agreed from time to time.

     10.14 Delegation to Affiliates. Each of the Borrowers and the Lenders agree that the Agent may delegate any of its duties under this Agreement to any of its Affiliates. Any such Affiliate (and such Affiliate’s directors, officers, agents and employees) which performs duties in connection with this Agreement shall be entitled to the same benefits of the indemnification, waiver and other protective provisions to which the Agent is entitled under Articles IX and X.

     10.15 Co-Agents, Documentation Agent, Syndication Agent, etc.. Neither any of the Lenders identified in this Agreement as a “co-agent” nor any Documentation Agent or the Syndication Agent shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Without limiting the foregoing, none of such Lenders shall have or be deemed to have a fiduciary relationship with any Lender. Each Lender hereby makes the same acknowledgments with respect to such Lenders as it makes with respect to the Agent in Section 10.11.

ARTICLE XI

SETOFF; RATABLE PAYMENTS

     11.1 Setoff. In addition to, and without limitation of, any rights of the Lenders under applicable law, if any Borrower becomes insolvent, however evidenced, or any Default occurs, any and all deposits (including all account balances, whether provisional or final and whether or not collected or available) and any other Indebtedness at any time held or owing by any Lender or any Affiliate of any Lender to or for the credit or account of such Borrower may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part thereof, shall then be due.

     11.2 Ratable Payments. If any Lender, whether by setoff or otherwise, has payment made to it upon its Outstanding Credit Exposure (other than payments received pursuant to Section 3.1, 3.2, 3.4 or 3.5) in a greater proportion than that received by any other Lender, such Lender agrees, promptly upon demand, to purchase a portion of the Aggregate Outstanding Credit Exposure held by the other Lenders so that after such purchase each Lender will hold its Pro Rata Share of the Aggregate Outstanding Credit Exposure. If any Lender, whether in connection with setoff or amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which may be subject to setoff, such Lender agrees, promptly upon demand, to take such action necessary such that all Lenders share in the benefits of such collateral ratably in proportion to their respective Pro Rata Share of

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the Aggregate Outstanding Credit Exposure. In case any such payment is disturbed by legal process, or otherwise, appropriate further adjustments shall be made.

     If an amount to be setoff is to be applied to Indebtedness of any Borrower to a Lender other than Indebtedness comprised of the Outstanding Credit Exposure of such Lender, such amount shall be applied ratably to such other Indebtedness and to the Indebtedness comprised of such Outstanding Credit Exposure.

ARTICLE XII

BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

     12.1 Successors and Assigns. The terms and provisions of the Loan Documents shall be binding upon and inure to the benefit of the Borrowers and the Lenders and their respective successors and assigns, except that (a) none of the Borrowers shall have the right to assign its rights or obligations under the Loan Documents and (b) any assignment by any Lender must be made in compliance with Section 12.3. The parties to this Agreement acknowledge that clause (b) of this Section 12.1 relates only to absolute assignments and does not prohibit assignments creating security interests, including, without limitation, (i) any pledge or assignment by any Lender of all or any portion of its rights under this Agreement and any Note to a Federal Reserve Bank or (ii) in the case of a Lender which is a fund, any pledge or assignment of all or any portion of its rights under this Agreement and any Note to its trustee in support of its obligations to its trustee; provided that no such pledge or assignment creating a security interest shall release the transferor Lender from its obligations hereunder unless and until the parties thereto have complied with the provisions of Section 12.3. The Agent may treat the Person which made any Loan or which holds any Note as the owner thereof for all purposes hereof unless and until such Person complies with Section 12.3; provided that the Agent may in its discretion (but shall not be required to) follow instructions from the Person which made any Loan or which holds any Note to direct payments relating to such Loan or Note to another Person. Any assignee of the rights to any Loan or any Note agrees by acceptance of such assignment to be bound by all the terms and provisions of the Loan Documents. Any request, authority or consent of any Person, who at the time of making such request or giving such authority or consent is the owner of the rights to any Loan (whether or not a Note has been issued in evidence thereof), shall be conclusive and binding on any subsequent holder or assignee of the rights to such Loan.

     12.2 Participations.

          12.2.1 Permitted Participants; Effect. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time sell to one or more banks or other entities (“Participants”) participating interests in any Outstanding Credit Exposure of such Lender, any Note held by such Lender, any Commitment of such Lender or any other interest of such Lender under the Loan Documents. In the event of any such sale by a Lender of participating interests to a Participant, such Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the owner of its Outstanding Credit Exposure and the holder of any Note issued to it in evidence thereof for all purposes under the Loan Documents, all amounts payable by the Borrowers under this Agreement shall be determined as if such Lender had not sold such participating interests, and the Borrowers and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under the Loan Documents.

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          12.2.2 Voting Rights. Each Lender shall retain the sole right to approve, without the consent of any Participant, any amendment, modification or waiver of any provision of the Loan Documents other than any amendment, modification or waiver with respect to any Credit Extension or Commitment in which such Participant has an interest which would require consent of all of the Lenders pursuant to the terms of Section 8.2 or of any other Loan Document.

          12.2.3 Benefit of Setoff. Each Borrower agrees that each Participant shall be deemed to have the right of setoff provided in Section 11.1 in respect of its participating interest in amounts owing under the Loan Documents to the same extent as if the amount of its participating interest were owing directly to it as a Lender under the Loan Documents, provided that each Lender shall retain the right of setoff provided in Section 11.1 with respect to the amount of participating interests sold to each Participant. The Lenders agree to share with each Participant, and each Participant, by exercising the right of setoff provided in Section 11.1, agrees to share with each Lender, any amount received pursuant to the exercise of its right of setoff, such amounts to be shared in accordance with Section 11.2 as if each Participant were a Lender.

     12.3 Assignments.

          12.3.1 Permitted Assignments. Any Lender may, in the ordinary course of its business and in accordance with applicable law, at any time assign to one or more Eligible Assignees all or any part of its rights and obligations under the Loan Documents. Such assignment shall be substantially in the form of Exhibit C or in such other form as may be agreed to by the parties thereto. The consent of the Parent and the Agent and the LC Issuers shall be required prior to an assignment becoming effective with respect to an Eligible Assignee which is not a Lender or an Affiliate thereof; provided that if a Default has occurred and is continuing, the consent of the Parent shall not be required. Such consent shall not be unreasonably withheld or delayed. Each such assignment with respect to an Eligible Assignee which is not a Lender or an Affiliate thereof shall (unless each of the Parent and the Agent otherwise consent) be in an amount not less than the lesser of (a) $5,000,000 or (b) the remaining amount of the assigning Lender’s Commitment (calculated as at the date of such assignment) or outstanding Loans (if the applicable Commitment has been terminated).

          12.3.2 Effect; Effective Date. Upon (a) delivery to the Agent of an assignment, together with any consents required by Section 12.3.1, and (b) payment of a $4,000 fee to the Agent for processing such assignment (unless such fee is waived by the Agent), such assignment shall become effective on the effective date specified in such assignment. The assignment shall contain a representation by the assignee to the effect that none of the consideration used to make the purchase of the Commitment and Outstanding Credit Exposure under the applicable assignment agreement constitutes “plan assets” as defined under ERISA and that the rights and interests of the assignee in and under the Loan Documents will not be “plan assets” under ERISA. On and after the effective date of such assignment, such assignee shall for all purposes be a Lender party to this Agreement and any other Loan Document executed by or on behalf of the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party hereto, and no further consent or action by the Borrower, the Lenders or the Agent shall be required to release the transferor Lender with respect to the percentage of the Aggregate Commitment and Outstanding Credit Exposure assigned to such assignee. Upon the consummation of any assignment pursuant to this Section 12.3.2, the transferor Lender, the Agent and any Borrower shall, if the transferor Lender or the assignee desires that its Loans be evidenced by Notes, make appropriate arrangements so that new Notes or, as appropriate, replacement Notes are issued to such transferor Lender and new Notes or, as

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appropriate, replacement Notes, are issued to such assignee, in each case in principal amounts reflecting their respective Commitments, as adjusted pursuant to such assignment.

     12.4 Dissemination of Information. Each Borrower authorizes each Lender to disclose to any Participant or Eligible Assignee or any other Person acquiring an interest in the Loan Documents by operation of law (each a "Transferee”) and any prospective Transferee any and all information in such Lender’s possession concerning the creditworthiness of the Parent and its Subsidiaries, including without limitation any information contained in any Reports; provided that each Transferee and prospective Transferee agrees to be bound by Section 9.11 of this Agreement.

     12.5 Tax Treatment. If any interest in any Loan Document is transferred to any Transferee which is organized under the laws of any jurisdiction other than the United States or any State thereof, the transferor Lender shall cause such Transferee, concurrently with the effectiveness of such transfer, to comply with the provisions of Section 3.5(d).

ARTICLE XIII

NOTICES

     13.1 Notices. Except as otherwise permitted by Section 2.17 with respect to borrowing notices, all notices, requests and other communications to any party hereunder shall be in writing (including electronic transmission, facsimile transmission or similar writing) and shall be given to such party: in the case of any Borrower or the Agent, at its address or facsimile number set out on the signature pages hereof, in the case of any Lender, at its address or facsimile number set out in its administrative questionnaire or in the case of any party, at such other address or facsimile number as such party may hereafter specify for the purpose by notice to the Agent and any Borrower in accordance with the provisions of this Section 13.1. Each such notice, request or other communication shall be effective (a) if given by facsimile transmission, when transmitted to the facsimile number specified in this Section and confirmation of receipt is received, (b) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid, or (c) if given by any other means, when delivered (or, in the case of electronic transmission, received) at the address specified in this Section; provided that notices to the Agent under Article II shall not be effective until received.

     13.2 Change of Address. Any Borrower, the Agent and any Lender may each change the address for service of notice upon it by a notice in writing to the other parties hereto.

ARTICLE XIV

COUNTERPARTS

     This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Agreement by signing any such counterpart. This Agreement shall be effective when it has been executed by the Borrowers, the Agent, the LC Issuers, and the Lenders and each party has notified the Agent by facsimile transmission or telephone that it has taken such action.

-61-

ARTICLE XV

CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

     15.1 CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

     15.2 CONSENT TO JURISDICTION. EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR TEXAS STATE COURT SITTING IN HOUSTON, TEXAS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, ANY LC ISSUER, OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY BORROWER AGAINST THE AGENT, ANY LC ISSUER, OR ANY LENDER OR ANY AFFILIATE OF THE AGENT, ANY LC ISSUER, OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN HOUSTON, TEXAS.

     15.3 WAIVER OF JURY TRIAL. EACH BORROWER, THE AGENT, EACH LC ISSUER, AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

[Signatures appear on the following pages.]

-62-

     IN WITNESS WHEREOF, the Borrowers, the Lenders, the LC Issuer, and the Agent have executed this Agreement as of the date first above written.

COOPER CAMERON CORPORATION
By:
	Michael C. Jennings Vice President & Treasurer
Address: Attention: Telephone: Telecopy:	1333 West Loop South, Suite 1700 Houston, Texas 77027 Michael C. Jennings Vice President & Treasurer (713) 513-3336 (713) 513-3355
COOPER CAMERON (U.K.) LIMITED CAMERON GMBH COOPER CAMERON (SINGAPORE) PTE. LTD. COOPER CAMERON CANADA CORP. COOPER CAMERON (LUXEMBOURG) SARL
By:
	Michael C. Jennings Attorney-in-fact
Address: Attention: Telephone: Telecopy:	1333 West Loop South, Suite 1700 Houston, Texas 770027 Michael C. Jennings Vice President & Treasurer (713) 513-3336 (713) 513-3355

Signature Page to the Credit Agreement

Commitment $25,000,000	BANK ONE, NA, individually, as Agent, and as LC Issuer
US Swing Line Commitment	By:
$15,000,000	Name:
	Title:
	Address: Attention: Telephone: Telecopy:	910 Travis Street, 5th Floor Mail Code TX2-4340 Houston, Texas 77002 Helen Carr (713) 751-6817 (713) 751-6825

Signature Page to the Credit Agreement

Canadian Swing Line Election $10,000,000	BANK ONE, NA, CANADA BRANCH, as Canadian Swing Line Lender
	By:
	Name:
	Title:
	Address: Attention: Telephone: Telecopy:	161 Bay Street, Suite 4240 Toronto, Canada Lehong Zhang (416) 365-5259 (416) 363-7574

Signature Page to the Credit Agreement

Commitment $23,000,000	CREDIT LYONNAIS NEW YORK BRANCH, individually and as Syndication Agent
	By:
	Name:
	Title:
	Address: Attention: Telephone: Telecopy:	1301 Travis Street, Suite 2100 Houston, Texas 77002 David Gurghigian (713) 890-8610 (713) 890-8668

Signature Page to the Credit Agreement

Commitment $23,000,000	ABN AMRO BANK N.V., individually and as Documentation Agent
	By:
	Name:
	Title:
	Address: Attention: Telephone: Telecopy:	208 South LaSalle Street, Suite 1500 Chicago, Illinois 60604-1003 Credit Administration (312) 992-5110 (312) 992-5111
	With a copy to:
	ABN AMRO Bank N.V. 4400 Post Oak Parkway, Suite 1500 Houston, Texas 77027 Attention: Quandra Kelley Telephone: (832) 681-7137 Telecopy: (832) 681-7141

Signature Page to the Credit Agreement

Commitment $23,000,000	CITIBANK, N.A., individually and as Documentation Agent
	By:
	Name:
	Title:
	Address:
	Attention:
	Telephone:
	Telecopy:

Signature Page to the Credit Agreement

Commitment $23,000,000	THE ROYAL BANK OF SCOTLAND plc, individually and as Documentation Agent
	By:
	Name:
	Title:
	Address: Attention: Telephone: Telecopy:	101 Park Avenue, 12th Floor New York, New York 10178 Sheila Shaw, Vice President (212) 401-1406 (212) 401-1494

Signature Page to the Credit Agreement

Commitment $23,000,000		UBS LOAN FINANCE, LLC
	By:
	Name:
	Title:
	By:
	Name:
	Title:
	Address:
	Attention:
	Telephone:
	Telecopy:

Signature Page to the Credit Agreement

Commitment $15,000,000	THE BANK OF TOKYO-MITSUBISHI, LTD.
	By:
	Name:
	Title:
	Address: Attention: Telephone: Telecopy:	1100 Louisiana Street, Suite 2800 Houston, Texas 77002 Bryan E. Hulshof, Banking Officer (713) 655-3418 (713) 658-0116

Signature Page to the Credit Agreement

Commitment $15,000,000	DEN NORSKE BANK ASA
	By:
	Name:
	Title:
	Address: Attention: Telephone: Telecopy:	200 Park Avenue, 31st Floor New York, New York 10166-0396 Nils Fykse (212) 681-3872 (212) 681-3900

Signature Page to the Credit Agreement

Commitment $15,000,000	SOUTHWEST BANK OF TEXAS, N.A.
	By:
	Name:
	Title:
	Address: Attention: Telephone: Telecopy:	4400 Post Oak Parkway, POP 404 Houston, Texas 77027 Carmen Dunmire (713) 888-4610 (713) 693-7475

Signature Page to the Credit Agreement

Commitment $15,000,000	SUNTRUST BANK
	By:
	Name:
	Title:
	Address: Attention: Telephone: Telecopy:	303 Peachtree Street, 10th Floor Atlanta, Georgia 30308 David Edge (404) 827-6735 (404) 827-6270

Signature Page to the Credit Agreement

PRICING SCHEDULE

Applicable Margin	Level I Status	Level II Status	Level III Status	Level IV Status	Level V Status	Level VI Status
Eurocurrency Rate	29.0 bps	40.0 bps	50.0 bps	72.5 bps	92.5 bps	125.0 bps
LC Fee — Financial LC’s	29.0 bps	40.0 bps	50.0 bps	72.5 bps	92.5 bps	125.0 bps
LC Fee — Performance LC’s	14.5 bps	20.0 bps	25.0 bps	36.5 bps	46.5 bps	62.5 bps
LC Fee — Documentary LC’s	7.5 bps	10.0 bps	12.5 bps	18.5 bps	23.5 bps	31.5 bps

Applicable Fee Rate	Level I Status	Level II Status	Level III Status	Level IV Status	Level V Status	Level VI Status
Facility Fee	8.5 bps	10.0 bps	12.5 bps	15.0 bps	20.0 bps	25.0 bps
Usage Fee	12.5 bps	12.5 bps	12.5 bps	12.5 bps	12.5 bps	25.0 bps

     For the purposes of this Schedule, the following terms have the following meanings, subject to the final paragraph of this Schedule:

     "Level I Status” exists at any date if, on such date, the Parent’s Moody’s Rating is A2 or better or the Parent’s S&P Rating is A or better.

     "Level II Status” exists at any date if, on such date, (a) the Parent has not qualified for Level I Status and (ii) the Parent’s Moody’s Rating is A3 or better or the Parent’s S&P Rating is A- or better.

     "Level III Status” exists at any date if, on such date, (a) the Parent has not qualified for Level I Status or Level II Status and (ii) the Parent’s Moody’s Rating is Baa1 or better or the Parent’s S&P Rating is BBB+ or better.

     "Level IV Status” exists at any date if, on such date, (a) the Parent has not qualified for Level I Status, Level II Status or Level III Status and (ii) the Parent’s Moody’s Rating is Baa2 or better or the Parent’s S&P Rating is BBB or better.

     "Level V Status” exists at any date if, on such date, (a) the Parent has not qualified for Level I Status, Level II Status, Level III Status or Level IV Status and (ii) the Parent’s Moody’s Rating is Baa3 or better or the Parent’s S&P Rating is BBB- or better.

     "Level VI Status” exists at any date if, on such date, the Parent has not qualified for Level I Status, Level II Status, Level III Status, Level IV Status or Level V Status.

Pricing Schedule — 1

     “Moody’s Rating” means, at any time, the rating issued by Moody’s and then in effect with respect to the Parent’s senior unsecured long-term debt securities without third-party credit enhancement.

     “S&P Rating” means, at any time, the rating issued by S&P and then in effect with respect to the Parent’s senior unsecured long-term debt securities without third-party credit enhancement.

     “Status” means either Level I Status, Level II Status, Level III Status, Level IV Status, Level V Status or Level VI Status.

     The Applicable Margin and Applicable Fee Rate shall be determined in accordance with the foregoing table based on the Borrower’s Status as determined by the then-current Moody’s and S&P Ratings. The credit rating in effect on any date for the purposes of this Schedule is that in effect at the close of business on such date. If at any time the Parent has no Moody’s Rating or no S&P Rating, Level IV Status shall exist. If the credit ratings from Moody’s and S&P fall within different categories, the Applicable Margin and Applicable Fee Rate shall be based on the higher of the two ratings unless the lower rating is two or more levels below the higher rating, in which case the rating which is one level above the lower rating will apply.

Pricing Schedule - 2

EXHIBIT A-1
FORM OF IN-HOUSE COUNSEL OPINION

See Attached

EXHIBIT A-1-1

EXHIBIT A-2
FORM OF OUTSIDE COUNSEL OPINION

See Attached

EXHIBIT A-2-1

EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE

To:  The Lenders parties to the
Credit Agreement Described Below

     This Compliance Certificate is furnished pursuant to that certain Credit Agreement dated as of December 12, 2003, (as amended, modified, renewed or extended from time to time, the “Agreement”) among Cooper Cameron Corporation (the “Parent”), Cooper Cameron (U.K.) Limited, Cameron GmbH, Cooper Cameron (Singapore) Pte. Ltd., Cooper Cameron Canada Corp., Cooper Cameron (Luxembourg) SARL, the lenders party thereto and Bank One, NA, as Agent for the Lenders and as LC Issuer. Unless otherwise defined herein, capitalized terms used in this Compliance Certificate have the meanings ascribed thereto in the Agreement.

     THE UNDERSIGNED HEREBY CERTIFIES THAT:

     1. I am the duly elected          of the Parent;

     2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under my supervision, a detailed review of the transactions and conditions of the Parent and its Subsidiaries during the accounting period covered by the attached financial statements;

     3. The examinations described in Section 2 did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or Unmatured Default during or at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate, except as set out below; and

     4. Schedule I attached hereto sets forth financial data and computations evidencing the Parent’s compliance with certain covenants of the Agreement, all of which data and computations are true, complete and correct.

     5. Schedule II hereto sets forth the determination of the interest rates to be paid for Advances, the LC Fee rates, and the commitment fee rates commencing on the fifth day following the delivery hereof.

     6. Schedule III attached hereto sets forth the various reports and deliveries which are required at this time under the Credit Agreement and the other Loan Documents and the status of compliance.

     Described below are the exceptions, if any, to Section 3 by listing, in detail, the nature of the condition or event, the period during which it has existed and the action which any Borrower has taken, is taking, or proposes to take with respect to each such condition or event:
     

                       

EXHIBIT B-1

     7. The [quarterly] [annual] financial statements required to be furnished by Parent under Section 6.1[(a)][(b)] of the Agreement are available on-line through EDGAR.

     The foregoing certifications, together with the computations set out in Schedule I [and Schedule II] hereto and the financial statements delivered with this Certificate in support hereof, are made and delivered this day of                    , 200     .

EXHIBIT B-2

SCHEDULE I TO COMPLIANCE CERTIFICATE

Compliance as of                    , 200      with
Provisions of Sections 6.20.1 and 6.20.2 of the Agreement

EXHIBIT B-3

SCHEDULE II TO COMPLIANCE CERTIFICATE

Borrower’s Applicable Margin Calculation

EXHIBIT B-4

SCHEDULE III TO COMPLIANCE CERTIFICATE

Reports and Deliveries Currently Due

EXHIBIT B-5

EXHIBIT C
form of ASSIGNMENT AGREEMENT

     This Assignment Agreement (this “Assignment Agreement”) between                    (the “Assignor”) and                     (the “Assignee”) is dated as of                    , 200     . The parties hereto agree as follows:

     1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement (which, as it may be amended, modified, renewed or extended from time to time is herein called the “Credit Agreement”) described in Item 1 of Schedule 1 attached hereto (“Schedule 1”). Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement.

     2. ASSIGNMENT AND ASSUMPTION. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor’s rights and obligations under the Credit Agreement and the other Loan Documents, such that after giving effect to such assignment the Assignee shall have purchased pursuant to this Assignment Agreement the percentage interest specified in Item 3 of Schedule 1 of all outstanding rights and obligations under the Credit Agreement and the other Loan Documents relating to the facilities listed in Item 3 of Schedule 1. The aggregate Commitment (or Outstanding Credit Exposure, if the applicable Commitment has been terminated) purchased by the Assignee hereunder is set out in Item 4 of Schedule 1.

     3. EFFECTIVE DATE. The effective date of this Assignment Agreement (the “Effective Date”) shall be the later of the date specified in Item 5 of Schedule 1 or two (2) Business Days (or such shorter period agreed to by the Agent) after this Assignment Agreement, together with any consents required under the Credit Agreement, are delivered to the Agent. In no event will the Effective Date occur if the payments required to be made by the Assignee to the Assignor on the Effective Date are not made on the proposed Effective Date.

     4. PAYMENT OBLIGATIONS. In consideration for the sale and assignment of Outstanding Credit Exposure hereunder, the Assignee shall pay the Assignor, on the Effective Date, the amount agreed to by the Assignor and the Assignee. On and after the Effective Date, the Assignee shall be entitled to receive from the Agent all payments of principal, interest, Reimbursement Obligations, and fees with respect to the interest assigned hereby. The Assignee will promptly remit to the Assignor any interest on Loans and fees received from the Agent which relate to the portion of the Commitment or Outstanding Credit Exposure assigned to the Assignee hereunder for periods prior to the Effective Date and not previously paid by the Assignee to the Assignor. In the event that either party hereto receives any payment to which the other party hereto is entitled under this Assignment Agreement, then the party receiving such amount shall promptly remit it to the other party hereto.

     5. RECORDATION FEE. The Assignor and Assignee each agree to pay one-half of the recordation fee required to be paid to the Agent in connection with this Assignment Agreement unless otherwise specified in Item 6 of Schedule 1.

     6. REPRESENTATIONS OF THE ASSIGNOR; LIMITATIONS ON THE ASSIGNOR’S LIABILITY. The Assignor represents and warrants that (a) it is the legal and beneficial owner of the interest being assigned by it hereunder, (ii) such interest is free and clear of any adverse claim created by the Assignor and (iii) the execution and delivery of this Assignment Agreement by the Assignor is duly authorized. It is understood and agreed that the assignment and assumption hereunder are made without recourse to the Assignor and that the Assignor makes no other representation or warranty of any kind to

EXHIBIT C-1

the Assignee. Neither the Assignor nor any of its officers, directors, employees, agents or attorneys shall be responsible for (a) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of any Loan Document, including without limitation, documents granting the Assignor and the other Lenders a security interest in assets of any Borrower or any guarantor, (ii) any representation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition or creditworthiness of any Borrower or any guarantor, (iv) the performance of or compliance with any of the terms or provisions of any of the Loan Documents, (v) inspecting any of the property, books or records of any Borrower, (vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loans or (vii) any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loans or the Loan Documents.

     7. REPRESENTATIONS AND UNDERTAKINGS OF THE ASSIGNEE. The Assignee (a) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements requested by the Assignee and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement, (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information at it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, (iii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto, (iv) confirms that the execution and delivery of this Assignment Agreement by the Assignee is duly authorized, (v) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender, (vi) agrees that its payment instructions and notice instructions are as set out in the attachment to Schedule 1, (vii) confirms that none of the funds, monies, assets or other consideration being used to make the purchase and assumption hereunder are “plan assets” as defined under ERISA and that its rights, benefits and interests in and under the Loan Documents will not be “plan assets” under ERISA, (viii) agrees to indemnify and hold the Assignor harmless against all losses, costs and expenses (including, without limitation, reasonable attorneys’ fees) and liabilities incurred by the Assignor in connection with or arising in any manner from the Assignee’s non-performance of the obligations assumed under this Assignment Agreement, and (ix) if applicable, attaches the forms prescribed by the Internal Revenue Service of the United States certifying that the Assignee is entitled to receive payments under the Loan Documents without deduction or withholding of any United States federal income taxes.

     8. GOVERNING LAW. This Assignment Agreement shall be governed by the internal law, and not the law of conflicts, of the State of Texas.

     9. NOTICES. Notices shall be given under this Assignment Agreement in the manner set out in the Credit Agreement. For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the address set out in the attachment to Schedule 1.

     10. COUNTERPARTS; DELIVERY BY FACSIMILE. This Assignment Agreement may be executed in counterparts. Transmission by facsimile of an executed counterpart of this Assignment Agreement shall be deemed to constitute due and sufficient delivery of such counterpart and such facsimile shall be deemed to be an original counterpart of this Assignment Agreement.

     IN WITNESS WHEREOF, the duly authorized officers of the parties hereto have executed this Assignment Agreement by executing Schedule 1 hereto as of the date first above written.

EXHIBIT C-2

SCHEDULE 1

to Assignment Agreement

1.	Description and Date of Credit Agreement:
	Credit Agreement dated as of                    , 2003, is among Cooper Cameron Corporation, a Delaware corporation, the other Borrowers named therein, the Lenders and Bank One, NA, a national banking association having its principal office in Chicago, Illinois, as Agent.
2.	Date of Assignment Agreement:		, 200
3.	Amounts (as of date of item 2 above):
	a.	Assignee’s percentage of Commitment (or Outstanding Credit Exposure with respect to terminated Commitments) purchased under the Assignment Agreement*	%
	b.	Amount of Commitment (or Outstanding Credit Exposure with respect to terminated Commitments) purchased under the Assignment Agreement**	$
4.	Assignee’s Commitment (or Outstanding Credit Exposure with respect to terminated Commitments) purchased hereunder:		$
5.	Proposed Effective Date:		, 200
6.	Non-standard Recordation Fee Arrangement		N/A** [Assignor/Assignee to pay 100% of fee] [Fee waived by Agent]

Exhibit C-3

Accepted and Agreed:

[NAME OF ASSIGNOR][NAME OF ASSIGNEE]
By:	By:
Title:	Title:
ACCEPTED AND CONSENTED TO BY	ACCEPTED AND CONSENTED TO BY
COOPER CAMERON CORPORATION***	BANK ONE, NA
By:	By:
Title:	Title:

*	Percentage taken to 10 decimal places
**	If fee is split 50-50, pick N/A as option
***	Delete if not required by Credit Agreement

Exhibit C-4

Attachment to SCHEDULE 1 to ASSIGNMENT AGREEMENT

ADMINISTRATIVE INFORMATION SHEET

Attach Assignor’s Administrative Information Sheet, which must
include notice addresses for the Assignor and the Assignee
(Sample form shown below)

ASSIGNOR INFORMATION
Contact:
Name:	Telephone No.:
Fax No.:	Telex No.:
	Answerback:
Payment Information:
Name & ABA # of Destination Bank:
Account Name & Number for Wire Transfer:
Other Instructions:
Address for Notices for Assignor:
ASSIGNEE INFORMATION
Credit Contact
Contact:
Name:	Telephone No.:
Fax No.:	Telex No.:
	Answerback:

Exhibit C-5

Key Operations Contacts:

Booking Installation: Booking Installation:

Name: Name:

Telephone No.: Telephone No.:

Fax No.: Fax No.:

Telex No.: Telex No.:

Answerback: Answerback:

Payment Information:

Name & ABA # of Destination Bank:

Account Name & Number for Wire Transfer:

Other Instructions:

Address for Notices for Assignor:

BANK ONE INFORMATION

Assignee will be called promptly upon receipt of the signed agreement.

Initial Funding Contact:			Subsequent Operations Contact:
Name:			Name:
Telephone No.:			Telephone No.:
Fax No.:			Fax No.:
Initial Funding Standards:
Libor — Fund 2 days after rates are set		.
Bank One Wire Instructions: Bank One, NA, ABA #071000013
	LS2 Incoming Account #481152860000
	Ref:
Address for Notices for Bank One: Bank One Plaza, Chicago, IL 60670
	Attn: Agency Compliance Division, Suite IL1-0353
	Fax No. (312) 732-2038 or (312) 732-4339

EXHIBIT D

FORM OF LOAN/CREDIT RELATED MONEY TRANSFER INSTRUCTION

To Bank One, NA,
as Agent (the “Agent”) under the Credit Agreement
Described Below.

Re:  Credit Agreement dated December 12, 2003 (as the same may be amended or modified, the “Credit Agreement”), among Cooper Cameron Corporation, the Lenders named therein, the LC Issuer, and the Agent. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned thereto in the Credit Agreement.

              The Agent is specifically authorized and directed to act upon the following standing money transfer instructions with respect to the proceeds of Advances or other extensions of credit from time to time until receipt by the Agent of a specific written revocation of such instructions by any Borrower, provided that the Agent may otherwise transfer funds as hereafter directed in writing by any Borrower in accordance with Section 13.1 of the Credit Agreement or based on any telephonic notice made in accordance with Section 2.14 of the Credit Agreement.

Facility Identification Number(s) 

Customer/Account Name 

Transfer Funds To 

For Account No.

Reference/Attention To

Authorized Officer (Customer Representative)	Date
(Please Print)		Signature
Bank Officer Name	Date
(Please Print)		Signature

(Deliver Completed Form to Credit Support Staff For Immediate Processing)

Exhibit D-1

EXHIBIT E

FORM OF NOTE

[Date]

     [Cooper Cameron Corporation, a Delaware corporation] (the “Borrower”), promises to pay to the order of                         (the “Lender”) the aggregate unpaid principal amount of all Loans made by the Lender to any Borrower pursuant to Article II of the Agreement (as hereinafter defined), in immediately available funds at the main office of Bank One, NA in Chicago, Illinois, as Agent, together with interest on the unpaid principal amount hereof at the rates and on the dates set out in the Agreement. The Borrower shall pay the principal of and accrued and unpaid interest on the Loans in full on the Facility Termination Date.

     The Lender shall, and is hereby authorized to, record on the schedule attached hereto, or to otherwise record in accordance with its usual practice, the date and amount of each Loan and the date and amount of each principal payment hereunder.

     This Note is one of the Notes issued pursuant to, and is entitled to the benefits of, the Credit Agreement dated as of December 12, 2003 (which, as it may be amended or modified and in effect from time to time, is herein called the “Agreement”), among the Borrower, the lenders party thereto, including the Lender, and Bank One, NA, As Agent, to which Agreement reference is hereby made for a statement of the terms and conditions governing this Note, including the terms and conditions under which this Note may be prepaid or its maturity date accelerated. This Note is guaranteed pursuant to the Guaranty, all as more specifically described in the Agreement, and reference is made thereto for a statement of the terms and provisions thereof. Capitalized terms used herein and not otherwise defined herein are used with the meanings attributed to them in the Agreement.

[COOPER CAMERON CORPORATION]

By:

Print Name:

Title:

Exhibit E-1

SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL

	Principal	Maturity	Principal
	Amount of	of Interest	Amount	Unpaid
Date	Loan	Period	Paid	Balance

Exhibit E-2

EXHIBIT F
FORM OF JOINDER AGREEMENT

     Reference is made to the Credit Agreement dated as of December 12, 2003 (as amended, modified, or supplemented from time-to-time, the “Credit Agreement”) among Cooper Cameron Corporation, a Delaware corporation (the “Parent”), the other borrowers named therein (together with the Parent, the “Borrowers”), the lenders party thereto (the “Lenders”), and Bank One, NA, as agent for the Lenders (the “Agent”) and as LC Issuer. Capitalized terms used herein but not defined herein shall have the meanings specified by the Credit Agreement.                   , a              corporation (the “Borrowing Subsidiary”), hereby agrees with the Agent, the Lenders and the Borrowers as follows:

     In accordance with Section 2.24 of the Credit Agreement, the Borrowing Subsidiary hereby (a) joins the Credit Agreement as a party thereto and shall have all the rights of a Borrower and assumes all the obligations of a Borrower under the Credit Agreement and the other Loan Documents to which the other Borrowing Subsidiaries are a party, (b) agrees to be bound by the provisions of the Credit Agreement or such other Loan Documents as if the Borrowing Subsidiary had been an original party to the Credit Agreement or such other Loan Documents, and (c) confirms that, after joining the Credit Agreement and the other Loan Documents as set forth above, the representations and warranties set forth in the Credit Agreement and the other Loan Documents with respect to the Borrowing Subsidiary are true and correct in all material respects as of the date of this Joinder Agreement and that no Default or Unmatured Default has occurred and is continuing.

     The Borrowing Subsidiary shall cooperate with the Agent and the Lenders and execute such further instruments and documents as the Agent or the Lenders shall reasonably request to effect, to the reasonable satisfaction of the Agent and the Lenders, the purposes of this Joinder Agreement.

     THIS WRITTEN AGREEMENT AND THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

     THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

     IN WITNESS WHEREOF this Joinder Agreement is executed and delivered as of the       day of      , 20     .

[BORROWING SUBSIDIARY]
 

By:  

Name:  

Title:  

Exhibit F-1

SCHEDULE 1

SUBSIDIARIES

(SEE SECTION 5.7)

[See attached.]

Schedule 1-1

SCHEDULE 2

LIENS

(SEE SECTION 6.15)

Schedule 2-1

SCHEDULE 3

EUROCURRENCY PAYMENT OFFICES OF THE AGENT

All Currencies:

BANK ONE, NA Bank One Plaza Suite IL1-0010 Chicago, Illinois 60670
ABA No.:	071000013
Account No.:	4811 5286 0000 LS2 Incoming Account
Reference:	Cooper Cameron
Attn:	Ken Fecko

EX-10.36 5 h13049exv10w36.htm FORM OF INDEMNIFICATION AGREEMENT

     EXHIBIT 10.36

INDEMNIFICATION AGREEMENT

      THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is effective as of February 20, 2003, by and among Cooper Cameron Corporation, a Delaware corporation (the “Company”), and [NAME] (the “Indemnitee”).

      WHEREAS, the Indemnitee is serving the Company in a “Corporate Status,” as defined herein;

      WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify persons serving it in a Corporate Status to the fullest extent permitted by applicable law so that they will serve or continue to serve in such status free from undue concern that they will not be so indemnified;

      WHEREAS, the Indemnitee is willing to serve and continue to serve the Company in a Corporate Status on the condition that he be so indemnified; and

      WHEREAS, to the extent permitted by law, this Agreement is a supplement to and in furtherance of the provisions of the Amended and Restated Certificate of Incorporation of the Company (the “Certificate”) and the provisions of the Bylaws of the Company (the “Bylaws”) or resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of the Indemnitee thereunder;

      NOW THEREFORE, in consideration of the premises and the covenants contained herein, the Company and the Indemnitee do hereby covenant and agree as follows:

      Section 1. Services by the Indemnitee. The Indemnitee agrees to continue to serve the Company in a Corporate Status. Notwithstanding the foregoing, the Indemnitee may at any time and for any reason resign from any such position.

      Section 2. Indemnification — General. The Company shall indemnify, and advance Expenses (as hereinafter defined) to, the Indemnitee as provided in this Agreement and to the fullest extent permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may thereafter from time to time permit. The rights of the Indemnitee provided under the preceding sentence shall include, but shall not be limited to, the rights set forth in the other Sections of this Agreement.

      Section 3. Proceedings Other Than Proceedings by or in the Right of the Company. The Indemnitee shall be entitled to the rights of indemnification provided in this Section 3 if, by reason of his Corporate Status (as hereinafter defined), he is, or is threatened to be made, a party to or participant in any threatened, pending or completed Proceeding (as hereinafter defined), other than a Proceeding by or in the right of the Company. Pursuant to this Section 3, the Company shall indemnify the Indemnitee against Expenses, judgments, penalties, fines and amounts paid in settlement (as and to the extent permitted hereunder) actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, if he also had no reasonable cause to believe his conduct was unlawful.

      Section 4. Proceedings by or in the Right of the Company. The Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any threatened, pending or completed Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, the Company shall indemnify the Indemnitee against Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Notwithstanding the foregoing, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which the Indemnitee shall have been adjudged to be liable to the Company or if applicable law prohibits such indemnification; provided, however, that if applicable law so permits, indemnification against Expenses shall nevertheless be made by the Company in such event if and to the extent that the court in which such Proceeding shall have been brought or is pending, shall so determine.

      Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful.

          (a) To the extent that the Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If the Indemnitee is not wholly successful in defense of any Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each such claim, issue or matter as to which the Indemnitee is successful, on the merits or otherwise. For purposes of this Section 5(a), the term “successful, on the merits or otherwise,” shall include, but shall not be limited to, (i) the termination of any claim, issue or matter in a Proceeding by withdrawal or dismissal, with or without prejudice, (ii) termination of any claim, issue or matter in a Proceeding by any other means without any express finding of liability or guilt against the Indemnitee, with or without prejudice, (iii) the expiration of 120 days after the making of a claim or threat of a Proceeding without the institution of the same and without any promise or payment made to induce a settlement or (iv) the settlement of any claim, issue or matter in a Proceeding pursuant to which the Indemnitee pays less than $200,000. The provisions of this Section 5(a) are subject to Section 5(b) below.

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          (b) In no event shall the Indemnitee be entitled to indemnification under Section 5(a) above with respect to a claim, issue or matter to the extent (i) applicable law prohibits such indemnification, or (ii) an admission is made by the Indemnitee in writing to the Company or in such Proceeding or a final, nonappealable determination is made in such Proceeding that the standard of conduct required for indemnification under this Agreement has not been met with respect to such claim, issue or matter.

      Section 6. Indemnification for Expenses as a Witness. Notwithstanding any provisions herein to the contrary, to the extent that the Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding, the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by or on behalf of the Indemnitee in connection therewith.

      Section 7. Advancement of Expenses. The Company shall advance all reasonable Expenses incurred by or on behalf of the Indemnitee in connection with any Proceeding within 10 days after the receipt by the Company of a statement or statements from the Indemnitee requesting such advance or advances from time to time, whether prior to or after the final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by or on behalf of the Indemnitee. The Indemnitee hereby expressly undertakes to repay such amounts advanced only if, and to the extent that, it shall ultimately be determined by a final, non-appealable adjudication or arbitration decision that the Indemnitee is not entitled to be indemnified against such Expenses. All amounts advanced to the Indemnitee by the Company pursuant to this Section 7 shall be without interest. The Company shall make all advances pursuant to this Section 7 without regard to the financial ability of the Indemnitee to make repayment, without bond or other security and without regard to the prospect of whether the Indemnitee may ultimately be found to be entitled to indemnification under the provisions of this Agreement. Any required reimbursement of Expenses by the Indemnitee shall be made by the Indemnitee to the Company within 10 days following the entry of the final, non-appealable adjudication or arbitration decision pursuant to which it is determined that the Indemnitee is not entitled to be indemnified against such Expenses.

      Section 8. Procedure for Determination of Entitlement to Indemnification.

          (a) To obtain indemnification under this Agreement, the Indemnitee shall submit to the Company a written request therefor, along with such documentation and information as is reasonably available to the Indemnitee and reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that the Indemnitee has requested indemnification.

          (b) Upon written request by the Indemnitee for indemnification pursuant to the first sentence of Section 8(a) hereof, a determination, if required by applicable law, with respect to the Indemnitee’s entitlement thereto shall be made in the specific case: (i) by the Board by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined); or (ii) if a quorum of the Board consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel (as hereinafter defined), as selected pursuant to Section 8(d), in a written opinion to the

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Board (which opinion may be a “more likely than not” opinion), a copy of which shall be delivered to the Indemnitee. If it is so determined that the Indemnitee is entitled to indemnification, the Company shall make payment to the Indemnitee within 10 days after such determination. The Indemnitee shall cooperate with the Person or Persons making such determination with respect to the Indemnitee’s entitlement to indemnification, including providing to such Person or Persons upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Indemnitee and reasonably necessary to such determination. Subject to the provisions of Section 10 hereof, any costs or expenses (including reasonable attorneys’ fees and disbursements) incurred by the Indemnitee in so cooperating with the Person or Persons making such determination shall be borne by the Company, and the Company hereby agrees to indemnify and hold the Indemnitee harmless therefrom.

          (c) Notwithstanding the foregoing, if a Change of Control has occurred, the Indemnitee may require a determination with respect to the Indemnitee’s entitlement to indemnification to be made by Independent Counsel, as selected pursuant to Section 8(d), in a written opinion to the Board (which opinion may be a “more likely than not” opinion), a copy of which shall be delivered to the Indemnitee.

          (d) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) or (c) hereof, the Independent Counsel shall be selected as provided in this Section 8(d). If a Change of Control shall not have occurred, the Independent Counsel shall be selected by the Board (including a vote of a majority of the Disinterested Directors if obtainable), and the Company shall give written notice to the Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change of Control shall have occurred, the Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and approved by the Company (which approval shall not be unreasonably withheld). If (i) an Independent Counsel is to make the determination of entitlement pursuant to Section 8(b) or (c) hereof, and (ii) within 20 days after submission by the Indemnitee of a written request for indemnification pursuant to Section 8(a) hereof, no Independent Counsel shall have been selected, either the Company or the Indemnitee may petition the appropriate court of the State (as hereafter defined) or other court of competent jurisdiction for the appointment as Independent Counsel of a Person selected by such court or by such other Person as such court shall designate. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 8(b) or (c) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 8(d), regardless of the manner in which such Independent Counsel was selected or appointed. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 10(a)(iv) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

      Section 9. Presumptions and Effect of Certain Proceedings; Construction of Certain Phrases.

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          (a) In making a determination with respect to whether the Indemnitee is entitled to indemnification hereunder, the Reviewing Party making such determination shall presume that the Indemnitee is entitled to indemnification under this Agreement if the Indemnitee has submitted a request for indemnification in accordance with Section 8(a) of this Agreement, and anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.

          (b) Subject to the terms of Section 16 below, the termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of the Indemnitee to indemnification or create a presumption that the Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that the Indemnitee had reasonable cause to believe that his conduct was unlawful.

          (c) For purposes of any determination of the Indemnitee’s entitlement to indemnification under this Agreement or otherwise, the Indemnitee shall be deemed to have acted in good faith and in a manner he reasonably believe to be in or not opposed to the best interests of the Company, and, with respect to a criminal Proceeding, to have also had no reasonable cause to believe his conduct was unlawful, if the Indemnitee’s action is based on the records or books of account of the Company or another enterprise, including financial statements, or on information supplied to the Indemnitee by the officers of the Company or another enterprise in the course of their duties, or on the advice of legal or financial counsel for the Company or the Board (or any committee thereof) or for another enterprise or its board of directors (or any committee thereof), or on information or records given or reports made by an independent certified public accountant or by an appraiser or other expert selected by the Company or the Board (or any committee thereof) or by another enterprise or its board of directors (or any committee thereof). For purposes of this Section 9(c), the term “another enterprise” means any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise of which the Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent. The provisions of this Section 9(c) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement. In addition, the knowledge and/or actions, or failure to act, of any other director, trustee, partner, managing member, fiduciary, officer, agent or employee of the Company shall not be imputed to the Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 9(c) are satisfied, it shall in any event be presumed that the Indemnitee has acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to a criminal Proceeding, that he also had no reasonable cause to believe his conduct was unlawful. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.

          (d) For purposes of this Agreement, references to “fines” shall include any excise taxes assessed on the Indemnitee with respect to an employee benefit plan; references to “serving at the request of the Company” shall include, but shall not be limited to, any service as a

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director, officer, employee or agent of the Company which imposes duties on, or involves services by, the Indemnitee with respect to an employee benefit plan, its participants or its beneficiaries; and if the Indemnitee has acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, he shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as used in this Agreement. The provisions of this Section 9(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement.

      Section 10. Remedies of the Indemnitee.

          (a) In the event that (i) a determination is made pursuant to Section 8 of this Agreement that the Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 7 of this Agreement, (iii) the determination of entitlement to indemnification is to be made by the Board pursuant to Section 8(b) of this Agreement and such determination shall not have been made and delivered to the Indemnitee in writing within twenty (20) days after receipt by the Company of the request for indemnification, (iv) the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) or (c) of this Agreement and such determination shall not have been made in a written opinion to the Board and a copy delivered to the Indemnitee within forty-five (45) days after receipt by the Company of the request for indemnification, (v) payment of indemnification is not made pursuant to Section 6 of this Agreement within 10 days after receipt by the Company of a written request therefor or (vi) payment of indemnification is not made within 10 days after a determination has been made that the Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 8 or 9 of this Agreement, the Indemnitee shall be entitled to an adjudication in an appropriate court of the State of his entitlement to such indemnification or advancement of Expenses. Alternatively, the Indemnitee, at his sole option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association. The Indemnitee shall commence such Proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which the Indemnitee first has the right to commence such Proceeding pursuant to this Section 10(a); provided, however, that the foregoing clause shall not apply in respect of a Proceeding brought by the Indemnitee to enforce his rights under Section 5 of this Agreement.

          (b) In the event that a determination is made pursuant to Section 8 of this Agreement that the Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 10 shall be conducted in all respects as a de novo trial or a de novo arbitration (as applicable) on the merits, and the Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 10, the Company shall have the burden of proving that the Indemnitee is not entitled to indemnification, and the Company shall be precluded from referring to or offering into evidence a determination made pursuant to Section 8 of this Agreement that is adverse to the Indemnitee’s right to indemnification. If the Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 10, the Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 7 until a final determination is made with respect to the Indemnitee’s entitlement to indemnification (as to which rights of appeal have been exhausted or lapsed).

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          (c) If a determination is made or deemed to have been made pursuant to Section 8 or 9 of this Agreement that the Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 10, absent (i) a misstatement by the Indemnitee of a material fact, or an omission by the Indemnitee of a material fact necessary to make the Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

          (d) The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 10 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all of the provisions of this Agreement.

          (e) In the event that the Indemnitee, pursuant to this Section 10, seeks a judicial adjudication or an award in arbitration to enforce his rights under, or to recover damages for breach of, this Agreement, the Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all Expenses actually and reasonably incurred by him in such judicial adjudication or arbitration, unless the court or arbitrator determines that each of the Indemnitee’s claims in such Proceeding were made in bad faith or were frivolous. In the event that a Proceeding is commenced by or in the right of the Company against the Indemnitee to enforce or interpret any of the terms of this Agreement, the Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all Expenses actually and reasonably incurred by him in such Proceeding (including with respect to any counter-claims or cross-claims made by the Indemnitee against the Company in such Proceeding), unless the court or arbitrator determines that each of the Indemnitee’s material defenses in such Proceeding were made in bad faith or were frivolous.

          (f) Any judicial adjudication or arbitration determined under this Section 10 shall be final and binding on the parties.

      Section 11. Defense of Certain Proceedings. In the event the Company shall be obligated under this Agreement to pay the Expenses of any Proceeding against the Indemnitee in which the Company is a co-defendant with the Indemnitee, the Company shall be entitled to assume the defense of such Proceeding, with counsel approved by the Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to the Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by the Indemnitee and the retention of such counsel by the Company, the Indemnitee shall nevertheless be entitled to employ or continue to employ his own counsel in such Proceeding. Employment of such counsel by the Indemnitee shall be at the cost and expense of the Company unless and until the Company shall have demonstrated to the reasonable satisfaction of the Indemnitee and the Indemnitee’s counsel that there is complete identity of issues and defenses and no conflict of interest between the Company and the Indemnitee in such Proceeding, after which time further employment of such counsel by the Indemnitee shall be at the cost and expense of the Indemnitee. In all events, if the Company shall not, in fact, have timely employed counsel to

7

assume the defense of such Proceeding, then the fees and Expenses of the Indemnitee’s counsel shall be at the cost and expense of the Company.

      Section 12. Exception to Right of Indemnification or Advancement of Expenses. Notwithstanding any other provision of this Agreement, the Indemnitee shall not be entitled to indemnification or advancement of Expenses under this Agreement with respect to any Proceeding, or any claim therein, brought or made by the Indemnitee against:

          (a) the Company, except for (i) any claim or Proceeding in respect of this Agreement and/or the Indemnitee’s rights hereunder, (ii) any claim or Proceeding to establish or enforce a right to indemnification under any statute or law and (iii) any counter-claim or cross-claim brought or made by him against the Company in any Proceeding brought by or in the right of the Company against him; or

          (b) any other Person, except for Proceedings or claims approved by the Board.

      Section 13. Contribution.

          (a) If, with respect to any Proceeding, the indemnification provided for in this Agreement is held by a court of competent jurisdiction to be unavailable to the Indemnitee for any reason other than that the Indemnitee did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to a criminal Proceeding, that the Indemnitee had reasonable cause to believe his conduct was unlawful, the Company shall contribute to the amount of Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by the Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or matter therein in such proportion as is appropriate to reflect the relative benefits received by the Indemnitee and the relative fault of the Indemnitee versus the other defendants or participants in connection with the action or inaction which resulted in such Expenses, judgments, penalties, fines and amounts paid in settlement, as well as any other relevant equitable considerations.

          (b) The Company and the Indemnitee agree that it would not be just and equitable if contribution pursuant to this Section 13 were determined by pro rata or per capita allocation or by any other method of allocation which does not take into account the equitable considerations referred to in Section 13(a) above.

          (c) No Person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act of 1933) shall be entitled to contribution from any Person who was not found guilty of such fraudulent misrepresentation.

      Section 14. Officer and Director Liability Insurance.

          (a) The Company shall use all commercially reasonable efforts to obtain and maintain in effect during the entire period for which the Company is obligated to indemnify the Indemnitee under this Agreement, one or more policies of insurance with reputable insurance companies to provide the directors and officers of the Company with coverage for losses from wrongful acts and omissions and to ensure the Company’s performance of its indemnification obligations under this Agreement. In all such insurance policies, the Indemnitee shall be named

8

as an insured in such a manner as to provide the Indemnitee with the same rights and benefits as are accorded to the most favorably insured of the Company’s directors and officers. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that the Indemnitee is covered by such insurance maintained by a subsidiary or parent of the Company.

          (b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors or officers of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise which the Indemnitee serves at the request of the Company, the Indemnitee shall be named as an insured under and shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for the most favorably insured director or officer under such policy or policies.

          (c) In the event that the Company is a named insured under any policy or policies of insurance referenced in either Section 14(a) or (b) above, the Company hereby covenants and agrees that it will not settle any claims or Proceedings that may be covered by such policy or policies of insurance and in which the Indemnitee has or may incur Expenses, judgments, penalties, fines or amounts paid in settlement without the prior written consent of the Indemnitee.

      Section 15. Security. Upon reasonable request by the Indemnitee, the Company shall provide security to the Indemnitee for the Company’s obligations hereunder through an irrevocable bank letter of credit, funded trust or other similar collateral. Any such security, once provided to the Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee, which consent may be granted or withheld at the Indemnitee’s sole and absolute discretion.

      Section 16. Settlement of Claims. The Company shall not be liable to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding effected without the Company’s written consent, which consent shall not be unreasonably withheld.

      Section 17. Duration of Agreement. This Agreement shall be unaffected by the termination of the Corporate Status of the Indemnitee and shall continue for so long as the Indemnitee may have any liability or potential liability by virtue of his Corporate Status, including, without limitation, the final termination of all pending Proceedings in respect of which the Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any Proceeding commenced by the Indemnitee pursuant to Section 10 of this Agreement relating thereto, whether or not he is acting or serving in such capacity at the time any liability or Expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.

      Section 18. Remedies of the Company. The Company hereby covenants and agrees to submit any and all disputes relating to this Agreement that the parties are unable to resolve

9

between themselves to binding arbitration pursuant to the rules of the American Arbitration Association and waives all rights to judicial adjudication of any matter or dispute relating to this Agreement except where judicial adjudication is requested or required by the Indemnitee.

      Section 19. Covenant Not to Sue, Limitation of Actions and Release of Claims. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company (or any of its subsidiaries) against the Indemnitee, his spouse, heirs, executors, personal representatives or administrators after the expiration of two (2) years from the date on which the Corporate Status of the Indemnitee is terminated (for any reason), and any claim or cause of action of the Company (or any of its subsidiaries) shall be extinguished and deemed released unless asserted by filing of a legal action within such two-year period; provided, however, that the foregoing shall not apply to any action or cause of action brought or asserted by the Company pursuant to or in respect of this Agreement and shall not constitute a waiver or release of any of the Company’s rights under this Agreement.

      Section 20. Limitation of Liability. Notwithstanding any other provision of this Agreement, neither party shall have any liability to the other for, and neither party shall be entitled to recover from the other, any consequential, special, punitive, multiple or exemplary damages as a result of a breach of this Agreement.

      Section 21. Subrogation. In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

      Section 22. No Multiple Recovery. The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

      Section 23. Definitions. For purposes of this Agreement:

          (a) “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For purposes hereof, “control” (including, with correlative meaning, the terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of such Person, by contract or otherwise.

          (b) “Change of Control” shall mean a change in control of the Company occurring after the date of this Agreement of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Exchange Act, whether or not the Company is then subject to such reporting requirement. Without limiting the foregoing, such a Change in Control shall be deemed to have occurred if, after the date of this Agreement, (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the

10

“beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors without the prior approval of at least two-thirds of the members of the Board in office immediately prior to such person attaining such percentage interest; (ii) the Company is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board (including for this purpose any new director whose election or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board; or (iv) approval by the shareholders of the Company of a liquidation or dissolution of the Company.

          (c) “Company” means Cooper Cameron Corporation, a Delaware corporation.

          (d) “Corporate Status” describes the status of an individual who is or was an officer or director of the Company, or is or was serving at the request of the Company as an officer, director, employee or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise.

          (e) “Disinterested Director” means a director of the Company who is not and was not a party to, or otherwise involved in, the Proceeding for which indemnification is sought by the Indemnitee.

          (f) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (g) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating or being or preparing to be a witness in a Proceeding.

          (h) “Independent Counsel” means a law firm or a member of a law firm that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or the Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any Person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement.

          (i) “Person” means a natural person, firm, partnership, joint venture, association, corporation, company, limited liability company, trust, business trust, estate or other entity.

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          (j) “Proceeding” includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative.

          (k) “State” means the State of Texas.

      Section 24. Non-Exclusivity. The Indemnitee’s rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may at any time be entitled under applicable law, the Certificate, the Bylaws, any agreement, a vote of stockholders, a resolution of directors or otherwise.

      Section 25. Remedies Not Exclusive. No right or remedy herein conferred upon the Indemnitee is intended to be exclusive of any other right or remedy, and every other right or remedy shall be cumulative of and in addition to the rights and remedies given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy of the Indemnitee hereunder or otherwise shall not be deemed an election of remedies on the part of the Indemnitee and shall not prevent the concurrent assertion or employment of any other right or remedy by the Indemnitee.

      Section 26. Changes in Law. In the event that a change in applicable law after the date of this Agreement, whether by statute, rule or judicial decision, expands or otherwise increases the right or ability of a Delaware corporation to indemnify a member of its board of directors or an officer, the Indemnitee shall, by this Agreement, enjoy the greater benefits so afforded by such change. In the event that a change in applicable law after the date of this Agreement, whether by statute, rule or judicial decision, narrows or otherwise reduces the right or ability of a Delaware corporation to indemnify a member of its board of directors or an officer, such change shall have no effect on this Agreement or any of the Indemnitee’s rights hereunder, except and only to the extent required by law.

      Section 27. Interpretation of Agreement. The Company and the Indemnitee acknowledge and agree that it is their intention that this Agreement be interpreted and enforced so as to provide indemnification to the Indemnitee to the fullest extent now or hereafter permitted by law.

      Section 28. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; (b) such provision or provisions will be deemed reformed to the extent necessary to conform to applicable law and to give maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision or provisions held invalid, illegal or unenforceable.

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      Section 29. Governing Law; Jurisdiction and Venue; Specific Performance.

          (a) The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

          (b) ANY “ACTION OR PROCEEDING” (AS SUCH TERM IS DEFINED BELOW) ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE FILED IN AND LITIGATED OR ARBITRATED SOLELY BEFORE THE COURTS LOCATED IN OR ARBITRATORS SITTING IN HARRIS COUNTY IN THE STATE OF TEXAS, AND EACH PARTY TO THIS AGREEMENT: (i) GENERALLY AND UNCONDITIONALLY ACCEPTS THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND ARBITRATORS AND VENUE THEREIN, AND WAIVES TO THE FULLEST EXTENT PROVIDED BY LAW ANY DEFENSE OR OBJECTION TO SUCH JURISDICTION AND VENUE BASED UPON THE DOCTRINE OF “FORUM NON CONVENIENS;” AND (ii) GENERALLY AND UNCONDITIONALLY CONSENTS TO SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING BY DELIVERY OF CERTIFIED OR REGISTERED MAILING OF THE SUMMONS AND COMPLAINT IN ACCORDANCE WITH THE NOTICE PROVISIONS OF THIS AGREEMENT. FOR PURPOSES OF THIS SECTION, THE TERM “ACTION OR PROCEEDING” IS DEFINED AS ANY AND ALL CLAIMS, SUITS, ACTIONS, HEARINGS, ARBITRATIONS OR OTHER SIMILAR PROCEEDINGS, INCLUDING APPEALS AND PETITIONS THEREFROM, WHETHER FORMAL OR INFORMAL, GOVERNMENTAL OR NON-GOVERNMENTAL, OR CIVIL OR CRIMINAL. THE FOREGOING CONSENT TO JURISDICTION SHALL NOT CONSTITUTE GENERAL CONSENT TO SERVICE OF PROCESS IN THE STATE FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE, AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES TO THIS AGREEMENT.

          (c) The Company acknowledges that the Indemnitee may, as a result of the Company’s breach of its covenants and obligations under this Agreement, sustain immediate and long-term substantial and irreparable injury and damage which cannot be reasonably or adequately compensated by damages at law. Consequently, the Company agrees that the Indemnitee shall be entitled, in the event of the Company’s breach or threatened breach of its covenants and obligations hereunder, to obtain equitable relief from a court of competent jurisdiction, including enforcement of each provision of this Agreement by specific performance and/or temporary, preliminary and/or permanent injunctions enforcing any of the Indemnitee’s rights, requiring performance by the Company, or enjoining any breach by the Company, all without proof of any actual damages that have been or may be caused to the Indemnitee by such breach or threatened breach and without the posting of bond or other security in connection therewith. The Company waives the claim or defense therein that the Indemnitee has an adequate remedy at law, and the Company shall not allege or otherwise assert the legal position that any such remedy at law exists. The Company agrees and acknowledges that: (i) the terms of this Section 29(c) are fair, reasonable and necessary to protect the legitimate interests of the Indemnitee; (ii) this waiver is a material inducement to the Indemnitee to enter into the

13

transactions contemplated hereby; and (iii) the Indemnitee relied upon this waiver in entering into this Agreement and will continue to rely on this waiver in its future dealings with the Company. The Company represents and warrants that it has reviewed this provision with its legal counsel, and that it has knowingly and voluntarily waived its rights referenced in this Section 29 following consultation with such legal counsel.

      Section 30. Nondisclosure of Payments. Except as expressly required by Federal securities laws, the Company shall not disclose any payments under this Agreement without the prior written consent of the Indemnitee. Any payments to the Indemnitee that must be disclosed shall, unless otherwise required by law, be described only in the Company proxy or information statements relating to special and/or annual meetings of the Company’s shareholders, and the Company shall afford the Indemnitee a reasonable opportunity to review all such disclosures and, if requested by the Indemnitee, to explain in such statement any mitigating circumstances regarding the events reported.

      Section 31. Notice by the Indemnitee. The Indemnitee agrees to promptly notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder.

      Section 32. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and received for by the party to whom said notice or other communication shall have been directed, or (b) mailed by U.S. certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed: (i) If to the Company: Cooper Cameron Corporation, 1333 West Loop South, Suite 1700, Houston, Texas 77027, Attention: President; and (ii) if to any other party hereto, including the Indemnitee, to the address of such party set forth on the signature page hereof; or to such other address as may have been furnished by any party to the other(s), in accordance with this Section 32.

      Section 33. Modification and Waiver. No supplement, modification or amendment of this Agreement or any provision hereof shall limit or restrict in any way any right of the Indemnitee under this Agreement with respect to any action taken or omitted by the Indemnitee in his Corporate Status prior to such supplement, modification or amendment. No supplement, modification or amendment of this Agreement or any provision hereof shall be binding unless executed in writing by both of the Company and the Indemnitee. No waiver of any provision of this Agreement shall be deemed or shall constitute a wavier of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

      Section 34. Headings. The headings of the Sections or paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

      Section 35. Gender. Use of the masculine pronoun in this Agreement shall be deemed to include usage of the feminine pronoun where appropriate.

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      Section 36. Identical Counterparts. This Agreement may be executed in one or more counterparts (whether by original, photocopy or facsimile signature), each of which shall for all purposes be deemed to be an original, but all of which together shall constitute one and the same Agreement. Only one such counterpart executed by the party against whom enforcement is sought must be produced to evidence the existence of this Agreement.

15

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day and year first above written.

ATTEST:	COOPER CAMERON CORPORATION
By:	By:
Name:	Name:	Sheldon R. Erikson
Title:	Title:	Chairman, President & CEO
	INDEMNITEE
	Name:	[                            ]
	Address:	1333 West Loop South, Suite 1700 Houston, Texas 77027

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EX-13.1 6 h13049exv13w1.htm PORTIONS OF THE 2003 ANNUAL REPORT

Exhibit 13.1

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION OF COOPER CAMERON CORPORATION

     The following discussion of Cooper Cameron Corporation’s (the Company) historical results of operations and financial condition should be read in conjunction with the Company’s consolidated financial statements and notes thereto included elsewhere in this Annual Report. All per share amounts included in this discussion are based on diluted shares outstanding.

Overview

     The Company’s operations are organized into three business segments — Cameron, Cooper Cameron Valves (CCV) and Cooper Compression. Based upon the amount of equipment installed worldwide and available industry data, Cameron is one of the world’s leading providers of systems and equipment used to control pressures and direct flows of oil and gas wells. Cameron’s products are employed in a wide variety of operating environments including basic onshore fields, highly complex onshore and offshore environments, deepwater subsea applications and ultra-high temperature geothermal operations. Cameron’s products include surface and subsea production systems, blowout preventers, drilling and production control systems, gate valves, actuators, chokes, wellheads, drilling riser and aftermarket parts and services. Cameron’s customers include oil and gas majors, independent producers, engineering and construction companies, drilling contractors, rental companies and geothermal energy producers. Based upon the amount of equipment installed worldwide and available industry data, CCV is a leading provider of valves and related systems primarily used to control pressures and direct the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines and transmission systems to refineries, petrochemical plants and industrial centers for processing. CCV’s products include gate valves, ball valves, butterfly valves, Orbit valves, rotary process valves, block and bleed valves, plug valves, globe valves, check valves, actuators, chokes and aftermarket parts and service. CCV’s customers include oil and gas majors, independent producers, engineering and construction companies, pipeline operators, drilling contractors and major chemical, petrochemical and refining companies. Based upon the amount of equipment installed worldwide and available industry data, Cooper Compression is a leading provider of compression equipment and related aftermarket parts and services. The Company’s compression equipment is used throughout the energy industry by gas transmission companies, compression leasing companies, oil and gas producers, independent power producers and a variety of other industries around the world.

     In addition to the historical data contained herein, this Annual Report, including the information set forth in the Company’s Management’s Discussion and Analysis and elsewhere in this report, includes forward-looking statements regarding the Company’s future revenues and earnings, cash generated from operations, capital expenditures, and plans for refinancing of certain debt instruments, as well as expectations regarding rig activity, oil and gas demand and pricing and order activity, made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company’s actual results may differ materially from those described in forward-looking statements. These statements are based on current expectations of the Company’s performance and are subject to a variety of factors, some of which are not under the control of the Company, which can affect the Company’s results of operations, liquidity or financial condition. Such factors may include overall demand for, and pricing of, the Company’s products; the size and timing of orders; the Company’s ability to successfully execute large subsea projects it has been awarded; changes in the price of and demand for oil and gas in both domestic and international markets; political and social issues affecting the countries in which the Company does business; fluctuations in currency and financial markets worldwide; and variations in global economic activity. In particular, current and projected oil and gas prices have historically affected customers’ spending levels and their related purchases of the Company’s products and services; however, recently there has been less linkage between commodity prices and spending. Additionally, the Company may change its cost structure, staffing or spending levels due to changes in oil and gas price expectations and the Company’s judgment of how such changes might affect customers’ spending, which may impact the Company’s financial results. See additional factors discussed in “Factors That May Affect Financial Condition and Future Results” contained herein.

     Because the information herein is based solely on data currently available, it is subject to change as a result of, among other things, changes in conditions over which the Company has no control or influence, and should not therefore be viewed as assurance regarding the Company’s future performance. Additionally, the Company is not obligated to make public indication of such changes unless required under applicable disclosure rules and regulations.

     The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to warranty obligations, bad debts, inventories, intangible assets, income taxes, pensions and other postretirement benefits, other employee benefit plans, and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Critical Accounting Policies

     The Company believes the following critical accounting policies affect the more significant judgments and estimates used in the preparation of its consolidated financial statements. These policies and the other sections of the Company’s Management’s Discussion and Analysis of Results of Operations and Financial Condition have been reviewed with the Company’s Audit Committee of the Board of Directors.

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     The Company generally recognizes revenue once the following four criteria are met: (i) a written contract or purchase order exists, (ii) delivery of the equipment has occurred or the customer has inspected, tested and accepted the equipment (if required by the contract) or services have been rendered, (iii) the price of the equipment or service is fixed and determinable and (iv) collectibility is reasonably assured. As the Company has expanded into the deepwater subsea systems market, a larger percentage of the Company’s revenue has been derived from projects in this market. These long lead-time projects accounted for 10.8% of the Company’s total revenues in 2003 as compared to 4.3% in 2002 and 0.6% in 2001. Since these projects are significantly more complex than the Company’s traditional product lines, scheduled delivery or acceptance dates often change. As a result, there can be more volatility in the Company’s revenues than has historically been present.

     The Company maintains allowances for doubtful accounts for estimated losses that may result from the inability of its customers to make required payments. Such allowances are based upon several factors including, but not limited to, historical experience and the current and projected financial condition of each specific customer. Were the financial condition of a customer to deteriorate, resulting in an impairment of its ability to make payments, additional allowances may be required.

     The Company’s aggregate inventories are carried at cost or, if lower, net realizable value. Inventories located in the United States and Canada are carried on the last-in, first-out (LIFO) method. Inventories located outside of the United States and Canada are carried on the first-in, first-out (FIFO) method. The Company writes down its inventory for estimated obsolescence or excess quantities on hand equal to the difference between the cost of the inventory and its estimated realizable value. If future conditions cause a reduction in the Company’s estimate of realizable value, additional provisions may be required.

     The Company provides for the estimated cost of product warranties at the time of sale, or, in some cases, when specific warranty problems are encountered. Should actual product failure rates or repair costs differ from the Company’s current estimates, revisions to the estimated warranty liability would be required. See Note 7 of the Notes to Consolidated Financial Statements for additional details surrounding the Company’s warranty accruals.

     The Company accrues for costs relating to litigation, claims and other contingent matters when such liabilities become probable and reasonably estimable. Such estimates may be based on advice from third parties or on management’s judgment, as appropriate. Actual amounts paid may differ from amounts estimated, and such differences will be charged to income in the period when final determination is made.

     The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized, considering future taxable income and ongoing prudent and feasible tax planning strategies. As of December 31, 2003, the Company had a net operating loss carryforward for U.S. tax purposes of approximately $287.0 million, which does not begin to expire until 2020. Currently, the Company believes it is more likely than not that it will generate sufficient future taxable income to fully utilize this net operating loss carryforward. Accordingly, the Company has not recorded a valuation allowance against this net operating loss carryforward. In the event the oil and gas exploration activity in the United States deteriorates over an extended period of time, the Company may determine that it would not be able to fully realize this deferred tax asset in the future. Should this occur, a valuation allowance against this deferred tax asset would be charged to income in the period such determination was made.

     Through December 31, 2001, the Company reviewed the carrying value of intangible assets, including goodwill, at least annually or whenever there were indications that the intangible might be impaired. In assessing the recoverability of these intangible assets and goodwill, the Company made assumptions regarding estimated future cash flows and other factors to determine the estimated fair value of the respective assets. Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (FAS 142), which requires that the Company estimate the fair value of each of its reporting units annually and compare such amounts to their respective book values to determine if an impairment of goodwill is required. Should the Company’s estimate of the fair value of any of its reporting units decline dramatically, an impairment of goodwill might be required.

     The Company accounts for its defined benefit pension plans in accordance with Statement of Financial Accounting Standards No. 87, Employers’ Accounting for Pensions (FAS 87), which requires that amounts recognized in the financial statements be determined on an actuarial basis. See Note 8 of the Notes to Consolidated Financial Statements for the amounts of pension expense (income) included in the Company’s Results of Operations and the Company’s contributions to the pension plans for the years ended December 31, 2003, 2002 and 2001, as well as the unrecognized net loss at December 31, 2003 and 2002.

     The assumptions used in calculating the amounts recognized in the Company’s financial statements include discount rates, interest costs, expected return on plan assets, retirement and mortality rates, inflation rates, salary growth and other factors. The Company bases the discount rate assumptions on investment yields available at the measurement date on an index of long-term, AA-rated corporate bonds. The Company’s inflation assumption is based on an evaluation of external market indicators. The expected rate of return on plan assets reflects asset allocations, investment strategy and the views of various investment professionals. Retirement and mortality rates are based primarily on actual plan experience. In accordance with FAS 87, actual results that differ from these assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense and the recorded obligation in future periods. While the Company believes the assumptions used are appropriate, differences in actual experience or changes in assumptions will affect the Company’s pension obligations and future expense.

     A significant reason for the increase in pension expense over the last three years results from the difference between the actual and assumed rates of return on plan assets. During 2001 and 2002, the Company assumed that the expected long-term rate of return on plan assets for these plans would be between 6.0% and 9.25%. In 2001 and 2002, the Company’s actual rate of return on the pension assets of these plans was substantially less than the assumed rates of return. For 2003, the Company lowered the assumed rate of return to between 6.0% and 8.9%, depending on the plan. The plans earned significantly more than the assumed rates of return in 2003.

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     The following table illustrates the sensitivity to a change in certain assumptions used in (i) the calculation of pension expense for the year ending December 31, 2004 and (ii) the calculation of the projected benefit obligation (PBO) at December 31, 2003 for the Company’s pension plans:

	Impact on 2004			Impact on
	Pre-tax Pension			December 31, 2003
(dollars in millions)	Expense			PBO
Change in Assumption:
25 basis point decrease in discount rate	$	1.1		$	12.2
25 basis point increase in discount rate		(1.1	)		(12.3	)
25 basis point decrease in expected return on assets		0.9			—
25 basis point increase in expected return on assets		(0.9	)		—

Financial Summary

     The following table sets forth the consolidated percentage relationship to revenues of certain income statement items for the periods presented:

	Year Ended December 31,
		2003		2002		2001
Revenues		100.0	%	100.0	%	100.0	%
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization)		72.3		71.7		69.2
Selling and administrative expenses		17.7		17.8		16.1
Depreciation and amortization		5.1		5.1		5.3
Interest income		(0.3	)	(0.6	)	(0.6	)
Interest expense		0.5		0.5		0.9
Total costs and expenses		95.3		94.5		90.9
Income before income taxes and cumulative effect of accounting change		4.7		5.5		9.1
Income tax provision		(1.2	)	(1.6	)	(2.8	)
Income before cumulative effect of accounting change		3.5		3.9		6.3
Cumulative effect of accounting change		0.7		—		—
Net income		4.2	%	3.9	%	6.3	%

Results of Operations

2003 Compared to 2002

     The Company had net income of $69.4 million, or $1.25 per share, for the twelve months ended December 31, 2003 compared with $60.5 million, or $1.10 per share in 2002. The results for 2003 and 2002 included pre-tax charges of $14.6 million and $33.3 million, respectively, related to plant closing, business realignment and other related costs. See Note 2 of the Notes to Consolidated Financial Statements for a discussion of these charges. The results for 2003 also include a $12.2 million after-tax gain resulting from the cumulative effect of adopting Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (FAS 150). See Note 1 of the Notes to Consolidated Financial Statements for further discussion.

Revenues

     Revenues for 2003 totaled $1.634 billion, an increase of 6.3% from 2002 revenues of $1.538 billion. Increased subsea deliveries in Cameron and the incremental revenue associated with the acquisition of a Canadian valve manufacturer in December 2002 more than offset continued weak market conditions in the domestic natural gas compression and transmission markets, which negatively impacted sales in the Cooper Compression division.

     Cameron’s revenues for 2003 totaled $1.019 billion, an increase of 10.9% from 2002 revenues of $918.7 million. Movement in foreign currencies caused a $32.4 million increase in revenues. Revenues in the subsea market increased 26.5%, revenues in the surface markets increased 1.8% and revenues in the drilling market increased 12.4%. The increase in subsea revenues was attributable to deliveries associated with the large subsea orders received during 2002, primarily related to projects located offshore West Africa and eastern Canada. The increase in drilling revenues was primarily attributable to increased deliveries to customers located in the former Soviet Union.

     CCV’s revenues for 2003 totaled $307.1 million, an increase of 12.3% from 2002 revenues of $273.5 million. Revenues increased 61.2% in the distributor product line, revenues in the engineered product line decreased 12.4%, and revenues in the aftermarket product line increased 9.6%. The vast majority of the revenue increase in the distributor product line was attributable to the acquisition of a Canadian valve manufacturer in December 2002. The decrease in revenues in the engineered product line was attributable to the downturn

27

in North American pipeline project activity, which began in 2002. The increase in the aftermarket product line was primarily attributable to new locations that were opened during 2003.

     Cooper Compression’s revenues for 2003 totaled $308.8 million, a decrease of 10.7% from 2002 revenues of $345.9 million. Aftermarket and new unit sales in the gas compression market decreased approximately 21% and 15%, respectively. The decrease in revenues in the gas compression market was attributable primarily to a lack of demand in the U.S. market resulting from, among other things, the financial difficulties that Cooper Compression’s customers experienced throughout the year, consolidation of the Company’s customer base and a lack of significant development projects that would require Cooper Compression’s equipment. In the air compression portion of Cooper Compression’s business, new unit sales increased 27.2%, while aftermarket revenue decreased 12.7%. The increase in new unit sales in the air compression business was attributable primarily to greater demand in the Asian markets. The decrease in aftermarket sales was attributable primarily to a change in mix from engineered units to plant air units, which do not carry the same level of aftermarket business as engineered units.

Cost and Expenses

     Gross margin (exclusive of depreciation and amortization) for 2003 was $452.7 million, an increase of 3.9% from 2002 gross margin of $435.6 million. Gross margin as a percentage of revenue for 2003 was 27.7% as compared to 28.3% for 2002. Included in cost of sales for 2003 was $16.2 million of increased costs in Cameron’s subsea business and $15.9 million of non-cash LIFO income, primarily associated with the liquidation of certain low-cost LIFO inventory layers in Cooper Compression. Included in cost of sales in 2002 was $11.2 million related to an inventory write-down in Cooper Compression associated with facility closures.

     Cameron’s gross margin percentage for 2003 was 25.5% as compared to 28.0% for 2002. The decrease in the gross margin percentage resulted primarily from $16.2 million of increased costs in Cameron’s subsea business related to increased scope changes, cost overruns and estimated liquidated damages that could be assessed by Cameron’s customers (which decreased the overall gross margin by 1.6%), as well as an overall increase in subsea revenues, which typically carry a lower margin percentage as compared to Cameron’s traditional surface products.

     CCV’s gross margin percentage for 2003 was 30.6% as compared to 30.5% for 2002. The increase in the gross margin percentage was attributable to higher margins associated with the sales resulting from the acquisition of a Canadian valve manufacturer in December 2002, partially offset by lower margins in the pipeline ball valve product line due to a shift to international projects, which typically carry lower margins as compared to domestic pipeline projects.

     Cooper Compression’s gross margin percentage for 2003 was 32.2% as compared to 27.5% for 2002. The increase in the gross margin percentage resulted from an $11.5 million increase in the amount of LIFO income associated with the liquidation of certain low-cost inventory layers (which increased the 2003 gross margin percentage by 3.7%) and the absence of an $11.2 million write-down of inventory associated with facility closures that was recorded in 2002 (which decreased the 2002 gross margin percentage by 3.3%). Excluding these two items, the gross margin percentage for 2003 actually declined 2.3% from 2002’s level, due primarily to lower margins in the gas and air compression aftermarket business as a result of a shift in the mix of parts sold and pricing pressures.

     Selling and administrative expenses for 2003 were $288.6 million, an increase of 5.7% from 2002’s $273.1 million. The increase in selling and administrative expenses resulted primarily from (i) the impact of a weaker U.S. dollar against the Canadian dollar and most European currencies, which increased selling and administrative expense by $6.0 million, (ii) the acquisition of a Canadian valve manufacturer in December 2002, which resulted in an additional $3.7 million of selling and administrative costs in 2003, (iii) a $5.0 million increase in postretirement benefit plan costs associated primarily with the amortization of unrecognized losses in prior years, (iv) a $3.9 million increase associated with rent on the Cameron headquarters building and costs associated with new facilities and (v) $1.8 million of increased costs associated with CCV’s aftermarket expansion. These increases were partially offset by a $7.5 million reduction in plant closings, business realignment and other related costs discussed below.

     Included within selling and administrative expenses for 2003 and 2002 were $14.6 million and $22.1 million, respectively, of plant closing, business realignment and other related costs. The $14.6 million recorded in 2003 was comprised of (i) $6.2 million for employee severance at Cameron and Cooper Compression, (ii) $1.2 million of costs at Cooper Compression related to the closure of 13 facilities announced in the fourth quarter of 2002, (iii) $4.7 million related to the Company’s unsuccessful efforts to acquire a certain oil service business, (iv) $1.0 million related to the Company’s international tax restructuring activities, which were begun in 2002, and (v) $1.5 million related to a litigation award associated with the use of certain intellectual property obtained in connection with a previous acquisition. Of the $22.1 million recorded in 2002, $14.6 million related to the Cooper Compression division and $7.5 million related to the Company’s other divisions. The costs attributable to Cooper Compression were generally related to the closure of 13 facilities in the gas compression business and were comprised primarily of (i) $1.6 million of severance and relocation expenses, (ii) $8.2 million of facility exit costs, including lease termination payments, and (iii) $4.8 million of facility write-downs. The $7.5 million of costs related to the Company’s other divisions was comprised of (i) $1.1 million of severance, (ii) $5.2 million of facility write-downs and losses on property disposals, and (iii) $1.2 million of costs associated with the Company’s international tax restructuring activities.

     Depreciation and amortization expense for 2003 was $83.6 million, an increase of 7.3% from 2002 depreciation and amortization expense of $77.9 million. The increase in depreciation and amortization expense was attributable to (i) a $2.8 million increase attributable to depreciation and amortization associated with capital additions, (ii) a $1.4 million increase attributable to depreciation and amortization associated with acquisitions, (iii) the impact of a weaker U.S. dollar against the British pound, Canadian dollar and Euro, which increased depreciation and amortization expense by $1.8 million, (iv) $1.8 million of write-downs associated with assets held for sale, and (v) a $7.7 million increase attributable to amortization associated with the Company’s new enterprise-wide business system, partially offset by the lack of depreciation and amortization related to assets that were retired or became fully depreciated, which decreased depreciation and amortization expense by approximately $9.1 million.

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     Interest income for 2003 was $5.2 million as compared to $8.5 million in 2002. The decline in interest income was primarily attributable to lower earnings on the Company’s excess cash balances as the interest rates associated with these investments have declined.

     Interest expense for 2003 was $8.2 million as compared to $8.0 million in 2002. Interest expense for both periods primarily represented interest on the Company’s convertible debentures.

     The $12.2 million cumulative effect of an accounting change recognized during 2003 reflects the impact of adopting FAS 150 (see Note 1 of the Notes to Consolidated Financial Statements). There was no tax expense associated with this item as the gain is not taxable.

     The income tax provision was $20.4 million in 2003 as compared to $24.7 million in 2002. The effective tax rate for 2003 was 26.2% as compared to 29.0% in 2002. The decline in the effective tax rate for 2003 primarily reflects the impact of the Company’s international tax restructuring activities.

Orders and Backlog

     Orders were as follows (in millions):

	Year Ended December 31,
		2003		2002	Increase
Cameron	$	1,082.4	$	1,081.6	$	0.8
CCV		324.0		258.4		65.6
Cooper Compression		340.2		325.0		15.2
	$	1,746.6	$	1,665.0	$	81.6
Orders for 2003 were $1.747 billion, an increase of 4.9% from $1.665 billion in 2002. Cameron’s orders for 2003 were $1.082 billion as compared to $1.082 billion for 2002. Movement in foreign currencies caused a $46.3 million increase in orders. An 11.0% decrease in subsea orders was offset by an 11.3% increase in drilling orders and a 6.0% increase in surface orders. The decrease in subsea orders was due primarily to a reduction in the overall level of project awards in 2003 as compared to 2002. The increase in drilling and surface orders was due primarily to increased activity in Canada and Latin America. CCV’s orders were $324.0 million, an increase of 25.4% from $258.4 million in 2002. Over 90% of this increase is attributable to the distributor product line, in particular, the acquisition of a Canadian valve manufacturer in December 2002. Cooper Compression’s orders were $340.2 million, an increase of 4.7% from $325.0 million in 2002. A 39.7% increase in new unit orders in the gas and air compression businesses was partially offset by a 10.3% decline in aftermarket orders in these businesses. The increase in new unit orders was driven by international sales, particularly Mexico, Asia and Europe. The decrease in aftermarket orders was caused primarily by the financial difficulties domestic customers in the gas compression market have experienced recently.
Backlog was as follows (in millions):
	Year Ended December 31,
		2003		2002	Increase
Cameron	$	771.8	$	695.8	$	76.0
CCV		72.4		56.1		16.3
Cooper Compression		102.4		75.9		26.5
	$	946.6	$	827.8	$	118.8

2002 Compared to 2001

     The Company had net income of $60.5 million, or $1.10 per share, for the twelve months ended December 31, 2002 compared with $98.3 million, or $1.75 per share in 2001. The results for 2002 and 2001 included pre-tax charges of $33.3 million and $20.2 million, respectively, related to plant closing, business realignment and other related costs. See Note 2 of the Notes to Consolidated Financial Statements for a discussion of these charges.

Revenues

     Revenues for 2002 totaled $1.538 billion, a decrease of 1.6% from 2001 revenues of $1.563 billion. Increased subsea deliveries in Cameron were more than offset by weak market conditions in domestic natural gas and compression and transmission markets, which negatively impacted sales in Cameron’s North American surface and aftermarket business and the CCV and Cooper Compression divisions.

     Cameron’s revenues for 2002 totaled $918.7 million, an increase of 2.4% from 2001 revenues of $897.6 million. Revenue in the subsea and international surface markets increased 13.7%, which more than offset declines in North American surface and aftermarket revenues of 13.0%. The increase in subsea revenues was attributable to the large increase in subsea orders received during 2001, primarily related to projects located offshore West Africa. North American surface and aftermarket revenues declined primarily as a result of weakness in the rig count in this region.

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     CCV’s revenues for 2002 totaled $273.5 million, a decrease of 6.4% from 2001 revenues of $292.3 million. Increased revenues in the Cameron Ball Valve product line of 16.5% were more than offset by declines in the distributor, Orbit and aftermarket product lines, which decreased 17.0%. The increase in the Cameron Ball Valve product line was attributable to the significant pipeline backlog that existed at December 31, 2001. The decline in the distributor product line resulted from weakness in the North American gas market. The decline in the Orbit product line was due to both weakness in the specialty valve market and intense competitive pressures in this market during 2002. Finally, the decline in the aftermarket product line resulted from softness in the pipeline, refining and petrochemical markets during the latter part of 2002.

     Cooper Compression’s revenues for 2002 totaled $345.9 million, a decrease of 7.3% from 2001 revenues of $373.1 million. Increased aftermarket revenues of 7.9% in the gas compression market were more than offset by a 45.3% decline in new unit sales in this market. The air compression portion of Cooper Compression’s business was relatively flat in 2002 as compared to 2001. The increase in aftermarket revenues in the gas compression market was attributable primarily to the acquisitions Cooper Compression made in 2001. The decrease in new unit sales in the gas compression market resulted from a lack of demand in this market attributable to, among other things, the financial difficulties that Cooper Compression’s customers experienced throughout the year and a lack of significant development projects that would require Cooper Compression’s equipment.

Cost and Expenses

     Gross margin (exclusive of depreciation and amortization) for 2002 was $435.6 million, a decrease of 9.6% from 2001 gross margin of $481.8 million. Gross margin as a percentage of revenue for 2002 was 28.3% as compared to 30.8% for 2001. The gross margin percentage for 2002 was negatively impacted by an $11.2 million inventory write-down in the Cooper Compression division associated with facility closures, which decreased the gross margin percentage by 0.7%.

     Cameron’s gross margin percentage for 2002 was 28.0% as compared to 31.6% for 2001. The decrease in the gross margin percentage resulted from pricing pressures in the North American surface and aftermarket businesses and the increased subsea shipments during 2002, which typically carry a lower margin percentage as compared to the Company’s traditional surface products.

     CCV’s gross margin percentage for 2002 was 30.5% as compared to 31.1% for 2001. The decline in the gross margin percentage was attributable to relatively fixed overhead costs which did not decline proportionally with the decline in revenues (resulting in an approximate 1.1% decrease in the gross margin percentage), partially offset by a reduction in warranty expense in 2002, which increased the gross margin percentage by 0.5%. Warranty expense in 2001 was abnormally high due to a dispute on an international pipeline project.

     Cooper Compression’s gross margin percentage for 2002 was 27.5% as compared to 28.9% for 2001. The decrease in the gross margin percentage resulted from an $11.2 million inventory write-down associated with facility closures (which decreased Cooper Compression’s margin percentage by 3.3%), partially offset by manufacturing efficiencies and a higher percentage of aftermarket revenues, which typically carry higher margins.

     Selling and administrative expenses for 2002 were $273.1 million, an increase of 8.7% from 2001’s $251.3 million. The increase in selling and administrative expenses resulted primarily from $3.5 million of increased investment associated with the Company’s expansion into the subsea markets and $11.4 million of higher postretirement benefit plan costs, associated primarily with lower returns on pension assets.

     Included within selling and administrative expenses for 2002 and 2001 were $22.1 million and $20.2 million, respectively, of plant closing, business realignment and other related costs. Of the $22.1 million recorded in 2002, $14.6 million related to the Cooper Compression division and $7.5 million related to the Company’s other divisions. The costs attributable to Cooper Compression were generally related to the closure of 13 facilities in the gas compression business and were comprised primarily of: (i) $1.6 million of severance and relocation expenses, (ii) $8.2 million of facility exit costs, including lease termination payments, and (iii) $4.8 million of facility write-downs. The $7.5 million of costs related to the Company’s other divisions was comprised of: (i) $1.1 million of severance, (ii) $5.2 million of facility write-downs and losses on property disposals, and (iii) $1.2 million of costs associated with the Company’s international tax restructuring activities. Of the $20.2 million recorded in 2001, $4.5 million related to employee severance and relocation costs, $2.5 million related to contract cancellation costs and $11.6 million related to plant shutdown costs.

     Depreciation and amortization expense for 2002 was $77.9 million, a decrease of 6.2% from 2001’s $83.1 million. The decrease in depreciation and amortization expense was attributable to (i) the lack of goodwill amortization for 2002 due to the implementation of FAS 142 (approximately $10.7 million) and (ii) lack of depreciation and amortization related to assets that were retired or became fully depreciated (approximately $5.2 million), partially offset by (i) an $8.5 million increase attributable to depreciation and amortization associated with capital additions, (ii) a $1.3 million increase attributable to depreciation and amortization associated with acquisitions, and (iii) a $2.0 million increase attributable to accelerated amortization associated with computer systems to be replaced by a new enterprise-wide system.

     Interest income for 2002 was $8.5 million as compared to $8.6 million in 2001. Interest expense for 2002 was $8.0 million, a decrease of $5.5 million from 2001 interest expense of $13.5 million. The decline in interest expense was primarily attributable to the retirement of outstanding higher-cost debt with the proceeds from the lower-cost convertible debentures that were issued in May 2001.

     The effective tax rate for 2002 was 29.0% compared to 31.0% for 2001. The reduction in the effective tax rate for 2002 was primarily attributable to the discontinuance of amortizing goodwill, which has historically been a permanent tax difference.

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Recent Pronouncements

     In May 2003, the Financial Accounting Standards Board (FASB) issued FAS 150, which became effective for the Company as of the beginning of the third quarter of 2003. FAS 150 affected the Company’s accounting for its two forward purchase agreements covering 1,006,500 shares of the Company’s common stock. Prior to the adoption of FAS 150, these agreements were treated as permanent equity and changes in the fair value of these agreements were not recognized. Upon the adoption of FAS 150, the Company recorded these agreements as an asset at their estimated fair value of $12.2 million. This amount has been reflected as the cumulative effect of an accounting change in the Company’s consolidated results of operations for 2003. There was no tax expense associated with this item as the gain is not taxable. The Company terminated these forward contracts effective August 14, 2003 by paying the counterparty approximately $38.0 million to purchase the shares covered by these agreements. The shares have been reflected as treasury stock in the Company’s consolidated balance sheet at December 31, 2003 at an amount equal to the cash paid to purchase the shares plus the estimated fair value of the agreements. This amount aggregated $50.0 million. The change in the fair value of the forward purchase agreements from July 1, 2003 to August 14, 2003, which was a loss of $0.2 million, was recognized in the Company’s consolidated results of operations.

     The Company adopted FASB Interpretation No. 46, Consolidation of Variable Interest Entities, in 2003. The interpretation requires the consolidation of variable interest entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. The adoption of this interpretation did not have any impact on the Company’s consolidated financial statements.

Liquidity and Capital Resources

     The Company’s combined cash and short-term investment balances increased to $314.1 million at December 31, 2003 from $299.1 million at December 31, 2002, due primarily to stronger Canadian and European currency values versus the U.S. dollar. During 2003, the Company’s operating activities generated $101.6 million of cash as compared to $177.8 million in 2002. Cash flow from operations in 2003 was comprised primarily of net income of $69.4 million, adjusted for depreciation and amortization of $83.6 million, and $38.2 million of working capital increases. The most significant increase in working capital was a $59.8 million increase in inventory, primarily to support the Company’s large subsea projects. The increase in subsea inventories was also impacted by delays in the delivery of certain equipment resulting from the manufacturing issues which arose during the fourth quarter of 2003. Accounts payable and accrued liabilities increased $44.6 million, primarily as a result of the timing of progress payments and cash advances associated with subsea projects. Other assets and liabilities increased $26.2 million, primarily as a result of $18.7 million of contributions to the Company’s various pension plans, as well as $7.4 million related to the purchase of several properties near a former manufacturing site in Houston, Texas.

     During 2003, the Company’s investing activities consumed $52.1 million of cash as compared to $25.3 million in 2002. Capital expenditures in 2003 of $64.7 million decreased from expenditures in 2002 of $82.1 million as the Company’s 2002 expenditures included $24.3 million for its enterprise-wide software system. Cash spent on acquisitions totaled $67.8 million for 2002 and was comprised of the acquisitions of a Canadian valve manufacturer, a wellhead business located in West Texas and certain drilling and riser-related assets from another oilfield equipment supplier. During 2002, the Company entered into a sale-leaseback transaction for its Cameron headquarters and sold land formerly used by the Cameron division. The Company realized net proceeds from these transactions of $39.5 million.

     During 2003, the Company’s financing activities consumed $47.9 million of cash, as compared to $2.3 million of cash in 2002. During 2003, the Company repurchased 1,251,900 shares of its stock at a total cost of $48.7 million.

     The Company is attempting to dispose of certain specialized fixed assets with a net book value of $2.6 million at December 31, 2003. Based upon an offer received on this equipment, the Company recorded an $0.8 million write-down on this equipment. If the Company is unable to ultimately dispose of these assets at the recorded value at December 31, 2003, additional write-downs will be required.

     During the fourth quarter of 2003, the Company entered into a credit agreement (the “Credit Agreement”) with various banks which provided for an aggregate multi-currency borrowing capacity as well as the ability to issue letters of credit totaling $200.0 million. The Credit Agreement expires December 12, 2007. The Credit Agreement provides for unsecured borrowings at the London Interbank Offered Rate (LIBOR) plus 0.40%. In addition to certain up-front costs, the agreement carries a facility fee of 0.10% per annum on the committed amount of the facility plus a usage fee of 0.125% on the outstanding borrowings if such amounts exceed 33% of the total amount committed, or approximately $66.0 million. The Credit Agreement also contains certain covenants, including maintaining specific interest coverage and debt-to-total capitalization ratios. The Company was in compliance with all loan covenants at year-end. The entire amount of the facility was available for borrowing at December 31, 2003.

     The Company has two series of convertible debentures outstanding. The first series consists of twenty-year zero-coupon convertible debentures with an aggregate principal amount at maturity of approximately $320.8 million. The holders of these debentures have the right to require the Company to repurchase the debentures on May 17, 2004 at an aggregate price of approximately $259.5 million. Accordingly, this obligation has been classified as a current liability as of December 31, 2003 in the Company’s consolidated balance sheet. The holders of the second series of debentures, aggregating $200.0 million, cannot require the Company to repurchase the debentures until May 2006.

     The Company currently believes it will be required to repurchase the first series of convertible debentures during the second quarter of 2004. The Company intends to repurchase these debentures with the proceeds of a new debt issuance. If the Company cannot execute a debt issuance on satisfactory terms, the Company would be forced to fund the repurchase of the debentures with proceeds from the Credit Agreement and available cash balances. Should this occur, the Company’s available liquidity would be negatively impacted.

     In January 2004, the Company reached an agreement to acquire Petreco International, a Houston-headquartered supplier of oil and gas separation products, for approximately $90 million, net of cash acquired and debt assumed. Petreco’s 2003 revenues were approximately $117 million, and income before taxes was approximately $12 million.

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     The Company currently expects to fund expenditures for capital requirements (estimated to be approximately $70 million for 2004) and the Petreco acquisition, as well as general liquidity needs, from available cash and short-term investment balances, cash generated from operating activities and amounts available under the Credit Agreement.

     During the third quarter of 2003, the Company terminated two forward purchase agreements with a third-party financial institution covering a total of 1,006,500 shares of the Company’s common stock by paying the third-party financial institution approximately $38.0 million. As a result of the termination, the Company acquired the 1,006,500 shares from the third-party financial institution and recorded the acquired shares as treasury stock. See Note 1 of the Notes to Consolidated Financial Statements.

     The following summarizes the Company’s significant cash contractual obligations and other commercial commitments for the next five years as of December 31, 2003.

(dollars in millions)			Payments Due by Period
			Less Than		1 - 3		4 - 5		After 5
Contractual Obligation	Total		1 Year		Years		Years		Years
Debt	$	461.7	$	261.5	$	0.2	$	200.0	$	—	(a)
Capital lease obligations		7.5		3.6		3.5		0.4		—	(b)
Operating leases		96.9		13.3		17.7		13.5		52.4
Total contractual cash obligations	$	566.1	$	278.4	$	21.4	$	213.9	$	52.4

(a)	See Note 10 of the Notes to Consolidated Financial Statements for information on redemption rights by the Company, and by holders of the Company’s debentures, that would allow for redemption of the zero-coupon debentures beginning in 2004 and for redemption of the interest-bearing debentures beginning in 2006.
(b)	Payments shown include interest.

(dollars in millions)	Amount of Commitment Expiration Per Period
Other Commercial Obligations	Total		Less Than		1 - 3		4 - 5		After 5
and Off-Balance Sheet Arrangements	Commitment		1 Year		Years		Years		Years
Committed lines of credit	$	200.0	$	—	$	—	$	200.0	$	—
Standby letters of credit		137.6		66.2		55.2		0.1		16.1
Bank guarantees and letters of credit		23.8		—		10.0		1.5		12.3
Guarantees of a portion of joint venture debt		1.5		—		1.5		—		—
Total commercial commitments	$	362.9	$	66.2	$	66.7	$	201.6	$	28.4

     The Company secures certain contractual obligations under various agreements with its customers or other parties through the issuance of letters of credit or bank guarantees. The Company has various agreements with financial institutions to issue such instruments. As of December 31, 2003, the Company had $161.4 million of letters of credit and bank guarantees outstanding. Should these facilities become unavailable to the Company, the Company’s operations and liquidity could be negatively impacted. Circumstances which could result in the withdrawal of such facilities include, but are not limited to, deteriorating financial performance of the Company, deteriorating financial condition of the financial institutions providing such facilities, overall constriction in the credit markets or rating downgrades of the Company.

Factors That May Affect Financial Condition and Future Results

Changes in the U.S. rig count have historically impacted the Company’s orders.

     Historically, the Company’s surface and distributor valve businesses in the U.S. market have tracked changes in the U.S. rig count. However, this correlation did not exist in 2003. The average U.S. rig count increased approximately 24% during the year while the Company’s U.S. surface and U.S. distributor valve orders were essentially flat. The Company believes its surface and distributor valve businesses were negatively impacted by the lack of drilling activity in the Gulf of Mexico, fewer completions of onshore high-temperature/high-pressure wells and a lower level of infrastructure development in the U.S. Such activity typically generates higher orders for the Company as compared to onshore shallow well activity.

Execution of deepwater subsea systems projects exposes the Company to new risks.

     The Company continues to expand into the deepwater subsea systems market. This market is significantly different from the Company’s other markets since deepwater subsea systems projects are significantly larger in scope and complexity, in terms of both technical and logistical requirements. Deepwater subsea projects (i) typically involve long lead times, (ii) typically are larger in financial scope, (iii) typically require substantial engineering resources to meet the technical requirements of the project and (iv) often involve the application of existing technology to new environments and in some cases, new technology. These projects accounted for 10.8%, 4.3% and 0.6% of total revenues in 2003, 2002 and 2001, respectively. During the fourth quarter of 2003, the Company experienced numerous shipment delays

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on its deepwater subsea systems contracts. Accordingly, the Company was unable to recognize revenue in 2003 on the delayed shipments, which had an aggregate sales value of approximately $30 million. The Company expects to recognize this revenue in 2004. Additionally, the Company incurred approximately $10.8 million of incremental costs related to these subsea contracts, which was reflected as cost of sales in the fourth quarter of 2003. The Company also recorded $5.4 million of estimated liquidated damages that could be assessed by Cameron’s customers as a result of the delays experienced during the fourth quarter of 2003. To the extent the Company continues to experience difficulties in meeting the technical and/or delivery requirements of the projects, the Company’s earnings or liquidity could be negatively impacted. As of December 31, 2003, the Company had a deepwater subsea backlog of approximately $373.3 million.

Fluctuations in worldwide currency markets can impact the Company’s profitability.

     The Company has established multiple “Centers of Excellence” facilities for manufacturing such products as subsea trees, subsea chokes, subsea production controls and BOPs. These production facilities are located in the United Kingdom and other European and Asian countries. To the extent the Company sells these products in U.S. dollars, the Company’s profitability is eroded when the U.S. dollar weakens against the British pound, the Euro and other currencies. This occurred throughout 2003. The Company estimates that its gross profit, as a percentage of revenue, was negatively impacted by 0.4% during 2003 as a result of the weakening U.S. dollar. To the extent the U.S. dollar continues to weaken, future profitability could be negatively impacted.

Increases in the cost of metals used in the Company’s manufacturing processes could negatively impact the Company’s profitability.

     During the latter part of 2003, commodity prices for items such as nickel, molybdenum and heavy metal scrap that are used to make the steel alloys required for the Company’s products began to increase significantly. Certain of the Company’s suppliers are beginning to attempt to pass these increases on to the Company. If the Company is not successful in raising its prices on products that are manufactured from these metals, future profitability may be negatively impacted.

Cooper Compression’s aftermarket revenues associated with legacy equipment are declining.

     Approximately 39% of Cooper Compression’s revenues come from the sale of replacement parts for equipment that the Company no longer manufactures. Many of these units have been in service for long periods of time, and are gradually being replaced. As this installed base of legacy equipment declines, the Company’s potential market for parts orders is also reduced. In recent years, the Company’s revenues from replacement parts associated with legacy equipment have declined nominally.

Changes in the financial condition of the Company’s customers could impact the Company’s business.

     Erosion of the financial condition of customers could adversely affect the Company’s business with regard to both receivables exposure and future revenue realization. In both the Cooper Compression and CCV divisions, a significant portion of revenues for 2001 through 2003 were derived from several domestic customers in the pipeline and gas compression business that are reported to be experiencing financial and/or other difficulties related to their capitalization. The Company believes that these difficulties have negatively impacted the Company’s business with these customers, particularly in the Cooper Compression division. To the extent these customers’ difficulties continue, worsen, and/or result in further curtailments of their expenditures, the Company’s revenues and earnings will continue to be negatively affected.

Downturns in the oil and gas industry have had, and may in the future have, a negative effect on the Company’s sales and profitability.

     Demand for most of the Company’s products and services, and therefore its revenues, depend to a large extent upon the level of capital expenditures related to oil and gas exploration, production, development, processing and transmission. Declines, as well as anticipated declines, in oil and gas prices could negatively affect the level of these activities. Factors that contribute to the volatility of oil and gas prices include the following:

• the demand for oil and gas, which is impacted by economic and political conditions and weather;

• the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and pricing;

• the level of production from non-OPEC countries;

• governmental policies regarding exploration and development of oil and gas reserves;

• the political environments of oil and gas producing regions, including the Middle East;

• the depletion rates of gas wells in North America; and

• advances in exploration and development technology.

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The Company’s international operations expose it to instability and changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations and other risks inherent to international business.

     The Company has manufacturing and service operations that are essential parts of its business in developing countries and economically and politically volatile areas in Africa, Latin America, the Middle East and the Asia-Pacific region. Additionally, the Company purchases a large portion of its raw materials and components from a relatively small number of foreign suppliers in countries such as India, South Korea, Taiwan and China. The risks of international business that the Company is exposed to include the following:

• volatility in general economic, social and political conditions;

• differing tax rates, tariffs, exchange controls or other similar restrictions;

• changes in currency rates;

• inability to repatriate income or capital;

• changes in, and compliance with, domestic and foreign laws and regulations which impose a range of restrictions on operations, trade practices, trade partners and investment decisions;

• reductions in the number or capacity of qualified personnel; and

• seizure of equipment.

Implementation of a new enterprise-wide software system could disrupt the Company’s business processes.

     The Company is in the process of implementing a new enterprise-wide software system. During October 2002, the Company converted the U.S. and Canadian operations of Cameron and CCV to the new system. During 2003, the Company converted Cooper Compression, as well as various foreign subsidiaries, to the new system. The Company’s remaining operations are expected to be converted to the new system during 2004. Any disruption in this implementation could negatively affect the Company’s ability to develop, procure, manufacture and/or deliver products, and could disrupt the Company’s financial reporting system.

Changes in the equity and debt markets impact pension expense and funding requirements for the Company’s defined benefit plans.

     The Company accounts for its defined benefit pension plans in accordance with FAS 87, which requires that amounts recognized in the financial statements be determined on an actuarial basis. A significant element in determining the Company’s pension income or expense in accordance with FAS 87 is the expected return on plan assets. The assumed long-term rate of return on assets is applied to a calculated value of plan assets, which results in an estimated return on plan assets that is included in current year pension income or expense. The difference between this expected return and the actual return on plan assets is deferred and amortized against future pension income or expense. Due to the weakness in the overall equity markets from 2000 through 2002, the plan assets earned a rate of return substantially less than the assumed long-term rate of return during this period. As a result, expense associated with the Company’s pension plans has increased significantly from the level recognized historically.

     Additionally, FAS 87 requires the recognition of a minimum pension liability to the extent the assets of the plans are below the accumulated benefit obligation of the plans. In order to avoid recognizing this minimum pension liability, the Company contributed approximately $18.7 million to its pension plans during 2003 and $27.1 million in 2002. If the Company’s pension assets perform poorly in the future, the Company may be required to recognize a minimum pension liability in the future or fund additional amounts to the pension plans.

The Company is subject to environmental, health and safety laws and regulations that expose the Company to potential liability.

     The Company’s operations are subject to a variety of national and state, provisional and local laws and regulations, including laws and regulations relating to the protection of the environment. The Company is required to invest financial and managerial resources to comply with these laws and expects to continue to do so in the future. To date, the cost of complying with governmental regulation has not been material, but the fact that such laws or regulations are frequently changed makes it impossible for the Company to predict the cost or impact of such laws and regulations on the Company’s future operations. The modification of existing laws or regulations or the adoption of new laws or regulations imposing more stringent environmental restrictions could adversely affect the Company.

Excess cash can be invested in marketable securities, which may subject the Company to potential losses.

     The Company has invested in publicly-traded debt and equity securities from time to time. Changes in the financial markets, including interest rates, as well as the performance of the issuing companies, can affect the market value of the Company’s short-term investments.

34

Environmental Remediation

     The cost of environmental remediation and compliance has not been a material expense for the Company during any of the periods presented. The Company has been identified as a potentially responsible party (PRP) with respect to three sites designated for cleanup under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) or similar state laws. The Company’s involvement at two of the sites is believed to be at a de minimis level. The third site is Osborne, Pennsylvania (a landfill into which the Cooper Compression operation in Grove City, Pennsylvania deposited waste), where remediation is complete and remaining costs relate to ongoing ground water treatment and monitoring. The Company is also engaged in site cleanup under the Voluntary Cleanup Plan of the Texas Commission on Environmental Quality at former manufacturing locations in Houston and Missouri City, Texas.

     Additionally, the Company has discontinued operations at a number of other sites which had previously been in existence for many years. The Company does not believe, based upon information currently available, that there are any material environmental liabilities existing at these locations.

     The Company has estimated its liability for environmental exposures, and the Company’s consolidated financial statements included a liability balance of $9.9 million for these matters at December 31, 2003. Cash expenditures for the Company’s known environmental exposures are expected to be incurred over the next twenty years, depending on the site. For the known exposures, the accrual reflects the Company’s best estimate of the amount it will incur under the agreed-upon or proposed work plans. The Company’s cost estimates were determined based upon the monitoring or remediation plans set forth in these work plans and have not been reduced by possible recoveries from third parties. These cost estimates are reviewed on an annual basis or more frequently if circumstances occur which indicate a review is warranted. The Company’s estimates include equipment and operating costs for remediation and long-term monitoring of the sites. The Company does not believe that the losses for the known exposures will exceed the current accruals by material amounts, but there can be no assurances to this effect.

Market Risk Information

     A large portion of the Company’s operations consist of manufacturing and sales activities in foreign jurisdictions, principally in Europe, Canada, West Africa, the Middle East, Latin America and the Pacific Rim. As a result, the Company’s financial performance may be affected by changes in foreign currency exchange rates or weak economic conditions in these markets. Overall, the Company generally is a net receiver of Pounds Sterling and Canadian dollars and, therefore, benefits from a weaker U.S. dollar with respect to these currencies. Typically, the Company is a net payer of euros and Norwegian krone as well as other currencies such as the Singapore dollar and the Brazilian real. A weaker U.S. dollar with respect to these currencies may have an adverse effect on the Company. For each of the last three years, the Company’s gain or loss from foreign currency-denominated transactions has not been material.

     In order to mitigate the effect of exchange rate changes, the Company will often attempt to structure sales contracts to provide for collections from customers in the currency in which the Company incurs its manufacturing costs. In certain limited instances, the Company has historically entered into forward foreign currency exchange contracts to hedge specific, large, non-U.S. dollar anticipated receipts or large anticipated receipts in currencies for which the Company does not traditionally have fully offsetting local currency expenditures. As of December 31, 2003, there were no outstanding forward foreign currency exchange contracts.

35

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
Cooper Cameron Corporation

     We have audited the accompanying consolidated balance sheets of Cooper Cameron Corporation as of December 31, 2003 and 2002 and the related statements of consolidated results of operations, consolidated changes in stockholders’ equity and consolidated cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cooper Cameron Corporation at December 31, 2003 and 2002, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States.

Houston, Texas
January 27, 2004

36

CONSOLIDATED RESULTS OF OPERATIONS

(dollars in thousands, except per share data)

	Year Ended December 31,
	2003			2002			2001
Revenues	$	1,634,346		$	1,538,100		$	1,562,899
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization)		1,181,650			1,102,504			1,081,078
Selling and administrative expenses		288,569			273,105			251,303
Depreciation and amortization		83,565			77,907			83,095
Interest income		(5,198	)		(8,542	)		(8,640	)
Interest expense		8,157			7,981			13,481
Total costs and expenses		1,556,743			1,452,955			1,420,317
Income before income taxes and cumulative effect of accounting change		77,603			85,145			142,582
Income tax provision		(20,362	)		(24,676	)		(44,237	)
Income before cumulative effect of accounting change		57,241			60,469			98,345
Cumulative effect of accounting change		12,209			—			—
Net income	$	69,450		$	60,469		$	98,345
Basic earnings per share:
Before cumulative effect of accounting change	$	1.05		$	1.12		$	1.82
Cumulative effect of accounting change		0.23			—			—
Net income	$	1.28		$	1.12		$	1.82
Diluted earnings per share:
Before cumulative effect of accounting change	$	1.04		$	1.10		$	1.75
Cumulative effect of accounting change		0.21			—			—
Net income	$	1.25		$	1.10		$	1.75

The Notes to Consolidated Financial Statements are an integral part of these statements.

37

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except shares and per share data)

	December 31,
	2003			2002
Assets
Cash and cash equivalents	$	292,116		$	273,800
Short-term investments		22,033			25,290
Receivables, net		316,135			304,821
Inventories, net		473,207			387,218
Other		44,210			26,732
Total current assets		1,147,701			1,017,861
Plant and equipment, at cost less accumulated depreciation		471,333			475,914
Goodwill, less accumulated amortization		316,098			301,882
Other assets		205,553			202,013
Total assets	$	2,140,685		$	1,997,670
Liabilities and stockholders’ equity
Current portion of long-term debt	$	265,011		$	4,870
Accounts payable and accrued liabilities		397,326			354,377
Accrued income taxes		17,582			15,563
Total current liabilities		679,919			374,810
Long-term debt		204,061			462,942
Postretirement benefits other than pensions		43,446			45,161
Deferred income taxes		46,049			45,641
Other long-term liabilities		30,487			27,813
Total liabilities		1,003,962			956,367
Stockholders’ equity:
Common stock, par value $.01 per share, 150,000,000 shares authorized, 54,933,658 shares issued (54,566,054 at December 31, 2002)		549			546
Preferred stock, par value $.01 per share, 10,000,000 shares authorized, no shares issued or outstanding		—			—
Capital in excess of par value		957,912			949,188
Retained earnings		177,597			108,147
Accumulated other elements of comprehensive income		55,329			(14,789	)
Less: Treasury stock, 1,130,600 shares at December 31, 2003 (54,954 shares at December 31, 2002)		(54,664	)		(1,789	)
Total stockholders’ equity		1,136,723			1,041,303
Total liabilities and stockholders’ equity	$	2,140,685		$	1,997,670

The Notes to Consolidated Financial Statements are an integral part of these statements.

38

CONSOLIDATED CASH FLOWS

(dollars in thousands)

	Year Ended December 31,
	2003			2002			2001
Cash flows from operating activities:
Net income	$	69,450		$	60,469		$	98,345
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		68,242			67,053			63,073
Amortization		15,323			10,854			20,022
Cumulative effect of account change		(12,209	)		—			—
Deferred income taxes and other		(979	)		(1,283	)		27,446
Changes in assets and liabilities, net of translation, acquisitions and non-cash items:
Receivables		3,212			15,632			(36,511	)
Inventories		(59,843	)		67,960			(40,277	)
Accounts payable and accrued liabilities		44,620			(9,579	)		23,342
Other assets and liabilities, net		(26,199	)		(33,281	)		(30,518	)
Net cash provided by operating activities		101,617			177,825			124,922
Cash flows from investing activities:
Capital expenditures		(64,665	)		(82,148	)		(125,004	)
Acquisitions		—			(67,750	)		(51,778	)
Purchases of short-term investments		(154,523	)		(45,862	)		(101,088	)
Sales of short-term investments		157,910			124,395			1,156
Proceeds from sale of Cameron division headquarters building and other property		—			39,460			—
Other		9,172			6,588			5,106
Net cash used for investing activities		(52,106	)		(25,317	)		(271,608	)
Cash flows from financing activities:
Loan repayments, net		(496	)		(7,448	)		(179,080	)
Debentures issued		—			—			450,000
Debenture issuance costs		—			—			(8,364	)
Purchase of treasury stock		(48,652	)		—			(25,082	)
Activity under stock option plans and other		1,280			5,156			6,316
Net cash provided by (used for) financing activities		(47,868	)		(2,292	)		243,790
Effect of translation on cash		16,673			11,944			(2,030	)
Increase in cash and cash equivalents		18,316			162,160			95,074
Cash and cash equivalents, beginning of year		273,800			111,640			16,566
Cash and cash equivalents, end of year	$	292,116		$	273,800		$	111,640

The Notes to Consolidated Financial Statements are an integral part of these statements.

39

CONSOLIDATED CHANGES IN STOCKHOLDERS’ EQUITY

(dollars in thousands)

									Accumulated
									other
			Capital in			Retained			elements of
	Common		excess of			earnings			comprehensive			Treasury
	stock		par value			(deficit)			income			stock			Total
Balance — December 31, 2000	$	540	$	929,511		$	(50,667	)	$	(37,105	)	$	—		$	842,279
Net income							98,345									98,345
Foreign currency translation										(15,681	)					(15,681	)
Minimum pension liability, net of $35 in taxes										57						57
Change in fair value of short-term investments										(321	)					(321	)
Comprehensive income																82,400
Purchase of treasury stock													(25,082	)		(25,082	)
Common stock issued under stock option and other employee benefit plans		6		14,828									1,748			16,582
Tax benefit of employee stock benefit plan transactions				7,129												7,129
Costs related to forward stock purchase agreement				(27	)											(27	)
Balance — December 31, 2001		546		951,441			47,678			(53,050	)		(23,334	)		923,281
Net income							60,469									60,469
Foreign currency translation										38,005						38,005
Minimum pension liability, net of $56 in taxes										91						91
Change in fair value of short-term investments, net of $56 in taxes										165						165
Comprehensive income																98,730
Common stock issued under stock option and other employee benefit plans				(4,729	)								21,545			16,816
Tax benefit of employee stock benefit plan transactions				2,944												2,944
Costs related to forward stock purchase agreement and other				(468	)											(468	)
Balance — December 31, 2002		546		949,188			108,147			(14,789	)		(1,789	)		1,041,303
Net income							69,450									69,450
Foreign currency translation										70,908						70,908
Minimum pension liability, net of $433 in taxes										(699	)					(699	)
Change in fair value of short-term investments, net of $56 in taxes										(91	)					(91	)
Comprehensive income																139,568
Purchase of treasury stock													(60,694	)		(60,694	)
Common stock issued under stock option and other employee benefit plans		3		4,447									7,819			12,269
Tax benefit of employee stock benefit plan transactions				4,831												4,831
Costs related to forward stock purchase agreements and other				(554	)											(554	)
Balance — December 31, 2003	$	549	$	957,912		$	177,597		$	55,329		$	(54,664	)	$	1,136,723

The Notes to Consolidated Financial Statements are an integral part of these statements.

40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Summary of Major Accounting Policies

     Company Operations - Cooper Cameron Corporation (the Company or Cooper Cameron) is engaged primarily in the manufacture of oil and gas pressure control equipment, including valves, wellheads, controls, chokes, blowout preventers and assembled systems for oil and gas drilling, production and transmission used in onshore, offshore and subsea applications. Cooper Cameron also manufactures and services air and gas compressors and turbochargers.

     Principles of Consolidation - The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. Investments from 20% to 50% in affiliated companies are accounted for using the equity method. The Company’s operations are organized into three separate business segments. The segments are Cameron, Cooper Cameron Valves (CCV) and Cooper Compression. Additional information regarding each segment may be found in Note 13 of the Notes to Consolidated Financial Statements.

     Estimates in Financial Statements - The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

     Revenue Recognition - The Company generally recognizes revenue once the following four criteria are met: (i) a written contract or purchase order exists, (ii) delivery of the equipment has occurred or the customer has inspected, tested and accepted the equipment (if required by the contract) or services have been rendered, (iii) the price of the equipment or service is fixed and determinable and (iv) collectibility is reasonably assured.

     Short-term Investments - Investments in available for sale marketable debt and equity securities are carried at market value, based on quoted market prices. Differences between cost and market value are reflected as a component of accumulated other elements of comprehensive income until such time as those differences are realized. The basis for computing realized gains or losses is the specific identification method. The realized gains on short-term investments included in the Consolidated Results of Operations were $278,000, $2,547,000 and $283,000 for the years ended December 31, 2003, 2002 and 2001, respectively. If the Company determines that a loss is other than temporary, such loss will be charged to earnings.

     Receivables - The Company maintains allowances for doubtful accounts for estimated losses that may result from the inability of its customers to make required payments. Such allowances are based upon several factors including, but not limited to, historical experience and the current and projected financial condition of the specific customer.

     Inventories - Aggregate inventories are carried at cost or, if lower, net realizable value. On the basis of current costs, 56% of inventories in 2003 and 64% in 2002 are carried on the last-in, first-out (LIFO) method. The remaining inventories, which are located outside the United States and Canada, are carried on the first-in, first-out (FIFO) method. The Company writes down its inventory for estimated obsolescence or excess quantities on hand equal to the difference between the cost of the inventory and its estimated realizable value. During 2003 and 2002, the Company reduced its LIFO inventory levels. These reductions resulted in a liquidation of certain low-cost inventory layers. As a result, the Company recorded non-cash LIFO income of $15,932,000 and $97,000 in 2003 and 2002, respectively.

     Plant and Equipment - Depreciation is provided over the estimated useful lives of the related assets, or in the case of assets under capital leases, over the related lease term, if less, using primarily the straight-line method. The range of estimated useful lives are: buildings — 10 to 40 years; machinery and equipment — 3 to 18 years; and office furniture and equipment, capitalized software, tooling, dies, patterns and all other — 3 to 10 years.

     Goodwill - Prior to 2002, goodwill arising from purchase acquisitions was being amortized over 40 years from respective acquisition dates, with minor exceptions. The Company considered this amortization period to be appropriate due to the long-lived nature of the businesses acquired and the lack of rapid technological change or obsolescence associated with these operations. Through December 31, 2001, the carrying value of the Company’s goodwill was reviewed at the division level at least annually or whenever there were indications that the goodwill might be impaired. With the adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (FAS 142), effective January 1, 2002, the Company no longer amortizes goodwill and reviews goodwill at least annually for impairment at the reporting unit level. The Company’s reporting units for FAS 142 purposes are Cameron, CCV, Cooper Energy Services and Cooper Turbocompressor. Cooper Energy Services and Cooper Turbocompressor are combined for segment reporting purposes in the Cooper Compression segment (see Note 13 of the Notes to Consolidated Financial Statements for further discussion of the Company’s business segments).

     The initial evaluation upon adoption, as well as the 2003 and 2002 annual evaluations, indicated that no impairment of goodwill was required.

41

     Income Taxes - The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Income tax expense includes U.S. and foreign income taxes, including U.S. federal taxes on undistributed earnings of foreign subsidiaries to the extent such earnings are planned to be remitted. Taxes are not provided on the translation component of comprehensive income since the effect of translation is not considered to modify the amount of the earnings that are planned to be remitted. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized.

     Environmental Remediation and Compliance - Environmental remediation and postremediation monitoring costs are accrued when such obligations become probable and reasonably estimable. Such future expenditures are not discounted to their present value.

     Product Warranty - Estimated warranty expense is accrued either at the time of sale or, in some cases, when specific warranty problems are encountered. Adjustments to the accruals are made periodically to reflect actual experience.

     Stock-Based Compensation - At December 31, 2003, the Company had two stock-based employee compensation plans and one stock-based compensation plan for its outside directors. These plans are described in further detail in Note 9 of the Notes to Consolidated Financial Statements. The Company measures compensation expense for its stock-based compensation plans using the intrinsic value method. The following table illustrates the effect on net income and earnings per share if the Company had used the alternative fair value method to recognize stock-based employee compensation expense based on the number of shares that vest in each period.

	Year Ended December 31,
(dollars in thousands, except per share data)	2003			2002			2001
Net income, as reported	$	69,450		$	60,469		$	98,345
Deduct: Total stock-based employee compensation expense determined under the fair value method for all awards, net of tax		(23,093	)		(22,753	)		(31,270	)
Pro forma net income	$	46,357		$	37,716		$	67,075
Earnings per share:
Basic — as reported	$	1.28		$	1.12		$	1.82
Basic — pro forma	$	0.85		$	0.70		$	1.24
Diluted — as reported	$	1.25		$	1.10		$	1.75
Diluted — pro forma	$	0.84		$	0.68		$	1.21

     Derivative Financial Instruments - The Company recognizes all derivative financial instruments as assets and liabilities and measures them at fair value. For derivative financial instruments that are designated and qualify as a cash flow hedge, the effective portions of changes in fair value of the derivative are recorded in other comprehensive income, net of tax, and are recognized in the income statement when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized currently in earnings. Changes in the fair value of derivatives that do not qualify for hedge treatment are recognized currently in earnings. The Company had no outstanding derivatives at December 31, 2003 or 2002.

     Cash Equivalents - For purposes of the Consolidated Cash Flows statement, the Company considers all investments purchased with original maturities of three months or less to be cash equivalents.

     Foreign Currency - For most subsidiaries and branches outside the U.S., the local currency is the functional currency. In accordance with Statement of Financial Accounting Standards No. 52, Foreign Currency Translation, the financial statements of these subsidiaries and branches are translated into U.S. dollars as follows: assets and liabilities at year-end exchange rates; income, expenses and cash flows at average exchange rates; and stockholders’ equity at historical exchange rates. For those subsidiaries for which the local currency is the functional currency, the resulting translation adjustment is recorded as a component of accumulated other elements of comprehensive income in the accompanying Consolidated Balance Sheets.

     For certain other subsidiaries and branches, operations are conducted primarily in U.S. dollars, which is therefore the functional currency. Non-U.S. dollar monetary assets and liabilities, and the related revenue, expense, gain and loss accounts of these foreign subsidiaries and branches are remeasured at year-end exchange rates. Non-U.S. dollar non-monetary assets and liabilities, and the related revenue, expense, gain and loss accounts are remeasured at historical rates.

     Foreign currency gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in income. The effects of foreign currency transactions were gains (losses) of $5,716,000, $(1,147,000) and $1,767,000 for the years 2003, 2002 and 2001, respectively.

     Reclassifications - Certain prior year amounts have been reclassified to conform to the current year presentation.

42

     Adoption of New Accounting Standards - In May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (FAS 150), which became effective for the Company as of the beginning of the third quarter of 2003. FAS 150 affected the Company’s accounting for its two forward purchase agreements covering 1,006,500 shares of the Company’s common stock. Prior to the adoption of FAS 150, these agreements were treated as permanent equity and changes in the fair value of these agreements were not recognized. Upon the adoption of FAS 150, the Company recorded these agreements as an asset at their estimated fair value of $12,209,000. This amount has been reflected as the cumulative effect of an accounting change in the Company’s consolidated results of operations. There was no tax expense associated with this item as the gain is not taxable. The Company terminated these forward contracts effective August 14, 2003 by paying the counterparty approximately $37,992,000 to purchase the shares covered by these agreements. These shares have been reflected as treasury stock in the Company’s consolidated balance sheet at December 31, 2003 at an amount equal to the cash paid to purchase the shares plus the estimated fair value of the agreements. This amount aggregated $50,034,000. The change in the fair value of the forward purchase agreements from July 1, 2003 to August 14, 2003, which was a loss of $167,000, was recognized in the Company’s consolidated results of operations.

     The Company adopted FASB Interpretation No. 46, Consolidation of Variable Interest Entities, in 2003. The interpretation requires the consolidation of variable interest entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. This interpretation did not have any impact on the Company’s consolidated financial statements.

Note 2: Plant Closing, Business Realignment and Other Related Costs

     Plant closing, business realignment and other related costs by segment for the last three years were as follows:

	Year Ended December 31,
(dollars in thousands)	2003		2002		2001
Amounts included in costs of sales:
Cooper Compression	$	—	$	11,214	$	—
Amounts included in selling and administrative expenses:
Cameron		5,784		6,275		—
CCV		—		—		—
Cooper Compression		3,137		14,637		20,159
Corporate		5,652		1,193		—
		14,573		22,105		20,159
Total costs	$	14,573	$	33,319	$	20,159

     During 2003, the Company’s selling and administrative expenses included plant closing, business realignment and other related costs totaling $14,573,000. This amount was comprised of (i) $6,181,000 for employee severance at Cameron and at Cooper Compression, (ii) $1,240,000 of other plant closure costs at Cooper Compression related to the closure of 13 facilities announced in the fourth quarter of 2002, (iii) $4,646,000 related to the Company’s unsuccessful efforts to acquire a certain oil service business, (iv) $1,006,000 related to the Company’s international tax restructuring activities, which were begun in 2002, and (v) $1,500,000 related to a litigation award associated with the use of certain intellectual property obtained in connection with a previous acquisition.

     During 2002, the Company recorded $33,319,000 of costs related to plant closing, business realignment and other related activities. Of this amount, Cooper Compression recorded $25,851,000 of costs related generally to the closure of 13 facilities in the gas compression business. This amount was comprised of: (i) $1,632,000 million related to severance and relocation expenses, (ii) $8,177,000 of facility exit costs, including lease termination payments, and (iii) $16,042,000 of facility and inventory write-downs. The $7,468,000 of costs related to the Company’s other divisions consisted of: (i) $1,082,000 related to severance, (ii) $5,193,000 of facility write-downs and losses on property disposals, and (iii) $1,193,000 related to the Company’s international tax restructuring activities.

     During 2001, Cooper Compression recorded $20,159,000 of costs related to the consolidation of the manufacturing operations, closing obsolete facilities and discontinuing the manufacture of new Superior engines in its gas compression business. The costs during 2001 consisted primarily of: (i) $4,516,000 of employee severance and various relocation costs, (ii) $2,544,000 of contract cancellation costs, and (iii) $11,579,000 of plant shutdown costs. Included in the plant shutdown costs were $4,088,000 of costs incurred by the Superior engine business during the shutdown period.

     The number of employees terminated as a result of the above actions was approximately 266, 210 and 190 in 2003, 2002 and 2001, respectively.

43

     A summary of the impact on various liability accounts associated with the aforementioned costs incurred during the year ended December 31, 2003 follows:

	Balance at
	Beginning				Cash			Balance at
(dollars in thousands)	of Year		Additions		Disbursements			End of Year
Severance	$	2,125	$	6,181	$	(6,984	)	$	1,322
Facility closure		8,194		1,240		(4,561	)		4,873
Retained liabilities from sale of Rotating business		3,313		—		(1,534	)		1,779
International tax restructuring		500		1,006		(1,506	)		—
Environmental		5,000		—		(620	)		4,380
Costs associated with an unsuccessful acquisition		—		4,646		(4,165	)		481
Litigation settlement		—		1,500		(1,500	)		—
Total	$	19,132	$	14,573	$	(20,870	)	$	12,835

Note 3: Acquisitions

     During 2002, the Company’s acquisitions consisted of a Canadian valve manufacturer, a wellhead business located in West Texas and certain drilling and riser-related assets from another oilfield equipment supplier. Cash and debt consideration for these acquisitions totaled $70,250,000 and resulted in goodwill of approximately $29,317,000, the majority of which resides in the CCV segment.

     During 2001, the Company’s acquisitions consisted primarily of two aftermarket parts and service suppliers in the Cooper Compression division and a supplier of motion compensation solutions in the Cameron division. Cash and debt consideration for these acquisitions totaled $55,350,000 and resulted in goodwill of approximately $27,193,000.

Note 4: Receivables

     Receivables consisted of the following:

	December 31,
(dollars in thousands)	2003			2002
Trade receivables	$	304,761		$	297,571
Other receivables		13,197			9,420
Allowance for doubtful accounts		(1,823	)		(2,170	)
	$	316,135		$	304,821

Note 5: Inventories

     Inventories consisted of the following:

	December 31,
(dollars in thousands)	2003			2002
Raw materials	$	38,766		$	37,078
Work-in-process		142,328			99,417
Finished goods, including parts and subassemblies		360,154			329,151
Other		2,183			1,818
		543,431			467,464
Excess of current standard costs over LIFO costs		(32,907	)		(44,891	)
Allowance for obsolete and excess inventory		(37,317	)		(35,355	)
	$	473,207		$	387,218

44

Note 6: Plant and Equipment, Goodwill and Other Assets

     Plant and equipment consisted of the following:

	December 31,
(dollars in thousands)	2003			2002
Land and land improvements	$	39,137		$	38,140
Buildings		203,072			185,267
Machinery and equipment		531,121			493,876
Tooling, dies, patterns, etc.		51,141			48,119
Office furniture & equipment		96,603			91,991
Capitalized software		114,332			110,538
Assets under capital leases		21,786			21,940
All other		13,116			13,316
Construction in progress		27,925			27,799
		1,098,233			1,030,986
Accumulated depreciation		(626,900	)		(555,072	)
	$	471,333		$	475,914

     During the fourth quarter of 2002, the Company entered into a sale-leaseback transaction involving the Cameron division headquarters building. The sale of the building resulted in net proceeds to the Company of approximately $31,000,000. The building is being leased back from the purchaser over a 22-year period (with options for renewals totaling an additional 15 years) at an initial rate of approximately $2,400,000 per year. This transaction was accounted for as a sale and subsequent operating lease, resulting in the removal of the building from the Company’s plant and equipment balances and a deferral of the related $0.6 million gain, which is being amortized over the initial 22-year term of the lease.

     Goodwill consisted of the following:

	December 31, 2003							December 31, 2002
			Accumulated			Net Book				Accumulated			Net book
(dollars in thousands)	Gross		Amortization			Value		Gross		Amortization			Value
Cameron	$	277,119	$	(131,212	)	$	145,907	$	257,657	$	(121,036	)	$	136,621
CCV		148,134		(40,165	)		107,969		142,453		(39,414	)		103,039
Cooper Compression		103,186		(40,964	)		62,222		103,186		(40,964	)		62,222
	$	528,439	$	(212,341	)	$	316,098	$	503,296	$	(201,414	)	$	301,882

     Changes to goodwill balances are largely related to changes in foreign currency exchange rates applied to goodwill denominated in currencies other than the U.S. dollar.

     Other assets consisted of the following:

	December 31,
(dollars in thousands)	2003			2002
Long-term prepaid benefit costs of defined benefit pension plans	$	121,515		$	107,151
Deferred income taxes		52,086			67,517
Intangible assets related to pension plans		116			175
Other intangibles:
Gross		12,492			11,004
Accumulated amortization		(8,978	)		(7,619	)
Other		28,322			23,785
	$	205,553		$	202,013

45

     In June 2001, the FASB issued FAS 142. Under FAS 142, goodwill and intangible assets with indefinite lives are no longer amortized, but are reviewed at least annually for impairment. Following are the pro forma amounts that would have been reported had FAS 142 been effective as of January 1, 2001:

	Year Ended December 31,
(dollars in thousands, except per share data)	2003		2002		2001
Reported net income	$	69,450	$	60,469	$	98,345
Add back goodwill amortization		—		—		10,719
Pro forma net income	$	69,450	$	60,469	$	109,064
Basic earnings per share:
Reported earnings per share	$	1.28	$	1.12	$	1.82
Add back goodwill amortization		—		—		0.19
Pro forma earnings per share	$	1.28	$	1.12	$	2.01
Diluted earnings per share:
Reported earnings per share	$	1.25	$	1.10	$	1.75
Add back goodwill amortization		—		—		0.18
Pro forma earnings per share	$	1.25	$	1.10	$	1.93

     Amortization associated with the Company’s capitalized software and other amortizable intangibles (primarily patents, trademarks and other) recorded as of December 31, 2003 is expected to approximate $11,302,000, $5,879,000, $5,315,000, $5,098,000 and $4,649,000 for the years ending December 31, 2004, 2005, 2006, 2007 and 2008, respectively.

Note 7: Accounts Payable and Accrued Liabilities

     Accounts payable and accrued liabilities consisted of the following:

	December 31,
(dollars in thousands)	2003		2002
Trade accounts and accruals	$	275,248	$	206,002
Salaries, wages and related fringe benefits		62,976		59,059
Payroll and other taxes		20,419		20,170
Product warranty		5,333		5,912
Deferred income taxes		12,074		32,904
Accruals for plant closing, business realignment and other related costs		3,981		11,705
Other		17,295		18,625
	$	397,326	$	354,377

     Activity during the year associated with the Company’s warranty accruals was as follows (dollars in thousands):

	Warranty	Charges
Balance	Provisions During	Against	Translation	Balance
December 31, 2002	the Year	Accrual	and Other	December 31, 2003
$5,912	7,591	(8,474)	304	$5,333

46

Note 8: Employee Benefit Plans

     Total net benefit expense (income) associated with the Company’s defined benefit pension and postretirement benefit plans consisted of the following:

										Postretirement
	Pension Benefits									Benefits
(dollars in thousands)	2003			2002			2001			2003			2002			2001
Service cost	$	6,597		$	6,359		$	5,971		$	11		$	13		$	48
Interest cost		19,842			20,021			18,721			3,118			2,936			3,090
Expected return on plan assets		(23,440	)		(25,572	)		(29,543	)		—			—			—
Amortization of prior service cost		(467	)		(346	)		(351	)		(80	)		(137	)		(136	)
Amortization of losses (gains) and other		7,838			4,322			(5,466	)		—			(500	)		(200	)
Net periodic benefit expense (income)		10,370			4,784			(10,668	)		3,049			2,312			2,802
Curtailment gain		—			—			(577	)		—			—			—
Termination benefit expense		—			—			839			—			—			—
Total net benefit expense (income)	$	10,370		$	4,784		$	(10,406	)	$	3,049		$	2,312		$	2,802
Net benefit expense (income):
U.S. plans	$	5,957		$	2,388		$	(7,500	)	$	3,049		$	2,312		$	2,802
Foreign plans		4,413			2,396			(2,906	)		—			—			—
	$	10,370		$	4,784		$	(10,406	)	$	3,049		$	2,312		$	2,802

     The change in the benefit obligations associated with the Company’s defined benefit pension and postretirement benefit plans consisted of the following:

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)	2003			2002			2003			2002
Benefit obligation at beginning of year	$	306,309		$	299,997		$	47,472		$	41,680
Service cost		6,597			6,359			11			13
Interest cost		19,842			20,021			3,118			2,936
Plan participants’ contributions		817			751			—			—
Amendments		(2,131	)		31			(3,825	)		—
Actuarial losses (gains)		30,735			(14,970	)		611			7,754
Exchange rate changes		17,631			14,018			—			—
Benefits paid directly or from plan assets		(20,279	)		(19,898	)		(4,763	)		(4,911	)
Benefit obligation at end of year	$	359,521		$	306,309		$	42,624		$	47,472
Benefit obligations at end of year:
U.S. plans	$	186,728		$	169,139		$	42,624		$	47,472
Foreign plans		172,793			137,170			—			—
	$	359,521		$	306,309		$	42,624		$	47,472

     The total accumulated benefit obligation for the Company’s defined benefit pension plans was $338,198,000 and $287,534,000 at December 31, 2003 and 2002, respectively.

47

     The change in the plan assets associated with the Company’s defined benefit pension and postretirement benefit plans consisted of the following::

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)	2003			2002			2003			2002
Fair value of plan assets at beginning of year	$	286,150		$	295,074		$	—		$	—
Actual return on plan assets		38,735			(32,687	)		—			—
Actuarial gains		1,927			2,969			—			—
Company contributions		18,678			27,124			4,763			4,911
Plan participants’ contributions		817			751			—			—
Exchange rate changes		15,697			12,617			—			—
Benefits paid from plan assets		(19,708	)		(19,698	)		(4,763	)		(4,911	)
Fair value of plan assets at end of year	$	342,296		$	286,150		$	—		$	—
Fair value of plan assets at end of year:
U.S. plans	$	186,288		$	163,666		$	—		$	—
Foreign plans		156,008			122,484			—			—
	$	342,296		$	286,150		$	—		$	—

     Asset investment allocations for the Company’s main defined benefit pension and postretirement benefit plans in the United States and the United Kingdom, which account for over 98% of total plan assets, are as follows:

							Postretirement
	Pension Benefits						Benefits
	2003			2002			2003		2002
U.S. plan:
Equity securities		58	%		52	%		—		—
Fixed income debt securities and cash		42	%		48	%		—		—
U.K. plan:
Equity securities		50	%		57	%		—		—
Fixed income debt securities and cash		50	%		43	%		—		—

     In each jurisdiction, the investment of plan assets is overseen by a plan asset committee whose members act as trustees of the plan and set investment policy. For the years ended December 31, 2003 and 2002, the investment strategy has been designed to approximate the performance of market indexes.

     During 2003, the Company made contributions totaling $18,678,000 to the assets of its various defined benefit plans. Such contributions for 2004 are currently expected to approximate $10,000,000, assuming no change in the current discount rate or expected investment earnings.

     The net assets (liabilities) associated with the Company’s defined benefit pension and postretirement benefit plans recognized on the balance sheet consisted of the following:

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)	2003			2002			2003			2002
Plan assets less than benefit obligations at end of year	$	(17,225	)	$	(20,159	)	$	(42,624	)	$	(47,472	)
Unrecognized net loss		137,503			124,734			3,089			2,477
Unrecognized prior service cost		(4,039	)		(2,380	)		(3,911	)		(166	)
Unrecognized net transition obligation		—			50			—			—
Prepaid (accrued) pension cost		116,239			102,245			(43,446	)		(45,161	)
Underfunded plan adjustments recognized:
Accrued minimum liability		(1,637	)		(563	)		—			—
Intangible asset		116			175			—			—
Accumulated other comprehensive income, net of tax		939			240			—			—
Net assets (liabilities) recognized on balance sheet at end of year	$	115,657		$	102,097		$	(43,446	)	$	(45,161	)

48

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)		2003			2002			2003			2002
Balance sheet classification at end of year:
Assets recognized:
U.S. plans	$	66,478		$	62,011		$	—		$	—
Foreign plans		55,153			45,315			—			—
Liabilities recognized:
U.S. plans		(3,707	)		(3,374	)		(43,446	)		(45,161	)
Foreign plans		(3,206	)		(2,095	)		—			—
Accumulated other comprehensive income, net of tax:
U.S. plans		272			68			—			—
Foreign plans		667			172			—			—
	$	115,657		$	102,097		$	(43,446	)	$	(45,161	)

     The weighted-average assumptions associated with the Company’s defined benefit pension and postretirement benefit plans were as follows:

						Postretirement
	Pension Benefits					Benefits
		2003		2002			2003		2002
Assumptions related to net benefit costs:
Domestic plans:
Discount rate		7.0	%	7.25	%		6.75	%	7.25	%
Expected return on plan assets		8.9	%	9.25	%
Rate of compensation increase		4.5	%	4.5	%
Health care cost trend rate							12.0	%	7.0	%
Measurement date		1/1/2003		1/1/2002			10/1/2002		10/1/2001
International plans:
Discount rate		6.0	%	6.0 - 6.25	%
Expected return on plan assets		6.0 - 8.0	%	6.0 - 8.5	%
Rate of compensation increase		2.75 - 4.0	%	3.5 - 4.5	%
Measurement date		12/31/2002		12/31/2001
Assumptions related to end of period benefit obligations:
Domestic plans:
Discount rate		6.25	%	7.0	%		6.25	%	6.75	%
Rate of compensation increase		4.5	%	4.5	%
Health care cost trend rate							11.0	%	12.0	%
Measurement date		12/31/2003		12/31/2002			10/1/2003		10/1/2002
International plans:
Discount rate		5.5 - 5.75	%	6.0	%
Rate of compensation increase		2.75 - 4.0	%	2.75 - 4.0	%
Measurement date		12/31/2003		12/31/2002

     The discount rates used for valuation calculations were lowered in 2003 to reflect the decrease in long-term interest rates. Additionally, the expected long-term rates of return on assets used to compute expense for the year ended December 31, 2003 were lowered from rates used in 2002 to reflect future investment returns and anticipated asset allocations and investment strategies.

     The rate of compensation increase for the domestic plans is based on an age-grade scale ranging from 7.5% to 3.0% with a weighted-average rate of approximately 4.5%.

     The health care cost trend rate is assumed to decrease gradually from 11.0% to 5.0% by 2010 and remain at that level thereafter. A one-percentage-point change in the assumed health care cost trend rate would have the following effects:

	One-percentage-		One-percentage-
(dollars in thousands)	point Increase		point Decrease
Effect on total of service and interest cost components in 2003	$	219	$	(193	)
Effect on postretirement benefit obligation as of December 31, 2003	$	2,956	$	(2,595	)

49

     Year-end amounts applicable to the Company’s pension plans with projected benefit obligations in excess of plan assets and accumulated benefit obligations in excess of plan assets were as follows:

	Projected Benefit						Accumulated Benefit
	Obligation in Excess						Obligation in Excess
	of Plan Assets						of Plan Assets
(dollars in thousands)		2003			2002			2003			2002
Fair value of applicable plan assets	$	156,464		$	286,150		$	4,493		$	3,512
Projected benefit obligation of applicable plans	$	(177,012	)	$	(306,309	)
Accumulated benefit obligation of applicable plans							$	(11,369	)	$	(8,903	)

     The Company sponsors the Cooper Cameron Corporation Retirement Plan (Retirement Plan) covering the majority of salaried U.S. employees and certain domestic hourly employees, as well as separate defined benefit pension plans for employees of its U.K. and German subsidiaries, and several unfunded defined benefit arrangements for various other employee groups. The U.K. defined benefit pension plan was frozen with respect to new entrants effective June 14, 1996, and the Retirement Plan was frozen with respect to new entrants effective May 1, 2003. Additionally, with respect to the Retirement Plan, the basic credits to participant account balances decreased from 4% of compensation below the Social Security Wage Base plus 8% of compensation in excess of the Social Security Wage Base to 3% and 6%, respectively, and vesting for participants who had not completed three full years of vesting service as of May 1, 2003 changed from a three-year graded vesting with 33% vested after three years and 100% vested after five years to five-year cliff vesting.

     In addition, the Company’s domestic employees who are not covered by a bargaining unit are also eligible to participate in the Cooper Cameron Corporation Retirement Savings Plan. Under this plan, employees’ savings deferrals are partially matched with shares of the Company’s Common stock. In addition, the Company makes cash contributions for hourly employees who are not covered under collective bargaining agreements and will make contributions equal to 2% of earnings of new employees hired on or after May 1, 2003, who are not eligible for participation in the Retirement Plan, based upon the achievement of certain financial objectives by the Company. The Company’s expense under this plan for the years ended December 31, 2003, 2002 and 2001 amounted to $8,050,000, $8,192,000 and $7,581,000, respectively. In addition, the Company provides various savings plans for employees under collective bargaining agreements and, in the case of certain international employees, as required by government mandate, which provide for, among other things, Company matching contributions in cash based on specified formulas. Expense with respect to these various defined contribution plans for the years ended December 31, 2003, 2002, and 2001 amounted to $12,810,000, $10,723,000 and $8,642,000, respectively.

     Certain of the Company’s employees participate in various domestic employee welfare benefit plans, including medical, dental and prescriptions. Certain employees will receive retiree medical, prescription and life insurance benefits.

     All of the welfare benefit plans, including those providing postretirement benefits, are unfunded.

     Effective January 1, 2004, various postretirement benefit plans were consolidated to standardize the provisions across all plans and update the plan design to control rising costs.

     The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”) was enacted by the U.S. government on December 8, 2003. The Act introduced a prescription drug benefit under Medicare (Medicare Part D) as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. As provided by Financial Staff Position No. FAS 106-1, issued by the Financial Accounting Standards Board, the Company has elected to defer recognizing the effects of the Act in the accounting for the accumulated postretirement benefit obligations and net postretirement benefit costs of its retiree health care benefit plans until authoritative guidance on the accounting for the federal subsidy is issued or until certain other events occur, if required, for the Company to benefit from the new legislation. Such guidance or events could change previously reported information.

Note 9: Stock Options and Employee Stock Purchase Plan

     The Company maintains two equity compensation plans which require the approval of security holders with regard to shares available for grant — the Long-term Incentive Plan, as Amended and Restated as of November 2002 (the Long-term Incentive Plan) and the Second Amended and Restated 1995 Stock Option Plan for Non-employee Directors (the Non-employee Director Stock Option Plan). An additional plan, the Broad Based 2000 Incentive Plan (the Broad Based Incentive Plan) did not require shareholder approval of the number of shares available for grant at the time the plan was initially established. However, under new corporate governance rules recently implemented by the New York Stock Exchange and approved by the Securities and Exchange Commission, all stock compensation plans now require shareholder approval for future increases in options available for grant and for material plan amendments.

50

     The following table summarizes stock option activity for each of the three years ended December 31:

	Number of Shares
	Broad Based			Long-term			Non-employee			Weighted
	Incentive			Incentive			Director			Average
	Plan			Plan			Plan			Exercise Prices
Stock options outstanding at December 31, 2000		797,200			4,670,932			324,774		$	46.96
Options granted		1,180,900			929,490			67,740		$	36.57
Options expired and forfeited		(46,032	)		(120,230	)		(10,290	)	$	48.13
Options exercised		—			(555,385	)		(45,000	)	$	32.01
Stock options outstanding at December 31, 2001		1,932,068			4,924,807			337,224		$	45.03
Options granted		1,012,800			614,802			42,000		$	47.20
Options expired and forfeited		(98,662	)		(124,903	)		(10,808	)	$	51.74
Options exercised		(44,987	)		(311,841	)		(54,946	)	$	32.34
Stock options outstanding at December 31, 2002		2,801,219			5,102,865			313,470		$	45.92
Options granted		274,046			1,397,736			36,000		$	44.26
Options expired and forfeited		(164,725	)		(302,156	)		(65,516	)	$	53.23
Options exercised		(97,888	)		(600,037	)		(6,000	)	$	31.35
Stock options outstanding at December 31, 2003		2,812,652			5,598,408			277,954		$	46.32
Weighted-average exercise price of options outstanding at December 31, 2003	$	44.14		$	46.97		$	55.49		$	46.32

     Information relating to selected ranges of exercise prices for outstanding and exercisable options at December 31, 2003 is as follows:

	Options Outstanding						Options Exercisable
			Weighted-
	Number		Average Years		Weighted-		Number		Weighted-
Range of	Outstanding as		Remaining on		Average		Exercisable as		Average
Exercise Prices	of 12/31/2003		Contractual Life		Exercise Price		of 12/31/2003		Exercise Price
$24.19 - $34.34		1,756,015		6.45	$	31.96		1,306,827	$	31.61
$34.69 - $42.93		2,368,652		7.94	$	42.45		1,064,071	$	41.97
$43.66 - $48.41		1,850,295		8.51	$	46.92		714,875	$	46.94
$48.57 - $60.25		1,948,568		5.38	$	54.15		1,820,671	$	54.38
$60.69 - $79.94		765,484		3.57	$	69.89		763,151	$	69.90
$24.19 - $79.94		8,689,014		6.80	$	46.32		5,669,595	$	47.95

     Options are granted to key employees under the Long-term and Broad Based Incentive Plans and generally become exercisable on the first anniversary date following the date of grant in one-third increments each year. Certain key executives also elected in 2001 to receive options in lieu of salary for the salary period ending December 31, 2002. The options granted under the Options in Lieu of Salary Program became exercisable at the end of the salary period and will expire five years after the beginning of the salary period. The Options in Lieu of Salary Program was discontinued effective January 1, 2003.

     Under the Company’s Non-employee Director Stock Option Plan, non-employee directors receive a grant of 6,000 stock options annually and, for new directors, upon first joining the Board. The options generally expire five years after the date of grant and become exercisable one year following the date of grant. In addition, prior to January 1, 2003, directors were permitted to take either a portion of or their full annual retainer in cash ($30,000) or receive, in lieu of cash, additional stock options. During 2001, all directors received their full retainer for the service year 2002 in stock options. These retainer options, totaling 25,740 shares, became exercisable one year following the beginning of the retainer period and will expire five years following the beginning of the retainer period. The exercise price for all option grants is equal to the fair market value of the Company’s stock at the date of grant.

     As of December 31, 2003, shares reserved for future grants under the Broad Based Incentive, Long-term Incentive and Non-employee Director Stock Option Plans were 50,619, 1,962,529 and 336,012, respectively.

     Had the Company followed the alternative fair value method of accounting for stock-based compensation, the weighted-average fair value per share of options granted during 2003, 2002 and 2001 would have been $14.67, $17.09 and $15.42, respectively. The weighted-

51

average fair value per share of stock purchases under the Employee Stock Purchase Plan during 2003, 2002 and 2001 would have been $15.45, $14.52 and $18.82, respectively. The fair values were estimated using the Black-Scholes model with the following weighted-average assumptions:

	Year Ended December 31,
	2003			2002			2001
Expected life (in years)		3.4			3.3			3.3
Risk-free interest rate		2.6	%		2.4	%		4.5	%
Volatility		41.8	%		47.6	%		53.3	%
Dividend yield		0.0	%		0.0	%		0.0	%

     Further information on the impact on net income and earnings per share of using the alternative fair value method to recognize stock-based employee compensation expense may be found in Note 1 of the Notes to Consolidated Financial Statements.

Employee Stock Purchase Plan

     Under the Cooper Cameron Employee Stock Purchase Plan, the Company is authorized to sell up to 2,000,000 shares of Common stock to its full-time employees in the United States, U.K., Ireland, Norway, Singapore and Canada, nearly all of whom are eligible to participate. Under the terms of the Plan, employees may elect each year to have up to 10% of their annual compensation withheld to purchase the Company’s Common stock. The purchase price of the stock is 85% of the lower of the beginning-of-plan year or end-of-plan year market price of the Company’s Common stock. Under the 2003/2004 plan, more than 1,700 employees elected to purchase approximately 173,000 shares of the Company’s Common stock at $40.71 per share, or 85% of the market price of the Company’s Common stock on July 31, 2004, if lower. A total of 162,440 shares were purchased at $35.85 per share on July 31, 2003 under the 2002/2003 plan.

Note 10: Long-term Debt

     The Company’s debt obligations were as follows:

	December 31,
(dollars in thousands)	2003			2002
Convertible debentures, net of $62,446 of unamortized original issue discount ($65,643 at December 31, 2002)	$	458,310		$	455,113
Other debt		3,399			3,652
Obligations under capital leases		7,363			9,047
		469,072			467,812
Current maturities		(265,011	)		(4,870	)
Long-term portion	$	204,061		$	462,942

     On May 16, 2001, the Company issued two series of convertible debentures with aggregate gross proceeds to the Company of $450,000,000. The first series consisted of twenty-year zero-coupon convertible debentures (the “Zero-Coupon Convertible Debentures”) with an aggregate principal amount at maturity of approximately $320,756,000. The debentures were priced at $779.41 per debenture, which represents a yield-to-maturity of approximately 1.25%. The Company has the right to redeem the Zero-Coupon Convertible Debentures anytime after three years at the issue price plus the accrued original issue discount, and the debenture holders have the right to require the Company to repurchase the debentures on the third, eighth and thirteenth anniversaries of the issue. The Zero-Coupon Convertible Debentures are convertible into the Company’s common stock at a rate of 8.1961 shares per debenture, representing an initial conversion price of $95.095 per share.

     The second series consisted of twenty-year convertible debentures in an aggregate amount of $200,000,000, with an interest rate of 1.75%, payable semi-annually on May 15 and November 15 (the “1.75% Convertible Debentures”). The Company has the right to redeem the 1.75% Convertible Debentures anytime after five years at the principal amount plus accrued and unpaid interest, and the debenture holders have the right to require the Company to repurchase the debentures on the fifth, tenth and fifteenth anniversaries of the issue. The 1.75% Convertible Debentures are convertible into the Company’s common stock at a rate of 10.5158 shares per debenture, or $95.095 per share.

     The net proceeds from the debentures were used to repay amounts outstanding under the Company’s then-existing revolving credit agreement and other borrowings and for other purposes, including share repurchases and acquisitions.

     As of December 31, 2003, the Company was party to a credit agreement (the “Credit Agreement”) with various banks, which provides for a multi-currency borrowing capacity, plus the ability to issue letters of credit, totaling $200,000,000, expiring December 12, 2007. The Credit Agreement provides for unsecured borrowings at the London Interbank Offered Rate (LIBOR) plus 0.40%. In addition to certain up-front costs, the agreement carries a facility fee of 0.10% per annum on the committed amount of the facility, plus a usage fee of 0.125% on the outstanding borrowings if such amounts exceed 33% of the total amount committed, or approximately $66,000,000. The Credit

52

Agreement also contains certain covenants including maintaining specific interest coverage and debt-to-total capitalization ratios. The Company is in compliance with all loan covenants. The entire amount of the facility was available for borrowing at December 31, 2003.

     In addition to the above, the Company also has other unsecured and uncommitted credit facilities available to its foreign subsidiaries. Certain of these facilities also include annual facility fees.

     Other debt, which mainly consists of acquisition-related notes, has a weighted-average interest rate of 4.13% at December 31, 2003 (3.87% at December 31, 2002).

     Future maturities of the Company’s debt (excluding capital leases) are $261,475,000 in 2004, $234,000 in 2005 and $200,000,000 in 2006. Maturities in 2004 include $258,310,000 related to the Company’s Zero-Coupon Convertible Debentures, which the holders have the right to require the Company to repurchase on May 17, 2004, for approximately $259,524,000 at that time, and maturities in 2006 include $200,000,000 related to the 1.75% Convertible Debentures, which the holders have the right to require the Company to repurchase on May 18, 2006.

     Interest paid during the years ended December 31, 2003, 2002 and 2001 approximated $4,143,000, $4,901,000 and $12,889,000, respectively. Capitalized interest during these same periods totaled $0, $371,000 and $1,847,000, respectively.

     The Company leases certain facilities, office space, vehicles and office, data processing and other equipment under capital and operating leases. Future minimum lease payments with respect to capital leases and operating leases with terms in excess of one year were as follows:

	Capital			Operating
(dollars in thousands)	Lease Payments			Lease Payments
Year ended December 31:
2004	$	3,582		$	13,274
2005		2,383			9,512
2006		1,134			8,199
2007		423			7,800
2008		19			5,666
Thereafter		—			52,457
Future minimum lease payments		7,541			96,908
Less: amount representing interest		(178	)		—
Lease obligations at December 31, 2003	$	7,363		$	96,908

Note 11: Income Taxes

     The components of income (loss) before income taxes were as follows:

	Year Ended December 31,
(dollars in thousands)	2003		2002			2001
Income (loss) before income taxes:
U.S. operations	$	21,590	$	(1,958	)	$	62,785
Foreign operations		56,013		87,103			79,797
Income before income taxes	$	77,603	$	85,145		$	142,582

     The provisions for income taxes charged to operations were as follows:

	Year Ended December 31,
(dollars in thousands)	2003			2002			2001
Current:
U.S. federal	$	4,574		$	2,559		$	6,696
U.S. state, local and franchise		1,032			1,835			2,432
Foreign		20,288			21,962			14,509
		25,894			26,356			23,637
Deferred:
U.S. federal		(293	)		(4,768	)		8,541
U.S. state and local		(44	)		(717	)		1,285
Foreign		(5,195	)		3,805			10,774
		(5,532	)		(1,680	)		20,600
Income tax provision	$	20,362		$	24,676		$	44,237

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     The reasons for the differences between the provision for income taxes and income taxes using the U.S. federal income tax rate were as follows:

	Year Ended December 31,
(dollars in thousands)	2003			2002			2001
U.S. federal statutory rate		35.00	%		35.00	%		35.00	%
Nondeductible goodwill		—			0.47			2.07
State and local income taxes		1.26			0.20			1.63
Tax exempt income		(5.76	)		(3.08	)		(3.70	)
Foreign statutory rate differential		(14.84	)		(6.36	)		(3.22	)
Change in valuation allowance on deferred tax assets		7.08			0.81			(1.89	)
Nondeductible expenses		2.30			1.03			0.61
All other		1.20			0.91			0.53
Total		26.24	%		28.98	%		31.03	%
Total income taxes paid	$	16,132		$	25,821		$	15,111

     Components of deferred tax assets (liabilities) were as follows:

	December 31,
(dollars in thousands)	2003			2002
Deferred tax liabilities:
Plant and equipment	$	(37,523	)	$	(28,901	)
Inventory		(46,195	)		(48,236	)
Pensions		(36,687	)		(37,485	)
Other		(37,135	)		(38,544	)
Total deferred tax liabilities		(157,540	)		(153,166	)
Deferred tax assets:
Postretirement benefits other than pensions		16,618			17,274
Reserves and accruals		27,342			32,658
Net operating losses and related deferred tax assets		137,978			115,386
Other		536			1,366
Total deferred tax assets		182,474			166,684
Valuation allowance		(23,613	)		(18,121	)
Net deferred tax assets (liabilities)	$	1,321		$	(4,603	)

     During the last three years, certain of the Company’s international operations have incurred losses that have not been tax benefited, while others utilized part of the unrecorded benefit of prior year losses. As a result of the foregoing, the valuation allowances established in prior years were increased in 2003, 2002, and 2001, respectively, by $5,492,000, $694,000, and $1,226,000 with a corresponding increase in the Company’s income tax expense. In addition, a tax benefit of $3,800,000 was recorded in 2001 relating to certain other foreign losses.

     At December 31, 2003, the Company had U.S. net operating loss carryforwards of approximately $287,000,000 that will expire in 2020 — 2023 if not utilized. At December 31, 2003, the Company had net operating loss carryforwards of approximately $34,000,000 and $15,000,000 in Brazil and Germany, respectively, that had no expiration periods. The Company had a valuation allowance of $23,613,000 as of December 31, 2003 against the net operating loss and other carryforwards. The Company has considered all available evidence in assessing the need for the valuation allowance, including future taxable income and ongoing prudent and feasible tax planning strategies. In the event the Company were to determine that it would not be able to realize all or part of its net deferred tax asset in the future, an adjustment to the net deferred tax asset would be charged to income in the period such determination was made.

     The tax benefit that the Company receives with respect to certain stock benefit plan transactions is credited to capital in excess of par value and does not reduce income tax expense. This benefit amounted to $4,831,000, $2,944,000, and $7,129,000 in 2003, 2002, and 2001, respectively.

     The Company considers all unremitted earnings of its foreign subsidiaries, except certain amounts primarily earned before 2003, to essentially be permanently reinvested. An estimate of these amounts considered permanently reinvested is $330,000,000. It is not practical for the Company to compute the amount of additional U.S. tax that would be due on this amount. The Company has provided deferred income taxes on the earnings that the Company anticipates to be remitted.

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Note 12: Stockholders’ Equity

Common Stock

     Under its Amended and Restated Certificate of Incorporation, the Company is authorized to issue up to 150,000,000 shares of Common stock, par value $.01 per share. Additionally, in November 1998, the Company’s board of directors approved the repurchase of up to 10,000,000 shares of Common stock for use in the Company’s various employee stock ownership, option and benefit plans.

     Changes in the number of shares of the Company’s outstanding stock for the last three years were as follows:

	Common		Treasury			Shares
	Stock		Stock			Outstanding
Balance — December 31, 2000		54,011,929		—			54,011,929
Purchase of treasury stock		—		(611,000	)		(611,000	)
Stock issued under stock option and other employee benefit plans		554,125		39,680			593,805
Balance — December 31, 2001		54,566,054		(571,320	)		53,994,734
Stock issued under stock option and other employee benefit plans		—		516,366			516,366
Balance — December 31, 2002		54,566,054		(54,954	)		54,511,100
Purchase of treasury stock		—		(1,251,900	)		(1,251,900	)
Stock issued under stock option and other employee benefit plans		367,604		176,254			543,858
Balance — December 31, 2003		54,933,658		(1,130,600	)		53,803,058

     At December 31, 2003, 12,260,034 shares of unissued Common stock were reserved for future issuance under various employee benefit plans.

Preferred Stock

     The Company is authorized to issue up to 10,000,000 shares of preferred stock, par value $.01 per share. At December 31, 2003, no preferred shares were issued or outstanding. Shares of preferred stock may be issued in one or more series of classes, each of which series or class shall have such distinctive designation or title as shall be fixed by the Board of Directors of the Company prior to issuance of any shares. Each such series or class shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issuance of such series or class of preferred stock as may be adopted by the Board of Directors prior to the issuance of any shares thereof. A total of 1,500,000 shares of Series A Junior Participating Preferred Stock has been reserved for issuance upon exercise of the Stockholder Rights described below.

Stockholder Rights Plan

     On May 23, 1995, the Company’s Board of Directors declared a dividend distribution of one Right for each then-current and future outstanding share of Common stock. Each Right entitles the registered holder to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock of the Company, par value $.01 per share, for an exercise price of $300. Unless earlier redeemed by the Company at a price of $.01 each, the Rights become exercisable only in certain circumstances constituting a potential change in control of the Company, described below, and will expire on October 31, 2007.

     Each share of Series A Junior Participating Preferred Stock purchased upon exercise of the Rights will be entitled to certain minimum preferential quarterly dividend payments as well as a specified minimum preferential liquidation payment in the event of a merger, consolidation or other similar transaction. Each share will also be entitled to 100 votes to be voted together with the Common stockholders and will be junior to any other series of Preferred Stock authorized or issued by the Company, unless the terms of such other series provides otherwise.

     Except as otherwise provided in the Plan, in the event any person or group of persons acquire beneficial ownership of 20% or more of the outstanding shares of Common stock, each holder of a Right, other than Rights beneficially owned by the acquiring person or group (which will have become void), will have the right to receive upon exercise of a Right that number of shares of Common stock of the Company, or, in certain instances, Common stock of the acquiring person or group, having a market value equal to two times the current exercise price of the Right.

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Retained Earnings

     The Company’s retained earnings includes a $441,000,000 charge related to the goodwill write-down that occurred concurrent with the Company becoming a separate stand-alone entity on June 30, 1995 in connection with the split-off from its former parent, Cooper Industries, Inc. Delaware law, under which the Company is incorporated, provides that dividends may be declared by the Company’s Board of Directors from a current year’s earnings as well as from the total of capital in excess of par value plus the retained earnings, which amounted to approximately $1,135,509,000 at December 31, 2003.

Note 13: Business Segments

     The Company’s operations are organized into three separate business segments — Cameron, CCV and Cooper Compression.

     Based upon the amount of equipment installed worldwide and available industry data, Cameron is one of the world’s leading providers of systems and equipment used to control pressures and direct flows of oil and gas wells. Cameron’s products include surface and subsea production systems, blowout preventers, drilling and production control systems, gate valves, actuators, chokes, wellheads, drilling riser and aftermarket parts and services. Based upon the amount of equipment installed worldwide and available industry data, CCV is a leading provider of valves and related systems primarily used to control pressures and direct the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines and transmission systems to refineries, petrochemical plants and industrial centers for processing. CCV’s products include gate valves, ball valves, butterfly valves, Orbit valves, rotary process valves, block and bleed valves, plug valves, globe valves, check valves, actuators, chokes and aftermarket parts and service. Based upon the amount of equipment installed worldwide and available industry data, Cooper Compression is a leading provider of compression equipment and related aftermarket parts and services for the energy industry and for manufacturing companies and chemical process industries worldwide.

     The Company’s primary customers are major and independent oil and gas exploration and production companies, foreign national oil and gas companies, engineering and construction companies, drilling contractors, pipeline operators, refiners and other industrial and petrochemical processing companies. Cooper Compression’s customers also include manufacturers and companies in the air separation, power production and chemical process industries.

     The Company markets its equipment through a worldwide network of sales and marketing employees supported by agents and distributors in selected international locations. Due to the extremely technical nature of many of the products, the marketing effort is further supported by a staff of engineering employees.

     For the years ended December 31, 2003, 2002 and 2001, the Company incurred research and development costs, including costs incurred on projects designed to enhance or add to its existing product offerings, totaling $28,703,000, $28,020,000 and $27,388,000, respectively. Cameron accounted for 85%, 85% and 76% of each respective year’s total costs.

     Summary financial data by segment follows:

	For the Year Ended December 31, 2003
					Cooper		Corporate
(dollars in thousands)	Cameron		CCV		Compression		& Other			Consolidated
Revenues	$	1,018,517	$	307,054	$	308,775	$	—		$	1,634,346
Depreciation and amortization	$	51,211	$	12,724	$	17,210	$	2,420		$	83,565
Interest income	$	—	$	—	$	—	$	(5,198	)	$	(5,198	)
Interest expense	$	—	$	—	$	—	$	8,157		$	8,157
Income (loss) before income taxes and cumulative effect of accounting change	$	63,364	$	33,694	$	10,268	$	(29,723	)	$	77,603
Capital expenditures	$	40,153	$	9,664	$	7,152	$	7,696		$	64,665
Total assets	$	1,233,172	$	320,982	$	298,020	$	288,511		$	2,140,685

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	For the Year Ended December 31, 2002
					Cooper			Corporate
(dollars in thousands)	Cameron		CCV		Compression			& Other			Consolidated
Revenues	$	918,677	$	273,507	$	345,916		$	—		$	1,538,100
Depreciation and amortization	$	46,040	$	10,122	$	19,216		$	2,529		$	77,907
Interest income	$	—	$	—	$	—		$	(8,542	)	$	(8,542	)
Interest expense	$	—	$	—	$	—		$	7,981		$	7,981
Income (loss) before income taxes and cumulative effect of accounting change	$	76,261	$	37,290	$	(8,477	)	$	(19,929	)	$	85,145
Capital expenditures	$	39,253	$	9,266	$	9,689		$	23,940		$	82,148
Total assets	$	1,067,598	$	303,506	$	300,665		$	325,901		$	1,997,670

	For the Year Ended December 31, 2001
					Cooper		Corporate
(dollars in thousands)	Cameron		CCV		Compression		& Other			Consolidated
Revenues	$	897,551	$	292,257	$	373,091	$	—		$	1,562,899
Depreciation and amortization	$	48,811	$	14,198	$	18,458	$	1,628		$	83,095
Interest income	$	—	$	—	$	—	$	(8,640	)	$	(8,640	)
Interest expense	$	—	$	—	$	—	$	13,481		$	13,481
Income (loss) before income taxes and cumulative effect of accounting change	$	123,121	$	38,275	$	2,006	$	(20,820	)	$	142,582
Capital expenditures	$	71,056	$	6,985	$	13,011	$	33,952		$	125,004
Total assets	$	1,038,322	$	247,864	$	346,390	$	242,476		$	1,875,052

     Geographic revenue by shipping location and long-lived assets related to operations as of and for the years ended December 31 were as follows:

(dollars in thousands)	2003		2002		2001
Revenues:
United States	$	833,935	$	836,264	$	932,490
United Kingdom		288,693		256,213		220,818
Other foreign countries		511,718		445,623		409,591
Total	$	1,634,346	$	1,538,100	$	1,562,899
Long-lived assets:
United States	$	468,717	$	505,069	$	529,803
United Kingdom		126,758		117,752		102,989
Other foreign countries		195,586		158,535		121,220
Total	$	791,061	$	781,356	$	754,012

     For internal management reporting, and therefore the above segment information, consolidated interest is treated as a Corporate item because short-term investments and debt, including location, type, currency, etc., are managed on a worldwide basis by the Corporate Treasury Department. In addition, spending for the Company’s enterprise-wide software upgrade has been reflected as a Corporate capital expenditure since 2001. In connection with the initial implementation of this system in 2002, amortization expense, as well as the associated asset, is being reflected in each segment’s information above for 2003 and 2002.

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Note 14: Off-Balance Sheet Risk and Guarantees, Concentrations of Credit Risk and Fair Value of Financial Instruments

Off-Balance Sheet Risk and Guarantees

     At December 31, 2003, the Company was contingently liable with respect to approximately $137,604,000 of standby letters of credit (“letters”) issued on its behalf by financial institutions in connection with the delivery, installation and performance of the Company’s products under contracts with customers throughout the world. The Company was also liable for approximately $23,794,000 of bank guarantees and letters of credit used to secure certain financial obligations of the Company. While many of the letters of credit expire within the next one to three years, the Company would expect to continue to issue new or extend existing letters in the normal course of business. In addition, the Company has provided third parties with guarantees of a portion of the outstanding bank loans of its joint ventures, as well as other matters, totaling $1,494,000 at December 31, 2003. Approximately $20,504,000 of the Company’s cash at December 31, 2003 was restricted for use in support of a portion of the standby letters of credit above and to satisfy certain other third-party obligations.

     The Company’s other off-balance sheet risks were not material.

Concentrations of Credit Risk

     Apart from its normal exposure to its customers, who are predominantly in the energy industry, the Company had no significant concentrations of credit risk at December 31, 2003.

Fair Value of Financial Instruments

     The Company’s financial instruments consist primarily of cash and cash equivalents, short-term marketable debt and equity securities, trade receivables, trade payables and debt instruments. The book values of cash and cash equivalents, trade receivables and trade payables and floating-rate debt instruments are considered to be representative of their respective fair values.

     The Company’s short-term investments (which consisted entirely of available-for-sale securities) comprised the following:

	December 31,
(dollars in thousands)	2003				2002
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Auction rate preferred stock	$	22,033	$	22,033	$	25,000	$	25,000
Equity instruments		—		—		290		290
	$	22,033	$	22,033	$	25,290	$	25,290

     The primary portion of the Company’s debt consists of fixed-rate convertible debentures. Based on quoted market prices, the book value for this debt at December 31, 2003 was $4,226,000 higher than the market value. The difference between book value and market value on the Company’s other fixed-rate debt was not material. Additional information on the Company’s debt may be found in Note 10 of the Notes to Consolidated Financial Statements.

Note 15: Summary of Noncash Investing and Financing Activities

     The effect on net assets of noncash investing and financing activities was as follows:

	Year Ended December 31,
(dollars in thousands)	2003				2002
Common stock issued for employee stock ownership plans	$	5,831		$		4,944
Tax benefit of certain employee stock benefit plan transactions		4,831				2,944
Other		(579	)			(3	)

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Note 16: Earnings Per Share

     The calculation of basic and diluted earnings per share for each period presented was as follows:

	Year Ended December 31,
(amounts in thousands)	2003		2002		2001
Income before cumulative effect of accounting change	$	57,241	$	60,469	$	98,345
Cumulative effect of accounting change		12,209		—		—
Net income		69,450		60,469		98,345
Add back interest on debentures, net of tax		5,248		5,024		3,032
Net income (assuming conversion of convertible debentures)	$	74,698	$	65,493	$	101,377
Average shares outstanding (basic)		54,403		54,215		54,170
Common stock equivalents		665		862		936
Incremental shares from assumed conversion of convertible debentures		4,732		4,732		2,969
Shares utilized in diluted earnings per share calculation		59,800		59,809		58,075

	Year Ended December 31,
	2003		2002		2001
Basic earnings per share:
Before cumulative effect of accounting change	$	1.05	$	1.12	$	1.82
Cumulative effect of accounting change		0.23		—		—
Net income	$	1.28	$	1.12	$	1.82

	Year Ended December 31,
	2003		2002		2001
Diluted earnings per share:
Before cumulative effect of accounting change	$	1.04	$	1.10	$	1.75
Cumulative effect of accounting change		0.21		—		—
Net income	$	1.25	$	1.10	$	1.75

Note 17: Accumulated Other Elements of Comprehensive Income

     Accumulated other elements of comprehensive income comprised the following:

	December 31,
(dollars in thousands)	2003			2002
Accumulated foreign currency translation gain (loss)	$	56,268		$	(14,640	)
Accumulated adjustments to record minimum pension liabilities, net of tax		(939	)		(240	)
Difference between cost and fair value of short-term investments, net of tax		—			91
	$	55,329		$	(14,789	)

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Note 18: Unaudited Quarterly Operating Results

     Unaudited quarterly operating results were as follows:

	2003 (by quarter)
(dollars in thousands, except per share data)	1		2		3		4
Revenues	$	361,073	$	400,913	$	429,153	$	443,207
Gross margin1		103,975		117,559		123,730		107,432
Plant closing, business realignment and other related costs		5,500		—		5,862		3,211
Income from liquidation of LIFO inventory layers, primarily at Cooper Compression		—		5,899		2,857		7,176
Income before cumulative effect of accounting change		8,411		20,753		24,017		4,060
Net income		8,411		20,753		36,226		4,060
Earnings per share:
Basic -
Income before cumulative effect of accounting change		0.15		0.38		0.44		0.08
Net income		0.15		0.38		0.67		0.08
Diluted -
Income before cumulative effect of accounting change		0.15		0.37		0.42		0.07
Net income		0.15		0.37		0.63		0.07

	2002 (by quarter)
(dollars in thousands, except per share data)	1		2		3		4
Revenues	$	366,901	$	402,583	$	383,847	$	384,769
Gross margin1		106,982		115,907		112,060		100,647
Plant closing, business realignment and other related costs		—		—		—		33,319
Net income (loss)		19,489		22,667		20,683		(2,370	)
Earnings (loss) per share:
Basic		0.36		0.42		0.38		(0.04	)
Diluted		0.35		0.40		0.37		(0.04	)

¹ Gross margin equals revenues less cost of sales before depreciation and amortization.

Note 19: Unaudited Subsequent Event

     In January 2004, the Company reached an agreement to acquire Petreco International, a Houston-headquartered supplier of oil and gas separation products, for approximately $90 million, net of cash acquired and debt assumed. Petreco’s 2003 revenues were approximately $117 million, and income before taxes was approximately $12 million.

60

SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF COOPER CAMERON CORPORATION

     The following table sets forth selected historical financial data for the Company for each of the five years in the period ended December 31, 2003. This information should be read in conjunction with the consolidated financial statements of the Company and notes thereto included elsewhere in this Annual Report.

	Year Ended December 31,
(dollars in thousands, except per share data)	2003			2002			2001			2000			1999
Income Statement Data:
Revenues	$	1,634,346		$	1,538,100		$	1,562,899		$	1,383,733		$	1,469,962
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization)		1,181,650			1,102,504			1,081,078			985,404			1,076,276
Selling and administrative expenses		288,569			273,105			251,303			264,173			216,319
Depreciation and amortization		83,565			77,907			83,095			75,321			83,716
Interest income		(5,198	)		(8,542	)		(8,640	)		(2,976	)		(5,099	)
Interest expense		8,157			7,981			13,481			18,038			27,834
Total costs and expenses		1,556,743			1,452,955			1,420,317			1,339,960			1,399,046
Income before income taxes and cumulative effect of accounting change		77,603			85,145			142,582			43,773			70,916
Income tax provision		(20,362	)		(24,676	)		(44,237	)		(16,113	)		(27,914	)
Income before cumulative effect of accounting change		57,241			60,469			98,345			27,660			43,002
Cumulative effect of accounting change		12,209			—			—			—			—
Net income	$	69,450		$	60,469		$	98,345		$	27,660		$	43,002
Basic earnings per share:
Before cumulative effect of accounting change	$	1.05		$	1.12		$	1.82		$	0.52		$	0.81
Cumulative effect of accounting change		0.23			—			—			—			—
Net income	$	1.28		$	1.12		$	1.82		$	0.52		$	0.81
Diluted earnings per share:
Before cumulative effect of accounting change	$	1.04		$	1.10		$	1.75		$	0.50		$	0.78
Cumulative effect of accounting change		0.21			—			—			—			—
Net income	$	1.25		$	1.10		$	1.75		$	0.50		$	0.78
Balance Sheet Data (at the end of period):
Total assets	$	2,140,685		$	1,997,670		$	1,875,052		$	1,493,873		$	1,470,719
Stockholders’ equity		1,136,723			1,041,303			923,281			842,279			714,078
Long-term debt		204,061			462,942			459,142			188,060			195,860
Other long-term obligations		119,982			118,615			114,858			117,503			138,955

61

EX-21.1 7 h13049exv21w1.htm SUBSIDIARIES OF REGISTRANT

Exhibit 21.1

COOPER CAMERON CORPORATION — SUBSIDIARIES & JOINT VENTURES
(As of February 26, 2004)

							State/Country of
	% Owned			% Owned			Incorporation or
Cooper Cameron Corporation (Delaware)—Parent	By Subsidiary			by CCC			Organization
Cameron Algerie (1 share owned by CCPEG)					100	%	Algeria
Cameron Argentina S.A.I.C. (122,700 shares owned by CCPEG)	Less than 1%				100	%	Argentina
Cameron Gabon, S.A. (1 share owned by Chairman)					100	%	Gabon
Cameron GmbH					100	%	Germany
Cameron Services Middle East LLC (Joint Venture)					24	%	Oman
Cameron Venezolana, S.A.					100	%	Venezuela
-Cameron Remanufacturas, C.A.		100	%				Venezuela
-Camercay, Ltd.		100	%				Grand Cayman
Compression Services Company					100	%	Ohio USA
Cooper Cameron Foreign Sales Company Ltd.					100	%	Barbados
Cooper Cameron Holding (Cayman) Limited					100	%	Cayman
-Cameron Australasia Pty. Ltd.		100	%				Australia
-Cooper Cameron do Brasil Ltda. (1 share owned by CC (Lux) SARL)		100	%				Brazil
-Cooper Cameron (Trinidad) Limited		100	%				Trinidad and Tobago
-Cooper Cameron Holding (Luxembourg) SARL		100	%				Luxembourg
-Cooper Cameron (Gibraltar) Limited		100	%				Gibraltar
–Cooper Cameron (Luxembourg) SARL		100	%				Luxembourg
—Cameron Ireland Limited		100	%				Ireland
—Cooper Cameron Holding Dutch B.V.		100	%				Netherlands
—Cooper Cameron Canada Corporation		100	%				Canada
—Cooper Cameron Holding (U.K.) Limited		100	%				United Kingdom
—Cameron France, S.A.S.		100	%				France
—Cooper Cameron (U.K.) Limited		100	%				United Kingdom
—–Cooper Cameron (U.K.) Investments Limited		100	%				United Kingdom
——Flow Link Systems Private Ltd.		100	%				India
——Nutron Manufacturers (India) Private Limited		100	%				India
——Flow Control-Tati Production Sdn. Bhd.		100	%				Malaysia
——Nutron Flow Control Sdn. Bhd.		100	%				Malaysia
—–Cameron Offshore Engineering Limited		100	%				United Kingdom
—–Cooper Cameron Pensions Limited		100	%				United Kingdom
—–Cameron Integrated Services Limited		100	%				United Kingdom
——Sherkate Mohandesi Hafar Chah Jonoob		50	%				Iran
—Cooper Cameron Holding B.V.		100	%				Netherlands
—–Cooper Energy Services B.V.		100	%				Netherlands
—–Cameron B.V.		100	%				Netherlands
—–Cooper Cameron Holding (Norway) AS		100	%				Norway
——Cameron Norge AS		100	%				Norway
- Cooper Cameron (Singapore) Pte. Ltd.		100	%				Singapore
- Riyan Cameron (B) Sendirian Berhad		100	%				Brunei
Cooper Cameron (Holding) Corp.					100	%	Nevada USA
- Cooper — Texgas Ltd. (1 share owned by Compression Services Co)		50	%				Colombia
Cooper Cameron International Holding Corp.					100	%	Nevada USA
Cooper Cameron Corporation Nigeria Limited					60	%	Nigeria
Cooper Cameron S.R.L.					100	%	Italy
Cooper Energy Services de Venezuela, S.A.					100	%	Venezuela
Cooper Energy Services International, Inc.					100	%	Ohio USA
-Canada Tiefbohrgeräte und Maschinenfabrik GmbH		100	%				Austria
Cooper Cameron de Mexico S.A. de C.V. (1 share owned by CCPEG)					100	%	Mexico
Cooper Cameron Petroleum Equipment Group, Inc. (CCPEG)					100	%	Delaware USA
Cooper Turbocompressor, Inc.					100	%	Delaware USA
Lyulka-Cooper (Russian Federation Joint Venture)		50	%		50	%	Russia
Orbit Valve International, Inc.					100	%	Arkansas USA
-Orbit Valve Company		100	%				Arkansas USA
Wellhead Services, Inc.					100	%	Nevada USA
-Cooper Cameron (Malaysia) Sdn Bhd		49	%				Malaysia

1

EX-23.1 8 h13049exv23w1.htm CONSENT OF INDEPENDENT AUDITORS

Exhibit 23.1

Consent of Independent Auditors

We consent to the incorporation by reference in the following Registration Statements on Forms S-8 or Forms S-3 and S-3/A of Cooper Cameron Corporation of our reports dated January 27, 2004, with respect to the consolidated financial statements and schedule of Cooper Cameron Corporation, incorporated by reference and included in this Annual Report (Form 10-K) for the year ended December 31, 2003, respectively.

Registration
Statement No.	Purpose
No. 333-26923	Form S-8 Registration Statements pertaining to the Amended and Restated
No. 33-95004	Cooper Cameron Corporation Long-Term Incentive Plan
No. 333-53545
No. 333-37850
No. 333-10624
No. 33-94948	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Employee Stock Purchase Plan
No. 33-95002	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Retirement Savings Plan
No. 333-57991	Form S-8 Registration Statement pertaining to the Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant
No. 333-51705	Form S-3 Registration Statement pertaining to the Cooper Cameron Corporation shelf registration of debt securities
No. 333-77641	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Savings-Investment Plan for Hourly Employees
No. 333-79787	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors
No. 333-46638	Form S-8 Registration Statements pertaining to the Cooper
No. 333-82082	Cameron Corporation Broad Based 2000 Incentive Plan
No. 333-61820
No. 333-104755
No. 333-96565	Form S-3 and S-3/A Registration Statements pertaining to the Cooper Cameron Corporation shelf registration of up to $500 million of securities
No. 333-106225	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Compensation Deferral Plan, Cooper Cameron Corporation Supplemental Excess Defined Contribution Plan and 2003 Cooper Cameron Corporation Supplemental Excess Defined Contribution Plan

/s/ Ernst & Young LLP

ERNST & YOUNG LLP

Houston, Texas
March 4, 2004

EX-31.1 9 h13049exv31w1.htm CERTIFICATION OF CEO PURSUANT TO SECTION 302

EXHIBIT 31.1

Cooper Cameron Corporation and Subsidiaries
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Sheldon R. Erikson, Chairman and Chief Executive Officer of Cooper Cameron Corporation, certify that:

1. I have reviewed this annual report on Form 10-K of Cooper Cameron Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 5, 2004

/s/ SHELDON R. ERIKSON

Sheldon R. Erikson

Chairman & Chief Executive Officer

EX-31.2 10 h13049exv31w2.htm CERTIFICATION OF CFO PURSUANT TO SECTION 302

EXHIBIT 31.2

Cooper Cameron Corporation and Subsidiaries
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Franklin Myers, Senior Vice President of Finance and Chief Financial Officer of Cooper Cameron Corporation, certify that:

1. I have reviewed this annual report on Form 10-K of Cooper Cameron Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 5, 2004

/s/ FRANKLIN MYERS

Franklin Myers

Senior Vice President of Finance and

Chief Financial Officer

EX-32.1 11 h13049exv32w1.htm CERTIFICATION OF CEO & CFO PURSUANT TO SECTION 906

EXHIBIT 32.1

Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

     In connection with the Annual Report on Form 10-K for the year ended December 31, 2003 of Cooper Cameron Corporation (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 5, 2004

/s/ Sheldon R. Erikson
Name:	Sheldon R. Erikson
Title:	Chairman, President & Chief     Executive Officer
/s/ Franklin Myers
Name:	Franklin Myers
Title:	Senior Vice President of Finance & Chief   Financial Officer

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EX-10.36

     EXHIBIT 10.36

INDEMNIFICATION AGREEMENT

      THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is effective as of February 20, 2003, by and among Cooper Cameron Corporation, a Delaware corporation (the “Company”), and [NAME] (the “Indemnitee”).

      WHEREAS, the Indemnitee is serving the Company in a “Corporate Status,” as defined herein;

      WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify persons serving it in a Corporate Status to the fullest extent permitted by applicable law so that they will serve or continue to serve in such status free from undue concern that they will not be so indemnified;

      WHEREAS, the Indemnitee is willing to serve and continue to serve the Company in a Corporate Status on the condition that he be so indemnified; and

      WHEREAS, to the extent permitted by law, this Agreement is a supplement to and in furtherance of the provisions of the Amended and Restated Certificate of Incorporation of the Company (the “Certificate”) and the provisions of the Bylaws of the Company (the “Bylaws”) or resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of the Indemnitee thereunder;

      NOW THEREFORE, in consideration of the premises and the covenants contained herein, the Company and the Indemnitee do hereby covenant and agree as follows:

      Section 1. Services by the Indemnitee. The Indemnitee agrees to continue to serve the Company in a Corporate Status. Notwithstanding the foregoing, the Indemnitee may at any time and for any reason resign from any such position.

      Section 2. Indemnification — General. The Company shall indemnify, and advance Expenses (as hereinafter defined) to, the Indemnitee as provided in this Agreement and to the fullest extent permitted by applicable law in effect on the date hereof and to such greater extent as applicable law may thereafter from time to time permit. The rights of the Indemnitee provided under the preceding sentence shall include, but shall not be limited to, the rights set forth in the other Sections of this Agreement.

      Section 3. Proceedings Other Than Proceedings by or in the Right of the Company. The Indemnitee shall be entitled to the rights of indemnification provided in this Section 3 if, by reason of his Corporate Status (as hereinafter defined), he is, or is threatened to be made, a party to or participant in any threatened, pending or completed Proceeding (as hereinafter defined), other than a Proceeding by or in the right of the Company. Pursuant to this Section 3, the Company shall indemnify the Indemnitee against Expenses, judgments, penalties, fines and amounts paid in settlement (as and to the extent permitted hereunder) actually and reasonably incurred by him or on his behalf in connection with such Proceeding or any claim, issue or matter therein, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, if he also had no reasonable cause to believe his conduct was unlawful.

      Section 4. Proceedings by or in the Right of the Company. The Indemnitee shall be entitled to the rights of indemnification provided in this Section 4 if, by reason of his Corporate Status, he is, or is threatened to be made, a party to or participant in any threatened, pending or completed Proceeding brought by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 4, the Company shall indemnify the Indemnitee against Expenses actually and reasonably incurred by him or on his behalf in connection with such Proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company. Notwithstanding the foregoing, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which the Indemnitee shall have been adjudged to be liable to the Company or if applicable law prohibits such indemnification; provided, however, that if applicable law so permits, indemnification against Expenses shall nevertheless be made by the Company in such event if and to the extent that the court in which such Proceeding shall have been brought or is pending, shall so determine.

      Section 5. Indemnification for Expenses of a Party Who is Wholly or Partly Successful.

          (a) To the extent that the Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith. If the Indemnitee is not wholly successful in defense of any Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in connection with each such claim, issue or matter as to which the Indemnitee is successful, on the merits or otherwise. For purposes of this Section 5(a), the term “successful, on the merits or otherwise,” shall include, but shall not be limited to, (i) the termination of any claim, issue or matter in a Proceeding by withdrawal or dismissal, with or without prejudice, (ii) termination of any claim, issue or matter in a Proceeding by any other means without any express finding of liability or guilt against the Indemnitee, with or without prejudice, (iii) the expiration of 120 days after the making of a claim or threat of a Proceeding without the institution of the same and without any promise or payment made to induce a settlement or (iv) the settlement of any claim, issue or matter in a Proceeding pursuant to which the Indemnitee pays less than $200,000. The provisions of this Section 5(a) are subject to Section 5(b) below.

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          (b) In no event shall the Indemnitee be entitled to indemnification under Section 5(a) above with respect to a claim, issue or matter to the extent (i) applicable law prohibits such indemnification, or (ii) an admission is made by the Indemnitee in writing to the Company or in such Proceeding or a final, nonappealable determination is made in such Proceeding that the standard of conduct required for indemnification under this Agreement has not been met with respect to such claim, issue or matter.

      Section 6. Indemnification for Expenses as a Witness. Notwithstanding any provisions herein to the contrary, to the extent that the Indemnitee is, by reason of his Corporate Status, a witness in any Proceeding, the Company shall indemnify the Indemnitee against all Expenses actually and reasonably incurred by or on behalf of the Indemnitee in connection therewith.

      Section 7. Advancement of Expenses. The Company shall advance all reasonable Expenses incurred by or on behalf of the Indemnitee in connection with any Proceeding within 10 days after the receipt by the Company of a statement or statements from the Indemnitee requesting such advance or advances from time to time, whether prior to or after the final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by or on behalf of the Indemnitee. The Indemnitee hereby expressly undertakes to repay such amounts advanced only if, and to the extent that, it shall ultimately be determined by a final, non-appealable adjudication or arbitration decision that the Indemnitee is not entitled to be indemnified against such Expenses. All amounts advanced to the Indemnitee by the Company pursuant to this Section 7 shall be without interest. The Company shall make all advances pursuant to this Section 7 without regard to the financial ability of the Indemnitee to make repayment, without bond or other security and without regard to the prospect of whether the Indemnitee may ultimately be found to be entitled to indemnification under the provisions of this Agreement. Any required reimbursement of Expenses by the Indemnitee shall be made by the Indemnitee to the Company within 10 days following the entry of the final, non-appealable adjudication or arbitration decision pursuant to which it is determined that the Indemnitee is not entitled to be indemnified against such Expenses.

      Section 8. Procedure for Determination of Entitlement to Indemnification.

          (a) To obtain indemnification under this Agreement, the Indemnitee shall submit to the Company a written request therefor, along with such documentation and information as is reasonably available to the Indemnitee and reasonably necessary to determine whether and to what extent the Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that the Indemnitee has requested indemnification.

          (b) Upon written request by the Indemnitee for indemnification pursuant to the first sentence of Section 8(a) hereof, a determination, if required by applicable law, with respect to the Indemnitee’s entitlement thereto shall be made in the specific case: (i) by the Board by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined); or (ii) if a quorum of the Board consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel (as hereinafter defined), as selected pursuant to Section 8(d), in a written opinion to the

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Board (which opinion may be a “more likely than not” opinion), a copy of which shall be delivered to the Indemnitee. If it is so determined that the Indemnitee is entitled to indemnification, the Company shall make payment to the Indemnitee within 10 days after such determination. The Indemnitee shall cooperate with the Person or Persons making such determination with respect to the Indemnitee’s entitlement to indemnification, including providing to such Person or Persons upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to the Indemnitee and reasonably necessary to such determination. Subject to the provisions of Section 10 hereof, any costs or expenses (including reasonable attorneys’ fees and disbursements) incurred by the Indemnitee in so cooperating with the Person or Persons making such determination shall be borne by the Company, and the Company hereby agrees to indemnify and hold the Indemnitee harmless therefrom.

          (c) Notwithstanding the foregoing, if a Change of Control has occurred, the Indemnitee may require a determination with respect to the Indemnitee’s entitlement to indemnification to be made by Independent Counsel, as selected pursuant to Section 8(d), in a written opinion to the Board (which opinion may be a “more likely than not” opinion), a copy of which shall be delivered to the Indemnitee.

          (d) In the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) or (c) hereof, the Independent Counsel shall be selected as provided in this Section 8(d). If a Change of Control shall not have occurred, the Independent Counsel shall be selected by the Board (including a vote of a majority of the Disinterested Directors if obtainable), and the Company shall give written notice to the Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change of Control shall have occurred, the Independent Counsel shall be selected by the Indemnitee (unless the Indemnitee shall request that such selection be made by the Board, in which event the preceding sentence shall apply), and approved by the Company (which approval shall not be unreasonably withheld). If (i) an Independent Counsel is to make the determination of entitlement pursuant to Section 8(b) or (c) hereof, and (ii) within 20 days after submission by the Indemnitee of a written request for indemnification pursuant to Section 8(a) hereof, no Independent Counsel shall have been selected, either the Company or the Indemnitee may petition the appropriate court of the State (as hereafter defined) or other court of competent jurisdiction for the appointment as Independent Counsel of a Person selected by such court or by such other Person as such court shall designate. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 8(b) or (c) hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 8(d), regardless of the manner in which such Independent Counsel was selected or appointed. Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 10(a)(iv) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

      Section 9. Presumptions and Effect of Certain Proceedings; Construction of Certain Phrases.

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          (a) In making a determination with respect to whether the Indemnitee is entitled to indemnification hereunder, the Reviewing Party making such determination shall presume that the Indemnitee is entitled to indemnification under this Agreement if the Indemnitee has submitted a request for indemnification in accordance with Section 8(a) of this Agreement, and anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.

          (b) Subject to the terms of Section 16 below, the termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of the Indemnitee to indemnification or create a presumption that the Indemnitee did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that the Indemnitee had reasonable cause to believe that his conduct was unlawful.

          (c) For purposes of any determination of the Indemnitee’s entitlement to indemnification under this Agreement or otherwise, the Indemnitee shall be deemed to have acted in good faith and in a manner he reasonably believe to be in or not opposed to the best interests of the Company, and, with respect to a criminal Proceeding, to have also had no reasonable cause to believe his conduct was unlawful, if the Indemnitee’s action is based on the records or books of account of the Company or another enterprise, including financial statements, or on information supplied to the Indemnitee by the officers of the Company or another enterprise in the course of their duties, or on the advice of legal or financial counsel for the Company or the Board (or any committee thereof) or for another enterprise or its board of directors (or any committee thereof), or on information or records given or reports made by an independent certified public accountant or by an appraiser or other expert selected by the Company or the Board (or any committee thereof) or by another enterprise or its board of directors (or any committee thereof). For purposes of this Section 9(c), the term “another enterprise” means any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise of which the Indemnitee is or was serving at the request of the Company as a director, officer, employee or agent. The provisions of this Section 9(c) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement. In addition, the knowledge and/or actions, or failure to act, of any other director, trustee, partner, managing member, fiduciary, officer, agent or employee of the Company shall not be imputed to the Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 9(c) are satisfied, it shall in any event be presumed that the Indemnitee has acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to a criminal Proceeding, that he also had no reasonable cause to believe his conduct was unlawful. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence.

          (d) For purposes of this Agreement, references to “fines” shall include any excise taxes assessed on the Indemnitee with respect to an employee benefit plan; references to “serving at the request of the Company” shall include, but shall not be limited to, any service as a

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director, officer, employee or agent of the Company which imposes duties on, or involves services by, the Indemnitee with respect to an employee benefit plan, its participants or its beneficiaries; and if the Indemnitee has acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, he shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as used in this Agreement. The provisions of this Section 9(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed or found to have met the applicable standard of conduct set forth in this Agreement.

      Section 10. Remedies of the Indemnitee.

          (a) In the event that (i) a determination is made pursuant to Section 8 of this Agreement that the Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 7 of this Agreement, (iii) the determination of entitlement to indemnification is to be made by the Board pursuant to Section 8(b) of this Agreement and such determination shall not have been made and delivered to the Indemnitee in writing within twenty (20) days after receipt by the Company of the request for indemnification, (iv) the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) or (c) of this Agreement and such determination shall not have been made in a written opinion to the Board and a copy delivered to the Indemnitee within forty-five (45) days after receipt by the Company of the request for indemnification, (v) payment of indemnification is not made pursuant to Section 6 of this Agreement within 10 days after receipt by the Company of a written request therefor or (vi) payment of indemnification is not made within 10 days after a determination has been made that the Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 8 or 9 of this Agreement, the Indemnitee shall be entitled to an adjudication in an appropriate court of the State of his entitlement to such indemnification or advancement of Expenses. Alternatively, the Indemnitee, at his sole option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the rules of the American Arbitration Association. The Indemnitee shall commence such Proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which the Indemnitee first has the right to commence such Proceeding pursuant to this Section 10(a); provided, however, that the foregoing clause shall not apply in respect of a Proceeding brought by the Indemnitee to enforce his rights under Section 5 of this Agreement.

          (b) In the event that a determination is made pursuant to Section 8 of this Agreement that the Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 10 shall be conducted in all respects as a de novo trial or a de novo arbitration (as applicable) on the merits, and the Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced pursuant to this Section 10, the Company shall have the burden of proving that the Indemnitee is not entitled to indemnification, and the Company shall be precluded from referring to or offering into evidence a determination made pursuant to Section 8 of this Agreement that is adverse to the Indemnitee’s right to indemnification. If the Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 10, the Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 7 until a final determination is made with respect to the Indemnitee’s entitlement to indemnification (as to which rights of appeal have been exhausted or lapsed).

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          (c) If a determination is made or deemed to have been made pursuant to Section 8 or 9 of this Agreement that the Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 10, absent (i) a misstatement by the Indemnitee of a material fact, or an omission by the Indemnitee of a material fact necessary to make the Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

          (d) The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 10 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all of the provisions of this Agreement.

          (e) In the event that the Indemnitee, pursuant to this Section 10, seeks a judicial adjudication or an award in arbitration to enforce his rights under, or to recover damages for breach of, this Agreement, the Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all Expenses actually and reasonably incurred by him in such judicial adjudication or arbitration, unless the court or arbitrator determines that each of the Indemnitee’s claims in such Proceeding were made in bad faith or were frivolous. In the event that a Proceeding is commenced by or in the right of the Company against the Indemnitee to enforce or interpret any of the terms of this Agreement, the Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all Expenses actually and reasonably incurred by him in such Proceeding (including with respect to any counter-claims or cross-claims made by the Indemnitee against the Company in such Proceeding), unless the court or arbitrator determines that each of the Indemnitee’s material defenses in such Proceeding were made in bad faith or were frivolous.

          (f) Any judicial adjudication or arbitration determined under this Section 10 shall be final and binding on the parties.

      Section 11. Defense of Certain Proceedings. In the event the Company shall be obligated under this Agreement to pay the Expenses of any Proceeding against the Indemnitee in which the Company is a co-defendant with the Indemnitee, the Company shall be entitled to assume the defense of such Proceeding, with counsel approved by the Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to the Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by the Indemnitee and the retention of such counsel by the Company, the Indemnitee shall nevertheless be entitled to employ or continue to employ his own counsel in such Proceeding. Employment of such counsel by the Indemnitee shall be at the cost and expense of the Company unless and until the Company shall have demonstrated to the reasonable satisfaction of the Indemnitee and the Indemnitee’s counsel that there is complete identity of issues and defenses and no conflict of interest between the Company and the Indemnitee in such Proceeding, after which time further employment of such counsel by the Indemnitee shall be at the cost and expense of the Indemnitee. In all events, if the Company shall not, in fact, have timely employed counsel to

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assume the defense of such Proceeding, then the fees and Expenses of the Indemnitee’s counsel shall be at the cost and expense of the Company.

      Section 12. Exception to Right of Indemnification or Advancement of Expenses. Notwithstanding any other provision of this Agreement, the Indemnitee shall not be entitled to indemnification or advancement of Expenses under this Agreement with respect to any Proceeding, or any claim therein, brought or made by the Indemnitee against:

          (a) the Company, except for (i) any claim or Proceeding in respect of this Agreement and/or the Indemnitee’s rights hereunder, (ii) any claim or Proceeding to establish or enforce a right to indemnification under any statute or law and (iii) any counter-claim or cross-claim brought or made by him against the Company in any Proceeding brought by or in the right of the Company against him; or

          (b) any other Person, except for Proceedings or claims approved by the Board.

      Section 13. Contribution.

          (a) If, with respect to any Proceeding, the indemnification provided for in this Agreement is held by a court of competent jurisdiction to be unavailable to the Indemnitee for any reason other than that the Indemnitee did not act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to a criminal Proceeding, that the Indemnitee had reasonable cause to believe his conduct was unlawful, the Company shall contribute to the amount of Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by the Indemnitee or on his behalf in connection with such Proceeding or any claim, issue or matter therein in such proportion as is appropriate to reflect the relative benefits received by the Indemnitee and the relative fault of the Indemnitee versus the other defendants or participants in connection with the action or inaction which resulted in such Expenses, judgments, penalties, fines and amounts paid in settlement, as well as any other relevant equitable considerations.

          (b) The Company and the Indemnitee agree that it would not be just and equitable if contribution pursuant to this Section 13 were determined by pro rata or per capita allocation or by any other method of allocation which does not take into account the equitable considerations referred to in Section 13(a) above.

          (c) No Person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act of 1933) shall be entitled to contribution from any Person who was not found guilty of such fraudulent misrepresentation.

      Section 14. Officer and Director Liability Insurance.

          (a) The Company shall use all commercially reasonable efforts to obtain and maintain in effect during the entire period for which the Company is obligated to indemnify the Indemnitee under this Agreement, one or more policies of insurance with reputable insurance companies to provide the directors and officers of the Company with coverage for losses from wrongful acts and omissions and to ensure the Company’s performance of its indemnification obligations under this Agreement. In all such insurance policies, the Indemnitee shall be named

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as an insured in such a manner as to provide the Indemnitee with the same rights and benefits as are accorded to the most favorably insured of the Company’s directors and officers. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that the Indemnitee is covered by such insurance maintained by a subsidiary or parent of the Company.

          (b) To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors or officers of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise which the Indemnitee serves at the request of the Company, the Indemnitee shall be named as an insured under and shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for the most favorably insured director or officer under such policy or policies.

          (c) In the event that the Company is a named insured under any policy or policies of insurance referenced in either Section 14(a) or (b) above, the Company hereby covenants and agrees that it will not settle any claims or Proceedings that may be covered by such policy or policies of insurance and in which the Indemnitee has or may incur Expenses, judgments, penalties, fines or amounts paid in settlement without the prior written consent of the Indemnitee.

      Section 15. Security. Upon reasonable request by the Indemnitee, the Company shall provide security to the Indemnitee for the Company’s obligations hereunder through an irrevocable bank letter of credit, funded trust or other similar collateral. Any such security, once provided to the Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee, which consent may be granted or withheld at the Indemnitee’s sole and absolute discretion.

      Section 16. Settlement of Claims. The Company shall not be liable to indemnify the Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding effected without the Company’s written consent, which consent shall not be unreasonably withheld.

      Section 17. Duration of Agreement. This Agreement shall be unaffected by the termination of the Corporate Status of the Indemnitee and shall continue for so long as the Indemnitee may have any liability or potential liability by virtue of his Corporate Status, including, without limitation, the final termination of all pending Proceedings in respect of which the Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any Proceeding commenced by the Indemnitee pursuant to Section 10 of this Agreement relating thereto, whether or not he is acting or serving in such capacity at the time any liability or Expense is incurred for which indemnification can be provided under this Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors and personal and legal representatives.

      Section 18. Remedies of the Company. The Company hereby covenants and agrees to submit any and all disputes relating to this Agreement that the parties are unable to resolve

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between themselves to binding arbitration pursuant to the rules of the American Arbitration Association and waives all rights to judicial adjudication of any matter or dispute relating to this Agreement except where judicial adjudication is requested or required by the Indemnitee.

      Section 19. Covenant Not to Sue, Limitation of Actions and Release of Claims. No legal action shall be brought and no cause of action shall be asserted by or on behalf of the Company (or any of its subsidiaries) against the Indemnitee, his spouse, heirs, executors, personal representatives or administrators after the expiration of two (2) years from the date on which the Corporate Status of the Indemnitee is terminated (for any reason), and any claim or cause of action of the Company (or any of its subsidiaries) shall be extinguished and deemed released unless asserted by filing of a legal action within such two-year period; provided, however, that the foregoing shall not apply to any action or cause of action brought or asserted by the Company pursuant to or in respect of this Agreement and shall not constitute a waiver or release of any of the Company’s rights under this Agreement.

      Section 20. Limitation of Liability. Notwithstanding any other provision of this Agreement, neither party shall have any liability to the other for, and neither party shall be entitled to recover from the other, any consequential, special, punitive, multiple or exemplary damages as a result of a breach of this Agreement.

      Section 21. Subrogation. In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

      Section 22. No Multiple Recovery. The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that the Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

      Section 23. Definitions. For purposes of this Agreement:

          (a) “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For purposes hereof, “control” (including, with correlative meaning, the terms “controlling”, “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of such Person, by contract or otherwise.

          (b) “Change of Control” shall mean a change in control of the Company occurring after the date of this Agreement of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Exchange Act, whether or not the Company is then subject to such reporting requirement. Without limiting the foregoing, such a Change in Control shall be deemed to have occurred if, after the date of this Agreement, (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the

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“beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors without the prior approval of at least two-thirds of the members of the Board in office immediately prior to such person attaining such percentage interest; (ii) the Company is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board in office immediately prior to such transaction or event constitute less than a majority of the Board thereafter; (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board (including for this purpose any new director whose election or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board; or (iv) approval by the shareholders of the Company of a liquidation or dissolution of the Company.

          (c) “Company” means Cooper Cameron Corporation, a Delaware corporation.

          (d) “Corporate Status” describes the status of an individual who is or was an officer or director of the Company, or is or was serving at the request of the Company as an officer, director, employee or agent of another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise.

          (e) “Disinterested Director” means a director of the Company who is not and was not a party to, or otherwise involved in, the Proceeding for which indemnification is sought by the Indemnitee.

          (f) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          (g) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating or being or preparing to be a witness in a Proceeding.

          (h) “Independent Counsel” means a law firm or a member of a law firm that is experienced in matters of corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company or the Indemnitee in any matter material to either such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any Person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or the Indemnitee in an action to determine the Indemnitee’s rights under this Agreement.

          (i) “Person” means a natural person, firm, partnership, joint venture, association, corporation, company, limited liability company, trust, business trust, estate or other entity.

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          (j) “Proceeding” includes any action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative.

          (k) “State” means the State of Texas.

      Section 24. Non-Exclusivity. The Indemnitee’s rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may at any time be entitled under applicable law, the Certificate, the Bylaws, any agreement, a vote of stockholders, a resolution of directors or otherwise.

      Section 25. Remedies Not Exclusive. No right or remedy herein conferred upon the Indemnitee is intended to be exclusive of any other right or remedy, and every other right or remedy shall be cumulative of and in addition to the rights and remedies given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy of the Indemnitee hereunder or otherwise shall not be deemed an election of remedies on the part of the Indemnitee and shall not prevent the concurrent assertion or employment of any other right or remedy by the Indemnitee.

      Section 26. Changes in Law. In the event that a change in applicable law after the date of this Agreement, whether by statute, rule or judicial decision, expands or otherwise increases the right or ability of a Delaware corporation to indemnify a member of its board of directors or an officer, the Indemnitee shall, by this Agreement, enjoy the greater benefits so afforded by such change. In the event that a change in applicable law after the date of this Agreement, whether by statute, rule or judicial decision, narrows or otherwise reduces the right or ability of a Delaware corporation to indemnify a member of its board of directors or an officer, such change shall have no effect on this Agreement or any of the Indemnitee’s rights hereunder, except and only to the extent required by law.

      Section 27. Interpretation of Agreement. The Company and the Indemnitee acknowledge and agree that it is their intention that this Agreement be interpreted and enforced so as to provide indemnification to the Indemnitee to the fullest extent now or hereafter permitted by law.

      Section 28. Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; (b) such provision or provisions will be deemed reformed to the extent necessary to conform to applicable law and to give maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision or provisions held invalid, illegal or unenforceable.

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      Section 29. Governing Law; Jurisdiction and Venue; Specific Performance.

          (a) The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

          (b) ANY “ACTION OR PROCEEDING” (AS SUCH TERM IS DEFINED BELOW) ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE FILED IN AND LITIGATED OR ARBITRATED SOLELY BEFORE THE COURTS LOCATED IN OR ARBITRATORS SITTING IN HARRIS COUNTY IN THE STATE OF TEXAS, AND EACH PARTY TO THIS AGREEMENT: (i) GENERALLY AND UNCONDITIONALLY ACCEPTS THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND ARBITRATORS AND VENUE THEREIN, AND WAIVES TO THE FULLEST EXTENT PROVIDED BY LAW ANY DEFENSE OR OBJECTION TO SUCH JURISDICTION AND VENUE BASED UPON THE DOCTRINE OF “FORUM NON CONVENIENS;” AND (ii) GENERALLY AND UNCONDITIONALLY CONSENTS TO SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING BY DELIVERY OF CERTIFIED OR REGISTERED MAILING OF THE SUMMONS AND COMPLAINT IN ACCORDANCE WITH THE NOTICE PROVISIONS OF THIS AGREEMENT. FOR PURPOSES OF THIS SECTION, THE TERM “ACTION OR PROCEEDING” IS DEFINED AS ANY AND ALL CLAIMS, SUITS, ACTIONS, HEARINGS, ARBITRATIONS OR OTHER SIMILAR PROCEEDINGS, INCLUDING APPEALS AND PETITIONS THEREFROM, WHETHER FORMAL OR INFORMAL, GOVERNMENTAL OR NON-GOVERNMENTAL, OR CIVIL OR CRIMINAL. THE FOREGOING CONSENT TO JURISDICTION SHALL NOT CONSTITUTE GENERAL CONSENT TO SERVICE OF PROCESS IN THE STATE FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE, AND SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES TO THIS AGREEMENT.

          (c) The Company acknowledges that the Indemnitee may, as a result of the Company’s breach of its covenants and obligations under this Agreement, sustain immediate and long-term substantial and irreparable injury and damage which cannot be reasonably or adequately compensated by damages at law. Consequently, the Company agrees that the Indemnitee shall be entitled, in the event of the Company’s breach or threatened breach of its covenants and obligations hereunder, to obtain equitable relief from a court of competent jurisdiction, including enforcement of each provision of this Agreement by specific performance and/or temporary, preliminary and/or permanent injunctions enforcing any of the Indemnitee’s rights, requiring performance by the Company, or enjoining any breach by the Company, all without proof of any actual damages that have been or may be caused to the Indemnitee by such breach or threatened breach and without the posting of bond or other security in connection therewith. The Company waives the claim or defense therein that the Indemnitee has an adequate remedy at law, and the Company shall not allege or otherwise assert the legal position that any such remedy at law exists. The Company agrees and acknowledges that: (i) the terms of this Section 29(c) are fair, reasonable and necessary to protect the legitimate interests of the Indemnitee; (ii) this waiver is a material inducement to the Indemnitee to enter into the

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transactions contemplated hereby; and (iii) the Indemnitee relied upon this waiver in entering into this Agreement and will continue to rely on this waiver in its future dealings with the Company. The Company represents and warrants that it has reviewed this provision with its legal counsel, and that it has knowingly and voluntarily waived its rights referenced in this Section 29 following consultation with such legal counsel.

      Section 30. Nondisclosure of Payments. Except as expressly required by Federal securities laws, the Company shall not disclose any payments under this Agreement without the prior written consent of the Indemnitee. Any payments to the Indemnitee that must be disclosed shall, unless otherwise required by law, be described only in the Company proxy or information statements relating to special and/or annual meetings of the Company’s shareholders, and the Company shall afford the Indemnitee a reasonable opportunity to review all such disclosures and, if requested by the Indemnitee, to explain in such statement any mitigating circumstances regarding the events reported.

      Section 31. Notice by the Indemnitee. The Indemnitee agrees to promptly notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification or advancement of Expenses covered hereunder.

      Section 32. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (a) delivered by hand and received for by the party to whom said notice or other communication shall have been directed, or (b) mailed by U.S. certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed: (i) If to the Company: Cooper Cameron Corporation, 1333 West Loop South, Suite 1700, Houston, Texas 77027, Attention: President; and (ii) if to any other party hereto, including the Indemnitee, to the address of such party set forth on the signature page hereof; or to such other address as may have been furnished by any party to the other(s), in accordance with this Section 32.

      Section 33. Modification and Waiver. No supplement, modification or amendment of this Agreement or any provision hereof shall limit or restrict in any way any right of the Indemnitee under this Agreement with respect to any action taken or omitted by the Indemnitee in his Corporate Status prior to such supplement, modification or amendment. No supplement, modification or amendment of this Agreement or any provision hereof shall be binding unless executed in writing by both of the Company and the Indemnitee. No waiver of any provision of this Agreement shall be deemed or shall constitute a wavier of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

      Section 34. Headings. The headings of the Sections or paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

      Section 35. Gender. Use of the masculine pronoun in this Agreement shall be deemed to include usage of the feminine pronoun where appropriate.

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      Section 36. Identical Counterparts. This Agreement may be executed in one or more counterparts (whether by original, photocopy or facsimile signature), each of which shall for all purposes be deemed to be an original, but all of which together shall constitute one and the same Agreement. Only one such counterpart executed by the party against whom enforcement is sought must be produced to evidence the existence of this Agreement.

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      IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day and year first above written.

ATTEST:	COOPER CAMERON CORPORATION
By:	By:
Name:	Name:	Sheldon R. Erikson
Title:	Title:	Chairman, President & CEO
	INDEMNITEE
	Name:	[                            ]
	Address:	1333 West Loop South, Suite 1700 Houston, Texas 77027

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EX-13.1

Exhibit 13.1

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION OF COOPER CAMERON CORPORATION

     The following discussion of Cooper Cameron Corporation’s (the Company) historical results of operations and financial condition should be read in conjunction with the Company’s consolidated financial statements and notes thereto included elsewhere in this Annual Report. All per share amounts included in this discussion are based on diluted shares outstanding.

Overview

     The Company’s operations are organized into three business segments — Cameron, Cooper Cameron Valves (CCV) and Cooper Compression. Based upon the amount of equipment installed worldwide and available industry data, Cameron is one of the world’s leading providers of systems and equipment used to control pressures and direct flows of oil and gas wells. Cameron’s products are employed in a wide variety of operating environments including basic onshore fields, highly complex onshore and offshore environments, deepwater subsea applications and ultra-high temperature geothermal operations. Cameron’s products include surface and subsea production systems, blowout preventers, drilling and production control systems, gate valves, actuators, chokes, wellheads, drilling riser and aftermarket parts and services. Cameron’s customers include oil and gas majors, independent producers, engineering and construction companies, drilling contractors, rental companies and geothermal energy producers. Based upon the amount of equipment installed worldwide and available industry data, CCV is a leading provider of valves and related systems primarily used to control pressures and direct the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines and transmission systems to refineries, petrochemical plants and industrial centers for processing. CCV’s products include gate valves, ball valves, butterfly valves, Orbit valves, rotary process valves, block and bleed valves, plug valves, globe valves, check valves, actuators, chokes and aftermarket parts and service. CCV’s customers include oil and gas majors, independent producers, engineering and construction companies, pipeline operators, drilling contractors and major chemical, petrochemical and refining companies. Based upon the amount of equipment installed worldwide and available industry data, Cooper Compression is a leading provider of compression equipment and related aftermarket parts and services. The Company’s compression equipment is used throughout the energy industry by gas transmission companies, compression leasing companies, oil and gas producers, independent power producers and a variety of other industries around the world.

     In addition to the historical data contained herein, this Annual Report, including the information set forth in the Company’s Management’s Discussion and Analysis and elsewhere in this report, includes forward-looking statements regarding the Company’s future revenues and earnings, cash generated from operations, capital expenditures, and plans for refinancing of certain debt instruments, as well as expectations regarding rig activity, oil and gas demand and pricing and order activity, made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company’s actual results may differ materially from those described in forward-looking statements. These statements are based on current expectations of the Company’s performance and are subject to a variety of factors, some of which are not under the control of the Company, which can affect the Company’s results of operations, liquidity or financial condition. Such factors may include overall demand for, and pricing of, the Company’s products; the size and timing of orders; the Company’s ability to successfully execute large subsea projects it has been awarded; changes in the price of and demand for oil and gas in both domestic and international markets; political and social issues affecting the countries in which the Company does business; fluctuations in currency and financial markets worldwide; and variations in global economic activity. In particular, current and projected oil and gas prices have historically affected customers’ spending levels and their related purchases of the Company’s products and services; however, recently there has been less linkage between commodity prices and spending. Additionally, the Company may change its cost structure, staffing or spending levels due to changes in oil and gas price expectations and the Company’s judgment of how such changes might affect customers’ spending, which may impact the Company’s financial results. See additional factors discussed in “Factors That May Affect Financial Condition and Future Results” contained herein.

     Because the information herein is based solely on data currently available, it is subject to change as a result of, among other things, changes in conditions over which the Company has no control or influence, and should not therefore be viewed as assurance regarding the Company’s future performance. Additionally, the Company is not obligated to make public indication of such changes unless required under applicable disclosure rules and regulations.

     The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including those related to warranty obligations, bad debts, inventories, intangible assets, income taxes, pensions and other postretirement benefits, other employee benefit plans, and contingencies and litigation. The Company bases its estimates on historical experience and on various other assumptions that the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Critical Accounting Policies

     The Company believes the following critical accounting policies affect the more significant judgments and estimates used in the preparation of its consolidated financial statements. These policies and the other sections of the Company’s Management’s Discussion and Analysis of Results of Operations and Financial Condition have been reviewed with the Company’s Audit Committee of the Board of Directors.

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     The Company generally recognizes revenue once the following four criteria are met: (i) a written contract or purchase order exists, (ii) delivery of the equipment has occurred or the customer has inspected, tested and accepted the equipment (if required by the contract) or services have been rendered, (iii) the price of the equipment or service is fixed and determinable and (iv) collectibility is reasonably assured. As the Company has expanded into the deepwater subsea systems market, a larger percentage of the Company’s revenue has been derived from projects in this market. These long lead-time projects accounted for 10.8% of the Company’s total revenues in 2003 as compared to 4.3% in 2002 and 0.6% in 2001. Since these projects are significantly more complex than the Company’s traditional product lines, scheduled delivery or acceptance dates often change. As a result, there can be more volatility in the Company’s revenues than has historically been present.

     The Company maintains allowances for doubtful accounts for estimated losses that may result from the inability of its customers to make required payments. Such allowances are based upon several factors including, but not limited to, historical experience and the current and projected financial condition of each specific customer. Were the financial condition of a customer to deteriorate, resulting in an impairment of its ability to make payments, additional allowances may be required.

     The Company’s aggregate inventories are carried at cost or, if lower, net realizable value. Inventories located in the United States and Canada are carried on the last-in, first-out (LIFO) method. Inventories located outside of the United States and Canada are carried on the first-in, first-out (FIFO) method. The Company writes down its inventory for estimated obsolescence or excess quantities on hand equal to the difference between the cost of the inventory and its estimated realizable value. If future conditions cause a reduction in the Company’s estimate of realizable value, additional provisions may be required.

     The Company provides for the estimated cost of product warranties at the time of sale, or, in some cases, when specific warranty problems are encountered. Should actual product failure rates or repair costs differ from the Company’s current estimates, revisions to the estimated warranty liability would be required. See Note 7 of the Notes to Consolidated Financial Statements for additional details surrounding the Company’s warranty accruals.

     The Company accrues for costs relating to litigation, claims and other contingent matters when such liabilities become probable and reasonably estimable. Such estimates may be based on advice from third parties or on management’s judgment, as appropriate. Actual amounts paid may differ from amounts estimated, and such differences will be charged to income in the period when final determination is made.

     The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized, considering future taxable income and ongoing prudent and feasible tax planning strategies. As of December 31, 2003, the Company had a net operating loss carryforward for U.S. tax purposes of approximately $287.0 million, which does not begin to expire until 2020. Currently, the Company believes it is more likely than not that it will generate sufficient future taxable income to fully utilize this net operating loss carryforward. Accordingly, the Company has not recorded a valuation allowance against this net operating loss carryforward. In the event the oil and gas exploration activity in the United States deteriorates over an extended period of time, the Company may determine that it would not be able to fully realize this deferred tax asset in the future. Should this occur, a valuation allowance against this deferred tax asset would be charged to income in the period such determination was made.

     Through December 31, 2001, the Company reviewed the carrying value of intangible assets, including goodwill, at least annually or whenever there were indications that the intangible might be impaired. In assessing the recoverability of these intangible assets and goodwill, the Company made assumptions regarding estimated future cash flows and other factors to determine the estimated fair value of the respective assets. Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (FAS 142), which requires that the Company estimate the fair value of each of its reporting units annually and compare such amounts to their respective book values to determine if an impairment of goodwill is required. Should the Company’s estimate of the fair value of any of its reporting units decline dramatically, an impairment of goodwill might be required.

     The Company accounts for its defined benefit pension plans in accordance with Statement of Financial Accounting Standards No. 87, Employers’ Accounting for Pensions (FAS 87), which requires that amounts recognized in the financial statements be determined on an actuarial basis. See Note 8 of the Notes to Consolidated Financial Statements for the amounts of pension expense (income) included in the Company’s Results of Operations and the Company’s contributions to the pension plans for the years ended December 31, 2003, 2002 and 2001, as well as the unrecognized net loss at December 31, 2003 and 2002.

     The assumptions used in calculating the amounts recognized in the Company’s financial statements include discount rates, interest costs, expected return on plan assets, retirement and mortality rates, inflation rates, salary growth and other factors. The Company bases the discount rate assumptions on investment yields available at the measurement date on an index of long-term, AA-rated corporate bonds. The Company’s inflation assumption is based on an evaluation of external market indicators. The expected rate of return on plan assets reflects asset allocations, investment strategy and the views of various investment professionals. Retirement and mortality rates are based primarily on actual plan experience. In accordance with FAS 87, actual results that differ from these assumptions are accumulated and amortized over future periods and, therefore, generally affect recognized expense and the recorded obligation in future periods. While the Company believes the assumptions used are appropriate, differences in actual experience or changes in assumptions will affect the Company’s pension obligations and future expense.

     A significant reason for the increase in pension expense over the last three years results from the difference between the actual and assumed rates of return on plan assets. During 2001 and 2002, the Company assumed that the expected long-term rate of return on plan assets for these plans would be between 6.0% and 9.25%. In 2001 and 2002, the Company’s actual rate of return on the pension assets of these plans was substantially less than the assumed rates of return. For 2003, the Company lowered the assumed rate of return to between 6.0% and 8.9%, depending on the plan. The plans earned significantly more than the assumed rates of return in 2003.

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     The following table illustrates the sensitivity to a change in certain assumptions used in (i) the calculation of pension expense for the year ending December 31, 2004 and (ii) the calculation of the projected benefit obligation (PBO) at December 31, 2003 for the Company’s pension plans:

	Impact on 2004			Impact on
	Pre-tax Pension			December 31, 2003
(dollars in millions)	Expense			PBO
Change in Assumption:
25 basis point decrease in discount rate	$	1.1		$	12.2
25 basis point increase in discount rate		(1.1	)		(12.3	)
25 basis point decrease in expected return on assets		0.9			—
25 basis point increase in expected return on assets		(0.9	)		—

Financial Summary

     The following table sets forth the consolidated percentage relationship to revenues of certain income statement items for the periods presented:

	Year Ended December 31,
		2003		2002		2001
Revenues		100.0	%	100.0	%	100.0	%
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization)		72.3		71.7		69.2
Selling and administrative expenses		17.7		17.8		16.1
Depreciation and amortization		5.1		5.1		5.3
Interest income		(0.3	)	(0.6	)	(0.6	)
Interest expense		0.5		0.5		0.9
Total costs and expenses		95.3		94.5		90.9
Income before income taxes and cumulative effect of accounting change		4.7		5.5		9.1
Income tax provision		(1.2	)	(1.6	)	(2.8	)
Income before cumulative effect of accounting change		3.5		3.9		6.3
Cumulative effect of accounting change		0.7		—		—
Net income		4.2	%	3.9	%	6.3	%

Results of Operations

2003 Compared to 2002

     The Company had net income of $69.4 million, or $1.25 per share, for the twelve months ended December 31, 2003 compared with $60.5 million, or $1.10 per share in 2002. The results for 2003 and 2002 included pre-tax charges of $14.6 million and $33.3 million, respectively, related to plant closing, business realignment and other related costs. See Note 2 of the Notes to Consolidated Financial Statements for a discussion of these charges. The results for 2003 also include a $12.2 million after-tax gain resulting from the cumulative effect of adopting Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (FAS 150). See Note 1 of the Notes to Consolidated Financial Statements for further discussion.

Revenues

     Revenues for 2003 totaled $1.634 billion, an increase of 6.3% from 2002 revenues of $1.538 billion. Increased subsea deliveries in Cameron and the incremental revenue associated with the acquisition of a Canadian valve manufacturer in December 2002 more than offset continued weak market conditions in the domestic natural gas compression and transmission markets, which negatively impacted sales in the Cooper Compression division.

     Cameron’s revenues for 2003 totaled $1.019 billion, an increase of 10.9% from 2002 revenues of $918.7 million. Movement in foreign currencies caused a $32.4 million increase in revenues. Revenues in the subsea market increased 26.5%, revenues in the surface markets increased 1.8% and revenues in the drilling market increased 12.4%. The increase in subsea revenues was attributable to deliveries associated with the large subsea orders received during 2002, primarily related to projects located offshore West Africa and eastern Canada. The increase in drilling revenues was primarily attributable to increased deliveries to customers located in the former Soviet Union.

     CCV’s revenues for 2003 totaled $307.1 million, an increase of 12.3% from 2002 revenues of $273.5 million. Revenues increased 61.2% in the distributor product line, revenues in the engineered product line decreased 12.4%, and revenues in the aftermarket product line increased 9.6%. The vast majority of the revenue increase in the distributor product line was attributable to the acquisition of a Canadian valve manufacturer in December 2002. The decrease in revenues in the engineered product line was attributable to the downturn

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in North American pipeline project activity, which began in 2002. The increase in the aftermarket product line was primarily attributable to new locations that were opened during 2003.

     Cooper Compression’s revenues for 2003 totaled $308.8 million, a decrease of 10.7% from 2002 revenues of $345.9 million. Aftermarket and new unit sales in the gas compression market decreased approximately 21% and 15%, respectively. The decrease in revenues in the gas compression market was attributable primarily to a lack of demand in the U.S. market resulting from, among other things, the financial difficulties that Cooper Compression’s customers experienced throughout the year, consolidation of the Company’s customer base and a lack of significant development projects that would require Cooper Compression’s equipment. In the air compression portion of Cooper Compression’s business, new unit sales increased 27.2%, while aftermarket revenue decreased 12.7%. The increase in new unit sales in the air compression business was attributable primarily to greater demand in the Asian markets. The decrease in aftermarket sales was attributable primarily to a change in mix from engineered units to plant air units, which do not carry the same level of aftermarket business as engineered units.

Cost and Expenses

     Gross margin (exclusive of depreciation and amortization) for 2003 was $452.7 million, an increase of 3.9% from 2002 gross margin of $435.6 million. Gross margin as a percentage of revenue for 2003 was 27.7% as compared to 28.3% for 2002. Included in cost of sales for 2003 was $16.2 million of increased costs in Cameron’s subsea business and $15.9 million of non-cash LIFO income, primarily associated with the liquidation of certain low-cost LIFO inventory layers in Cooper Compression. Included in cost of sales in 2002 was $11.2 million related to an inventory write-down in Cooper Compression associated with facility closures.

     Cameron’s gross margin percentage for 2003 was 25.5% as compared to 28.0% for 2002. The decrease in the gross margin percentage resulted primarily from $16.2 million of increased costs in Cameron’s subsea business related to increased scope changes, cost overruns and estimated liquidated damages that could be assessed by Cameron’s customers (which decreased the overall gross margin by 1.6%), as well as an overall increase in subsea revenues, which typically carry a lower margin percentage as compared to Cameron’s traditional surface products.

     CCV’s gross margin percentage for 2003 was 30.6% as compared to 30.5% for 2002. The increase in the gross margin percentage was attributable to higher margins associated with the sales resulting from the acquisition of a Canadian valve manufacturer in December 2002, partially offset by lower margins in the pipeline ball valve product line due to a shift to international projects, which typically carry lower margins as compared to domestic pipeline projects.

     Cooper Compression’s gross margin percentage for 2003 was 32.2% as compared to 27.5% for 2002. The increase in the gross margin percentage resulted from an $11.5 million increase in the amount of LIFO income associated with the liquidation of certain low-cost inventory layers (which increased the 2003 gross margin percentage by 3.7%) and the absence of an $11.2 million write-down of inventory associated with facility closures that was recorded in 2002 (which decreased the 2002 gross margin percentage by 3.3%). Excluding these two items, the gross margin percentage for 2003 actually declined 2.3% from 2002’s level, due primarily to lower margins in the gas and air compression aftermarket business as a result of a shift in the mix of parts sold and pricing pressures.

     Selling and administrative expenses for 2003 were $288.6 million, an increase of 5.7% from 2002’s $273.1 million. The increase in selling and administrative expenses resulted primarily from (i) the impact of a weaker U.S. dollar against the Canadian dollar and most European currencies, which increased selling and administrative expense by $6.0 million, (ii) the acquisition of a Canadian valve manufacturer in December 2002, which resulted in an additional $3.7 million of selling and administrative costs in 2003, (iii) a $5.0 million increase in postretirement benefit plan costs associated primarily with the amortization of unrecognized losses in prior years, (iv) a $3.9 million increase associated with rent on the Cameron headquarters building and costs associated with new facilities and (v) $1.8 million of increased costs associated with CCV’s aftermarket expansion. These increases were partially offset by a $7.5 million reduction in plant closings, business realignment and other related costs discussed below.

     Included within selling and administrative expenses for 2003 and 2002 were $14.6 million and $22.1 million, respectively, of plant closing, business realignment and other related costs. The $14.6 million recorded in 2003 was comprised of (i) $6.2 million for employee severance at Cameron and Cooper Compression, (ii) $1.2 million of costs at Cooper Compression related to the closure of 13 facilities announced in the fourth quarter of 2002, (iii) $4.7 million related to the Company’s unsuccessful efforts to acquire a certain oil service business, (iv) $1.0 million related to the Company’s international tax restructuring activities, which were begun in 2002, and (v) $1.5 million related to a litigation award associated with the use of certain intellectual property obtained in connection with a previous acquisition. Of the $22.1 million recorded in 2002, $14.6 million related to the Cooper Compression division and $7.5 million related to the Company’s other divisions. The costs attributable to Cooper Compression were generally related to the closure of 13 facilities in the gas compression business and were comprised primarily of (i) $1.6 million of severance and relocation expenses, (ii) $8.2 million of facility exit costs, including lease termination payments, and (iii) $4.8 million of facility write-downs. The $7.5 million of costs related to the Company’s other divisions was comprised of (i) $1.1 million of severance, (ii) $5.2 million of facility write-downs and losses on property disposals, and (iii) $1.2 million of costs associated with the Company’s international tax restructuring activities.

     Depreciation and amortization expense for 2003 was $83.6 million, an increase of 7.3% from 2002 depreciation and amortization expense of $77.9 million. The increase in depreciation and amortization expense was attributable to (i) a $2.8 million increase attributable to depreciation and amortization associated with capital additions, (ii) a $1.4 million increase attributable to depreciation and amortization associated with acquisitions, (iii) the impact of a weaker U.S. dollar against the British pound, Canadian dollar and Euro, which increased depreciation and amortization expense by $1.8 million, (iv) $1.8 million of write-downs associated with assets held for sale, and (v) a $7.7 million increase attributable to amortization associated with the Company’s new enterprise-wide business system, partially offset by the lack of depreciation and amortization related to assets that were retired or became fully depreciated, which decreased depreciation and amortization expense by approximately $9.1 million.

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     Interest income for 2003 was $5.2 million as compared to $8.5 million in 2002. The decline in interest income was primarily attributable to lower earnings on the Company’s excess cash balances as the interest rates associated with these investments have declined.

     Interest expense for 2003 was $8.2 million as compared to $8.0 million in 2002. Interest expense for both periods primarily represented interest on the Company’s convertible debentures.

     The $12.2 million cumulative effect of an accounting change recognized during 2003 reflects the impact of adopting FAS 150 (see Note 1 of the Notes to Consolidated Financial Statements). There was no tax expense associated with this item as the gain is not taxable.

     The income tax provision was $20.4 million in 2003 as compared to $24.7 million in 2002. The effective tax rate for 2003 was 26.2% as compared to 29.0% in 2002. The decline in the effective tax rate for 2003 primarily reflects the impact of the Company’s international tax restructuring activities.

Orders and Backlog

     Orders were as follows (in millions):

	Year Ended December 31,
		2003		2002	Increase
Cameron	$	1,082.4	$	1,081.6	$	0.8
CCV		324.0		258.4		65.6
Cooper Compression		340.2		325.0		15.2
	$	1,746.6	$	1,665.0	$	81.6
Orders for 2003 were $1.747 billion, an increase of 4.9% from $1.665 billion in 2002. Cameron’s orders for 2003 were $1.082 billion as compared to $1.082 billion for 2002. Movement in foreign currencies caused a $46.3 million increase in orders. An 11.0% decrease in subsea orders was offset by an 11.3% increase in drilling orders and a 6.0% increase in surface orders. The decrease in subsea orders was due primarily to a reduction in the overall level of project awards in 2003 as compared to 2002. The increase in drilling and surface orders was due primarily to increased activity in Canada and Latin America. CCV’s orders were $324.0 million, an increase of 25.4% from $258.4 million in 2002. Over 90% of this increase is attributable to the distributor product line, in particular, the acquisition of a Canadian valve manufacturer in December 2002. Cooper Compression’s orders were $340.2 million, an increase of 4.7% from $325.0 million in 2002. A 39.7% increase in new unit orders in the gas and air compression businesses was partially offset by a 10.3% decline in aftermarket orders in these businesses. The increase in new unit orders was driven by international sales, particularly Mexico, Asia and Europe. The decrease in aftermarket orders was caused primarily by the financial difficulties domestic customers in the gas compression market have experienced recently.
Backlog was as follows (in millions):
	Year Ended December 31,
		2003		2002	Increase
Cameron	$	771.8	$	695.8	$	76.0
CCV		72.4		56.1		16.3
Cooper Compression		102.4		75.9		26.5
	$	946.6	$	827.8	$	118.8

2002 Compared to 2001

     The Company had net income of $60.5 million, or $1.10 per share, for the twelve months ended December 31, 2002 compared with $98.3 million, or $1.75 per share in 2001. The results for 2002 and 2001 included pre-tax charges of $33.3 million and $20.2 million, respectively, related to plant closing, business realignment and other related costs. See Note 2 of the Notes to Consolidated Financial Statements for a discussion of these charges.

Revenues

     Revenues for 2002 totaled $1.538 billion, a decrease of 1.6% from 2001 revenues of $1.563 billion. Increased subsea deliveries in Cameron were more than offset by weak market conditions in domestic natural gas and compression and transmission markets, which negatively impacted sales in Cameron’s North American surface and aftermarket business and the CCV and Cooper Compression divisions.

     Cameron’s revenues for 2002 totaled $918.7 million, an increase of 2.4% from 2001 revenues of $897.6 million. Revenue in the subsea and international surface markets increased 13.7%, which more than offset declines in North American surface and aftermarket revenues of 13.0%. The increase in subsea revenues was attributable to the large increase in subsea orders received during 2001, primarily related to projects located offshore West Africa. North American surface and aftermarket revenues declined primarily as a result of weakness in the rig count in this region.

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     CCV’s revenues for 2002 totaled $273.5 million, a decrease of 6.4% from 2001 revenues of $292.3 million. Increased revenues in the Cameron Ball Valve product line of 16.5% were more than offset by declines in the distributor, Orbit and aftermarket product lines, which decreased 17.0%. The increase in the Cameron Ball Valve product line was attributable to the significant pipeline backlog that existed at December 31, 2001. The decline in the distributor product line resulted from weakness in the North American gas market. The decline in the Orbit product line was due to both weakness in the specialty valve market and intense competitive pressures in this market during 2002. Finally, the decline in the aftermarket product line resulted from softness in the pipeline, refining and petrochemical markets during the latter part of 2002.

     Cooper Compression’s revenues for 2002 totaled $345.9 million, a decrease of 7.3% from 2001 revenues of $373.1 million. Increased aftermarket revenues of 7.9% in the gas compression market were more than offset by a 45.3% decline in new unit sales in this market. The air compression portion of Cooper Compression’s business was relatively flat in 2002 as compared to 2001. The increase in aftermarket revenues in the gas compression market was attributable primarily to the acquisitions Cooper Compression made in 2001. The decrease in new unit sales in the gas compression market resulted from a lack of demand in this market attributable to, among other things, the financial difficulties that Cooper Compression’s customers experienced throughout the year and a lack of significant development projects that would require Cooper Compression’s equipment.

Cost and Expenses

     Gross margin (exclusive of depreciation and amortization) for 2002 was $435.6 million, a decrease of 9.6% from 2001 gross margin of $481.8 million. Gross margin as a percentage of revenue for 2002 was 28.3% as compared to 30.8% for 2001. The gross margin percentage for 2002 was negatively impacted by an $11.2 million inventory write-down in the Cooper Compression division associated with facility closures, which decreased the gross margin percentage by 0.7%.

     Cameron’s gross margin percentage for 2002 was 28.0% as compared to 31.6% for 2001. The decrease in the gross margin percentage resulted from pricing pressures in the North American surface and aftermarket businesses and the increased subsea shipments during 2002, which typically carry a lower margin percentage as compared to the Company’s traditional surface products.

     CCV’s gross margin percentage for 2002 was 30.5% as compared to 31.1% for 2001. The decline in the gross margin percentage was attributable to relatively fixed overhead costs which did not decline proportionally with the decline in revenues (resulting in an approximate 1.1% decrease in the gross margin percentage), partially offset by a reduction in warranty expense in 2002, which increased the gross margin percentage by 0.5%. Warranty expense in 2001 was abnormally high due to a dispute on an international pipeline project.

     Cooper Compression’s gross margin percentage for 2002 was 27.5% as compared to 28.9% for 2001. The decrease in the gross margin percentage resulted from an $11.2 million inventory write-down associated with facility closures (which decreased Cooper Compression’s margin percentage by 3.3%), partially offset by manufacturing efficiencies and a higher percentage of aftermarket revenues, which typically carry higher margins.

     Selling and administrative expenses for 2002 were $273.1 million, an increase of 8.7% from 2001’s $251.3 million. The increase in selling and administrative expenses resulted primarily from $3.5 million of increased investment associated with the Company’s expansion into the subsea markets and $11.4 million of higher postretirement benefit plan costs, associated primarily with lower returns on pension assets.

     Included within selling and administrative expenses for 2002 and 2001 were $22.1 million and $20.2 million, respectively, of plant closing, business realignment and other related costs. Of the $22.1 million recorded in 2002, $14.6 million related to the Cooper Compression division and $7.5 million related to the Company’s other divisions. The costs attributable to Cooper Compression were generally related to the closure of 13 facilities in the gas compression business and were comprised primarily of: (i) $1.6 million of severance and relocation expenses, (ii) $8.2 million of facility exit costs, including lease termination payments, and (iii) $4.8 million of facility write-downs. The $7.5 million of costs related to the Company’s other divisions was comprised of: (i) $1.1 million of severance, (ii) $5.2 million of facility write-downs and losses on property disposals, and (iii) $1.2 million of costs associated with the Company’s international tax restructuring activities. Of the $20.2 million recorded in 2001, $4.5 million related to employee severance and relocation costs, $2.5 million related to contract cancellation costs and $11.6 million related to plant shutdown costs.

     Depreciation and amortization expense for 2002 was $77.9 million, a decrease of 6.2% from 2001’s $83.1 million. The decrease in depreciation and amortization expense was attributable to (i) the lack of goodwill amortization for 2002 due to the implementation of FAS 142 (approximately $10.7 million) and (ii) lack of depreciation and amortization related to assets that were retired or became fully depreciated (approximately $5.2 million), partially offset by (i) an $8.5 million increase attributable to depreciation and amortization associated with capital additions, (ii) a $1.3 million increase attributable to depreciation and amortization associated with acquisitions, and (iii) a $2.0 million increase attributable to accelerated amortization associated with computer systems to be replaced by a new enterprise-wide system.

     Interest income for 2002 was $8.5 million as compared to $8.6 million in 2001. Interest expense for 2002 was $8.0 million, a decrease of $5.5 million from 2001 interest expense of $13.5 million. The decline in interest expense was primarily attributable to the retirement of outstanding higher-cost debt with the proceeds from the lower-cost convertible debentures that were issued in May 2001.

     The effective tax rate for 2002 was 29.0% compared to 31.0% for 2001. The reduction in the effective tax rate for 2002 was primarily attributable to the discontinuance of amortizing goodwill, which has historically been a permanent tax difference.

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Recent Pronouncements

     In May 2003, the Financial Accounting Standards Board (FASB) issued FAS 150, which became effective for the Company as of the beginning of the third quarter of 2003. FAS 150 affected the Company’s accounting for its two forward purchase agreements covering 1,006,500 shares of the Company’s common stock. Prior to the adoption of FAS 150, these agreements were treated as permanent equity and changes in the fair value of these agreements were not recognized. Upon the adoption of FAS 150, the Company recorded these agreements as an asset at their estimated fair value of $12.2 million. This amount has been reflected as the cumulative effect of an accounting change in the Company’s consolidated results of operations for 2003. There was no tax expense associated with this item as the gain is not taxable. The Company terminated these forward contracts effective August 14, 2003 by paying the counterparty approximately $38.0 million to purchase the shares covered by these agreements. The shares have been reflected as treasury stock in the Company’s consolidated balance sheet at December 31, 2003 at an amount equal to the cash paid to purchase the shares plus the estimated fair value of the agreements. This amount aggregated $50.0 million. The change in the fair value of the forward purchase agreements from July 1, 2003 to August 14, 2003, which was a loss of $0.2 million, was recognized in the Company’s consolidated results of operations.

     The Company adopted FASB Interpretation No. 46, Consolidation of Variable Interest Entities, in 2003. The interpretation requires the consolidation of variable interest entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. The adoption of this interpretation did not have any impact on the Company’s consolidated financial statements.

Liquidity and Capital Resources

     The Company’s combined cash and short-term investment balances increased to $314.1 million at December 31, 2003 from $299.1 million at December 31, 2002, due primarily to stronger Canadian and European currency values versus the U.S. dollar. During 2003, the Company’s operating activities generated $101.6 million of cash as compared to $177.8 million in 2002. Cash flow from operations in 2003 was comprised primarily of net income of $69.4 million, adjusted for depreciation and amortization of $83.6 million, and $38.2 million of working capital increases. The most significant increase in working capital was a $59.8 million increase in inventory, primarily to support the Company’s large subsea projects. The increase in subsea inventories was also impacted by delays in the delivery of certain equipment resulting from the manufacturing issues which arose during the fourth quarter of 2003. Accounts payable and accrued liabilities increased $44.6 million, primarily as a result of the timing of progress payments and cash advances associated with subsea projects. Other assets and liabilities increased $26.2 million, primarily as a result of $18.7 million of contributions to the Company’s various pension plans, as well as $7.4 million related to the purchase of several properties near a former manufacturing site in Houston, Texas.

     During 2003, the Company’s investing activities consumed $52.1 million of cash as compared to $25.3 million in 2002. Capital expenditures in 2003 of $64.7 million decreased from expenditures in 2002 of $82.1 million as the Company’s 2002 expenditures included $24.3 million for its enterprise-wide software system. Cash spent on acquisitions totaled $67.8 million for 2002 and was comprised of the acquisitions of a Canadian valve manufacturer, a wellhead business located in West Texas and certain drilling and riser-related assets from another oilfield equipment supplier. During 2002, the Company entered into a sale-leaseback transaction for its Cameron headquarters and sold land formerly used by the Cameron division. The Company realized net proceeds from these transactions of $39.5 million.

     During 2003, the Company’s financing activities consumed $47.9 million of cash, as compared to $2.3 million of cash in 2002. During 2003, the Company repurchased 1,251,900 shares of its stock at a total cost of $48.7 million.

     The Company is attempting to dispose of certain specialized fixed assets with a net book value of $2.6 million at December 31, 2003. Based upon an offer received on this equipment, the Company recorded an $0.8 million write-down on this equipment. If the Company is unable to ultimately dispose of these assets at the recorded value at December 31, 2003, additional write-downs will be required.

     During the fourth quarter of 2003, the Company entered into a credit agreement (the “Credit Agreement”) with various banks which provided for an aggregate multi-currency borrowing capacity as well as the ability to issue letters of credit totaling $200.0 million. The Credit Agreement expires December 12, 2007. The Credit Agreement provides for unsecured borrowings at the London Interbank Offered Rate (LIBOR) plus 0.40%. In addition to certain up-front costs, the agreement carries a facility fee of 0.10% per annum on the committed amount of the facility plus a usage fee of 0.125% on the outstanding borrowings if such amounts exceed 33% of the total amount committed, or approximately $66.0 million. The Credit Agreement also contains certain covenants, including maintaining specific interest coverage and debt-to-total capitalization ratios. The Company was in compliance with all loan covenants at year-end. The entire amount of the facility was available for borrowing at December 31, 2003.

     The Company has two series of convertible debentures outstanding. The first series consists of twenty-year zero-coupon convertible debentures with an aggregate principal amount at maturity of approximately $320.8 million. The holders of these debentures have the right to require the Company to repurchase the debentures on May 17, 2004 at an aggregate price of approximately $259.5 million. Accordingly, this obligation has been classified as a current liability as of December 31, 2003 in the Company’s consolidated balance sheet. The holders of the second series of debentures, aggregating $200.0 million, cannot require the Company to repurchase the debentures until May 2006.

     The Company currently believes it will be required to repurchase the first series of convertible debentures during the second quarter of 2004. The Company intends to repurchase these debentures with the proceeds of a new debt issuance. If the Company cannot execute a debt issuance on satisfactory terms, the Company would be forced to fund the repurchase of the debentures with proceeds from the Credit Agreement and available cash balances. Should this occur, the Company’s available liquidity would be negatively impacted.

     In January 2004, the Company reached an agreement to acquire Petreco International, a Houston-headquartered supplier of oil and gas separation products, for approximately $90 million, net of cash acquired and debt assumed. Petreco’s 2003 revenues were approximately $117 million, and income before taxes was approximately $12 million.

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     The Company currently expects to fund expenditures for capital requirements (estimated to be approximately $70 million for 2004) and the Petreco acquisition, as well as general liquidity needs, from available cash and short-term investment balances, cash generated from operating activities and amounts available under the Credit Agreement.

     During the third quarter of 2003, the Company terminated two forward purchase agreements with a third-party financial institution covering a total of 1,006,500 shares of the Company’s common stock by paying the third-party financial institution approximately $38.0 million. As a result of the termination, the Company acquired the 1,006,500 shares from the third-party financial institution and recorded the acquired shares as treasury stock. See Note 1 of the Notes to Consolidated Financial Statements.

     The following summarizes the Company’s significant cash contractual obligations and other commercial commitments for the next five years as of December 31, 2003.

(dollars in millions)			Payments Due by Period
			Less Than		1 - 3		4 - 5		After 5
Contractual Obligation	Total		1 Year		Years		Years		Years
Debt	$	461.7	$	261.5	$	0.2	$	200.0	$	—	(a)
Capital lease obligations		7.5		3.6		3.5		0.4		—	(b)
Operating leases		96.9		13.3		17.7		13.5		52.4
Total contractual cash obligations	$	566.1	$	278.4	$	21.4	$	213.9	$	52.4

(a)	See Note 10 of the Notes to Consolidated Financial Statements for information on redemption rights by the Company, and by holders of the Company’s debentures, that would allow for redemption of the zero-coupon debentures beginning in 2004 and for redemption of the interest-bearing debentures beginning in 2006.
(b)	Payments shown include interest.

(dollars in millions)	Amount of Commitment Expiration Per Period
Other Commercial Obligations	Total		Less Than		1 - 3		4 - 5		After 5
and Off-Balance Sheet Arrangements	Commitment		1 Year		Years		Years		Years
Committed lines of credit	$	200.0	$	—	$	—	$	200.0	$	—
Standby letters of credit		137.6		66.2		55.2		0.1		16.1
Bank guarantees and letters of credit		23.8		—		10.0		1.5		12.3
Guarantees of a portion of joint venture debt		1.5		—		1.5		—		—
Total commercial commitments	$	362.9	$	66.2	$	66.7	$	201.6	$	28.4

     The Company secures certain contractual obligations under various agreements with its customers or other parties through the issuance of letters of credit or bank guarantees. The Company has various agreements with financial institutions to issue such instruments. As of December 31, 2003, the Company had $161.4 million of letters of credit and bank guarantees outstanding. Should these facilities become unavailable to the Company, the Company’s operations and liquidity could be negatively impacted. Circumstances which could result in the withdrawal of such facilities include, but are not limited to, deteriorating financial performance of the Company, deteriorating financial condition of the financial institutions providing such facilities, overall constriction in the credit markets or rating downgrades of the Company.

Factors That May Affect Financial Condition and Future Results

Changes in the U.S. rig count have historically impacted the Company’s orders.

     Historically, the Company’s surface and distributor valve businesses in the U.S. market have tracked changes in the U.S. rig count. However, this correlation did not exist in 2003. The average U.S. rig count increased approximately 24% during the year while the Company’s U.S. surface and U.S. distributor valve orders were essentially flat. The Company believes its surface and distributor valve businesses were negatively impacted by the lack of drilling activity in the Gulf of Mexico, fewer completions of onshore high-temperature/high-pressure wells and a lower level of infrastructure development in the U.S. Such activity typically generates higher orders for the Company as compared to onshore shallow well activity.

Execution of deepwater subsea systems projects exposes the Company to new risks.

     The Company continues to expand into the deepwater subsea systems market. This market is significantly different from the Company’s other markets since deepwater subsea systems projects are significantly larger in scope and complexity, in terms of both technical and logistical requirements. Deepwater subsea projects (i) typically involve long lead times, (ii) typically are larger in financial scope, (iii) typically require substantial engineering resources to meet the technical requirements of the project and (iv) often involve the application of existing technology to new environments and in some cases, new technology. These projects accounted for 10.8%, 4.3% and 0.6% of total revenues in 2003, 2002 and 2001, respectively. During the fourth quarter of 2003, the Company experienced numerous shipment delays

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on its deepwater subsea systems contracts. Accordingly, the Company was unable to recognize revenue in 2003 on the delayed shipments, which had an aggregate sales value of approximately $30 million. The Company expects to recognize this revenue in 2004. Additionally, the Company incurred approximately $10.8 million of incremental costs related to these subsea contracts, which was reflected as cost of sales in the fourth quarter of 2003. The Company also recorded $5.4 million of estimated liquidated damages that could be assessed by Cameron’s customers as a result of the delays experienced during the fourth quarter of 2003. To the extent the Company continues to experience difficulties in meeting the technical and/or delivery requirements of the projects, the Company’s earnings or liquidity could be negatively impacted. As of December 31, 2003, the Company had a deepwater subsea backlog of approximately $373.3 million.

Fluctuations in worldwide currency markets can impact the Company’s profitability.

     The Company has established multiple “Centers of Excellence” facilities for manufacturing such products as subsea trees, subsea chokes, subsea production controls and BOPs. These production facilities are located in the United Kingdom and other European and Asian countries. To the extent the Company sells these products in U.S. dollars, the Company’s profitability is eroded when the U.S. dollar weakens against the British pound, the Euro and other currencies. This occurred throughout 2003. The Company estimates that its gross profit, as a percentage of revenue, was negatively impacted by 0.4% during 2003 as a result of the weakening U.S. dollar. To the extent the U.S. dollar continues to weaken, future profitability could be negatively impacted.

Increases in the cost of metals used in the Company’s manufacturing processes could negatively impact the Company’s profitability.

     During the latter part of 2003, commodity prices for items such as nickel, molybdenum and heavy metal scrap that are used to make the steel alloys required for the Company’s products began to increase significantly. Certain of the Company’s suppliers are beginning to attempt to pass these increases on to the Company. If the Company is not successful in raising its prices on products that are manufactured from these metals, future profitability may be negatively impacted.

Cooper Compression’s aftermarket revenues associated with legacy equipment are declining.

     Approximately 39% of Cooper Compression’s revenues come from the sale of replacement parts for equipment that the Company no longer manufactures. Many of these units have been in service for long periods of time, and are gradually being replaced. As this installed base of legacy equipment declines, the Company’s potential market for parts orders is also reduced. In recent years, the Company’s revenues from replacement parts associated with legacy equipment have declined nominally.

Changes in the financial condition of the Company’s customers could impact the Company’s business.

     Erosion of the financial condition of customers could adversely affect the Company’s business with regard to both receivables exposure and future revenue realization. In both the Cooper Compression and CCV divisions, a significant portion of revenues for 2001 through 2003 were derived from several domestic customers in the pipeline and gas compression business that are reported to be experiencing financial and/or other difficulties related to their capitalization. The Company believes that these difficulties have negatively impacted the Company’s business with these customers, particularly in the Cooper Compression division. To the extent these customers’ difficulties continue, worsen, and/or result in further curtailments of their expenditures, the Company’s revenues and earnings will continue to be negatively affected.

Downturns in the oil and gas industry have had, and may in the future have, a negative effect on the Company’s sales and profitability.

     Demand for most of the Company’s products and services, and therefore its revenues, depend to a large extent upon the level of capital expenditures related to oil and gas exploration, production, development, processing and transmission. Declines, as well as anticipated declines, in oil and gas prices could negatively affect the level of these activities. Factors that contribute to the volatility of oil and gas prices include the following:

• the demand for oil and gas, which is impacted by economic and political conditions and weather;

• the ability of the Organization of Petroleum Exporting Countries (“OPEC”) to set and maintain production levels and pricing;

• the level of production from non-OPEC countries;

• governmental policies regarding exploration and development of oil and gas reserves;

• the political environments of oil and gas producing regions, including the Middle East;

• the depletion rates of gas wells in North America; and

• advances in exploration and development technology.

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The Company’s international operations expose it to instability and changes in economic and political conditions, foreign currency fluctuations, changes in foreign regulations and other risks inherent to international business.

     The Company has manufacturing and service operations that are essential parts of its business in developing countries and economically and politically volatile areas in Africa, Latin America, the Middle East and the Asia-Pacific region. Additionally, the Company purchases a large portion of its raw materials and components from a relatively small number of foreign suppliers in countries such as India, South Korea, Taiwan and China. The risks of international business that the Company is exposed to include the following:

• volatility in general economic, social and political conditions;

• differing tax rates, tariffs, exchange controls or other similar restrictions;

• changes in currency rates;

• inability to repatriate income or capital;

• changes in, and compliance with, domestic and foreign laws and regulations which impose a range of restrictions on operations, trade practices, trade partners and investment decisions;

• reductions in the number or capacity of qualified personnel; and

• seizure of equipment.

Implementation of a new enterprise-wide software system could disrupt the Company’s business processes.

     The Company is in the process of implementing a new enterprise-wide software system. During October 2002, the Company converted the U.S. and Canadian operations of Cameron and CCV to the new system. During 2003, the Company converted Cooper Compression, as well as various foreign subsidiaries, to the new system. The Company’s remaining operations are expected to be converted to the new system during 2004. Any disruption in this implementation could negatively affect the Company’s ability to develop, procure, manufacture and/or deliver products, and could disrupt the Company’s financial reporting system.

Changes in the equity and debt markets impact pension expense and funding requirements for the Company’s defined benefit plans.

     The Company accounts for its defined benefit pension plans in accordance with FAS 87, which requires that amounts recognized in the financial statements be determined on an actuarial basis. A significant element in determining the Company’s pension income or expense in accordance with FAS 87 is the expected return on plan assets. The assumed long-term rate of return on assets is applied to a calculated value of plan assets, which results in an estimated return on plan assets that is included in current year pension income or expense. The difference between this expected return and the actual return on plan assets is deferred and amortized against future pension income or expense. Due to the weakness in the overall equity markets from 2000 through 2002, the plan assets earned a rate of return substantially less than the assumed long-term rate of return during this period. As a result, expense associated with the Company’s pension plans has increased significantly from the level recognized historically.

     Additionally, FAS 87 requires the recognition of a minimum pension liability to the extent the assets of the plans are below the accumulated benefit obligation of the plans. In order to avoid recognizing this minimum pension liability, the Company contributed approximately $18.7 million to its pension plans during 2003 and $27.1 million in 2002. If the Company’s pension assets perform poorly in the future, the Company may be required to recognize a minimum pension liability in the future or fund additional amounts to the pension plans.

The Company is subject to environmental, health and safety laws and regulations that expose the Company to potential liability.

     The Company’s operations are subject to a variety of national and state, provisional and local laws and regulations, including laws and regulations relating to the protection of the environment. The Company is required to invest financial and managerial resources to comply with these laws and expects to continue to do so in the future. To date, the cost of complying with governmental regulation has not been material, but the fact that such laws or regulations are frequently changed makes it impossible for the Company to predict the cost or impact of such laws and regulations on the Company’s future operations. The modification of existing laws or regulations or the adoption of new laws or regulations imposing more stringent environmental restrictions could adversely affect the Company.

Excess cash can be invested in marketable securities, which may subject the Company to potential losses.

     The Company has invested in publicly-traded debt and equity securities from time to time. Changes in the financial markets, including interest rates, as well as the performance of the issuing companies, can affect the market value of the Company’s short-term investments.

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Environmental Remediation

     The cost of environmental remediation and compliance has not been a material expense for the Company during any of the periods presented. The Company has been identified as a potentially responsible party (PRP) with respect to three sites designated for cleanup under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) or similar state laws. The Company’s involvement at two of the sites is believed to be at a de minimis level. The third site is Osborne, Pennsylvania (a landfill into which the Cooper Compression operation in Grove City, Pennsylvania deposited waste), where remediation is complete and remaining costs relate to ongoing ground water treatment and monitoring. The Company is also engaged in site cleanup under the Voluntary Cleanup Plan of the Texas Commission on Environmental Quality at former manufacturing locations in Houston and Missouri City, Texas.

     Additionally, the Company has discontinued operations at a number of other sites which had previously been in existence for many years. The Company does not believe, based upon information currently available, that there are any material environmental liabilities existing at these locations.

     The Company has estimated its liability for environmental exposures, and the Company’s consolidated financial statements included a liability balance of $9.9 million for these matters at December 31, 2003. Cash expenditures for the Company’s known environmental exposures are expected to be incurred over the next twenty years, depending on the site. For the known exposures, the accrual reflects the Company’s best estimate of the amount it will incur under the agreed-upon or proposed work plans. The Company’s cost estimates were determined based upon the monitoring or remediation plans set forth in these work plans and have not been reduced by possible recoveries from third parties. These cost estimates are reviewed on an annual basis or more frequently if circumstances occur which indicate a review is warranted. The Company’s estimates include equipment and operating costs for remediation and long-term monitoring of the sites. The Company does not believe that the losses for the known exposures will exceed the current accruals by material amounts, but there can be no assurances to this effect.

Market Risk Information

     A large portion of the Company’s operations consist of manufacturing and sales activities in foreign jurisdictions, principally in Europe, Canada, West Africa, the Middle East, Latin America and the Pacific Rim. As a result, the Company’s financial performance may be affected by changes in foreign currency exchange rates or weak economic conditions in these markets. Overall, the Company generally is a net receiver of Pounds Sterling and Canadian dollars and, therefore, benefits from a weaker U.S. dollar with respect to these currencies. Typically, the Company is a net payer of euros and Norwegian krone as well as other currencies such as the Singapore dollar and the Brazilian real. A weaker U.S. dollar with respect to these currencies may have an adverse effect on the Company. For each of the last three years, the Company’s gain or loss from foreign currency-denominated transactions has not been material.

     In order to mitigate the effect of exchange rate changes, the Company will often attempt to structure sales contracts to provide for collections from customers in the currency in which the Company incurs its manufacturing costs. In certain limited instances, the Company has historically entered into forward foreign currency exchange contracts to hedge specific, large, non-U.S. dollar anticipated receipts or large anticipated receipts in currencies for which the Company does not traditionally have fully offsetting local currency expenditures. As of December 31, 2003, there were no outstanding forward foreign currency exchange contracts.

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REPORT OF INDEPENDENT AUDITORS

To the Board of Directors and Stockholders
Cooper Cameron Corporation

     We have audited the accompanying consolidated balance sheets of Cooper Cameron Corporation as of December 31, 2003 and 2002 and the related statements of consolidated results of operations, consolidated changes in stockholders’ equity and consolidated cash flows for each of the three years in the period ended December 31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cooper Cameron Corporation at December 31, 2003 and 2002, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States.

Houston, Texas
January 27, 2004

36

CONSOLIDATED RESULTS OF OPERATIONS

(dollars in thousands, except per share data)

	Year Ended December 31,
	2003			2002			2001
Revenues	$	1,634,346		$	1,538,100		$	1,562,899
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization)		1,181,650			1,102,504			1,081,078
Selling and administrative expenses		288,569			273,105			251,303
Depreciation and amortization		83,565			77,907			83,095
Interest income		(5,198	)		(8,542	)		(8,640	)
Interest expense		8,157			7,981			13,481
Total costs and expenses		1,556,743			1,452,955			1,420,317
Income before income taxes and cumulative effect of accounting change		77,603			85,145			142,582
Income tax provision		(20,362	)		(24,676	)		(44,237	)
Income before cumulative effect of accounting change		57,241			60,469			98,345
Cumulative effect of accounting change		12,209			—			—
Net income	$	69,450		$	60,469		$	98,345
Basic earnings per share:
Before cumulative effect of accounting change	$	1.05		$	1.12		$	1.82
Cumulative effect of accounting change		0.23			—			—
Net income	$	1.28		$	1.12		$	1.82
Diluted earnings per share:
Before cumulative effect of accounting change	$	1.04		$	1.10		$	1.75
Cumulative effect of accounting change		0.21			—			—
Net income	$	1.25		$	1.10		$	1.75

The Notes to Consolidated Financial Statements are an integral part of these statements.

37

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except shares and per share data)

	December 31,
	2003			2002
Assets
Cash and cash equivalents	$	292,116		$	273,800
Short-term investments		22,033			25,290
Receivables, net		316,135			304,821
Inventories, net		473,207			387,218
Other		44,210			26,732
Total current assets		1,147,701			1,017,861
Plant and equipment, at cost less accumulated depreciation		471,333			475,914
Goodwill, less accumulated amortization		316,098			301,882
Other assets		205,553			202,013
Total assets	$	2,140,685		$	1,997,670
Liabilities and stockholders’ equity
Current portion of long-term debt	$	265,011		$	4,870
Accounts payable and accrued liabilities		397,326			354,377
Accrued income taxes		17,582			15,563
Total current liabilities		679,919			374,810
Long-term debt		204,061			462,942
Postretirement benefits other than pensions		43,446			45,161
Deferred income taxes		46,049			45,641
Other long-term liabilities		30,487			27,813
Total liabilities		1,003,962			956,367
Stockholders’ equity:
Common stock, par value $.01 per share, 150,000,000 shares authorized, 54,933,658 shares issued (54,566,054 at December 31, 2002)		549			546
Preferred stock, par value $.01 per share, 10,000,000 shares authorized, no shares issued or outstanding		—			—
Capital in excess of par value		957,912			949,188
Retained earnings		177,597			108,147
Accumulated other elements of comprehensive income		55,329			(14,789	)
Less: Treasury stock, 1,130,600 shares at December 31, 2003 (54,954 shares at December 31, 2002)		(54,664	)		(1,789	)
Total stockholders’ equity		1,136,723			1,041,303
Total liabilities and stockholders’ equity	$	2,140,685		$	1,997,670

The Notes to Consolidated Financial Statements are an integral part of these statements.

38

CONSOLIDATED CASH FLOWS

(dollars in thousands)

	Year Ended December 31,
	2003			2002			2001
Cash flows from operating activities:
Net income	$	69,450		$	60,469		$	98,345
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		68,242			67,053			63,073
Amortization		15,323			10,854			20,022
Cumulative effect of account change		(12,209	)		—			—
Deferred income taxes and other		(979	)		(1,283	)		27,446
Changes in assets and liabilities, net of translation, acquisitions and non-cash items:
Receivables		3,212			15,632			(36,511	)
Inventories		(59,843	)		67,960			(40,277	)
Accounts payable and accrued liabilities		44,620			(9,579	)		23,342
Other assets and liabilities, net		(26,199	)		(33,281	)		(30,518	)
Net cash provided by operating activities		101,617			177,825			124,922
Cash flows from investing activities:
Capital expenditures		(64,665	)		(82,148	)		(125,004	)
Acquisitions		—			(67,750	)		(51,778	)
Purchases of short-term investments		(154,523	)		(45,862	)		(101,088	)
Sales of short-term investments		157,910			124,395			1,156
Proceeds from sale of Cameron division headquarters building and other property		—			39,460			—
Other		9,172			6,588			5,106
Net cash used for investing activities		(52,106	)		(25,317	)		(271,608	)
Cash flows from financing activities:
Loan repayments, net		(496	)		(7,448	)		(179,080	)
Debentures issued		—			—			450,000
Debenture issuance costs		—			—			(8,364	)
Purchase of treasury stock		(48,652	)		—			(25,082	)
Activity under stock option plans and other		1,280			5,156			6,316
Net cash provided by (used for) financing activities		(47,868	)		(2,292	)		243,790
Effect of translation on cash		16,673			11,944			(2,030	)
Increase in cash and cash equivalents		18,316			162,160			95,074
Cash and cash equivalents, beginning of year		273,800			111,640			16,566
Cash and cash equivalents, end of year	$	292,116		$	273,800		$	111,640

The Notes to Consolidated Financial Statements are an integral part of these statements.

39

CONSOLIDATED CHANGES IN STOCKHOLDERS’ EQUITY

(dollars in thousands)

									Accumulated
									other
			Capital in			Retained			elements of
	Common		excess of			earnings			comprehensive			Treasury
	stock		par value			(deficit)			income			stock			Total
Balance — December 31, 2000	$	540	$	929,511		$	(50,667	)	$	(37,105	)	$	—		$	842,279
Net income							98,345									98,345
Foreign currency translation										(15,681	)					(15,681	)
Minimum pension liability, net of $35 in taxes										57						57
Change in fair value of short-term investments										(321	)					(321	)
Comprehensive income																82,400
Purchase of treasury stock													(25,082	)		(25,082	)
Common stock issued under stock option and other employee benefit plans		6		14,828									1,748			16,582
Tax benefit of employee stock benefit plan transactions				7,129												7,129
Costs related to forward stock purchase agreement				(27	)											(27	)
Balance — December 31, 2001		546		951,441			47,678			(53,050	)		(23,334	)		923,281
Net income							60,469									60,469
Foreign currency translation										38,005						38,005
Minimum pension liability, net of $56 in taxes										91						91
Change in fair value of short-term investments, net of $56 in taxes										165						165
Comprehensive income																98,730
Common stock issued under stock option and other employee benefit plans				(4,729	)								21,545			16,816
Tax benefit of employee stock benefit plan transactions				2,944												2,944
Costs related to forward stock purchase agreement and other				(468	)											(468	)
Balance — December 31, 2002		546		949,188			108,147			(14,789	)		(1,789	)		1,041,303
Net income							69,450									69,450
Foreign currency translation										70,908						70,908
Minimum pension liability, net of $433 in taxes										(699	)					(699	)
Change in fair value of short-term investments, net of $56 in taxes										(91	)					(91	)
Comprehensive income																139,568
Purchase of treasury stock													(60,694	)		(60,694	)
Common stock issued under stock option and other employee benefit plans		3		4,447									7,819			12,269
Tax benefit of employee stock benefit plan transactions				4,831												4,831
Costs related to forward stock purchase agreements and other				(554	)											(554	)
Balance — December 31, 2003	$	549	$	957,912		$	177,597		$	55,329		$	(54,664	)	$	1,136,723

The Notes to Consolidated Financial Statements are an integral part of these statements.

40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Summary of Major Accounting Policies

     Company Operations - Cooper Cameron Corporation (the Company or Cooper Cameron) is engaged primarily in the manufacture of oil and gas pressure control equipment, including valves, wellheads, controls, chokes, blowout preventers and assembled systems for oil and gas drilling, production and transmission used in onshore, offshore and subsea applications. Cooper Cameron also manufactures and services air and gas compressors and turbochargers.

     Principles of Consolidation - The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. Investments from 20% to 50% in affiliated companies are accounted for using the equity method. The Company’s operations are organized into three separate business segments. The segments are Cameron, Cooper Cameron Valves (CCV) and Cooper Compression. Additional information regarding each segment may be found in Note 13 of the Notes to Consolidated Financial Statements.

     Estimates in Financial Statements - The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

     Revenue Recognition - The Company generally recognizes revenue once the following four criteria are met: (i) a written contract or purchase order exists, (ii) delivery of the equipment has occurred or the customer has inspected, tested and accepted the equipment (if required by the contract) or services have been rendered, (iii) the price of the equipment or service is fixed and determinable and (iv) collectibility is reasonably assured.

     Short-term Investments - Investments in available for sale marketable debt and equity securities are carried at market value, based on quoted market prices. Differences between cost and market value are reflected as a component of accumulated other elements of comprehensive income until such time as those differences are realized. The basis for computing realized gains or losses is the specific identification method. The realized gains on short-term investments included in the Consolidated Results of Operations were $278,000, $2,547,000 and $283,000 for the years ended December 31, 2003, 2002 and 2001, respectively. If the Company determines that a loss is other than temporary, such loss will be charged to earnings.

     Receivables - The Company maintains allowances for doubtful accounts for estimated losses that may result from the inability of its customers to make required payments. Such allowances are based upon several factors including, but not limited to, historical experience and the current and projected financial condition of the specific customer.

     Inventories - Aggregate inventories are carried at cost or, if lower, net realizable value. On the basis of current costs, 56% of inventories in 2003 and 64% in 2002 are carried on the last-in, first-out (LIFO) method. The remaining inventories, which are located outside the United States and Canada, are carried on the first-in, first-out (FIFO) method. The Company writes down its inventory for estimated obsolescence or excess quantities on hand equal to the difference between the cost of the inventory and its estimated realizable value. During 2003 and 2002, the Company reduced its LIFO inventory levels. These reductions resulted in a liquidation of certain low-cost inventory layers. As a result, the Company recorded non-cash LIFO income of $15,932,000 and $97,000 in 2003 and 2002, respectively.

     Plant and Equipment - Depreciation is provided over the estimated useful lives of the related assets, or in the case of assets under capital leases, over the related lease term, if less, using primarily the straight-line method. The range of estimated useful lives are: buildings — 10 to 40 years; machinery and equipment — 3 to 18 years; and office furniture and equipment, capitalized software, tooling, dies, patterns and all other — 3 to 10 years.

     Goodwill - Prior to 2002, goodwill arising from purchase acquisitions was being amortized over 40 years from respective acquisition dates, with minor exceptions. The Company considered this amortization period to be appropriate due to the long-lived nature of the businesses acquired and the lack of rapid technological change or obsolescence associated with these operations. Through December 31, 2001, the carrying value of the Company’s goodwill was reviewed at the division level at least annually or whenever there were indications that the goodwill might be impaired. With the adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets (FAS 142), effective January 1, 2002, the Company no longer amortizes goodwill and reviews goodwill at least annually for impairment at the reporting unit level. The Company’s reporting units for FAS 142 purposes are Cameron, CCV, Cooper Energy Services and Cooper Turbocompressor. Cooper Energy Services and Cooper Turbocompressor are combined for segment reporting purposes in the Cooper Compression segment (see Note 13 of the Notes to Consolidated Financial Statements for further discussion of the Company’s business segments).

     The initial evaluation upon adoption, as well as the 2003 and 2002 annual evaluations, indicated that no impairment of goodwill was required.

41

     Income Taxes - The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Income tax expense includes U.S. and foreign income taxes, including U.S. federal taxes on undistributed earnings of foreign subsidiaries to the extent such earnings are planned to be remitted. Taxes are not provided on the translation component of comprehensive income since the effect of translation is not considered to modify the amount of the earnings that are planned to be remitted. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized.

     Environmental Remediation and Compliance - Environmental remediation and postremediation monitoring costs are accrued when such obligations become probable and reasonably estimable. Such future expenditures are not discounted to their present value.

     Product Warranty - Estimated warranty expense is accrued either at the time of sale or, in some cases, when specific warranty problems are encountered. Adjustments to the accruals are made periodically to reflect actual experience.

     Stock-Based Compensation - At December 31, 2003, the Company had two stock-based employee compensation plans and one stock-based compensation plan for its outside directors. These plans are described in further detail in Note 9 of the Notes to Consolidated Financial Statements. The Company measures compensation expense for its stock-based compensation plans using the intrinsic value method. The following table illustrates the effect on net income and earnings per share if the Company had used the alternative fair value method to recognize stock-based employee compensation expense based on the number of shares that vest in each period.

	Year Ended December 31,
(dollars in thousands, except per share data)	2003			2002			2001
Net income, as reported	$	69,450		$	60,469		$	98,345
Deduct: Total stock-based employee compensation expense determined under the fair value method for all awards, net of tax		(23,093	)		(22,753	)		(31,270	)
Pro forma net income	$	46,357		$	37,716		$	67,075
Earnings per share:
Basic — as reported	$	1.28		$	1.12		$	1.82
Basic — pro forma	$	0.85		$	0.70		$	1.24
Diluted — as reported	$	1.25		$	1.10		$	1.75
Diluted — pro forma	$	0.84		$	0.68		$	1.21

     Derivative Financial Instruments - The Company recognizes all derivative financial instruments as assets and liabilities and measures them at fair value. For derivative financial instruments that are designated and qualify as a cash flow hedge, the effective portions of changes in fair value of the derivative are recorded in other comprehensive income, net of tax, and are recognized in the income statement when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized currently in earnings. Changes in the fair value of derivatives that do not qualify for hedge treatment are recognized currently in earnings. The Company had no outstanding derivatives at December 31, 2003 or 2002.

     Cash Equivalents - For purposes of the Consolidated Cash Flows statement, the Company considers all investments purchased with original maturities of three months or less to be cash equivalents.

     Foreign Currency - For most subsidiaries and branches outside the U.S., the local currency is the functional currency. In accordance with Statement of Financial Accounting Standards No. 52, Foreign Currency Translation, the financial statements of these subsidiaries and branches are translated into U.S. dollars as follows: assets and liabilities at year-end exchange rates; income, expenses and cash flows at average exchange rates; and stockholders’ equity at historical exchange rates. For those subsidiaries for which the local currency is the functional currency, the resulting translation adjustment is recorded as a component of accumulated other elements of comprehensive income in the accompanying Consolidated Balance Sheets.

     For certain other subsidiaries and branches, operations are conducted primarily in U.S. dollars, which is therefore the functional currency. Non-U.S. dollar monetary assets and liabilities, and the related revenue, expense, gain and loss accounts of these foreign subsidiaries and branches are remeasured at year-end exchange rates. Non-U.S. dollar non-monetary assets and liabilities, and the related revenue, expense, gain and loss accounts are remeasured at historical rates.

     Foreign currency gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in income. The effects of foreign currency transactions were gains (losses) of $5,716,000, $(1,147,000) and $1,767,000 for the years 2003, 2002 and 2001, respectively.

     Reclassifications - Certain prior year amounts have been reclassified to conform to the current year presentation.

42

     Adoption of New Accounting Standards - In May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (FAS 150), which became effective for the Company as of the beginning of the third quarter of 2003. FAS 150 affected the Company’s accounting for its two forward purchase agreements covering 1,006,500 shares of the Company’s common stock. Prior to the adoption of FAS 150, these agreements were treated as permanent equity and changes in the fair value of these agreements were not recognized. Upon the adoption of FAS 150, the Company recorded these agreements as an asset at their estimated fair value of $12,209,000. This amount has been reflected as the cumulative effect of an accounting change in the Company’s consolidated results of operations. There was no tax expense associated with this item as the gain is not taxable. The Company terminated these forward contracts effective August 14, 2003 by paying the counterparty approximately $37,992,000 to purchase the shares covered by these agreements. These shares have been reflected as treasury stock in the Company’s consolidated balance sheet at December 31, 2003 at an amount equal to the cash paid to purchase the shares plus the estimated fair value of the agreements. This amount aggregated $50,034,000. The change in the fair value of the forward purchase agreements from July 1, 2003 to August 14, 2003, which was a loss of $167,000, was recognized in the Company’s consolidated results of operations.

     The Company adopted FASB Interpretation No. 46, Consolidation of Variable Interest Entities, in 2003. The interpretation requires the consolidation of variable interest entities in which an enterprise absorbs a majority of the entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, as a result of ownership, contractual or other financial interests in the entity. This interpretation did not have any impact on the Company’s consolidated financial statements.

Note 2: Plant Closing, Business Realignment and Other Related Costs

     Plant closing, business realignment and other related costs by segment for the last three years were as follows:

	Year Ended December 31,
(dollars in thousands)	2003		2002		2001
Amounts included in costs of sales:
Cooper Compression	$	—	$	11,214	$	—
Amounts included in selling and administrative expenses:
Cameron		5,784		6,275		—
CCV		—		—		—
Cooper Compression		3,137		14,637		20,159
Corporate		5,652		1,193		—
		14,573		22,105		20,159
Total costs	$	14,573	$	33,319	$	20,159

     During 2003, the Company’s selling and administrative expenses included plant closing, business realignment and other related costs totaling $14,573,000. This amount was comprised of (i) $6,181,000 for employee severance at Cameron and at Cooper Compression, (ii) $1,240,000 of other plant closure costs at Cooper Compression related to the closure of 13 facilities announced in the fourth quarter of 2002, (iii) $4,646,000 related to the Company’s unsuccessful efforts to acquire a certain oil service business, (iv) $1,006,000 related to the Company’s international tax restructuring activities, which were begun in 2002, and (v) $1,500,000 related to a litigation award associated with the use of certain intellectual property obtained in connection with a previous acquisition.

     During 2002, the Company recorded $33,319,000 of costs related to plant closing, business realignment and other related activities. Of this amount, Cooper Compression recorded $25,851,000 of costs related generally to the closure of 13 facilities in the gas compression business. This amount was comprised of: (i) $1,632,000 million related to severance and relocation expenses, (ii) $8,177,000 of facility exit costs, including lease termination payments, and (iii) $16,042,000 of facility and inventory write-downs. The $7,468,000 of costs related to the Company’s other divisions consisted of: (i) $1,082,000 related to severance, (ii) $5,193,000 of facility write-downs and losses on property disposals, and (iii) $1,193,000 related to the Company’s international tax restructuring activities.

     During 2001, Cooper Compression recorded $20,159,000 of costs related to the consolidation of the manufacturing operations, closing obsolete facilities and discontinuing the manufacture of new Superior engines in its gas compression business. The costs during 2001 consisted primarily of: (i) $4,516,000 of employee severance and various relocation costs, (ii) $2,544,000 of contract cancellation costs, and (iii) $11,579,000 of plant shutdown costs. Included in the plant shutdown costs were $4,088,000 of costs incurred by the Superior engine business during the shutdown period.

     The number of employees terminated as a result of the above actions was approximately 266, 210 and 190 in 2003, 2002 and 2001, respectively.

43

     A summary of the impact on various liability accounts associated with the aforementioned costs incurred during the year ended December 31, 2003 follows:

	Balance at
	Beginning				Cash			Balance at
(dollars in thousands)	of Year		Additions		Disbursements			End of Year
Severance	$	2,125	$	6,181	$	(6,984	)	$	1,322
Facility closure		8,194		1,240		(4,561	)		4,873
Retained liabilities from sale of Rotating business		3,313		—		(1,534	)		1,779
International tax restructuring		500		1,006		(1,506	)		—
Environmental		5,000		—		(620	)		4,380
Costs associated with an unsuccessful acquisition		—		4,646		(4,165	)		481
Litigation settlement		—		1,500		(1,500	)		—
Total	$	19,132	$	14,573	$	(20,870	)	$	12,835

Note 3: Acquisitions

     During 2002, the Company’s acquisitions consisted of a Canadian valve manufacturer, a wellhead business located in West Texas and certain drilling and riser-related assets from another oilfield equipment supplier. Cash and debt consideration for these acquisitions totaled $70,250,000 and resulted in goodwill of approximately $29,317,000, the majority of which resides in the CCV segment.

     During 2001, the Company’s acquisitions consisted primarily of two aftermarket parts and service suppliers in the Cooper Compression division and a supplier of motion compensation solutions in the Cameron division. Cash and debt consideration for these acquisitions totaled $55,350,000 and resulted in goodwill of approximately $27,193,000.

Note 4: Receivables

     Receivables consisted of the following:

	December 31,
(dollars in thousands)	2003			2002
Trade receivables	$	304,761		$	297,571
Other receivables		13,197			9,420
Allowance for doubtful accounts		(1,823	)		(2,170	)
	$	316,135		$	304,821

Note 5: Inventories

     Inventories consisted of the following:

	December 31,
(dollars in thousands)	2003			2002
Raw materials	$	38,766		$	37,078
Work-in-process		142,328			99,417
Finished goods, including parts and subassemblies		360,154			329,151
Other		2,183			1,818
		543,431			467,464
Excess of current standard costs over LIFO costs		(32,907	)		(44,891	)
Allowance for obsolete and excess inventory		(37,317	)		(35,355	)
	$	473,207		$	387,218

44

Note 6: Plant and Equipment, Goodwill and Other Assets

     Plant and equipment consisted of the following:

	December 31,
(dollars in thousands)	2003			2002
Land and land improvements	$	39,137		$	38,140
Buildings		203,072			185,267
Machinery and equipment		531,121			493,876
Tooling, dies, patterns, etc.		51,141			48,119
Office furniture & equipment		96,603			91,991
Capitalized software		114,332			110,538
Assets under capital leases		21,786			21,940
All other		13,116			13,316
Construction in progress		27,925			27,799
		1,098,233			1,030,986
Accumulated depreciation		(626,900	)		(555,072	)
	$	471,333		$	475,914

     During the fourth quarter of 2002, the Company entered into a sale-leaseback transaction involving the Cameron division headquarters building. The sale of the building resulted in net proceeds to the Company of approximately $31,000,000. The building is being leased back from the purchaser over a 22-year period (with options for renewals totaling an additional 15 years) at an initial rate of approximately $2,400,000 per year. This transaction was accounted for as a sale and subsequent operating lease, resulting in the removal of the building from the Company’s plant and equipment balances and a deferral of the related $0.6 million gain, which is being amortized over the initial 22-year term of the lease.

     Goodwill consisted of the following:

	December 31, 2003							December 31, 2002
			Accumulated			Net Book				Accumulated			Net book
(dollars in thousands)	Gross		Amortization			Value		Gross		Amortization			Value
Cameron	$	277,119	$	(131,212	)	$	145,907	$	257,657	$	(121,036	)	$	136,621
CCV		148,134		(40,165	)		107,969		142,453		(39,414	)		103,039
Cooper Compression		103,186		(40,964	)		62,222		103,186		(40,964	)		62,222
	$	528,439	$	(212,341	)	$	316,098	$	503,296	$	(201,414	)	$	301,882

     Changes to goodwill balances are largely related to changes in foreign currency exchange rates applied to goodwill denominated in currencies other than the U.S. dollar.

     Other assets consisted of the following:

	December 31,
(dollars in thousands)	2003			2002
Long-term prepaid benefit costs of defined benefit pension plans	$	121,515		$	107,151
Deferred income taxes		52,086			67,517
Intangible assets related to pension plans		116			175
Other intangibles:
Gross		12,492			11,004
Accumulated amortization		(8,978	)		(7,619	)
Other		28,322			23,785
	$	205,553		$	202,013

45

     In June 2001, the FASB issued FAS 142. Under FAS 142, goodwill and intangible assets with indefinite lives are no longer amortized, but are reviewed at least annually for impairment. Following are the pro forma amounts that would have been reported had FAS 142 been effective as of January 1, 2001:

	Year Ended December 31,
(dollars in thousands, except per share data)	2003		2002		2001
Reported net income	$	69,450	$	60,469	$	98,345
Add back goodwill amortization		—		—		10,719
Pro forma net income	$	69,450	$	60,469	$	109,064
Basic earnings per share:
Reported earnings per share	$	1.28	$	1.12	$	1.82
Add back goodwill amortization		—		—		0.19
Pro forma earnings per share	$	1.28	$	1.12	$	2.01
Diluted earnings per share:
Reported earnings per share	$	1.25	$	1.10	$	1.75
Add back goodwill amortization		—		—		0.18
Pro forma earnings per share	$	1.25	$	1.10	$	1.93

     Amortization associated with the Company’s capitalized software and other amortizable intangibles (primarily patents, trademarks and other) recorded as of December 31, 2003 is expected to approximate $11,302,000, $5,879,000, $5,315,000, $5,098,000 and $4,649,000 for the years ending December 31, 2004, 2005, 2006, 2007 and 2008, respectively.

Note 7: Accounts Payable and Accrued Liabilities

     Accounts payable and accrued liabilities consisted of the following:

	December 31,
(dollars in thousands)	2003		2002
Trade accounts and accruals	$	275,248	$	206,002
Salaries, wages and related fringe benefits		62,976		59,059
Payroll and other taxes		20,419		20,170
Product warranty		5,333		5,912
Deferred income taxes		12,074		32,904
Accruals for plant closing, business realignment and other related costs		3,981		11,705
Other		17,295		18,625
	$	397,326	$	354,377

     Activity during the year associated with the Company’s warranty accruals was as follows (dollars in thousands):

	Warranty	Charges
Balance	Provisions During	Against	Translation	Balance
December 31, 2002	the Year	Accrual	and Other	December 31, 2003
$5,912	7,591	(8,474)	304	$5,333

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Note 8: Employee Benefit Plans

     Total net benefit expense (income) associated with the Company’s defined benefit pension and postretirement benefit plans consisted of the following:

										Postretirement
	Pension Benefits									Benefits
(dollars in thousands)	2003			2002			2001			2003			2002			2001
Service cost	$	6,597		$	6,359		$	5,971		$	11		$	13		$	48
Interest cost		19,842			20,021			18,721			3,118			2,936			3,090
Expected return on plan assets		(23,440	)		(25,572	)		(29,543	)		—			—			—
Amortization of prior service cost		(467	)		(346	)		(351	)		(80	)		(137	)		(136	)
Amortization of losses (gains) and other		7,838			4,322			(5,466	)		—			(500	)		(200	)
Net periodic benefit expense (income)		10,370			4,784			(10,668	)		3,049			2,312			2,802
Curtailment gain		—			—			(577	)		—			—			—
Termination benefit expense		—			—			839			—			—			—
Total net benefit expense (income)	$	10,370		$	4,784		$	(10,406	)	$	3,049		$	2,312		$	2,802
Net benefit expense (income):
U.S. plans	$	5,957		$	2,388		$	(7,500	)	$	3,049		$	2,312		$	2,802
Foreign plans		4,413			2,396			(2,906	)		—			—			—
	$	10,370		$	4,784		$	(10,406	)	$	3,049		$	2,312		$	2,802

     The change in the benefit obligations associated with the Company’s defined benefit pension and postretirement benefit plans consisted of the following:

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)	2003			2002			2003			2002
Benefit obligation at beginning of year	$	306,309		$	299,997		$	47,472		$	41,680
Service cost		6,597			6,359			11			13
Interest cost		19,842			20,021			3,118			2,936
Plan participants’ contributions		817			751			—			—
Amendments		(2,131	)		31			(3,825	)		—
Actuarial losses (gains)		30,735			(14,970	)		611			7,754
Exchange rate changes		17,631			14,018			—			—
Benefits paid directly or from plan assets		(20,279	)		(19,898	)		(4,763	)		(4,911	)
Benefit obligation at end of year	$	359,521		$	306,309		$	42,624		$	47,472
Benefit obligations at end of year:
U.S. plans	$	186,728		$	169,139		$	42,624		$	47,472
Foreign plans		172,793			137,170			—			—
	$	359,521		$	306,309		$	42,624		$	47,472

     The total accumulated benefit obligation for the Company’s defined benefit pension plans was $338,198,000 and $287,534,000 at December 31, 2003 and 2002, respectively.

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     The change in the plan assets associated with the Company’s defined benefit pension and postretirement benefit plans consisted of the following::

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)	2003			2002			2003			2002
Fair value of plan assets at beginning of year	$	286,150		$	295,074		$	—		$	—
Actual return on plan assets		38,735			(32,687	)		—			—
Actuarial gains		1,927			2,969			—			—
Company contributions		18,678			27,124			4,763			4,911
Plan participants’ contributions		817			751			—			—
Exchange rate changes		15,697			12,617			—			—
Benefits paid from plan assets		(19,708	)		(19,698	)		(4,763	)		(4,911	)
Fair value of plan assets at end of year	$	342,296		$	286,150		$	—		$	—
Fair value of plan assets at end of year:
U.S. plans	$	186,288		$	163,666		$	—		$	—
Foreign plans		156,008			122,484			—			—
	$	342,296		$	286,150		$	—		$	—

     Asset investment allocations for the Company’s main defined benefit pension and postretirement benefit plans in the United States and the United Kingdom, which account for over 98% of total plan assets, are as follows:

							Postretirement
	Pension Benefits						Benefits
	2003			2002			2003		2002
U.S. plan:
Equity securities		58	%		52	%		—		—
Fixed income debt securities and cash		42	%		48	%		—		—
U.K. plan:
Equity securities		50	%		57	%		—		—
Fixed income debt securities and cash		50	%		43	%		—		—

     In each jurisdiction, the investment of plan assets is overseen by a plan asset committee whose members act as trustees of the plan and set investment policy. For the years ended December 31, 2003 and 2002, the investment strategy has been designed to approximate the performance of market indexes.

     During 2003, the Company made contributions totaling $18,678,000 to the assets of its various defined benefit plans. Such contributions for 2004 are currently expected to approximate $10,000,000, assuming no change in the current discount rate or expected investment earnings.

     The net assets (liabilities) associated with the Company’s defined benefit pension and postretirement benefit plans recognized on the balance sheet consisted of the following:

							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)	2003			2002			2003			2002
Plan assets less than benefit obligations at end of year	$	(17,225	)	$	(20,159	)	$	(42,624	)	$	(47,472	)
Unrecognized net loss		137,503			124,734			3,089			2,477
Unrecognized prior service cost		(4,039	)		(2,380	)		(3,911	)		(166	)
Unrecognized net transition obligation		—			50			—			—
Prepaid (accrued) pension cost		116,239			102,245			(43,446	)		(45,161	)
Underfunded plan adjustments recognized:
Accrued minimum liability		(1,637	)		(563	)		—			—
Intangible asset		116			175			—			—
Accumulated other comprehensive income, net of tax		939			240			—			—
Net assets (liabilities) recognized on balance sheet at end of year	$	115,657		$	102,097		$	(43,446	)	$	(45,161	)

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							Postretirement
	Pension Benefits						Benefits
(dollars in thousands)		2003			2002			2003			2002
Balance sheet classification at end of year:
Assets recognized:
U.S. plans	$	66,478		$	62,011		$	—		$	—
Foreign plans		55,153			45,315			—			—
Liabilities recognized:
U.S. plans		(3,707	)		(3,374	)		(43,446	)		(45,161	)
Foreign plans		(3,206	)		(2,095	)		—			—
Accumulated other comprehensive income, net of tax:
U.S. plans		272			68			—			—
Foreign plans		667			172			—			—
	$	115,657		$	102,097		$	(43,446	)	$	(45,161	)

     The weighted-average assumptions associated with the Company’s defined benefit pension and postretirement benefit plans were as follows:

						Postretirement
	Pension Benefits					Benefits
		2003		2002			2003		2002
Assumptions related to net benefit costs:
Domestic plans:
Discount rate		7.0	%	7.25	%		6.75	%	7.25	%
Expected return on plan assets		8.9	%	9.25	%
Rate of compensation increase		4.5	%	4.5	%
Health care cost trend rate							12.0	%	7.0	%
Measurement date		1/1/2003		1/1/2002			10/1/2002		10/1/2001
International plans:
Discount rate		6.0	%	6.0 - 6.25	%
Expected return on plan assets		6.0 - 8.0	%	6.0 - 8.5	%
Rate of compensation increase		2.75 - 4.0	%	3.5 - 4.5	%
Measurement date		12/31/2002		12/31/2001
Assumptions related to end of period benefit obligations:
Domestic plans:
Discount rate		6.25	%	7.0	%		6.25	%	6.75	%
Rate of compensation increase		4.5	%	4.5	%
Health care cost trend rate							11.0	%	12.0	%
Measurement date		12/31/2003		12/31/2002			10/1/2003		10/1/2002
International plans:
Discount rate		5.5 - 5.75	%	6.0	%
Rate of compensation increase		2.75 - 4.0	%	2.75 - 4.0	%
Measurement date		12/31/2003		12/31/2002

     The discount rates used for valuation calculations were lowered in 2003 to reflect the decrease in long-term interest rates. Additionally, the expected long-term rates of return on assets used to compute expense for the year ended December 31, 2003 were lowered from rates used in 2002 to reflect future investment returns and anticipated asset allocations and investment strategies.

     The rate of compensation increase for the domestic plans is based on an age-grade scale ranging from 7.5% to 3.0% with a weighted-average rate of approximately 4.5%.

     The health care cost trend rate is assumed to decrease gradually from 11.0% to 5.0% by 2010 and remain at that level thereafter. A one-percentage-point change in the assumed health care cost trend rate would have the following effects:

	One-percentage-		One-percentage-
(dollars in thousands)	point Increase		point Decrease
Effect on total of service and interest cost components in 2003	$	219	$	(193	)
Effect on postretirement benefit obligation as of December 31, 2003	$	2,956	$	(2,595	)

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     Year-end amounts applicable to the Company’s pension plans with projected benefit obligations in excess of plan assets and accumulated benefit obligations in excess of plan assets were as follows:

	Projected Benefit						Accumulated Benefit
	Obligation in Excess						Obligation in Excess
	of Plan Assets						of Plan Assets
(dollars in thousands)		2003			2002			2003			2002
Fair value of applicable plan assets	$	156,464		$	286,150		$	4,493		$	3,512
Projected benefit obligation of applicable plans	$	(177,012	)	$	(306,309	)
Accumulated benefit obligation of applicable plans							$	(11,369	)	$	(8,903	)

     The Company sponsors the Cooper Cameron Corporation Retirement Plan (Retirement Plan) covering the majority of salaried U.S. employees and certain domestic hourly employees, as well as separate defined benefit pension plans for employees of its U.K. and German subsidiaries, and several unfunded defined benefit arrangements for various other employee groups. The U.K. defined benefit pension plan was frozen with respect to new entrants effective June 14, 1996, and the Retirement Plan was frozen with respect to new entrants effective May 1, 2003. Additionally, with respect to the Retirement Plan, the basic credits to participant account balances decreased from 4% of compensation below the Social Security Wage Base plus 8% of compensation in excess of the Social Security Wage Base to 3% and 6%, respectively, and vesting for participants who had not completed three full years of vesting service as of May 1, 2003 changed from a three-year graded vesting with 33% vested after three years and 100% vested after five years to five-year cliff vesting.

     In addition, the Company’s domestic employees who are not covered by a bargaining unit are also eligible to participate in the Cooper Cameron Corporation Retirement Savings Plan. Under this plan, employees’ savings deferrals are partially matched with shares of the Company’s Common stock. In addition, the Company makes cash contributions for hourly employees who are not covered under collective bargaining agreements and will make contributions equal to 2% of earnings of new employees hired on or after May 1, 2003, who are not eligible for participation in the Retirement Plan, based upon the achievement of certain financial objectives by the Company. The Company’s expense under this plan for the years ended December 31, 2003, 2002 and 2001 amounted to $8,050,000, $8,192,000 and $7,581,000, respectively. In addition, the Company provides various savings plans for employees under collective bargaining agreements and, in the case of certain international employees, as required by government mandate, which provide for, among other things, Company matching contributions in cash based on specified formulas. Expense with respect to these various defined contribution plans for the years ended December 31, 2003, 2002, and 2001 amounted to $12,810,000, $10,723,000 and $8,642,000, respectively.

     Certain of the Company’s employees participate in various domestic employee welfare benefit plans, including medical, dental and prescriptions. Certain employees will receive retiree medical, prescription and life insurance benefits.

     All of the welfare benefit plans, including those providing postretirement benefits, are unfunded.

     Effective January 1, 2004, various postretirement benefit plans were consolidated to standardize the provisions across all plans and update the plan design to control rising costs.

     The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”) was enacted by the U.S. government on December 8, 2003. The Act introduced a prescription drug benefit under Medicare (Medicare Part D) as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. As provided by Financial Staff Position No. FAS 106-1, issued by the Financial Accounting Standards Board, the Company has elected to defer recognizing the effects of the Act in the accounting for the accumulated postretirement benefit obligations and net postretirement benefit costs of its retiree health care benefit plans until authoritative guidance on the accounting for the federal subsidy is issued or until certain other events occur, if required, for the Company to benefit from the new legislation. Such guidance or events could change previously reported information.

Note 9: Stock Options and Employee Stock Purchase Plan

     The Company maintains two equity compensation plans which require the approval of security holders with regard to shares available for grant — the Long-term Incentive Plan, as Amended and Restated as of November 2002 (the Long-term Incentive Plan) and the Second Amended and Restated 1995 Stock Option Plan for Non-employee Directors (the Non-employee Director Stock Option Plan). An additional plan, the Broad Based 2000 Incentive Plan (the Broad Based Incentive Plan) did not require shareholder approval of the number of shares available for grant at the time the plan was initially established. However, under new corporate governance rules recently implemented by the New York Stock Exchange and approved by the Securities and Exchange Commission, all stock compensation plans now require shareholder approval for future increases in options available for grant and for material plan amendments.

50

     The following table summarizes stock option activity for each of the three years ended December 31:

	Number of Shares
	Broad Based			Long-term			Non-employee			Weighted
	Incentive			Incentive			Director			Average
	Plan			Plan			Plan			Exercise Prices
Stock options outstanding at December 31, 2000		797,200			4,670,932			324,774		$	46.96
Options granted		1,180,900			929,490			67,740		$	36.57
Options expired and forfeited		(46,032	)		(120,230	)		(10,290	)	$	48.13
Options exercised		—			(555,385	)		(45,000	)	$	32.01
Stock options outstanding at December 31, 2001		1,932,068			4,924,807			337,224		$	45.03
Options granted		1,012,800			614,802			42,000		$	47.20
Options expired and forfeited		(98,662	)		(124,903	)		(10,808	)	$	51.74
Options exercised		(44,987	)		(311,841	)		(54,946	)	$	32.34
Stock options outstanding at December 31, 2002		2,801,219			5,102,865			313,470		$	45.92
Options granted		274,046			1,397,736			36,000		$	44.26
Options expired and forfeited		(164,725	)		(302,156	)		(65,516	)	$	53.23
Options exercised		(97,888	)		(600,037	)		(6,000	)	$	31.35
Stock options outstanding at December 31, 2003		2,812,652			5,598,408			277,954		$	46.32
Weighted-average exercise price of options outstanding at December 31, 2003	$	44.14		$	46.97		$	55.49		$	46.32

     Information relating to selected ranges of exercise prices for outstanding and exercisable options at December 31, 2003 is as follows:

	Options Outstanding						Options Exercisable
			Weighted-
	Number		Average Years		Weighted-		Number		Weighted-
Range of	Outstanding as		Remaining on		Average		Exercisable as		Average
Exercise Prices	of 12/31/2003		Contractual Life		Exercise Price		of 12/31/2003		Exercise Price
$24.19 - $34.34		1,756,015		6.45	$	31.96		1,306,827	$	31.61
$34.69 - $42.93		2,368,652		7.94	$	42.45		1,064,071	$	41.97
$43.66 - $48.41		1,850,295		8.51	$	46.92		714,875	$	46.94
$48.57 - $60.25		1,948,568		5.38	$	54.15		1,820,671	$	54.38
$60.69 - $79.94		765,484		3.57	$	69.89		763,151	$	69.90
$24.19 - $79.94		8,689,014		6.80	$	46.32		5,669,595	$	47.95

     Options are granted to key employees under the Long-term and Broad Based Incentive Plans and generally become exercisable on the first anniversary date following the date of grant in one-third increments each year. Certain key executives also elected in 2001 to receive options in lieu of salary for the salary period ending December 31, 2002. The options granted under the Options in Lieu of Salary Program became exercisable at the end of the salary period and will expire five years after the beginning of the salary period. The Options in Lieu of Salary Program was discontinued effective January 1, 2003.

     Under the Company’s Non-employee Director Stock Option Plan, non-employee directors receive a grant of 6,000 stock options annually and, for new directors, upon first joining the Board. The options generally expire five years after the date of grant and become exercisable one year following the date of grant. In addition, prior to January 1, 2003, directors were permitted to take either a portion of or their full annual retainer in cash ($30,000) or receive, in lieu of cash, additional stock options. During 2001, all directors received their full retainer for the service year 2002 in stock options. These retainer options, totaling 25,740 shares, became exercisable one year following the beginning of the retainer period and will expire five years following the beginning of the retainer period. The exercise price for all option grants is equal to the fair market value of the Company’s stock at the date of grant.

     As of December 31, 2003, shares reserved for future grants under the Broad Based Incentive, Long-term Incentive and Non-employee Director Stock Option Plans were 50,619, 1,962,529 and 336,012, respectively.

     Had the Company followed the alternative fair value method of accounting for stock-based compensation, the weighted-average fair value per share of options granted during 2003, 2002 and 2001 would have been $14.67, $17.09 and $15.42, respectively. The weighted-

51

average fair value per share of stock purchases under the Employee Stock Purchase Plan during 2003, 2002 and 2001 would have been $15.45, $14.52 and $18.82, respectively. The fair values were estimated using the Black-Scholes model with the following weighted-average assumptions:

	Year Ended December 31,
	2003			2002			2001
Expected life (in years)		3.4			3.3			3.3
Risk-free interest rate		2.6	%		2.4	%		4.5	%
Volatility		41.8	%		47.6	%		53.3	%
Dividend yield		0.0	%		0.0	%		0.0	%

     Further information on the impact on net income and earnings per share of using the alternative fair value method to recognize stock-based employee compensation expense may be found in Note 1 of the Notes to Consolidated Financial Statements.

Employee Stock Purchase Plan

     Under the Cooper Cameron Employee Stock Purchase Plan, the Company is authorized to sell up to 2,000,000 shares of Common stock to its full-time employees in the United States, U.K., Ireland, Norway, Singapore and Canada, nearly all of whom are eligible to participate. Under the terms of the Plan, employees may elect each year to have up to 10% of their annual compensation withheld to purchase the Company’s Common stock. The purchase price of the stock is 85% of the lower of the beginning-of-plan year or end-of-plan year market price of the Company’s Common stock. Under the 2003/2004 plan, more than 1,700 employees elected to purchase approximately 173,000 shares of the Company’s Common stock at $40.71 per share, or 85% of the market price of the Company’s Common stock on July 31, 2004, if lower. A total of 162,440 shares were purchased at $35.85 per share on July 31, 2003 under the 2002/2003 plan.

Note 10: Long-term Debt

     The Company’s debt obligations were as follows:

	December 31,
(dollars in thousands)	2003			2002
Convertible debentures, net of $62,446 of unamortized original issue discount ($65,643 at December 31, 2002)	$	458,310		$	455,113
Other debt		3,399			3,652
Obligations under capital leases		7,363			9,047
		469,072			467,812
Current maturities		(265,011	)		(4,870	)
Long-term portion	$	204,061		$	462,942

     On May 16, 2001, the Company issued two series of convertible debentures with aggregate gross proceeds to the Company of $450,000,000. The first series consisted of twenty-year zero-coupon convertible debentures (the “Zero-Coupon Convertible Debentures”) with an aggregate principal amount at maturity of approximately $320,756,000. The debentures were priced at $779.41 per debenture, which represents a yield-to-maturity of approximately 1.25%. The Company has the right to redeem the Zero-Coupon Convertible Debentures anytime after three years at the issue price plus the accrued original issue discount, and the debenture holders have the right to require the Company to repurchase the debentures on the third, eighth and thirteenth anniversaries of the issue. The Zero-Coupon Convertible Debentures are convertible into the Company’s common stock at a rate of 8.1961 shares per debenture, representing an initial conversion price of $95.095 per share.

     The second series consisted of twenty-year convertible debentures in an aggregate amount of $200,000,000, with an interest rate of 1.75%, payable semi-annually on May 15 and November 15 (the “1.75% Convertible Debentures”). The Company has the right to redeem the 1.75% Convertible Debentures anytime after five years at the principal amount plus accrued and unpaid interest, and the debenture holders have the right to require the Company to repurchase the debentures on the fifth, tenth and fifteenth anniversaries of the issue. The 1.75% Convertible Debentures are convertible into the Company’s common stock at a rate of 10.5158 shares per debenture, or $95.095 per share.

     The net proceeds from the debentures were used to repay amounts outstanding under the Company’s then-existing revolving credit agreement and other borrowings and for other purposes, including share repurchases and acquisitions.

     As of December 31, 2003, the Company was party to a credit agreement (the “Credit Agreement”) with various banks, which provides for a multi-currency borrowing capacity, plus the ability to issue letters of credit, totaling $200,000,000, expiring December 12, 2007. The Credit Agreement provides for unsecured borrowings at the London Interbank Offered Rate (LIBOR) plus 0.40%. In addition to certain up-front costs, the agreement carries a facility fee of 0.10% per annum on the committed amount of the facility, plus a usage fee of 0.125% on the outstanding borrowings if such amounts exceed 33% of the total amount committed, or approximately $66,000,000. The Credit

52

Agreement also contains certain covenants including maintaining specific interest coverage and debt-to-total capitalization ratios. The Company is in compliance with all loan covenants. The entire amount of the facility was available for borrowing at December 31, 2003.

     In addition to the above, the Company also has other unsecured and uncommitted credit facilities available to its foreign subsidiaries. Certain of these facilities also include annual facility fees.

     Other debt, which mainly consists of acquisition-related notes, has a weighted-average interest rate of 4.13% at December 31, 2003 (3.87% at December 31, 2002).

     Future maturities of the Company’s debt (excluding capital leases) are $261,475,000 in 2004, $234,000 in 2005 and $200,000,000 in 2006. Maturities in 2004 include $258,310,000 related to the Company’s Zero-Coupon Convertible Debentures, which the holders have the right to require the Company to repurchase on May 17, 2004, for approximately $259,524,000 at that time, and maturities in 2006 include $200,000,000 related to the 1.75% Convertible Debentures, which the holders have the right to require the Company to repurchase on May 18, 2006.

     Interest paid during the years ended December 31, 2003, 2002 and 2001 approximated $4,143,000, $4,901,000 and $12,889,000, respectively. Capitalized interest during these same periods totaled $0, $371,000 and $1,847,000, respectively.

     The Company leases certain facilities, office space, vehicles and office, data processing and other equipment under capital and operating leases. Future minimum lease payments with respect to capital leases and operating leases with terms in excess of one year were as follows:

	Capital			Operating
(dollars in thousands)	Lease Payments			Lease Payments
Year ended December 31:
2004	$	3,582		$	13,274
2005		2,383			9,512
2006		1,134			8,199
2007		423			7,800
2008		19			5,666
Thereafter		—			52,457
Future minimum lease payments		7,541			96,908
Less: amount representing interest		(178	)		—
Lease obligations at December 31, 2003	$	7,363		$	96,908

Note 11: Income Taxes

     The components of income (loss) before income taxes were as follows:

	Year Ended December 31,
(dollars in thousands)	2003		2002			2001
Income (loss) before income taxes:
U.S. operations	$	21,590	$	(1,958	)	$	62,785
Foreign operations		56,013		87,103			79,797
Income before income taxes	$	77,603	$	85,145		$	142,582

     The provisions for income taxes charged to operations were as follows:

	Year Ended December 31,
(dollars in thousands)	2003			2002			2001
Current:
U.S. federal	$	4,574		$	2,559		$	6,696
U.S. state, local and franchise		1,032			1,835			2,432
Foreign		20,288			21,962			14,509
		25,894			26,356			23,637
Deferred:
U.S. federal		(293	)		(4,768	)		8,541
U.S. state and local		(44	)		(717	)		1,285
Foreign		(5,195	)		3,805			10,774
		(5,532	)		(1,680	)		20,600
Income tax provision	$	20,362		$	24,676		$	44,237

53

     The reasons for the differences between the provision for income taxes and income taxes using the U.S. federal income tax rate were as follows:

	Year Ended December 31,
(dollars in thousands)	2003			2002			2001
U.S. federal statutory rate		35.00	%		35.00	%		35.00	%
Nondeductible goodwill		—			0.47			2.07
State and local income taxes		1.26			0.20			1.63
Tax exempt income		(5.76	)		(3.08	)		(3.70	)
Foreign statutory rate differential		(14.84	)		(6.36	)		(3.22	)
Change in valuation allowance on deferred tax assets		7.08			0.81			(1.89	)
Nondeductible expenses		2.30			1.03			0.61
All other		1.20			0.91			0.53
Total		26.24	%		28.98	%		31.03	%
Total income taxes paid	$	16,132		$	25,821		$	15,111

     Components of deferred tax assets (liabilities) were as follows:

	December 31,
(dollars in thousands)	2003			2002
Deferred tax liabilities:
Plant and equipment	$	(37,523	)	$	(28,901	)
Inventory		(46,195	)		(48,236	)
Pensions		(36,687	)		(37,485	)
Other		(37,135	)		(38,544	)
Total deferred tax liabilities		(157,540	)		(153,166	)
Deferred tax assets:
Postretirement benefits other than pensions		16,618			17,274
Reserves and accruals		27,342			32,658
Net operating losses and related deferred tax assets		137,978			115,386
Other		536			1,366
Total deferred tax assets		182,474			166,684
Valuation allowance		(23,613	)		(18,121	)
Net deferred tax assets (liabilities)	$	1,321		$	(4,603	)

     During the last three years, certain of the Company’s international operations have incurred losses that have not been tax benefited, while others utilized part of the unrecorded benefit of prior year losses. As a result of the foregoing, the valuation allowances established in prior years were increased in 2003, 2002, and 2001, respectively, by $5,492,000, $694,000, and $1,226,000 with a corresponding increase in the Company’s income tax expense. In addition, a tax benefit of $3,800,000 was recorded in 2001 relating to certain other foreign losses.

     At December 31, 2003, the Company had U.S. net operating loss carryforwards of approximately $287,000,000 that will expire in 2020 — 2023 if not utilized. At December 31, 2003, the Company had net operating loss carryforwards of approximately $34,000,000 and $15,000,000 in Brazil and Germany, respectively, that had no expiration periods. The Company had a valuation allowance of $23,613,000 as of December 31, 2003 against the net operating loss and other carryforwards. The Company has considered all available evidence in assessing the need for the valuation allowance, including future taxable income and ongoing prudent and feasible tax planning strategies. In the event the Company were to determine that it would not be able to realize all or part of its net deferred tax asset in the future, an adjustment to the net deferred tax asset would be charged to income in the period such determination was made.

     The tax benefit that the Company receives with respect to certain stock benefit plan transactions is credited to capital in excess of par value and does not reduce income tax expense. This benefit amounted to $4,831,000, $2,944,000, and $7,129,000 in 2003, 2002, and 2001, respectively.

     The Company considers all unremitted earnings of its foreign subsidiaries, except certain amounts primarily earned before 2003, to essentially be permanently reinvested. An estimate of these amounts considered permanently reinvested is $330,000,000. It is not practical for the Company to compute the amount of additional U.S. tax that would be due on this amount. The Company has provided deferred income taxes on the earnings that the Company anticipates to be remitted.

54

Note 12: Stockholders’ Equity

Common Stock

     Under its Amended and Restated Certificate of Incorporation, the Company is authorized to issue up to 150,000,000 shares of Common stock, par value $.01 per share. Additionally, in November 1998, the Company’s board of directors approved the repurchase of up to 10,000,000 shares of Common stock for use in the Company’s various employee stock ownership, option and benefit plans.

     Changes in the number of shares of the Company’s outstanding stock for the last three years were as follows:

	Common		Treasury			Shares
	Stock		Stock			Outstanding
Balance — December 31, 2000		54,011,929		—			54,011,929
Purchase of treasury stock		—		(611,000	)		(611,000	)
Stock issued under stock option and other employee benefit plans		554,125		39,680			593,805
Balance — December 31, 2001		54,566,054		(571,320	)		53,994,734
Stock issued under stock option and other employee benefit plans		—		516,366			516,366
Balance — December 31, 2002		54,566,054		(54,954	)		54,511,100
Purchase of treasury stock		—		(1,251,900	)		(1,251,900	)
Stock issued under stock option and other employee benefit plans		367,604		176,254			543,858
Balance — December 31, 2003		54,933,658		(1,130,600	)		53,803,058

     At December 31, 2003, 12,260,034 shares of unissued Common stock were reserved for future issuance under various employee benefit plans.

Preferred Stock

     The Company is authorized to issue up to 10,000,000 shares of preferred stock, par value $.01 per share. At December 31, 2003, no preferred shares were issued or outstanding. Shares of preferred stock may be issued in one or more series of classes, each of which series or class shall have such distinctive designation or title as shall be fixed by the Board of Directors of the Company prior to issuance of any shares. Each such series or class shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issuance of such series or class of preferred stock as may be adopted by the Board of Directors prior to the issuance of any shares thereof. A total of 1,500,000 shares of Series A Junior Participating Preferred Stock has been reserved for issuance upon exercise of the Stockholder Rights described below.

Stockholder Rights Plan

     On May 23, 1995, the Company’s Board of Directors declared a dividend distribution of one Right for each then-current and future outstanding share of Common stock. Each Right entitles the registered holder to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock of the Company, par value $.01 per share, for an exercise price of $300. Unless earlier redeemed by the Company at a price of $.01 each, the Rights become exercisable only in certain circumstances constituting a potential change in control of the Company, described below, and will expire on October 31, 2007.

     Each share of Series A Junior Participating Preferred Stock purchased upon exercise of the Rights will be entitled to certain minimum preferential quarterly dividend payments as well as a specified minimum preferential liquidation payment in the event of a merger, consolidation or other similar transaction. Each share will also be entitled to 100 votes to be voted together with the Common stockholders and will be junior to any other series of Preferred Stock authorized or issued by the Company, unless the terms of such other series provides otherwise.

     Except as otherwise provided in the Plan, in the event any person or group of persons acquire beneficial ownership of 20% or more of the outstanding shares of Common stock, each holder of a Right, other than Rights beneficially owned by the acquiring person or group (which will have become void), will have the right to receive upon exercise of a Right that number of shares of Common stock of the Company, or, in certain instances, Common stock of the acquiring person or group, having a market value equal to two times the current exercise price of the Right.

55

Retained Earnings

     The Company’s retained earnings includes a $441,000,000 charge related to the goodwill write-down that occurred concurrent with the Company becoming a separate stand-alone entity on June 30, 1995 in connection with the split-off from its former parent, Cooper Industries, Inc. Delaware law, under which the Company is incorporated, provides that dividends may be declared by the Company’s Board of Directors from a current year’s earnings as well as from the total of capital in excess of par value plus the retained earnings, which amounted to approximately $1,135,509,000 at December 31, 2003.

Note 13: Business Segments

     The Company’s operations are organized into three separate business segments — Cameron, CCV and Cooper Compression.

     Based upon the amount of equipment installed worldwide and available industry data, Cameron is one of the world’s leading providers of systems and equipment used to control pressures and direct flows of oil and gas wells. Cameron’s products include surface and subsea production systems, blowout preventers, drilling and production control systems, gate valves, actuators, chokes, wellheads, drilling riser and aftermarket parts and services. Based upon the amount of equipment installed worldwide and available industry data, CCV is a leading provider of valves and related systems primarily used to control pressures and direct the flow of oil and gas as they are moved from individual wellheads through flow lines, gathering lines and transmission systems to refineries, petrochemical plants and industrial centers for processing. CCV’s products include gate valves, ball valves, butterfly valves, Orbit valves, rotary process valves, block and bleed valves, plug valves, globe valves, check valves, actuators, chokes and aftermarket parts and service. Based upon the amount of equipment installed worldwide and available industry data, Cooper Compression is a leading provider of compression equipment and related aftermarket parts and services for the energy industry and for manufacturing companies and chemical process industries worldwide.

     The Company’s primary customers are major and independent oil and gas exploration and production companies, foreign national oil and gas companies, engineering and construction companies, drilling contractors, pipeline operators, refiners and other industrial and petrochemical processing companies. Cooper Compression’s customers also include manufacturers and companies in the air separation, power production and chemical process industries.

     The Company markets its equipment through a worldwide network of sales and marketing employees supported by agents and distributors in selected international locations. Due to the extremely technical nature of many of the products, the marketing effort is further supported by a staff of engineering employees.

     For the years ended December 31, 2003, 2002 and 2001, the Company incurred research and development costs, including costs incurred on projects designed to enhance or add to its existing product offerings, totaling $28,703,000, $28,020,000 and $27,388,000, respectively. Cameron accounted for 85%, 85% and 76% of each respective year’s total costs.

     Summary financial data by segment follows:

	For the Year Ended December 31, 2003
					Cooper		Corporate
(dollars in thousands)	Cameron		CCV		Compression		& Other			Consolidated
Revenues	$	1,018,517	$	307,054	$	308,775	$	—		$	1,634,346
Depreciation and amortization	$	51,211	$	12,724	$	17,210	$	2,420		$	83,565
Interest income	$	—	$	—	$	—	$	(5,198	)	$	(5,198	)
Interest expense	$	—	$	—	$	—	$	8,157		$	8,157
Income (loss) before income taxes and cumulative effect of accounting change	$	63,364	$	33,694	$	10,268	$	(29,723	)	$	77,603
Capital expenditures	$	40,153	$	9,664	$	7,152	$	7,696		$	64,665
Total assets	$	1,233,172	$	320,982	$	298,020	$	288,511		$	2,140,685

56

	For the Year Ended December 31, 2002
					Cooper			Corporate
(dollars in thousands)	Cameron		CCV		Compression			& Other			Consolidated
Revenues	$	918,677	$	273,507	$	345,916		$	—		$	1,538,100
Depreciation and amortization	$	46,040	$	10,122	$	19,216		$	2,529		$	77,907
Interest income	$	—	$	—	$	—		$	(8,542	)	$	(8,542	)
Interest expense	$	—	$	—	$	—		$	7,981		$	7,981
Income (loss) before income taxes and cumulative effect of accounting change	$	76,261	$	37,290	$	(8,477	)	$	(19,929	)	$	85,145
Capital expenditures	$	39,253	$	9,266	$	9,689		$	23,940		$	82,148
Total assets	$	1,067,598	$	303,506	$	300,665		$	325,901		$	1,997,670

	For the Year Ended December 31, 2001
					Cooper		Corporate
(dollars in thousands)	Cameron		CCV		Compression		& Other			Consolidated
Revenues	$	897,551	$	292,257	$	373,091	$	—		$	1,562,899
Depreciation and amortization	$	48,811	$	14,198	$	18,458	$	1,628		$	83,095
Interest income	$	—	$	—	$	—	$	(8,640	)	$	(8,640	)
Interest expense	$	—	$	—	$	—	$	13,481		$	13,481
Income (loss) before income taxes and cumulative effect of accounting change	$	123,121	$	38,275	$	2,006	$	(20,820	)	$	142,582
Capital expenditures	$	71,056	$	6,985	$	13,011	$	33,952		$	125,004
Total assets	$	1,038,322	$	247,864	$	346,390	$	242,476		$	1,875,052

     Geographic revenue by shipping location and long-lived assets related to operations as of and for the years ended December 31 were as follows:

(dollars in thousands)	2003		2002		2001
Revenues:
United States	$	833,935	$	836,264	$	932,490
United Kingdom		288,693		256,213		220,818
Other foreign countries		511,718		445,623		409,591
Total	$	1,634,346	$	1,538,100	$	1,562,899
Long-lived assets:
United States	$	468,717	$	505,069	$	529,803
United Kingdom		126,758		117,752		102,989
Other foreign countries		195,586		158,535		121,220
Total	$	791,061	$	781,356	$	754,012

     For internal management reporting, and therefore the above segment information, consolidated interest is treated as a Corporate item because short-term investments and debt, including location, type, currency, etc., are managed on a worldwide basis by the Corporate Treasury Department. In addition, spending for the Company’s enterprise-wide software upgrade has been reflected as a Corporate capital expenditure since 2001. In connection with the initial implementation of this system in 2002, amortization expense, as well as the associated asset, is being reflected in each segment’s information above for 2003 and 2002.

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Note 14: Off-Balance Sheet Risk and Guarantees, Concentrations of Credit Risk and Fair Value of Financial Instruments

Off-Balance Sheet Risk and Guarantees

     At December 31, 2003, the Company was contingently liable with respect to approximately $137,604,000 of standby letters of credit (“letters”) issued on its behalf by financial institutions in connection with the delivery, installation and performance of the Company’s products under contracts with customers throughout the world. The Company was also liable for approximately $23,794,000 of bank guarantees and letters of credit used to secure certain financial obligations of the Company. While many of the letters of credit expire within the next one to three years, the Company would expect to continue to issue new or extend existing letters in the normal course of business. In addition, the Company has provided third parties with guarantees of a portion of the outstanding bank loans of its joint ventures, as well as other matters, totaling $1,494,000 at December 31, 2003. Approximately $20,504,000 of the Company’s cash at December 31, 2003 was restricted for use in support of a portion of the standby letters of credit above and to satisfy certain other third-party obligations.

     The Company’s other off-balance sheet risks were not material.

Concentrations of Credit Risk

     Apart from its normal exposure to its customers, who are predominantly in the energy industry, the Company had no significant concentrations of credit risk at December 31, 2003.

Fair Value of Financial Instruments

     The Company’s financial instruments consist primarily of cash and cash equivalents, short-term marketable debt and equity securities, trade receivables, trade payables and debt instruments. The book values of cash and cash equivalents, trade receivables and trade payables and floating-rate debt instruments are considered to be representative of their respective fair values.

     The Company’s short-term investments (which consisted entirely of available-for-sale securities) comprised the following:

	December 31,
(dollars in thousands)	2003				2002
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Auction rate preferred stock	$	22,033	$	22,033	$	25,000	$	25,000
Equity instruments		—		—		290		290
	$	22,033	$	22,033	$	25,290	$	25,290

     The primary portion of the Company’s debt consists of fixed-rate convertible debentures. Based on quoted market prices, the book value for this debt at December 31, 2003 was $4,226,000 higher than the market value. The difference between book value and market value on the Company’s other fixed-rate debt was not material. Additional information on the Company’s debt may be found in Note 10 of the Notes to Consolidated Financial Statements.

Note 15: Summary of Noncash Investing and Financing Activities

     The effect on net assets of noncash investing and financing activities was as follows:

	Year Ended December 31,
(dollars in thousands)	2003				2002
Common stock issued for employee stock ownership plans	$	5,831		$		4,944
Tax benefit of certain employee stock benefit plan transactions		4,831				2,944
Other		(579	)			(3	)

58

Note 16: Earnings Per Share

     The calculation of basic and diluted earnings per share for each period presented was as follows:

	Year Ended December 31,
(amounts in thousands)	2003		2002		2001
Income before cumulative effect of accounting change	$	57,241	$	60,469	$	98,345
Cumulative effect of accounting change		12,209		—		—
Net income		69,450		60,469		98,345
Add back interest on debentures, net of tax		5,248		5,024		3,032
Net income (assuming conversion of convertible debentures)	$	74,698	$	65,493	$	101,377
Average shares outstanding (basic)		54,403		54,215		54,170
Common stock equivalents		665		862		936
Incremental shares from assumed conversion of convertible debentures		4,732		4,732		2,969
Shares utilized in diluted earnings per share calculation		59,800		59,809		58,075

	Year Ended December 31,
	2003		2002		2001
Basic earnings per share:
Before cumulative effect of accounting change	$	1.05	$	1.12	$	1.82
Cumulative effect of accounting change		0.23		—		—
Net income	$	1.28	$	1.12	$	1.82

	Year Ended December 31,
	2003		2002		2001
Diluted earnings per share:
Before cumulative effect of accounting change	$	1.04	$	1.10	$	1.75
Cumulative effect of accounting change		0.21		—		—
Net income	$	1.25	$	1.10	$	1.75

Note 17: Accumulated Other Elements of Comprehensive Income

     Accumulated other elements of comprehensive income comprised the following:

	December 31,
(dollars in thousands)	2003			2002
Accumulated foreign currency translation gain (loss)	$	56,268		$	(14,640	)
Accumulated adjustments to record minimum pension liabilities, net of tax		(939	)		(240	)
Difference between cost and fair value of short-term investments, net of tax		—			91
	$	55,329		$	(14,789	)

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Note 18: Unaudited Quarterly Operating Results

     Unaudited quarterly operating results were as follows:

	2003 (by quarter)
(dollars in thousands, except per share data)	1		2		3		4
Revenues	$	361,073	$	400,913	$	429,153	$	443,207
Gross margin1		103,975		117,559		123,730		107,432
Plant closing, business realignment and other related costs		5,500		—		5,862		3,211
Income from liquidation of LIFO inventory layers, primarily at Cooper Compression		—		5,899		2,857		7,176
Income before cumulative effect of accounting change		8,411		20,753		24,017		4,060
Net income		8,411		20,753		36,226		4,060
Earnings per share:
Basic -
Income before cumulative effect of accounting change		0.15		0.38		0.44		0.08
Net income		0.15		0.38		0.67		0.08
Diluted -
Income before cumulative effect of accounting change		0.15		0.37		0.42		0.07
Net income		0.15		0.37		0.63		0.07

	2002 (by quarter)
(dollars in thousands, except per share data)	1		2		3		4
Revenues	$	366,901	$	402,583	$	383,847	$	384,769
Gross margin1		106,982		115,907		112,060		100,647
Plant closing, business realignment and other related costs		—		—		—		33,319
Net income (loss)		19,489		22,667		20,683		(2,370	)
Earnings (loss) per share:
Basic		0.36		0.42		0.38		(0.04	)
Diluted		0.35		0.40		0.37		(0.04	)

¹ Gross margin equals revenues less cost of sales before depreciation and amortization.

Note 19: Unaudited Subsequent Event

     In January 2004, the Company reached an agreement to acquire Petreco International, a Houston-headquartered supplier of oil and gas separation products, for approximately $90 million, net of cash acquired and debt assumed. Petreco’s 2003 revenues were approximately $117 million, and income before taxes was approximately $12 million.

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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF COOPER CAMERON CORPORATION

     The following table sets forth selected historical financial data for the Company for each of the five years in the period ended December 31, 2003. This information should be read in conjunction with the consolidated financial statements of the Company and notes thereto included elsewhere in this Annual Report.

	Year Ended December 31,
(dollars in thousands, except per share data)	2003			2002			2001			2000			1999
Income Statement Data:
Revenues	$	1,634,346		$	1,538,100		$	1,562,899		$	1,383,733		$	1,469,962
Costs and expenses:
Cost of sales (exclusive of depreciation and amortization)		1,181,650			1,102,504			1,081,078			985,404			1,076,276
Selling and administrative expenses		288,569			273,105			251,303			264,173			216,319
Depreciation and amortization		83,565			77,907			83,095			75,321			83,716
Interest income		(5,198	)		(8,542	)		(8,640	)		(2,976	)		(5,099	)
Interest expense		8,157			7,981			13,481			18,038			27,834
Total costs and expenses		1,556,743			1,452,955			1,420,317			1,339,960			1,399,046
Income before income taxes and cumulative effect of accounting change		77,603			85,145			142,582			43,773			70,916
Income tax provision		(20,362	)		(24,676	)		(44,237	)		(16,113	)		(27,914	)
Income before cumulative effect of accounting change		57,241			60,469			98,345			27,660			43,002
Cumulative effect of accounting change		12,209			—			—			—			—
Net income	$	69,450		$	60,469		$	98,345		$	27,660		$	43,002
Basic earnings per share:
Before cumulative effect of accounting change	$	1.05		$	1.12		$	1.82		$	0.52		$	0.81
Cumulative effect of accounting change		0.23			—			—			—			—
Net income	$	1.28		$	1.12		$	1.82		$	0.52		$	0.81
Diluted earnings per share:
Before cumulative effect of accounting change	$	1.04		$	1.10		$	1.75		$	0.50		$	0.78
Cumulative effect of accounting change		0.21			—			—			—			—
Net income	$	1.25		$	1.10		$	1.75		$	0.50		$	0.78
Balance Sheet Data (at the end of period):
Total assets	$	2,140,685		$	1,997,670		$	1,875,052		$	1,493,873		$	1,470,719
Stockholders’ equity		1,136,723			1,041,303			923,281			842,279			714,078
Long-term debt		204,061			462,942			459,142			188,060			195,860
Other long-term obligations		119,982			118,615			114,858			117,503			138,955

61

EX-21.1

Exhibit 21.1

COOPER CAMERON CORPORATION — SUBSIDIARIES & JOINT VENTURES
(As of February 26, 2004)

							State/Country of
	% Owned			% Owned			Incorporation or
Cooper Cameron Corporation (Delaware)—Parent	By Subsidiary			by CCC			Organization
Cameron Algerie (1 share owned by CCPEG)					100	%	Algeria
Cameron Argentina S.A.I.C. (122,700 shares owned by CCPEG)	Less than 1%				100	%	Argentina
Cameron Gabon, S.A. (1 share owned by Chairman)					100	%	Gabon
Cameron GmbH					100	%	Germany
Cameron Services Middle East LLC (Joint Venture)					24	%	Oman
Cameron Venezolana, S.A.					100	%	Venezuela
-Cameron Remanufacturas, C.A.		100	%				Venezuela
-Camercay, Ltd.		100	%				Grand Cayman
Compression Services Company					100	%	Ohio USA
Cooper Cameron Foreign Sales Company Ltd.					100	%	Barbados
Cooper Cameron Holding (Cayman) Limited					100	%	Cayman
-Cameron Australasia Pty. Ltd.		100	%				Australia
-Cooper Cameron do Brasil Ltda. (1 share owned by CC (Lux) SARL)		100	%				Brazil
-Cooper Cameron (Trinidad) Limited		100	%				Trinidad and Tobago
-Cooper Cameron Holding (Luxembourg) SARL		100	%				Luxembourg
-Cooper Cameron (Gibraltar) Limited		100	%				Gibraltar
–Cooper Cameron (Luxembourg) SARL		100	%				Luxembourg
—Cameron Ireland Limited		100	%				Ireland
—Cooper Cameron Holding Dutch B.V.		100	%				Netherlands
—Cooper Cameron Canada Corporation		100	%				Canada
—Cooper Cameron Holding (U.K.) Limited		100	%				United Kingdom
—Cameron France, S.A.S.		100	%				France
—Cooper Cameron (U.K.) Limited		100	%				United Kingdom
—–Cooper Cameron (U.K.) Investments Limited		100	%				United Kingdom
——Flow Link Systems Private Ltd.		100	%				India
——Nutron Manufacturers (India) Private Limited		100	%				India
——Flow Control-Tati Production Sdn. Bhd.		100	%				Malaysia
——Nutron Flow Control Sdn. Bhd.		100	%				Malaysia
—–Cameron Offshore Engineering Limited		100	%				United Kingdom
—–Cooper Cameron Pensions Limited		100	%				United Kingdom
—–Cameron Integrated Services Limited		100	%				United Kingdom
——Sherkate Mohandesi Hafar Chah Jonoob		50	%				Iran
—Cooper Cameron Holding B.V.		100	%				Netherlands
—–Cooper Energy Services B.V.		100	%				Netherlands
—–Cameron B.V.		100	%				Netherlands
—–Cooper Cameron Holding (Norway) AS		100	%				Norway
——Cameron Norge AS		100	%				Norway
- Cooper Cameron (Singapore) Pte. Ltd.		100	%				Singapore
- Riyan Cameron (B) Sendirian Berhad		100	%				Brunei
Cooper Cameron (Holding) Corp.					100	%	Nevada USA
- Cooper — Texgas Ltd. (1 share owned by Compression Services Co)		50	%				Colombia
Cooper Cameron International Holding Corp.					100	%	Nevada USA
Cooper Cameron Corporation Nigeria Limited					60	%	Nigeria
Cooper Cameron S.R.L.					100	%	Italy
Cooper Energy Services de Venezuela, S.A.					100	%	Venezuela
Cooper Energy Services International, Inc.					100	%	Ohio USA
-Canada Tiefbohrgeräte und Maschinenfabrik GmbH		100	%				Austria
Cooper Cameron de Mexico S.A. de C.V. (1 share owned by CCPEG)					100	%	Mexico
Cooper Cameron Petroleum Equipment Group, Inc. (CCPEG)					100	%	Delaware USA
Cooper Turbocompressor, Inc.					100	%	Delaware USA
Lyulka-Cooper (Russian Federation Joint Venture)		50	%		50	%	Russia
Orbit Valve International, Inc.					100	%	Arkansas USA
-Orbit Valve Company		100	%				Arkansas USA
Wellhead Services, Inc.					100	%	Nevada USA
-Cooper Cameron (Malaysia) Sdn Bhd		49	%				Malaysia

1

EX-23.1

Exhibit 23.1

Consent of Independent Auditors

We consent to the incorporation by reference in the following Registration Statements on Forms S-8 or Forms S-3 and S-3/A of Cooper Cameron Corporation of our reports dated January 27, 2004, with respect to the consolidated financial statements and schedule of Cooper Cameron Corporation, incorporated by reference and included in this Annual Report (Form 10-K) for the year ended December 31, 2003, respectively.

Registration
Statement No.	Purpose
No. 333-26923	Form S-8 Registration Statements pertaining to the Amended and Restated
No. 33-95004	Cooper Cameron Corporation Long-Term Incentive Plan
No. 333-53545
No. 333-37850
No. 333-10624
No. 33-94948	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Employee Stock Purchase Plan
No. 33-95002	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Retirement Savings Plan
No. 333-57991	Form S-8 Registration Statement pertaining to the Individual Account Retirement Plan for Bargaining Unit Employees at the Cooper Cameron Corporation Buffalo, New York Plant
No. 333-51705	Form S-3 Registration Statement pertaining to the Cooper Cameron Corporation shelf registration of debt securities
No. 333-77641	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Savings-Investment Plan for Hourly Employees
No. 333-79787	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Second Amended and Restated 1995 Stock Option Plan for Non-Employee Directors
No. 333-46638	Form S-8 Registration Statements pertaining to the Cooper
No. 333-82082	Cameron Corporation Broad Based 2000 Incentive Plan
No. 333-61820
No. 333-104755
No. 333-96565	Form S-3 and S-3/A Registration Statements pertaining to the Cooper Cameron Corporation shelf registration of up to $500 million of securities
No. 333-106225	Form S-8 Registration Statement pertaining to the Cooper Cameron Corporation Compensation Deferral Plan, Cooper Cameron Corporation Supplemental Excess Defined Contribution Plan and 2003 Cooper Cameron Corporation Supplemental Excess Defined Contribution Plan

/s/ Ernst & Young LLP

ERNST & YOUNG LLP

Houston, Texas
March 4, 2004

EX-31.1

EXHIBIT 31.1

Cooper Cameron Corporation and Subsidiaries
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Sheldon R. Erikson, Chairman and Chief Executive Officer of Cooper Cameron Corporation, certify that:

1. I have reviewed this annual report on Form 10-K of Cooper Cameron Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 5, 2004

/s/ SHELDON R. ERIKSON

Sheldon R. Erikson

Chairman & Chief Executive Officer

EX-31.2

EXHIBIT 31.2

Cooper Cameron Corporation and Subsidiaries
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Franklin Myers, Senior Vice President of Finance and Chief Financial Officer of Cooper Cameron Corporation, certify that:

1. I have reviewed this annual report on Form 10-K of Cooper Cameron Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 5, 2004

/s/ FRANKLIN MYERS

Franklin Myers

Senior Vice President of Finance and

Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification of CEO and CFO Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

     In connection with the Annual Report on Form 10-K for the year ended December 31, 2003 of Cooper Cameron Corporation (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s knowledge:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 5, 2004

/s/ Sheldon R. Erikson
Name:	Sheldon R. Erikson
Title:	Chairman, President & Chief     Executive Officer
/s/ Franklin Myers
Name:	Franklin Myers
Title:	Senior Vice President of Finance & Chief   Financial Officer