Prepared by R.R. Donnelley Financial -- Amendment No. 2 to Form S-1

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NNzSws87s/w+9cdDmNZd7bvFLiCI+e0Q/Z5S3np/jsK9Kc436eljdWeKC2ew4j41 gi3jeTJCmD3R/xxNYdlbtg== 0001021408-02-009696.txt : 20020723 0001021408-02-009696.hdr.sgml : 20020723 20020723090317 ACCESSION NUMBER: 0001021408-02-009696 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 17 FILED AS OF DATE: 20020723 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NPTEST INC CENTRAL INDEX KEY: 0001173451 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 810550988 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-88710 FILM NUMBER: 02708141 BUSINESS ADDRESS: STREET 1: 150 BAYTECH DRIVE CITY: SAN JOSE STATE: CA ZIP: 95134 BUSINESS PHONE: 4085868200 FORMER COMPANY: FORMER CONFORMED NAME: SCHLUMBERGER TEST SOLUTIONS INC DATE OF NAME CHANGE: 20020514 S-1/A 1 ds1a.htm AMENDMENT NO. 2 TO FORM S-1 Prepared by R.R. Donnelley Financial -- Amendment No. 2 to Form S-1

As filed with the Securities and Exchange Commission on July 23, 2002

Registration No. 333-88710

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

AMENDMENT NO. 2

FORM S-1

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

NPTEST, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware		3825		81-0550988
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification No.)		(I.R.S. Employer Identification No.)

150 Baytech Drive

San Jose, CA 95134

(Address, Including Zip Code, of Registrant’s Principal Executive Offices)

Roland Ewubare

General Counsel

NPTEST, INC.

150 Baytech Drive

San Jose, CA 95134

(408) 586-8200

(Name, Address and Telephone Number, Including Area Code, of Agent For Service)

Copies to:

Gregory C. Smith, Esq.		William Hinman, Jr., Esq.
Keith L. Belknap, Jr., Esq.		SIMPSON THACHER & BARTLETT
Hina Ahmad, Esq.		3330 Hillview Avenue
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP		Palo Alto, CA 94304
525 University Avenue		(650) 251-5000
Palo Alto, CA 94301
(650) 470-4500

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933, check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ¨

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file an amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

We will amend and complete the information in this prospectus. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities, in any state where the offer or sale is not permitted or legal.

Subject to Completion, Dated July 23, 2002

Shares

NPTest

[logo]

Common Stock

$ per share

We are selling newly issued shares of common stock to the public and the selling stockholders are selling shares of common stock. We will not receive any of the proceeds from the shares sold by the selling stockholders. We anticipate that the initial public offering price will be between $ and $ per share. Immediately after the offering, Schlumberger Limited will beneficially own approximately % of our outstanding shares of common stock, assuming no exercise of the underwriters’ over-allotment option. The selling stockholders have granted the underwriters an option to purchase up to additional shares of common stock to cover over-allotments.

No public market currently exists for our shares of common stock. We have applied to list our common stock on the New York Stock Exchange under the symbol “NP”.

Investing in our common stock involves risks. See “ Risk Factors” on page 6.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Share	Total
Public offering price	$	$
Underwriting discount	$	$
Proceeds to us before expenses	$	$
Proceeds to the selling stockholders before expenses	$	$

The underwriters expect to deliver the shares of common stock to purchasers on or about , 2002.

Goldman, Sachs & Co.		Salomon Smith Barney
Lehman Brothers		Morgan Stanley

Prospectus dated , 2002.

[Inside Cover Page]

[A picture of each of an NPTest Test and Probe System is depicted, together with the following text:

Probe Systems:		The IDS OptiFIB performs microscopic fixes within semiconductor chips to accelerate development and improve performance.

Test Systems:		The DeFT structural test platform enables semiconductor manufacturers to customize and simplify their design for test strategy, effectively reducing the cost of test.]

TABLE OF CONTENTS

Prospectus Summary		1
Risk Factors		6
Special Note Regarding Forward-Looking Statements		16
Use of Proceeds		17
Dividend Policy		17
Capitalization		18
Dilution		19
Selected Combined Financial Data		20
Pro Forma Condensed Financial Statements		21
Management’s Discussion and Analysis of Financial Condition and Results of Operations		22

Business		37
Management		47
Certain Relationships and Related Transactions		56
Principal and Selling Stockholders		70
Description of Capital Stock		71
Underwriting		73
Shares Eligible for Future Sale		76
Legal Matters		77
Experts		77
Where You Can Find More Information		77
Index to Combined Financial Statements		F-1

Until , 2002, all dealers that buy, sell or trade in our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PROSPECTUS SUMMARY

You should read the following summary together with the more detailed information regarding our company and the securities being sold in this offering and the financial statements and the related notes and the pro forma financial data appearing elsewhere in this prospectus. Unless the context otherwise indicates or requires, the term Schlumberger refers to Schlumberger Limited and its consolidated subsidiaries.

NPTest

We provide advanced test and diagnostic systems and related product engineering services to the semiconductor industry. Our customers include semiconductor manufacturers, foundries and assembly contractors worldwide. Our products are designed to enable our customers to accelerate prototype development and time to full-scale production, as well as to enhance the quality of product shipments. Test Systems, our largest product line, provides wafer level and final test equipment used in the design and manufacture of complex semiconductor integrated circuits. Our Probe Systems product line provides diagnostic equipment to identify and repair design flaws during prototype development, product characterization, initial production ramp and failure analysis. Our services include maintenance for our test and diagnostic systems and SABER, which provides design validation and product and test engineering services for integrated circuit vendors. As of March 31, 2002, we employed approximately 930 people worldwide.

The semiconductor industry is expected to experience growth in demand for semiconductors for use in personal computers, networking equipment, digital consumer electronics, wireless communication products and other applications. According to the Semiconductor Industry Association, an industry trade association, worldwide sales of semiconductor devices are expected to increase from approximately $139.0 billion in 2001 to approximately $213.4 billion in 2004, or a compound annual growth rate of approximately 15%. In addition, according to VLSI Research, worldwide sales of automated test systems are expected to increase from approximately $2.6 billion in 2001 to approximately $4.8 billion in 2004, or a compound annual growth rate of approximately 22%. Our products and services address the automated test systems market, as well as other portions of the overall semiconductor devices market. Competition in the semiconductor industry has created pressure to reduce both the time-to-market of new integrated circuits and the cost of test. In addition, reduced circuit dimensions and greater functionality have led to an increase in the complexity of integrated circuit design. These industry dynamics have created challenges for integrated circuit manufacturers in implementing test and diagnostic applications.

Our Solution

Our products and services address the test and diagnostic challenges faced by integrated circuit manufacturers by:

•

Reducing customers’ time-to-market. Using our products, design flaws in integrated circuit prototypes can often be identified and repaired in the laboratory in a matter of hours.

•

Enabling faster and more complex integrated circuits. Our test and diagnostic equipment is designed to process currently existing integrated circuit devices, as well as anticipated next generation products. Utilizing our test and diagnostic systems and product engineering expertise, manufacturers can validate, test and debug integrated circuits at maximum operating performance levels.

•

Reducing customers’ manufacturing costs. Our products and services are designed to reduce integrated circuit engineering and manufacturing costs by improving yields and reducing the cost of test.

•

Bridging the engineering services gap. We deliver design validation and product and test engineering services primarily to integrated circuit vendors.

Our Business Strategy

Our objective is to become the leader in providing test and diagnostic systems and product engineering services to the integrated circuit industry. Key elements of our strategy include the following:

•

Targeting customers in high-growth markets. We focus on semiconductor customers that operate in rapidly growing markets such as computer processors, peripherals, graphics accelerator chips, Internet backbone, edge and access systems, digital entertainment products and wireless and wireline infrastructure.

•

Maintaining and extending strong relationships with strategic customers. We intend to maintain and expand our customer relationships by focusing on the needs of our customers and providing them with a wide range of value-added products and services.

•

Leveraging our technology. We intend to invest in software and hardware technology to enable our customers to overcome their testing and diagnostic technology challenges as they implement next generation products.

•

Facilitating the market transition to structural test. We believe our products and services can facilitate the industry’s transition to structural test.

•

Enhancing our price performance. We are actively pursuing new technologies and high levels of system integration to make advanced performance available to a broader set of applications and customers on a cost-effective basis.

•

Integrating design and validation and characterization stages. We seek to expand the use of our set of tools that allows integrated circuit manufacturers to integrate the design and validation and characterization stages of the manufacturing process.

Our Risks

Our business depends upon capital expenditures of manufacturers of semiconductors and other electronics, which in turn depend on the current and anticipated market demand for these products. These industries have been highly cyclical, with recurring periods of over-supply. In the most recent downward cycle, our net product revenue decreased from approximately $216.4 million in 2000 to approximately $149.5 million in 2001. In addition, our revenue is concentrated, with one customer comprising 37% of our net revenue in 2001, and another customer comprising 18% of our net revenue in the same period. A loss of or a decrease in purchases from a key customer would harm our operating results. We also are subject to risks of rapid technology changes, competition, international developments and intellectual property concerns. We expect our operating results to fluctuate in future periods for these and other reasons.

Our Relationship with Schlumberger

Our history dates back to 1965 when Fairchild Semiconductor established an automated test equipment division. Schlumberger acquired Fairchild Semiconductor in 1979. Schlumberger is a global technology services company primarily organized around two business segments, Schlumberger Oilfield Services and SchlumbergerSema. Schlumberger employs a total of approximately 81,000 people in nearly 100 countries with revenues in 2001 of approximately $13.7 billion. Under Schlumberger, the automated test equipment division of Fairchild evolved significantly over time into the Schlumberger Semiconductor Solutions Group.

After completion of this offering, Schlumberger will beneficially own approximately % of our outstanding common stock, assuming no exercise of the underwriters’ over-allotment option. Schlumberger has advised us that it intends to divest its remaining ownership in our company through private or public sales of our shares. Schlumberger will, in its sole discretion, determine the timing and terms of any sales, taking into account business and market conditions.

We have entered into various agreements with Schlumberger subsidiaries related to certain interim and ongoing relationships. These agreements are described more fully in the section entitled “Certain Relationships and Related Transaction” included elsewhere in this prospectus.

We were incorporated in May 2002 in Delaware. Our principal executive offices are located at 150 Baytech Drive, San Jose, CA 95134, and our telephone number is (408) 586-8200. Our web site will be www.nptest.com. The information on our web site does not constitute part of this document.

The Offering


Common stock to be sold by NPTest		shares

Common stock to be sold by the selling stockholders		shares

Common stock to be outstanding after the offering		shares

Use of proceeds		We estimate that our net proceeds from this offering will be approximately $ million. We will not receive any of the proceeds from the sale of the shares offered by the selling stockholders. We expect to use the net proceeds from the sale of the shares by us in this offering for general corporate purposes, including investments in sales and marketing, general and administration activities and product development. In addition, we may use a portion of the net proceeds to acquire complementary products, technologies or businesses. See “Use of Proceeds.”

New York Stock Exchange symbol		“NP”

Dividend policy		We intend to retain all future earnings to fund development and growth of our business. We do not anticipate paying cash dividends on our common stock in the foreseeable future.

The common stock to be outstanding after the offering is based on the number of shares outstanding as of June 30, 2002, all of which are or will be owned by wholly-owned indirect subsidiaries of Schlumberger Limited, and excludes:

•

shares of common stock reserved for issuance upon exercise of options to be issued as of the date of this prospectus, to our employees, officers and some of our directors at an exercise price per share equal to the initial public offering price; and

•

shares of common stock reserved for future issuance under our stock option plan.

Except as otherwise indicated, all information contained in this prospectus assumes:

•

the filing of our amended and restated certificate of incorporation;

•

consummation of the transfer of assets and assumption of liabilities relating to the Semiconductor Solutions Group business from Schlumberger to us and the execution of the related intercompany agreements; and

•

no exercise of the underwriters’ over-allotment option.

SUMMARY HISTORICAL AND PRO FORMA COMBINED FINANCIAL DATA

The following table presents summary historical and pro forma financial data for NPTest. The data presented in the table are derived from and should be read in conjunction with the “Pro Forma Condensed Financial Statements” and the historical combined financial statements and the related notes that are included elsewhere in this prospectus as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

The pro forma per share data assume that all of the currently outstanding shares of common stock were issued and outstanding during the year ended December 31, 2001 and during the three months ended March 31, 2002. The pro forma balance sheet data assume that the separation from Schlumberger was completed as of the balance sheet date. The pro forma as adjusted balance sheet data further reflect our receipt of the estimated net proceeds from the sale of the shares of common stock by us in the offering, based on an assumed initial public offering price of $ per share after deducting underwriting discounts payable by us.

The following financial information may not be indicative of our future performance and does not reflect what our financial position and results of operations would have been if we had operated as a separate, stand-alone entity during the periods presented.

	Year Ended December 31,								Three Months Ended March 31,
	1999		2000			2001			2001			2002
	(in thousands)
Statement of Operations Data
Net revenue:
Product	$	228,806	$	216,445		$	149,543		$	50,052		$	51,662
Services		43,232		69,889			71,389			19,385			15,978

Total net revenue		272,038		286,334			220,932			69,437			67,640
Cost of net revenue:
Product		140,622		140,255			130,627			31,364			28,039
Services		31,796		44,127			49,549			12,845			10,602

Total cost of net revenue		172,418		184,382			180,176			44,209			38,641
Operating expenses:
Research and development		36,281		32,718			34,748			10,029			7,821
Selling, general and administrative		55,625		66,571			51,971			15,407			13,060

Total operating expenses		91,906		99,289			86,719			25,436			20,881

Operating income (loss)		7,714		2,663			(45,963	)		(208	)		8,118
Other income (expense), net		957		(34	)		(139	)		52			(122	)

Income (loss) before income taxes		8,671		2,629			(46,102	)		(156	)		7,996
Income tax benefit (expense)		422		3,328			22,366			1,965			(1,553	)

Net income (loss)	$	9,093	$	5,957		$	(23,736	)	$	1,809		$	6,443

Unaudited pro forma basic and diluted net income (loss) per share
Shares used in computing unaudited pro forma basic and diluted net income (loss) per share

	March 31, 2002
	Actual		Pro Forma		Pro Forma as Adjusted
	(in thousands)
Balance Sheet Data
Cash and cash equivalents	$	10,305	$	1,569	$
Working capital		178,441		182,497
Total assets		278,728		255,405
Stockholders’ net investment		189,249		211,906

RISK FACTORS

Risks Related to Our Business

Our operating results are harmed by downward cycles in the semiconductor industry into which we sell our products, and by general economic slowdowns.

Our business and operating results depend in significant part upon capital expenditures of manufacturers of semiconductors and other electronics, which in turn depend upon the current and anticipated market demand for these products. Historically, the electronic and semiconductor industries have been highly cyclical with recurring periods of over-supply, which often have had a severe negative effect on demand for test equipment, including systems manufactured and marketed by us. During these periods, we experienced significant reductions in customer orders. In the most recent downward cycle, our net product revenue decreased from approximately $216.4 million in 2000 to approximately $149.5 million in 2001. This industry slowdown had, and future slowdowns may have, a material adverse effect on our backlog and operating results.

In addition, general economic slowdowns that adversely affect the semiconductor or electronics industry also adversely affect our business and operating results. Market demand for semiconductor equipment has been impacted by the economic slowdown that began in the latter portion of 2000 and by the terrorist attacks of September 11, 2001. The uncertainty regarding the growth rate of the worldwide economies has caused companies to reduce capital investment and may cause further reduction of such investments. These reductions have been particularly severe in the semiconductor industry, which we serve. If the worldwide economies rebound in the near future, we do not know if our business will experience similar effects. If the worldwide economies do not rebound in the near future, we expect that the growth we have recently experienced may not be sustainable and that our business may be harmed.

Our quarterly operating results fluctuate significantly from period to period and this may cause our stock price to decline.

In the past we have experienced, and in the future we expect to continue to experience, fluctuations in revenue and operating results from quarter to quarter for a variety of reasons, including:

•

demand for and market acceptance of our products as a result of the cyclical nature of the semiconductor equipment industry or otherwise;

•

changes in the timing and terms of product orders by our primary customers as a result of our customer concentration;

•

competitive pressures resulting in lower selling prices arising from the current economic downturn in our industry or otherwise;

•

adverse changes in the semiconductor and electronics industries, on which we are particularly dependent;

•

delays or problems in the introduction of new products arising from the technical nature of our products, our customers’ requirements, or trends in the semiconductor equipment industry, among other things;

•

our competitors’ announcements of new products, services or technological innovations, which can, among other things, render our products less competitive due to the rapid technological change in our industry; and

•

write-offs for obsolete inventory arising from fluctuations in the market for our products due to the cyclicality of the semiconductor industry.

Each of the risks indicated in the foregoing list applies to us without regard to geographic or other boundaries as a result of the global nature of the semiconductor industry. As a result of these risks, we believe that quarter-to-quarter comparisons of our revenue and operating results may not be meaningful, and that these comparisons may not be an accurate indicator of our future performance. Given the nature of the markets in

which we participate, we cannot reliably predict future revenue or profitability. A high proportion of our costs are fixed, due in part to our significant sales, research and development and manufacturing costs. Also, sales of a relatively limited number of our systems account for a substantial portion of our net revenue in any particular quarter. Thus, changes in the timing or terms of a small number of transactions could disproportionately affect our operating results in any particular quarter. In this regard, we expect that our revenue and profits may sequentially decrease in the fourth quarter of 2002 due to the purchasing patterns of our key customers. Moreover, our operating results in one or more future quarters may fail to meet the expectations of securities analysts or investors. If this occurs, we would expect to experience an immediate and significant decline in the trading price of our stock.

Variations in the amount of time it takes for us to sell our systems may cause fluctuations in our operating results.

Variations in the length of our sales cycles could cause our net sales, and therefore our business, financial condition, operating results and cash flows, to fluctuate widely from period to period. These variations often are based upon factors partially or completely outside our control. The factors that affect the length of time it takes us to complete a sale depend upon many elements including:

•

the efforts of our sales force;

•

the history of previous sales to a customer;

•

the complexity of the customer’s fabrication processes;

•

the internal technical capabilities and sophistication of the customer; and

•

the capital expenditures of our customers.

As a result of these and a number of other factors influencing our sales cycles with particular customers, the period between our initial contact with a potential customer and the time when we recognize revenue from that customer, if ever, varies widely. Our sales cycle typically can range from nine to 18 months. Sometimes our sales cycle can be much longer, particularly when the sales cycle involves developing new applications for our systems and technology. During these cycles, we commit substantial resources to our sales efforts before receiving any revenue, and we may never receive any revenue from a customer despite these sales efforts.

We rely on a small number of customers for a significant portion of our revenues and the termination of any of these relationships would adversely affect our business.

One of our customers accounted for 45% in 1999, 30% in 2000 and 37% in 2001 of our net revenue, and another customer accounted for 17% in 1999, 30% in 2000 and 18% in 2001 of our net revenue. Our customers are generally not obligated by long-term contracts to purchase our systems. The semiconductor industry is highly concentrated, and a small number of semiconductor device manufacturers and contract assemblers account for a substantial portion of the purchases of semiconductor test equipment generally, including our diagnostic and test equipment. Consequently, our business and operating results would be materially adversely affected by the loss of, or any reduction in orders by, any of our significant customers.

In addition, our ability to increase our sales will depend in part upon our ability to obtain orders from new customers. Obtaining orders from new customers is difficult because semiconductor manufacturers typically select one vendor’s systems for testing a particular new generation device and make substantial investments to develop related test program software and interfaces. Once a manufacturer has selected a test system vendor for a generation of devices, that manufacturer is more likely to continue to purchase test systems from that vendor for that generation of devices, as well as subsequent generations of devices. We therefore place great emphasis on relationships with our current customers because these customers are difficult to replace. If we are unable to maintain our relationships with our existing significant customers, or obtain new customers that adopt and implement our products and technology, our business will be harmed.

If we do not continue to introduce new products and services that reflect advances in semiconductor technology in a timely manner, our products and services will become obsolete, and our operating results will suffer.

The semiconductor design and manufacturing industry into which we sell our products is characterized by rapid technological changes, frequent new product and service introductions and evolving industry standards. The success of our new product and service offerings will depend on several factors, including our ability to:

•

properly identify customer needs and anticipate technological advances and industry trends;

•

innovate, develop and commercialize new technologies and applications in a timely manner;

•

adjust to changing market conditions;

•

manufacture and deliver our products in sufficient volumes on time;

•

price our products competitively and maintain effective marketing strategies; and

•

differentiate our offerings from our competitors’ offerings.

Many of our products are used by our customers to develop, test and manufacture their new products. We therefore must anticipate industry trends and develop products in advance of the commercialization of our customers’ products. Development of new products generally requires a substantial investment before we can determine the commercial viability of these innovations. For example, currently only one of our customers has implemented our structural test system, which was introduced in 2001. The future success of our new technologies and products, including structural test technology, depends on broad acceptance among our customers. If we fail to adequately predict our customers’ needs and technological advances, we may invest heavily in research and development of products and services that do not lead to significant revenue, or we may fail to invest in technology necessary to meet changing customer demands. Without the timely introduction of new products, services and enhancements that reflect these changes, our products and services will likely become technologically obsolete and our revenue and operating results would suffer.

We face aggressive competition in all areas of our business, and if we do not compete effectively, our business will be harmed.

We face substantial competition throughout the world in each of our product areas. Our competitors in the automated test systems market primarily include Advantest, Agilent Technologies, Credence Systems, LTX Corporation and Teradyne. Our Probe Systems product line faces competition primarily from Advantest, FEI Company, Optonics and Seiko Instruments. Veeco Instruments recently announced an agreement to acquire FEI Company. Some of these competitors have substantially greater financial resources and more extensive engineering, manufacturing, marketing and customer support capabilities. We expect our competitors to continue to improve the performance of their current products and to introduce new products, new technologies or services that could adversely affect sales of our current and future products or services. In addition, we anticipate that increased competitive pressures will cause intensified price-based competition and we may have to adjust the prices of many of our products. For example, to the extent our competitors move to structural test technology, we would expect more price-based competition that would likely result in lower margins. We may not be able to compete effectively with these competitors.

Economic, political and other risks associated with international sales and operations, particularly in Asia, could adversely affect our sales.

Since we sell our products worldwide, our business is subject to risks associated with doing business internationally. Our revenue originating outside the United States, including export sales from our United States manufacturing facilities to foreign customers and sales by our foreign subsidiaries and branches, as a percentage of our total net revenue, was 48.2% in 1999, 64.9% in 2000 and 61.1% in 2001. In particular, the economies of Asia have been highly volatile and recessionary in recent years, resulting in significant fluctuations in local

currencies and other instabilities. These instabilities continue and may occur again in the future, which could hurt our sales to the region and thus hurt our business and operating results. Our exposure to the business risks presented by the economies of Asia will increase to the extent that we continue to expand our operations in that region.

Accordingly, our future results could be harmed by a variety of factors, including:

•

changes in foreign currency exchange rates, particularly those affecting various European and Asian currencies;

•

changes in a specific country’s or region’s political or economic conditions, particularly in various Asian and other emerging markets;

•

trade protection measures and import or export licensing requirements, particularly those affecting imports to Europe and Asia and various other regions;

•

potentially negative consequences from changes in tax laws of the United States and various European and Asian countries, among others;

•

difficulty in staffing and managing widespread operations;

•

differing labor regulations among the United States and various countries in Europe and Asia in which our employees are located; and

•

differing protection of intellectual property.

The technology labor market is very competitive, and our business will suffer if we are not able to hire and retain sufficient personnel.

Our future success depends in part on the continued service of our key research, engineering, sales, marketing, manufacturing, executive and administrative personnel, none of whom are subject to an employment or non-competition agreement. A number of our employees have been employees of Schlumberger for extended periods of time, and our agreements with Schlumberger do not restrict their ability to rehire any of our employees. As a result, these employees may elect not to remain with us following our separation from Schlumberger or thereafter. In addition, competition for qualified personnel in the technology area is intense, and we operate in several geographic locations where labor markets are particularly competitive, including the Silicon Valley region of Northern California where our headquarters and central research and development laboratories are located. The loss of any of our key employees, or a broader loss of any of our employees who are highly-skilled in our specialized sector of semiconductor technology, would harm our business.

Our success also depends on our ability to expand, integrate and retain our management team after our separation from Schlumberger. If we fail to retain and hire a sufficient number of these personnel, we will not be able to maintain and expand our business.

Our dependence on subcontractors and sole source suppliers may prevent us from delivering an acceptable product on a timely basis.

We rely on subcontractors to manufacture certain components and subassemblies for our products, and we rely on sole source suppliers for some components in each of our products. Our reliance on subcontractors gives us less control over the manufacturing process and exposes us to significant risks, especially inadequate capacity, late delivery, substandard quality and high costs. Additionally, certain of our subcontractors and sole source suppliers are under no obligation to provide us with these components for any specified period of time. As a result, the loss or failure to perform by any of these providers could adversely affect our business and operating results.

In addition, the manufacture of certain of these components and subassemblies is an extremely complex process. If a supplier became unable to provide parts in the volumes needed or at an acceptable price, we would

have to identify and qualify acceptable replacements from alternative sources of supply, or manufacture such components internally. The process of qualifying subcontractors and suppliers is a lengthy process. Some of the components and subassemblies for our products are obtained from either a sole source or limited group of suppliers. We purchase our custom components through individual purchase orders.

Third parties may claim we are infringing their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling products or services.

Third parties may claim that we are infringing their intellectual property rights, and although we do not believe that any of our products or services infringe the valid intellectual property rights of third parties, we may be unaware of intellectual property rights of others that may cover some of our technology, products and services. Any litigation regarding patents or other intellectual property could be costly and time-consuming, and divert our management and key personnel from our business operations. The complexity of the technology involved and the uncertainty of intellectual property litigation increase these risks. Claims of intellectual property infringement might also require us to enter into costly royalty or license agreements. However, we may not be able to obtain royalty or license agreements on terms acceptable to us, or at all. We also may be subject to significant damages or injunctions against development and sale of certain of our products and services.

We often rely on licenses of intellectual property useful for our business. We cannot assure you that these licenses will be available in the future on favorable terms or at all. In addition, our position with respect to the negotiation of licenses may change as a result of our separation from Schlumberger. The loss of any of these licenses could harm our business and our operating results.

Third parties may infringe our intellectual property, and we may expend significant resources enforcing our rights or suffer competitive injury.

Our success depends in large part on our proprietary technology. We rely on a combination of patents, copyrights, trademarks, trade secrets, confidentiality provisions and licensing arrangements to establish and protect our proprietary rights. If we fail to successfully enforce our intellectual property rights, our competitive position could suffer, which could harm our operating results.

Our pending patent and trademark registration applications may not be allowed or competitors may challenge the validity or scope of these patent applications or trademark registrations. In addition, our patents may not provide us a significant competitive advantage.

We may be required to spend significant resources to monitor and police our intellectual property rights. We may not be able to detect infringement and may lose competitive position in the market before we do so. In addition, competitors may design around our technology or develop competing technologies. Intellectual property rights may also be unavailable or limited in some foreign countries, which could make it easier for competitors to capture market share in those countries.

In the event that environmental contamination were to occur as a result of our ongoing operations, we could be subject to substantial liabilities in the future.

Our semiconductor equipment manufacturing processes involve the use of substances regulated under various international, federal, state and local laws governing the environment. The failure or inability to comply with existing or future laws could result in significant remediation liabilities, the imposition of fines or the suspension or termination of production. While designated Schlumberger subsidiaries have agreed to indemnify us for environmental liabilities resulting from past operations under the terms of the separation agreements, we will be responsible for any liabilities resulting from our operations after the separation and also for future costs of compliance with these laws. Although our policy is to apply strict standards for environmental protection at our sites inside and outside the United States, even if not subject to regulations imposed by foreign governments, we may not be aware of all conditions that could subject us to liability.

If our facilities were to experience catastrophic loss due to earthquake, our operations would be seriously harmed.

Several of our facilities could be subject to a catastrophic loss caused by earthquake due to their location. We have significant facilities in areas with above average seismic activity, such as our production facilities and headquarters in California. If any of these facilities were to experience a catastrophic loss, it could disrupt our operations, delay production and shipments, reduce revenue and result in large expenses to repair or replace the facility. We do not carry catastrophic insurance policies which cover potential losses caused by earthquakes.

Risks Related to Our Separation from Schlumberger

We currently use Schlumberger’s operational and administrative infrastructure, and our ability to satisfy our customers and operate our business will suffer if we do not develop our own infrastructure quickly and cost-effectively.

We currently use Schlumberger’s information systems to support our operations, including human resources, accounting and payroll. Many of these systems are proprietary to Schlumberger and are complex. These systems have been modified, and are in the process of being further modified, to enable us to separately track items related to our business. These modifications, however, may result in unexpected system failures or the loss or corruption of data. Also, we are in the process of creating our own systems to replace Schlumberger’s systems. We may not be successful in implementing these systems and transitioning data from Schlumberger’s systems to ours.

Any failure or significant downtime in Schlumberger’s or our own information systems could prevent us from taking customer orders, shipping products or billing customers and could harm our business. In addition, Schlumberger’s and our information systems require the services of employees with extensive knowledge of these information systems and the business environment in which we operate. In order to successfully implement and operate our systems, we must be able to attract and retain a significant number of highly-skilled employees. If we fail to attract and retain the highly skilled personnel required to implement, maintain and operate our information systems, our business could suffer.

Our historical financial information may not be representative of our results as a separate company.

Our consolidated financial statements have been derived from the consolidated financial statements of Schlumberger. Accordingly, the historical financial information we have included in this prospectus does not necessarily reflect what our financial position, operating results and cash flows would have been had we been a separate, stand-alone entity during the periods presented. Schlumberger did not account for us, and we were not operated, as a separate, stand-alone entity for the periods presented.

Our stock price may decline if Schlumberger does not complete its sale of our common stock.

until Schlumberger elects to sell some of its significant ownership. Also, if Schlumberger does not sell its shares, we may face significant difficulty in hiring and retaining key personnel, many of whom may be attracted by the potential of operating our business as a fully independent entity. In addition, unless and until this divestment occurs, the risks discussed below relating to Schlumberger’s control of us will continue to be relevant to our stockholders.

We will be controlled by Schlumberger as long as it owns a majority of our common stock, and our other stockholders will be unable to affect the outcome of stockholder voting during such time.

After the completion of this offering, Schlumberger will own approximately % of our outstanding common stock, or approximately % if the underwriters exercise in full their option to purchase additional shares. As long as Schlumberger owns a majority of our outstanding common stock, Schlumberger will continue to be able to elect our entire board of directors. Investors in this offering will not be able to affect the outcome of any stockholder vote prior to the time that Schlumberger owns less than a majority of our outstanding common stock. As a result, Schlumberger will control all matters affecting us, including:

•

the composition of our board of directors and, through it, any determination with respect to our business direction and policies, including the appointment and removal of officers;

•

any determinations with respect to mergers or other business combinations;

•

our acquisition or disposition of assets;

•

our financing;

•

changes to the agreements providing for our separation from Schlumberger;

•

the payment of dividends on our common stock; and

•

determinations with respect to our tax returns.

Also, under the master separation agreement, until Schlumberger and its affiliates other than us own shares of our common stock constituting less than % of our outstanding voting power, we have agreed to limitations on our ability to amend our charter or bylaws or to take, or recommend that our stockholders take, specified other actions that are adverse to Schlumberger without its consent. Due to these limitations, if Schlumberger were to attempt to acquire all of our outstanding shares, our board of directors could be limited in its ability to negotiate for our stockholders the same premium for their shares as our board would be able to negotiate from another party that does not have the benefit of these limitations. Should, at any time in the future, Schlumberger acquire additional shares of our common stock such that it would own 90% or more of our outstanding common stock, Schlumberger would be able to require us to merge with it without a vote of our stockholders, subject to the requirements of Delaware law and other applicable laws, rules and regulations.

In addition, to the extent that Schlumberger continues to own a significant portion of our outstanding common stock, although less than a majority, it will continue to have a significant influence over all matters submitted to our stockholders and to exercise significant control over our business policies and affairs. Such concentration of voting power could have the effect of delaying, deterring or preventing a change of control or other business combination that might otherwise be beneficial to our stockholders. Under the master separation agreement between us and Schlumberger, for so long as Schlumberger and its affiliates other than us own shares representing more than 10%, and less than 50%, of our outstanding voting power, we have agreed to nominate at each annual meeting for election to our board a number of directors designated by Schlumberger that is equal to the percentage of our voting power owned by Schlumberger and to use our best efforts to cause these nominees to be elected to our board. Schlumberger also is not prohibited from selling a controlling interest in us to a third party or a participant in our industry. For additional information regarding the provisions of the master separation agreement, you should read the section of this prospectus entitled “Certain Relationships and Related Transactions.”

We will not be able to rely on Schlumberger to fund our future capital requirements, and financing from other sources may not be available on favorable terms or at all.

In the past, our capital needs have been satisfied by Schlumberger. However, following our separation, Schlumberger will no longer provide funds to finance our working capital or other cash requirements. Our future capital requirements will depend on many factors, including our rate of revenue growth, the timing and extent of spending to support product development efforts, the expansion of sales and marketing activities, the timing of introductions of new products and enhancement to existing products, the cost to ensure access to adequate manufacturing capacity, and the market acceptance of our products. To the extent that funds generated by this offering, together with any cash from operations, are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing. Future equity financings could be dilutive to the existing holders of our common stock. Future debt financings could involve restrictive covenants. We will likely not be able to obtain financing with interest rates as favorable as those that Schlumberger could obtain. If we cannot raise funds on acceptable terms, if and when needed, we may not be able to develop or enhance our products and services, take advantage of future opportunities, grow our business or respond to competitive pressures or unanticipated requirements, which could seriously harm our business.

If the transitional services being provided to us by Schlumberger are not sufficient to meet our needs, or if we are not able to replace these services after our agreements with Schlumberger expire, we will be unable to manage critical operational functions of our business.

Schlumberger has agreed to provide transitional services to us, including services related to information technology systems, human resources administration, treasury and legal, finance and accounting. Although Schlumberger is contractually obligated to provide us with these services until at least December 31, 2002, these services may not be provided at the same level as when we were part of Schlumberger, and we may not be able to obtain the same benefits. These transitional services will be provided by Schlumberger to us at cost until December 31, 2002. Thereafter, we may not be able to replace these transitional services on terms and conditions, including costs, as favorable as those we will receive from Schlumberger prior to December 31, 2002.

These agreements were made in the context of a parent-subsidiary relationship and were negotiated in the overall context of our separation from Schlumberger. The prices charged to us under these agreements may be lower than the prices that we may be required to pay unaffiliated parties for similar services or the costs of similar services if we undertake them ourselves.

We may have potential business conflicts of interest with Schlumberger with respect to our past and ongoing relationships that could harm our business relationships.

Conflicts of interest may arise between Schlumberger and us in a number of areas relating to our past and ongoing relationships, including:

•

labor, tax, employee benefit, indemnification and other matters arising from our separation from Schlumberger;

•

intellectual property matters;

•

employee retention and recruiting;

•

major business combinations involving us;

•

sales or distributions by Schlumberger of all or any portion of its ownership interest in us;

•

the nature, quality and pricing of transitional services Schlumberger has agreed to provide us; and

•

business opportunities that may be attractive to both Schlumberger and us.

Nothing restricts Schlumberger from competing with us, except that, prior to the second anniversary of the separation, Schlumberger may not license or transfer certain trademarks to third parties for use with products and services that compete with our products and services.

Following our separation, we expect to submit material related party transactions with Schlumberger to our independent directors for review and approval. However, we are not required to do so, and Schlumberger, through our Board or as a controlling stockholder, may direct otherwise, subject to their fiduciary obligations under applicable law. We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable than if we were dealing with an unaffiliated party. In addition, the agreements we have entered into with Schlumberger may be amended upon agreement between the parties. While we are controlled by Schlumberger, Schlumberger may be able to require us to agree to amendments to these agreements that may be less favorable to us than the current terms of the agreement.

Risks Related to the Securities Markets and Ownership of Our Common Stock

Substantial sales of common stock may occur in connection with the contemplated sale of Schlumberger’s shares, which could cause our stock price to decline.

Schlumberger has advised us that it intends to divest its remaining ownership in our company through private or public sales of our shares. Schlumberger will, in its sole discretion, determine the timing and terms of any sales, taking into account business and market conditions. We have agreed to register the sale of these shares, if requested by Schlumberger. We are unable to predict whether significant amounts of common stock will be sold in the open market in anticipation of, or following, any sale by Schlumberger. We are also unable to predict whether a sufficient number of buyers will be in the market at that time. Any sales of substantial amounts of common stock in the public market by Schlumberger, or the perception that such sales might occur, whether as a result of Schlumberger’s contemplated sale or otherwise, could harm the market price of our common stock.

Other future sales of our common stock could depress our stock price.

Sales of substantial amounts of common stock by stockholders other than Schlumberger, or the perception that these sales might occur, may depress prevailing market prices of our common stock. All of our outstanding shares, including the shares held by Schlumberger, are subject to lock-up agreements with our underwriters that prohibit the resale of these shares for 180 days from the date of this prospectus. Upon expiration of such 180-day period, in addition to the shares held by Schlumberger that may be sold by registration, shares underlying exercisable options to purchase our common stock will be available for resale without restriction or further registration under the Securities Act, unless such shares are held by an affiliate of Schlumberger.

Our underwriters may release all or a portion of the shares subject to lock-up agreements at any time without notice. See “Underwriting” and “Shares Eligible for Future Sales.”

Our securities have no prior trading history, and we cannot assure you that our stock price will not decline after the offering.

Before this offering, there has not been a public market for our common stock, and an active public market for our common stock may not develop or be sustained after this offering. The market price of our common stock could be subject to significant fluctuations after this offering. Among the factors that could affect our stock price are:

•

quarterly variations in our operating results;

•

changes in revenue or earnings estimates or publication of research reports by analysts;

•

speculation in the press or investment community;

•

strategic actions by us or our competitors, such as acquisitions or restructurings;

•

announcements relating to any of our key customers, significant suppliers or the semiconductor manufacturing industry generally;

•

actions by institutional stockholders or by Schlumberger prior to its contemplated sale of our stock;

•

general market conditions; and

•

domestic and international economic factors unrelated to our performance.

The stock markets in general, and the markets for high technology stocks in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. In particular, we cannot assure you that you will be able to resell your shares at or above the initial public offering price, which will be determined by negotiations between the representatives of the underwriters and us.

Provisions in our charter documents and Delaware law may delay or prevent acquisition of us, which could decrease the value of your shares.

Our Amended and Restated Certificate of Incorporation, Bylaws and Delaware law contain provisions that could make it harder for a third party to acquire us without the consent of our board of directors. These provisions include limitations on actions by written consent by our stockholders. In addition, our board of directors has the right to issue preferred stock without stockholder approval, which could be used to dilute the stock ownership of a potential hostile acquirer. Delaware law also imposes some restrictions on mergers and other business combinations between us and any “interested stockholders,” defined, generally, as any holder of 15% or more of our outstanding common stock at any time in the past three years. Schlumberger is not an interested stockholder under this statute. Although we believe these provisions provide for an opportunity to receive a higher bid by requiring potential acquirers to negotiate with our board of directors, these provisions apply even if the offer may be considered beneficial by some stockholders. We also have agreed to specified limitations regarding future actions by us that are adverse to Schlumberger, which could deter an acquisition of us. For additional information regarding the master separation agreement, you should read the section of this prospectus titled “Certain Relationships and Related Transactions.”

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements which reflect our current views with respect to future events and financial performance. You should not rely on forward-looking statements in this prospectus. We use words such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” “may,” “will,” “should,” “estimates,” “predicts,” “potential,” “continue” and similar expressions to identify these forward-looking statements. This prospectus also contains forward-looking statements attributed to third parties relating to their estimates regarding the growth of our markets. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results, as well as those of the markets we serve, levels of activity, performance, achievements and prospects to differ materially from the results predicted, and our reported results should not be considered as an indication of our future performance. These risks, uncertainties and other factors include, among others, those identified in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this prospectus.

USE OF PROCEEDS

We estimate that our net proceeds from this offering will be approximately $ million, based on an assumed initial public offering price of $ per share after deducting underwriting discounts payable by us. We will not receive any of the proceeds from the sale of shares offered by the selling stockholders. We expect to use the net proceeds from the sale of the shares by us in this offering for general corporate purposes, including investments in selling, general and administrative activities and product development. In addition, we may use a portion of the net proceeds to acquire complementary products, technologies or businesses.

The number of shares to be sold by us was determined based on our estimate of the funds reasonably necessary to capitalize NPTest, taking into consideration our expectation as to future revenue and the time and extent of expenditures to support product development efforts, as well as working capital needs. The number of shares to be sold by the Schlumberger selling stockholders was determined based on expectations as to market conditions and Schlumberger’s desire to divest the NPTest business. Schlumberger is divesting the NPTest business because it is not related to the primary business of Schlumberger and because of Schlumberger’s desire to raise cash proceeds to repay a portion of its subsidiaries’ debt. We will have significant discretion in the use of the net proceeds we receive from this offering. Investors will be relying on the judgment of our management regarding the application of the net proceeds we receive from this offering. Pending use of these proceeds as discussed above, we intend to invest these funds in short-term, interest-bearing investment-grade obligations.

DIVIDEND POLICY

We intend to retain any future earnings to fund the development and growth of our business. We do not anticipate paying any cash dividends in the foreseeable future.

CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2002. Our capitalization is presented:

•

on an actual basis;

•

on a pro forma basis giving effect to the pro forma adjustments arising from our separation from Schlumberger; and

•

on a pro forma as adjusted basis to reflect the pro forma effect of our separation from Schlumberger and our receipt of the estimated net proceeds from the sale of the shares of common stock by us in this offering, based on an assumed initial public offering price of $ per share after deducting underwriting discounts payable by us.

You should read the information set forth below together with the “Pro Forma Condensed Financial Statements,” our combined financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

	March 31, 2002
	Actual		Pro Forma		Pro Forma As Adjusted
	(in thousands, except share data)

Cash and cash equivalents	$	10,305	$	1,569	$

Stockholders’ equity:
Stockholders’ net investment		189,249		211,906
Preferred stock, par value $0.01 per share, shares authorized; no shares issued and outstanding		—		—
Common stock, par value $0.01 per share, shares authorized; shares issued and outstanding, actual and pro forma; and shares issued and outstanding, pro forma as adjusted
Additional paid-in capital		—		—
Total stockholders’ equity

Total capitalization	$	189,249	$	211,906	$

DILUTION

Our pro forma net tangible book value at March 31, 2002, was approximately $211.9 million, or $ per share. Pro forma net tangible book value per share is determined by dividing our pro forma stockholders’ net investment, which is total pro forma tangible assets less total liabilities, in each case as set forth in the “Pro Forma Condensed Financial Statements” appearing elsewhere in this prospectus, by the number of shares of common stock outstanding immediately before this offering. Dilution in pro forma net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of our common stock in this offering and the pro forma net tangible book value per share of our common stock immediately afterwards. After giving effect to our sale of shares of common stock in this offering, based on an assumed initial public offering price of $ per share, and after deducting underwriting discounts payable by us, our pro forma as adjusted net tangible book value at March 31, 2002, would have been approximately $ million, or $ per share. This represents an immediate increase in pro forma net tangible book value of $ per share to our existing stockholders and an immediate dilution in pro forma net tangible book value of $ per share to new investors purchasing shares of common stock in this offering.

The following table illustrates this dilution per share:

Assumed initial public offering price per share		$
Pro forma net tangible book value per share before this offering, as of March 31, 2002	$
Increase per share attributable to new investors

Pro forma as adjusted net tangible book value per share after this offering

Dilution in pro forma net tangible book value per share to new investors		$

The discussion and table above assume no exercise of options outstanding under our stock option plan and no issuance of shares reserved for future issuance under our stock option plan. Upon completion of this offering, there will be shares issuable upon exercise of outstanding stock options, with an exercise price per share equal to the initial public offering price. The exercise of these or other stock options granted under our stock option plan in the future could result in further dilution to new investors.

Assuming this offering had occurred on March 31, 2002, the following table summarizes the differences between the total consideration paid, or to be paid, and the average price per share paid, or to be paid, by our current stockholders and the investors in this offering with respect to the number of shares of common stock purchased from us:

Shares Purchased

Total Consideration

(in millions, except per share amounts)

Number

Percent

Amount

Percent

Average Price

Per Share

Current stockholders

Investors in this offering

Total

100

The table above does not take into account any shares underlying stock options to be granted to our employees, officers and directors. We intend to make initial stock option grants to substantially all of our employees and those non-employee directors who are also not employees of Schlumberger. These grants will be made when the initial public offering price is determined and will be granted at an exercise price per share equal to the initial public offering price.

SELECTED COMBINED FINANCIAL DATA

The following tables present our selected combined financial data. The information set forth below should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical combined financial statements and notes to those statements included in this prospectus. Our combined statements of operations data set forth below for the three years ended December 31, 2001, and the combined balance sheet data as of December 31, 2000 and 2001, are derived from, and are qualified by reference to, our audited combined financial statements included in this prospectus, which have been audited by PricewaterhouseCoopers LLP, independent accountants, whose report is also included in this prospectus. The combined statements of operations data for the two years ended December 31, 1998, and the combined balance sheet data as of December 31, 1997, 1998 and 1999 are derived from our unaudited combined financial data that are not included in this prospectus. The combined statements of operations data for the three months ended March 31, 2001 and 2002, and the combined balance sheet data as of March 31, 2001 and 2002, are derived from unaudited combined financial statements included in this prospectus and, in the opinion of management, include all adjustments, consisting only of normal recurring accruals, that are necessary for a fair presentation of our financial position and results of operations for these periods. The pro forma per share data assume that all of the currently outstanding shares of common stock were issued and outstanding during the year ended December 31, 2001 and during the three months ended March 31, 2002. The historical financial information may not be indicative of our future performance and does not reflect what our financial position and results of operations would have been had we operated as a separate, stand-alone entity during the periods presented.

	Year Ended December 31,														Three Months Ended March 31,
	1997			1998			1999		2000			2001			2001			2002
	(in thousands except per share data)
Statement of Operations Data
Net revenue:
Product	$	349,230		$	405,783		$	228,806	$	216,445		$	149,543		$	50,052		$	51,662
Services		33,060			34,776			43,232		69,889			71,389			19,385			15,978

Total net revenue		382,290			440,559			272,038		286,334			220,932			69,437			67,640
Cost of net revenue:
Product		174,726			244,693			140,622		140,255			130,627			31,364			28,039
Services		21,954			27,102			31,796		44,127			49,549			12,845			10,602

Total cost of net revenue		196,680			271,795			172,418		184,382			180,176			44,209			38,641
Operating expenses:
Research and development		41,624			45,665			36,281		32,718			34,748			10,029			7,821
Selling, general and administrative		54,232			60,056			55,625		66,571			51,971			15,407			13,060

Total operating expenses		95,856			105,721			91,906		99,289			86,719			25,436			20,881

Operating income (loss)		89,754			63,043			7,714		2,663			(45,963	)		(208	)		8,118
Other income (expense), net		(274	)		(606	)		957		(34	)		(139	)		52			(122	)

Income (loss) before income taxes		89,480			62,437			8,671		2,629			(46,102	)		(156	)		7,996
Income tax benefit (expense)		(31,758	)		(21,961	)		422		3,328			22,366			1,965			(1,553	)

Net income (loss)	$	57,722		$	40,476		$	9,093	$	5,957		$	(23,736	)	$	1,809		$	6,443

Unaudited pro forma basic and diluted net income (loss) per share
Shares used in computing unaudited pro forma basic and diluted net income (loss) per share


	December 31,										March 31,
	1997		1998		1999		2000		2001		2002
	(in thousands)
Balance Sheet Data
Cash and cash equivalents	$	4,123	$	5,642	$	13,599	$	16,387	$	10,184	$	10,305
Working capital		172,835		235,610		142,324		190,482		191,495		178,441
Total assets		288,874		322,271		252,574		366,444		295,504		278,728
Stockholders’ net investment		171,861		233,391		147,895		214,140		205,804		189,249

PRO FORMA CONDENSED FINANCIAL STATEMENTS

The following unaudited pro forma condensed financial data are derived from and should be read in conjunction with the historical combined financial statements and the related notes as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus. The pro forma balance sheet data assume that the separation from Schlumberger was completed as of the balance sheet date. The pro forma as adjusted balance sheet data further reflect our receipt of the estimated net proceeds from the sale of the shares of common stock by us in the offering, based on an assumed initial public offering price of $ per share after deducting underwriting discounts payable by us.

	March 31, 2002
	Actual		Adjustments for Separation			Pro Forma		Adjustments for the Offering	Pro Forma As Adjusted
	(in thousands)
Assets
Current assets:
Cash and cash equivalents	$	10,305	$	(8,736	)(A)	$	1,569	$	$
Accounts receivable, net of allowance for doubtful accounts of $1,338		44,781					44,781
Receivables from related parties		45		(45	)(B)		—
Inventory		133,341					133,341
Deferred income taxes		41,834					41,834
Prepaid expenses and other current assets		4,471					4,471

Total current assets		234,777		(8,781	)		225,996
Property, plant and equipment, net		28,679					28,679
Deferred income taxes		15,164		(14,542	)(C)		622
Other assets		108					108

Total assets	$	278,728	$	(23,323	)	$	255,405	$	$

Liabilities and stockholders’ net equity
Current liabilities:
Book overdrafts	$	223	$	(223	)(A)	$	—	$	$
Accounts payable		8,492					8,492
Accrued liabilities		34,807					34,807
Payables to related parties		9,765		(9,765	)(B)		—
Income taxes payable		3,049		(2,849	)(D)		200

Total current liabilities		56,336		(12,837	)		43,499
Pension and post-retirement benefits		33,143		(33,143	)(E)		—

Total liabilities		89,479		(45,980	)		43,499
Stockholders’ equity
Total stockholders’ equity
Preferred stock
Common stock
Additional paid-in capital
Stockholders’ net investment		189,249		22,657			211,906

Total liabilities and stockholders’ net equity	$	278,728	$	(23,323	)	$	255,405	$	$

(A)	Reflects cash and cash equivalents and book overdrafts that will be transferred to Schlumberger.

(B)	Reflects settlement of intercompany receivables and payables.

(C)	Reflects the deferred tax assets relating to pension and other post-retirement benefits liabilities that will be retained by Schlumberger.

(D)	Reflects income taxes payable that will be retained by Schlumberger.

(E)	Reflects pension and other post-retirement benefits liabilities that will be retained by Schlumberger.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto and the pro forma financial data included elsewhere in this prospectus. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from the results contemplated by these forward-looking statements due to certain factors, including those factors discussed below and elsewhere in this prospectus.

Overview

General

NPTest, which is being divested in part through this initial public offering, comprises the core business of the Semiconductor Solutions Group of Schlumberger. We have entered into agreements with various Schlumberger subsidiaries under which these subsidiaries will provide services to us during a transition period after this offering. The agreements primarily relate to building services, information and technology services, human resource administration services and accounting and finance services. Transitional services under these agreements will be provided by Schlumberger to us at cost until December 31, 2002. While Schlumberger has agreed to provide us services thereafter at mutually acceptable terms and prices to be negotiated, we expect to obtain these services from third parties or Schlumberger on a competitive basis. The terms of these agreements, which were negotiated in the context of a parent-subsidiary relationship, may be more or less favorable to us than if they had been negotiated with unaffiliated third parties. These agreements are described more fully in the section entitled “Certain Relationships and Related Transactions” included elsewhere in this prospectus.

As part of our separation from Schlumberger, we will negotiate new agreements with various third parties and obtain assignments and consents from other third parties for matters such as our real estate leases. The terms of these agreements may not be as favorable as those terms we previously obtained as part of Schlumberger. In addition, as part of Schlumberger we benefited from various economies of scale including shared global administrative functions, facilities and volume purchase discounts. For example, we will be required to obtain insurance as a public company, and expect that these costs will exceed the insurance costs previously obtained through Schlumberger. We expect that our costs and expenses may increase as a result of the loss of these economies of scale, although the amount of increase, if any, is not determinable at this time.

Basis of Presentation

Our combined financial statements have been derived from the consolidated financial statements of Schlumberger. Although NPTest was not a separate company, the accompanying combined financial statements are presented as if NPTest had existed as an entity separate from Schlumberger and its subsidiaries. The combined financial statements include the historical assets, liabilities, revenues and expenses that were directly related to the NPTest business of Schlumberger during the periods presented and have been derived from Schlumberger’s historical bases in the assets and liabilities and the historical results of operations of NPTest.

Upon completion of our separation from Schlumberger, pension and post retirement benefits liabilities along with certain cash balances, taxes payable and deferred tax assets shown in the combined balance sheets will be retained by Schlumberger. Stockholders’ net investment represents Schlumberger’s transfer of its net capital investment in NPTest, after giving effect to the net earnings of NPTest plus net cash transfers to Schlumberger and other transfers from Schlumberger. NPTest will begin accumulating retained earnings, if any, upon completion of our separation from Schlumberger.

Certain amounts of Schlumberger’s corporate expenses, including legal, accounting, employee benefits, real estate, insurance services, information technology services, treasury and other corporate and infrastructure costs, although not directly attributable to NPTest’s operations, have been allocated to NPTest on a basis that Schlumberger and NPTest considered to be a reasonable reflection of the utilization of services provided or the benefit received by NPTest. However, the financial information included in this prospectus may not reflect the combined financial position, operating results, changes in equity and cash flows of NPTest in the future or what they would have been had NPTest been a separate, stand-alone entity during the periods presented. For example, upon completion of the separation, we expect that the costs under our transitional services agreements with Schlumberger may be less than the same historical costs recognized within the Schlumberger group. However, some costs, such as director and officer insurance, are not covered by the transitional services agreements and are expected to increase after the separation. Pension and North American retiree medical benefits will no longer be provided by NPTest following consummation of this offering, thereby eliminating these expenses going forward. However, our employer contributions to our 401(k) plan are expected to increase, which may offset or exceed any anticipated savings that otherwise would be realized. While we currently expect that our operating expenses during the second half of 2002 following the separation may decrease relative to the same types of expenses prior to the separation, our future expectations are subject to unknown events and difficult to quantify with certainty.

The accompanying combined financial information for the three-month periods ended March 31, 2001 and 2002 is unaudited. The unaudited interim combined financial information has been prepared on the same basis as the accompanying annual combined financial statements. In the opinion of management, such interim combined financial information reflects adjustments consisting only of normal and recurring adjustments necessary for a fair presentation of such financial information. The unaudited results of operations for the interim periods ended March 31, 2001 and 2002 are not necessarily indicative of the results of operations to be expected for any other interim period or for the full year.

The financial information presented in this prospectus is not indicative of our financial position, results of operations or cash flows in the future nor is it necessarily indicative of what our financial position, results of operations or cash flows would have been had we been a separate, stand-alone entity for the periods presented. The financial information presented in this prospectus does not reflect significant changes that will occur in our funding and operations as a result of our becoming a stand-alone entity.

Reorganization and Restructuring

In the fourth quarter of 2000 and throughout 2001, we formulated and implemented reorganization, restructuring and reduction-in-force actions that significantly reduced our personnel costs. The restructuring separated NPTest’s activities from other Schlumberger technology businesses and eliminated shared positions. The reorganization efforts primarily combined the North American product and field marketing organizations. The rationale for the reorganization and restructuring was that our business activities would perform more efficiently outside the structure of the larger Schlumberger technology business. The reductions-in-force continued throughout 2001 due in part to the continued deterioration in market conditions. As a result, approximately 15% of our workforce positions were eliminated by a reduction-in-force, more than 5% were transferred to positions within Schlumberger and approximately 12% left us through normal attrition. Approximately 85% of the reductions-in-force occurred in the United States with an emphasis on positions in manufacturing. We recognized charges of approximately $1.8 million for severance payments related to these initiatives, of which approximately $1.4 million was recognized during the fourth quarter of 2000 and

approximately $200,000 was recognized in each of the first and third quarters of 2001. These charges are reflected in our cost of net product revenue. Savings realized from the reductions-in-force were approximately $12.0 million in compensation and benefits on an annual basis.

Schlumberger has advised us that it intends to make a special cash bonus payment of approximately $6.5 million to substantially all of our employees upon the consummation of this offering. While Schlumberger will pay or reimburse us for this payment, we expect to record a one-time compensation charge of approximately $6.5 million during the third quarter of 2002, since this expense is paid to the employees of NPTest. An aggregate of approximately $1.0 million of such amount will be paid to executive officers of NPTest. Separately, Schlumberger will also pay the cash cost of approximately $1.5 million that has been or is expected to be accrued as an operating expense of NPTest under Schlumberger’s management incentive program during the first half of 2002.

Cyclical Business

Our business and operating results depend in significant part upon capital expenditures of manufacturers of semiconductors and other electronics, which in turn depend upon the current and anticipated market demand for those products. Historically, the electronic and semiconductor industries have been highly cyclical with recurring periods of over-supply, which often have had a severe negative effect on demand for test equipment, including systems manufactured and marketed by us. During these periods, we experienced significant reductions in customer orders. In the most recent downward cycle, our net product revenue decreased from $216.4 million in 2000 to approximately $149.5 million in 2001. This industry slowdown had, and future slowdowns may have, a material adverse effect on our backlog and operating results.

Foreign Currencies

We sell our products and services in four main regions of the world and primarily in three major currencies. Sales in North America and Asia Pacific are primarily denominated in U.S. dollars. Sales in Europe are primarily denominated in the Euro, and sales in Japan are primarily denominated in the Japanese Yen. Sales by region translated into U.S. dollars, as more fully set forth in the notes to our combined financial statements, are indicated as follows:

	Year Ended December 31,						Three Months Ended March 31,
	1999		2000		2001		2001		2002
	(in thousands)
North America	$	141,642	$	100,608	$	86,796	$	12,974	$	38,099
Europe		58,712		96,300		51,731		21,221		3,626
Asia Pacific		57,917		77,143		61,915		34,600		17,229
Japan		13,767		12,283		20,490		642		8,686

Total	$	272,038	$	286,334	$	220,932	$	69,437	$	67,640

Our historical financial statements do not reflect any foreign currency hedging arrangements. Upon completion of this offering, we may seek to hedge our exposure to foreign currency rate fluctuations with forward contracts.

Concentration of Customers

One of our customers accounted for 45% in 1999, 30% in 2000 and 37% in 2001 of our net revenue, and another customer accounted for 17% in 1999, 30% in 2000 and 18% in 2001 of our net revenue. Our customers are generally not obligated by long-term contracts to purchase our systems. A small number of semiconductor device manufacturers and contract assemblers account for a substantial portion of the purchases of semiconductor test equipment generally, including our diagnostic and test equipment. Consequently, our business and operating results would be materially adversely affected by the loss of, or any reduction in orders by, any of our significant customers.

Recent Accounting Pronouncements

In June 2001, SFAS 141, “Business Combinations,” and SFAS 142, “Goodwill and Other Intangible Assets,” were issued. SFAS 141 is effective for all business combinations completed after June 30, 2001. We expect that the application of SFAS 141 will not have a material impact on our financial statements. As we have no goodwill and other intangible assets, the adoption of SFAS 142 has no effect on our financial position and results of operations.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS 143 requires that obligations associated with the retirement of a tangible long-lived asset be recorded as a liability when those obligations are incurred, with the amount of the liability initially measured at fair value. Upon initially recognizing a liability for an asset retirement obligation, or ARO, an entity must capitalize the cost by recognizing an increase in the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. SFAS 143 will be effective for financial statements for fiscal years beginning after June 15, 2002. Upon adoption of the final statement, an entity will use a cumulative-effect approach to recognize transition amounts for existing ARO liabilities, asset retirement costs and accumulated depreciation. All transition amounts are to be measured using information, assumptions, and interest rates that are current as of the date of adoption of the final statement. We do not expect the adoption of SFAS No. 143 to have a material impact on our financial position or results of operations.

In October 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which is effective for years beginning after December 15, 2001. SFAS No. 144 supersedes FASB Statement No. 121 and parts of APB Opinion No. 30, “Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions Relating to Extraordinary Items.” However, SFAS No. 144 retains the requirement of APB Opinion No. 30 to report discontinued operations separately from continuing operations and extends that reporting to a component of an entity that either has been disposed of by sale, by abandonment, or in a distribution to owners or is classified as held for sale. SFAS No. 144 addresses financial accounting and reporting for the impairment of certain long-lived assets and for long-lived assets to be disposed of. We do not expect the adoption of SFAS No. 144 to have a material impact on our financial position or results of operations.

In November 2001, the FASB EITF staff issued announcement Topic D-103, “Income Statement Characterization of Reimbursements Received for ‘Out-of-Pocket’ Expenses.” As a result, customer reimbursements, including those relating to travel and other out-of-pocket expenses, and other similar third-party costs, will be required to be included as revenues effective January 1, 2002 with all periods being presented on a comparable basis, and an equivalent amount of reimbursable expenses will be included in expenses. The adoption of this announcement did not have a material effect on our net revenue and expenses.

Significant Accounting Policies

We have identified the policies below as critical to our business operations and the understanding of our results of operations. For a detailed discussion on the application of these and other accounting policies, see note 1 to our combined financial statements. In preparing the financial statements included in this prospectus, we are required to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. We expect that our actual results may differ from these estimates.

Revenue Recognition. We recognize revenue in accordance with the Securities and Exchange Commission’s Staff Accounting Bulletin No. 101 (SAB 101), “Revenue Recognition in Financial Statements.”

For all transactions where legal title passes to the customer upon shipment, we generally recognize revenue upon shipment for all products that have been demonstrated to meet product specifications prior to shipment. Our shipping terms are primarily free-on-board, or FOB, shipping point. However, a portion of revenue associated with certain installation-related tasks, based upon fair value of that service, is recognized when the tasks are completed. For products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized on receipt of customer technical acceptance. For transactions where legal title does not transfer at shipment, no revenue is recognized before legal title passes to the customer or customer acceptance. A provision for the estimated cost of warranty is recorded when revenue is recognized. Revenue related to spare parts is generally recognized upon shipment. Service revenue is generally recognized ratably over the period of the related contract. Deferred income includes amounts that have been billed per the contractual terms, but have not been recognized as revenue. This typically includes the amount of deferred product revenue less all product and warranty costs.

Tax. We calculate our tax provision on a separate return basis. We record the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in the accompanying consolidated balance sheets, as well as operating loss and tax credit carry forwards. We follow very specific and detailed guidelines regarding the recoverability of any tax assets recorded on the balance sheet and provide any necessary allowances as required. To date, we have not recorded any valuation allowance because, based on the available evidence, we believe it is more likely than not that we will be able to utilize all our deferred tax assets in the future. Based on estimates of future taxable profits and losses, management has determined that a valuation allowance is not required. If these estimates prove inaccurate, a valuation allowance could be required in the future in light of, among other things, the cyclical industry in which we operate.

Inventory. We value our inventory at the lower of cost or estimated market value. We regularly review inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand and production requirements for the next 18 months. A significant increase in the demand for our products could result in a short-term increase in the cost of inventory purchases while a significant decrease in demand could result in an increase in the amount of excess inventory quantities on hand. We expect that demand for our products and services will fluctuate in the future in light of, among other things, the cyclical industry in which we operate, therefore causing an impact on the provisions for excess and obsolete inventory.

Income Taxes

Our tax rate is based on our earnings before taxes in the various tax jurisdictions in which we operate throughout the world. Changes in our mix of earnings before taxes in these tax jurisdictions cause our tax rate to fluctuate. In certain periods we recognize tax benefits on pre-tax income due to the benefits generated on pre-tax losses in certain jurisdictions exceeding the tax expense generated by pre-tax income in other jurisdictions with different tax rates. In addition, we record U.S. tax credits when earned.

NPTest has subsidiaries in several foreign countries, mainly in Europe and Asia. Part of the income that was previously recognized from Schlumberger’s foreign operations and was not subject to U.S. taxation due to Schlumberger’s foreign incorporation will become subject to U.S. taxation following this offering due to NPTest’s incorporation in Delaware. As a result, we expect that NPTest’s overall tax rate may increase. The amount of loss derived from tax on foreign operations taxed at rates other than the U.S. rates is disclosed in Note 6 to our financial statements.

Results of Operations

The following table sets forth certain items in our statement of operations for the years ended December 31, 1999, 2000 and 2001, and for the three months ended March 31, 2001 and 2002 expressed as a percentage of total net revenues, except that cost of product revenue is expressed as a percentage of product revenue, and cost of services revenue is expressed as a percentage of services revenue:

	Years Ended December 31,						Three Months Ended March 31,
	1999		2000		2001		2001		2002
Net revenue:
Product	84.1	%	75.6	%	67.7	%	72.1	%	76.4	%
Services	15.9		24.4		32.3		27.9		23.6

Total net revenue	100.0		100.0		100.0		100.0		100.0
Cost of net revenue:
Product	61.5		64.8		87.4		62.7		54.3
Services	73.5		63.1		69.4		66.3		66.4

Total cost of net revenue	63.4		64.4		81.6		63.7		57.1
Operating expenses:
Research and development	13.3		11.4		15.7		14.4		11.6
Selling, general and administrative	20.4		23.3		23.6		22.2		19.3

Total operating expenses	33.7		34.7		39.3		36.6		30.9

Operating income (loss)	2.9		0.9		(20.9	)	(0.3	)	12.0
Other income (expense), net	0.3		(0.0	)	(0.0	)	0.1		(0.1	)

Income (loss) before income taxes	3.2		0.9		(20.9	)	(0.2	)	11.9

Income tax benefit (expense)	0.1		1.2		10.2		2.8		(2.3	)

Net income (loss)	3.3	%	2.1	%	(10.7	)%	2.6	%	9.6	%

Three months ended March 31, 2002 and 2001

Product Revenue

Our product revenue is derived from the sale of our primary products, Test Systems and Probe Systems. Product revenue increased 3.2% to approximately $51.7 million in the three months ended March 31, 2002 from approximately $50.1 million in the three months ended March 31, 2001. Our product revenue during the three months ended March 31, 2002 was favorably affected by revenue of approximately $7.4 million derived from trial sales to new customers in Asia of our test products that were shipped prior to the second half of 2001. We do not expect to recognize similar revenue of this magnitude in subsequent periods. An increase in the sales of recently released structural test products of approximately $16.0 million was partially offset by a decrease of approximately $14.6 million, after taking into account the trial sales, in sales of our system-on-a-chip testers, related to a reduction in customers’ end-demand.

Services Revenue

Our services revenue includes maintenance fees for the installed base of our Test and Probe Systems, as well as engineering services marketed through our SABER organization. Maintenance fees comprised the substantial majority of our services revenue. Services revenue decreased 17.6% to approximately $16.0 million in the three months ended March 31, 2002 from approximately $19.4 million in the three months ended March 31, 2001, primarily as a result of lower SABER sales of approximately $2.5 million and lower after-sale services revenue of approximately $900,000.

Cost of Product Revenue

Cost of product net revenue consists of costs of manufacturing products and providing services. These costs include materials, costs of third-party contract manufacturers, salaries and related expenses for manufacturing, distribution costs, warranty costs, depreciation of manufacturing equipment and overhead allocations for facilities expenses and information technology services. Cost of product revenue decreased 10.6% to approximately $28.0 million in the three months ended March 31, 2002 from approximately $31.4 million in the three months ended March 31, 2001. As a percentage of product revenue, cost of product revenue decreased to 54.3% in the three months ended March 31, 2002 from 62.7% in the three months ended March 31, 2001 primarily as a result of approximately $2.4 million in reduced prices on a discontinued system-on-a-chip tester product during the first quarter of 2001, and approximately $959,000 in reduced manufacturing costs.

Cost of Services Revenue

Cost of service net revenue consist of service personnel and related overhead allocations for facilities expenses and information technology services. Cost of services revenue decreased 17.5% to approximately $10.6 million in the three months ended March 31, 2002 from approximately $12.8 million in the three months ended March 31, 2001, primarily as a result of lower personnel costs and related expenses corresponding to decreased activity levels. As a percentage of services revenue, cost of services revenue remained relatively flat at 66.4% in the three months ended March 31, 2002 as compared to 66.3% in the three months ended March 31, 2001.

Research and Development

Research and development expenses include salaries and expenses of engineers and related engineering support personnel, initial tooling, project materials, depreciation on equipment used in research and development and an allocation of facilities expenses and information technology services. Research and development expenses decreased 22.0% to approximately $7.8 million in the three months ended March 31, 2002 from approximately $10.0 million in the three months ended March 31, 2001. As a percentage of total revenue, research and development expenses decreased to 11.6% in the three months ended March 31, 2002 from 14.4% in the three months ended March 31, 2001. The decrease in research and development expenses was primarily due to a reduction in compensation expenses of approximately $1.6 million resulting from our reorganization described above, as well as a decrease in our outside contractor expenses of approximately $700,000 as a result of the release of products into production. We expect that our research and development costs may increase in absolute dollars in subsequent periods as we invest in future products offerings and enhance our current products.

Selling, General and Administrative

Selling, general and administrative expenses include salaries and related expenses for sales, account management, marketing, commissions, consignment costs and other expenses for marketing programs and trade shows as well as salaries and related expenses for administrative, finance, legal, human resources and executive personnel. These expenses also include an allocation for general and administrative expenses provided by Schlumberger. Selling, general and administrative expenses decreased 15.2% to approximately $13.1 million in the three months ended March 31, 2002 from approximately $15.4 million in the three months ended March 31, 2001. As a percentage of net revenue, selling, general and administrative expenses decreased to 19.3% in the three months ended March 31, 2002 from 22.7% in the three months ended March 31, 2001. The decrease was primarily due to approximately $2.0 million in compensation and travel expenses related to our reorganization described above as well as a reduction in communications and trade show costs of approximately $400,000. This decrease was partially offset by the increase in allocation of general and administrative expenses provided by Schlumberger to approximately $2.1 million in the three months ended March 31, 2002 from approximately $1.8 million in the three months ended March 31, 2001.

The allocation of general and administrative expenses by Schlumberger will terminate on or prior to the completion of this offering. Thereafter, we will reimburse Schlumberger for services performed on our behalf at cost until December 31, 2002. Despite the reduction in charges or allocations from Schlumberger, our general and administrative expenses may not decrease over time as we develop and enhance our own general and administrative support capabilities.

Other Income (Expense), Net

Other expense was approximately $122,000 in the three months ended March 31, 2002 as compared to other income of approximately $52,000 in the three months ended March 31, 2001. The difference was primarily due to exchange rate gains and losses. No interest is recorded on related party payables or receivables.

Income Taxes

Income tax expense was approximately $1.6 million for the three months ended March 31, 2002 on pre-tax income of approximately $8.0 million, an effective tax rate of 20%. This compares to a tax benefit of approximately $2.0 million for the three months ended March 31, 2001 on pre-tax loss of approximately $156,000. The change in the tax rate was due to higher taxes on income from foreign operations partially offset by higher tax credits in the U.S. relative to pre-tax income.

Years ended December 31, 2001 and 2000

Product Revenue

Product revenue decreased 30.9% to approximately $149.5 million in 2001 from approximately $216.4 million in 2000. This decrease in product revenue was primarily due to an industry-wide reduction in demand across our customer base and product lines, partially offset by an increase related to the commencement of structural tester sales of approximately $22.9 million in the second half of 2001.

Services Revenue

Services revenue increased 2.1% to approximately $71.4 million in 2001 from approximately $69.9 million in 2000. The increase in service revenue in 2001 was primarily due to the growth in SABER services of approximately $1.0 million.

Cost of Product Revenue

Cost of product revenue decreased 6.9% to approximately $130.6 million in 2001 from approximately $140.3 million in 2000. This decrease was primarily due to lower product costs on reduced sales, offset by approximately $35.4 million excess material charge in 2001 resulting from the abrupt slowdown in sales during that period. Excluding this charge, cost of product revenue decreased 32.1% to approximately $95.2 million in 2001, which was generally consistent with the revenue decrease during this period. As a percentage of product revenue, cost of product revenue, excluding the excess material charge, decreased to 63.7% in 2001 from 64.8% in 2000. With respect to the inventory subject to the $35.4 million charge noted above, as of June 30, 2002, approximately $11.8 million of the inventory was physically scrapped with the balance remaining in inventory, most likely to be scrapped.

Cost of Services Revenue

Cost of services revenue increased 12.3% to approximately $49.5 million in 2001 from approximately $44.1 million in 2000. As a percentage of services revenue, cost of services revenue increased to 69.4% in 2001, from 63.1% in 2000 primarily as a result of an increase in resources dedicated to SABER of approximately $4.2 million.

Research and Development

Research and development expenses increased 6.2% to approximately $34.7 million in 2001 from approximately $32.7 million in 2000. This increase was primarily driven by a decision to continue the investment into four new platforms during the industry downturn, namely, the ITS9000ZX, our next generation high-end tester; the DeFT, our latest generation low cost structural tester; and the Probe Systems platforms of the IDS PICA and OptiFIB. As a percentage of total revenue, research and development expenses increased to 15.7% in 2001 from 11.4% in 2000.

Selling, General and Administrative

Selling, general and administrative expenses decreased 21.9% to approximately $52.0 million in 2001 from approximately $66.6 million in 2000. This decrease was primarily due to approximately $11.6 million in savings related to the company reorganization described above, a decrease in Schlumberger general and administrative fees, including both direct costs and general allocation, of approximately $1.2 million and a decrease in trade show and advertising costs of approximately $1.2 million.

Other Income (Expense), Net

Other expense increased to approximately $139,000 in 2001 from approximately $34,000 in 2000. Charges in both years related to exchange rate losses. No interest is recorded on related party payables or receivables.

Income Taxes

Income tax benefit was approximately $22.4 million in 2001 on pre-tax loss of approximately $46.1 million. This compares to a tax benefit of approximately $3.3 million in 2000 on pre-tax income of approximately $2.6 million. The change in the tax rate was due to lower tax credits in the U.S. relative to pre-tax income partially offset by lower taxes on income from foreign operations.

Years ended December 31, 2000 and 1999

Product Revenue

Product revenue decreased 5.4% to approximately $216.4 million in 2000 from approximately $228.8 million in 1999. The decrease in product revenue primarily reflects reduced sales volume of high-end logic testers of approximately $32.0 million, partially offset by increased mixed signal tester sales of approximately $20.5 million.

Services Revenue

Services revenue increased 61.7% to approximately $69.9 million in 2000 from approximately $43.2 million in 1999. The increase is due to higher after-sale services on Probe and Test Systems equipment of approximately $20.6 million and wider acceptance of the SABER services model of approximately $6.1 million.

Cost of Product Revenue

Cost of product revenue was approximately flat at approximately $140.3 million in 2000 compared to approximately $140.6 million in 1999. As a percentage of product revenue, cost of product revenue increased to 64.8% in 2000 from 61.5% in 1999, due in part to a change in the mix of product sales, with reduced high-end logic sales resulting in a reduced margin of approximately $1.6 million, an equipment write-off of approximately $900,000, as well as the restructuring charge of approximately $1.4 million described above.

Cost of Services Revenue

Cost of services revenue increased 38.8% to approximately $44.1 million in 2000 from approximately $31.8 million in 1999. The increase was the result of the growth during the same period in services revenue. As a percentage of services revenue, cost of service revenue decreased to 63.1% in 2000 from 73.5% in 1999, as a result of an approximately $3.4 million non-recurring maintenance charge in 1999 with respect to a specific product and efficiencies from increased revenue in 2000. The non-recurring charge related to a redesign and retrofit of a timing overload device for a module in our high-end logic tester product.

Research and Development

Research and development expenses decreased 9.8% in 2000 to approximately $32.7 million from approximately $36.3 million in 1999. This decrease reflects the combined effect of a reduction in engineering support requirements after the EXA 3000 was released into production, partially offset by a nearly simultaneous ramp-up of resources required to develop the new structural test platform. Additionally, we began development of two Probe Systems products and a high-end Test System product in 2000. As a percentage of net revenue, research and development decreased to 11.4% in 2000 from 13.3% in 1999.

Selling, General and Administrative

Selling, general and administrative expenses increased 19.7% to approximately $66.6 million in 2000 from approximately $55.6 million in 1999. Of this increase, approximately $7.7 million was due to increased payroll and related direct expenses associated with a shared management structure across various Schlumberger businesses implemented by Schlumberger in 1999. In addition, Schlumberger management fees charged to the business increased to approximately $9.6 million in 2000 from approximately $7.1 million in 1999. As a percentage of net revenue, selling, general and administrative expenses increased to 23.2% in 2000 from 20.4% in 1999.

Other Income (Expense), Net

Other expense was approximately $34,000 in 2000 compared to other income of approximately $957,000 in 1999. The expense in 2000 was the result of exchange rate losses and the income in 1999 was derived from exchange rate gains in Europe and Japan. No interest is recorded on related party payables or receivables.

Income Taxes

Income tax benefit was approximately $3.3 million in 2000 on pre-tax income of approximately $2.6 million. This compares to a tax benefit of approximately $422,000 in 1999 on pre-tax income of approximately $8.7 million. The change in the tax rate was due to higher losses and higher tax credits in the U.S. partially offset by higher taxes on income from foreign operations.

Quarterly Financial Results

The following tables present our operating results for each of the nine quarters in the period ended March 31, 2002, in dollars and as a percentage of net revenue, except that cost of product revenue is expressed as a percentage of product revenue, and cost of services revenue is expressed as a percentage of services revenue. The information for each of these quarters is unaudited and has been prepared on the same basis as the audited consolidated financial statements included elsewhere in this prospectus. In the opinion of management, all necessary adjustments, which consist only of normal and recurring adjustments, have been included to present fairly the unaudited quarterly results. This data should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this prospectus. These operating results are not indicative of the results of any future period.

	Three Months Ended
	Mar. 31, 2000			Jun. 30, 2000			Sep. 30, 2000			Dec. 31, 2000			Mar. 31, 2001			Jun. 30, 2001			Sep. 30, 2001			Dec. 31, 2001			Mar. 31, 2002
	(in thousands)
Net revenue:
Product	$	35,928		$	58,347		$	59,459		$	62,711		$	50,052		$	31,233		$	21,649		$	46,609		$	51,662
Services		17,372			15,869			17,350			19,298			19,385			18,604			17,155			16,245			15,978

Total net revenue		53,300			74,216			76,809			82,009			69,437			49,837			38,804			62,854			67,640
Cost of net revenue:
Product		21,589			34,290			36,830			47,546			31,364			19,921			16,345			62,997			28,039
Services		8,497			10,357			11,185			14,088			12,845			12,902			12,214			11,588			10,602

Total cost of net revenue		30,086			44,647			48,015			61,634			44,209			32,823			28,559			74,585			38,641
Operating expenses:
Research and development		5,248			7,863			9,516			10,091			10,029			8,749			7,807			8,163			7,821
Selling, general and administrative		15,975			16,118			16,301			18,177			15,407			13,864			11,506			11,194			13,060

Total operating expenses		21,223			23,981			25,817			28,268			25,436			22,613			19,313			19,357			20,881

Operating income (loss)		1,991			5,588			2,977			(7,893	)		(208	)		(5,599	)		(9,068	)		(31,088	)		8,118
Other income (expense), net		(145	)		190			306			(385	)		52			(268	)		44			33			(122	)

Income (loss) before income taxes		1,846			5,778			3,283			(8,278	)		(156	)		(5,867	)		(9,024	)		(31,055	)		7,996
Income tax benefit (expense)		232			(1,160	)		(64	)		4,320			1,965			3,221			4,265			12,915			(1,553	)

Net income (loss)	$	2,078		$	4,618		$	3,219		$	(3,958	)	$	1,809		$	(2,646	)	$	(4,759	)	$	(18,140	)	$	6,443


	Three Months Ended
	Mar. 31, 2000		Jun. 30, 2000		Sep. 30, 2000		Dec. 31, 2000		Mar. 31, 2001		Jun. 30, 2001		Sep. 30, 2001		Dec. 31, 2001		Mar. 31, 2002
Net revenue:
Product	67.4	%	78.6	%	77.4	%	76.5	%	72.1	%	62.7	%	55.8	%	74.2	%	76.4	%
Services	32.6		21.4		22.6		23.5		27.9		37.3		44.2		25.8		23.6

Total net revenue	100.0		100.0		100.0		100.0		100.0		100.0		100.0		100.0		100.0
Cost of net revenue:
Product	60.1		58.8		61.9		75.8		62.7		63.8		75.5		135.2		54.3
Services	48.9		65.3		64.5		73.0		66.3		69.4		71.2		71.3		66.4

Total cost of net revenue	56.4		60.2		62.5		75.2		63.7		65.9		73.6		118.7		57.1
Operating expenses:
Research and development	9.9		10.6		12.4		12.3		14.4		17.6		20.1		13.0		11.6
Selling, general and administrative	30.0		21.6		21.2		22.2		22.2		27.7		29.7		17.8		19.3

Total operating expenses	39.9		32.2		33.6		34.5		36.6		45.3		49.8		30.8		30.9

Operating Income	3.7		7.6		3.9		(9.7	)	(0.3	)	(11.2	)	(23.4	)	(49.5	)	12.0
Other income (expense), net	(0.2	)	0.3		0.4		(0.5	)	0.1		(0.6	)	0.1		0.1		(0.1	)

Income (loss) before income taxes	3.5		7.9		4.3		(10.2	)	(0.2	)	(11.8	)	(23.3	)	(49.4	)	11.9
Income tax benefit (expense)	0.4		(1.6	)	(0.1	)	5.3		2.8		6.5		11.0		20.5		(2.3	)

Net income (loss)	3.9	%	6.3	%	4.2	%	(4.9	)%	2.6	%	(5.3	)%	(12.3	)%	(28.9	)%	9.6	%

Net Revenue

After a difficult year in 1999 when our logic test sales fell significantly, we gained market share with our mixed signal test products in 2000. With the introduction of EXA 3000 during the second quarter of 2000, we experienced strong sales in Europe and Asia for the following two quarters. Beginning in the first quarter of 2001, our sales fell as the test, assembly and packaging segment of semiconductor equipment market fell precipitously. Our revenue increased in the three months ended December 31, 2001 and the three months ended March 31, 2002 with the introduction of our structural tester product and large shipments to our initial customer for this product. Following this customer’s initial conversion to structural test, its purchases of this product may decline.

Cost of Revenue

Cost of product revenue in the three months ended December 31, 2000 included a charge of approximately $900,000 related to equipment write-off. Cost of product revenue in the three months ended December 31, 2001 included a charge of approximately $1.4 million relating to our reorganization and restructuring, as described above. Cost of product revenue for the three months ended December 31, 2001 included a charge of approximately $35.4 million related to excess material. As a percentage of total product revenue, total cost of product revenue increased in the three months ended December 31, 2000 as a result of approximately $1.5 million in a change in product mix, approximately $1.1 million in increased inventory charges, approximately $1.4 million in restructuring charges and approximately $900,000 in an equipment write-off. As a percentage of total services revenue, total cost of services increased in the three months ended December 31, 2000 as a result of approximately $1.2 million in increased employee cost and approximately $700,000 in higher repair costs.

Liquidity and Capital Resources

During the three months ended March 31, 2002, net cash provided by operating activities was approximately $24.7 million, as compared to net cash used in operating activities of approximately $11.8 million for the three months ended March 31, 2001. Cash used in operating activities in 2001 and 2000 was approximately $17.8 million and approximately $36.3 million respectively. Cash provided by operating activities in 1999 was approximately $114.9 million.

Cash provided in operating activities in the three months ended March 31, 2002 reflects net income of approximately $6.4 million, depreciation of approximately $2.5 million, and working capital and other movements generating cash of approximately $15.8 million. Key movements within working capital and other include favorable movements in net inventory of approximately $9.0 million, including decreases of approximately $6.0 million in North America, approximately $1.9 million in Japan and approximately $1.1 million in Europe, due to strong shipments and reduced procurement levels; net accounts receivable of approximately $7.7 million, including approximately $7.6 million in North America following delays during the fourth quarter due to a client upgrading its accounting system; and other accrued liabilities of approximately $5.2 million; offset by unfavorable movements in deferred income of approximately $8.0 million.

Cash used in operating activities in the three months ended March 31, 2001 reflects net income of approximately $1.8 million, depreciation of approximately $2.8 million, and working capital and other movements utilizing cash of approximately $16.4 million. Key movements within working capital and other include unfavorable movements in deferred income of approximately $40.2 million; and accounts payable of approximately $8.4 million, due to reduced material purchases; partially offset by favorable movements in net accounts receivable of approximately $28.5 million, including movements in North America of approximately $15.7 million, Asia of approximately $7.7 million and Japan of approximately $5.1 million; and other accrued liabilities of approximately $3.6 million.

Cash used in operating activities in 2001 reflected a net loss of approximately $23.7 million, depreciation of approximately $10.8 million, and working capital and other movements utilizing cash of approximately

$4.9 million. Key movements within working capital and other include favorable movements in net inventory of approximately $32.1 million, related to the provision for excess material of approximately $35.4 million during the fourth quarter; net accounts receivable of approximately $33.5 million, involving approximately $14.2 million in Asia, approximately $6.3 million in Europe, approximately $7.4 million in North America and approximately $5.6 million in Japan, representing lower shipments in each such region; and payables to related parties of approximately $7.1 million, primarily due to a timing related change in intercompany payables to a payroll processing entity; offset by unfavorable movements in deferred income taxes of approximately $12.9 million, related to the excess material provision taken in the period; and deferred income of approximately $42.6 million, as 2000 year end deferred revenue was reduced primarily as a result of amounts that had been deferred at December 31, 2000 on transactions for which acceptance had not been received by the year end. Such acceptances were received in 2001 and the revenue was released accordingly. Other changes include accounts payable of approximately $18.0 million, due to reduced material procurement; and other accrued liabilities of $9.3 million, due to lower employee and miscellaneous payables.

Cash used in operating activities in 2000 reflected a net income of approximately $6.0 million, depreciation of approximately $6.9 million, and working capital and other movements utilizing cash of approximately $49.2 million. Key movements within working capital and other include unfavorable movements in net inventory of approximately $60.5 million, including increases in North America of approximately $34.2 million, Asia of approximately $13.0 million, Japan of approximately $5.5 million and Europe of approximately $7.8 million; net accounts receivable of approximately $30.5 million, due to increased shipments and some extended payment terms in Asia; partially offset by a favorable movement in deferred income of approximately $37.2 million.

Cash provided by operating activities in 1999 reflected a net income of approximately $9.1 million, plus depreciation of approximately $4.1 million, and working capital and other movements generating cash of approximately $101.7 million. Key movements within working capital and other include favorable movements in net inventory of approximately $61.2 million on significantly reduced activity compared to levels of activity during 1998; and net accounts receivable of approximately $22.1 million, on reduced activity primarily in North America.

Cash used in investing activities was approximately $4.0 million in 2001, approximately $27.0 million in 2000, and approximately $14.3 million in 1999. Cash used from investing activities was approximately $1.3 million in the three months ended March 31, 2002, compared to approximately $3.2 million in the three months ended March 31, 2001. Capital spending on building improvements specific to the headquarter facility in San Jose accounts for approximately $17.5 million in 2000.

Cash used in financing activities was approximately $92.5 million in 1999. Cash provided by financing activities was approximately $15.8 million in 2001 and approximately $66.2 million in 2000. Cash used in financing activities was approximately $23.2 million in the first three months of 2002, compared to cash provided of approximately $9.3 million in the first three months of 2001. Cash flows from financing activities in each period are comprised of net investments received from or extended to Schlumberger.

Our inventory is comprised of spare parts, raw materials, work in progress and finished goods. Historically, we have carried reserves against our gross inventory, and we expect to carry reserves in the future. The most significant components of the inventory reserve include spare parts (representing approximately 44% of the total inventory reserve as of June 30, 2002) and raw materials (representing approximately 41% of the total inventory reserve as of June 30, 2002). As of the same date, approximately 32% of our current gross inventory was comprised of spare parts inventories which support the maintenance of our installed base. This inventory, while regularly utilized, will become obsolete when the equipment for which it is used is no longer in service. As a result, this component of inventory was 58% reserved. In addition, approximately 44% of our current gross inventory was comprised of raw materials. The primary reason for the balance of reserve on raw materials was the rapid and unforeseen slowdown in the industry in 2001, which resulted in excess inventory. Approximately $11.8 million of reserved inventory has been scrapped year-to-date. We expect to scrap a significant portion of

the remaining reserved inventory. Approximately 39% of total gross raw material was reserved as of June 30, 2002. We consider our current reserves to be sufficient to cover exposure related to inventory, and we re-evaluate reserve levels on a monthly basis.

We expect that our remaining capital expenditures through 2002 will be approximately $6.0 million. These anticipated expenditures primarily relate to the purchase of capital equipment for the general support of our business. Our other commitments are primarily comprised of our lease obligations, which are more fully described in note 8 to our combined financial statements.

In the past, our capital needs have been satisfied by Schlumberger. However, following our separation, Schlumberger will no longer provide funds to finance our working capital or other cash requirements. We will benefit from net proceeds received from the issuance of the shares by us in this offering and expect to use the net proceeds for general corporate purposes. Schlumberger intends to use the net proceeds from the sale of its shares of NPTest common stock in this offering to repay a portion of its subsidiaries’ debt. Before this offering, under the terms of the separation, we will transfer all of our existing cash to Schlumberger, except for the cash in some subsidiaries. As of March 31, 2002, giving pro forma effect to the separation, there was approximately $10.3 million of cash and cash equivalents on our balance sheet, of which approximately $8.7 million would have been transferred to Schlumberger and approximately $1.6 million would have remained with us. Our future capital requirements will depend on many factors, including our rate of revenue growth, the timing and extent of spending to support product development efforts, the expansion of sales and marketing activities, the timing of introductions of new products and enhancement to existing products, the cost to ensure access to adequate manufacturing capacity, and the continuing market acceptance of our products. We currently expect that the net proceeds of this offering along with our anticipated future cash flow from operations, will be sufficient to satisfy our anticipated cash needs for at least the next 12 months. To the extent that funds generated by this offering, together with any cash from operations, are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing. Future equity financings would be dilutive to the existing holders of our common stock. Future debt financings could involve restrictive covenants. We will likely not be able to obtain financing with interest rates as favorable as those that Schlumberger could obtain. If we cannot raise funds on acceptable terms, if and when needed, we may not be able to develop or enhance our products and services, take advantage of future opportunities, grow our business or respond to competitive pressures or unanticipated requirements, which could seriously harm our business.

Although we are not a party to any agreement or letter of intent with respect to potential investments in, or acquisitions of, complementary businesses, products or technologies, we may enter into these arrangements in the future, which could also require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all.

Qualitative and Quantitative Disclosure about Market Risk

Market risk is the risk of loss arising from adverse changes in market rates and prices, such as interest rates, foreign currency exchange rates, and other relevant market rate or price changes. Market risk is directly influenced by the volatility and liquidity in the markets in which the related underlying assets are traded.

Foreign exchange rates

We are exposed to foreign currency exchange movements, primarily in the Euro, the British Pound, and the Japanese Yen, as we enter into various contracts, which change in value as foreign currency exchange rates change. The primary exposure exists during the period between when a contract price is fixed in foreign currency and when the related receivable is collected. To mitigate this risk we only fix contracts in the above referenced foreign currencies, and normally fix prices for long term contracts using U.S. dollar prices. The length of time between when a short-term contract price is contractually fixed, and when the equipment is delivered, typically

ranges between two to four months, unless the equipment can be taken from finished goods inventory. Our standard terms of sale are 80% due 30 days after delivery, and 20% due 30 days after customer site acceptance, which is required within 30 days of delivery. On completion of this offering, we may seek to hedge our exposure to foreign currency rate fluctuations with forward contracts. Our historical financial statements do not reflect any foreign currency arrangements.

Interest rates

We have virtually no debt, and therefore exposure to market risk related to interest rates is limited. If and when we do enter into borrowing arrangements, we will seek to manage the exposure to interest rate changes by using a mix of debt maturities and variable- and fixed-rate debt together with interest rate swaps, where appropriate, to fix or lower borrowing costs.

BUSINESS

Overview

Our history dates back to 1965 when Fairchild Semiconductor established an automated test equipment division. Schlumberger acquired Fairchild Semiconductor in 1979. Schlumberger is a global technology services company primarily organized around two business segments, Schlumberger Oilfield Services and SchlumbergerSema. Schlumberger employs a total of approximately 81,000 people in nearly 100 countries around the world with revenues in 2001 of $13.7 billion. Under Schlumberger, the automated test equipment division of Fairchild evolved significantly over time into the Schlumberger Semiconductor Solutions Group.

Industry Background

The semiconductor industry has historically advanced in accordance with what is commonly referred to as “Moore’s Law,” which states that the number of transistors in a digital integrated circuit doubles every 18 to 24 months. This has been accomplished by consistently shrinking circuit dimensions, which have now reached deep sub-micron levels. As a consequence of the resulting improvements in performance, integrated circuits are becoming increasingly pervasive in a wide range of business and consumer applications. Sales of semiconductor devices are estimated to have been approximately $50.5 billion in 1990, $204.4 billion in 2000 and $139.0 billion in 2001, according to the Semiconductor Industry Association. The Semiconductor Industry Association currently estimates that by 2004, the industry will have sales of approximately $213.4 billion. In addition, according to VLSI Research, worldwide sales of automated test systems are expected to increase from approximately $2.6 billion in 2001 to approximately $4.8 billion in 2004, or a compound annual growth rate of approximately 22%. Our products and services address the automated test systems market, as well as the overall semiconductor devices market.

Semiconductor Design and Manufacturing Process

The semiconductor design and manufacturing process, which is shown below, entails a complex, multistage process.

•

Design Stage. The product concept is developed into a software-based model of the electrical circuit. This model is developed into a photolithographic “mask” set that contains the circuit layout.

•

Prototype Stage. The mask set is used to manufacture a small quantity of prototype devices.

•

Validation and Characterization Stage. The functionality and specifications of prototype devices are validated, comparing the prototype to the model, and characterized in detail. Prototypes often require redesign and repetition of the photolithographic process with a new mask set to correct architectural or design flaws.

•

Wafer Fabrication Stage. Once the prototype is validated and fully characterized, it is moved to high-volume manufacturing. After manufacturing, wafer level testing is conducted.

•

Final Assembly and Test Stage. The integrated circuit is assembled, packaged and undergoes final testing and is shipped.

As the cost and complexity of designing and manufacturing semiconductors has increased, the semiconductor industry has begun to disaggregate into separate sectors, each with a specialized business model. Unlike vertically-integrated semiconductor producers, companies operating within these sectors focus only on certain stages in the design and manufacturing process. In the case of the non-manufacturer, or fabless integrated circuit vendor, focus is on design and marketing; in the case of the foundry, or fab, focus is on integrated circuit manufacturing technology; and in the case of the assembly contractor, focus is on packaging and final testing of devices. This more fragmented industrial framework has resulted in certain product engineering roles being underserved.

Test and Diagnostic Market Challenges

In the semiconductor design and manufacturing process there is a need to identify non-performing devices and isolate the cause of malfunctions. Addressing this need through test and diagnostic steps is becoming more challenging for manufacturers due to a number of factors, including:

•

Rapid time-to-market. The competitive pressure in end-user markets creates short product life cycles, placing a premium on the ability to be first-to-market and achieve volume production. As a result, integrated circuit vendors strive to complete their processes, including all necessary test and diagnostic steps, within a very short period when introducing next generation devices.

•

Rising complexity. Integrated circuit complexity has grown at both the physical and logical levels. At the physical level, the increasing number of transistors and layers of an integrated circuit have increased the cost of locating the cause of malfunctions. At the logical level, analog, digital and memory functions have been integrated to create the system-on-a-chip. To be cost-effective, system-on-a-chip devices require testers that are modular in design and capable of addressing each of the functions on the device on a single platform.

•

Priority on costs and shift to structural test. Increased integrated circuit complexity has resulted in rising costs of test for new devices using conventional test methodologies. As a result, the industry is increasingly turning to structural test techniques such as design-for-test, which do not attempt to reproduce the target operating environment of the integrated circuit. Design-for-test techniques facilitate the testing of devices by embedding test structures within the devices themselves. By appropriately activating these embedded structures, a manufacturer can test the integrated circuit at a lower overall cost. Structural test techniques have special technical requirements in their implementation that are not commonly met by conventional test equipment.

Our Solution

We provide advanced test and diagnostic systems and related product engineering services to the semiconductor industry that can enable our customers to accelerate prototype development and reduce time to full-scale production. Our products and services address the challenges of test and diagnostic applications by:

•

Reducing customers’ time-to-market. Using our products, design flaws in integrated circuit prototypes can often be identified and repaired in the laboratory in a matter of hours. No replacement of a mask set, with lengthy repetition of the photolithographic process, is necessary to produce a working prototype, enabling our customers to achieve a design win with the first few samples produced at a foundry.

•

Enabling faster and more complex integrated circuits. Utilizing our test and diagnostic systems and product engineering expertise, manufacturers can validate, test and debug high-speed processors operating at frequencies in excess of 1 GHz, advanced system-on-a-chip devices with diverse functional units and high speed interfaces, all at maximum operating performance levels. Our test and diagnostic equipment is designed to process currently existing integrated circuit devices, as well as anticipated next generation products.

•

Reducing customers’ manufacturing costs. Our products and services are designed to reduce integrated circuit engineering and manufacturing costs by improving yields and reducing the cost of test. Our diagnostic equipment can trace the reason for a yield loss and identify the associated process step. Our test equipment combines low cost of ownership with high throughput to achieve lower cost of test per device shipped. Our solution enables our customers to identify and correct design flaws and manufacturing issues earlier in the process, thereby reducing their overall costs.

•

Bridging the engineering services gap. We deliver design validation and product and test engineering services primarily to integrated circuit vendors. We provide expertise both on our proprietary platform and on the platforms of our competitors.

Business Strategy

Our objective is to become the leader in providing test and diagnostic systems and product engineering services to the semiconductor industry. Key elements of our strategy include the following:

•

Targeting customers in high-growth markets. We focus on semiconductor customers that operate in rapidly growing markets, such as computer processors, peripherals and graphics accelerator chips, Internet backbone, edge and access systems, digital entertainment products and wireless and wireline infrastructure. Customers producing devices for these markets typically require highly-complex and multi-function devices, which puts a premium on our test and diagnostic technology.

•

Maintaining and extending strong relationships with strategic customers. Faced with technical challenges in developing the next generation of products, our customers often engage us early in the development stage to ensure that new design and test requirements do not delay time-to-market and full production schedule. We intend to maintain and expand these relationships by focusing on the needs of our customers and providing them with a wide range of value-added products and services.

•

Leveraging our technology. New developments in assembly and packaging and emerging high performance standards challenge our customers’ technology and create opportunities for us to deliver value-added services. We intend to invest in software and hardware technology to enable our customers to overcome their testing and diagnostic technology challenges as they implement next generation products.

•

Facilitating the market transition to structural test. Confronted with competitive pressures, integrated circuit manufacturers have identified structural test techniques as key enablers of lower manufacturing costs and reduced investment in capital expenditures and engineering organization. We believe our products and services can facilitate the industry’s transition to structural test.

•

Integrating design and validation and characterization stages. In the design and manufacturing process for the most advanced integrated circuits, the product design stage is not considered to be complete until the prototype is fully validated and characterized. We seek to expand the use of our set of tools that allows interactive design edits at the validation and characterization stage. These tools enable our customers to complete process cycles in a single circuit editing session, thereby reducing time-to-market.

Products and Services

We believe that our complementary products and services position us to cost-effectively meet our customers’ challenges in integrated circuit diagnostics, rapid prototyping, characterization and manufacturing test. Our products are large and complex computer-controlled electrical systems with sophisticated graphical software interfaces. Our Test Systems products are sophisticated electrical signal generators and analyzers that provide the integrated circuit under test with extensive inputs and monitor the corresponding outputs. Our Probe Systems products acquire electrical signals from the integrated circuit during operation. Some of these systems identify the cause of malfunctions, while others repair the defects in the integrated circuit. Test and Probe Systems are integrated by design to work side-by-side in our customers’ laboratories. SABER delivers design validation and product and test engineering services to integrated circuit vendors. In March 2002, we were awarded the Intel Preferred Quality Supplier award, which is awarded by Intel to vendors that achieve certain performance levels.

Test Systems

The objective of our Test Systems product line is to improve the productivity of integrated circuit vendors by providing test equipment for manufacturing, characterization and validation of advanced integrated circuits. We design our products to deliver high throughput, resulting in a lower cost of test per device over a long economic life, and superior accuracy, resulting in high manufacturing yields. Our test products assist customers in reducing time-to-market of new integrated circuits by providing high functionality with a user-friendly interface. Since the introduction of our ITS9000 tester in 1991, we have installed over 500 digital and 250 system-on-a-chip testers worldwide. We believe that over 2000 legacy testers from previous generations of our products are still in use.

Logic Test. Our logic test products have been consistently positioned in high-end market segments such as microprocessors, PC chip sets and high pin count application specific integrated circuits. This product portfolio is based on our ITS 9000 series, with its innovative Sequencer Per Pin^® architecture. This architecture enables more signal processing to be done in the digital domain than with competitive logic testers, thereby reducing the risk of errors in computations, regardless of the complexity of the target waveform. Over four successive generations, the ITS9000 series has achieved a 10-fold increase in data rate, a 4-fold increase in accuracy and a 2-fold increase in throughput, without losing compatibility with the initial ITS9000 FX model introduced in 1991. At the same time, equipment footprint was reduced by over 50%, while maintaining prices at competitive levels. With our portfolio of logic test products, we hold a significant market position by virtue of our relationship with a leading manufacturer of microprocessors.

High-End Test. We have developed a new product offering to test the next generation of integrated circuits for microprocessors, Internet servers, backbone routers and other emerging high-performance applications. These devices implement advanced bus architectures, such as HyperTransport^®, InfiniBand^® and serial communication standards such as OC-192. This new offering builds upon the proven test and calibration technology of our ITS9000 series to provide an effective solution for all of these emerging application standards.

System-on-a-Chip Test. To address the test needs of system-on-a-chip devices, which exceed the capability of mixed-signal testers, we have developed the EXA system, a family of testers that leverages the digital test capabilities of our ITS9000 series and combines them with true mixed signal synchronization, advanced analog instruments and a seamless user interface. The EXA system has a significant installed base at major system-on-a-chip manufacturers and at assembly and test contractors in Taiwan and in the rest of Asia. Today the EXA family is deployed in the test of system-on-a-chip devices for DVD players, set-top boxes and other digital convergence applications.

Structural Test. The industry is increasingly recognizing structural test techniques as a key means to reduce the cost of test. As a result, demand is emerging for testers that can support design-for-test and built-in-self-test techniques within acceptable cost parameters. Many conventional low cost testers have been rendered obsolete by this trend, because they cannot support the most recent structural test strategies. At the same time, the development of widely available software tools to set up a design-for-test environment is making design-for-test a practical proposition for a broad population of integrated device manufacturers. Our DeFT product combines a high level of support for advanced design-for-test techniques with aggressive system cost reduction.

Probe Systems

Our Probe Systems product line, established in 1987, integrated for the first time advanced and diverse technologies for integrated circuit diagnosis into a compact system with a seamless and comprehensive Computer Aided Design navigation user interface. Our IDS 5000 electron beam prober directly provided a designer the capability to understand and validate the inner workings of any circuit in real time in the context of the design framework. These new tools made integrated circuit diagnostic and rapid prototyping, as well as process monitoring, a practical and cost effective proposition. Today, the capabilities made available by Probe Systems products effectively extend the scope of design through the validation and characterization stage, fostering engineering synergies across prototype development and initial device launch. This can contribute to a dramatic reduction in time-to-market for a wide range of integrated circuit applications. These products have become a standard for in-circuit measurement in many if not most integrated circuit applications.

In-Circuit Measurement Systems. Our in-circuit measurement products enable engineers to measure electrical signals inside the integrated circuit without interfering with its operation. Our products find the cause of any malfunctions in the integrated circuit that failed testing. Our software enables engineers to identify the precise location of the defect from among the millions of transistors in the integrated circuit. Once the defect has been identified, it can be repaired using our circuit edit systems, described below. In-circuit measurement technology has evolved to keep pace with shrinking device geometries and manufacturing changes. The current version of our in-circuit measurement system for 0.18 micron processes is the IDS 2500 prober. For next generation processes, such as 0.13 micron and 0.09 micron geometries, we have developed the IDS PICA. Our in-circuit measurement products are deployed in verification laboratories and have cumulative sales of over 370 systems.

Circuit Edit Systems. After a flaw is pinpointed using in-circuit measurement technology, our circuit edit products allow integrated circuit manufacturers to modify the integrated circuit layout in “microsurgery” fashion with focused ion beam technology to correct design errors or process faults in a matter of hours. The uniform Computer Aided Design navigation user interface used in both our in-circuit measurement and circuit edit tools allows seamless transition between diagnostic and edit operations. Our IDS P3X, the third generation of our circuit edit tools, includes exclusive technology capable of editing 0.18 micron geometries and of performing analog measurements. To enable modifications in flip-chip devices at 0.13 micron and below, we introduced our IDS OptiFIB, which is based on a proprietary technology that delivers simultaneous imaging and editing with a high degree of accuracy. We have shipped over 80 circuit edit systems worldwide.

The following tables set forth our current product offerings, their features and examples of typical devices tested by each product.

Test Systems

	ITS 9000KX	ITS 9000ZX	EXA3000	DeFT
	Logic Test	High-End Test	System-on-a-chip Test	Structural Test
Target Application	Advanced Processors	HyperTransport/ InfiniBand IC	Digital consumer, PC peripheral	Manufacturing test of high volume devices
	Computer ASICs	Network backbone, serial interfaces	Network access

Max data rate	800 megabits per second	1600/3200 megabits per second	800 megabits per second	—

Guaranteed accuracy	+/-75 picoseconds	+/-50 picoseconds	+/-75 picoseconds	—

Calibration	to the socket	to the socket	to the pogo	—

Differential pins	no	yes	no	—

Source synchronous channels	no	yes	no	—

Serial channels	no	yes	yes	—

Max power delivery	150 Amps	150 Amps	90 Amps	150 Amps

Max scan memory on 64 chains	128 Megavectors	128 Megavectors	128 Megavectors	1 Gigavector

Configurable analog instruments	—	—	32	—

Noise floor	—	—	-120 decibels	—

Max instrument resolution	—	—	20 bit	—

Probe Systems

	IDS 2500	IDS PICA	IDS OptiFIB
	In-Circuit Measurement		Circuit Edit
Geometry node	180 nanometers	130-90 nanometers	130-90 nanometers

Device types	processors, ASICs, SOCs	processors, ASICs, SOCs	processors, ASICs, SOCs

Software	STAR	STAR	STAR

ATE interface	direct-compatible	direct-compatible	direct-compatible

Back side access	total	total	total

Timing accuracy	trigger dependent	+/-15 picoseconds	—

Bandwidth	10 Gigahertz	2.1 Gigahertz	—

Measurement	point-to-point	global	—

Beam alignment accuracy	—	—	0.1 micrometers

Copper etch	—	—	complete

Analog capability	—	—	yes

Wafer capability	—	—	200 & 300 millimeters

Services

Customer Support. Maintenance for our test and diagnostic systems encompasses a broad range of support services, from standard maintenance and repair services to on-site deployment of task forces to complement customers’ operations. To achieve its objectives, our maintenance department has developed and implemented a process to monitor customer requirements and service delivery. We have recently introduced an e-diagnostics distributed system that links remote sites to technical centers for immediate resolution of issues. This system builds upon an extensive knowledge database where information on each product is stored and searchable. If a customer problem goes beyond known issues, an e-ticket is generated and the technical and engineering staff delivers a new solution, which is then stored in the knowledge database.

SABER. Established in 1998, SABER provides design validation and product and test engineering services that address the needs created by the continuous disaggregation of the integrated circuit manufacturing industry. Through SABER, we deliver services to our customers that leverage our general test and diagnostic competencies and span characterization, validation, production implementation and failure analysis. To deliver the most complete test and diagnostic engineering services to our customers, SABER’s services extend beyond our proprietary equipment to those of other participants in the industry. SABER also offers services designed to optimize processes and enhance product yields in the context of outsourced design validation, fab operations and test, assembly and packaging contracting. SABER’s clients include integrated device manufacturers and fabless integrated circuit vendors. SABER has developed a special focus on fabless integrated circuit vendors that often do not have the critical mass or the desire to develop in-house product engineering expertise. To better serve these customers, SABER has agreed to provide integrated circuit validation services to a major foundry, which in turn has agreed to promote SABER services to its customers and provide a link between its website and the website of SABER. This arrangement better positions SABER to take advantage of the fragmented nature of the industry and to reach the fabless integrated circuit vendors.

Test Practice. SABER delivers processes for the development and implementation of test methods and applications. We provide our customers with access to test equipment by different vendors and to highly trained professionals with extensive industry experience. Turnkey characterization jobs, advanced thermal behavior analysis and test solution optimization are some of the typical services offered.

Diagnostic Practice. Our extensive knowledge of advanced techniques for device debug and validation, coupled with our use of the latest generation diagnostic and repair equipment, enables SABER to deliver strong value in time-to-market enhancement. Rapid Prototyping Services, where we provide validation and debugging of prototype integrated circuits on behalf of the customer, are aimed at a critical need of the members of the growing fabless integrated circuit vendor community.

Interface Development. Emerging high-frequency standards in the communications and PC industries require equally advanced tester interfaces for the devices that support them. SABER leverages its experience in advanced applications to develop custom solutions for the general market.

Sales and Marketing

We grow our business primarily by expanding customer relationships. In a number of cases, early technology exchanges with industry leaders have developed into common projects, whereby the customer specifies product performance and we develop the required technology and implement the solution, within specified schedule and pricing constraints. We place a high value on developing and maintaining these types of relationships with our customers, which we believe is the best approach to product development.

We sell our products and services directly to integrated circuit manufacturers and assembly and test service companies. We market our products and services to integrated device manufacturers through our account managers, who have worldwide responsibility for each of their accounts. Each account manager is a sales professional with significant industry experience. Account managers are responsible for the general relationship

with the customer, including the coordination and preparation of technology roadmap exchanges. We have also established specialized sales and marketing teams to meet the particular requirements of fabless design houses and test contractors, with a team dedicated to each group. These teams market both Test and Probe Systems to take advantage of cross-selling opportunities. Our SABER value-added services are marketed by dedicated regional sales teams.

Customers

The semiconductor industry is highly concentrated, and a small number of semiconductor device manufacturers and contract assemblers account for a substantial portion of the purchases of semiconductor test equipment generally, including our diagnostic and test equipment. In 2001, two customers, Intel and STMicroelectronics, each accounted for in excess of 10% of our total revenue.

Manufacturing

All our products are assembled at our 110,000 square foot facility in Simi Valley, California. It is organized into two sectors, front-end manufacturing and system integration. Front-end manufacturing delivers complete and fully tested multi-layer electronic boards, both in conventional and surface mount technology. The system integration sector is organized into Test and Probe work cells, each of which performs systems level integration and calibration, final test and acceptance. The facility is responsible for planning and procurement, based on a build plan, which is reviewed monthly by senior management, and a material requirements planning information system. There is a formal quality structure in place, with a strategy focused on process improvement teams for each work cell that closely cooperate with specialized working groups for measurement and corrective and preventative actions. Regular quality assessments are conducted, both by internal teams and by customer representatives. The manufacturing center scores high on customer assessments of product quality and on-time shipment.

Front-end manufacturing is partially outsourced to contractors, including two subcontractors that together accounted for 3% to 4% of our front-end manufactured product volume in 2001, and a Schlumberger factory in St. Etienne, France that accounted for approximately 3% of our front-end manufactured product volume in 2001. The Schlumberger arrangement pertains to the subcontracting of circuit board assembly from Schlumberger St. Etienne, for which we paid Schlumberger $2.4 million, $3.2 million and $1.8 million in 1999, 2000 and 2001, respectively. The Schlumberger factory in St. Etienne is currently the only affiliate conducting manufacturing for us.

Systems modules, such as power supplies, mechanical frames and certain instruments, are purchased on the market. Integrated circuits and other components are purchased as standard devices or developed as application-specific integrated circuits.

Research and Development

We have a highly structured approach to maximize research and development efficiency. A group of advisors formulates a long-term technology plan with clear objectives. Through our direct engagement with customers, high-priority projects are identified and appropriate resources are allocated. Engineering resources are organized by area of competence to effectively develop expertise and to share technologies across product lines. To improve our time-to-market with new products and technologies, we have multiple development centers worldwide that work simultaneously on projects, delivering 24-hour engineering capability.

We internally develop all software components of our products to achieve ease of use, integrated functionality, throughput efficiency and calibration/diagnostic effectiveness. This development is based on object-oriented architecture, modeling and design. Our software engineering group has achieved the Software Engineering Institute’s Capability Maturity Model, or CMM, Level 2 in our San Jose facility and CMM Level 3 in the Ferndown and St. Etienne facilities.

We design all critical devices, boards and modules that implement our proprietary architecture in Test Systems products. We partly develop internally and partly license the advanced sub-micron diagnostic technology implemented in Probe Systems.

Competition

We face substantial competition throughout the world in each of our product areas. Our competitors in the automated test systems market primarily include Advantest, Agilent Technologies, Credence Systems, LTX Corporation and Teradyne. Our Probe Systems product line faces competition primarily from Advantest, FEI Company, Seiko Instruments and Optonics. Veeco Instruments recently announced an agreement to acquire FEI Company. Some of these competitors have substantially greater financial resources and more extensive engineering, manufacturing, marketing and customer support capabilities. We expect our competitors to continue to improve the performance of their current products and to introduce new products or new technologies that could adversely affect sales of our current and future products. In addition, we anticipate that increased competitive pressures will cause intensified price-based competition and we may have to adjust the prices of many of our products.

Intellectual Property

Our success depends in large part on our proprietary technology. We are not dependent on any individual patent but instead we rely on a combination of patents, copyrights, trademarks, trade secrets, confidentiality provisions and licensing arrangements to establish and protect our proprietary rights. Since 1982, approximately 74 United States patents have been granted to us. These patents primarily relate to our Test and Probe Systems and expire from time to time over the next 18 years. Approximately 53 United States patent applications are currently pending. The total number of foreign patents granted to us over the same period is approximately 80 and the total number of pending foreign patent applications is approximately 200. We may be required to spend significant resources to monitor and police our intellectual property rights. We may not be able to detect infringement and may lose competitive position in the market before we do so. In addition, competitors may design around our technology or develop competing technologies. Intellectual property rights may also be unavailable or limited in some foreign countries, which could make it easier for competitors to capture market share. We often rely on licenses of intellectual property useful for our business. We cannot assure you that these licenses will be available in the future on favorable terms or at all. In addition, our position with respect to the negotiation of licenses may change as a result of our separation from Schlumberger.

Third parties may claim that we are infringing their intellectual property rights, and although we do not believe that any of our products infringe the valid intellectual property rights of third parties, we may be unaware of intellectual property rights of others that may cover some of our technology, products and services. Any litigation regarding patents or other intellectual property could be costly and time-consuming, and divert our management and key personnel from our business operations. The complexity of the technology involved and the uncertainty of intellectual property litigation increase these risks. Claims of intellectual property infringement might also require us to enter into costly royalty or license agreements. However, we may not be able to obtain royalty or license agreements on terms acceptable to us, or at all. We also may be subject to significant damages or injunctions against development and sale of certain of our products.

Employees

As of March 31, 2002, we had approximately 930 full time employees, of which approximately 150 were located in Europe, 140 were located in Asia and 640 were located in the United States. Of these, approximately 200 were principally dedicated to research and development, 445 were dedicated to sales, marketing and services and 285 were involved in manufacturing and operations. None of our employees located in the United States is represented by a union. Employees are compensated with a combination of salary, cash bonus and stock options.

Our employees located in France and Italy are represented by labor unions, and we have workers’ councils in several other European countries. We have never experienced a work stoppage, and believe that our relations with our employees are good.

Facilities

We are headquartered in San Jose, California, where we lease approximately 150,000 square feet of commercial space under a term lease that expires October 31, 2009, subject to renewal for up to 15 years at our option. Under the lease, monthly payments for 2002 will be approximately $189,000. These facilities are used for executive office space, including sales and marketing and finance and administration. We also lease approximately 105,000 square feet in Simi Valley, California under a term lease that expires January 14, 2004, subject to renewal at our option for an additional five-year period. We also lease an additional 24,000 square feet in Simi Valley, California under a sublease that expires July 31, 2002. Aggregate monthly payments for 2002 under these leases will be approximately $90,000. The Simi Valley facilities are primarily used for product assembly and manufacturing.

Backlog

Our backlog of unfilled orders for all products and services was $ million at June 30, 2002 and $ million at June 30, 2001. While backlog is calculated on the basis of firm orders, all orders are subject to cancellation or delay by the customer. Our backlog at any particular date, therefore, is not necessarily indicative of actual sales which may be generated for any succeeding period. Historically, our backlog levels have fluctuated based upon the ordering patterns of our customers and changes in our manufacturing capacity.

MANAGEMENT

Directors, Executive Officers and Key Employees

Set forth below is information concerning our directors, executive officers and key employees and their ages as of May 15, 2002:

Name	Age	Position
Ashok Belani	43	President, Chief Executive Officer and Director
Jorge Celaya	36	Chief Financial Officer
Jean-Luc Pelissier	40	Vice President and General Manager, Test Systems
Michel Villemain	41	Vice President and General Manager, Probe Systems
William Dillon	45	Vice President and General Manager, Operations
Thomas Ho	41	Vice President and General Manager, SABER
Burnell West	63	Technical Advisor
Roland Ewubare	35	General Counsel and Secretary
Brett Hooper	39	Vice President, Human Resources and Communications
Jack Sexton	38	Controller and Chief Accounting Officer
Allan Chu	53	Vice President, Asia Region
Euan Baird	64	Chairman of the Board of Directors
Frank Sorgie	54	Director
Dale Gaudier	50	Director
Brian Bachman	57	Director
Edward Hayes	47	Director

Ashok Belani has served as our President and Chief Executive Officer and as a Director since our inception in May 2002. Prior to our inception, Mr. Belani served as President of Semiconductor Solutions from March of 2000 and Chief Information Officer for Schlumberger from September 2001 to May 2002. Previously, he was appointed Vice President of Business Development for Test & Transactions in September 1999, Vice President of Marketing and Product Development for Oilfield Services in January 1998 and Vice President of Marketing and Product Development for Wireline & Testing in October 1994. Mr. Belani joined Schlumberger in 1980. Mr. Belani received a Bachelor of Technology in Electronics Engineering from the Indian Institute of Technology in New Delhi, and an M.S. in Petroleum Engineering from Stanford University.

Jorge Celaya has served as our Chief Financial Officer since our inception in May 2002. Prior to our inception, Mr. Celaya was Vice President of Finance for Schlumberger Network Solutions from July 1999. Previously, he was appointed Treasurer Western Hemisphere in New York for Schlumberger Limited in June 1998, Controller for Anadrill Latin America in January 1997 and Assistant Controller in Paris for Measurement & Systems worldwide in July 1995. Mr. Celaya joined Schlumberger in 1990. Mr. Celaya received his B.A. and M.B.A. in Finance from the University of Texas at Austin.

Jean-Luc Pelissier has served as our Vice President and General Manager, Test Systems since our inception in May 2002 and previously held an equivalent position with Semiconductor Solutions from October 2001. Dr. Pelissier was appointed Vice President Business Development for Semiconductor Solutions in September 2000. For a period of four months in 2000, Dr. Pelissier left Schlumberger to pursue other business interests. From January 1998 to April 2000 he had held the position of Vice President and General Manager, SABER. Dr. Pelissier joined Schlumberger in 1987. Dr. Pelissier completed his doctorate in Microelectronics, Circuits and Systems at the University of Science and Techniques of Languedoc in Montpellier, France.

Michel Villemain has served as our Vice President and General Manager, Probe Systems since our inception in May 2002 and previously held an equivalent position with Semiconductor Solutions from 1998. Previously, Dr. Villemain was appointed Vice President of Marketing for Diagnostic Systems in June 1997, Vice

President of Marketing for Test Systems in 1995 and General Manager for ATE, Europe in 1993. Dr. Villemain joined Schlumberger in 1984. Dr. Villemain received his B.S. in Engineering from the Ecole Polytechnique in Palaiseau, France and his doctorate in Computer Science, Artificial Intelligence from Orsay University, France.

William Dillon has served as our Vice President and General Manager, Operations since our inception in May 2002 and previously held an equivalent position with Semiconductor Solutions from late 2001. Mr. Dillon was appointed Vice President Customer Service for Semiconductor Solutions in May 1998 and Director of Field Operations for Semiconductor Solutions in February 1997. Mr. Dillon joined Schlumberger in 1984. Mr. Dillon received his B.S. in Electronic Engineering Technology from DeVry Institute of Technology.

Thomas Ho has served as our Vice President and General Manager, SABER, since our inception in May 2002 and previously held an equivalent position with Semiconductor Solutions from 2000. Mr. Ho was appointed Vice President and General Manager Asia for Smart Cards & Terminals in January 1999 and Vice President Technical Development for Semiconductor Solutions in July 1997. Mr. Ho joined Schlumberger in 1983. Mr. Ho received a B.S. in Electrical Engineering/Computer Science from the University of California, Berkeley and an M.B.A. from the University of Santa Clara.

Burnell West has served as our Technical Advisor since our inception in May 2002 and previously held an equivalent position with Semiconductor Solutions from April of 2000. From January 1996, he held an Engineering Advisor position with Schlumberger and has held several technical positions in its Test Systems business unit. Dr. West joined Schlumberger in January 1982. Dr. West received a B.S. in Physics from Massachusetts Institute of Technology and a doctorate in Physics at the University of Colorado.

Roland Ewubare has served as our General Counsel and Secretary since our inception in May 2002. Previously, he served as corporate counsel in the legal department of Schlumberger Limited in New York from September 2000. Prior to joining Schlumberger, Mr. Ewubare was an attorney at the firm of Skadden, Arps, Slate, Meagher & Flom LLP in New York from 1998 to 2000 and a lecturer in law at the Nigerian Law School in Lagos, Nigeria from 1994 to 1997. Mr. Ewubare received a Bachelor of Laws degree from the University of Ife in Ife, Nigeria, a Master of Laws degree in International Business Law from the University of London in London, England, where he was a British Council Scholar, and a Master of Laws degree from Harvard Law School.

Brett Hooper has served as our Vice President of Human Resources and Communications since our inception in May 2002 and previously held an equivalent Human Resources position with Semiconductor Solutions from early 2001. Previously, Mr. Hooper was appointed Personnel Manager for Semiconductor Solutions in April of 2000, Personnel Manager North America in April 1999, Director of Marketing Communications for Test & Transactions in January 1997 and Investor Relations Manager North America in 1995. Mr. Hooper joined Schlumberger in 1987. Mr. Hooper holds a B.S. in Petroleum Engineering from the University of Texas at Austin.

Jack Sexton has served as our Controller and Chief Accounting Officer since our inception in May 2002 and previously held an equivalent Controller position with Semiconductor Solutions from February 2002. Previously, Mr. Sexton was appointed Worldwide Controller for Resource Management Services in June 2001, Regional Controller & Director for Schlumberger Industries, United Kingdom and South Africa in March 1998 and North America Regional Controller in August 1996. Mr. Sexton joined Schlumberger in 1990. Mr. Sexton received a B.S. in Finance and a B.S. in Accounting from Boston College.

Allan Chu has served as our Vice President of Asia since our inception in May 2002 and previously held an equivalent position with Semiconductor Solutions from October 2001. Previously, Mr. Chu was appointed Vice President Taiwan in May 2001, General Manager Semiconductor Solutions, Taiwan in October 2000 and General Manager for ATE, North Asia in November 1996. Mr. Chu joined Schlumberger in 1997. Mr. Chu received a B.S. from the Chinese Naval Academy (Taiwan) and graduated from the US Naval War College in Newport, RI. He also holds an M.S. in Mechanical Engineering from California State University in Long Beach.

Euan Baird has served as Chairman of the Board of Directors since our inception in May 2002. Mr. Baird has served as Chairman of the Board and Chief Executive Officer of Schlumberger Limited since 1986. Mr. Baird has held various executive management positions, including Vice President of Operations for Schlumberger Technical Services in Paris, France, and Executive Vice President in charge of Worldwide Wireline Operations for Schlumberger Limited in New York. Mr. Baird joined Schlumberger in 1960. Mr. Baird received a M.A. in Geophysics from Cambridge University. Mr. Baird is a director of Scottish Power, a company which supplies gas, electricity and water services in the United Kingdom and Western United States; Societe Generale Group, an international banking group; and AREVA, a nuclear power and connectors company, and a trustee of Haven Capital Management Trust.

Frank Sorgie has served as a Director since our inception in May 2002. Mr. Sorgie was appointed Chief Accounting Officer of Schlumberger Limited in May 2002 and was previously the Director of Financial Reporting for Schlumberger Limited. Before joining Schlumberger in 1982, he was a Senior Audit Manager at Price Waterhouse. Mr. Sorgie received a B.B.A. in Accounting from Iona College.

Dale Gaudier has served as a Director since our inception in May 2002. Mr. Gaudier has held a variety of positions in the legal department and since December 2000 has served as General Counsel for Schlumberger Information Solutions. From May 1998 to November 2000 he was General Counsel for GeoQuest and Data and Consulting Services, and Manager of Intellectual Property for GeoQuest and Data and Consulting Services. From September 1996 to April 1998 he was General Counsel for Geco-Prakla, England. Mr. Gaudier joined Schlumberger in 1979. He received a B.S. in Physics from the Georgia Institute of Technology and a J.D. from the University of Georgia.

Brian Bachman has served as a Director since June 2002. Mr. Bachman was Axcelis Technologies’ Chief Executive Officer and Vice Chairman from May 2000 to January 2002. From December 1995 to July 2000, he was Senior Vice President and Group Executive-Hydraulics, Semiconductor Equipment and Specialty Controls of Eaton Corporation. Mr. Bachman is a member of the Board of Directors of Keithley Instruments, Inc. and serves on the Board of the Northwestern University’s Kellogg McCormick Master of Management in Manufacturing Program Advisory. Mr. Bachman is also a member of the Board of Governors of the Electronic Industries Association. Mr. Bachman received a B.S. in Engineering from the University of Illinois and a Masters Degree in Business and Finance from the University of Chicago.

Edward Hayes has served as a Director since June 2002. Mr. Hayes is the President and CEO of DIRECTV Broadband, Inc., a position he assumed in 2001. He was the Chief Financial Officer of Telocity Inc. in 2000, and a Vice President and Chief Financial Officer in two different business segments of Lucent Technologies from 1996 to 2000. Mr. Hayes received a B.A. from Colgate University. Mr. Hayes also attended the New York University Graduate School of Business and the International Finance and Markets Program at IMD in Lausanne, Switzerland.

Our officers terminated their positions with Schlumberger shortly following the formation of NPTest. Our board members affiliated with Schlumberger will retain their positions with Schlumberger following the separation.

Board Structure and Compensation

Our board of directors currently consists of six directors, and we expect to increase the board to a total of seven directors prior to the completion of this offering. All of our directors will stand for election at each annual meeting of stockholders. Non-employee directors who are not affiliated with Schlumberger will be paid an annual retainer in an amount to be determined. Employee directors and non-employee directors who are not affiliated with Schlumberger will be eligible for stock option grants under our 2002 Stock Option Plan.

Our board of directors has an audit committee and compensation committee, each of which are described below. Our audit committee will be comprised entirely of independent directors that will be designated prior to the completion of this offering. Our compensation committee will initially be comprised of our entire board of directors, except that in the case of compensation intended to qualify as performance-based compensation for the

purpose of Internal Revenue Section 162(m), the Compensation Committee will be composed solely of at least two outside directors within the meaning set forth in 162(m).

Audit Committee

Our audit committee will review our auditing, accounting, financial reporting and internal control functions and make recommendations to the board of directors for the selection of independent accountants. In addition, the committee will monitor the quality of our accounting principles and financial reporting, as well as the independence of and the non-audit services provided by our independent accountants. In discharging its duties, the audit committee will:

•

review and approve the scope of the annual audit and the independent accountants’ fees;

•

meet independently with our internal auditing staff, our independent accountants and our senior management; and

•

review the general scope of our accounting, financial reporting, annual audit and internal audit program, matters relating to internal control systems as well as the results of the annual audit.

Compensation Committee

Our compensation committee will determine, approve and report to the board on all elements of compensation for our elected officers including targeted total cash compensation and long-term equity based incentives.

Compensation Committee Interlocks and Insider Participation

No member of our compensation committee will serve as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or compensation committee. Additional information concerning transactions between us and entities affiliated with members of the compensation committee is included in this prospectus under the caption “Certain Relationships and Related Transactions.”

Schlumberger Stock Ownership of Directors and Executive Officers

The following table sets forth the number of outstanding shares of Schlumberger common stock beneficially owned on May 15, 2002 by each of our directors and executive officers that own such shares and all directors, director nominees and executive officers as a group. Except as otherwise noted, the individual director or executive officer or their family members had sole voting and investment power with respect to such securities. The total number of shares of Schlumberger common stock outstanding as of March 31, 2002 was 577,100,933.

	Shares of Schlumberger Beneficially Owned
Name of Beneficial Owner	Number of Shares	Percent of Total Outstanding
Ashok Belani	4,532	*
Jean-Luc Pelissier	436	*
Jorge Celaya	1,089	*
Michel Villemain	0	*
Thomas Ho	706	*
Euan Baird	699,955	*
Frank Sorgie	8,384	*
Dale Gaudier	744	*
Executive officers and directors as a group (14 persons)	723,792	*

Less than 1% of the outstanding shares of common stock.

The following table indicates the total number of beneficially owned shares of Schlumberger, including shares subject to options exercisable within 60 days of May 15, 2002, of those executive officers and directors that hold such options:

Name of Beneficial Owner		Shares Subject to Options
Ashok Belani		118,910
Jean-Luc Pelissier		6,000
Jorge Celaya		6,745
Michel Villemain		10,324
Thomas Ho		24,068
Euan Baird		1,263,849
Frank Sorgie		13,946
Dale Gaudier		6,753
Executive officers and directors as a group (14 persons)		1,487,792

Executive Compensation

The following table sets forth compensation information for our chief executive officer and the four other executive officers of NPTest who, based on salary and bonus compensation from Schlumberger and its subsidiaries, would have been the most highly compensated persons of NPTest for the year ended December 31, 2001. All information set forth in this table reflects compensation earned by these individuals for services with Schlumberger and its subsidiaries for the year ended December 31, 2001.

Summary Compensation Table

		Annual Compensation		Long-Term Compensation Awards
Name and Principal Position	Year	Salary ($)	Bonus ($)	Securities Underlying Options (#) (1)	All Other Compensation ($)
Ashok Belani President & Chief Executive Officer	2001	312,500	168,800	30,000	1,000	(2)
Jean-Luc Pelissier Vice President & General Manager, Test Systems	2001	250,000	112,500	15,000	2,000	(2)(4)
Jorge Celaya Chief Financial Officer	2001	140,000	107,916	—	14,006	(2)(3)
Michel Villemain Vice President & General Manager, Probe Systems	2001	180,000	12,600	—	1,000	(2)
Thomas Ho Vice President & General Manager, SABER	2001	220,000	24,200	—	2,000	(2)(4)

(1)	Schlumberger has granted no stock appreciation rights or restricted stock.

(2)	Includes employer contributions to the Profit Sharing Plans.

(3)	Includes employer unfunded credits to the Schlumberger Supplementary Benefit Plan.

(4)

Includes employer unfunded matching credits to the Schlumberger Restoration Savings Plan. Under the Restoration Savings Plan, participants may defer up to 10% of any annual compensation in excess of $200,000 and Schlumberger will make a matching contribution equal to 50% of the first 6% of each participant’s deferral. Participants are 100% vested in their deferrals at all times, and with respect to matching contributions are 33¹/3% vested after three years of service, 66²/3% vested after four years of service and 100% vested after five years of service. Any U.S. employee of Schlumberger and any non-U.S. employee who is on the payroll of Schlumberger Resources, Inc. may participate in the plan if such employee is projected to have compensation in excess of $200,000 in the subsequent year.

Schlumberger has advised us that it intends to make a special bonus payment to our officers, including the officers named in the preceding table, of approximately $1.0 million in cash in the aggregate upon the consummation of this offering. With respect to the executive officers named in the preceding table, Schlumberger has advised us that it currently intends to make special bonus payments of $210,000 to Mr. Belani, $100,000 to Mr. Celaya, $125,000 to Mr. Pelissier, $80,000 to Mr. Villemain and $80,000 to Mr. Ho.

Grants of Stock Options

The following table shows all grants of options to acquire shares of Schlumberger common stock to the executive officers named in the Summary Compensation Table in the year ended December 31, 2001.

	Individual Grants				Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation for Option Term
Name	Number of Securities Underlying Option Granted (#)	Percent of Total Options Granted to Employees in Fiscal Year	Exercise Price ($/Share)	Expiration Date	5% ($)	10% ($)
Ashok Belani	30,000	0.73	62.375	4/18/11	1,176,819	2,982,291
Jean-Luc Pelissier	15,000	0.36	62.375	4/18/11	588,410	1,491,145
Jorge Celaya	—	—	—	—	—	—
Michel Villemain	—	—	—	—	—	—
Thomas Ho	—	—	—	—	—	—

The following table shows all proposed grants of options to acquire shares of NPTest common stock to the executive officers named in the Summary Compensation Table.

Individual Grants

Potential Realizable Value

at Assumed Annual Rates

of Stock Price Appreciation

for Option Term

Name

Number

of Securities

Underlying

Option Granted (#)

Percent of

Total Options

Granted to

Employees in

Fiscal Year

Exercise

Price

($/Share)

Expiration Date

5% ($)

10% ($)

Ashok Belani

Jean-Luc Pelissier

Jorge Celaya

Michel Villemain

Thomas Ho

We expect that the vesting of these options will accelerate upon a “change of control,” as defined in the option agreements, which term will exclude, among other things, a change in control that may result from this offering.

Exercises of Stock Options

The following table shows aggregate exercises of options to purchase Schlumberger common stock in the year ended December 31, 2001 by the executive officers in the Summary Compensation Table in the “Executive Compensation” section above.

Name	Shares Acquired on Exercise (#)	Value Realized ($)	Number of Securities Underlying Unexercised Options Held at Fiscal Year-End (#)		Value of Unexercised In-The-Money Options at Fiscal Year-End ($)
Name	Shares Acquired on Exercise (#)	Value Realized ($)	Exercisable	Unexercisable	Exercisable	Unexercisable
Ashok Belani	—	—	92,722	93,168	941,074	0
Jean-Luc Pelissier	—	—	3,000	27,000	0	0
Jorge Celaya	—	—	5,537	5,546	50,743	3,077
Michel Villemain	—	—	8,865	5,616	103,892	0
Thomas Ho	352	11,809	21,870	13,747	210,865	21,249

No options for NPTest shares have been exercised to date by any of our executive officers.

Pension Plans

Although we do not maintain any pension plans, Schlumberger and certain of its subsidiaries maintain pension plans for employees, providing for lifetime pensions upon retirement after a specified number of years of service. Our employees may have participated in one or more Schlumberger pension plans in the course of their careers with Schlumberger or its subsidiaries, in which case they will be entitled to a pension from each plan based upon the benefits accrued during the years of service related to each plan. These plans are funded on an actuarial basis through cash contributions made by Schlumberger or its subsidiaries. Certain of the plans also permit or require contributions by employees. In connection with this offering, our employees who participated in the Schlumberger pension plans will be treated as if they terminated employment with Schlumberger and will become fully vested in their U.S. pension plan benefits.

Benefits under the international staff pension plans of Schlumberger and certain of its subsidiaries are based on a participant’s pensionable salary (generally, base salary plus incentive) for each year in which the employee participates in the plans and the employee’s length of service with Schlumberger or its subsidiaries. Since January 1, 1993, the benefit earned has been 3.2% of pensionable salary for each year of service. Benefits are payable upon normal retirement age, at or after age 55, or upon early retirement. Estimated annual benefits payable from these plans to our named executive officers in the Summary Compensation Table above are: $36,700 for Mr. Belani.

Benefits under the U.S. tax qualified pension plans of Schlumberger and certain of its subsidiaries are based on an employee’s admissible compensation (generally, base salary plus incentive) for each year in which an employee participates in the U.S. plans and the employee’s length of service with Schlumberger or its subsidiaries. From January 1, 1989, the benefit earned has been 1.5% of admissible compensation for service prior to the employee’s completion of 15 years of active service and 2% of admissible compensation for service after completion of 15 years of active service. Schlumberger has also adopted a supplementary benefit plan for eligible employees. Amounts under the supplementary plan are accrued under an unfunded arrangement to pay each individual the additional amount which would have been payable under the plans if the amount had not been subject to limitations imposed by law on maximum annual benefit payments and on annual compensation recognized to compute plan benefits. Supplementary pension benefits are forfeited if the participant is not age 55 at the time of termination from Schlumberger. Estimated annual benefits payable at age 65 from the U.S. plans to our named executive officers in the Summary Compensation Table above are: $10,800 for Mr. Belani, $20,298 for Mr. Pelissier, $15,845 for Mr. Celaya, $21,476 for Mr. Villemain and $28,011 for Mr. Ho.

Treatment of Schlumberger Stock Options

Certain of our employees hold outstanding options to purchase Schlumberger common stock pursuant to Schlumberger’s 2001 Stock Option Plan, 1998 Stock Option Plan, 1994 Stock Option Plan and 1989 Stock Incentive Plan. Under the terms of these Schlumberger option plans, these employees may continue to participate in the Schlumberger option plans until the date at which Schlumberger ceases to own at least 50% of our outstanding common stock. On such date, these employees will be treated as terminated employees for the purposes of the Schlumberger option plans; and all unvested Schlumberger options will terminate and optionees will have three months to exercise vested options. Any vested options that remain unexercised after this three-month period will terminate, unless the employee qualifies for retirement and elects to retire.

2002 Stock Option Plan

In May 2002, our board of directors adopted and our stockholders approved our 2002 Stock Option Plan, referred to as the “2002 Plan.” The 2002 Plan will become effective concurrent with the effective date of the registration statement of which this prospectus is a part.

Awards Available under the 2002 Plan. The 2002 Plan provides for the grant of incentive stock options within the meaning of section 422 of the Internal Revenue Code and nonstatutory stock options.

Number of Shares of Common Stock Available under the 2002 Plan. The common stock initially reserved for issuance pursuant to exercise of awards under the 2002 Plan consists of shares of authorized but unissued NPTest common stock, subject to certain adjustments as described below. On the first day of each fiscal year of NPTest, the number of shares reserved for issuance under the 2002 Plan will be increased by an amount equal to the lesser of (i) shares or (ii) % of the number of outstanding shares on the last trading day of the immediately preceding fiscal year. As of May 17, 2002, no options to purchase our common stock were issued and outstanding. We intend to issue options to our employees and non-employee members of our board of directors who are not affiliated with Schlumberger. These option grants are discussed below.

Persons Eligible to Receive Awards. Employees and non-employee members of the board of directors of NPTest or any 50%-owned subsidiary of NPTest may participate in the 2002 Plan.

Administration of the 2002 Plan. Our board of directors or a committee appointed by our board of directors administers the 2002 Plan. In the case of stock options granted to our officers or directors, the committee will consist solely of at least two “non-employee directors” or “outside directors” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 and Section 162(m) of the Internal Revenue Code. The committee has the power to interpret the provisions of the 2002 Plan and to supervise its administration. Subject to the provisions of the 2002 Plan, the committee has the authority to, among other things, make rules and regulations appropriate for the administration of the 2002 Plan, determine the persons to whom stock options may be granted, the number of shares to be covered by each stock option, the exercise price of each stock option, the vesting schedule of each option, and whether the stock option will be designated as an incentive stock option or nonstatutory stock option.

Options. The committee determines the exercise price of options granted under the 2002 Plan, but in no event may the exercise price of an incentive stock option be less than the fair market value of our common stock on the date of grant. The term of any option may not exceed ten years. No optionee may be granted options for more than shares of our common stock in any calendar year, subject to certain adjustments described below.

Termination of Employment. Unless otherwise provided in the optionee’s option agreement, if the optionee’s employment is terminated other than due to death or for cause, then the optionee has three months from the date of termination to exercise any options that are vested and exercisable on the date of termination. Regardless of the reason for termination (including death), in no event may any option be exercised following its expiration.

If the optionee’s termination of employment is due to the optionee’s death, all vested and exercisable stock options on the date of termination will remain exercisable for 12 months following the date of termination. If the optionee’s employment is terminated for cause (as determined by the committee), any outstanding options, whether vested or unvested, will terminate immediately.

Transferability of Stock Options. Stock options granted under our 2002 Plan will not be assignable or otherwise transferable except by will or the laws of descent and distribution.

Recapitalizations. In the event that prior to the exercise of an option we effect a subdivision, consolidation or other capital readjustment of our common stock, or in the event of a payment of a stock dividend or other increase or decrease in the number of shares of our common stock, then the number of shares reserved under the 2002 Plan, the number of shares underlying any outstanding options and the purchase price of such options will be proportionately and appropriately adjusted.

Change in Control. In the event of a change in control of NPTest (as defined in the 2002 Plan) unless the committee otherwise determines in its sole discretion, all outstanding options will become fully vested and exercisable prior to such change in control. In connection with a change in control, the committee may provide, in its sole discretion, (1) for the cancellation of any outstanding options in exchange for payment in cash or other property in an amount equal to the fair market value of the share covered by such options reduced (but not below zero) by the purchase price for the shares, and/or (2) for the assumption or substitution of such options by a successor entity, subject to appropriate adjustment as determined by the committee.

Amendment and Termination of the 2002 Plan. Subject to certain conditions and stockholder approval as necessary, our board of directors may amend, alter or terminate the plan at any time, provided, however, that no amendment may impair the rights of any optionee with respect to any outstanding option without that optionee’s consent. In all events, our 2002 Plan will automatically terminate ten years following the effective date of this registration statement.

Stock Option Grants

Consistent with the purposes of the 2002 Plan, we intend to make initial stock option grants to substantially all of our employees and those non-employee directors who are also not employees of Schlumberger. Such option grants will be made on the date that the initial public offering price is determined and will be granted at an exercise price per share equal to the initial public offering price. These initial option grants will account for, in the aggregate, approximately shares of our common stock. Subject to various local laws applicable to our non-U.S. employees and the discretion of our compensation committee, these option grants generally will become vested and exercisable over three years with 25% of the options becoming vested and exercisable on the date of grant and the remaining 75% becoming vested and exercisable in equal installments on the first, second and third anniversary dates of the grant, except that all grants to non-employee directors will be 100% vested and exercisable on the date of grant. We expect that the vesting of the initial options granted to our officers will accelerate upon a “change of control,” as defined in the option agreements, which term will exclude, among other things, a change of control that may result from this offering. Any shares purchased pursuant to such option grants are nontransferable during the 180-day period commencing on the date of this prospectus. These initial option grants will be subject to the individual option agreements entered into with each optionee as well as the terms of the 2002 Plan.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

We have provided below a summary description of the master separation and distribution agreement along with the key related agreements between us and Schlumberger. This description, which summarizes the material terms of the agreements, is not complete. You should read the full text of these agreements, which have been filed with the Securities and Exchange Commission as exhibits to the registration statement of which this prospectus is a part.

The separation agreements referred to below are by and among NPTest and certain subsidiaries of Schlumberger Limited, including Schlumberger Technologies, Inc., Schlumberger Technology Corporation and Schlumberger B.V., each of which is a wholly owned direct or indirect subsidiary of Schlumberger Limited, and are referred to collectively as the Schlumberger Subsidiaries. Schlumberger Limited and its other affiliates are not a party to any of the separation agreements and, therefore, are not responsible for the obligations under, or liable for any breach of, these agreements.

Euan Baird, Frank Sorgie and Dale Gaudier, each of whom serves on our board of directors, are officers of Schlumberger and, accordingly, may be deemed to have an indirect interest in the following agreements between us and the Schlumberger Subsidiaries. In addition, as disclosed in greater detail in the section of this prospectus entitled “Management,” many of our directors and executive officers beneficially own shares of Schlumberger Limited common stock.

Master Separation and Sale Agreement

The master separation agreement contains the key provisions agreed to by us and the Schlumberger Subsidiaries relating to both our separation from Schlumberger and this offering.

The Separation. The separation will be completed prior to the consummation of this initial public offering. Although the Schlumberger Subsidiaries are entitled under the terms of the master separation agreement to amend or terminate that agreement or any of the other ancillary agreements related to the separation prior to the signing of the underwriting agreement for this offering, we do not expect to complete this offering if the separation has not previously occurred on substantially the terms set forth in those agreements.

The master separation agreement provides for the transfer to us of assets and liabilities from the Schlumberger Subsidiaries related to our business as described in this prospectus, no later than the separation date. The master separation agreement recognizes that some of these transfers have already occurred. The various ancillary agreements that are exhibits to the master separation agreement and which detail the separation and various interim and ongoing relationships between the Schlumberger Subsidiaries and us following the separation date include:

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a general assignment and assumption agreement;

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technology, patent, and trademark ownership and license agreements;

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an employee matters agreement;

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a tax sharing agreement;

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a transitional services agreement;

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a real estate matters agreement;

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a confidential disclosure agreement;

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an indemnification and insurance matters agreement; and

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a registration rights agreement.

These agreements are described more fully below.

The Initial Public Offering. We and the Schlumberger Subsidiaries are obligated to use our reasonable efforts to satisfy the following conditions to the consummation of this offering, any of which may be waived by the Schlumberger Subsidiaries and us:

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the registration statement containing this prospectus must be effective and no stop order may be in effect;

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United States securities and blue sky laws must be satisfied;

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our common stock must be listed on the New York Stock Exchange or the NASDAQ National Market;

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all our obligations under the underwriting agreement must be met or waived by the underwriters;

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no legal restraints must exist preventing the separation or this offering;

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all governmental approvals required to permit the separation and this offering must have been obtained;

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the separation must have occurred; and

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the master separation agreement must not have been terminated.

Future Sales by the Schlumberger Subsidiaries. The Schlumberger Subsidiaries have indicated that, following this offering, they intend to divest their remaining ownership in us through public or private sales of their shares of our common stock, with each Schlumberger Subsidiary, in its sole discretion, determining the timing and terms of any such sale transactions, taking into account business and market conditions. We have agreed to cooperate with the Schlumberger Subsidiaries in all respects to accomplish these sales and promptly take all actions necessary or desirable to effect these sales, including the filing of one or more registration statements pursuant to the terms of the registration rights agreement described below.

Covenants between the Schlumberger Subsidiaries and NPTest. In addition to signing documents that transfer control and ownership of various assets and liabilities of the Schlumberger Subsidiaries relating to our business, we have agreed with the Schlumberger Subsidiaries to exchange information, engage in certain auditing practices and resolve disputes in particular ways.

The Schlumberger Subsidiaries do not operate any businesses that presently compete with us, and we do not expect them to do so. However, nothing in any agreement between us and the Schlumberger Subsidiaries prohibits them from competing with us in any business in which we are engaged. Although pursuant to the general assignment and assumption agreement described below we expect to own all assets of Schlumberger that are primarily used in our business at the separation date, Schlumberger may use its remaining assets, as well as any assets it acquires in the future, to compete with us.

Restrictions Regarding Actions Adverse to Schlumberger. So long as Schlumberger owns % of our voting power, we will not, without the prior consent of Schlumberger, amend our certificate of incorporation or bylaws or take or recommend to our stockholders any action that would:

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impose limitations on the legal rights of Schlumberger as stockholders of us, including any action which would impose restrictions (A) based upon the size of the security holding, the business in which a security holder is engaged or considerations applicable to Schlumberger and not to security holders generally, or (B) with reference to our common stock generally, by issuing any other class of securities having voting power disproportionately greater than the equity investment in us represented by our common stock;

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involve the issuance of any warrant, capital stock, rights or other security that has rights that are dependent upon the amount of voting securities owned by Schlumberger;

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deny any benefit to Schlumberger proportionately as holders of any class of voting securities that is made available to other holders of the same class of voting securities generally; or

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alter voting or other rights of the holders of any class of voting securities so that any of those rights are determined with reference to the amount of voting securities held by Schlumberger.

However, this generally does not prohibit us from adopting a customary shareholder rights plan that is reasonably satisfactory to Schlumberger if it allows Schlumberger to continue to hold the shares it owns when the plan is adopted.

Board Representation. Pursuant to the master separation agreement between us and Schlumberger, for so long as Schlumberger and its affiliates other than us own shares representing more than 10%, and less than 50%, of our voting power, we have agreed to nominate at each annual meeting for election to our board a number of directors designated by Schlumberger that is equal to the percentage of our voting power owned by Schlumberger and to use our best efforts to cause these nominees to be elected to our board, including soliciting proxies in favor of their election.

Information Exchange. The Schlumberger Subsidiaries and we have agreed to share information relating to governmental, accounting, contractual and other similar requirements of our ongoing businesses, unless the sharing would be commercially detrimental. In furtherance of this, the Schlumberger Subsidiaries and we have agreed as follows:

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Each party has agreed to maintain adequate internal accounting to allow the other party to satisfy its own reporting obligations and prepare its own financial statements.

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Each party will retain records beneficial to the other party for a specified period of time. If the records are going to be destroyed, the destroying party will give the other party an opportunity to retrieve all relevant information from the records, unless the records are destroyed in accordance with adopted record retention policies.

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Each party will use commercially reasonable efforts to provide the other party with directors, officers, employees, other personnel and agents who may be used as witnesses in and books, records and other documents which may reasonably be required in connection with legal, administrative or other proceedings.

Auditing Practices. So long as the Schlumberger Subsidiaries are required in accordance with U.S. generally accepted accounting principles to consolidate our results or record our results under the equity method, we have agreed to:

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not select a different independent accounting firm from that used by Schlumberger without the Schlumberger Subsidiaries’ consent;

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use reasonable commercial efforts to enable our auditors to complete their audit and date their opinion on our audited annual financial statements on the same date as Schlumberger’s auditors complete their audit and date their opinion on the Schlumberger Subsidiaries’ financial statements;

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exchange all relevant information needed to prepare financial statements;

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grant each other’s internal auditors access to each other’s records;

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notify each other of any change in accounting principles; and

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provide to the Schlumberger Subsidiaries all relevant monthly, quarterly and annual financial information and reports in accordance with the Schlumberger Subsidiaries’ financial procedures.

Dispute Resolution. If problems arise between us and the Schlumberger Subsidiaries, we have agreed to the following procedures:

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The parties will make a good faith effort to first resolve the dispute through negotiation.

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If negotiations fail, the parties agree to attempt to resolve the dispute through non-binding mediation.

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If mediation fails, the parties can resort to binding arbitration. In addition, nothing prevents either party acting in good faith from initiating litigation at any time if failure to do so would cause serious and irreparable injury to one of the parties or to others or where there is a breach of any obligation of confidentiality or infringement, misappropriation or misuse of any intellectual property right.

Cooperation in Obtaining New Agreements. During the first year after this offering, the Schlumberger Subsidiaries have agreed to provide reasonable assistance to us in obtaining agreements with third parties from which we currently derive benefits under agreements and relationships not being assigned to us in the separation. In addition, Schlumberger has agreed to assist us in obtaining the consent of third parties, if necessary, to the assignment of agreements to us in connection with the separation.

No Representations and Warranties. Neither party is making any promises to the other regarding:

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the value of any asset that the Schlumberger Subsidiaries are transferring;

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whether there is a lien or encumbrance on any asset the Schlumberger Subsidiaries are transferring;

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the transferability of rights, obligations or license of third parties with respect to the assets the Schlumberger Subsidiaries are transferring;

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the absence of defenses or counterclaims regarding any claim that the Schlumberger Subsidiaries are transferring; or

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the legal sufficiency of any conveyance of title to any asset the Schlumberger Subsidiaries are transferring.

Expenses. All of the costs and expenses related to this offering as well as the costs and expenses related to the separation, other than certain taxes, will be paid by the Schlumberger Subsidiaries. In addition, the costs and expenses associated with this offering will be paid by the selling stockholders. We will each bear our own internal costs incurred in consummating these transactions.

Termination of the Agreements. The Schlumberger Subsidiaries, in their sole discretion, can terminate the master separation agreement and all ancillary agreements at any time prior to the signing of the underwriting agreement for this offering. Between the signing of the underwriting agreement and the closing of this offering, the master separation agreement and the ancillary agreements may only be terminated with the mutual consent of the Schlumberger Subsidiaries and us.

General Assignment and Assumption Agreement

The general assignment and assumption agreement identifies the assets Schlumberger will transfer to us and the liabilities we will assume from the Schlumberger Subsidiaries in the separation. The agreement also describes when and how these transfers and assumptions will occur. While the following discussion for convenience uses the future tense, the agreement recognizes that some of the transactions described below have already occurred.

Asset Transfer. Prior to the separation date, the Schlumberger Subsidiaries will transfer the following assets to us, except as provided in this agreement:

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all assets reflected on our balance sheet as of March 31, 2002, less any assets disposed of after March 31, 2002;

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all written off, expensed or fully depreciated assets that would have appeared on our balance sheet as of March 31, 2002 if we had not written off, expensed or fully depreciated them;

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all assets that the Schlumberger Subsidiaries acquired after March 31, 2002 that would have appeared in our balance sheet as of the separation date if we prepared that balance sheet using the same principles we used in preparing our balance sheet as of March 31 2002;

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all assets that are primarily used in our business at the separation date but are not reflected in our balance sheet as of March 31, 2002 due to mistake or omission, provided that we provide notice of such mistake or omission to the Schlumberger Subsidiaries prior to the first anniversary of this offering;

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all contingent gains, other than taxes, related primarily to our business;

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all contracts that relate primarily to our business;

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all accounts receivable;

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specified rights under existing insurance policies of Schlumberger; and

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other specified assets.

Excluded Assets. Specified assets will not be transferred to us, including:

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cash; and

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deferred tax assets relating to pension and other post-retirement benefits liabilities that will be retained by the Schlumberger Subsidiaries.

Assumption of Liabilities. Prior to the separation date, we will assume the following liabilities from the Schlumberger Subsidiaries, except as provided in this agreement:

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all liabilities reflected on our balance sheet as of March 31, 2002, less any liabilities discharged after March 31, 2002;

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all liabilities of the Schlumberger Subsidiaries that arose after March 31, 2002 that would have appeared in our balance sheet as of the separation date if we prepared that balance sheet using the same principles we used in preparing our balance sheet as of March 31 2002;

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all liabilities that are related primarily to our business at the separation date but are not reflected in our balance sheet as of March 31, 2002 due to mistake or omission, provided that the Schlumberger Subsidiaries provide notice of such mistake or omission to us prior to the first anniversary of this offering;

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all contingent liabilities related primarily to our business, other than taxes, pending litigation and specific environmental contamination, if any;

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all accounts payable;

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all liabilities, other than taxes, primarily relating to the operation of our business or any of the assets that the Schlumberger Subsidiaries transferred to us;

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all liabilities arising out of specified terminated, divested or discontinued businesses and operations; and

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other specified liabilities.

Excluded Liabilities. We will not assume specified liabilities, including:

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any liability under the Schlumberger employee benefit plans relating to pension and retiree medical benefits; and

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other liabilities, including specified income tax liabilities and pending litigation.

The Non-United States Transfers. The transfer of international assets and assumption of international liabilities will be accomplished through agreements entered into between international subsidiaries of us and the Schlumberger Subsidiaries and will be substantially completed prior to the consummation of this initial public offering. The agreement acknowledges that circumstances in jurisdictions outside of the United States may require the timing of the international separation to be delayed past the separation date.

Delayed Transfers. If it is not practicable to transfer specified assets and liabilities prior to the separation date, the agreement provides that these assets and liabilities will be transferred as soon as practicable after the separation date.

Obtaining Approvals and Consents. The parties agree to cooperate to obtain any governmental approvals and any required consents, substitutions or amendments required to novate or assign all rights and obligations under any contracts that will be transferred in the separation. Even if the Schlumberger Subsidiaries are unable to transfer a specified asset to us, we will still otherwise assume in the separation any liabilities that relate to that asset. If the parties have been unable to obtain any required governmental approval or consent, substitution or amendment within six months of the separation date, the parties will use their reasonable efforts to achieve an alternative solution in accordance with their intentions.

Master Technology Ownership and License Agreement

The master technology ownership and license agreement, or the master technology agreement, allocates intellectual property rights in technology other than patents, patent applications, invention disclosures, trademarks, trade names, service marks or related applications as of the separation date. The purpose of these reciprocal licenses is to clarify the separation of the intangible property covered by the agreement between our business and that of the Schlumberger Subsidiaries. In the master technology agreement, the Schlumberger Subsidiaries will assign to us, and confirm the prior assignment to us of, all technology directly used in connection with or otherwise directly relating to our business. The Schlumberger Subsidiaries will not restrict our right to use the assigned technology. The Schlumberger Subsidiaries’ assignment of technology to us will be subject to any and all licenses or other rights that the Schlumberger Subsidiaries may have granted with respect to the technology prior to the separation date.

In addition, each party will grant a personal, irrevocable, non-exclusive, worldwide, fully-paid, royalty-free and generally non-transferable license to its technology to the other party and its subsidiaries for generally unrestricted use (except for commercially released software, which is subject to narrower rights) in connection with the other party’s business, but only to the extent that such technology has been disclosed to or is in the possession of the other party as of the separation date. Each party will be able to sublicense the technology licensed to its subsidiaries, affiliates, distributors, resellers, customers, systems integrators, distribution channels and, subject to specified requirements, transferees of any going businesses of such party. Each party’s license of technology to the other party will be subject to any and all licenses or other rights that the licensing party may have granted with respect to the technology prior to the separation date.

The master technology agreement will not obligate either party to provide to the other party improvements that it makes, whether to its own technology or to the other party’s technology licensed to it under the agreement. In the event of an acquisition of either party or an acquisition of all or substantially all of the assets of either party, the acquired party or the party whose assets are acquired, as applicable, may assign the master technology agreement and any licenses thereunder to the acquiring party.

Master Patent Ownership Agreement

The master patent ownership agreement, or the master patent agreement, allocates rights relating to patents, patent applications and invention disclosures. Under the master patent agreement, the Schlumberger Subsidiaries will assign to us, and confirm the prior assignment to us of, ownership of specified patents, patent applications

and invention disclosures, as well as related causes of action and rights or recovery for past infringement. The specified patents will include approximately 74 United States patents and approximately 80 foreign patents, and the specified patent applications will include approximately 53 United States patent applications currently pending and approximately 200 pending foreign patent applications. Schlumberger will not restrict our right to exploit the assigned patents, patent applications and invention disclosures. The Schlumberger Subsidiaries’ assignment of the patents, patent applications and invention disclosures to us will be subject to any and all licenses or other rights that the Schlumberger Subsidiaries may have granted with respect to the patents, patent applications and invention disclosures prior to the separation date.

In addition, each party will covenant not to sue the other party and its subsidiaries, affiliates, customers and third party manufacturers under its patents that exist as of the separation date or that are based on applications or invention disclosures that exist as of the separation date, for infringement by the products and services of the other party, as they exist as of the separation date. Both parties agree to impose this covenant not to sue on any third party to whom they assign any of their patents, patent applications or invention disclosures. The covenants not to sue are non-transferable, but in the event of a change of control of either party, an acquisition of all or substantially all of the assets of either party or a transfer of a subsidiary or business unit by either party, the other party is obligated to enter into a covenant not to sue with the acquiring party subject to certain reductions in the scope of the covenant not to sue and subject to the agreement of the acquiring party to grant a covenant not to sue back to the other party. The purpose of these reciprocal covenants is to clarify the separation of the intangible property covered by the agreement between our business and that of the Schlumberger Subsidiaries.

The master patent agreement also provides that the Schlumberger Subsidiaries and we will cooperate reasonably and in good faith to the extent consistent with each other’s own business objectives for a period of five years after the separation date in the event either party is subject to patent litigation.

Neither party to the master patent agreement is obligated to file any patent applications, secure any patent rights, maintain any patent in force or provide any technical assistance to the other party, other than the obligations expressly assumed in the master patent agreement.

Master Trademark Ownership and License Agreement

The master trademark ownership and license agreement, or the master trademark agreement, allocates rights relating to trademarks, service marks, trade names and domain names. In the master trademark agreement, the Schlumberger Subsidiaries will assign to us, and confirm the prior assignment to us of, trademarks, service marks, trade names and domain names that are used in connection with our business. The Schlumberger Subsidiaries’ assignment of the trademarks, service marks, trade names and domain names to us will be subject to any and all licenses or other rights that the Schlumberger Subsidiaries may have granted with respect to the trademarks, service marks, trade names and domain names prior to the separation date.

In addition, the Schlumberger Subsidiaries will grant us a personal, irrevocable, non-exclusive, worldwide, fully-paid, royalty-free and generally non-transferable license to mark our existing products and services with, and advertise and promote these products and services using, specified trademarks of the Schlumberger Subsidiaries. The term of this license is two years after the separation date. We may allow authorized dealers to use the licensed trademarks in the advertisement and promotion of our existing products and services. During the first two years from the separation date, the Schlumberger Subsidiaries will agree not to license to third parties the trademarks that they license to us for use in connection with products or services that compete with our existing products and services that are listed on a corporate price list mutually agreeable to us and the Schlumberger Subsidiaries. The Schlumberger Subsidiaries may terminate the license under the master trademark agreement only with regard to products and services that fail to meet required quality standards or failure to adhere to the Schlumberger Subsidiaries’ trademark usage guidelines, in each case subject to a notice and cure period. In the event of an acquisition of either party or an acquisition of all or substantially all of the

assets of either party, the acquired party or the party whose assets are acquired, as applicable, may assign the license to the acquiring party.

Under the master trademark agreement, the Schlumberger Subsidiaries have also allowed us to use the licensed trademarks on our business cards, letterhead, stationary, paper stock and other supplies for up to six months after the separation date in connection with our business to the extent the trademarks are in use, in inventory or on order.

Neither party to the master trademark agreement is obligated to file any trademark applications or secure or maintain any rights in any trademark, service mark, trade name or domain name.

Employee Matters Agreement

We will enter into an employee matters agreement with the Schlumberger Subsidiaries to allocate certain assets, liabilities, and responsibilities relating to our current and former employees and their participation in the benefits plans, including stock plans, that Schlumberger currently sponsors and maintains.

All of our eligible employees will continue to participate in certain Schlumberger benefit plans until such time as the first to occur of: (A) we establish our own benefit plans for the benefit of our eligible employees, (B) we elect not to participate in the Schlumberger benefit plans, regardless of whether or not we establish a similar type benefit plan for our eligible employees or (C) rights of our eligible employees to participate in the Schlumberger benefit plans terminate under the terms of such benefit plan. In the event we elect not to participate in a Schlumberger benefit plan, or establish our own benefit plan, we will remain liable for any liability under a benefit plan that covered our eligible employees until such time as the benefit plan liability has been satisfied for any obligation incurred while the employee was covered by the applicable plan.

We will work together with the Schlumberger Subsidiaries to provide a reasonable transition for eligible employees from the benefit plans sponsored by Schlumberger to our benefit plans. We and the Schlumberger Subsidiaries agree that as of the date of this prospectus, where there are no conflicts with benefit plan provisions, they will provide payroll services, health and welfare benefits and savings and profit sharing plan benefits at cost for our employees under Schlumberger sponsored benefit plans through December 31, 2002. After December 31, 2002, we may continue to receive certain benefit services from the Schlumberger Subsidiaries, but at market rate, or we may elect to use other third party vendors. We intend to establish our own benefit plans no later than the date on which the Schlumberger Subsidiaries cease to own at least 50% of our outstanding common stock. We will be responsible for notifying our employees within a reasonable time period preceding any benefit plan change of the employee’s eligibility for coverage under our benefit plan and the subsequent termination of coverage under the Schlumberger benefit plans.

Each of our newly established benefit plans will provide that all service, compensation and other benefit determinations that were recognized under a similar type of benefit plan maintained by Schlumberger at the time our employees are no longer eligible to participate in the Schlumberger plans, will be taken into account to the extent possible under our benefit plan upon enrollment in such plan.

Options. Under the terms of the Schlumberger option plans, our employees may continue to participate in the Schlumberger option plans until the date on which the Schlumberger Subsidiaries cease to own at least 50% of our outstanding common stock. On this date, optionees will have three months to exercise all outstanding Schlumberger options to the extent such options are vested.

Stock Purchase Plan. All of our eligible employees will continue to participate in the Schlumberger Discounted Stock Purchase Plan, under which these employees are able to purchase Schlumberger common stock at a discount through regular after-tax payroll deductions. Consistent with the requirements of Section 424 of the Internal Revenue Code, our eligible employees are eligible to participate in the Schlumberger Discounted Stock

Purchase Plan until the date on which the Schlumberger Subsidiaries cease to own at least 50% of our outstanding common stock. We do not presently intend to offer a comparable stock purchase plan.

Notwithstanding the U.S. Pension Plan provisions set forth below, liabilities relating to other employee benefits plans will be transferred to us or the specific plan or trust, as applicable, and the underlying assets related to such liability, if any, will be transferred to us or the specific plan or trust, or other funding vehicle as agreed to between the Schlumberger Subsidiaries and us and further set out in the Employee Matters Agreement.

Qualified Retirement Plans. From the date of this offering, our employees located in the United States will cease to participate in any Schlumberger-sponsored pension plan. Schlumberger will fully vest our employees in their U.S. pension plan benefit that was earned up to the date of this offering. The Schlumberger Subsidiaries will retain the liabilities and the assets of the pension plan.

Our eligible employees will continue to participate in the Schlumberger Savings and Profit Sharing Plan, and we will continue to make an employer contribution with respect to our eligible employees until we establish our own 401(k) plan. Pursuant to the employee matters agreement, we have agreed to establish our own 401(k) plan effective as of the first to occur of: (A) the Schlumberger Subsidiaries cease to own at least 50% of our outstanding common stock, (B) January 1, 2003 or (C) such earlier date as we and the Schlumberger Subsidiaries may agree. The transition of assets and liabilities from the Schlumberger sponsored Savings and Profit Sharing Plan to our newly established 401(k) plan, will be determined at the time we establish a similar type plan and to the extent possible the assets and liabilities shall be transferred to our plan, on a plan-to-plan transfer basis, and will be made in accordance with any regulation concerning the transfer of such assets and liabilities.

U.S. Non-Qualified Retirement Plans. From the date of this offering, our employees will cease to accrue any benefits in any Schlumberger sponsored non-qualified pension plan. The Schlumberger Subsidiaries shall retain the liabilities and the assets of this plan. Our employees will forfeit any non-qualified pension benefit if they are not age 55 or older at the time the Schlumberger Subsidiaries cease to own at least 50% of our outstanding common stock.

Health and Welfare Plans. Our eligible employees will continue to participate in the Schlumberger health and welfare plans until January 1, 2003 or such earlier date as we and the Schlumberger Subsidiaries may agree. Notwithstanding the preceding sentence, employees in North America will cease to be eligible to participate in or be covered by the Retiree Medical Plan sponsored by Schlumberger as of this offering.

To the extent we determine it is administratively and financially feasible to sponsor a similar type health and welfare plan, we intend to provide to our eligible employees health and welfare plans that are comparable in the aggregate in all material features to the corresponding Schlumberger health and welfare plans, excluding retiree medical coverage.

Tax Sharing Agreement

Presently, we are included in Schlumberger’s consolidated group for U.S. federal income tax purposes as well as Schlumberger’s combined groups for various state, local and foreign income tax purposes. Upon completion of this offering, we will probably no longer be included in Schlumberger’s U.S. federal consolidated group because no U.S. subsidiary of Schlumberger is expected to own at least 80% of our voting power and value. We may continue to be included in certain of Schlumberger’s state, local and foreign combined groups.

We have entered into a tax sharing agreement with Schlumberger, effective upon completion of this offering, which governs Schlumberger’s and our respective rights, responsibilities and obligations with respect to taxes and tax benefits. The general principles of the tax sharing agreement will include the following:

•

All taxes and tax benefits of the U.S. federal consolidated group through the offering date, including taxes and tax benefits attributable to us, will be for the account of Schlumberger.

•

If we and Schlumberger are members of a U.S. federal consolidated group for any period after the offering date, we will be responsible for all taxes attributable to us for that period, determined as if we had filed separate U.S. federal income tax returns beginning after the offering date. We will also be entitled to reimbursement by Schlumberger on a current basis for any tax benefits realized by Schlumberger as a result of our being a member of that group. As indicated, however, we do not expect that Schlumberger and we will be members of a U.S. federal consolidated group after the offering date.

•

All taxes and tax benefits of any state or local combined group through the offering date, including taxes and tax benefits attributable to us, will be for the account of Schlumberger.

•

All taxes and tax benefits of any state or local combined group of which we and Schlumberger are members after the offering date will be shared in the same manner as U.S. federal income taxes after the offering date, as described above.

•

Taxes and tax benefits of any foreign combined group will generally be shared between us and Schlumberger for all periods, including those before the offering date. These taxes and tax benefits will be shared in the same manner as U.S. federal income taxes after the offering date, as described above.

•

Apart from taxes and tax benefits arising in a consolidated or combined group, Schlumberger will be responsible for all taxes, and will be entitled to all tax benefits, attributable to Schlumberger, and we will be responsible for all taxes, and will be entitled to all tax benefits, attributable to us, for all periods, whether before or after the offering date.

•

There will be certain limits on our ability to obtain a refund from a carryback to a year in which we and Schlumberger joined in a consolidated or combined return.

•

We will have the right to be notified of tax matters for which we are responsible under the terms of the tax sharing agreement, although Schlumberger will have sole authority to respond to and conduct all tax proceedings, including tax audits, relating to any Schlumberger consolidated or combined income tax returns in which we are included.

•

Any assets we may acquire or have acquired from Schlumberger in a taxable asset transfer, or in a transaction treated as a taxable asset transfer, may increase our tax basis for U.S. federal income tax purposes in the assets to fair market value and result in tax benefits that reduce our future income tax liability. If such a basis increase occurs, we will generally be required to pay Schlumberger, on an annual basis for fifteen years, the tax savings amount, generally calculated by comparing our actual tax liability to the tax liability that we would have incurred absent such basis increase, in both cases excluding the effect of any loss carrybacks.

•

We will also be responsible for certain transfer taxes, whether domestic or foreign, incurred in separating our assets from Schlumberger, if we derive a benefit from the payment of such taxes.

The tax sharing agreement further provides for cooperation between Schlumberger and us with respect to tax matters, the exchange of information, and the retention of records that may affect the income tax liability of the parties to the agreement.

Notwithstanding the tax sharing agreement, under U.S. treasury regulations, each member of a consolidated group is severally liable for the U.S. federal income tax liability of each other member of the consolidated group. Accordingly, with respect to periods in which we have been included in Schlumberger’s consolidated group, we could be liable to the U.S. government for any U.S. federal income tax liability incurred, but not discharged, by any other member of Schlumberger’s consolidated group. However, if any such liability were imposed, we would be entitled to be indemnified by Schlumberger for tax liabilities allocated to Schlumberger under the tax sharing agreement.

Master Transitional Services Agreement

The master transitional services agreement governs the provision of transitional services by the Schlumberger Subsidiaries to us, on an interim basis, including financial, legal, accounting, customer service, human resources, administration supply chain, product order administration facilities and information technology services. The Schlumberger Subsidiaries will provide these services to us generally at a price equal to their direct and indirect costs until December 31, 2002, and thereafter at commercially reasonable terms and prices to be negotiated. At any time between the date of this offering and December 31, 2002, we generally may terminate the master transitional services agreement with respect to any of the services that the Schlumberger Subsidiaries provide on 30 days prior written notice, and after December 31, 2002 either party generally may terminate the agreement with respect to any of the services on 30 days prior written notice.

The master transitional services agreement also covers the provision of additional transitional services identified from time to time after the separation date that were provided by the Schlumberger Subsidiaries prior to the separation date or that are essential to effectuate an orderly transition under the master separation agreement, so long as the provision of such services would not significantly disrupt the Schlumberger Subsidiaries’ operations or materially increase the scope of its responsibility under the master transitional services agreement.

If the Schlumberger Subsidiaries reasonably believe they are unable to provide any service due to a failure to obtain any necessary consent, license or approval, the parties will cooperate to determine the best alternative and, subject to specified limitations in the agreement, they will use reasonable efforts to continue providing the service.

Real Estate Matters Agreement

The real estate matters agreement addresses real estate matters relating to the leased and owned properties of the Schlumberger Subsidiaries that have been or will be transferred to or shared with us. The agreement describes the manner in which the Schlumberger Subsidiaries will transfer to or share with us various leased and owned properties, including the following types of transactions:

•

specified real properties leased by the Schlumberger Subsidiaries prior to the separation date will be assigned to us on the later of the separation date and the fifth day after the landlord for the particular property consents to the assignment, if required;

•

we will grant to the Schlumberger Subsidiaries a sublease to occupy a portion of specified real properties leased by the Schlumberger Subsidiaries prior to the separation date that are assigned to us, which subleases will become effective on the dates of the assignments of those properties; and

•

the Schlumberger Subsidiaries will grant to us a sublease to occupy a portion of specified real properties owned or leased by the Schlumberger Subsidiaries, which subleases will become effective on the separation date.

The subleases granted by us and the Schlumberger Subsidiaries for a term of 18 months, commencing on the separation date, will be at scheduled rental rates.

If the Schlumberger Subsidiaries are not able to transfer any leased property to us due to the failure to obtain a required consent, the Schlumberger Subsidiaries have agreed to allow us to occupy that property as a sublessee upon the terms and conditions of the lease for the property until the Schlumberger Subsidiaries are able to transfer the lease to us. However, the Schlumberger Subsidiaries may require us to immediately vacate any of these properties, at our sole expense, if they reasonably believe that our occupation constitutes a breach of the lease and an enforcement action or forfeiture by the landlord is unavoidable unless we vacate the property. We will be required to indemnify the Schlumberger Subsidiaries for any losses that they incur as a result of our occupation of these properties, except losses related to any breach by the Schlumberger Subsidiaries resulting from their permitting us to occupy the properties as sublessees. In addition, we may be subject to lawsuits by the

landlords of any of these properties that we occupy without the landlord’s prior consent, if required, and we are not able to predict whether we will be able to successfully defend any such lawsuits or avoid the payment of material damages.

On and after the separation date, we will be obligated to reimburse the Schlumberger Subsidiaries for all rents and other charges required under the leases to be transferred to us, regardless of whether such transfer has occurred on the separation date or whether we are then able to occupy the property, and must indemnify the Schlumberger Subsidiaries with respect to any such rents or charges paid by them.

The real estate matters agreement includes a description of each property to be transferred to or shared with us for each type of transaction described above. The standard forms of the proposed transfer documents, such as the assignment of leases and the licenses, are contained in schedules.

The real estate matters agreement also requires both parties to use reasonable efforts to obtain any landlord consents required for the proposed transfers of leased properties to us, including the Schlumberger Subsidiaries paying all reasonable costs and expenses in connection with obtaining necessary consents to the extent such payments are required by the relevant leases or are typical in the open market and our providing any security required under the applicable leases. In addition, if any landlord refuses to release any guarantee or security previously provided by the Schlumberger Subsidiaries, we must indemnify the Schlumberger Subsidiaries against any losses related to the guarantee or security as a result of our occupancy of the property.

If the landlord for any leased real property that is contemplated to be transferred to us formally and unconditionally refuses to consent to the transfer, we and Schlumberger will enter into good faith negotiations and use reasonable efforts to allocate the applicable property and consider alternative structures to accommodate the needs of both parties and the allocation of costs. If we are unable to agree upon an allocation, the dispute resolution mechanisms in the master separation agreement will apply.

The real estate matters agreement further provides that we and the Schlumberger Subsidiaries will be required to accept the transfer, assignments, leases, subleases and licenses of properties described in the agreement, even if a site has been damaged by a casualty before the separation date. Transfers with respect to leased sites or licenses of sites where the underlying lease is terminated due to casualty or action by the landlord prior to the separation date will not be made, and neither party will have any liability related to those leases and licenses. The real estate matters agreement also gives the parties the right to change the allocation and terms of specified sites by mutual agreement based on changes in the requirements of the parties.

Master Confidential Disclosure Agreement

The master confidential disclosure agreement provides that both parties agree not to disclose confidential information of the other party for at least five years from the separation date, except in specific circumstances. The Schlumberger Subsidiaries and we also agree not to use this information in violation of any use restrictions in one of the other written agreements between us.

Indemnification and Insurance Matters Agreement

General Release of Pre-Separation Claims. Effective as of the separation date, subject to specified exceptions, we will release the Schlumberger Subsidiaries and their subsidiaries, affiliates, directors and officers, successors and assigns, and the Schlumberger Subsidiaries will release us, and our subsidiaries, affiliates, directors and officers, successors and assigns, from any liabilities arising from events occurring on or before the separation date, including events occurring in connection with the activities to implement the separation, this offering and the divestiture of our shares held by the Schlumberger Subsidiaries. This provision will not impair a party from enforcing the master separation agreement, any ancillary agreement or any arrangement specified in any of these agreements.

Indemnification. The indemnification and insurance matters agreement also contains provisions governing indemnification. In general, we have agreed to indemnify the Schlumberger Subsidiaries and their subsidiaries, affiliates, directors and officers, successors and assigns from all liabilities arising from:

•

our business, any of our liabilities or any of our contracts; and

•

any breach by us of the master separation agreement or any ancillary agreement.

The Schlumberger Subsidiaries have agreed to indemnify us and our subsidiaries, affiliates, directors and officers, successors and assigns from all liabilities arising from:

•

the Schlumberger Subsidiaries’ business other than the NPTest business; and

•

any breach by the Schlumberger Subsidiaries of the master separation agreement or any ancillary agreement.

The agreement also contains provisions governing notice and indemnification procedures.

Liability Arising From This Prospectus. We will bear any liability arising from any untrue statement of a material fact or any omission of a material fact in this prospectus.

Insurance Matters. The agreement also contains provisions governing our insurance coverage from the separation date until the offering. As of the separation date, no further insurance coverage with respect to NPTest will be provided by the Schlumberger Subsidiaries. We will work with them to secure additional insurance if desired and cost effective.

Environmental Matters. The Schlumberger Subsidiaries have agreed to indemnify us and our subsidiaries, affiliates, directors and officers, successors and assigns from all liabilities arising from environmental conditions existing prior to the separation date at facilities transferred to us, or which arise out of operations occurring before the separation date at these facilities. Further, the Schlumberger Subsidiaries have agreed to indemnify us and our subsidiaries, affiliates, directors and officers, successors and assigns from all liabilities for any claims brought against us arising from environmental conditions caused by operations occurring at any time, whether before or after the separation date, at any of their facilities other than those facilities transferred to us.

We have agreed to indemnify the Schlumberger Subsidiaries and their subsidiaries, affiliates, directors and officers, successors and assigns from all liabilities arising from environmental conditions caused by operations on and after the separation date at any of the facilities transferred to us, and from environmental conditions at our facilities arising from an event causing contamination that first occurs on or after the separation date, except to the extent that the environmental condition arises out of the operations of the Schlumberger Subsidiaries on and after the separation date.

Each party will be responsible for all liabilities associated with any environmental contamination caused by that party post-separation.

Assignment. The indemnification and insurance matters agreement is not assignable by either party without prior written consent of the other party, except an assignment to any entity that succeeds to all or substantially all of the business or assets of the assigning party.

Registration Rights Agreement

Prior to the offering, we will enter into a registration rights agreement with the Schlumberger Subsidiaries, pursuant to which we will provide the Schlumberger Subsidiaries with a shelf registration allowing the continuous resale of their securities. Under this agreement we also have granted the Schlumberger Subsidiaries

four demand registration rights, each of which may consist of a shelf registration, and unlimited “piggy-back” registration rights. Sales under the shelf registration, as well as the demand and “piggy-back” sales rights, may occur by one or more underwritten offerings or otherwise. We will be required to file the shelf registration statement within 120 days after the completion of this offering, use our reasonable efforts to cause it to become effective not later than 150 days after the completion of this offering, and use our reasonable efforts to keep the registration statement effective for up to 24 months. However, in connection with this offering the Schlumberger Subsidiaries have agreed with the underwriters to limitations on their ability to sell their shares during the 180 days after the date of this prospectus, which agreement is described in the section of this prospectus titled “Underwriting.” We will be permitted to suspend the Schlumberger Subsidiaries’ use of the shelf registration statement for up to 60 days per suspension notice, for a total of 90 days during any 12-month period, under specified circumstances.

The Schlumberger Subsidiaries will pay their pro rata share of the underwriting discounts, fees and expenses in connection with subsequent shelf, demand or piggy-back registrations effected on their behalf. In connection with any other offering effected pursuant to the registration rights agreement, we will indemnify the Schlumberger Subsidiaries for liabilities or losses incurred, including liability under federal securities laws. The Schlumberger Subsidiaries may assign their rights under this agreement in connection with any transfer of their shares.

Other Matters

A portion of our circuit board assembly is outsourced to a Schlumberger factory in St. Etienne, France. The costs paid to Schlumberger were $2.4 million in 1999, $3.2 million in 2000 and $1.8 million in 2001. Schlumberger provides these services to us pursuant to informal arrangements. We expect to continue this arrangement with Schlumberger in the future or, if advantageous, to obtain these services from another manufacturer.

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding the beneficial ownership of our common stock by (i) each person known by us to be the beneficial owner of 5% or more of the outstanding shares of our common stock, (ii) each of our directors, (iii) each of the executive officers named in the Summary Compensation Table in the section entitled “Management” above and (iv) all of our executive officers and directors as a group.

Percentage ownership calculations are based on shares of common stock to be outstanding immediately prior to the closing of this offering. To the extent that any shares are issued upon exercise of options, warrants or other rights to acquire our capital stock that are presently outstanding or granted in the future or reserved for future issuance under our stock plans, there will be further dilution to new public investors. Unless otherwise indicated, the address of each of the named entities or individuals is c/o NPTest, Inc., 150 Baytech Drive, San Jose, California 95134.

Shares Beneficially Owned
Prior to Offering(1)

Shares Beneficially Owned
Subsequent to Offering(1)(2)

Beneficial Owner

Number of Shares

Number of Shares Subject to Options(1)

Percent of Total

Number of Shares

Number of Shares Subject to Options(1)

Percent of Total

Schlumberger Technologies Inc.(3)(4)

Schlumberger B.V.(3)(5)

Ashok Belani

Jean-Luc Pelissier

Jorge Celaya

Michel Villemain

Thomas Ho

Euan Baird

Frank Sorgie

Dale Gaudier

Brian Bachman

Edward Hayes

Executive officers and directors as a group (14 persons)

*	Less than 1% of the outstanding shares of common stock.

(1)	Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned.

(2)	Assumes no exercise of the underwriters’ over-allotment option.

(3)	The aggregate number of shares to be sold by Schlumberger Technologies Inc. and Schlumberger B.V. may be reallocated between them. Schlumberger Technologies Inc. and Schlumberger B.V. are each wholly owned direct or indirect subsidiaries of Schlumberger Limited.

(4)	The address of Schlumberger Technologies Inc. is 150 Baytech Drive, San Jose, California 95134.

(5)	The address of Schlumberger B.V. is Parkstraat 83-89, 2514 JG, The Hague, The Netherlands.

DESCRIPTION OF CAPITAL STOCK

The following description summarizes the material terms of our capital stock. This information does not purport to be complete and is subject in all respects to the applicable provisions of our Amended and Restated Certificate of Incorporation and Bylaws.

Immediately following the closing of this offering, our authorized capital stock will consist of shares of common stock, $.01 par value per share, and shares of preferred stock, $.01 par value per share. Immediately prior to the offering, there were shares of common stock outstanding, which were held of record by two stockholders.

Common Stock

Voting Rights. Each outstanding share of common stock is entitled to one vote on all matter submitted to a vote of stockholders, including the election of directors. There are no cumulative voting rights, and therefore the holders of a plurality of the shares of common stock voting for the election of directors may elect all of the directors standing for office. For additional information regarding the election of directors designated by Schlumberger you should read the section of this prospectus entitled “Certain Relationships and Related Transactions.”

Dividends. Holders of common stock are entitled to receive dividends at the same rate if and when dividends are declared by our board of directors out of assets legally available for the payment of dividends.

Liquidation. In the event of a liquidation, dissolution or winding up of our affairs, whether voluntary or involuntary, after payment of debts and other liabilities, our remaining assets will be distributed ratably among holders of shares of common stock.

Rights and Preferences. The common stock has no preemptive, redemption, conversion or subscription rights.

Special Meetings of Stockholders. Our Amended and Restated Bylaws provides that special meetings of stockholders may be called only by our Chairman of the Board of Directors, President, Secretary, Assistant Secretary or Board of Directors. This provision could have the effect of delaying, deferring or preventing a change in control of our company or discouraging a potential acquiror from attempting to obtain control of us, which in turn could adversely affect the market price of our stock.

Preferred Stock

Our board is authorized without stockholder approval to issue preferred stock in one or more classes or series and to designate for each class or series the following:

•

the terms and conditions of any voting, dividend and conversion or exchange rights;

•

the amount payable on the series upon redemption and upon our dissolution or distribution of our assets; and

•

the rights, qualifications, limitations or restrictions pertaining to the class or series.

These rights and privileges could adversely affect your voting power, and our board’s authority to issue preferred stock without your approval could delay or prevent a change in control of the company.

Delaware Anti-Takeover Law

We are subject to Section 203 of the Delaware General Corporation Law. In general, Section 203 restricts some business combinations involving interested stockholders or their affiliates. An interested stockholder is defined as any person or entity that is the beneficial owner of 15% or more of the outstanding voting stock of the corporation at any time in the past three years. Schlumberger is not an interested stockholder under this statute.

Limitation of Liability and Indemnification

Our Amended and Restated Certificate of Incorporation limits the liability of our directors to the maximum extent permitted by Delaware law. Delaware law provides that directors will not be personally liable for monetary damages for breach of their fiduciary duties as directors, except liability for:

•

any breach of their duty of loyalty to the corporation or its stockholders;

•

acts or omission not in good faith or which involve intentional misconduct or a knowing violation of law;

•

unlawful payments of dividends or unlawful stock repurchases or redemptions; or

•

any transaction from which the director derived an improper personal benefit.

This provision has no effect on any non-monetary remedies that may be available to us or our stockholders, nor does it relieve us or our officers or directors from compliance with federal or state securities laws.

Our Amended and Restated Certificate of Incorporation also generally provides that we will indemnify, to the fullest extent permitted by Section 145 of the Delaware General Corporate Law, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit, investigation, administrative hearing or any other proceeding by reason of the fact that he or she is or was a director or officer of ours, or is or was serving at our request as a director, officer, employee or agent of another entity, against expenses incurred by him or her in connection with that proceeding. An officer or director will not be entitled to indemnification by us if:

•

the officer or director did not act in good faith and in a manner reasonably believed to be in, or not opposed to, our best interests; or

•

with respect to any criminal action or proceeding, the officer or director had reasonable cause to believe his or her conduct was unlawful.

We have entered or intend to enter into agreements to indemnify our directors and executive officers, in addition to indemnification provided for in our Bylaws. These agreements, among other things, will provide for indemnification of our directors and executive officers for expenses, judgments, fines and settlement amounts incurred by any such person in any action or proceeding arising out of the person’s services as a director or executive officer or at our request. We believe that these provisions and agreements are necessary to attract and retain qualified persons as directors and executive officers.

Our Amended and Restated Certificate of Incorporation also permits us to secure insurance on behalf of any officer or director for any liability arising our of his or her actions in such capacity, regardless of whether our Certificate of Incorporation would otherwise permit indemnification for that liability. In addition, we will obtain insurance on behalf of our directors and executive officers insuring them against any liability asserted against them in their capacities as directors or officers or arising out of this status.

At the present time, there is no pending litigation or proceeding involving any director, officer, employee or agent in which indemnification will be required or permitted. We are not aware of any threatened litigation or proceeding which may result in a claim for such indemnification.

Transfer Agent and Registrar

Wells Fargo Shareowner Services will serve as the transfer agent and registrar for our common stock. The transfer agent’s address is 161 North Concord Exchange, South St. Paul, Minnesota 55075-1139, and the telephone number is 800-767-3330.

UNDERWRITING

Goldman, Sachs & Co. and Salomon Smith Barney Inc. are acting as joint book running managers of the offering and, together with Lehman Brothers Inc. and Morgan Stanley & Co. Incorporated, are acting as representatives of the underwriters named below. Subject to the terms and conditions stated in the underwriting agreement dated as of the date of this prospectus, each underwriter named below has severally agreed to purchase, and we and the selling stockholders have agreed to sell to such underwriter, the number of common shares set forth opposite the name of such underwriter.

Underwriter		Number of Shares
Goldman, Sachs & Co.
Salomon Smith Barney Inc.
Lehman Brothers Inc.
Morgan Stanley & Co. Incorporated

Total

The underwriters are obligated to purchase all the common shares, other than those covered by the over-allotment option described below, if they purchase any of the common shares.

The underwriters propose to offer some of the shares directly to the public at the public offering price set forth on the cover page of this prospectus and some of the shares to certain dealers at the public offering price less a concession not in excess of $ per share. The underwriters may allow, and such dealers may reallow, a concession not in excess of $ per share on sales to certain other dealers. If all of the shares are not sold at the initial offering price, the representatives may change the public offering price and the other selling terms.

The selling stockholders have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to additional common shares at the public offering price less the underwriting discount. The underwriters may exercise such option solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent such option is exercised, each underwriter will be obligated, subject to certain conditions, to purchase a number of additional common shares approximately proportionate to such underwriter’s initial purchase commitment.

The underwriters have informed us that they do not expect sales to discretionary accounts to exceed five percent of the total number of common shares offered by them.

A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters. The underwriters may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations. In addition, shares may be sold by the underwriters to securities dealers who resell shares to online brokerage account holders.

In connection with the offering, we, the selling stockholders and our directors and officers have agreed that, subject to certain limited exceptions, without the prior written consent of Goldman, Sachs & Co. and Salomon Smith Barney Inc., on behalf of the underwriters, we and they will not:

(a) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any common shares or any securities convertible into or exercisable or exchangeable for common shares, or

(b) enter into any swap or similar arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the common shares, whether any such transaction described in

clause (a) or (b) of this paragraph is to be settled by delivery of such common shares or such other securities, in cash or otherwise, for a period of 180 days after the date of this prospectus.

In addition, we have agreed with the underwriters to include a provision in our stock option plans providing that our officers, directors and employees who receive shares of our common stock under these plans cannot enter into any transaction described in clause (a) or (b) of this paragraph for a period of 180 days after the date of this prospectus. We have further agreed that we will not waive these provisions of our stock option plans without the prior written consent of Goldman, Sachs & Co. and Salomon Smith Barney Inc. The restrictions described in this paragraph shall not apply to the common shares to be sold in this offering, including any common shares sold pursuant to the over-allotment option described above.

We have applied for our common stock to be quoted on the New York Stock Exchange under the symbol “NP”.

The following tables show the underwriting discounts and commissions to be paid to the underwriters by us and the selling stockholders in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase additional common shares.

	Paid by Us
	No Exercise	Full Exercise
Per share	$	$
Total	$	$

	Paid by the Selling Stockholders
	No Exercise	Full Exercise
Per share	$	$
Total	$	$

In connection with the offering, the underwriters may purchase and sell common shares in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares from us in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. “Naked” short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common shares in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchase of common shares made by the underwriters in the open market prior to the completion of the offering.

The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

Purchases to cover a short position and stabilizing transactions may have the effect of preventing or retarding a decline in the market price of our common shares, and, together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common shares. As a result, the price of the common shares may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the New York Stock Exchange, in the over-the-counter market or otherwise.

We estimate that the total expenses of this offering, excluding underwriting discounts and commissions, will be $ , which will be paid by the selling stockholders.

Each of the representatives have performed certain investment banking and advisory services for us and Schlumberger from time to time for which they have received customary fees and expenses. The representatives may, from time to time, engage in transactions with and perform services for us and Schlumberger in the ordinary course of their business.

We and the selling stockholders have each agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of any of those liabilities.

Prior to this offering, there has been no public market for the common shares. The initial public offering price will be determined by negotiations among us, the selling stockholders and the representatives. Among the factors to be considered in determining the initial public offering price will be our future prospects and our industry in general, our sales, earnings and certain other financial operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities and certain financial and operating information of companies engaged in activities similar to ours. The estimated initial public offering price range set forth on the cover page of this preliminary prospectus is subject to change as a result of market conditions and other factors. There can be no assurance, however, that the prices at which the shares will sell in the public market after this offering will not be lower than the price at which they are sold by the underwriters or that an active trading market in the common shares will develop and continue after this offering.

SHARES ELIGIBLE FOR FUTURE SALE

All of the shares of our common stock sold in this offering will be freely tradable without restriction under the Securities Act, except for any shares which may be acquired by one of our affiliates, as such term is defined in Rule 144 under the Securities Act. Persons who may be deemed to be affiliates generally include individuals or entities that control, are controlled by, or are under common control with us and may include our directors and officers as well as significant shareholders. Persons who are affiliates will be permitted to sell the shares of common stock that are issued in this offering through registration under the Securities Act, or under an exemption from registration, such as the one provided by Rule 144.

The shares of our common stock deemed “restricted securities,” as defined in Rule 144, may not be sold other than through registration under the Securities Act or under an exemption from registration, such as the one provided by Rule 144. All of the shares held by Schlumberger are “restricted securities” that may be sold pursuant to the volume, notice and other limitations of Rule 144 commencing on , 2003. In addition, we will enter into a registration rights agreement with the Schlumberger Subsidiaries with a shelf registration allowing for continuous registration for resale of their securities, as well as four demand registration rights and unlimited “piggy-back” registration rights. The shelf registration, as well as the demand and “piggy-back” sales rights, may occur by one or more underwritten offerings or otherwise. Each of NPTest, our officers and directors and Schlumberger has agreed not to offer or sell any shares of our common stock, subject to exceptions, for a period of 180 days after the date of this prospectus, without the prior written consent of our underwriters. The underwriters may release all or a portion of the shares subject to these agreements at any time without prior public notice.

We will grant options to acquire shares of our common stock pursuant to stock option plan. All of the shares issued under the plan within 180 days of this prospectus will be subject to a lockup agreement described above. We currently expect to file a registration statement under the Securities Act to register shares reserved for issuance under our stock option plan. Shares issued under the plan will be registered and therefore freely tradable, unless those shares are held by one of our affiliates.

LEGAL MATTERS

The validity of the shares of common stock being offered will be passed upon for us by Skadden, Arps, Slate, Meagher & Flom LLP, Palo Alto, California. Selected legal matters in connection with this offering will be passed on for the underwriters by Simpson Thacher & Bartlett, Palo Alto, California. From time to time, Skadden, Arps, Slate, Meagher & Flom LLP has performed and continues to perform legal services unrelated to this offering for Schlumberger, and has represented Schlumberger in connection with the negotiation of the agreements described under the heading “Certain Relationships and Related Transactions’’ and other matters relating to this offering.

EXPERTS

The combined financial statements of NPTest as of December 31, 2000 and 2001 and for each of the three years in the period ended December 31, 2001 included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement regarding this offering on Form S-1, including all amendments and supplements thereto with the Securities and Exchange Commission under the Securities Act of 1933, as amended. This prospectus, which constitutes a part of the registration statement, does not contain all of the information included in the registration statement, certain items of which are contained in schedules and exhibits to the registration statement as permitted by the rules and regulations of the Commission. You should refer to the registration statement and its exhibits to read that information. Statements made in this prospectus as to any of our contracts, agreements or other documents referred to are not necessarily complete and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document. You may read and copy information omitted from this prospectus but contained in the registration statement at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You may also request copies of all or any portion of such material may from the Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the operation of the public reference rooms. In addition, materials filed electronically with the Commission are available at the Commission’s World Wide Web site at http://www.sec.gov. You may also request a copy of these filings, at no cost, by writing or telephoning us at: NPTest, 150 Baytech Drive, San Jose, California 95134, (408) 586-8200.

We intend to furnish to our stockholders annual reports containing combined financial statements and quarterly reports for the first three quarters of each fiscal year containing unaudited interim financial information, in each case prepared in accordance with generally accepted accounting principles.

NPTest, Inc.

INDEX TO COMBINED FINANCIAL STATEMENTS

December 31, 1999, 2000 and 2001

		Page
Report of Independent Accountants		F-2

Combined Balance Sheets		F-3

Combined Statements of Operations		F-4

Combined Statements of Stockholders’ Net Investment		F-5

Combined Statements of Cash Flow		F-6

Notes to Combined Financial Statements		F-7

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of NPTest, Inc.

The Company separation described in Note 1 and the agreements with Schlumberger as described in Note 13 to the financial statements have not been completed at July 19, 2002. When they have been completed, we will be in a position to furnish the following report:

“In our opinion, the accompanying combined financial statements present fairly, in all material respects, the financial position of NPTest, Inc. (the “Company”) at December 31, 2000 and 2001, and the results of their operations and cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in Item 16(b) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related combined financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

The Company was historically a fully integrated business of several indirect wholly owned subsidiaries of Schlumberger Limited. Consequently, as indicated in Note 1, these combined financial statements have been derived from the consolidated financial statements and accounting records of Schlumberger Limited and reflect significant assumptions and allocations. Moreover, as indicated in Note 1, the Company relies on Schlumberger Limited and its other businesses for certain administrative, management and other services. Accordingly, these combined financial statements do not necessarily reflect the combined financial position, results of operations, changes in stockholders’ net investment and cash flows of the Company had it been a separate, stand-alone entity during the periods presented.”

PricewaterhouseCoopers LLP

San Jose, California

May 21, 2002

F-2

NPTest, Inc.

COMBINED BALANCE SHEETS

(in thousands)

	December 31,				March 31,
	2000		2001		2002
					(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	16,387	$	10,184	$	10,305
Accounts receivable, net of allowance for doubtful accounts of $1,731, $1,338 and $1,338		86,435		52,587		44,781
Receivables from related parties		228		43		45
Inventory		175,889		142,639		133,341
Deferred income taxes		30,603		41,834		41,834
Prepaid expenses and other current assets		5,444		2,047		4,471

Total current assets		314,986		249,334		234,777
Property, plant and equipment, net		37,845		30,852		28,679
Deferred income taxes		13,450		15,164		15,164
Other assets		163		154		108

Total assets	$	366,444	$	295,504	$	278,728

Liabilities and stockholders’ net investment
Current liabilities:
Book overdrafts	$	2,774	$	1,009	$	223
Accounts payable		22,776		4,794		8,492
Accrued liabilities		90,006		36,921		34,807
Payables to related parties		4,996		12,066		9,765
Income taxes payable		3,952		3,049		3,049

Total current liabilities		124,504		57,839		56,336
Pension and post-retirement benefits		27,800		31,861		33,143

Total liabilities		152,304		89,700		89,479

Commitments and contingencies (Note 11)

Stockholders’ net investment		214,140		205,804		189,249

Total liabilities and stockholders’ net investment	$	366,444	$	295,504	$	278,728

The accompanying notes are an integral part of these financial statements.

F-3

NPTest, Inc.

COMBINED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	Years Ended December 31,								Three Months Ended March 31,
	1999		2000			2001			2001			2002
									(unaudited)
Net revenue:
Product	$	228,806	$	216,445		$	149,543		$	50,052		$	51,662
Services		43,232		69,889			71,389			19,385			15,978

Total net revenue		272,038		286,334			220,932			69,437			67,640
Cost of net revenue:
Product		140,622		140,255			130,627			31,364			28,039
Services		31,796		44,127			49,549			12,845			10,602

Total cost of net revenue		172,418		184,382			180,176			44,209			38,641
Operating expenses:
Research and development		36,281		32,718			34,748			10,029			7,821
Selling, general and administrative		55,625		66,571			51,971			15,407			13,060

Total operating expenses		91,906		99,289			86,719			25,436			20,881

Operating income (loss)		7,714		2,663			(45,963	)		(208	)		8,118
Foreign currency transactions gain (loss), net		957		(34	)		(139	)		52			(122	)

Income (loss) before income taxes		8,671		2,629			(46,102	)		(156	)		7,996
Income tax benefit (expense)		422		3,328			22,366			1,965			(1,553	)

Net income (loss)	$	9,093	$	5,957		$	(23,736	)	$	1,809		$	6,443

Unaudited pro forma basic and diluted net income (loss) per share
Shares used in computing unaudited pro forma basic and diluted net income (loss) per share

The accompanying notes are an integral part of these financial statements.

F-4

NPTest, Inc.

COMBINED STATEMENTS OF STOCKHOLDERS’ NET INVESTMENT

(in thousands)

	Stockholders’ Net Investment
Balance, January 1, 1999	$	233,391
Net income		9,093
Stockholders’ net investment (distribution)		(90,864	)
Foreign currency translation		(3,725	)

Balance, December 31, 1999		147,895
Net income		5,957
Stockholders’ net investment (distribution)		64,309
Foreign currency translation		(4,021	)

Balance, December 31, 2000		214,140
Net loss		(23,736	)
Stockholders’ net investment (distribution)		17,604
Foreign currency translation		(2,204	)

Balance, December 31, 2001		205,804
Net income *		6,443
Stockholders’ net investment (distribution)*		(22,463	)
Foreign currency translation *		(535	)

Balance, March 31, 2002*	$	189,249

unaudited

The accompanying notes are an integral part of these financial statements.

F-5

NPTest, Inc.

COMBINED STATEMENTS OF CASH FLOW

(in thousands)

	Years Ended December 31,									Three Months Ended March 31,
	1999			2000			2001			2001			2002
										(unaudited)
Cash flows from operating activities:
Net income (loss)	$	9,093		$	5,957		$	(23,736	)	$	1,809		$	6,443
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Depreciation		4,076			6,854			10,761			2,806			2,487
Write-off of fixed assets		872			—			—			—			923
Deferred income taxes		1,414			(1,397	)		(12,945	)		—			—
Pension and post-retirement benefits		4,322			3,394			4,457			1,162			1,282
Allowance for doubtful accounts		549			829			(393	)		(34	)		—
Deferred income		4,056			37,233			(42,557	)		(40,204	)		(8,042	)
Warranty reserve		5,024			(2,190	)		(1,550	)		(1,665	)		708
Changes in operating assets and liabilities:
Accounts receivable		21,575			(31,370	)		33,915			28,535			7,710
Receivables from related parties		(48	)		(168	)		185			115			(2	)
Inventory		61,155			(60,545	)		32,142			3,052			9,046
Prepaid expenses and other assets		(330	)		(1,119	)		3,406			(862	)		(2,378	)
Accounts payable		604			5,537			(18,019	)		(8,424	)		3,681
Other accrued liabilities		(5,449	)		984			(9,260	)		3,604			5,151
Payables to related parties		6,546			(2,211	)		7,070			(1,584	)		(2,301	)
Income taxes payable		1,736			2,216			(903	)		—			—
Payment of post-retirement benefits		(343	)		(332	)		(396	)		(102	)		—

Net cash (used in) provided by operating activities		114,852			(36,328	)		(17,823	)		(11,792	)		24,708

Cash flows (used in) investing activities:
Capital expenditures		(14,275	)		(27,047	)		(4,004	)		(3,150	)		(1,294	)

Net cash (used in) investing activities		(14,275	)		(27,047	)		(4,004	)		(3,150	)		(1,294	)

Cash flows from (used in) financing activities:
Stockholders’ net investment (distribution)		(90,864	)		64,309			17,604			10,977			(22,463	)
Book overdrafts		(1,681	)		1,908			(1,765	)		(1,648	)		(786	)

Net cash provided by (used in) provided by financing activities		(92,545	)		66,217			15,839			9,329			(23,249	)
Effect of exchange rate changes on cash		(75	)		(54	)		(215	)		(113	)		(44	)

Net increase (decrease) in cash and cash equivalents		7,957			2,788			(6,203	)		(5,726	)		121
Cash and cash equivalents, beginning of period		5,642			13,599			16,387			16,387			10,184

Cash and cash equivalents, end of period	$	13,599		$	16,387		$	10,184		$	10,661		$	10,305

Supplemental disclosure
Income taxes paid		464			642			706			477			181

The accompanying notes are an integral part of these financial statements.

F-6

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS

(amounts in thousands)

1. Background and Basis of Presentation

Background

The Company provides advanced test and diagnostic systems and related product engineering services to the semiconductor industry. The Company’s customers include semiconductor manufacturers, foundries and assembly contractors worldwide. The Company’s products are designed to enable its customers to accelerate prototype development and time to full-scale production, as well as to enhance the quality of product shipments. Test Systems, the Company’s largest product line, provides wafer level and final test equipment used in the design and manufacture of complex semiconductor integrated circuits, or ICs. The Probe Systems product line provides equipment to identify and repair design flaws during prototype development, product characterization, initial production ramp and failure analysis. The Company’s services include maintenance for test and diagnostic systems, and SABER, which provides design validation and product and test engineering services for IC vendors.

During 2001, Schlumberger announced its intention to divest various businesses, including its Semiconductor Solutions Group. NPTest, which is being divested in part through this initial public offering, comprises the core business of the Semiconductor Solutions Group. NPTest was incorporated in Delaware on May 7, 2002 as a wholly owned subsidiary of Schlumberger. On May 10, 2002, shares of the Company’s $0.01 par value common stock were issued to Schlumberger. After completion of this offering, Schlumberger will beneficially own approximately % of the Company’s outstanding common stock, assuming no exercise of the underwriters’ over-allotment option. Schlumberger has advised the Company that it intends to divest its remaining ownership in the Company through private or public sales of our shares. Schlumberger will, in its sole discretion, determine the timing and terms of any sales, taking into account business and market conditions. In , 2002, Schlumberger and the Company entered into the Separation Agreement under which Schlumberger transferred to the Company the assets and liabilities associated with the business of the Company to the extent not previously transferred. The Company has entered into various agreements with Schlumberger subsidiaries related to certain interim and ongoing relationships. These agreements are described more fully in Note 13.

The Company’s source of revenue is test systems sales, professional services and maintenance. The Company’s primary markets are North America, Europe, Asia and Japan.

Basis of Presentation

The combined financial statements have been derived from the consolidated financial statements of Schlumberger Limited. The Company was historically a fully integrated business of several indirect wholly owned subsidiaries of Schlumberger. Although NPTest was not a separate company, the accompanying combined financial statements are presented as if NPTest had existed as an entity separate from Schlumberger and its subsidiaries. The combined financial statements include the historical assets, liabilities, revenues and expenses that were directly related to the NPTest business of Schlumberger during the periods presented. Upon completion of the separation, pension and post-retirement benefits liabilities along with certain cash balances, taxes payable and deferred tax assets shown in the combined balance sheets will be retained by Schlumberger. Stockholders’ net investment represents Schlumberger’s transfer of its net capital investment in NPTest, after giving effect to the net earnings of NPTest plus net cash transfers to Schlumberger and other transfers from Schlumberger. NPTest will begin accumulating retained earnings, if any, upon completion of the separation.

F-7

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

Unaudited interim financial statements

2. Summary of Significant Accounting Policies

Principles of combination

The combined financial statements of NPTest include the accounts of the Company’s four regions: North America, Europe, Asia and Japan. All significant intra-company balances and transactions are eliminated.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, 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. While actual results could differ from these estimates, management believes that the estimates are reasonable.

Revenue recognition

The Company recognizes revenue in accordance with the Securities and Exchange Commission’s Staff Accounting Bulletin No. 101 (SAB 101), “Revenue Recognition in Financial Statements.” For all transactions where legal title passes to the customer upon shipment, the Company generally recognizes revenue upon shipment for all products that have been demonstrated to meet product specifications prior to shipment. The Company’s shipping terms are primarily freight-on-board, or FOB, shipping point. However, a portion of revenue, associated with certain installation-related tasks, based upon fair value of that service is recognized when the tasks are completed. For products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized on receipt of customer technical acceptance. For transactions where legal title does not transfer at shipment, no revenue is recognized before legal title passes to the customer or customer acceptance. A provision for the estimated cost of warranty is recorded when revenue is recognized. Revenue related to spare parts is generally recognized upon shipment. Services revenue is generally recognized ratably over the period of the related contract. Deferred income includes amounts that have been billed per the contractual terms but have not been recognized as revenue. This typically includes the amount of deferred product revenue less all product and warranty costs.

F-8

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

Book overdraft

Book overdraft represents outstanding checks in excess of cash on hand at the applicable bank, and generally result from timing differences in the transfer of funds between banks. Historically, these checks are covered when presented for payment through the transfer of funds from other Company cash accounts held in other banks.

Concentration of credit risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and accounts receivable. Risks associated with cash are mitigated by banking with credit worthy institutions. NPTest maintains an allowance for doubtful accounts based upon expected collectibility and performs ongoing credit evaluations of its customers’ financial condition.

Foreign currency accounting

The Company’s functional currencies are primarily local currencies. All assets and liabilities recorded in functional currencies other than U.S. dollars are translated at current exchange rates. The resulting adjustments are charged or credited directly to stockholders’ net investment in the Combined Balance Sheets. Revenue and expenses are translated at the weighted-average exchange rates for the period. Realized and unrealized transaction gains and losses are the only components of Other income (expense), net in the combined statements of operations and are included in the period in which they occur.

Earnings per share

Basic and diluted earnings (loss) per share have been computed by dividing the net income (loss) for each period presented by the common shares outstanding subsequent to completion of the separation.

Cash and cash equivalents

Cash and cash equivalents are comprised of cash and short-term investments. The short-term investments are stated at cost plus accrued interest, which approximates market, and are comprised primarily of Eurodollar time deposits, certificates of deposit and commercial paper, Euronotes and Eurobonds, substantially all denominated in U.S. dollars. The Company considers short-term investments to be cash or cash equivalents as they do not have original maturities in excess of three months.

Fair value of financial instruments

The fair value of cash and cash equivalents, accounts receivable, trade accounts payable and accrued expenses are not materially different than their carrying amounts as reported at December 31, 2000 and 2001 because of their short maturities.

Inventories

Inventories are stated at lower of average cost or market. The Company provides inventory allowances based on excess and obsolete inventories.

F-9

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

Property, plant and equipment

Property, plant and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the asset as follows:

Leasehold improvements		3-15 years
Machinery and equipment		2-7 years

Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the lease term. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from their separate accounts, and any gain or loss on such sale is reflected in operations. Maintenance and repairs are charged to operating expense as incurred. Expenditures that substantially increase an asset’s life are capitalized.

Accounting for long-lived assets

NPTest reviews the appropriateness of the carrying value of its long-lived assets whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. NPTest assesses recoverability of the carrying value of the asset by estimating the future undiscounted net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value.

Research and development

All research and development expenditures are expensed as incurred, including costs relating to patents or rights that may result from such expenditures.

Taxes on income

NPTest’s operating results historically have been included in Schlumberger’s consolidated U.S. and state income tax returns and in tax returns of Schlumberger’s foreign subsidiaries. The provision for income taxes reflected in NPTest’s combined financial statements has been determined on a separate return basis. No provision is made for deferred income taxes on those earnings considered to be indefinitely reinvested.

Taxes on income are computed in accordance with the tax rules and regulations of the taxing authorities where the income is earned. The income tax rates imposed by these taxing authorities vary substantially. Taxable income may differ from pre-tax income for financial accounting purposes. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax asset will not be realized.

Comprehensive income (loss)

Comprehensive income (loss) includes net income (loss) and the change in accumulated other comprehensive income (loss). The Company’s change in accumulated other comprehensive income (loss) shown in the combined statements of stockholders’ net investment consists solely of foreign currency translation adjustments which are not adjusted for income taxes since they relate to indefinite investments in non-U.S.

F-10

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

operations. Other comprehensive losses amounted to $3,725, $4,021, $2,204 and $535 in 1999, 2000, 2001 and first quarter ended March 31, 2002, respectively.

Recent accounting pronouncements

In June 2001, SFAS 141, “Business Combinations,” and SFAS 142, “Goodwill and Other Intangible Assets,” were issued. SFAS 141 is effective for all business combinations completed after June 30, 2001. The Company expects that the application of SFAS 141 will not have a material impact on its financial statements. As the Company has no goodwill and other intangible assets, the adoption of SFAS 142 has no effect on the financial position and result of operations.

In June 2001, the FASB issued Statement No. 143, “Accounting for Asset Retirement Obligations.” FAS 143 requires that obligations associated with the retirement of a tangible long-lived asset to be recorded as a liability when those obligations are incurred, with the amount of the liability initially measured at fair value. Upon initially recognizing a liability for an Asset Retirement Obligation (“ARO”), an entity must capitalize the cost by recognizing an increase in the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement.

FAS 143 will be effective for financial statements for fiscal years beginning after June 15, 2002. Upon adoption of the final Statement, an entity will use a cumulative-effect approach to recognize transition amounts for existing ARO liabilities, asset retirement costs, and accumulated depreciation. All transition amounts are to be measured using current (as of the date of adoption of the final Statement) information, current assumptions, and current interest rates. The Company does not expect the adoption of SFAS No. 143 to have a material impact on the Company’s financial position or results of operations.

In October 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which is effective for years beginning after December 15, 2001. SFAS No. 144 supersedes FASB Statement No. 121 and parts of APB Opinion No. 30, “Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions Relating to Extraordinary Items,” however, SFAS No. 144 retains the requirement of APB Opinion No. 30 to report discontinued operations separately from continuing operations and extends that reporting to a component of an entity that either has been disposed of (by sale, by abandonment, or in a distribution to owners) or is classified as held for sale. SFAS No. 144 addresses financial accounting and reporting for the impairment of certain long-lived assets and for long-lived assets to be disposed of. The Company does not expect the adoption of SFAS No. 144 to have a material impact on the Company’s financial position or results of operations.

In November 2001, the FASB EITF staff issued announcement Topic D-103, “Income Statement Characterization of Reimbursements Received for “Out-of-Pocket” expenses.” As a result, customer reimbursements, including those relating to travel and other out-of-pocket expenses, and other similar third-party costs, will be required to be included as revenues effective January 1, 2002 with all periods being presented on a comparable basis, and an equivalent amount of reimbursable expenses will be included in expenses. The adoption of this announcement did not have a material effect on net revenue and expenses.

F-11

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

3. Property, Plant and Equipment, Net

Property, plant and equipment (net) consists of the following:

	December 31,
	2000			2001
Leasehold improvements	$	23,295		$	23,357
Machinery and equipment		44,224			45,875

Total cost		67,519			69,232
Less: Accumulated depreciation		(29,674	)		(38,380	)

	$	37,845		$	30,852

Depreciation expense aggregated $4,076 in 1999, $6,854 in 2000 and $10,761 in 2001.

4. Inventory

Inventory consists of the following:

	December 31,				March 31,
	2000		2001		2002
					(unaudited)
Raw materials (including spare parts)	$	107,492	$	99,034	$	89,837
Work in progress		30,746		10,831		14,777
Finished goods		37,651		32,774		28,727

	$	175,889	$	142,639	$	133,341

Inventory reserve aggregated $58,506, $92,520 and $95,675 at December 31, 2000, December 31, 2001 and March 31, 2002, respectively.

The Company recorded a charge to cost of net product revenue of $35,400 in October 2001 related primarily to the write down of certain inventory. This additional excess inventory charge was due to a significant decrease in forecasted revenue over the expected life cycle of the related products.

5. Accrued Liabilities

Accrued liabilities consist of the following:

	December 31,
	2000		2001
Employee incentives	$	4,932	$	3,472
Vacation		3,124		1,896
Other employee accruals		5,298		5,915
Deferred income		54,432		11,875
Warranty reserve		10,860		9,310
Other		11,360		4,453

	$	90,006	$	36,921

F-12

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

During the fourth quarter of 2000, the Company recorded a charge to cost of net product revenue of $1,400 related to reorganization, restructuring and reduction-in-force initiatives. The related reserve balance, included in Other, consisting primarily of severance and associated benefits was $1,400 at December 31, 2000. These initiatives resulted in the elimination of 176 positions worldwide. The reserve was fully utilized in the first half of 2001. In addition, $200 was recorded in cost of net product revenue in each of the first and third quarters of 2001 for additional severances related to the same eliminated positions. These charges were utilized in 2001.

6. Taxes on Income

Income (loss) subject to U.S. and foreign income taxes was as follows:

	Year Ended December 31,
	1999			2000			2001
United States	$	(5,356	)	$	(19,637	)	$	(68,831	)
Foreign		14,027			22,266			22,729

	$	8,671		$	2,629		$	(46,102	)

The following table shows current and deferred income tax expense (benefit) by taxing jurisdiction:

	Year Ended December 31,
	1999			2000			2001
Current:
United States—federal	$	(4,827	)	$	(8,068	)	$	(13,833	)
United States—state		(591	)		(1,080	)		(2,097	)
Foreign		3,582			7,217			6,509

Total current		(1,836	)		(1,931	)		(9,421	)
Deferred:
United States—federal		726			(854	)		(11,504	)
United States—state		124			(146	)		(1,973	)
Foreign		564			(397	)		532

Total deferred		1,414			(1,397	)		(12,945	)

Total income tax (benefit) expense	$	(422	)	$	(3,328	)	$	(22,366	)

The following table shows the principal components of the net deferred tax assets:

	December 31,
	2000		2001
Inventory reserve	$	21,947	$	35,631
Allowance for doubtful accounts		710		549
Warranty reserve		2,207		2,086
Accrued liabilities and other		5,739		3,568

Total current deferred income taxes		30,603		41,834
Property, plant and equipment		1,175		622
Pension and post-retirement benefits		12,275		14,542

Total long-term deferred income taxes		13,450		15,164

	$	44,053	$	56,998

F-13

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

Reconciliation between the U.S. federal income tax on pretax income (loss) and the actual income tax benefit is:

	Year Ended December 31,
	1999			2000			2001
Federal income taxes	$	2,930		$	920		$	(16,136	)
State income taxes, net of federal income tax benefit		(467	)		(1,226	)		(4,070	)
Foreign operations taxed at other than US rates		(658	)		(973	)		(914	)
Tax credits		(1,382	)		(1,768	)		(1,600	)
Permanent differences		(845	)		(281	)		354

Income tax benefit	$	(422	)	$	(3,328	)	$	(22,366	)

7. Pension and Other Benefit Plans

These combined financial statements include allocations of Schlumberger Technology Corporation assets, liabilities and expenses related to pensions and other benefit plans managed by Schlumberger on a consolidated basis. In general these allocations were based upon certain actuarial calculations of the employee base. Pension and post-retirement benefits liabilities shown in the combined balance sheets will be retained by Schlumberger after the effective date of the separation.

U.S. Pension Plans

Schlumberger Technology Corporation, a wholly owned subsidiary of Schlumberger, sponsors several defined benefit pension plans that cover substantially all employees. The benefits are based on years of service and compensation on a career-average pay basis. These plans are fully funded with a trustee in respect to past and current service. Charges to expense are based upon costs computed by independent actuaries. The funding policy is to annually contribute amounts that are allowable for federal income tax purposes. These contributions are intended to provide for benefits earned to date and those expected to be earned in the future.

The assumed discount rate, compensation increases and return on plan assets used to determine pension expense in 1999 were 7.0%, 4.5% and 9.0%, respectively. In 2000, the assumptions were 7.8%, 4.5% and 9.0%, respectively. In 2001, the assumptions were 7.5%, 4.5% and 9.0%, respectively.

Allocated net pension cost in the U.S. for 1999, 2000 and 2001, included the following components:

	Year Ended December 31,
	1999			2000			2001
Service costs—benefits earned during the period	$	2,758		$	2,380		$	2,475
Interest cost on projected benefit obligation		2,404			2,741			3,059
Expected return on plan assets; actual return of $7,441, $871, $(2,174)		(2,366	)		(2,850	)		(3,048	)
Amortization of transition assets		(62	)		(62	)		(62	)
Amortization prior service cost/other		209			209			209
Amortization of unrecognized net gain		—			(376	)		(82	)

Net pension cost	$	2,943		$	2,042		$	2,551

Effective January 1, 2000, Schlumberger and its subsidiaries amended their pension plans to improve retirement benefits for active employees.

F-14

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

The change in the projected benefit obligation, plan assets and funded status of the plans at December 31, 2000 and 2001 was as follows:

	December 31,
	2000			2001
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	35,855		$	41,372
Service cost		2,380			2,475
Interest cost		2,741			3,059
Actuarial losses/(gains)		1,375			1,309
Benefits paid		(979	)		(1,168	)

Projected benefit obligation at end of the year	$	41,372		$	47,047

Change in plan assets:
Plan assets at market value at beginning of the year	$	36,992		$	36,884
Actual return on plan assets		871			(2,174	)
Benefits paid		(979	)		(1,168	)

Plan assets at market value at end of the year	$	36,884		$	33,542

Deficit (Excess) of assets over projected benefit obligation	$	4,488		$	13,505
Unrecognized net (loss) gain		5,715			(899	)
Unrecognized prior service cost		(1,111	)		(901	)
Unrecognized net asset at transition date		62			—

Pension liability	$	9,154		$	11,705

The assumed discount rate, the rate of compensation increases and the expected long-term rate of return on plan assets used to determine the projected benefit obligations were 7.5%, 4.5% and 9.0%, respectively, in 2000, and 7.3%, 4.5% and 9.0%, respectively, in 2001. Plan assets on December 31, 2001, consisted of common stocks ($19,790), cash or cash equivalents ($1,341), fixed income investments ($10,063) and other investments ($2,348). On December 31, 2001, there is no investment of the plan assets in Schlumberger common stock.

Non-U.S. pension plans

Outside the U.S., Schlumberger sponsors several defined benefit and defined contribution plans that cover substantially all employees who are not covered by statutory plans. For defined benefit plans, charges to expense are based upon costs computed by independent actuaries.

These plans are substantially fully funded with trustees in respect to past and current service. At December 31, 2000 and 2001 the pension liability was $1,127 and $1,282, respectively. The expenses associated to these plans were not material in 1999, 2000 and 2001.

Post-retirement benefits other than pensions

Schlumberger Technology Corporation provides certain health care benefits to former employees who have retired under the U.S. pension plans.

F-15

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

The principal actuarial assumptions used to measure costs were a discount rate of 7.0% in 1999, 7.8% in 2000 and 7.5% in 2001. The overall medical cost trend rate assumption is 9.5% graded to 5.0% over the next six years and 5.0% thereafter.

Allocated net periodic post-retirement benefit cost in the U.S. for 1999, 2000 and 2001, included the following components:

	Year Ended December 31,
	1999			2000			2001
Service costs—benefits earned during the period	$	778		$	635		$	717
Interest cost on accumulated post-retirement benefit obligation		837			928			1,046
Amortization of unrecognized net gain and other		(109	)		(183	)		(12	)

Net post-retirement benefit cost	$	1,506		$	1,380		$	1,751

The change in accumulated post-retirement benefit obligation and funded status on December 31, 2000 and 2001, was as follows:

	December 31,
	2000			2001
Accumulated post-retirement benefit obligation at the beginning of the year	$	12,145		$	14,142
Service cost		635			717
Interest cost		928			1,046
Actuarial losses/(gains)		766			721
Benefits paid		(332	)		(396	)

Accumulated post-retirement benefit obligation at the end of the year		14,142			16,230
Unrecognized net gain		3,218			2,497
Unrecognized prior service cost/other		159			147

Post-retirement benefit liability	$	17,519		$	18,874

The components of the accumulated post-retirement benefit obligation on December 31, 2000 and 2001 were as follows:

	December 31,
	2000		2001
Retirees	$	4,314	$	4,355
Fully eligible		3,651		4,070
Actives		6,177		7,805

	$	14,142	$	16,230

The assumed discount rate used to determine the accumulated post-retirement benefit obligation was 7.5% for 2000 and 7.3% for 2001.

If the assumed medical cost trend rate was increased by one percentage point, health care cost in 2001 would have been $2,169, and the accumulated post-retirement benefit obligation would have been $19,483 on December 31, 2001.

F-16

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

If the assumed medical cost trend rate was decreased by one percentage point, health care cost in 2001 would have been $653, and the accumulated post-retirement benefit obligation would have been $13,676 on December 31, 2001.

8. Leases and Lease Commitments

Minimum rental commitments under non-cancellable operating leases, primarily real estate and office facilities in effect at December 31, 2001 are as follows:

Year Ending December 31,
2002	$	3,792
2003		3,780
2004		2,932
2005		3,838
2006		3,695

	$	18,037

Operating lease rental expense aggregated $5,023, $6,637 and $6,820 for 1999, 2000 and 2001, respectively.

9. Stock Option Plans and Employee Stock Purchase Plan

Employees of the Company participate in the Schlumberger stock option plans. Upon completion of the separation, vested and unvested stock options under the Schlumberger plan will not convert or be exchanged for stock options of the Company. As of December 31, 2001, Schlumberger had two types of stock-based compensation plans, which are described below. Schlumberger applies APB Opinion 25 and related Interpretations in accounting for its plans. Accordingly, no compensation cost has been recognized for its stock option plans and its stock purchase plan. Had compensation cost for the grants of stock-based compensation to Company’s employees under the Schlumberger plans been determined based on the fair value at the grant dates for awards under those plans, consistent with the method of SFAS 123, NPTest net income and earnings per share would have been the pro forma amounts indicated below:

	Year Ended December 31,
	1999		2000		2001
Net income/(loss)
As reported	$	9,093	$	5,957	$	(23,736	)
Pro forma		6,711		3,109		(26,545	)
Unaudited pro forma basic and diluted net income (loss) per share
As reported
Pro forma for effect of FAS 123

Stock Option Plans

During 1999, 2000, 2001, and in prior years, key employees were granted stock options under Schlumberger stock option plans. For all of the stock options granted, the exercise price of each option equals the market price of Schlumberger stock on the date of grant; an option’s maximum term is ten years, and options generally vest in 20% increments over five years.

F-17

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

As required by SFAS 123, the fair value of each grant is estimated on the date of grant using the multiple option Black-Scholes option-pricing model with the following weighted-average assumptions used for 1999, 2000 and 2001: dividend of $0.75; expected volatility of 27-29% for 1999 grants, 30-33% for 2000 grants and 32-35% for 2001 grants; risk-free interest rates of 4.8-6.3% for 1999 grants, 5.7-6.7% for 2000 grants and 3.9-5.0% for 2001 grants; and expected option lives of 5.28 years for 1999 grants, 5.49 years for 2000 grants and 5.02 years for 2001 grants.

A summary of the status of the stock option grants to employees of the Company under Schlumberger stock option plans as of December 31, 1999, 2000 and 2001, and changes during the years ending on those dates is presented below:

Fixed Option	1999				2000				2001
Fixed Option	Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
Outstanding at beginning of year	418,828		$	48.39	553,940		$	50.99	617,442		$	57.83
Granted	154,107			55.26	120,250			76.24	25,000			62.38
Exercised	(18,995	)		28.44	(56,748	)		30.00	(9,761	)		34.94
Forfeited	—			—	—			—	(2,500	)		82.28

Outstanding at end of year	553,940		$	50.99	617,442		$	57.83	630,181		$	58.27

Options exercisable at year-end	242,815				280,761				384,140

Weighted-average fair value of options granted during the year	$17.91				$28.56				$17.72

The following table summarizes information concerning currently outstanding and exercisable options by ranges of exercise prices on December 31, 2001:

	Options Outstanding				Options Exercisable
Range of Exercise Price	Number Outstanding As of December 31, 2001	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Number Exercisable As of December 31, 2001	Weighted Average Exercise Price
$ 3.831 – $22.073	78	5.35	$	15.58	78	$	15.58
24.142 – 30.710	73,791	2.59		26.74	73,791		26.74
30.795 – 44.843	119,020	4.41		38.82	116,383		38.69
46.075 – 65.330	208,936	7.32		56.33	71,570		54.55
$71.315 – $82.348	228,356	7.02		80.39	122,318		81.46

	630,181	6.06	$	58.27	384,140	$	52.96

F-18

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

Employee Stock Purchase Plan

Under the Schlumberger Discounted Stock Purchase Plan, Schlumberger is authorized to issue up to 22,012,245 shares of common stock to its employees. Under the terms of the Plan, employees can choose each year to have up to 10% of their annual earnings withheld to purchase Schlumberger common stock. The purchase price of the stock is 85% of the lower of its beginning or end of the Plan year market price. Under the Plan, Schlumberger sold 27,587 shares in 1999, 34,158 shares in 2000 and 45,652 shares in 2001 to employees of the Company. Compensation cost has been computed for the fair value of the employees’ purchase rights and included in the preceding pro forma presentation, using the Black-Scholes model with the following assumptions for 1999, 2000 and 2001: dividend of $0.75; expected life of one year; expected volatility of 40% for 1999, 38% for 2000 and 36% for 2001; and risk-free interest rates of 5.3% for 1999, 5.7% for 2000 and 3.0% for 2001.

2002 Stock Option Plan

In May 2002, our Board of Directors adopted and our stockholders approved our 2002 Stock Option Plan, referred to as the “2002 Plan.” The 2002 Plan will become effective concurrent with the effective date of the registration statement of which this prospectus is a part.

Persons Eligible to Receive Awards. Employees and non-employee members of the board of directors of NPTest or any 50%-owned subsidiary of NPTest may participate in the 2002 Plan.

Consistent with the purposes of the 2002 Plan, the Company intends to make initial stock option grants to substantially all of our employees and non-employee directors effective concurrent with the effective date of the registration statement of which this prospectus is a part. These initial option grants will account for, in the aggregate, approximately shares of our common stock. Subject to various local laws applicable to our non-U.S. employees and the discretion of our compensation committee, these option grants generally will become vested and exercisable over three years with 25% of the options becoming vested and exercisable on the date of grant and the remaining 75% becoming vested and exercisable in equal installments on the first, second and third anniversary dates of the grant, except that all grants to non-employee directors will be 100% vested and exercisable on the date of grant. We expect that the vesting of the initial options granted to our officers will accelerate upon a “change of control,” as defined in the option agreements, which term will exclude, among other things, a change of control that may result from this offering. Any shares purchased pursuant to such option grants are nontransferable during the 180-day period commencing on the date of this prospectus. These initial option grants will be subject to the individual option agreements entered into with each optionee as well as the terms of the 2002 Plan.

F-19

NPTest, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

10. Related Party Transactions

The combined financial statements include allocations of certain corporate expenses, including legal, accounting, employee benefits, real estate, insurance services, information technology services, treasury and other corporate and infrastructure costs. These services are provided by wholly owned subsidiaries of Schlumberger and are allocated to the Company. These allocations have been determined on bases that Schlumberger and NPTest considered to be a reasonable reflection of the utilization of services provided or the benefit received by NPTest. The allocation methods are based on the nature of the costs being allocated and include relative sales, headcount, square footage and others:

	Year Ended December 31,						Three Months Ended March 31,
	1999		2000		2001		2001		2002
							(unaudited)
Selling, general and administrative	$	7,059	$	9,563	$	8,396	$	1,821	$	2,148

Total	$	7,059	$	9,563	$	8,396	$	1,821	$	2,148

The cost of net revenue includes amounts of $2,449, $3,238, $1,848, $325 and $533 for the years ended December 31, 1999, 2000 and 2001 and for the quarters ended March 31, 2001, 2002 respectively for costs related to manufacturing outsourced to the Schlumberger factory in St. Etienne, France.

In certain countries, NPTest participates in Schlumberger’s centralized treasury and cash processes. In these countries, cash is managed either through zero balance accounts or an interest-bearing offsetting mechanism. Schlumberger cash pool is funded by Schlumberger through operations or long-term borrowing facilities.

There was no intercompany debt with Schlumberger and its subsidiaries. All net contributions from Schlumberger and its subsidiaries were of a permanent nature and are included within the item stockholder’s net investment.

The current related party receivables and payables balances included in the combined balance sheets represent amounts arising from inter-company transactions entered into by NPTest, to settle outstanding inter-company receivables and payables with other Schlumberger entities. Related party payables primarily relate to payroll, other employee costs and other shared services paid by Schlumberger on behalf of the Company.

In certain countries, there are tax sharing arrangements between NPTest and the respective entity of Schlumberger. In certain countries, NPTest is a division of the Schlumberger legal entity that is the ultimate taxpayer in that jurisdiction.

It is not practical to disclose what the operating results would have been had the Company operated on a stand-alone basis.

There are no lease commitments to Schlumberger or its subsidiaries.

11. Commitments and Contingencies

NPTest is party to various legal proceedings and claims which arise in the ordinary course of business. As of December 31, 2001, there are no such matters pending that NPTest expects to be material in relation to its business, financial condition, results of operations or cash flows which have not been fully provided.

F-20

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

12. Segment Information

The Company has adopted SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information.” This statement requires enterprises to report information about operating segments in annual financial statements. It also establishes standards for related disclosures about products, geographic areas and major customers. The method of determining what information to report is based upon the “management” approach. Our chief operating decision-maker reviews revenues by both geography and customer. We are not organized into business units nor do we capture expenses or allocate resources based on segmentation of the business. Therefore, we believe that we operate in a single industry segment.

Our revenues by geographic area based on the location of customers are as follows:

	Year Ended December 31,						Three Months Ended March 31,
	1999		2000		2001		2001		2002
							(unaudited)
France	$	36,630	$	63,135	$	22,409	$	6,027	$	1,478
Italy		16,705		23,522		13,176		10,498		208
Other in Europe		5,377		9,643		16,146		4,696		1,940
United States		140,872		100,289		86,042		12,902		37,826
Other in North America		770		319		754		72		273
Taiwan		30,175		34,325		19,667		13,074		11,896
Malaysia		10,931		26,745		27,912		17,869		3,311
Other in Asia		16,811		16,073		14,336		3,657		2,022
Japan		13,767		12,283		20,490		642		8,686

	$	272,038	$	286,334	$	220,932	$	69,437	$	67,640

Revenues outside North America were 48%, 65% and 60% of total revenues for the years ended December 31, 1999, 2000 and 2001, respectively and 81% and 44% for the quarters ended March 31, 2001 and March 31, 2002.

Customer A and Customer B accounted for approximately 45% and 17% of revenues for the year ended December 31, 1999, for 30% and 30% of revenues for the year ended December 31, 2000 for 37% and 18% of revenues for the year ended December 31, 2001.

Customer A and Customer B accounted for approximately 6% and 30% of accounts receivable at December 31, 2000 and for 39% and 12% of accounts receivable at December 31, 2001.

Property and equipment by location is as follows:

	December 31,
	2000		2001
Property and equipment, net:
United States	$	32,457	$	27,822
Other countries		5,388		3,030

	$	37,845	$	30,852

F-21

NPTest, Inc.

NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)

(amounts in thousands)

13. Agreements with Schlumberger

The Master Transfer and Separation Agreement. This agreement will contain the key provisions relating to the separation of NPTest from Schlumberger Technologies, Inc., Schlumberger Technology Corporation and Schlumberger B.V. (“Schlumberger Subsidiaries”). The details of the separation will be contained in various ancillary agreements which will be exhibits to the master agreement. The master agreement and the ancillary agreements will recognize that certain of the transactions described in those agreements have already occurred. The ancillary agreements include:

General Assignment and Assumption Agreement. The agreement will identify the assets to be transferred by the Schlumberger Subsidiaries to NPTest, as well as the liabilities to be assumed by NPTest. The agreement will further describe when and how these transfers and assumptions will occur.

Master Patent License Agreement. The agreement will allocate rights relating to patents and patent applications between the Schlumberger Subsidiaries and NPTest. The agreement will also contain covenants by the Schlumberger Subsidiaries and NPTest relating to infringement of patents that exist as of the date of separation.

Master Trademark Ownership and License Agreement. The agreement will allocate rights relating to trademarks, service marks and trade names between the Schlumberger Subsidiaries and NPTest.

Employee Matters Agreement. The agreement will allocate assets, liabilities and responsibilities relating to certain current and former employees of the Schlumberger Subsidiaries and their participation in the benefit plans, including stock plans that NPTest will sponsor and maintain.

Real Estate Matters Agreement. The agreement will address real estate matters relating to certain property owned or leased by the Schlumberger Subsidiaries that will be transferred or shared with NPTest.

Master Confidential Disclosure Agreement. The agreement will contain provisions requiring the Schlumberger Subsidiaries and NPTest not to disclose any confidential information of the other party, subject to certain exceptions.

Indemnification and Insurance Matters Agreement. The agreement will provide for a mechanism for indemnification between the Schlumberger Subsidiaries and NPTest. In general, NPTest will indemnify and hold these Schlumberger Subsidiaries harmless from all liabilities arising from NPTest’s business and or any of NPTest's contracts and any breach of obligations under the Master Separation Agreement or any of the ancillary agreements. In turn they will indemnify and hold NPTest harmless from all liabilities arising from their business other than NPTest’s business and any breach of obligations under the Master Separation Agreement or any of the ancillary agreements.

Tax Sharing Agreement. The agreement will set out the principles and responsibilities of the parties regarding the allocation of taxes and other related liabilities and adjustments with respect to taxes and audits. It will define responsibilities for the preparation and filing of returns, payment of taxes, and will include provisions concerning indemnifications, provision of information, mutual cooperation and related matters.

Master Transitional Services Agreement. The agreement will set out the basis on which the Schlumberger Subsidiaries will provide to NPTest certain support services after the separation.

Master Technology Ownership and License Agreements. The agreement will allocate intellectual property rights in technology other than patents, patent applications, invention disclosures, trademarks, trade names, service marks or related applications between the Schlumberger Subsidiaries and NPTest.

F-22

[NP Test Logo]

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution

The following table indicates the expenses to be incurred in connection with the offering described in this Registration Statement, all of which will be paid by affiliates of Schlumberger Ltd. All amounts are estimates, other than the registration fee, the NASD fee, and the New York Stock Exchange listing fee.

SEC Registration fee		$
NASD filing fee
New York Stock Exchange listing fee
Accounting fees and expenses
Legal fees and expenses
Printing and engraving expenses
Transfer agent fees and expenses
Blue sky fees and expenses
Miscellaneous fees and expenses

Total		$

Item 14. Indemnification of Directors and Officers

We are incorporated under the laws of the State of Delaware. Section 102 of the Delaware General Corporation Law, or the DGCL, as amended, allows a corporation to eliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit.

Section 145 of the DGCL provides, among other things, that we may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of NPTest) by reason of the fact that the person is or was a director, officer, agent or employee of NPTest or is or was serving at our request as a director, officer, agent, or employee of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgment, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with the action, suit or proceeding. The power to indemnify applies (a) if the person is successful on the merits or otherwise in defense of any action, suit or proceeding, or (b) if the person acted in good faith and in a manner he reasonably believed to be in the best interest, or not opposed to the best interest, of NPTest, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The power to indemnify applies to actions brought by or in the right of NPTest as well, but only to the extent of defense expenses (including attorneys’ fees but excluding amounts paid in settlement) actually and reasonably incurred and not to any satisfaction of judgment or settlement of the claim itself, and with the further limitation that in these actions no indemnification shall be made in respect of a claim, issue or matter in which the person is found to be liable to NPTest, unless the court believes that in light of all the circumstances indemnification should apply.

Section 174 of the DGCL provides, among other things, that a director, who willfully or negligently approves of an unlawful payment of dividends or an unlawful stock purchase or

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redemption, may be held liable for these actions. A director who was either absent when the unlawful actions were approved or dissented at the time, may avoid liability by causing his or her dissent to these actions to be entered in the books containing the minutes of the meetings of the board of directors at the time the action occurred or immediately after the absent director receives notice of the unlawful acts.

Our Amended and Restated Certificate of Incorporation includes a provision that indemnifies our directors to the fullest extent authorized or permitted by law except in connection with a proceeding initiated by a director unless such a proceeding is authorized by the board.

Our Bylaws provide that:

•

we must indemnify our directors and officers to the fullest extent permitted by Delaware law;

•

we may indemnify our other employees and agents to the same extent that we indemnified our officers and directors, unless otherwise determined by out board of directors; and

•

we must advance expenses, as incurred, to our directors and executive officers in connection with a legal proceeding to the fullest extent permitted by Delaware law.

The indemnification provisions contained in our Amended and Restated Certificate of Incorporation and Bylaws are not exclusive of any other rights to which a person may be entitled by law, agreement, vote of stockholders or disinterested directors or otherwise. In addition, we will obtain insurance on behalf of our directors and executive officers insuring them against any liability asserted against them in their capacities as directors or officers or arising out of this status.

Item 15. Recent Sales of Unregistered Securities

The Registrant has not issued and sold any unregistered securities other than:

(1) In May 2002, the Registrant issued shares to Schlumberger Technologies Inc. in connection with the transfer of assets and assumption of liabilities of our business owned by Schlumberger Technologies Inc.

(2) The Registrant expects to issue shares to Schlumberger B.V. in connection with the contribution of the non-U.S. business owned by Schlumberger B.V.

(3) The Registrant expects to issue options to purchase up to shares of common stock to officers, directors and employees of the Registrant pursuant to the 2002 Stock Option Plan as of the date of the prospectus.

The sale of these shares was exempt from registration under the Securities Act pursuant to Section 4(2) or Rule 701.

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Item 16. Exhibits and Financial Statement Schedules

Exhibit		Description

1.1		Form of Underwriting Agreement.*

3.1		Form of Amended and Restated Certificate of Incorporation.

3.2		Form of Bylaws.

4.1		Specimen Stock Certificate.*

5.1		Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.*

10.1		Form of Master Separation Agreement between Schlumberger and NPTest.

10.2		Form of General Assignment and Assumption Agreement between Schlumberger and NPTest.

10.3		Form of Master Technology Ownership and License Agreement between Schlumberger and NPTest.

10.4		Form of Master Patent Ownership and License Agreement between Schlumberger and NPTest.

10.5		Form of Master Trademark Ownership and License Agreement between Schlumberger and NPTest.

10.6		Form of Employee Matters Agreement between Schlumberger and NPTest.

10.7		Form of Tax Sharing Agreement between Schlumberger and NPTest.

10.8		Form of Master Transitional Services Agreement between Schlumberger and NPTest.

10.9		Form of Real Estate Matters Agreement between Schlumberger and NPTest.

10.10		Form of Master Confidential Disclosure Agreement between Schlumberger and NPTest.

10.11		Form of Indemnification and Insurance Matters Agreement between Schlumberger and NPTest.

10.12		Form of 2002 Stock Option Plan.*

10.13		Form of Stock Option Agreements.*

10.14		Form of Indemnification Agreement between NPTest and each of its directors and executive officers.*

10.15		Form of Registration Rights Agreement.

10.16		Manufacturing Agreement (St. Etienne facility).*

21.1		Subsidiaries of NPTest.*

23.1		Independent Auditors’ consent.

23.2		Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included on Exhibit 5.1).*

24.1		Power of Attorney.**

*	To be filed by amendment.

**	Previously filed.

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(b) Financial Statement Schedules

The following financial statement schedule, together with the Report of Independent Auditors thereon, is filed as part of this Registration Statement:

Schedule II

VALUATION AND QUALIFYING ACCOUNTS

Allowance for Doubtful Accounts

Fiscal Year	Balance at Beginning of Year		Additions Charged to Income	Deductions		Balance at End of Year
	(Dollars in thousands)
1999	$	353	549	—		$	902
2000	$	902	829	—		$	1,731
2001	$	1,731	—	(393	)	$	1,338

Inventory Reserve

Fiscal Year	Balance at Beginning of Year		Additions Charged to Income	Deductions(1)		Balance at End of Year
	(Dollars in thousands)
1999	$	52,274	21,015	(13,068	)	$	60,221
2000	$	60,221	8,028	(9,743	)	$	58,506
2001	$	58,506	39,074	(5,060	)	$	92,520

(1)

Primarily comprised of release of reserves due to physical scrapping of inventory.

Item 17. Undertakings

The Registrant hereby undertakes to provide the Underwriters at the closing specified in the Underwriting Agreement certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 14, or otherwise, the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification by the registrant against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes that:

(1) for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective; and

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(2) for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and this offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California, on July 23, 2002.

NPTEST, INC.

By:		/s/ ASHOK BELANI
		Name: Ashok Belani Title: Chief Executive Officer and Director

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Name	Title	Date

/s/ ASHOK BELANI Ashok Belani	Chief Executive Officer and Director	July 23, 2002

/s/ JORGE CELAYA Jorge Celaya	Chief Financial Officer	July 23, 2002

/s/ JACK SEXTON Jack Sexton	Controller and Chief Accounting Officer	July 23, 2002

* Euan Baird	Director	July 23, 2002

* Frank Sorgie	Director	July 23, 2002

* Dale Gaudier	Director	July 23, 2002

Brian Bachman	Director	July 23, 2002

Edward Hayes	Director	July 23, 2002


*By:		/s/ ROLAND EWUBARE
		Roland Ewubare Attorney-in-fact

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EXHIBIT INDEX

Exhibit		Description

1.1		Form of Underwriting Agreement.*

3.1		Form of Amended and Restated Certificate of Incorporation.

3.2		Form of Bylaws.

4.1		Specimen Stock Certificate.*

5.1		Form of Opinion of Skadden, Arps, Slate, Meagher & Flom LLP.*

10.1		Form of Master Separation Agreement between Schlumberger and NPTest.

10.2		Form of General Assignment and Assumption Agreement between Schlumberger and NPTest.

10.3		Form of Master Technology Ownership and License Agreement between Schlumberger and NPTest.

10.4		Form of Master Patent Ownership and License Agreement between Schlumberger and NPTest.

10.5		Form of Master Trademark Ownership and License Agreement between Schlumberger and NPTest.

10.6		Form of Employee Matters Agreement between Schlumberger and NPTest.

10.7		Form of Tax Sharing Agreement between Schlumberger and NPTest.

10.8		Form of Master Transitional Services Agreement between Schlumberger and NPTest.

10.9		Form of Real Estate Matters Agreement between Schlumberger and NPTest.

10.10		Form of Master Confidential Disclosure Agreement between Schlumberger and NPTest.

10.11		Form of Indemnification and Insurance Matters Agreement between Schlumberger and NPTest.

10.12		Form of 2002 Stock Option Plan.*

10.13		Form of Stock Option Agreements.*

10.14		Form of Indemnification Agreement between NPTest and each of its directors and executive officers.*

10.15		Form of Registration Rights Agreement.

10.16		Manufacturing Agreement (St. Etienne facility).*

21.1		Subsidiaries of NPTest.*

23.1		Independent Auditors’ consent.

23.2		Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included on Exhibit 5.1).*

24.1		Power of Attorney.**

*	To be filed by amendment.

**	Previously filed.

EX-3.1 3 dex31.txt FORM OF AMENDED AND RESTATED CERTIFICATE OF INC. EXHIBIT 3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION ____________________________________________________________________ Pursuant to Sections 242 and 245 of the Delaware General Corporation Law _____________________________________________________________________ NPTest, Inc., (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of Delaware (the "GCL"), does hereby certify as follows: (1) The name of the Corporation is NPTest, Inc. The Corporation was originally incorporated under the name Schlumberger Test Solutions, Inc. The original certificate of incorporation of the Corporation was filed with the office of the Secretary of State of the State of Delaware on the 7/th/ of May, 2002. (2) This Amended and Restated Certificate of Incorporation was duly adopted by the Board of Directors of the Corporation (the "Board of Directors") and by the stockholders of the Corporation in accordance with Sections 228, 242 and 245 of the GCL. (3) This Amended and Restated Certificate of Incorporation restates and integrates and amends the certificate, as heretofore amended or supplemented. (4) The text of the Certificate of Incorporation is restated in its entirety as follows: FIRST: The name of the Corporation is NPTest, Inc. (the "Corporation"). SECOND: The address of the registered office of the Corporation in the State of Delaware is at 9 East Loockerman Street in the City of Dover, County of Kent, State of Delaware 19901. The name of its registered agent at that address is National Registered Agents, Inc. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware (the "GCL"). FOURTH: (a) Authorized Capital Stock. The total number of shares of stock which the Corporation shall have authority to issue is [__________] shares of capital stock, consisting of (i) [____________] shares of common stock, each having a par value of $0.01 per share (the " Common Stock") and (ii) [__________] shares of preferred stock, each having a par value of $0.01 per share (the "Preferred Stock"). Upon the filing of this amended and restated certificate of incorporation, each [__________] share[s] of Common Stock outstanding shall be split and converted into [__________] shares of Common Stock. (a) Preferred Stock. The Board of Directors is hereby expressly authorized to provide for the issuance of all or any shares of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such class or series, including, without limitation, the authority to provide that any such class or series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at such rates, on such conditions, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of stock, of the Corporation at such price or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions. (b) Power to Sell and Purchase Shares. Subject to the requirements of applicable law, the Corporation shall have the power to issue and sell all or any part of any shares of any class of stock herein or hereafter authorized to such persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not greater consideration could be received upon the issue or sale of the same number of shares of another class, and as otherwise permitted by law. Subject to the requirements of applicable law, the Corporation shall have the power to purchase any shares of any class of stock herein or hereafter authorized from such persons, and for such consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not less consideration could be paid upon the purchase of the same number of shares of another class, and as otherwise permitted by law. FIFTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders: (a) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. (b) The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the Bylaws of the Corporation. 2 (c) A director shall hold office until the annual meeting for the year in which his or her term expires and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. (d) In addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the GCL, this Amended and Restated Certificate of Incorporation, and any By-Laws adopted by the stockholders; provided, however, that no By-Laws hereafter adopted by the stockholders shall invalidate any prior act of the directors which would have been valid if such By-Laws had not been adopted. SIXTH: No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the GCL as the same exists or may hereafter be amended. If the GCL is amended hereafter to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent authorized by the GCL, as so amended. Any repeal or modification of this Article SIXTH shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification. SEVENTH: The Corporation shall indemnify its directors and officers to the fullest extent authorized or permitted by law, as now or hereafter in effect, and such right to indemnification shall continue as to a person who has ceased to be a director or officer of the Corporation and shall inure to the benefit of his or her heirs, executors and personal and legal representatives; provided, however, that, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors. The right to indemnification conferred by this Article SEVENTH shall include the right to be paid by the Corporation the expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article SEVENTH to directors and officers of the Corporation. The rights to indemnification and to the advance of expenses conferred in this Article SEVENTH shall not be exclusive of any other right which any person may have or hereafter acquire under this Amended and Restated Certificate of Incorporation, 3 the By-Laws of the Corporation, any statute, agreement, vote of stockholders or disinterested directors or otherwise. Any repeal or modification of this Article SEVENTH shall not adversely affect any rights to indemnification and to the advancement of expenses of a director or officer of the Corporation existing at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification. EIGHTH: Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation, and the ability of the stockholders to consent in writing to the taking of any action is hereby specifically denied. NINTH: Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the GCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation. TENTH: In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power to adopt, amend, alter or repeal the Corporation's By-Laws. The affirmative vote of at least a majority of the entire Board of Directors shall be required to adopt, amend, alter or repeal the Corporation's By-Laws. The Corporation's By-Laws also may be adopted, amended, altered or repealed by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of the shares entitled to vote at an election of directors. ELEVENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation in the manner now or hereafter prescribed in this Amended and Restated Certificate of Incorporation, the Corporation's By-Laws or the GCL, and all rights herein conferred upon stockholders are granted subject to such reservation; provided, however, that, notwithstanding any other provision of this Amended and Restated Certificate of Incorporation (and in addition to any other vote that may be required by law), the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of the shares entitled to vote at an election of directors shall be required to amend, alter, change or repeal, or to adopt any provision as part of this Amended and Restated Certificate of Incorporation inconsistent with the purpose and intent of Articles FIFTH, EIGHTH and TENTH of this Amended and Restated Certificate of Incorporation or this Article ELEVENTH. 4 IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be executed on its behalf this __ day of __, 2002. NPTEST, INC. By:________________________ Name: Title: 5 EX-3.2 4 dex32.txt FORM OF AMENDED AND RESTATED BYLAWS EXHIBIT 3.2 AMENDED AND RESTATED BY-LAWS OF NPTEST, INC. (hereinafter called the "Corporation") ARTICLE I OFFICES Section 1. Registered Office. The registered office of the Corporation shall be at 9 East Loockerman Street in the City of Dover, County of Kent, State of Delaware 19901. Section 2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware as shall be designated from time to time by the Board of Directors. The Board of Directors may, in its sole discretion, determine that a meeting of the stockholders shall not be held at any place, but may instead be held solely by means of remote communication in the manner authorized by the General Corporation Law of the State of Delaware (the "DGCL"). Section 2. Annual Meetings. The Annual Meetings of Stockholders for the election of directors shall be held on such date and at such time as shall be designated from time to time by the Board of Directors. Any other proper business may be transacted at the Annual Meeting of Stockholders. Section 3. Special Meetings. Unless otherwise required by law or by the certificate of incorporation of the Corporation, as amended and restated from time to time (the "Certificate of Incorporation"), special meetings of the stockholders, for any purpose or purposes, may be called by either (i) the Chairman of the Board of Directors, if there be one, (ii) the President (iii) the Secretary, (iv) any Assistant Secretary, if there be one, or (v) the Board of Directors. The ability of the stockholders to call a special meeting is hereby specifically denied. Section 4. Notice. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting, shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise required by law, the written notice of any meeting shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting. Section 5. Adjournments. Any meeting of the stockholders may be adjourned from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place, if any, thereof and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting in accordance with the requirements of Section 4 hereof shall be given to each stockholder of record entitled to vote at the meeting. Section 6. Quorum. Unless otherwise required by applicable law or the Certificate of Incorporation, the holders of a majority of the Corporation's capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, in the manner provided in Section 5, until a quorum shall be present or represented. Section 7. Voting. Unless otherwise required by law, the Certificate of Incorporation or these By-laws, any question brought before any meeting of stockholders, other than the election of directors, shall be decided by the vote of the holders of a majority of the total number of votes of the Corporation's capital stock represented and entitled to vote thereat, voting as a single class. Unless otherwise provided in the Certificate of Incorporation, and subject to Section 11 hereof, each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder. Such votes may be cast in person or by proxy as provided in Section 8 hereof but no proxy shall be voted on or after three years from its date, unless such proxy provides for a longer period. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in such officer's discretion, may require that any votes cast at such meeting shall be cast by written ballot. Section 8. Proxies. Each stockholder entitled to vote at a meeting of the stockholders may authorize another person or persons to act for such stockholder as proxy, but no such proxy shall be voted upon after three years from its date, unless such proxy provides for a longer period. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy, the following shall constitute a valid means by which a stockholder may grant such authority: 2 (a) A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished by the stockholder or such stockholder's authorized officer, director, employee or agent signing such writing or causing such person's signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature. (b) A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. If it is determined that such telegrams, cablegrams or other electronic transmissions are valid, the inspectors, or if there are no inspectors, such other persons making that determination shall specify the information on which they relied. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used; provided, however, that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. Section 9. Consent of Stockholders in Lieu of Meeting. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation, and the ability of the stockholders to consent in writing to the taking of any action is hereby specifically denied. Section 10. List of Stockholders Entitled to Vote. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present. If the meeting is to be held solely by means of remote communication then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic 3 network, and the information required to access such list shall be provided with the notice of the meeting. Section 11. Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of the stockholders shall be at the close of business on the day next proceeding the date on which notice is given, or, if notice is waived, at the close of business on the next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Section 12. Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 10 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders. Section 13. Conduct of Meetings. The Board of Directors of the Corporation may adopt by resolution such rules and regulations for the conduct of the meeting of the stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of the stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (iii) rules and procedures for maintaining order at the meeting and the safety of those present; (iv) limitations on attendance at or participation in the meeting to stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (vi) limitations on the time allotted to questions or comments by participants. Section 14. Inspectors of Election. In advance of any meeting of the stockholders, the Board of Directors, by resolution, the Chairman or the President shall appoint one or more inspectors to act at the meeting and make a written report thereof. One or more persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of the stockholders, the Chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by applicable law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best 4 of such inspector's ability. The inspector shall have the duties prescribed by law and shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and such other facts as may be required by applicable law. Section 15. Nature of Business at Meetings of Stockholders. No business may be transacted at an annual meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any stockholder of the Company (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 15 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 15. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Company. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Company not less than sixty days nor more than ninety days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs. To be in proper written form, a stockholder's notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 15; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 15 shall be deemed to preclude discussion by any stockholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in 5 accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted. Section 16. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Company, except as may be otherwise provided in the Certificate of Incorporation with respect to the right of holders of preferred stock of the Corporation to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Company (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 16 and on the record date for the determination of stockholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section 16. In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Company. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Company (a) in the case of an annual meeting, not less than sixty days nor more than ninety days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs; and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs. To be in proper written form, a stockholder's notice to the Secretary 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 Company which are owned beneficially or 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 Company 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 meeting to nominate the persons named in its 6 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. No person shall be eligible for election as a director of the Company unless nominated in accordance with the procedures set forth in this Section 16. If the Chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded. ARTICLE III DIRECTORS Section 1. Number and Election of Directors. The Board of Directors shall consist of not less than one nor more than nine members, the exact number of which shall be fixed from time to time by the Board of Directors. Except as provided in Section 2 of this Article III, directors shall be elected by a plurality of the votes cast at the Annual Meetings of Stockholders and each director so elected shall hold office until the next Annual Meeting of Stockholders and until such director's successor is duly elected and qualified, or until such director's earlier death, resignation or removal. Directors need not be stockholders. Section 2. Vacancies. Unless otherwise required by law or the Certificate of Incorporation, vacancies arising through death, resignation, removal, an increase in the number of directors or otherwise may be filled only by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and qualified, or until their earlier death, resignation or removal. Section 3. Duties and Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-Laws required to be exercised or done by the stockholders. Section 4. Meetings. The Board of Directors may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the Chairman, if there be one or the President. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight hours before the date of the meeting, by telephone or telegram or electronic means on twenty-four hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. 7 Section 5. Organization. At each meeting of the Board of Directors, the Chairman of the Board of Directors, or, in his or her absence, a director chosen by a majority of the directors present, shall act as chairman. The Secretary of the Corporation shall act as secretary at each meeting of the Board of Directors. In case the Secretary shall be absent from any meeting of the Board of Directors, an Assistant Secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Secretary and all the Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting. Section 6. Resignations and Removals of Directors. Any director of the Corporation may resign at any time, by giving notice in writing or by electronic transmission to the Chairman of the Board of Directors, the President or the Secretary of the Corporation. Such resignation shall take effect at the time therein specified or, if no time is specified, immediately; and, unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective. Except as otherwise required by applicable law, any director or the entire Board of Directors may be removed from office at any time by the affirmative vote of the holders of at least sixty-six and two-thirds percent in voting power of the issued and outstanding capital stock of the Corporation entitled to vote in the election of directors. Section 7. Quorum. Except as otherwise required by law or the Certificate of Incorporation, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present. Section 8. Actions of the Board by Written Consent. Unless otherwise provided in the Certificate of Incorporation, or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Section 9. Meetings by Means of Conference Telephone. Unless otherwise provided in the Certificate of Incorporation or these By-Laws, members of the Board of Directors of the Corporation, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 9 shall constitute presence in person at such meeting. Section 10. Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The 8 Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent permitted by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Each committee shall keep regular minutes and report to the Board of Directors when required. Section 11. Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary for service as director, payable in cash or securities. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. Section 12. Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because the director or officer's vote is counted for such purpose if (i) the material facts as to the director or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to the director or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. ARTICLE IV OFFICERS Section 1. General. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, a Secretary and a Treasurer. The Board of Directors, in its discretion, also may choose a Chairman of the Board of Directors (who must be a director) 9 and one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers. Any number of offices may be held by the same person, unless otherwise prohibited by law or the Certificate of Incorporation or these By-Laws. The officers of the Corporation need not be stockholders of the Corporation nor, except in the case of the Chairman of the Board of Directors, need such officers be directors of the Corporation. Section 2. Election. The Board of Directors, at its first meeting held after each Annual Meeting of Stockholders, shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier death, resignation or removal. Any officer elected by the Board of Directors may be removed at any time by the affirmative vote of the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors. The salaries of all officers of the Corporation shall be fixed by the Board of Directors. Section 3. Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the President or any Vice President or any other officer authorized to do so by the Board of Directors and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons. Section 4. Chairman of the Board of Directors. The Chairman of the Board of Directors, if there be one, shall preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board of Directors shall be the Chief Executive Officer of the Corporation, unless the Board of Directors designates the President as the Chief Executive Officer, and, except where by law the signature of the President is required, the Chairman of the Board of Directors shall possess the same power as the President to sign all contracts, certificates and other instruments of the Corporation which may be authorized by the Board of Directors. During the absence or disability of the President, the Chairman of the Board of Directors shall exercise all the powers and discharge all the duties of the President. The Chairman of the Board of Directors shall also perform such other duties and may exercise such other powers as may from time to time be assigned by these By-Laws or by the Board of Directors. Section 5. President. The President shall, subject to the control of the Board of Directors and, if there be one, the Chairman of the Board of Directors, have general supervision of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The President shall execute all bonds, mortgages, contracts and other instruments of the Corporation requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise signed and executed and except that the other officers of the Corporation may sign and execute documents when so 10 authorized by these By-Laws, the Board of Directors or the President. In the absence or disability of the Chairman of the Board of Directors, or if there be none, the President shall preside at all meetings of the stockholders and, provided the President is also a director, the Board of Directors. If there be no Chairman of the Board of Directors, or if the Board of Directors shall otherwise designate, the President shall be the Chief Executive Officer of the Corporation. The President shall also perform such other duties and may exercise such other powers as may from time to time be assigned to such officer by these By-Laws or by the Board of Directors. Section 6. Vice Presidents. At the request of the President or in the President's absence or in the event of the President's inability or refusal to act (and if there be no Chairman of the Board of Directors), the Vice President, or the Vice Presidents if there is more than one (in the order designated by the Board of Directors), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Each Vice President shall perform such other duties and have such other powers as the Board of Directors from time to time may prescribe. If there be no Chairman of the Board of Directors and no Vice President, the Board of Directors shall designate the officer of the Corporation who, in the absence of the President or in the event of the inability or refusal of the President to act, shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Section 7. Secretary. The Secretary shall attend all meetings of the Board of Directors and all meetings of stockholders and record all the proceedings thereat in a book or books to be kept for that purpose; the Secretary shall also perform like duties for committees of the Board of Directors when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board of Directors or the President, under whose supervision the Secretary shall be. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, and if there be no Assistant Secretary, then either the Board of Directors or the President may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest to the affixing by such officer's signature. The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be. Section 8. Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so 11 requires, an account of all transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office of the Treasurer and for the restoration to the Corporation, in case of the Treasurer's death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the Treasurer's possession or under the Treasurer's control belonging to the Corporation. Section 9. Assistant Secretaries. Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Secretary, and in the absence of the Secretary or in the event of the Secretary's disability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary. Section 10. Assistant Treasurers. Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the President, any Vice President, if there be one, or the Treasurer, and in the absence of the Treasurer or in the event of the Treasurer's disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of the office of Assistant Treasurer and for the restoration to the Corporation, in case of the Assistant Treasurer's death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in the Assistant Treasurer's possession or under the Assistant Treasurer's control belonging to the Corporation. Section 11. Other Officers. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers. ARTICLE V STOCK Section 1. Form of Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation (i) by the Chairman of the Board of Directors, the President or a Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by such stockholder in the Corporation. Section 2. Signatures. Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or 12 registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. Section 3. Lost Certificates. The Board of Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or the owner's legal representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of such new certificate. Section 4. Transfers. Stock of the Corporation shall be transferable in the manner prescribed by applicable law and in these By-Laws. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by such person's attorney lawfully constituted in writing and upon the surrender of the certificate therefor, properly endorsed for transfer and payment of all necessary transfer taxes; provided however, that such surrender and endorsement or payment of taxes shall not be required in any case in which the officers of the corporation shall determine to waive such requirement. Every certificate exchanged, returned or surrendered to the Corporation shall be marked "cancelled" with the date of cancellation, by the Secretary of the Corporation or the transfer agent thereof. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred. Section 5. Dividend Record Date. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. Section 6. Record Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law. Section 7. Transfer and Registry Agents. The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors. 13 ARTICLE VI NOTICES Section 1. Notices. Whenever written notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at such person's address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under applicable law, the Certificate of Incorporation or these By-Laws shall be effective if given by a form of electronic transmission if consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed to be revoked if (i) the Corporation is unable to deliver by electronic transmission two consecutive notices by the Corporation in accordance with such consent and (ii) such inability becomes known to the Secretary or Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, that the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given by electronic transmission, as described above, shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail, at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network, together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (iv) if by any other form of electronic transmission, when directed to the stockholder. Notice to directors or committee members may also be given personally by telegram, telex or cable or by means of electronic transmission. Section 2. Waivers of Notice. Whenever any notice is required by applicable law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed by the person or persons entitled to notice, or a waiver by electronic transmission, by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of a person at a meeting, present in person or represented by proxy, shall constitute a waiver of notice of such meeting, except where the person attends the meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any Annual or Special Meeting of Stockholders or any regular or special meeting of the directors or members of a committee of directors need be specified in any written waiver of notice unless so required by law, the Certificate of Incorporation or these By-Laws. ARTICLE VII GENERAL PROVISIONS 14 Section 1. Dividends. Dividends upon the capital stock of the Corporation, subject to the requirements of the DGCL and the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting of the Board of Directors (or any action by written consent in lieu thereof in accordance with Section 8 of Article III hereof), and may be paid in cash, in property, or in shares of the Corporation's capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for purchasing any of the shares of capital stock, warrants, rights, options, bond, debentures, notes, scrip or other securities or evidences of indebtedness of the Corporation, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve. Section 2. Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 3. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. Section 4. Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE VIII INDEMNIFICATION Section 1. Power to Indemnify in Actions, Suits or Proceedings other than Those by or in the Right of the Corporation. Subject to Section 3 of this Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director or officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with 15 respect to any criminal action or proceeding, had reasonable cause to believe that such person's conduct was unlawful. Section 2. Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation. Subject to Section 3 of this Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Section 3. Authorization of Indemnification. Any indemnification under this Article VIII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the present or former director or officer is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VIII, as the case may be. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination, (i) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion or (iv) by the stockholders. Such determination shall be made, with respect to former directors and officers, by any person or persons having the authority to act on the matter on behalf of the Corporation. To the extent, however, that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith, without the necessity of authorization in the specific case. Section 4. Good Faith Defined. For purposes of any determination under Section 3 of this Article VIII, a person shall be deemed to have acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, or, with respect to any criminal action or proceeding, to have had no reasonable cause to believe such person's conduct was unlawful, if such person's action is based on the records or books of account of the Corporation or another enterprise, or on information supplied to such person by the officers of the Corporation or another enterprise in the course of their duties, or on the advice of legal counsel for the Corporation or another enterprise or on 16 information or records given or reports made to the Corporation or another enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Corporation or another enterprise. The provisions of this Section 4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VIII, as the case may be. Section 5. Indemnification by a Court. Notwithstanding any contrary determination in the specific case under Section 3 of this Article VIII, and notwithstanding the absence of any determination thereunder, any director or officer may apply to the Court of Chancery of the State of Delaware or any other court of competent jurisdiction in the State of Delaware for indemnification to the extent otherwise permissible under Sections 1 and 2 of this Article VIII. The basis of such indemnification by a court shall be a determination by such court that indemnification of the director or officer is proper in the circumstances because such person has met the applicable standards of conduct set forth in Section 1 or Section 2 of this Article VIII, as the case may be. Neither a contrary determination in the specific case under Section 3 of this Article VIII nor the absence of any determination thereunder shall be a defense to such application or create a presumption that the director or officer seeking indemnification has not met any applicable standard of conduct. Notice of any application for indemnification pursuant to this Section 5 shall be given to the Corporation promptly upon the filing of such application. If successful, in whole or in part, the director or officer seeking indemnification shall also be entitled to be paid the expense of prosecuting such application. Section 6. Expenses Payable in Advance. Expenses incurred by a director or officer in defending any civil, criminal, administrative or investigative action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation as authorized in this Article VIII. Such expenses (including attorneys' fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if any, as the Corporation deems appropriate. Section 7. Nonexclusivity of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by or granted pursuant to this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the Certificate of Incorporation, any By-Law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Section 1 and Section 2 of this Article VIII shall be made to the fullest extent permitted by law. The provisions of this Article VIII shall not be deemed to preclude the indemnification of any person who is not specified in Section 1 or Section 2 of this Article VIII but whom the Corporation has the power or obligation to indemnify under the provisions of the General Corporation Law of the State of Delaware, or otherwise. Section 8. Insurance. The Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was a 17 director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power or the obligation to indemnify such person against such liability under the provisions of this Article VIII. Section 9. Certain Definitions. For purposes of this Article VIII, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. The term "another enterprise" as used in this Article VIII shall mean any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise of which such person is or was serving at the request of the Corporation as a director, officer, employee or agent. For purposes of this Article VIII, references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director or officer with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article VIII. Section 10. Survival of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 11. Limitation on Indemnification. Notwithstanding anything contained in this Article VIII to the contrary, except for proceedings to enforce rights to indemnification (which shall be governed by Section 5 of this Article VIII), the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) or advance expenses in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors of the Corporation. Section 12. Indemnification of Employees and Agents. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to 18 indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article VIII to directors and officers of the Corporation. ARTICLE IX AMENDMENTS Section 1. Amendments. In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power to adopt, amend, alter or repeal the Corporation's By-Laws. The affirmative vote of at least a majority of the entire Board of Directors shall be required to adopt, amend, alter or repeal the Corporation's By-Laws. The Corporation's By-Laws also may be adopted, amended, altered or repealed by the affirmative vote of the holders of at least sixty-six and two-thirds percent of the voting power of the shares entitled to vote at an election of directors. Section 2. Entire Board of Directors. As used in this Article IX and in these By-Laws generally, the term "entire Board of Directors" means the total number of directors which the Corporation would have if there were no vacancies. * * * Adopted as of: _________________________________ Last Amended as of: ____________________________ 19 EX-10.1 5 dex101.txt FORM OF MASTER SEPARATION AND SALE AGREEMENT Exhibit 10.1 Master Separation and Sale Agreement by and among Schlumberger Technologies, Inc., Schlumberger Technology Corporation, Schlumberger BV and NPTest, Inc. _______ __, 2002 TABLE OF CONTENTS -----------------

Section 5.12 Cooperation in Obtaining New Agreements................................................. 14 Section 5.13 Property Damage to NPT Assets Prior to the Separation Date.............................. 14 Section 5.14 Charter/bylaw Amendments................................................................ 14 Section 5.15 NPTest Board Representation............................................................. 15 ARTICLE VI MISCELLANEOUS ..................................................................................... 16 Section 6.1 Limitation of Liability................................................................. 16 Section 6.2 Entire Agreement........................................................................ 17 Section 6.3 Governing Law........................................................................... 17 Section 6.4 Descriptive Headings.................................................................... 17 Section 6.5 Termination............................................................................. 17 Section 6.6 Notices................................................................................. 17 Section 6.7 Counterparts............................................................................ 18 Section 6.8 Binding Effect; Assignment.............................................................. 18 Section 6.9 Severability............................................................................ 19 Section 6.10 Failure or Indulgence Not Waiver; Remedies Cumulative................................... 19 Section 6.11 Amendment............................................................................... 19 Section 6.12 Authority............................................................................... 19 Section 6.13 Conflicting Agreements.................................................................. 19 ARTICLE VII DEFINITIONS ...................................................................................... 20 Section 7.1 Affiliate............................................................................... 20 Section 7.2 "Ancillary Agreements".................................................................. 20 Section 7.3 Employee Agreement...................................................................... 20 Section 7.4 Governmental Approvals.................................................................. 20 Section 7.5 Governmental Authority.................................................................. 20 Section 7.6 Information............................................................................. 20 Section 7.7 IPO Closing Date........................................................................ 20 Section 7.8 Local Transfer Agreements............................................................... 20 Section 7.9 NPT Assets.............................................................................. 20 Section 7.10 NPT Group............................................................................... 20 Section 7.11 NPT's Auditors.......................................................................... 21 Section 7.12 Person.................................................................................. 21 Section 7.13 Schlumberger Group...................................................................... 21 Section 7.14 Schlumberger's Auditors................................................................. 21 Section 7.15 Subsidiary.............................................................................. 21

ii MASTER SEPARATION AND SALE AGREEMENT This Master Separation and Sale Agreement (this "Agreement") is entered into as of _______ __, 2002, by and among Schlumberger Technologies, Inc., a Delaware corporation ("STI"), Schlumberger Technology Corporation, a Texas corporation ("STC"), Schlumberger BV, a company organized and existing under the laws of the Netherlands ("SBV" and, together with STI, and STC, "Schlumberger"), and NPTest, Inc. ("NPT"), a Delaware corporation. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in Article VII hereof. RECITALS WHEREAS, STI and SBV collectively own all of the currently issued and outstanding common stock of NPT; WHEREAS, NPT is engaged in certain aspects of the automated test equipment business and related businesses (collectively, the "NPT Business") as described in the Registration Statement on Form S-1, Registration No. 333-88710 (as amended or supplemented from time to time, the "IPO Registration Statement"); WHEREAS, the Board of Directors of each of STI, STC, SBV and NPT has determined that it would be appropriate and desirable for Schlumberger to contribute and transfer to NPT, and for NPT to receive and assume, directly or indirectly, certain assets and liabilities currently held, directly or indirectly, by Schlumberger and associated with the NPT Business, as identified in more detail herein (the "Separation"); WHEREAS, effective as of May 10, 2002, STI contributed and transferred to NPT, and NPT received and assumed, assets and liabilities theretofore held by Schlumberger and associated with the NPT Business that was theretofore conducted by Schlumberger in the United States (the "U.S. Transfer"); WHEREAS, on or prior to the date of this Agreement, members of the Schlumberger Group have transferred to members of the NPT Group certain assets and liabilities associated with the NPT Business that was theretofore conducted by Schlumberger outside the United States (together with the U.S. Transfer, the "Prior Transfers"), with the intent of completing the Prior Transfers on or before the Separation Date; WHEREAS, Schlumberger and NPT currently contemplate that, following the contribution and assumption of the assets and liabilities associated with the NPT Business as identified herein, NPT will make an initial public offering ("IPO") of an amount of its common stock pursuant to the IPO Registration Statement that will reduce STI's and SBV's combined ownership of NPT's issued and outstanding shares of common stock after the IPO to not more than ____%, assuming no exercise of the underwriters' over-allotment option; WHEREAS, each of STI and SBV currently intends to divest its remaining ownership in NPT through public or private sales of all of the shares of NPT common stock owned by it at a time subsequent to the date of the IPO (the "Sale"); and WHEREAS, the parties intend in this Agreement, including the Exhibits hereto, to set forth the principal arrangements between them regarding the separation of NPT and the NPT Business from Schlumberger. NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the parties hereto agree as follows: ARTICLE I SEPARATION Section 1.1 Separation Date. Unless otherwise provided in this Agreement, or in any agreement to be executed in connection with this Agreement, the effective time and date of each transfer of property, assumption of liability, license, undertaking, or agreement in connection with the Separation shall be 12:01 a.m., Pacific Time, _______ __, 2002 or such other date as may be fixed by the parties (the "Separation Date"). Section 1.2 Closing of Transactions. Unless otherwise provided herein, the closing of the transactions contemplated in Article II shall occur by the lodging of each of the executed instruments of transfer, assumptions of liability, undertakings, agreements, instruments or other documents executed or to be executed with Skadden, Arps, Slate, Meagher & Flom LLP ("SASM&F"), 525 University Avenue, Palo Alto, California 94301, to be held in escrow for delivery as provided in Section 1.3. Section 1.3 Exchange of Secretary's Certificates. Upon receipt of a certificate of the Secretary or an Assistant Secretary of each of STI, STC and SBV in the form attached to this Agreement as Exhibit A, SASM&F shall deliver to NPT on behalf of STI, STC and SBV all of the items required to be delivered by them hereunder pursuant to Section 2.1 and each such item shall be deemed to be delivered to NPT as of the Separation Date upon delivery of such certificate. Upon receipt of a certificate of the Secretary or an Assistant Secretary of NPT in the form attached to this Agreement as Exhibit B, SASM&F shall deliver to STI, STC and SBV on behalf of NPT all of the items required to be delivered by NPT pursuant to Section 2.2 hereunder and each such item shall be deemed to be delivered to STI, STC and SBV as of the Separation Date upon receipt of such certificate. Section 1.4 No Derogation from Prior Transfers. For convenience, this Agreement and the Ancillary Agreements may speak in the future tense as to transfers to NPT or other members of the NPT Group of certain assets and liabilities associated with the NPT Business, but nothing in this Agreement or any Ancillary Agreement shall derogate from the fact that the Prior Transfers have already been completed, and any reference to either or both of the Prior Transfers in the future tense shall be construed as confirmatory of the same. Section 1.5 Transfers to NPT Include Transfers to Other Members of the NPT Group. References in this Agreement and the Ancillary Agreements to transfers of assets and liabilities to NPT shall, where appropriate, include transfers of certain assets and liabilities to other members of the NPT Group. 2 ARTICLE II DOCUMENTS AND ITEMS TO BE DELIVERED ON OR PRIOR TO THE SEPARATION DATE Section 2.1 Documents to Be Delivered by Schlumberger. On the Separation Date or such other date as agreed in connection with the Prior Transfers, each of STI and SBV will deliver, or will cause its appropriate Affiliates to deliver, to NPT all of the following items and agreements (collectively, together with all agreements and documents contemplated by such agreements, the "Ancillary Agreements"): (a) A duly executed General Assignment and Assumption Agreement (the "Assignment Agreement") substantially in the form attached hereto as Exhibit C; (b) A duly executed Master Technology Ownership and License Agreement substantially in the form attached hereto as Exhibit D-1, a duly executed Master Patent Ownership Agreement substantially in the form attached hereto as Exhibit D-2 and a duly executed Master Trademark Ownership and License Agreement substantially in the form attached as Exhibit D-3; (c) A duly executed Employee Matters Agreement substantially in the form attached hereto as Exhibit E; (d) A duly executed Tax Sharing Agreement substantially in the form attached hereto as Exhibit F; (e) A duly executed Master Transitional Services Agreement substantially in the form attached hereto as Exhibit G; (f) A duly executed Real Estate Matters Agreement substantially in the form attached hereto as Exhibit H; (g) A duly executed Master Confidential Disclosure Agreement substantially in the form attached hereto as Exhibit I; (h) A duly executed Indemnification and Insurance Matters Agreement substantially in the form attached hereto as Exhibit J; (i) A duly executed Registration Rights Agreement substantially in the form attached hereto as Exhibit K; (j) The agreements, documents and instruments relating to the Prior Transfers; (k) Resignations of each person who is an officer or director of Schlumberger or its Affiliates immediately prior to the Separation Date, and who will be an employee of NPT or its Subsidiaries from and after the Separation Date; and 3 (l) Such other agreements, documents or instruments as the parties may agree are necessary or desirable in order to achieve the purposes hereof. Section 2.2 Documents to Be Delivered by NPT. As of the Separation Date, NPT will deliver to each of STI and SBV all of the following: (a) In each case where NPT is a party to any agreement or instrument referred to in Section 2.1, a duly executed counterpart of such agreement or instrument; and (b) Resignations of each person who is an officer or director of NPT or its Subsidiaries immediately prior to the Separation Date, and who will be an employee of Schlumberger or its Affiliates (excluding NPT and its controlled Affiliates) from and after the Separation Date. ARTICLE III THE IPO AND ACTIONS PENDING THE IPO Section 3.1 Transactions Prior to the IPO. Subject to the conditions specified in Section 3.3, STI, SBV and NPT shall each use their reasonable efforts to consummate the IPO. Such efforts shall include, but not necessarily be limited to, those specified in this Section 3.1. (a) Registration Statement. NPT, STI, STC and SBV shall cooperate in preparing, filing with the Securities and Exchange Commission (the "Commission") and causing to become effective a registration statement registering the common stock of NPT under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and any registration statements or amendments thereof which are required to reflect the establishment of, or amendments to, any employee benefit and other plans necessary or appropriate in connection with the IPO, the Separation, the Sale or the other transactions contemplated by this Agreement. NPT shall file such amendments or supplements to the IPO Registration Statement as may be necessary in order to cause the same to become and remain effective as required by law or by the underwriters for the IPO (the "Underwriters"), including, but not limited to, filing such amendments to the IPO Registration Statement as may be required by the underwriting agreement to be entered into among NPT, STI, STC and SBV and the Underwriters (in form and substance reasonably acceptable to NPT, STI, STC and SBV, the "Underwriting Agreement"), the Commission, or federal, state or foreign securities laws. (b) Underwriting Agreement. Each of NPT, STI, STC and SBV shall enter into the Underwriting Agreement, and shall comply with its obligations thereunder, except as may otherwise be waived by the underwriters. (c) NASDAQ or NYSE Listing. NPT shall use reasonable efforts to apply to have its shares of the common stock to be issued in the IPO quoted on The NASDAQ Stock Market's National Market (the "Nasdaq") or The New York Stock Exchange ("NYSE") (each hereinafter being referred to as a "National Exchange"), subject to official notice of issuance. Section 3.2 Cooperation. NPT shall consult, and cooperate in all respects, with STI and SBV in connection with the pricing of the common stock of NPT to be offered in the IPO 4 and shall, at their direction, promptly take any and all actions necessary or desirable to consummate the IPO as contemplated by the IPO Registration Statement and the Underwriting Agreement. Schlumberger shall have final authority over the pricing for the NPT common stock to be offered in the IPO of the secondary shares and number of shares to be so offered. Section 3.3 Conditions Precedent to Consummation of the IPO. The IPO closing is currently scheduled to occur on or before _______ __, 2002 (the "IPO Closing Date"). The obligations of the parties to use their reasonable efforts to consummate the IPO on or before the IPO Closing Date shall be conditioned on the satisfaction of the following conditions: (a) Registration Statement. The IPO Registration Statement shall have been filed and declared effective by the Commission, and there shall be no stop-order in effect with respect thereto. (b) Blue Sky. The actions and filings with regard to state securities and blue sky laws of the United States (and any comparable laws under any foreign jurisdictions) shall have been taken and, where applicable, have become effective or been accepted. (c) National Exchange Listing. The common stock of NPT to be issued in the IPO shall have been accepted for quotation on a National Exchange, subject to official notice of issuance. (d) Underwriting Agreement. Each of NPT, STI, STC and SBV shall have entered into the Underwriting Agreement and all conditions to the obligations of NPT and the Underwriters shall have been satisfied or waived. (e) No Legal Restraints. No order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Separation or the IPO or any of the other transactions contemplated by this Agreement shall be in effect. (f) Regulatory Compliance. All regulatory notices or relevant permissions have been received with respect to the IPO and Separation and all relevant waiting periods have lapsed. (g) Separation. The Separation shall have become effective by execution and delivery of this Agreement and the Ancillary Agreements. (h) Board Approval. The execution of this agreement and those other agreements contemplated hereunder have been duly authorized by the Board of Directors of each party. (i) Other Actions. Such other actions as the parties hereto may, based upon the advice of counsel, reasonably request to be taken prior to the IPO in order to assure the successful completion of the IPO shall have been taken. (j) No Termination. This Agreement shall not have been terminated in accordance with its terms. 5 ARTICLE IV THE SALE Section 4.1 The Sale. The Sale may occur at one or more times (subject to any agreed to lockup periods or required quiet periods) and in amounts to be determined solely at the discretion of STI and SBV, taking into account business and market conditions. NPT shall cooperate with STI and SBV in all respects to accomplish each such Sale and shall, at their direction, promptly take any and all actions necessary or desirable to effect any such Sale, including, without limitation, the registration under the Securities Act of 1933, as amended (the "Securities Act") of the common stock of NPT on an appropriate registration form or forms to be designated by STI or SBV in accordance with the terms and conditions set forth in the Registration Rights Agreement, or as otherwise mutually agreed to among NPT, STI and SBV. Schlumberger shall have the sole right to select any investment banker(s), manager(s) and underwriter(s) in connection with the Sale, as well as any financial printer, except as otherwise provided in the Registration Rights Agreement with respect to "piggyback" rights; provided, however, that nothing herein shall prohibit each of NPT, STI and SBV from engaging (at its own expense) its own financial, legal, accounting and other advisors in connection with the Sale. ARTICLE V COVENANTS AND OTHER MATTERS Section 5.1 Other Agreements. Schlumberger, SBV and NPT agree to execute or cause to be executed by the appropriate parties and deliver, as appropriate, such other agreements, instruments and other documents as may be necessary or desirable in order to effect the purposes of this Agreement and the Ancillary Agreements. Section 5.2 Further Instruments. At the request of NPT, and without further consideration, STI, STC and SBV will execute and deliver, and will cause their respective applicable Affiliates to execute and deliver, to NPT and its applicable Subsidiaries such other instruments of transfer, conveyance, assignment, substitution and confirmation and take such action as NPT may reasonably deem necessary or desirable to transfer, convey and assign to NPT and its Subsidiaries and confirm NPT's and its Subsidiaries' title to all of the assets, rights and other things of value contemplated to be transferred to NPT and its Subsidiaries pursuant to this Agreement, the Ancillary Agreements and any documents referred to therein, to put NPT and its Subsidiaries in actual possession and operating control thereof and to permit NPT and its Subsidiaries to exercise all rights with respect thereto (including, without limitation, rights under contracts and other arrangements as to which the consent of any third party to the transfer thereof shall not have previously been obtained). At the request of STI, STC or SBV and without further consideration, NPT will execute and deliver, and will cause its applicable Subsidiaries to execute and deliver, to Schlumberger and its applicable Affiliates all instruments, assumptions, novations, undertakings, substitutions or other documents and take such other action as STI or SBV may reasonably deem necessary or desirable in order to have NPT fully and unconditionally assume and discharge the liabilities contemplated to be assumed by NPT under this Agreement or any document in connection herewith and to relieve the Schlumberger Group of any liability or obligation with respect thereto and evidence the same to third parties. Neither 6 STI, STC, SBV nor NPT shall be obligated, in connection with the foregoing, to expend money other than reasonable out-of-pocket expenses, attorneys' fees and recording or similar fees. Furthermore, each party, at the request of the other party hereto, shall execute and deliver such other instruments and do and perform such other acts and things as may be necessary or desirable for effecting completely the consummation of the transactions contemplated hereby. Section 5.3 Intentionally Omitted. Section 5.4 Agreement for Exchange of Information. (a) Generally. Each of STI, SBV and NPT agrees to provide, or cause to be provided, to each other, at any time before or after the IPO Closing Date, as soon as reasonably practicable after written request therefor, any Information in the possession or under the control of such party that the requesting party reasonably needs (i) to comply with reporting, disclosure, filing or other requirements imposed on the requesting party (including under applicable securities laws) by a Governmental Authority having jurisdiction over the requesting party, (ii) for use in any other judicial, regulatory, administrative or other proceeding or in order to satisfy audit, accounting, claims, regulatory, litigation or other similar requirements, (iii) to comply with its obligations under this Agreement or any Ancillary Agreement or (iv) in connection with the ongoing businesses of STI, SBV or NPT, or their respective Affiliates, as the case may be; provided, however, that (a) any Confidential Information so disclosed shall be subject to the terms of the Master Confidential Disclosure Agreement, and (b) further provided that in the event that any party determines that any such provision of Information could be commercially detrimental, violate any law or agreement or waive any attorney-client privilege, the parties shall take all reasonable measures to permit the compliance with such obligations in a manner that avoids any such harm or consequence. (b) Internal Accounting Controls; Financial Information. After the Separation Date, (i) each party shall maintain in effect at its own cost and expense adequate systems and controls for its business to the extent necessary to enable the other party to satisfy its reporting, accounting, audit and other obligations, and (ii) each party shall provide, or cause to be provided, to the other party and its Affiliates in such form as such requesting party shall request, at no charge to the requesting party, all financial and other data and information as the requesting party determines necessary or advisable in order to prepare its financial statements and reports or filings with any Governmental Authority. (c) Ownership of Information. Any Information owned by a party that is provided to a requesting party pursuant to this Section 5.4 shall be deemed to remain the property of the providing party. Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of license or otherwise in any such Information. (d) Record Retention. To facilitate the possible exchange of Information pursuant to this Section 5.4 and other provisions of this Agreement after the Separation Date, each party agrees to use its reasonable efforts to retain all Information in its respective possession or control on the Separation Date substantially in accordance with the policies of Schlumberger as in effect on the Separation Date. However, except as set forth in the Tax 7 Sharing Agreement, at any time after the Separation Date, each party may amend its respective record retention policies at such party's discretion; provided, however, that if a party desires to effect the amendment within three years after the Separation Date, the amending party must give 30 days' prior written notice of such change in the policy to the other party to this Agreement. (i) No party will destroy, or permit any of its Subsidiaries to knowingly destroy, any Information that exists on the Separation Date (other than Information that is permitted to be destroyed under the current record retention policies of Schlumberger) and that falls under the categories listed in Section 5.4(a), without first using reasonable efforts to notify the other party of the proposed destruction and giving the other party the opportunity to take possession of such Information prior to such destruction. (e) Limitation of Liability. No party shall have any liability to any other party in the event that any Information exchanged or provided pursuant to this Section 5.4 is found to be inaccurate, in the absence of gross negligence or willful misconduct by the party providing such Information. No party shall have any liability to any other party if any Information is destroyed or lost after reasonable efforts by such party to comply with the provisions of this Section 5.4. (f) Other Agreements Providing for Exchange of Information. The rights and obligations granted under this Section 5.4 are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange or confidential treatment of Information set forth in this Agreement and any Ancillary Agreement, including the provisions of the Confidential Disclosure Agreement. (g) Production of Witnesses; Records; Cooperation. After the Separation Date, except in the case of a legal or other proceeding by one party against another party (which shall be governed by such discovery rules as may be applicable under Section 5.10 or otherwise), each party hereto shall use its reasonable efforts to make available to each other party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of such party as witnesses and any books, records or other documents within its control or which it otherwise has the ability to make available, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with any legal, administrative or other proceeding in which the requesting party may from time to time be involved, regardless of whether such legal, administrative or other proceeding is a matter with respect to which indemnification may be sought hereunder. The requesting party shall bear all costs and expenses in connection therewith, including legal fees. Section 5.5 Auditors and Audits; Annual and Quarterly Statements and Accounting. Each party agrees that, for so long as Schlumberger is required in accordance with United States generally accepted accounting principles to consolidate or record under the equity method NPT's results of operations and financial position: (a) Selection of Auditors. NPT shall not select a different accounting firm from that used by Schlumberger to serve as its (and its Subsidiaries') independent certified public accountants ("NPT's Auditors") for purposes of providing an opinion on its consolidated 8 financial statements without Schlumberger's prior written consent (which consent may be withheld at Schlumberger's sole discretion). (b) Date of Auditors' Opinion and Quarterly Reviews. NPT shall use its reasonable efforts to enable the NPT Auditors to complete their audit such that they will date their opinion on NPT's audited annual financial statements on the same date that Schlumberger's independent certified public accountants ("Schlumberger's Auditors") date their opinion on Schlumberger's audited annual financial statements, and to enable Schlumberger to meet its timetable for the printing, filing and public dissemination of Schlumberger's annual financial statements. NPT shall use its reasonable commercial efforts to enable the NPT Auditors to complete their quarterly review procedures such that they will provide clearance on NPT's quarterly financial statements on the same date that Schlumberger's Auditors provide clearance on Schlumberger's quarterly financial statements. (c) Annual and Quarterly Financial Statements. NPT shall provide to Schlumberger on a timely basis all Information that Schlumberger reasonably requires to meet its schedule for the preparation, printing, filing, and public dissemination of Schlumberger's annual and quarterly financial statements in accordance with Schlumberger's financial procedures. Without limiting the generality of the foregoing, NPT will provide all required financial Information with respect to NPT and its Subsidiaries to NPT's Auditors in a sufficient and reasonable time and in sufficient detail to permit NPT's Auditors to take all steps and perform all reviews necessary to provide sufficient assistance to Schlumberger's Auditors with respect to financial Information to be included or contained in Schlumberger's annual and quarterly financial statements. Similarly, Schlumberger shall provide to NPT on a timely basis all financial Information that NPT reasonably requires to meet its schedule for the preparation, printing, filing, and public dissemination of NPT's annual and quarterly financial statements. Without limiting the generality of the foregoing, Schlumberger will provide all required financial Information with respect to Schlumberger and its Subsidiaries to Schlumberger's Auditors in a sufficient and reasonable time and in sufficient detail to permit Schlumberger's Auditors to take all steps and perform all reviews necessary to provide sufficient assistance to NPT's Auditors with respect to Information that is required to be included or contained in NPT's annual and quarterly financial statements. (d) Identity of Personnel Performing the Annual Audit and Quarterly Reviews. NPT shall authorize NPT's Auditors to make available to Schlumberger's Auditors both the personnel who performed or will perform the annual audits and quarterly reviews of NPT and work papers related to the annual audits and quarterly reviews of NPT, in all cases within a reasonable time prior to NPT's Auditors' opinion date, so that Schlumberger's Auditors are able to perform the procedures they consider necessary to take responsibility for the work of NPT's Auditors as it relates to Schlumberger's Auditors' report on Schlumberger's financial statements, all within sufficient time to enable Schlumberger to meet its timetable for the printing, filing and public dissemination of Schlumberger's annual and quarterly statements. Similarly, Schlumberger shall authorize Schlumberger's Auditors to make available to NPT's Auditors both the personnel who performed or will perform the annual audits and quarterly reviews of Schlumberger and work papers related to the annual audits and quarterly reviews of Schlumberger, in all cases within a reasonable time prior to Schlumberger's Auditors' opinion date, so that NPT's Auditors are able to perform the procedures they consider necessary to take 9 responsibility for the work of Schlumberger's Auditors as it relates to NPT's Auditors' report on NPT's statements, all within sufficient time to enable NPT to meet its timetable for the printing, filing and public dissemination of NPT's annual and quarterly financial statements. (e) Access to Books and Records. NPT shall provide Schlumberger's internal auditors and their designees access to NPT's and its Subsidiaries' books and records so that Schlumberger may conduct reasonable audits relating to the financial statements provided by NPT pursuant hereto as well as to the internal accounting controls and operations of NPT and its Subsidiaries. (f) Notice of Change in Accounting Principles. NPT shall give Schlumberger as much prior notice as reasonably practicable of any proposed determination of, or any significant changes in, its accounting estimates or accounting principles from those in effect on the Separation Date. NPT will consult with Schlumberger and, if requested by Schlumberger, NPT will consult with Schlumberger's independent public accountants with respect thereto. Schlumberger shall give NPT as much prior notice as reasonably practicable of any proposed determination of, or any significant changes in, its accounting estimates or accounting principles with respect to NPT from those in effect on the Separation Date. (g) Conflict with Third-Party Agreements. Nothing in Sections 5.4 or 5.5 shall require NPT to violate any agreement with any third party regarding the confidentiality of confidential and proprietary information relating to that third party or its business; provided, however, that in the event that NPT is required under Sections 5.4 or 5.5 to disclose any such Information, NPT shall use reasonable efforts to seek to obtain such third party's consent to the disclosure of such information. Section 5.6 Consistency with Past Practices. At all times before the Separation Date, Schlumberger and NPT will conduct the NPT Business in the ordinary course, consistent with past practices. Section 5.7 Payment of Expenses. Except as otherwise provided in this Agreement, the Ancillary Agreements or any other agreement between the parties relating to the Separation, the IPO or the Sale, all costs and expenses of the parties hereto in connection with the Separation, other than certain taxes (as specified in the Ancillary Agreements) shall be borne by Schlumberger. The costs and expenses of the parties hereto in connection with the IPO (other than underwriting discounts and commissions) and the Sale shall be borne by STI and SBV. Each party hereto shall be responsible for its own internal costs incurred in connection with the Separation, the IPO and the Sale. Section 5.8 Dispute Resolution. (a) If a dispute, controversy or claim ("Dispute") arises between the parties relating to the interpretation or performance of this Agreement or the Ancillary Agreements, or the grounds for the termination hereof, appropriate senior executives (e.g. director or V.P. level) of each party who shall have the authority to resolve the matter shall meet to attempt in good faith to negotiate a resolution of the Dispute prior to pursuing other available remedies. The initial meeting between the appropriate senior executives shall be referred to herein as the 10 "Dispute Resolution Commencement Date." Discussions and correspondence relating to trying to resolve such Dispute shall be treated as confidential information developed for the purpose of settlement and shall be exempt from discovery or production and shall not be admissible. If the senior executives are unable to resolve the Dispute within 30 days from the Dispute Resolution Commencement Date, and either party wishes to pursue its rights relating to such Dispute, then the Dispute will be mediated by a mutually acceptable mediator appointed pursuant to the mediation rules of JAMS/Endispute within 30 days after written notice by one party to the other demanding non-binding mediation. Neither party may unreasonably withhold consent to the selection of a mediator or the location of the mediation. Both parties will share the costs of the mediation equally, except that each party shall bear its own costs and expenses, including attorney's fees, witness fees, travel expenses, and preparation costs. The parties may also mutually agree to replace mediation with some other form of non-binding or binding ADR. (b) Any Dispute which the parties cannot resolve through mediation within 90 days of the Dispute Resolution Commencement Date, unless otherwise mutually agreed, shall be submitted to final and binding arbitration under the then current Commercial Arbitration Rules of the American Arbitration Association ("AAA"), by three arbitrators in Santa Clara County, California. Such arbitrators shall be selected by the mutual agreement of the parties or, failing such agreement, shall be selected according to the aforesaid AAA rules. The arbitrators will be instructed to prepare and deliver a written, reasoned opinion stating their decision within 30 days of the completion of the arbitration. The prevailing party in such arbitration shall be entitled to expenses, including costs and reasonable attorneys' and other professional fees, incurred in connection with the arbitration (but excluding any costs and fees associated with prior negotiation or mediation). The decision of the arbitrator shall be final and non-appealable and may be enforced in any court of competent jurisdiction. The use of any ADR procedures will not be construed under the doctrine of laches, waiver or estoppel to adversely affect the rights of either party. (c) Any Dispute regarding the following is not required to be negotiated, mediated or arbitrated prior to seeking relief from a court of competent jurisdiction: breach of any obligation of confidentiality; infringement, misappropriation, or misuse of any intellectual property right; any other claim where interim or equitable relief from the court is sought to prevent serious and irreparable injury to one of the parties or to others. However, the parties to the Dispute shall make a good faith effort to negotiate and mediate such Dispute, according to the above procedures, while such court action is pending. (d) Continuity of Service and Performance. Unless otherwise agreed in writing, the parties will continue to provide service and honor all other commitments under this Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this Section 5.8 with respect to all matters not subject to such dispute, controversy or claim. Section 5.9 Governmental Approvals. To the extent that the Separation requires any Governmental Approvals, the parties will use their best efforts to obtain any such Governmental Approvals. 11 Section 5.10 No Representation or Warranty. Schlumberger does not, in this Agreement or any other agreement, instrument or document contemplated by this Agreement, make any representation as to, warranty of or covenant with respect to: (a) the value of any asset or thing of value previously transferred or to be transferred to NPT; (b) the freedom from encumbrance or claims of any asset or thing of value previously transferred or to be transferred to NPT; (c) the transferability of rights, obligations, or licenses of third parties with respect to the assets of the NPT Business; (d) the absence of defenses or freedom from counterclaims with respect to any claim previously transferred or to be transferred to NPT; or (e) the legal sufficiency of any assignment, document or instrument delivered or previously delivered hereunder to convey title to any asset or thing of value upon its execution, deliver and filing. Except as may expressly be set forth herein or in any Ancillary Agreement, all assets previously transferred or to be transferred to NPT shall have been or will be transferred "AS IS, WHERE IS" and NPT shall bear the economic and legal risk that any conveyance shall prove to be insufficient to vest in NPT good and marketable title, free and clear of any lien, claim, equity or other encumbrance. NPT ACKNOWLEDGES AND AGREES THAT SCHLUMBERGER MAKES NO REPRESENTATIONS OR EXTENDS ANY WARRANTIES WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT THERETO, INCLUDING WITHOUT LIMITATION ANY WARRANTIES CONCERNING THE QUALITY, SUFFICIENCY OR USEABILITY OF THE ASSETS TRANSFERRED HEREUNDER, AND ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY OR NON-INFRINGEMENT. NPT ACKNOWLEDGES THAT IT IS SOLELY RESPONSIBLE FOR ANY RESULTS OBTAINED FROM THE USE OF THE ASSETS AND NPT HEREBY IRREVOCABLY WAIVES ANY CLAIMS IT MAY HAVE OR LATER MAY HAVE AGAINST SCHLUMBERGER AND THE SCHLUMBERGER GROUP IN CONNECTION WITH SUCH USE. Section 5.11 Employee Agreements: Definition. As used in this Section 5.11, "Employee Agreement" means the Patent and Confidential Information Agreement and corresponding agreements in foreign countries executed by each Schlumberger employee. (a) Survival of Employee Agreement Obligations and Schlumberger's Common Law Rights. The Employee Agreements of all Schlumberger employees transferred to NPT as of the IPO Closing Date shall remain in full force and effect according to their terms; provided, however, that none of the following acts committed by former Schlumberger employees within the scope of their NPT employment shall constitute a breach of such Schlumberger Employee Agreements: (i) the use or disclosure of Confidential Information (as that term is defined in the former Schlumberger employee's Schlumberger Employee Agreement) 12 for or on behalf of NPT, if such disclosure is consistent with the rights granted to NPT and restrictions imposed on NPT under this Agreement, any Ancillary Agreement or any other agreement between the parties; (ii) the disclosure and assignment to NPT of rights in proprietary developments authored or conceived by the former Schlumberger employee after the Separation Date and resulting from the use of, or based upon intellectual property (whether patented or not) which is retained by Schlumberger; provided, however, that in no event shall such disclosure and assignment be regarded as assigning rights in or to the underlying intellectual property to NPT, which rights are defined in the Ancillary Agreements; or (iii) the rendering of any services, directly or indirectly, to NPT to the extent such services are consistent with the assignment or license of rights granted to NPT and the restrictions imposed on NPT under this Agreement, any Ancillary Agreement or any other agreement between the parties. Schlumberger retains any rights it has under statute or common law with respect to actions by its former employees to the extent such actions are inconsistent with the rights granted to NPT and restrictions imposed on NPT under this Agreement, any Ancillary Agreement or any other agreement between the parties. (b) Assignment, Cooperation for Compliance and Enforcement. (i) Schlumberger retains all rights under the Schlumberger Employee Agreements of all former Schlumberger employees necessary to permit Schlumberger to protect the rights and interests of Schlumberger, but hereby transfers and assigns to NPT its rights under the Schlumberger Employee Agreements of all former Schlumberger employees to the extent required to permit NPT to enjoin, restrain, recover damages from or obtain specific performance of the Schlumberger Employee Agreements or obtain other remedies against any employee who breaches his/her Schlumberger Employee Agreement with respect to matters relating to the NPT Business. (ii) Schlumberger and NPT agree, at their own respective cost and expense, to use their reasonable efforts to cooperate as follows: (A) NPT shall advise Schlumberger of: (1) any violation(s) of the Schlumberger Employee Agreements by former Schlumberger employees, and (2) any violation(s) of the NPT Employee Agreement which affect Schlumberger's rights; and (B) Schlumberger shall advise NPT of any violations of the Schlumberger Employee Agreements by current or former Schlumberger employees which affect NPT's rights; provided, however, that the foregoing obligations shall only apply to violations which become known to an attorney within the legal department of the party obligated to provide notice thereof. (iii) Schlumberger and NPT each may separately enforce the Schlumberger Employee Agreements of former Schlumberger employees to the extent necessary to reasonably protect their respective interests, provided, however, that (i) NPT shall not commence any legal action relating thereto without first consulting with Schlumberger's General Counsel or his/her designee and (ii) Schlumberger shall not commence any legal action relating thereto against any former Schlumberger employee who is at the time an NPT employee without first consulting with NPT's General Counsel or his/her designee. If either party, in seeking to enforce any Schlumberger Employee Agreement, notifies the other party that it is, in their legal advisor's reasonable opinion, desirable for such party to join in such action, then the other party shall do so, provided however that the party bringing such action and requiring such joinder shall pay any 13 expenses and costs (including legal fees) incurred by the other party. In addition, if either party commences or becomes a party to any action to enforce a Schlumberger Employee Agreement of a former Schlumberger employee, the other party shall, whether or not it becomes a party to the action, cooperate with the other party by making available its files and employees who have information or knowledge relevant to the dispute, subject to appropriate measures to protect the confidentiality of any proprietary or confidential information that may be disclosed in the course of such cooperation or action and subject to any relevant privacy laws and regulations. Any such action shall be conducted at the expense of the party bringing the action and the parties shall agree on a case by case basis on compensation, if any, of the other party for the value of the time of such other party's employees as reasonably required in connection with the action. (iv) Schlumberger and NPT understand and acknowledge that matters relating to the making, performance, enforcement, assignment and termination of employee agreements are typically governed by the laws and regulations of the national, federal, state or local governmental unit where an employee resides, or where an employee's services are rendered, and that such laws and regulations may supersede or limit the applicability or enforceability of this Section 5.11. In such circumstances, Schlumberger and NPT agree to take action with respect to the employee agreements that best accomplishes the parties' objectives as set forth in this Section 5.11 and that is consistent with applicable law. Section 5.12 Cooperation in Obtaining New Agreements. The parties understand that, prior to the Separation Date, NPT has derived benefits under certain agreements and relationships between Schlumberger and third parties, which agreements and relationships are not being assigned or transferred to NPT in connection with the Separation. During the first year following the Separation Date and upon the request of NPT, Schlumberger agrees to make introductions of appropriate NPT personnel to Schlumberger's contacts at such third parties, and agrees to provide reasonable assistance to NPT, at Schlumberger's own expense, so that NPT may seek to enter into agreements or relationships with such third parties. Such assistance may include, but is not limited to, (i) requesting and encouraging such third parties to enter into such agreements or relationships with NPT and (ii) attending meetings with NPT and such third parties. The parties further understand that certain agreements between Schlumberger and third parties which are being assigned to NPT in connection with the Separation may require the consent of the applicable third party. Schlumberger shall reasonably assist NPT in seeking to obtain the consent of such third parties to such assignment(s). Section 5.13 Property Damage to NPT Assets Prior to the Separation Date. In the event of any property damage, other than ordinary wear and tear, to any NPT Assets held by Schlumberger which occurs prior to the Separation Date, Schlumberger shall, at its sole discretion, make its reasonable efforts to repair or otherwise address such damage in the ordinary course of business consistent with past practices; provided, however, that nothing in this clause shall restrict Schlumberger from disposing of any Assets in the ordinary course of business consistent with past practices. Section 5.14 Charter/bylaw Amendments. So long as the Schlumberger Group owns shares representing [ ]% of the voting power of all of the outstanding shares of Common Stock of NPT, NPT will not, without the prior consent of Schlumberger, adopt any amendments to its certificate of incorporation or bylaws or take or recommend to its stockholders any action that 14 would (i) impose limitations on the legal rights of the Schlumberger Group as NPT stockholders other than those imposed pursuant to the express terms of this Agreement, including, without limitation, any action which would impose restrictions (A) based upon the size of security holding, the business in which a security holder is engaged or considerations applicable to the Schlumberger Group and not to security holders generally, or (B) with reference to the Common Stock generally, by means of the issuance of or proposal to issue any other class of securities having voting power disproportionately greater than the equity investment in NPT represented by such securities; (ii) involve the issuance or corporate action providing for the issuance of any warrant, capital stock, rights or other security that has rights (including rights of redemption) that are dependent upon the amount of voting securities owned by the Schlumberger Group; (iii) deny any benefit to the Schlumberger Group proportionately as holders of any class of voting securities that is made available to other holders of the same class of voting securities generally; or (iv) alter voting or other rights of the holders of any class of voting securities so that any such rights (or the vote required with respect to any matter) are determined with reference to the amount of voting securities held by the Schlumberger Group; provided, that this Section 5.14 shall not prohibit NPT from adopting a customary shareholder rights plan, reasonably satisfactory to Schlumberger, or taking any action otherwise prohibited hereby, so long as the Schlumberger Group is either expressly or as part of a class of stockholders which includes the Schlumberger Group exempted from such action or the limitations on legal rights imposed thereby with respect to the number of shares of Common Stock owned by them at the time such plan is adopted. Section 5.15 NPT Board Representation. (a) For so long as the Schlumberger Group beneficially owns shares representing less than 50% but more than 10% of the voting power of all of the outstanding Common Stock, Schlumberger shall have the right to designate for nomination by the NPT Board (or any nominating committee thereof) to the NPT Board a proportionate number of members of the NPT Board, as calculated in accordance with Section 5.15(d). Notwithstanding anything to the contrary set forth herein, NPT's obligations with respect to the election or appointment of Schlumberger designated members shall be limited to the obligations set forth under subsections (b) and (c) below. (b) NPT shall exercise all authority under applicable law and shall use its best efforts to cause three persons designated by Schlumberger to be elected to the NPT Board effective at or prior to the Separation Date. Commencing with the annual meeting of stockholders of NPT to be held in 2003 and prior to each annual meeting of stockholders of NPT thereafter, Schlumberger shall be entitled to present to the NPT Board or any nominating committee thereof such number of designees of Schlumberger (each, a "Schlumberger Designee") for election at such annual meeting as would result in Schlumberger having the appropriate number of Schlumberger Designees on the NPT Board as determined pursuant to subsection (a) above. (c) NPT shall at all such times exercise all authority under applicable law and use its best efforts to cause all such designees to be nominated as Board members by the nominating committee of the NPT Board if there is such a committee or by the NPT Board otherwise. NPT shall cause each Schlumberger Designee for election to the NPT Board to be 15 included in the slate of designees recommended by the NPT Board to NPT's stockholders for election as directors at each annual meeting of the stockholders of NPT (or at any special meeting held for the election of directors) and shall use its best efforts to cause the election of each such Schlumberger Designee, including soliciting proxies in favor of the election of such person. In the event that any Schlumberger Designee elected to the NPT Board shall cease to serve as a director for any reason, the vacancy resulting therefrom shall be filled by the NPT Board with a substitute Schlumberger Designee, unless such vacancy was caused by action of stockholders (in which case, in accordance with NPT's Restated Certificate of Incorporation, the stockholders shall fill such vacancy). In the event that as a result of an increase in the size of the NPT Board, Schlumberger is entitled to have one or more additional Schlumberger Designees elected to the NPT Board pursuant to subsection (a) above, the NPT Board shall appoint the appropriate number of such additional Schlumberger Designees, unless such increase in size of the NPT Board was caused by the action of stockholders (in which case, in accordance with NPT's Restated Certificate of Incorporation, the stockholders shall elect such additional director or directors). The parties hereto agree that the directors of NPT identified in the Registration Statement include three Schlumberger Designees. (d) If at any time that Schlumberger Designees are to serve on the NPT Board, Schlumberger beneficially owns shares representing less than 50% but more than 10% of the total voting power of all of the outstanding Common Stock of NPT, the number of persons Schlumberger shall be entitled to designate for nomination by the NPT Board (or any nominating committee thereof) for election to the NPT Board shall be equal to the number of directors computed using the following formula (rounded to the nearest whole number): the product of (1) the percentage of the voting power of all of the outstanding shares of Common Stock of NPT beneficially owned by the Schlumberger Group and (2) the number of directors then on the NPT Board (assuming no vacancies exist). Notwithstanding the foregoing, if Schlumberger beneficially owns shares of Common Stock of NPT representing less than 50% of the total voting power of all outstanding shares of voting stock of NPT and the calculation of the formula set forth in the foregoing sentence would result in Schlumberger being entitled to elect a majority of the members of the NPT Board, the formula will be recalculated with the product being rounded down to the nearest whole number. If the number of Schlumberger Designees serving on the NPT Board exceeds the number determined pursuant to the foregoing sentences of this Section 5.15(d) (such difference being herein called the "Excess Director Number"), then Schlumberger shall, upon request of the NPT Board (with the Schlumberger Designees abstaining), use its reasonable best efforts to cause Schlumberger Designees selected by Schlumberger in its sole discretion (the number of which designees shall be equal to the Excess Director Number) to promptly resign from the NPT Board, and, to the extent such persons do not so resign, Schlumberger shall assist NPT in increasing the size of the NPT Board, so that after giving effect to such increase, the number of Schlumberger Designees on the NPT Board is in accordance with the provisions of this Section 5.15(d). ARTICLE VI MISCELLANEOUS Section 6.1 Limitation of Liability. IN NO EVENT SHALL ANY MEMBER OF THE SCHLUMBERGER GROUP OR NPT GROUP BE LIABLE TO ANY OTHER MEMBER 16 OF THE SCHLUMBERGER GROUP OR NPT GROUP FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES, LOST PROFITS, LOSS OF BUSINESS, LOSS OF USE OF ASSETS, LOSS OF VALUE OF ASSETS, LOSS OF DATA, COST OF COVER, OR BUSINESS INTERRUPTION HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT EACH PARTY'S INDEMNIFICATION OBLIGATIONS FOR THOSE LIABILITIES THAT ARE SET FORTH IN THE INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT. THE FOREGOING LIMITATION WILL NOT LIMIT EITHER PARTY'S OBLIGATIONS WITH RESPECT TO PAYMENT OF DAMAGES OF ANY KIND INCLUDED IN AN AWARD OR SETTLEMENT OF A THIRD PARTY CLAIM UNDER ANY INDEMNITY OR INFRINGEMENT DEFENSE PROVISIONS SPECIFIED HEREIN OR IN THE ANCILLARY AGREEMENTS. Section 6.2 Entire Agreement. This Agreement, the Ancillary Agreements, the Exhibits and Schedules referenced or attached hereto and thereto and the agreements and documents pertaining to the Prior Transfers constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof. Section 6.3 Governing Law. This Agreement shall be construed in accordance with and all Disputes hereunder shall be governed by the laws of the State of Delaware, excluding its conflict of law rules and the United Nations Convention on Contracts for the International Sale of Goods. Section 6.4 Descriptive Headings. The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section, Exhibit or Schedule, such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. Section 6.5 Termination. This Agreement and all Ancillary Agreements may be terminated and the IPO Closing abandoned at any time prior to the IPO Closing Date by and in the sole discretion of Schlumberger without the approval of NPT. This Agreement may be terminated at any time after the IPO Closing Date and before the Sale Date by mutual consent of Schlumberger and NPT. In the event of termination pursuant to this Section 6.5, no party shall have any liability of any kind to the other party. Section 6.6 Notices. Notices, offers, requests or other communications required or permitted to be given by either party pursuant to the terms of this Agreement shall be given in writing to the respective parties to the following addresses: 17 if to STI: Schlumberger Technologies, Inc. [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to SBV: Schlumberger BV [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to STC: Schlumberger Technology Corporation [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to NPT: NPTest, Inc. [To Come] Attention: General Counsel Telephone: [__________] Facsimile: [__________] or to such other address as the party to whom notice is given may have previously furnished to the other in writing as provided herein. Any notice involving non-performance, termination, or renewal shall be sent by hand delivery, recognized overnight courier or, within the United States, may also be sent via certified mail, return receipt requested. All other notices may also be sent by fax, confirmed by first class mail. All notices shall be deemed to have been given and received on the earlier of actual delivery or three days from the date of postmark. Section 6.7 Counterparts. This Agreement, including the Ancillary Agreement and the Exhibits and Schedules hereto and thereto and the other documents referred to herein or therein, may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. Section 6.8 Binding Effect; Assignment. No party may, directly or indirectly, in whole or in part, whether by operation of law or otherwise, assign or transfer this Agreement, without the other parties' prior written consent, and any attempted assignment, transfer or 18 delegation without such prior written consent shall be voidable at the sole option of such other parties. Notwithstanding the foregoing, each party (or its permitted successive assignees or transferees hereunder) may assign or transfer this Agreement as a whole without consent to an entity that succeeds to all or substantially all of the business or assets of such party. Without limiting the foregoing, this Agreement will be binding upon and inure to the benefit of the parties and their permitted successors and assigns. Section 6.9 Severability. If any term or other provision of this Agreement or the Exhibits or Schedules attached hereto is determined by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. Section 6.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of either party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the Exhibits or Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available. Section 6.11 Amendment. No change or amendment will be made to this Agreement or the Exhibits or Schedules attached hereto except by an instrument in writing signed on behalf of each of the parties to such agreement. Section 6.12 Authority. Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and general equity principles. Section 6.13 Conflicting Agreements. In the event of conflict between this Agreement and any Ancillary Agreement or other agreement executed in connection herewith, including any agreements executed in connection with the Prior Transfers, the provisions of such other agreement shall prevail. 19 ARTICLE VII DEFINITIONS Section 7.1 Affiliate. "Affiliate" of any Person means any entity that controls, is controlled by, or is under common control with such Person. As used herein, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise. Section 7.2 Ancillary Agreements "Ancillary Agreements" has the meaning set forth in Section 2.1 hereof. Section 7.3 Employee Agreement. "Employee Agreement" has the meaning set forth in Section 5.11 hereof. Section 7.4 Governmental Approvals. "Governmental Approvals" means any notices, reports or other filings to be made, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Authority. Section 7.5 Governmental Authority. "Governmental Authority" shall mean any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority. Section 7.6 Information. "Information" means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data. Section 7.7 IPO Closing Date. "IPO Closing Date" has the meaning set forth in the Section 3.3 hereof. Section 7.8 Local Transfer Agreements. "Local Transfer Agreements" means the agreements, documents and instruments relating to the Prior Transfers. Section 7.9 NPT Assets. "NPT Assets" has the meaning set forth in Section 1.2 of the Assignment Agreement. Section 7.10 NPT Group. "NPT Group" means NPT and each Subsidiary immediately after the Separation Date or that is contemplated to be a Subsidiary pursuant to this Agreement or 20 the General Assignment and Assumption Agreement and each Person that becomes a Subsidiary after the Separation Date. Section 7.11 NPT's Auditors. "NPT's Auditors" means NPT's independent certified public accountants. Section 7.12 Person. "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. Section 7.13 Schlumberger Group. "Schlumberger Group" means Schlumberger Limited, and each Subsidiary and Affiliate of Schlumberger Limited (other than any member of the NPT Group). Section 7.14 Schlumberger's Auditors. "Schlumberger's Auditors" means Schlumberger's independent certified public accountants. Section 7.15 Subsidiary. "Subsidiary" of any Person means a corporation or other organization whether incorporated or unincorporated of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries; provided, however, that no Person that is not directly or indirectly wholly-owned by any other Person shall be a Subsidiary of such other Person unless such other Person controls, or has the right, power or ability to control, that Person. 21 WHEREFORE, the parties have signed this Master Separation and Sale Agreement effective as of the date first set forth above. Schlumberger Technologies, Inc. NPTest, Inc. By: _______________________________ By: ____________________________________ Name: Name: Title: Title: Schlumberger BV By: _______________________________ Name: Title: Schlumberger Technology Corporation By: _______________________________ Name: Title: 22 EXHIBITS Exhibit A Certificate of Secretary of STI or SBV Exhibit B Certificate of Secretary of NPT Exhibit C General Assignment and Assumption Agreement Exhibit D-1 Master Technology Ownership and License Agreement Exhibit D-2 Master Patent Ownership Agreement Exhibit D-3 Master Trademark Ownership and License Agreement Exhibit E Employee Matters Agreement Exhibit F Tax Sharing Agreement Exhibit G Master Transitional Services Agreement Exhibit H Real Estate Matters Agreement Exhibit I Master Confidential Disclosure Agreement Exhibit J Indemnification and Insurance Matters Agreement Exhibit K Registration Rights Agreement EXHIBIT A CERTIFICATE OF SECRETARY OF [SCHLUMBERGER TECHNOLOGIES, INC. OR SCHLUMBERGER BV] SECRETARY'S CERTIFICATE I, _______________________________, Secretary of [Schlumberger Technologies, Inc. or Schlumberger BV], a ____________ organized and existing under the laws of __________________, DO HEREBY CERTIFY that attached hereto are true and correct copies of certain resolutions adopted at a duly convened meeting of the [Schlumberger Technologies, Inc. or Schlumberger BV] Board of Directors on __________, 2002, which resolutions have not been amended, modified or rescinded and remain in full force and effect on the date hereof. IN WITNESS WHEREOF, I have hereunder set my hand and affixed the seal of [Schlumberger Technologies, Inc. or Schlumberger BV] this __________ day of __________, 2002. _______________________________________ Secretary EXHIBIT B CERTIFICATE OF SECRETARY OF NPT, INC. SECRETARY'S CERTIFICATE I, ___________________________, Secretary of NPT, a corporation organized and existing under the laws of the State of Delaware (the "Company"), DO HEREBY CERTIFY that attached hereto are true and correct copies of certain resolutions adopted at a duly convened meeting of the Company's Board of Directors on __________, 2002, which resolutions have not been amended, modified or rescinded and remain in full force and effect on the date hereof. IN WITNESS WHEREOF, I have hereunder set my hand and affixed the seal of the Company this __________ day of __________, 2002. _______________________________________ Secretary EXHIBIT C GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT EXHIBIT D-1 MASTER TECHNOLOGY OWNERSHIP AND LICENSE AGREEMENT EXHIBIT D-2 MASTER PATENT OWNERSHIP AGREEMENT EXHIBIT D-3 MASTER TRADEMARK OWNERSHIP AND LICENSE AGREEMENT EXHIBIT E EMPLOYEE MATTERS AGREEMENT EXHIBIT F TAX SHARING AGREEMENT EXHIBIT G MASTER TRANSITIONAL SERVICES AGREEMENT EXHIBIT H REAL ESTATE MATTERS AGREEMENT EXHIBIT I MASTER CONFIDENTIAL DISCLOSURE AGREEMENT EXHIBIT J INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT EXHIBIT K REGISTRATION RIGHTS AGREEMENT EXHIBIT L REORGANIZATION OF OPERATIONS (DOMESTIC AND INTERNATIONAL) 37 EX-10.2 6 dex102.txt FORM OF GENERAL ASSIGNMENT AND ASSUMPTION Exhibit 10.2 General Assignment and Assumption Agreement by and among Schlumberger Technologies, Inc., Schlumberger Technology Corporation, Schlumberger BV and NPTest, Inc. _______ __, 2000 TABLE OF CONTENTS -----------------
Page ---- ARTICLE I CONTRIBUTION AND ASSUMPTION............................................ 2 - ------------------------------------- Section 1.1 Contribution of Assets and Assumption of Liabilities......... 2 ----------- ---------------------------------------------------- Section 1.2 NPT Assets................................................... 3 ----------- ---------- Section 1.3 NPT Liabilities.............................................. 4 ----------- --------------- Section 1.4 Local Transfer Agreements.................................... 6 ----------- ------------------------- Section 1.5 Methods of Transfer and Assumption........................... 6 ----------- ---------------------------------- Section 1.6 Governmental Approvals and Consents.......................... 7 ----------- ----------------------------------- Section 1.7 Novation of Assumed NPT Liabilities.......................... 8 ----------- ----------------------------------- ARTICLE II LITIGATION............................................................ 9 - --------------------- Section 2.1 Allocation................................................... 9 ----------- ---------- Section 2.2 Cooperation.................................................. 9 ----------- ----------- ARTICLE III MISCELLANEOUS........................................................ 9 - ------------------------- Section 3.1 Entire Agreement............................................. 10 ----------- ---------------- Section 3.2 Governing Law................................................ 10 ----------- ------------- Section 3.3 Descriptive Headings......................................... 10 ----------- -------------------- Section 3.4 Termination.................................................. 10 ----------- ----------- Section 3.5 Notices...................................................... 10 ----------- ------- Section 3.6 Counterparts................................................. 11 ----------- ------------ Section 3.7 Binding Effect; Assignment................................... 11 ----------- -------------------------- Section 3.8 Severability................................................. 11 ----------- ------------ Section 3.9 Failure or Indulgence Not Waiver; Remedies Cumulative........ 12 ----------- ----------------------------------------------------- Section 3.10 Amendment.................................................... 12 ------------ --------- Section 3.11 Authority.................................................... 12 ------------ --------- Section 3.12 Interpretation............................................... 12 ------------ -------------- Section 3.13 Dispute Resolution........................................... 12 ------------ ------------------ ARTICLE IV DEFINITIONS........................................................... 12 - ---------------------- Section 4.1 Action....................................................... 12 ----------- ------ Section 4.2 Accounts Payable............................................. 12 ----------- ----------------
Section 4.3 Accounts Receivable.................................................. 13 - ----------- ------------------- Section 4.4 Affiliate............................................................ 13 - ----------- --------- Section 4.5 Ancillary Agreement.................................................. 13 - ----------- ------------------- Section 4.6 Assets............................................................... 13 - ----------- ------ Section 4.7 Contracts............................................................ 15 - ----------- --------- Section 4.8 Delayed Transfer Assets.............................................. 15 - ----------- ----------------------- Section 4.9 Delayed Transfer Liabilities......................................... 15 - ----------- ---------------------------- Section 4.10 Governmental Approvals............................................... 15 - ------------ ---------------------- Section 4.11 Governmental Authority............................................... 15 - ------------ ---------------------- Section 4.12 Indemnification and Insurance Matters Agreement...................... 15 - ------------ ----------------------------------------------- Section 4.13 Insurance Policies................................................... 15 - ------------ ------------------ Section 4.14 Intellectual Property................................................ 15 - ------------ --------------------- Section 4.15 IPO Closing Date..................................................... 15 - ------------ ---------------- Section 4.16 IPO Pricing Date..................................................... 15 - ------------ ---------------- Section 4.17 Liabilities.......................................................... 15 - ------------ ----------- Section 4.18 Local Transfer Agreements............................................ 15 - ------------ ------------------------- Section 4.19 Master Separation and Sale Agreement................................. 16 - ------------ ------------------------------------ Section 4.20 NPT Balance Sheet.................................................... 16 - ------------ ----------------- Section 4.21 NPT Contingent Gain.................................................. 16 - ------------ ------------------- Section 4.22 NPT Contingent Liability............................................. 16 - ------------ ------------------------ Section 4.23 NPT Contracts........................................................ 17 - ------------ ------------- Section 4.24 NPT Group............................................................ 17 - ------------ --------- Section 4.25 Person............................................................... 18 - ------------ ------ Section 4.26 Sale................................................................. 18 - ------------ ---- Section 4.27 Schlumberger Group................................................... 18 - ------------ ------------------ Section 4.28 Security Interest.................................................... 18 - ------------ ----------------- Section 4.29 Taxes................................................................ 18 - ------------ -----

ii GENERAL ASSIGNMENT AND ASSUMPTION AGREEMENT This General Assignment and Assumption Agreement (this "Agreement") is effective as of _______ __, 2002, by and among Schlumberger Technologies, Inc., a Delaware corporation ("STI"), Schlumberger Technology Corporation, a Texas corporation ("STC"), Schlumberger BV, a company organized and existing under the laws of the Netherlands ("SBV" and, together with STI, and STC, "Schlumberger"), and NPTest, Inc. ("NPT"), a Delaware corporation. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in Article IV hereof. RECITALS WHEREAS, STI and SBV collectively own all of the currently issued and outstanding common stock of NPT; WHEREAS, NPT is engaged in the NPT Business (as such term is defined in the Master Separation and Sale Agreement); WHEREAS, the Board of Directors of each of STI, STC, SBV and NPT has determined that it would be appropriate and desirable for Schlumberger to contribute and transfer to NPT, and for NPT to receive and assume, directly or indirectly, certain assets and liabilities currently held, directly or indirectly, by Schlumberger and associated with the NPT Business, as identified in more detail herein, in the other Ancillary Agreements and in the Master Separation and Sale Agreement; WHEREAS, Schlumberger hereby intends to transfer, and by certain other agreements and instruments has transferred or will transfer, to NPT on or prior to the Separation Date, certain assets of the NPT Business owned by Schlumberger, in accordance with this Agreement, the Master Separation and Sale Agreement and the other agreements and instruments referenced herein or therein or attached hereto or thereto; and WHEREAS, NPT hereby intends to assume, and by certain other agreements and instruments has assumed or will assume, from Schlumberger on or prior to the Separation Date, certain liabilities related to the NPT Business owed by Schlumberger, in accordance with this Agreement, the Master Separation and Sale Agreement and the other agreements and instruments referenced herein or therein or attached hereto or thereto. NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the parties hereto agree as follows: ARTICLE I CONTRIBUTION AND ASSUMPTION Section 1.1 Contribution of Assets and Assumption of Liabilities. (a) Transfer of Assets. Schlumberger has assigned, transferred, conveyed and delivered or hereby assigns, transfers, conveys and delivers (or has caused or will cause any applicable Schlumberger Subsidiary (as defined in the Master Separation and Sale Agreement) to assign, transfer, convey and deliver) to NPT or to any applicable NPT Subsidiary (as defined in the Master Separation and Sale Agreement), and NPT has accepted or hereby accepts from Schlumberger, or applicable Schlumberger Subsidiary, and has accepted or agrees to cause its applicable NPT Subsidiary to accept, all of Schlumberger's and its applicable Subsidiaries' respective right, title and interest in NPT Assets, other than the Delayed Transfer Assets; provided, however, that any NPT Assets that are specifically assigned or transferred pursuant to another Ancillary Agreement shall not be assigned or transferred pursuant to this Section 1.1(a). (b) Assumption of Liabilities. NPT has assumed or hereby assumes and agrees faithfully to perform and fulfill (or has caused or will cause any applicable Subsidiary to assume, perform and fulfill), all the NPT Liabilities (as defined in Section 1.3) owed by Schlumberger, other than the Delayed Transfer Liabilities; provided, however, that any NPT Liabilities that are specifically assumed pursuant to another Ancillary Agreement shall not be assumed pursuant to this Section 1.1(b). Unless another Ancillary Agreement provides otherwise, from and after the Separation Date, NPT shall be responsible (or will cause any applicable NPT Subsidiary to be responsible) for all NPT Liabilities held by Schlumberger that are being assumed hereunder, regardless of when or where such Liabilities arose or arise, or whether the facts on which they are based occurred prior to, on or after the date hereof, regardless of where or against whom such Liabilities are asserted or determined (including any NPT Liabilities arising out of claims made by Schlumberger's or NPT's respective directors, officers, consultants, independent contractors, employees or agents against any member of the Schlumberger Group or the NPT Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of law, fraud, misconduct or misrepresentation by any member of the Schlumberger Group or the NPT Group or any of their respective directors, officers, employees or agents. (c) Delayed Transfer Assets and Liabilities. Each of the parties hereto agrees that the Delayed Transfer Assets will be assigned, transferred, conveyed and delivered, and the Delayed Transfer Liabilities will be assumed, in accordance with the terms of the agreements that provide for such assignment, transfer, conveyance and delivery, or such assumption, as soon as practicable after the date of this Agreement or as otherwise set forth on Schedule 1.1(c). Following such assignment, transfer, conveyance and delivery of any Delayed Transfer Asset, or the assumption of any Delayed Transfer Liability, the applicable Delayed Transfer Asset or Delayed Transfer Liability shall be treated for all purposes of this Agreement and the other Ancillary Agreements as an NPT Asset or as an NPT Liability, as the case may be, with effect from the Separation Date, unless otherwise provided for in another Ancillary Agreement or mutually agreed to in writing by the parties. 2 (d) Misallocated Assets. In the event that at any time or from time to time (whether prior to, on or after the Separation Date), any party hereto (or any member of such party's respective Group), shall receive or otherwise possess any Asset that is allocated to any other Person pursuant to this Agreement or any Ancillary Agreement, such party shall promptly transfer, or cause to be transferred, such Asset to the Person so entitled thereto. Prior to any such transfer, the Person receiving or possessing such Asset shall hold such Asset as nominee for any such other Person. Section 1.2 NPT Assets. (a) Included Assets. For purposes of this Agreement, "NPT Assets" shall mean (without duplication) the following Assets, except as otherwise provided for in any other Ancillary Agreement or other express agreement of the parties: (i) all Assets reflected in the NPT Balance Sheet, subject to any dispositions of such Assets subsequent to the date of the NPT Balance Sheet; (ii) all Assets that have been written off, expensed or fully depreciated that, had they not been written off, expensed or fully depreciated, would have been reflected in the NPT Balance Sheet in accordance with the principles and accounting policies under which the NPT Balance Sheet was prepared; (iii) all Assets acquired by Schlumberger or its Subsidiaries after the date of the NPT Balance Sheet that would be reflected in the consolidated balance sheet of NPT as of the Separation Date if such consolidated balance sheet was prepared using the same principles and accounting policies under which the NPT Balance Sheet was prepared, including any business transaction processing that may occur on Schlumberger systems on behalf of NPT during the period between the Separation Date and the initialization of the processing systems required by NPT; (iv) all Assets that are used primarily by the NPT Business at the Separation Date but are not reflected in the NPT Balance Sheet due to mistake or omission; provided, however, that no Asset shall be an NPT Asset requiring any transfer by Schlumberger unless NPT or its Subsidiaries have, on or before the first anniversary of the IPO Closing Date, given Schlumberger or its Subsidiaries notice that such Asset is an NPT Asset; (v) all NPT Contingent Gains; (vi) all NPT Contracts; (vii) all Accounts Receivable; (viii) to the extent permitted by law and subject to the Indemnification and Insurance Matters Agreement, all rights of any member 3 of the NPT Group under any of Schlumberger's Insurance Policies or other insurance policies issued by Persons unaffiliated with Schlumberger; and (ix) all Assets that are expressly contemplated by this Agreement, the Master Separation and Sale Agreement or any other Ancillary Agreement (or Schedule 1.2(a)(ix) or any other Schedule hereto or thereto), or any agreement or document (each, a "Prior Transfer Agreement") executed and delivered in connection with the Prior Transfers (as defined in the Master Separation and Sale Agreement), as Assets to be transferred to NPT or any other member of the NPT Group. Notwithstanding the foregoing, the NPT Assets shall not include the Excluded Assets referred to in Section 1.2(b) below. (b) Excluded Assets. For the purposes of this Agreement, "Excluded Assets" shall mean: (i) the Assets listed or described on Schedule 1.2(b)(i); (ii) all cash of NPT as of the Separation Date, except where the transfer of such cash is prohibited by applicable law; and (iii) any Assets that are expressly contemplated by the Master Separation and Sale Agreement, this Agreement or any other Ancillary Agreement (or the Schedules hereto or thereto), or any Prior Transfer Agreement, as Assets to be retained by Schlumberger or any other member of the Schlumberger Group. Section 1.3 NPT Liabilities. (a) Included Liabilities. For the purposes of this Agreement, "NPT Liabilities" shall mean (without duplication) the following Liabilities, except as otherwise provided for in any other Ancillary Agreement or other express agreement of the parties: (i) all Liabilities reflected in the NPT Balance Sheet, subject to any discharge of such Liabilities subsequent to the date of the NPT Balance Sheet; (ii) all Liabilities of Schlumberger or its Subsidiaries that arise after the date of the NPT Balance Sheet that would be reflected in the consolidated balance sheet of NPT as of the Separation Date if such consolidated balance sheet was prepared using the same principles and accounting policies under which the NPT Balance Sheet was prepared; (iii) all Liabilities that are related primarily to the NPT Business at the Separation Date but are not reflected in the NPT Balance Sheet due to mistake or unintentional omission; provided, however, that no 4 Liability shall be considered as a NPT Liability unless Schlumberger or its Subsidiaries, on or before the first anniversary of the IPO Closing Date, has given NPT or its Subsidiaries notice that such Liability is a NPT Liability; (iv) all NPT Contingent Liabilities; (v) the Accounts Payable; (vi) all Liabilities (other than Liabilities for Taxes), whether arising before, on or after the Separation Date, primarily relating to, arising out of or resulting from: (1) the operation of the NPT Business, as conducted at any time prior to, on or after the Separation Date (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person's authority)); (2) the operation of any business conducted by any member of the NPT Group at any time after the Separation Date (including any Liability relating to, arising out of or resulting from any act or failure to act by any director, officer, employee, agent or representative (whether or not such act or failure to act is or was within such Person's authority)); or (3) any NPT Assets; (vii) all Liabilities relating to, arising out of or resulting from any of the terminated, divested or discontinued businesses and operations listed or described on Schedule 1.3(a)(vii); and (viii) all Liabilities that are expressly contemplated by this Agreement, Schedule 1.3(a)(viii), the Master Separation and Sale Agreement or any other Ancillary Agreement (or the Schedules hereto or thereto), or any Prior Transfer Agreement, as Liabilities to be assumed by NPT or any member of the NPT Group, and all agreements, obligations and Liabilities of any member of the NPT Group under this Agreement, any of the Ancillary Agreements or any of the Prior Transfer Agreements. Notwithstanding the foregoing, the NPT Liabilities shall not include the Excluded Liabilities referred to in Section 1.3(b) below. (b) Excluded Liabilities. For the purposes of this Agreement, "Excluded Liabilities" shall mean: (i) all Liabilities listed or described in Schedule 1.3(b)(i); 5 (ii) all Liabilities that are expressly contemplated by this Agreement, the Master Separation and Sale Agreement or any other Ancillary Agreement (or the Schedules hereto or thereto), or any Prior Transfer Agreement, as Liabilities to be retained or assumed by Schlumberger or any other member of the Schlumberger Group, and all agreements and obligations of any member of the Schlumberger Group under the Master Separation and Sale Agreement, this Agreement, any of the Ancillary Agreements or any of the Prior Transfer Agreements. Section 1.4 Local Transfer Agreements. Each of Schlumberger and NPT shall take, and shall cause each member of its respective Group to take, such action as reasonably necessary to consummate the transactions contemplated by the Local Transfer Agreements (whether prior to, on or after the Separation Date). Section 1.5 Methods of Transfer and Assumption. (a) Terms of Other Ancillary Agreements Govern. Subject to the provisions of Section 1.5(b) hereof, the parties shall enter into the other Ancillary Agreements, on or prior to the date of this Agreement. To the extent that the transfer of any NPT Asset or the assumption of any NPT Liability is expressly provided for by the terms or provisions of any other Ancillary Agreement or of any Prior Transfer Agreement, the terms or provisions of such other Ancillary Agreement or Prior Transfer Agreement, including, without limitation, any Local Transfer Agreement, shall effect, and determine the manner of, the transfer or assumption. It is the intent of the parties that pursuant to Sections 1.1, 1.2 and 1.3, the transfer and assumption of all other NPT Assets and NPT Liabilities, other than Delayed Transfer Assets and Delayed Transfer Liabilities, shall be made on or prior to the Separation Date; provided, however, that circumstances in various jurisdictions may require the transfer of certain Assets and the assumption of certain Liabilities to occur in such other manner and at such other time as the parties shall agree, as provided in Section 1.4 hereof. (b) Mistaken Assignments and Assumptions. In addition to those transfers and assumptions accurately identified and designated by the parties to take place but which the parties are not able to effect prior to the Separation Date, there may exist (i) Assets that the parties discover were, contrary to the agreements between the parties, by mistake or omission, transferred to NPT or (ii) Liabilities that the parties discover were, contrary to the agreements between the parties, by mistake or omission, assumed by NPT. In the event that the Assets or Liabilities transferred or assumed under the terms or provisions of a Local Transfer Agreement are materially different than those that are contemplated to be transferred or assumed under this Agreement or any other Ancillary Agreement, the parties hereto shall take such remedial action as may be necessary or appropriate so as to restore the benefits provided for or contemplated by this Agreement and the Ancillary Agreement to the party or parties otherwise harmed, despite the terms and provisions effecting the relevant transfer and assumption by a Local Transfer Agreement. The parties shall cooperate in good faith to effect the transfer or re-transfer of such Assets, and/or the assumption or re-assumption of such Liabilities, to or by the appropriate party and shall not use the determination that remedial actions need to be taken to alter the original intent of the parties hereto with respect to the Assets to be transferred to or Liabilities to be assumed by NPT. Each party shall reimburse the other or make other financial 6 adjustments (e.g., without limitation, cash reserves) or other adjustments to remedy any mistakes or omissions relating to any of the Assets transferred hereby or any of the Liabilities assumed hereby. (c) Documents Relating to Other Transfers of Assets and Assumption of Liabilities. In furtherance of the assignment, transfer and conveyance of NPT Assets and the assumption of NPT Liabilities set forth in Sections 1.5(a) and (b) and certain other Ancillary Agreements, simultaneously with the execution and delivery hereof or as promptly as practicable thereafter, (i) Schlumberger shall execute and deliver, or shall cause its Subsidiaries, in accordance with Local Transfer Agreements, to execute and deliver, such bills of sale, stock powers, certificates of title, assignments of contracts and other instruments of transfer, conveyance and assignment as and to the extent necessary to evidence the transfer, conveyance and assignment (to the extent not previously accomplished) of all of Schlumberger's and its Subsidiaries' right, title and interest in and to the NPT Assets to NPT or another member of the NPT Group, and (ii) NPT or another member of the NPT Group shall execute and deliver to Schlumberger or its Subsidiaries such assumptions of contracts and other instruments of assumption as and to the extent necessary to evidence the valid and effective assumption, to the extent not previously assumed, of the NPT Liabilities by NPT or another member of the NPT Group. Section 1.6 Governmental Approvals and Consents. (a) Transfer In Violation of Laws. If and to the extent that the valid, complete and perfected transfer assignment or novation to the NPT Group of any NPT Assets and NPT Liabilities (or from the NPT Group of any Non-NPT Assets) would be a violation of applicable laws or require any consent or Governmental Approval in connection with the Separation, the IPO or the Sale, then, unless Schlumberger shall otherwise determine, the transfer, assignment or novation to or from the NPT Group, as the case may be, of such NPT Assets or Non-NPT Assets, respectively, shall be automatically deemed deferred and any such purported transfer, assignment or novation shall be null and void until such time as all legal impediments are removed and/or such consents or Governmental Approvals have been obtained. Notwithstanding the foregoing, such Asset shall still be considered a NPT Asset for purposes of determining whether any Liability is a NPT Liability; provided, however, that if such consents or Governmental Approvals have not been obtained within six months of the Separation Date, the parties will use their reasonable commercial efforts to achieve an alternative solution in accordance with the parties' intentions. (b) Transfers Not Consummated Prior to Separation Date. If the transfer, assignment or novation of any Assets intended to be transferred or assigned hereunder, is not consummated prior to or on the Separation Date, whether as a result of the provisions of Section 1.6(a) or for any other reason, then the Person retaining such Asset shall thereafter hold such Asset for the use and benefit, insofar as reasonably possible, of the Person entitled thereto (at the expense of the Person entitled thereto). In addition, the Person retaining such Asset shall take such other actions as may be reasonably requested by the Person to whom such Asset is to be transferred in order to place such Person, insofar as reasonably possible, in the same position as if such Asset had been transferred as contemplated hereby and so that all the benefits and burdens relating to such NPT Assets (or such Non-NPT Assets, as the case may be), including 7 possession, use, risk of loss, potential for gain, and dominion, control and command over such Assets, are to inure from and after the Separation Date to the NPT Group (or the Schlumberger Group, as the case may be). If and when the consents and/or Governmental Approvals, the absence of which caused the deferral of transfer of any Asset pursuant to Section 1.6(a), are obtained, the transfer of the applicable Asset shall be effected in accordance with the terms of this Agreement and/or such other applicable provisions of the Master Separation and Sale Agreement or any other Ancillary Agreement. Section 1.7 Novation of Assumed NPT Liabilities. (a) Reasonable Efforts. Each of Schlumberger and NPT, at the request of the other, shall use its reasonable efforts to obtain, or to cause to be obtained, any consent, substitution, approval or amendment required to novate (including with respect to any federal government contract) or assign all rights and obligations under agreements, leases, licenses and other obligations or Liabilities (including NPT OFLs) of any nature whatsoever that constitute NPT Liabilities or to obtain in writing the unconditional release of all parties to such arrangements other than any member of the NPT Group, so that, in any such case, NPT and its Subsidiaries will be solely responsible for such Liabilities; provided, however, that neither Schlumberger, NPT nor their Subsidiaries shall be obligated to pay any consideration therefor to any third party from whom such consents, approvals, substitutions and amendments are requested. (b) Inability to Obtain Novation. If Schlumberger or NPT is unable to obtain, or to cause to be obtained, any such required consent, approval, release, substitution or amendment, the applicable member of the Schlumberger Group shall continue to be bound by such agreements, leases, licenses and other obligations and, unless not permitted by law or the terms thereof (except to the extent expressly set forth in this Agreement, the Master Separation and Sale Agreement or any other Ancillary Agreement), NPT shall, as agent or subcontractor for Schlumberger or such other Person, as the case may be, pay, perform and discharge fully, or cause to be paid, transferred or discharged all the obligations or other Liabilities of Schlumberger or such other Person, as the case may be, thereunder from and after the date hereof. Schlumberger shall, without further consideration, pay and remit, or cause to be paid or remitted, to NPT or its appropriate Subsidiary promptly all money, rights and other consideration received by it or any member of its respective Group in respect of such performance (unless any such consideration is an Excluded Asset). If and when any such consent, approval, release, substitution or amendment shall be obtained or such agreement, lease, license or other rights or obligations shall otherwise become assignable or able to be novated, Schlumberger shall thereafter assign, or cause to be assigned, all its rights, obligations and other Liabilities thereunder or any rights or obligations of any member of its respective Group to NPT without payment of further consideration and NPT shall, without the payment of any further consideration, assume such rights and obligations. 8 ARTICLE II LITIGATION Section 2.1 Allocation. (a) Litigation to Be Transferred to NPT. Notwithstanding any contrary provisions in the Indemnification and Insurance Matters Agreement, on the Separation Date, the responsibilities for management of the litigation identified in a litigation disclosure letter (the "Litigation Disclosure Letter"), which will be delivered by Schlumberger to NPT on or prior to the Separation Date, shall be transferred in their entirety from Schlumberger and its Subsidiaries to NPT and its Subsidiaries and shall be considered as NPT Assets or NPT Liabilities, as the case may be. As of the Separation Date and thereafter, NPT shall be responsible for managing the defense of such litigation and shall cause its applicable Subsidiaries to do the same. Schlumberger and its Subsidiaries must first obtain the prior consent of NPT or its applicable Subsidiary for any action taken subsequent to the Separation Date in connection with the litigation identified in the Litigation Disclosure Letter, which consent shall not be unreasonably withheld or delayed. All other matters relating to such litigation, including but not limited to indemnification for such claims, shall be governed by the provisions of the Indemnification and Insurance Matters Agreement. (b) Litigation to be Defended by Schlumberger at NPT's Expense. Notwithstanding any contrary provisions in the Indemnification and Insurance Matters Agreement, Schlumberger shall defend, and shall cause its applicable Subsidiaries to defend, the litigation identified in the Litigation Disclosure Letter that is delivered by Schlumberger to NPT on or prior to the Separation Date. All other matters relating to such litigation, including but not limited to indemnification for such claims, shall be governed by the provisions of the Indemnification and Insurance Matters Agreement. Section 2.2 Cooperation. Schlumberger and NPT and their respective Subsidiaries shall cooperate with each other in the defense of any litigation covered under this Article II and afford to each other reasonable access upon reasonable advance notice to witnesses and Information (other than Information protected from disclosure by applicable privileges) that is reasonably required to defend this litigation (as "Information" is defined pursuant to Section 7.4 of the Master Separation and Sale Agreement). The foregoing agreement to cooperate includes, but is not limited to, an obligation to provide access to qualified assistance to provide information, witnesses and documents to respond to discovery requests in specific lawsuits. In such cases, cooperation shall be timely so that the party responding to discovery may meet all court-imposed deadlines. The party requesting information shall reimburse the party providing information consistent with the terms of Section 5.4 of the Master Separation and Sale Agreement. The obligations set forth in this paragraph are set forth in more detail in Section 5.4 of the Master Separation and Sale Agreement. ARTICLE III MISCELLANEOUS 9 Section 3.1 Entire Agreement. This Agreement, the Master Separation and Sale Agreement, the other Ancillary Agreements and the Exhibits and Schedules referenced or attached hereto and thereto, and the Prior Transfer Agreements constitute the entire agreement between the parties with respect to the subject matter hereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof. Section 3.2 Governing Law. This Agreement shall be construed in accordance with and all Disputes hereunder shall be governed by the laws of the State of Delaware, excluding its conflict of law rules and the United Nations Convention on Contracts for the International Sale of Goods. Section 3.3 Descriptive Headings. The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section, Exhibit or Schedule, such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. Section 3.4 Termination. This Agreement may be terminated at any time prior to the IPO Pricing Date by and in the sole discretion of Schlumberger without the approval of NPT. This Agreement may be terminated at any time after the IPO Pricing Date and before the Sale Date by mutual consent of Schlumberger and NPT. In the event of termination pursuant to this Section 3.4, no party shall have any liability of any kind to the other party under this Agreement. Section 3.5 Notices. Notices, offers, requests or other communications required or permitted to be given by either party pursuant to the terms of this Agreement shall be given in writing to the respective parties to the following addresses: if to STI: Schlumberger Technologies, Inc. [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to SBV: Schlumberger BV [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] 10 if to STC: Schlumberger Technology Corporation [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to NPT: NPTest, Inc. [To Come] Attention: General Counsel Telephone: [__________] Facsimile: [__________] or to such other address as the party to whom notice is given may have previously furnished to the other in writing as provided herein. Any notice involving non-performance, termination, or renewal shall be sent by hand delivery, recognized overnight courier or, within the United States, may also be sent via certified mail, return receipt requested. All other notices may also be sent by fax, confirmed by first class mail. All notices shall be deemed to have been given and received on the earlier of actual delivery or three days from the date of postmark. Section 3.6 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. Section 3.7 Binding Effect; Assignment. No party may, directly or indirectly, in whole or in part, whether by operation of law or otherwise, assign or transfer this Agreement, without the other parties' prior written consent, and any attempted assignment, transfer or delegation without such prior written consent shall be voidable at the sole option of such other parties. Notwithstanding the foregoing, each party (or its permitted successive assignees or transferees hereunder) may assign or transfer this Agreement as a whole without consent to an entity that succeeds to all or substantially all of the business or assets of such party. Without limiting the foregoing, this Agreement will be binding upon and inure to the benefit of the parties and their permitted successors and assigns. Section 3.8 Severability. If any term or other provision of this Agreement or the Exhibits or Schedules attached hereto is determined by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. 11 Section 3.9 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of either party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the Exhibits or Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available. Section 3.10 Amendment. No change or amendment will be made to this Agreement except by an instrument in writing signed on behalf of each of the parties to such agreement. Section 3.11 Authority. Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and general equity principles. Section 3.12 Interpretation. The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section, Exhibit or Schedule, such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. Section 3.13 Dispute Resolution. The terms of the provisions entitled "Dispute Resolution" in the Master Separation and Sale Agreement shall apply to any claims or controversies or disputes arising hereunder among the parties to this Agreement. ARTICLE IV DEFINITIONS Section 4.1 Action. "Action" has the meaning set forth in the Indemnification and Insurance Matters Agreement. Section 4.2 Accounts Payable. "Accounts Payable" means (i) all accounts payable and other obligations of payment for goods or services purchased, leased or otherwise received in the conduct of the NPT Business that as of the Separation Date are payable to a third Person by Schlumberger or any of Schlumberger's Subsidiaries, whether past due, due or to become due, including any interest, sales or use taxes, finance charges, late or returned check charges and other obligations of Schlumberger or any of Schlumberger's Subsidiaries with 12 respect thereto, and any obligations related to any of the foregoing and (ii) all employee compensation Liabilities and other miscellaneous Liabilities for which an adjustment is made in the NPT Balance Sheet. Section 4.3 Accounts Receivable. "Accounts Receivable" means (i) all accounts receivable and other rights to payment for goods or services sold, leased or otherwise provided in the conduct of the NPT Business that as of the Separation Date are payable by a third Person to Schlumberger or any of Schlumberger's Subsidiaries, whether past due, due or to become due, including any interest, sales or use taxes, finance charges, late or returned check charges and other obligations of the account debtor with respect thereto, and any proceeds of any of the foregoing and (ii) all other miscellaneous Assets for which an adjustment is made in the NPT Pro Forma Balance Sheet (as defined in the Master Separation and Sale Agreement). Section 4.4 Affiliate. "Affiliate" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.5 Ancillary Agreement. "Ancillary Agreement" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.6 Assets. "Assets" means assets, properties and rights (including goodwill), wherever located (including in the possession of vendors or other third parties or elsewhere), whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person, including the following: (i) all accounting and other books, records and files whether in paper, microfilm, microfiche, computer tape or disc, magnetic tape or any other form; (ii) all apparatus, computers and other electronic data processing equipment, automobiles, trucks, aircraft, rolling stock, vessels, motor vehicles and other transportation equipment, special and general tools, test devices, prototypes and models and other tangible personal property, but excluding fixtures, machinery, equipment, furniture and office equipment; (iii) all inventories of materials, parts, raw materials, supplies, work-in-process and finished goods and products; (iv) all interests in real property of whatever nature, including easements, whether as owner, mortgagee or holder of a Security Interest, lessor, sublessor, lessee, sublessee or otherwise; (v) all interests in any capital stock or other equity interests of any Subsidiary or any other Person; all bonds, notes, debentures or other securities issued by any Subsidiary or any other Person; all loans, advances or other extensions of credit or capital contributions to any Subsidiary or any other Person; and all other investments in securities of any Person; 13 (vi) all license agreements, leases of personal property, open purchase orders for raw materials, supplies, parts or services, unfilled orders for the manufacture and sale of products and other contracts, agreements or commitments; (vii) all deposits, letters of credit and performance and surety bonds; (viii) all written technical information, data, specifications, research and development information, engineering drawings, operating and maintenance manuals, and materials and analyses prepared by consultants and other third parties; (ix) all Intellectual Property and licenses from third Persons granting the right to use any Intellectual Property; (x) all computer applications, programs and other software, including operating software, network software, firmware, middleware, design software, design tools, systems documentation and instructions; (xi) all cost information, sales and pricing data, customer prospect lists, supplier records, customer and supplier lists, customer and vendor data, correspondence and lists, product literature, artwork, design, development and manufacturing files, vendor and customer drawings, formulations and specifications, quality records and reports and other books, records, studies, surveys, reports, plans and documents; (xii) all prepaid expenses, trade accounts and other accounts and notes receivables; (xiii) all rights under contracts or agreements, all claims or rights against any Person arising from the ownership of any Asset, all rights in connection with any bids or offers and all claims, choses in action or similar rights, whether accrued or contingent; (xiv) all rights under insurance policies and all rights in the nature of insurance, indemnification or contribution; (xv) all licenses (including radio and similar licenses), permits, approvals and authorizations which have been issued by any Governmental Authority; and (xvi) interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements. 14 Section 4.7 Contracts. "Contracts" means any contract, agreement, lease, license, sales order, purchase order, instrument or other commitment that is binding on any Person or any part of its property under applicable law. Section 4.8 Delayed Transfer Assets. "Delayed Transfer Assets" means any NPT Assets that are expressly provided in this Agreement, the Master Separation and Sale Agreement or any other Ancillary Agreement to be transferred after the date of this Agreement. Section 4.9 Delayed Transfer Liabilities. Delayed Transfer Liabilities means any NPT Liabilities that are expressly provided in this Agreement, the Master Separation and Sale Agreement or any other Ancillary Agreement to be transferred after the date of this Agreement. Section 4.10 Governmental Approvals. "Governmental Approvals" means any notices, reports or other filings to be made, or any consents, registrations, approvals, permits or authorizations to be obtained from, any Governmental Authority. Section 4.11 Governmental Authority. "Governmental Authority" means any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority. Section 4.12 Indemnification and Insurance Matters Agreement. "Indemnification and Insurance Matters Agreement" means the Indemnification and Insurance Matters Agreement attached as Exhibit J to the Master Separation and Sale Agreement. Section 4.13 Insurance Policies. "Insurance Policies" means insurance policies pursuant to which a Person makes a true risk transfer to an insurer. Section 4.14 Intellectual Property. "Intellectual Property" has the meaning set forth in the Master Technology Ownership and License Agreement attached as Exhibit D-1 to the Master Separation and Sale Agreement. Section 4.15 IPO Closing Date. "IPO Closing Date" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.16 IPO Pricing Date. "IPO Pricing Date" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.17 Liabilities. "Liabilities" means all debts, liabilities, guarantees, assurances, commitments and obligations, whether fixed, contingent or absolute, asserted or unasserted, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due, whenever or however arising (including, without limitation, whether arising out of any Contract or tort based on negligence or strict liability) and whether or not the same would be required by generally accepted principles and accounting policies to be reflected in financial statements or disclosed in the notes thereto. Section 4.18 Local Transfer Agreements. "Local Transfer Agreements" has the meaning set forth in the Master Separation and Sale Agreement. 15 Section 4.19 Master Separation and Sale Agreement. "Master Separation and Sale Agreement" means the Master Separation and Sale Agreement by and among STI, STC, SBV and NPT. Section 4.20 NPT Balance Sheet. "NPT Balance Sheet" means the pro forma combined balance sheet (including the notes thereto) of the NPT Business as of [March 31], 2002, that is included in the IPO Registration Statement. Section 4.21 NPT Contingent Gain. "NPT Contingent Gain" means any claim or other right of a member of the Schlumberger Group or the NPT Group that primarily relates to the NPT Business, whenever arising, against any Person other than a member of the Schlumberger Group or the NPT Group, if and to the extent that (i) such claim or right arises out of the events, acts or omissions occurring prior to the Separation Date (based on then existing law) and (ii) the existence or scope of the obligation of such other Person prior to the Separation Date was not acknowledged, fixed or determined in any material respect, due to a dispute or other uncertainty prior to the Separation Date or as a result of the failure of such claim or other right to have been discovered or asserted prior to the Separation Date. A claim or right meeting the foregoing definition shall be considered a NPT Contingent Gain regardless of whether there was any Action pending, threatened or contemplated prior to the Separation Date with respect thereto. In the case of any claim or right a portion of which arises out of events, acts or omissions occurring prior to the Separation Date and a portion of which arises out of events, acts or omissions occurring on or after the Separation Date, only that portion that arises out of events, acts or omissions occurring prior to the Separation Date shall be considered a NPT Contingent Gain. For purposes of the foregoing, a claim or right shall be deemed to have accrued as of the Separation Date if all the elements of the claim necessary for its assertion shall have occurred on or prior to the Separation Date, such that the claim or right, were it asserted in an Action on or prior to the Separation Date, would not be dismissed by a court on ripeness or similar grounds. Notwithstanding the foregoing, none of (i) any Insurance Proceeds, (ii) any Excluded Assets, (iii) any reversal of any litigation or other reserve, or (iv) any matters relating to Taxes (which are governed by the Tax Sharing Agreement) shall be deemed to be a NPT Contingent Gain. Section 4.22 NPT Contingent Liability. "NPT Contingent Liability" means any Liability, other than Liabilities for Taxes (which are governed by the Tax Sharing Agreement), of a member of the Schlumberger Group or the NPT Group that primarily relates to the NPT Business, whenever arising, to any Person other than a member of the Schlumberger Group or the NPT Group, if and to the extent that (i) such Liability arises out of the events, acts or omissions occurring prior to the Separation Date and (ii) the existence or scope of the obligation of a member of the Schlumberger Group or the NPT Group prior to the Separation Date with respect to such Liability was not acknowledged, fixed or determined in any material respect, due to a dispute or other uncertainty prior to the Separation Date or as a result of the failure of such Liability to have been discovered or asserted prior to the Separation Date (it being understood that the existence of a litigation or other reserve with respect to any Liability shall not be sufficient for such Liability to be considered acknowledged, fixed or determined). In the case of any Liability a portion of which arises out of events, acts or omissions occurring prior to the Separation Date and a portion of which arises out of events, acts or omissions occurring on or after the Separation Date, only that portion that arises out of events, acts or omissions occurring prior to the Separation Date shall be considered a NPT Contingent Liability. For purposes of the 16 foregoing, a Liability shall be deemed to have arisen out of events, acts or omissions occurring prior to the Separation Date if all the elements necessary for the assertion of a claim with respect to such Liability shall have occurred on or prior to the Separation Date, such that the claim, were it asserted in an Action on or prior to the Separation Date, would not be dismissed by a court on ripeness or similar grounds. For purposes of clarification of the foregoing, the parties agree that no Liability relating to, arising out of or resulting from any obligation of any Person to perform the executory portion of any contract or agreement existing as of the Separation Date, or to satisfy any obligation accrued under any Plan (as defined in the Employee Matters Agreement) as of the Separation Date, shall deemed to be a NPT Contingent Liability. Section 4.23 NPT Contracts. "NPT Contracts" means the following contracts and agreements to which Schlumberger is a party or by which it or any of its Assets is bound, whether or not in writing, except for any such contract or agreement that is contemplated to be retained by Schlumberger or any member of the Schlumberger Group pursuant to any provision of this Agreement or any other Ancillary Agreement: (i) any contract or agreement entered into in the name of, or expressly on behalf of, any division or business unit of NPT; (ii) any contract or agreement that relates primarily to the NPT Business; (iii) any contract or agreement that is otherwise expressly contemplated pursuant to this Agreement, the Master Separation and Sale Agreement or any of the other Ancillary Agreements to be assigned to NPT; (iv) any guarantee, indemnity, representation, warranty or other Liability of any member of the NPT Group or the Schlumberger Group in respect of any other NPT Contract, any NPT Liability or the NPT Business (including guarantees of financing incurred by customers or other third parties in connection with purchases of products or services from the NPT Business); and (v) any NPT OFL. Section 4.24 NPT Group. "NPT Group" has the meaning set forth in the Master Separation and Sale Agreement.Section 4.32 OFLs. "OFLs" mean all liabilities, obligations, contingencies, instruments and other Liabilities of any member of the Schlumberger Group of a financial nature with third parties existing on the date hereof or entered into or established between the date hereof and the Separation Date, including any of the following: (i) foreign exchange contracts; (ii) letters of credit; (iii) guarantees of third party loans to customers; 17 (iv) surety bonds (excluding surety for workers' compensation self-insurance); (v) interest support agreements on third party loans to customers; (vi) performance bonds or guarantees issued by third parties; (vii) swaps or other derivatives contracts; and (viii) recourse arrangements on the sale of receivables or notes. Section 4.25 Person. "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. Section 4.26 Sale. "Sale" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.27 Schlumberger Group. "Schlumberger Group" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.28 Security Interest. "Security Interest" means any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer, or other encumbrance of any nature whatsoever. Section 4.29 Taxes. "Taxes" has the meaning set forth in the Tax Sharing Agreement. 18 IN WITNESS WHEREOF, each of the parties has caused this General Assignment and Assumption Agreement to be executed on its behalf by its officers thereunto duly authorized on the day and year first above written. Schlumberger Technologies, Inc. NPTest, Inc. By: __________________________________ By: __________________________________ Name: Name: Title: Title: Schlumberger BV By:___________________________________ Name: Title: Schlumberger Technology Corporation By:___________________________________ Name: Title: 19 SCHEDULES ---------- Schedule 1.1(c) Delayed Transfer Assets and Liabilities Schedule 1.2(a)(xii) Specific NPT Assets to be Transferred Schedule 1.2(b)(i) Excluded Assets Schedule 1.3(a)(vi) Divested Businesses Which Contain Liabilities to be Transferred to NPT Schedule 1.3(a)(vii) Specific NPT Liabilities Schedule 1.3(b)(i) Excluded Liabilities 20 Schedule 1.1(c) Delayed Transfer Assets and Liabilities Schedule 1.2(a)(xii) Specific NPT Assets to be Transferred Schedule 1.2(b)(i) Excluded Assets Schedule 1.3(a)(vi) Divested Businesses Which Contain Liabilities to be Transferred to NPT Schedule 1.3(a)(vii) Specific NPT Liabilities Schedule 1.3(b)(i) Excluded Liabilities EX-10.3 7 dex103.txt FORM OF MASTER TECHNOLOGY OWNERSHIP Exhibit 10.3 Master Technology Ownership and License Agreement by and among Schlumberger Technologies, Inc., Schlumberger Technology Corporation, Schlumberger BV and NPTest, Inc. _______ __, 2002 TABLE OF CONTENTS -----------------
Page ---- ARTICLE I DEFINITIONS ............................................................ 1 - --------------------- Section 1.1 Affiliate ..................................................... 1 ----------- --------- Section 1.2 Ancillary Agreements .......................................... 1 ----------- -------------------- Section 1.3 Copyrights .................................................... 2 ----------- ---------- Section 1.4 Database Rights ............................................... 2 ----------- --------------- Section 1.5 General Assignment and Assumption Agreement ................... 2 ----------- ------------------------------------------- Section 1.6 Invention Disclosure .......................................... 2 ----------- -------------------- Section 1.7 Improvements .................................................. 2 ----------- ------------ Section 1.8 Licensed NPT Technology ....................................... 2 ----------- ----------------------- Section 1.9 Licensed Schlumberger Technology .............................. 2 ----------- -------------------------------- Section 1.10 Mask Work Rights .............................................. 3 ------------ ---------------- Section 1.11 Master Confidential Disclosure Agreement ...................... 3 ------------ ---------------------------------------- Section 1.12 Master Separation and Sale Agreement .......................... 3 ------------ ------------------------------------ Section 1.13 NPT Business .................................................. 3 ------------ ------------ Section 1.14 NPT Group ..................................................... 3 ------------ --------- Section 1.15 NPT Proprietary Technology .................................... 3 ------------ -------------------------- Section 1.16 NPT Products .................................................. 3 ------------ ------------ Section 1.17 Patents ....................................................... 3 ------------ ------- Section 1.18 Person ........................................................ 4 ------------ ------ Section 1.19 Schlumberger Business ......................................... 4 ------------ --------------------- Section 1.20 Schlumberger Group ............................................ 4 ------------ ------------------ Section 1.21 Schlumberger Products ......................................... 4 ------------ --------------------- Section 1.22 Sell .......................................................... 4 ------------ ---- Section 1.23 Separation Date ............................................... 4 ------------ --------------- Section 1.24 Subsidiary .................................................... 4 ------------ ---------- Section 1.25 Technology .................................................... 4 ------------ ---------- Section 1.26 Third Party ................................................... 4 ------------ ----------- Section 1.27 VAD ........................................................... 5 ------------ --- Section 1.28 VAR ........................................................... 5 ------------ --- ARTICLE II ALLOCATION OF OWNERSHIP ............................................... 5 - ----------------------------------
Section 2.1 Assignment ................................................... 5 ----------- ---------- Section 2.2 Prior Grants ................................................. 5 ----------- ------------ Section 2.3 ASSIGNMENT DISCLAIMER ........................................ 5 ----------- --------------------- Section 2.4 Copies in Its Possession ..................................... 6 ----------- ------------------------ ARTICLE III LICENSE GRANTS ...................................................... 6 - -------------------------- Section 3.1 License to the Schlumberger Group ............................ 6 ----------- --------------------------------- Section 3.2 License to the NPT Group ..................................... 8 ----------- ------------------------ Section 3.3 Have Made Rights ............................................. 11 ----------- ---------------- Section 3.4 Improvements ................................................. 11 ----------- ------------ Section 3.5 Duration of Sublicenses ...................................... 11 ----------- ----------------------- Section 3.6 No Patent Licenses ........................................... 11 ----------- ------------------ Section 3.7 Third Party Technology ....................................... 12 ----------- ---------------------- ARTICLE IV CONFIDENTIALITY ...................................................... 12 - -------------------------- ARTICLE V TERMINATION ........................................................... 12 - --------------------- ........................................................... 12 Section 5.1 Voluntary Termination ........................................ 12 ----------- --------------------- Section 5.2 Survival ..................................................... 12 ----------- -------- Section 5.3 No Other Termination ......................................... 12 ----------- -------------------- ARTICLE VI DISPUTE RESOLUTION ................................................... 12 - ----------------------------- ARTICLE VII LIMITATION OF LIABILITY ............................................. 12 - ----------------------------------- ARTICLE VIII MISCELLANEOUS PROVISIONS ........................................... 13 - ------------------------------------- Section 8.1 Disclaimer ................................................... 13 ----------- ---------- Section 8.2 No Implied Licenses .......................................... 13 ----------- ------------------- Section 8.3 Infringement Suits ........................................... 13 ----------- ------------------ Section 8.4 No Other Obligations ......................................... 14 ----------- -------------------- Section 8.5 Entire Agreement ............................................. 14 ----------- ---------------- Section 8.6 Governing Law ................................................ 14 ----------- ------------- Section 8.7 Descriptive Headings ......................................... 14 ----------- -------------------- Section 8.8 Notices ...................................................... 14 ----------- ------- Section 8.9 Binding Effect; Assignment ................................... 15 ----------- -------------------------- Section 8.10 Severability ................................................. 16 ------------ ------------ Section 8.11 Failure or Indulgence Not Waiver; Remedies Cumulative ........ 16 ------------ ----------------------------------------------------- Section 8.12 Amendment .................................................... 16 ------------ ---------

ii Section 8.13 Counterparts ..................................................... 16 - ------------ ------------ Section 8.14 Authority ........................................................ 16 - ------------ ---------

iii MASTER TECHNOLOGY OWNERSHIP AND LICENSE AGREEMENT This Master Technology Ownership and License Agreement (the "Agreement") is entered into as of _______ __, 2002, by and among Schlumberger Technologies, Inc., a Delaware corporation ("STI"), Schlumberger Technology Corporation, a Texas corporation ("STC"), Schlumberger BV, a company organized and existing under the laws of the Netherlands ("SBV") and, together with STI and STC, "Schlumberger"), and NPTest, Inc., a Delaware corporation ("NPT"). RECITALS WHEREAS, STI and SBV collectively own all of the currently issued and outstanding common stock of NPT; WHEREAS, NPT is engaged in certain aspects of the automated test equipment business and related businesses as defined in the Master Separation and Sale Agreement (collectively, the "NPT Business"); WHEREAS, the Board of Directors of each of STI, SBV and NPT has determined that it would be appropriate and desirable for the Schlumberger Group (as defined below) to contribute and transfer to NPT, and for NPT to receive and assume, directly or indirectly, certain assets and liabilities currently held by the Schlumberger Group and associated with the NPT Business; WHEREAS, certain Prior Transfers, as defined in the Master Separation and Sale Agreement, have already occurred; and WHEREAS, as part of the foregoing, the parties wish to allocate ownership of technology directly associated with the NPT Business to NPT (and to confirm the allocation of ownership of such technology to NPT which was accomplished in the Prior Transfers) and to license certain technology to each other. NOW, THEREFORE, in consideration of the mutual promises of the parties, and of good and valuable consideration, it is agreed by and between the parties as follows: ARTICLE I DEFINITIONS For the purpose of this Agreement the following capitalized terms are defined in this Article I and shall have the meaning specified herein: Section 1.1 Affiliate. "Affiliate" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.2 Ancillary Agreements. "Ancillary Agreements" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.3 Copyrights. "Copyrights" means (i) any copyright in any original works of authorship fixed in any tangible medium of expression as set forth in 17 U.S.C. Section 101 et. seq., whether registered or unregistered, including any applications for registration thereof, (ii) any corresponding foreign copyrights under the laws of any jurisdiction, in each case, whether registered or unregistered, and any applications for registration thereof, including rights under international treaties, and (iii) moral rights under the laws of any jurisdiction. Section 1.4 Database Rights. "Database Rights" means any rights in databases under the laws of the United States or any other jurisdiction, whether registered or unregistered, and any applications for registration thereof. Section 1.5 General Assignment and Assumption Agreement. "General Assignment and Assumption Agreement" means that certain General Assignment and Assumption Agreement by and among STI, STC, SBV and NPT. Section 1.6 Invention Disclosure. "Invention Disclosure" means a written disclosure of an invention (i) prepared for the purpose of allowing legal and business people to determine whether to file a Patent application with respect to such invention and (ii) recorded with a control number in the owning party's records prior to the Separation Date. Section 1.7 Improvements. "Improvements" to Technology means (i) with respect to Copyrights, any modifications, derivative works, and translations of works of authorship, (ii) with respect to Database Rights, any database that is created by extraction or re-utilization of another database, and (iii) with respect to Mask Work Rights, trade secrets and other intellectual property rights included within the definition of Technology and not covered by Sections 1.7(i) - (ii) above, any improvements of Technology. For the purposes of clarification, an item of Technology will be deemed to be an Improvement of another item of Technology only if it is actually derived from such other item of Technology and not merely because it may have the same or similar functionality or use as such other item of Technology. Section 1.8 Licensed NPT Technology. "Licensed NPT Technology" means any Technology: (a) which, as of the Separation Date, NPT (i) owns or controls or (ii) otherwise has the right to grant any licenses of the type and on the terms contemplated herein without the obligation to pay royalties or other consideration to Third Parties; and (b) which has been disclosed to or is in the possession of Schlumberger as of the Separation Date. Section 1.9 Licensed Schlumberger Technology. "Licensed Schlumberger Technology" means any Technology: 2 (a) which, as of the Separation Date, Schlumberger (i) owns or controls or (ii) otherwise has the right to grant any licenses of the type and on the terms contemplated herein without the obligation to pay royalties or other consideration to Third Parties; and (b) which has been disclosed to or is in the possession of NPT as of the Separation Date. Section 1.10 Mask Work Rights. "Mask Work Rights" means (i) any rights in mask works, as defined in 17 U.S.C. Section 901, whether registered or unregistered, including applications for registration thereof, and (ii) any foreign rights in semiconductor topologies under the laws of any jurisdiction, whether registered or unregistered, including applications for registration thereof. Section 1.11 Master Confidential Disclosure Agreement. "Master Confidential Disclosure Agreement" means that certain Master Confidential Disclosure Agreement by and among STI, STC, SBV and NPT. Section 1.12 Master Separation and Sale Agreement. "Master Separation and Sale Agreement" means that certain Master Separation and Sale Agreement by and among STI, STC, SBV and NPT. Section 1.13 NPT Business. "NPT Business" has the meaning set forth in the Recitals. Section 1.14 NPT Group. "NPT Group" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.15 NPT Proprietary Technology. "NPT Proprietary Technology" means (i) all Technology directly associated with the development, design, testing, manufacture, maintenance, support, debugging, quality control, repair, use, marketing and sale of the products developed or being developed directly by or for the NPT Business as of the Separation Date, (ii) all Technology developed or being developed directly by or for the NPT Business as of the Separation Date and (iii) all other Technology used by the NPT Business and not by the Schlumberger Business. Section 1.16 NPT Products. "NPT Products" means any and all products and services of the businesses in which any member of the NPT Group is now or hereafter engaged (including the business of making (but not having made) Third Party products for Third Parties when such member of the NPT Group is acting as a contract manufacturer or foundry for such Third Parties). Section 1.17 Patents. "Patents" means patents, utility models, design patents, design registrations, certificates of invention and other governmental grants for the protection of inventions or industrial designs anywhere in the world and all reissues, renewals, reexaminations and extensions of any of the foregoing. 3 Section 1.18 Person. "Person" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.19 Prior Transfers. "Prior Transfers" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.20 Schlumberger Business. "Schlumberger Business" means the businesses of the Schlumberger Group as of the Separation Date, but specifically excluding the NPT Business. Section 1.21 Schlumberger Group. "Schlumberger Group" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.22 Schlumberger Products. "Schlumberger Products" means any and all products and services of the businesses in which any member of the Schlumberger Group is now or hereafter engaged (including the business of making, but not having made, Third Party products for Third Parties when such member of the Schlumberger Group is acting as a contract manufacturer or foundry for such Third Parties). Section 1.23 Sell. To "Sell" a product means to sell, transfer, lease or otherwise dispose of a product. "Sale" and "Sold" have the corollary meanings ascribed thereto. Section 1.24 Separation Date. "Separation Date" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.25 Subsidiary. "Subsidiary" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.26 Technology. "Technology" means technological models, algorithms, manufacturing processes, design processes, behavioral models, logic diagrams, schematics, test vectors, know-how, computer and electronic data processing and other apparatus programs and software (object code and source code), optical, hydraulic and fluidic apparatus and processes, apparatuses and prototypes, processes, detection and analytical devices, databases and documentation thereof, trade secrets, technical information, specifications, drawings, records, documentation, works of authorship or other creative works, websites, ideas, knowledge, data or the like. The term Technology includes Copyrights, Database Rights, Mask Work Rights, trade secrets and any other intellectual property right, but expressly does not include (i) any trademark, trade name, trade dress or service mark, or applications for registration thereof or (ii) any Patents or applications therefor, including any of the foregoing that may be based on Invention Disclosures, which are covered by the Master Patent Ownership Agreement between the parties, but does include trade secret rights in and to inventions disclosed in such Patent applications and Invention Disclosures. Section 1.27 Third Party. "Third Party" means a Person other than any member of the NPT Group or the Schlumberger Group. 4 Section 1.28 VAD. "VAD" means value-added dealer. Section 1.29 VAR. "VAR" means value-added reseller or value-added retailer. ARTICLE II ALLOCATION OF OWNERSHIP Section 2.1 Assignment. Subject to Sections 2.2 and 2.3 below, Schlumberger has granted, conveyed and assigned, or hereby grants, conveys and assigns (and agrees to cause other members of the Schlumberger Group to grant, convey and assign) to NPT, by execution hereof (or, where appropriate or required, by execution of separate instruments of assignment), all its (and their) right, title and interest in and to the NPT Proprietary Technology, to be held and enjoyed by NPT, its successors and assigns. Schlumberger further has granted, conveyed and assigned, or hereby grants, conveys and assigns (and agrees to cause other members of the Schlumberger Group to grant, convey and assign) to NPT all its (and their) right, title and interest in and to any and all causes of action and rights of recovery for past infringement of Copyrights, Database Rights and Mask Work Rights in and to the NPT Proprietary Technology, and for past misappropriation of trade secrets in and to the NPT Proprietary Technology. Where necessary, Schlumberger further covenants that it will, without demanding any further consideration therefor, at the request and expense of NPT (except for the value of the time of the Schlumberger Group employees), provide (and cause other members of the Schlumberger Group to provide) reasonable assistance in evidencing, maintaining, recording and perfecting NPT's rights to such NPT Proprietary Technology consistent with its general business practice as of the Separation Date, including but not limited to, execution and acknowledgement of (and causing other members of the Schlumberger Group to execute and acknowledge) assignments and other instruments in a form reasonably required by NPT for each Copyright, Mask Work Right or Database Right jurisdiction. Section 2.2 Prior Grants. NPT acknowledges and agrees that the foregoing assignment is subject to any and all licenses or other rights that may have been granted by the Schlumberger Group with respect to the NPT Proprietary Technology prior to the Separation Date. Schlumberger shall respond to reasonable inquiries from NPT regarding any such prior grants. Section 2.3 ASSIGNMENT DISCLAIMER. NPT ACKNOWLEDGES AND AGREES THAT THE FOREGOING ASSIGNMENTS HAVE BEEN AND ARE MADE ON AN "AS IS", "WHERE IS", QUITCLAIM BASIS AND THAT NEITHER SCHLUMBERGER NOR OTHER MEMBERS OF THE SCHLUMBERGER GROUP HAVE MADE OR WILL MAKE ANY WARRANTY WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY OR NON-INFRINGEMENT. 5 Section 2.4 Copies in Its Possession. Notwithstanding the allocation of ownership in this Article II, each party has the right to retain copies of any Technology that it has in its possession as of the Separation Date. ARTICLE III LICENSE GRANTS Section 3.1 License to the Schlumberger Group. (a) NPT grants to the Schlumberger Group the following personal, irrevocable, nonexclusive, worldwide, fully paid, royalty-free and non-transferable (except as specified in Section 8.9 below) licenses: (i) under its Copyrights in and to the Licensed NPT Technology, (A) to reproduce and have reproduced the works of authorship included in the Licensed NPT Technology and Improvements thereof prepared by or for Schlumberger, in whole or in part, as part of Schlumberger Products, (B) to prepare Improvements or have Improvements prepared for it based upon the works of authorship included in the Licensed NPT Technology in order to create Schlumberger Products, (C) to distribute (by any means and using any technology, whether now known or unknown, including without limitation electronic transmission) copies of the works of authorship included in the Licensed NPT Technology and Improvements thereof prepared by or for Schlumberger to the public by sale or other transfer of ownership or by rental, lease or lending, as part of Schlumberger Products, and (D) to perform (by any means and using any technology, whether now known or unknown, including without limitation electronic transmission) and display the works of authorship included in the Licensed NPT Technology and Improvements thereof prepared by or for Schlumberger, as part of Schlumberger Products; (ii) under its Database Rights in and to the Licensed NPT Technology, to extract data from the databases included in the Licensed NPT Technology and to re-utilize such data to design, develop, manufacture and have manufactured Schlumberger Products and to Sell such Schlumberger Products that incorporate such data, databases and Improvements thereof prepared by or for Schlumberger; (iii) under its Mask Work Rights in and to the Licensed NPT Technology, (A) to reproduce and have reproduced mask works and semiconductor topologies included in the Licensed NPT Technology and embodied in Schlumberger Products by optical, electronic or any other means, (B) to import or distribute a product in which any such mask work or semiconductor topology is embodied, and (C) to induce or knowingly to cause a Third Party to do any of the acts described in Sections 3.1(a)(iii)(A) and (B) above; and (iv) under its trade secrets and other intellectual property rights in and to the Licensed NPT Technology (except the intellectual property rights excluded from the definition of Technology), to use the Licensed NPT Technology and 6 Improvements thereof prepared by or for Schlumberger to design, develop, manufacture and have manufactured Schlumberger Products and to Sell such Schlumberger Products. (b) Without limiting the generality of the foregoing licenses granted in Section 3.1(a) above, with respect to software included within the Licensed NPT Technology, such licenses include the right to use, modify, and reproduce such software and Improvements thereof made by or for Schlumberger to create Schlumberger Products, in source code and object code form, and to Sell such software and Improvements thereof made by or for Schlumberger, in source code and object code form, as part of Schlumberger Products; provided, however, that, (i) with respect to NPT's software products that are commercially released as of the Separation Date, Schlumberger shall be limited to using no more than ten percent (10%) of the lines of code of any such commercially released software product in any the Schlumberger Product Sold by Schlumberger to a Third Party. Any other rights of Schlumberger to Sell such commercially released software products of NPT shall be solely as set forth in a separate written agreement. For purposes of this Section 3.1(b), a "commercially released" product shall mean a product that has been placed on a NPT corporate price list or released by NPT to Third Parties for beta testing; and (ii) with respect to NPT software that is only used internally, Schlumberger recognizes that such software was not designed for use in products that are Sold to Third Parties and that NPT has no obligation whatsoever to support such software. Accordingly, Schlumberger agrees to use reasonable care in selecting any such software for use in Schlumberger Products, taking into account that such software will be difficult to support. (c) The foregoing licenses in this Section 3.1 include the right to have contract manufacturers and foundries manufacture Schlumberger Products for Schlumberger. (d) Schlumberger may grant sublicenses within the scope of the licenses granted under Sections 3.1(a) and (b) above as follows: (i) Schlumberger may grant sublicenses to other members of the Schlumberger Group for so long as they remain a Schlumberger Group member, with no right to grant further sublicenses other than, in the case of a sublicensed Schlumberger Group member, to another Schlumberger Group member and as described in Section 3.2(d)(ii) below; provided that any such sublicense may be made effective retroactively but not prior to the sublicensee's becoming a Schlumberger Group member; (ii) Schlumberger may grant sublicenses with respect to Schlumberger Products in the form of software, in object code and source code form, to its distributors, resellers, OEM customers, VAR customers, VAD customers, systems integrators and other channels of distribution and to its end user customers; and 7 (iii) Schlumberger may grant sublicenses with respect to the relevant Licensed NPT Technology to the Transferee (as defined below), in the event that Schlumberger transfers, after the Separation Date, a going business (but not all or substantially all of its business or assets), regardless of whether such transfer is part of an asset sale to a Third Party or a sale of shares or securities to a Third Party (in each case, any such Third Party shall be referred to herein as a "Transferee"); provided that: (1) the Transferee shall have no right to grant further sublicenses except as described in Section 3.1(d)(ii) above; (2) such sublicenses shall not come into effect unless and until such Transferee agrees in writing for the benefit of NPT to be bound by the terms of this Agreement, including but not limited to the confidentiality obligations under Article IV; (3) this Section 3.1(d)(iii) shall be excluded from such sublicense in any event; and (4) Schlumberger shall give NPT prompt written notice of any such sublicense and a copy of the portions of the relevant agreement between Schlumberger and such Transferee containing the sublicense terms. (e) The licenses granted above to the Licensed NPT Technology shall continue in perpetuity (or, in the case of Copyrights, Database Rights and Mask Work Rights, until the expiration of the term thereof). (f) Schlumberger acknowledges and agrees that the foregoing license is subject to any and all licenses or other rights that may have been granted under the Licensed NPT Technology prior to the Separation Date. NPT shall respond to reasonable inquiries from Schlumberger regarding any such prior grants. Section 3.2 License to the NPT Group. (a) Schlumberger grants (and agrees to cause other members of the Schlumberger Group to grant) to the NPT Group the following personal, irrevocable, nonexclusive, worldwide, fully paid, royalty-free and non-transferable (except as specified in Section 8.9 below) licenses: (i) under its and their Copyrights in and to the Licensed Schlumberger Technology, (A) to reproduce and have reproduced the works of authorship included in the Licensed Schlumberger Technology and Improvements thereof prepared by or for NPT, in whole or in part, as part of NPT Products, (B) to prepare Improvements or have Improvements prepared for it based upon the works of authorship included in the Licensed Schlumberger Technology in order to create NPT Products, (C) to distribute (by any means and using any technology, whether now known or unknown, including without limitation electronic transmission) copies of the works of authorship included in the Licensed Schlumberger Technology and Improvements thereof prepared 8 by or for NPT to the public by sale or other transfer of ownership or by rental, lease or lending, as part of NPT Products, and (D) to perform (by any means and using any technology, whether now known or unknown, including without limitation electronic transmission) and display the works of authorship included in the Licensed Schlumberger Technology and Improvements thereof prepared by or for NPT, as part of NPT Products; (ii) under its and their Database Rights in and to the Licensed Schlumberger Technology, to extract data from the databases included in the Licensed Schlumberger Technology and to re-utilize such data to design, develop, manufacture and have manufactured NPT Products and to Sell such NPT Products that incorporate such data, databases and Improvements thereof prepared by or for NPT; (iii) under its and their Mask Work Rights in and to the Licensed Schlumberger Technology, (A) to reproduce and have reproduced mask works and semiconductor topologies included in the Licensed Schlumberger Technology and embodied in NPT Products by optical, electronic or any other means, (B) to import or distribute a product in which any such mask work or semiconductor topology is embodied, and (C) to induce or knowingly to cause a Third Party to do any of the acts described in Sections 3.2(a)(iii)(A) and (B) above; and (iv) under its and their trade secrets and other intellectual property rights in and to the Licensed Schlumberger Technology (except the intellectual property rights excluded from the definition of Technology), to use the Licensed Schlumberger Technology and Improvements thereof prepared by or for NPT to design, develop, manufacture and have manufactured NPT Products and to Sell such NPT Products. (b) Without limiting the generality of the foregoing licenses granted in Section 3.2(a) above, with respect to software included within the Licensed Schlumberger Technology, such licenses include the right to use, modify, and reproduce such software and Improvements thereof made by or for NPT to create NPT Products, in source code and object code form, and to Sell such software and Improvements thereof made by or for NPT, in source code and object code form, as part of NPT Products; provided, however, that, (i) with respect to Schlumberger's software products that are commercially released as of the Separation Date, NPT shall be limited to using no more than ten percent (10%) of the lines of code of any such commercially released software product in any NPT Product Sold by NPT to a Third Party. Any other rights of NPT to Sell such commercially released software products of Schlumberger shall be solely as set forth in a separate written agreement. For purposes of this Section 3.2(b), a "commercially released" product shall mean a product that has been placed on a corporate price list of Schlumberger or released by Schlumberger to Third Parties for beta testing; and (ii) with respect to Schlumberger's software that is only used internally, NPT recognizes that such software was not designed for use in products that 9 are Sold to Third Parties and that Schlumberger has no obligation whatsoever to support such software. Accordingly, NPT agrees to use reasonable care in selecting any such software for use in NPT Products, taking into account that such software will be difficult to support. (c) The foregoing licenses in this Section 3.2 include the right to have contract manufacturers manufacture NPT Products (or components thereof) for NPT. (d) NPT may grant sublicenses within the scope of the licenses granted under Sections 3.2(a) and (b) above as follows: (i) NPT may grant sublicenses to other members of the NPT Group for so long as they remain an NPT Group member, with no right to grant further sublicenses other than, in the case of a sublicensed NPT Group member, to another NPT Group member and as described in Section 3.2(d)(ii) below; provided that any such sublicense may be made effective retroactively but not prior to the sublicensee's becoming an NPT Group member; (ii) NPT may grant sublicenses with respect to NPT Products in the form of software, in object code and source code form, to its distributors, resellers, OEM customers, VAR customers, VAD customers, systems integrators and other channels of distribution and to its end user customers; and (iii) NPT may grant sublicenses with respect to the relevant Licensed Schlumberger Technology to the Transferee (as defined below), in the event that NPT transfers, after the Separation Date, a going business (but not all or substantially all of its business or assets), regardless of whether such transfer is part of an asset sale to a Third Party or a sale of shares or securities in a Subsidiary to a Third Party (in each case, any such Third Party shall be referred to herein as a "Transferee"); provided that: (1) the Transferee shall have no right to grant further sublicenses except as described in Section 3.2(d)(ii) above; (2) such sublicenses shall not come into effect unless and until such Transferee agrees in writing for the benefit of Schlumberger to be bound by the terms of this Agreement including but not limited to the confidentiality obligations under Article IV; (3) this Section 3.2(d)(iii) shall be excluded from such sublicense in any event; and (4) NPT shall give Schlumberger prompt written notice of any such sublicense and a copy of the portions of the relevant agreement between NPT and such Transferee containing the sublicense terms. 10 (e) The licenses granted above to the Licensed Schlumberger Technology shall continue in perpetuity (or, in the case of Copyrights, Database Rights and Mask Work Rights, until the expiration of the term thereof). (f) NPT acknowledges and agrees that the foregoing license is subject to any and all licenses or other rights that may have been granted by the Schlumberger Group with respect to the Licensed Schlumberger Technology prior to the Separation Date. Schlumberger shall respond to reasonable inquiries from NPT regarding any such prior grants. Section 3.3 Have Made Rights. Each party understands and acknowledges that the "have made" rights granted to it in Section 3.1 or 3.2, as applicable, and the sublicenses of such "have made" rights granted pursuant to Sections 3.1(d) and 3.2(d), as applicable, are intended to cover only the products of such party and its Affiliates and Subsidiaries (including private label or OEM versions of such products), and are not intended to cover foundry or contract manufacturing activities that such party may undertake through Third Parties for Third Parties. Section 3.4 Improvements. As between the parties, after the Separation Date, NPT hereby retains all right, title and interest, including all intellectual property rights, in and to any Improvements to Licensed Schlumberger Technology made by or for NPT or for the Probe systems, Test Systems, or Saber business lines of Schlumberger Semiconductor Solutions in the exercise of the licenses granted to it hereunder, subject only to the ownership by Schlumberger in the underlying Licensed Schlumberger Technology, and Schlumberger hereby retains all right, title and interest, including all intellectual property rights, in and to any Improvements to Licensed NPT Technology made by or for Schlumberger in the exercise of the licenses granted to it hereunder, subject only to the ownership by NPT in the underlying Licensed NPT Technology. Neither party shall have any obligation under this Agreement to notify the other party of any Improvements made by or for it or to disclose or license any such Improvements to the other party. Section 3.5 Duration of Sublicenses. A sublicense to a particular Affiliate or Subsidiary of a party hereto shall terminate upon the date that such Affiliate or Subsidiary ceases to be an Affiliate or Subsidiary of such party; provided, however, that such cessation shall not affect such party's rights to grant further sublicenses to such terminated Affiliate or Subsidiary as set forth in Section 3.1(d)(ii) or 3.2(d)(iii) above. In the event that, at the time of such cessation, such terminated Affiliate or Subsidiary owns any Technology to which the other party is licensed, such license shall continue for the term thereof. Section 3.6 No Patent Licenses. Nothing contained in this Agreement shall be construed as conferring to either party by implication, estoppel or otherwise any license or right under any Patent or applications therefor, whether or not the exercise of any right herein granted necessarily employs an invention of any existing or later issued Patent. 11 Section 3.7 Third Party Technology. The assignment of any applicable license agreements with respect to Third Party Technology are set forth in a separate General Assignment and Assumption Agreement between the parties. ARTICLE IV CONFIDENTIALITY The terms of the Master Confidential Disclosure Agreement shall apply to any Confidential Information (as defined therein) which is disclosed pursuant to this Agreement. ARTICLE V TERMINATION Section 5.1 Voluntary Termination. By written notice to the other party, each party may voluntarily terminate all or a specified portion of the licenses and rights granted to it hereunder by such other party. Such notice shall specify the effective date of such termination and shall clearly specify any affected Technology, product or service. Section 5.2 Survival. Any voluntary termination of licenses and rights of a party under Section 5.1 shall not affect such party's rights with respect to any product made or service furnished prior to such termination, and shall not affect the rights granted to the other party hereunder. Section 5.3 No Other Termination. Each party acknowledges and agrees that its remedy for breach by the other party of any provision hereof, shall be, subject to the requirements of Article VI, to bring a claim to recover damages subject to the limits set forth in this Agreement and to seek any other appropriate equitable relief, other than termination of the licenses granted under this Agreement. ARTICLE VI DISPUTE RESOLUTION The terms of the provisions entitled "Dispute Resolution" in the Master Separation and Sale Agreement shall apply to any claims or controversies or disputes arising hereunder among the parties to this Agreement. ARTICLE VII LIMITATION OF LIABILITY The terms of the provisions entitled "Limitation of Liability" in the Master Separation and Sales Agreement shall apply to any liabilities or damages incurred by the 12 parties by reason of any breach of this Agreement or the activities of the parties hereunder. ARTICLE VIII MISCELLANEOUS PROVISIONS Section 8.1 Disclaimer. EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL TECHNOLOGY AND ANY OTHER INFORMATION OR MATERIALS LICENSED OR PROVIDED HEREUNDER OR IN CONNECTION WITH THE PRIOR TRANSFERS IS LICENSED OR PROVIDED ON AN "AS IS" BASIS, AND THAT NEITHER PARTY (NOR ANY OTHER MEMBER OF THE SCHLUMBERGER GROUP AND THE NPT GROUP) MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT THERETO, INCLUDING WITHOUT LIMITATION ANY WARRANTIES CONCERNING THE QUALITY OR ENFORCEABILITY OF ANY RIGHTS TO SUCH TECHNOLOGY AND ANY OTHER INFORMATION OR MATERIALS LICENSED OR PROVIDED HEREUNDER, AND ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY OR NON-INFRINGEMENT. EACH PARTY ACKNOWLEDGES THAT IT IS SOLELY RESPONSIBLE FOR ANY RESULTS OBTAINED FROM THE USE OF THE TECHNOLOGY OR INFORMATION AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY CLAIMS IT MAY HAVE OR LATER MAY HAVE AGAINST THE OTHER IN CONNECTION WITH SUCH USE. Without limiting the generality of the foregoing, neither party (nor any other member of the Schlumberger Group and the NPT Group) makes any warranty or representation that any manufacture, use, importation, offer for sale or sale of any product or service will be free from infringement of any Patent or other intellectual property right of any Third Party. Section 8.2 No Implied Licenses. Nothing contained in this Agreement shall be construed as conferring any rights by implication, estoppel or otherwise, under any intellectual property right, other than the rights expressly granted in this Agreement with respect to the Licensed NPT Technology and the Licensed Schlumberger Technology. Neither party is required hereunder to furnish or disclose to the other any technical or other information (including copies of the Licensed NPT Technology and the Licensed Schlumberger Technology), except as specifically provided herein. Section 8.3 Infringement Suits. Neither party shall have any obligation hereunder to institute any action or suit against Third Parties for infringement of any Copyrights, Database Rights or Mask Work Rights or misappropriation of any trade secret rights in or to any Technology licensed to the other party hereunder, or to defend any action or suit brought by a Third Party which challenges or concerns the validity of any of such rights or which claims that any Technology assigned or licensed to the other 13 party hereunder infringes any Patent, Copyright, Database Right, Mask Work Right or other intellectual property right of any Third Party or constitutes a misappropriated trade secret of any Third Party. Schlumberger shall not have any right to institute any action or suit against Third Parties for infringement of any of the Copyrights, Database Rights or Mask Work Rights in or to the Licensed NPT Technology and NPT shall not have any right to institute any action or suit against Third Parties for infringement of any of the Copyrights, Database Rights or Mask Work Rights in or to the Licensed Schlumberger Technology. Section 8.4 No Other Obligations. NEITHER PARTY ASSUMES ANY RESPONSIBILITIES OR OBLIGATIONS WHATSOEVER, OTHER THAN THE RESPONSIBILITIES AND OBLIGATIONS EXPRESSLY SET FORTH IN THIS AGREEMENT OR A SEPARATE WRITTEN AGREEMENT BETWEEN THE PARTIES. Without limiting the generality of the foregoing, neither party nor any of its Subsidiaries, is obligated to provide any technical assistance. Section 8.5 Entire Agreement. This Agreement, the Ancillary Agreements and the Exhibits and Schedules referenced or attached hereto and thereto, and the agreements and documents executed and delivered in connection with the Prior Transfers, constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof. Section 8.6 Governing Law. This Agreement shall be construed in accordance with and all Disputes hereunder shall be governed by the laws of the State of Delaware, excluding its conflict of law rules and the United Nations Convention on Contracts for the International Sale of Goods. Section 8.7 Descriptive Headings. The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section, Exhibit or Schedule, such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. Section 8.8 Notices. Notices, offers, requests or other communications required or permitted to be given by either party pursuant to the terms of this Agreement shall be given in writing to the respective parties to the following addresses: if to STI: Schlumberger Technologies, Inc. [To Come] Attention: [__________] 14 Telephone: [__________] Facsimile: [__________] if to SBV: Schlumberger BV [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to STC: Schlumberger Technology Corp. [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to NPT: NPTest, Inc. 150 Baytech Drive San Jose, CA 95134 Attention: General Counsel Telephone: [408__________] Facsimile: [408__________] or to such other address as the party to whom notice is given may have previously furnished to the other in writing as provided herein. Any notice involving non-performance, termination, or renewal shall be sent by hand delivery, recognized overnight courier or, within the United States, may also be sent via certified mail, return receipt requested. All other notices may also be sent by fax, confirmed by first class mail. All notices shall be deemed to have been given and received on the earlier of actual delivery or three days from the date of postmark. Section 8.9 Binding Effect; Assignment. No party may, directly or indirectly, in whole or in part, whether by operation of law or otherwise, assign or transfer this 15 Agreement, without the other parties' prior written consent, and any attempted assignment, transfer or delegation without such prior written consent shall be voidable at the sole option of such other parties. Notwithstanding the foregoing, each party (or its permitted successive assignees or transferees hereunder) may assign or transfer this Agreement as a whole without consent to an entity that succeeds to all or substantially all of the business or assets of such party. Without limiting the foregoing, this Agreement will be binding upon and inure to the benefit of the parties and their permitted successors and assigns. Section 8.10 Severability. If any term or other provision of this Agreement or the Exhibits or Schedules attached hereto is determined by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. Section 8.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of either party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the Exhibits or Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available. Section 8.12 Amendment. No change or amendment will be made to this Agreement or the Exhibits or Schedules attached hereto except by an instrument in writing signed on behalf of each of the parties to such agreement. Section 8.13 Counterparts. This Agreement, including the Ancillary Agreement and the Exhibits and Schedules hereto and thereto and the other documents referred to herein or therein, may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. Section 8.14 Authority. Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to 16 applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and general equity principles. 17 IN WITNESS WHEREOF, each of the parties has caused this Master Technology Ownership and License Agreement to be executed on its behalf by its officers thereunto duly authorized on the day and year first above written. Schlumberger Technologies, Inc. NPTest, Inc. By: _____________________________________ By: _______________________________ Name: Name: Title: Title: Schlumberger BV By: _____________________________________ Name: Title: Schlumberger Technology Corporation By: _____________________________________ Name: Title: _____________________________________ _____________________________________ 18 EX-10.4 8 dex104.txt FORM OF MASTER PATENT OWNERSHIP AND LICENSE Exhibit 10.4 Master Patent Ownership Agreement by and among Schlumberger Technologies, Inc., Schlumberger Technology Corporation, Schlumberger BV and NPTest, Inc. _______ __, 2002 TABLE OF CONTENTS
Page ARTICLE I DEFINITIONS............................................................... 1 Section 1.1 Allocated Patent Assets Schedule................................ 1 Section 1.2 Ancillary Agreements............................................ 2 Section 1.3 Assigned Patents................................................ 2 Section 1.4 Change of Control............................................... 2 Section 1.5 First Effective Filing Date..................................... 2 Section 1.6 Invention Disclosure............................................ 2 Section 1.7 Master Confidential Disclosure Agreement........................ 3 Section 1.8 Master Separation and Sale Agreement............................ 3 Section 1.9 NPT Business.................................................... 3 Section 1.10 NPT Group....................................................... 3 Section 1.11 NPT Patents..................................................... 3 Section 1.12 NPT Products.................................................... 3 Section 1.13 NPT Services.................................................... 3 Section 1.14 Patents......................................................... 3 Section 1.15 Person.......................................................... 3 Section 1.16 Prior Transfers................................................. 3 Section 1.17 Schlumberger Business........................................... 3 Section 1.18 Schlumberger Group.............................................. 3 Section 1.19 Schlumberger Patents............................................ 4 Section 1.20 Schlumberger Products........................................... 4 Section 1.21 Schlumberger Services........................................... 4 Section 1.22 Separation Date................................................. 4 Section 1.23 Subsidiary...................................................... 4 Section 1.24 Third Party..................................................... 4 ARTICLE II OWNERSHIP................................................................ 4 Section 2.1 Ownership of Patents............................................ 4 Section 2.2 Prior Grants.................................................... 4 Section 2.3 ASSIGNMENT DISCLAIMER........................................... 5 ARTICLE III COVENANTS NOT TO SUE.................................................... 5 Section 3.1 Covenant Not to Sue by the Schlumberger......................... 5 Section 3.2 Covenant Not to Sue by NPT...................................... 7 ARTICLE IV ADDITIONAL OBLIGATIONS................................................... 8 Section 4.1 Additional Obligations with Regard to Assigned Patents.......... 8 Section 4.2 Defensive Protective Measures................................... 9
ARTICLE V CONFIDENTIALITY........................................................... 10 ARTICLE VI TERMINATION.............................................................. 10 Section 6.1 Voluntary Termination........................................... 10 Section 6.2 Survival........................................................ 10 Section 6.3 No Other Termination............................................ 10 ARTICLE VII DISPUTE RESOLUTION...................................................... 10 ARTICLE VIII LIMITATION OF LIABILITY................................................ 10 ARTICLE IX MISCELLANEOUS PROVISIONS................................................. 11 Section 9.1 Disclaimer...................................................... 11 Section 9.2 No Implied Licenses............................................. 11 Section 9.3 Infringement Suits.............................................. 11 Section 9.4 No Other Obligations............................................ 11 Section 9.5 Entire Agreement................................................ 12 Section 9.6 Governing Law................................................... 12 Section 9.7 Descriptive Headings............................................ 12 Section 9.8 Notices......................................................... 12 Section 9.9 Binding Effect; Assignment...................................... 13 Section 9.10 Severability.................................................... 13 Section 9.11 Failure or Indulgence Not Waiver; Remedies Cumulative........... 14 Section 9.12 Amendment....................................................... 14 Section 9.13 Counterparts.................................................... 14 Section 9.14 Authority....................................................... 14

ii MASTER PATENT OWNERSHIP AGREEMENT This Master Patent Ownership Agreement (the "Agreement") is entered into on _______ __, 2002, by and among Schlumberger Technologies, Inc., a Delaware corporation ("STI"), Schlumberger Technology Corporation, a Texas corporation ("STC"), Schlumberger BV, a company organized and existing under the laws of the Netherlands ("SBV" and, together with STI and STC, "Schlumberger"), and NPTest, Inc., a Delaware corporation ("NPT"). RECITALS WHEREAS, STI and SBV collectively own all of the currently issued and outstanding common stock of NPT; WHEREAS, NPT is engaged in certain aspects of the automated test equipment business and related businesses as defined in the Master Separation and Sale Agreement (collectively, the "NPT Business"); WHEREAS, the Board of Directors of each of STI, SBV and NPT has determined that it would be appropriate and desirable for the Schlumberger Group (as defined below) to contribute and transfer to NPT, and for NPT to receive and assume, directly or indirectly, certain assets and liabilities currently held by the Schlumberger Group and associated with the NPT Business; WHEREAS, certain Prior Transfers, as defined in the Master Separation and Sale Agreement, have already occurred; WHEREAS, as part of the foregoing, the parties wish to allocate ownership of all patents, patent applications and invention disclosures that disclose inventions associated with the NPT Business to NPT (and to confirm the allocation of ownership of such patents, patent applications and invention disclosures to NPT which was accomplished in the Prior Transfers) and to record any such patents and patent applications in NPT's name; and WHEREAS, the parties further desire to enter into reciprocal covenants not to sue for patent infringement. NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the parties hereto agree as follows: ARTICLE I DEFINITIONS For the purpose of this Agreement the following capitalized terms are defined in this Article I and shall have the meaning specified herein: Section 1.1 Allocated Patent Assets Schedule. "Allocated Patent Assets Schedule" means the schedule of Patents, Patent applications and Invention Disclosures that have been or are to be transferred to NPT, as set forth in Exhibit A hereto, as it may be updated by the parties upon mutual agreement to add Patents, Patent applications and Invention Disclosures. Section 1.2 Ancillary Agreements. "Ancillary Agreements" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.3 Assigned Patents. "Assigned Patents" means only those: (a) Patents, Patent applications and Invention Disclosures that are allocated to NPT in the Allocated Patent Assets Schedule; (b) Patent applications filed on the foregoing Invention Disclosures described in Section 1.3(a); (c) continuations, continuations-in-part, divisions and substitutions of any of the foregoing Patent applications described in Sections 1.3(a) and (b); (d) Patents which may issue on any of the foregoing Patent applications described in Sections 1.3(a)-(c); (e) renewals, reissues, reexaminations and extensions of the foregoing Patents described in Sections 1.3(a) and (d); and (f) foreign Patent applications and Patents that are counterparts of any of the foregoing Patent applications or Patents described in Sections 1.3(a)-(e), including any Patent application or Patent to the extent that it claims priority from any of the foregoing Patent applications or Patents described in Sections 1.3(a)-(e); but excluding from any Patent or Patent application described in Sections 1.3(c)-(f) any claimed invention (i) that does not appear in a Patent application having a First Effective Filing Date prior to the Separation Date and (ii) as to which neither NPT nor any person having a legal duty to assign his/her interest therein to NPT is entitled to be named as an inventor. Section 1.4 Change of Control. "Change of Control" of a party means the acquisition by a Third Party of sufficient beneficial ownership of the outstanding voting securities (or other ownership interest) of such party to control such party. As used herein, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise. Section 1.5 First Effective Filing Date. "First Effective Filing Date" means the earliest effective filing date in the particular country for any Patent or any Patent application. By way of example, it is understood that the First Effective Filing Date for a United States Patent is the earliest of: (i) the actual filing date of the United States Patent application which issued into such Patent; (ii) the priority date under 35 U.S.C. (S)119 for such Patent; and (iii) the priority date under 35 U.S.C. (S)120 for such Patent. Section 1.6 Invention Disclosure. "Invention Disclosure" means a written disclosure of an invention (i) prepared for the purpose of allowing legal and business people to determine 2 whether to file a Patent application with respect to such invention and (ii) recorded with a control number in the owning party's records prior to the Separation Date. Section 1.7 Master Confidential Disclosure Agreement. "Master Confidential Disclosure Agreement" means that certain Master Confidential Disclosure Agreement by and among STI, STC, SBV and NPT. Section 1.8 Master Separation and Sale Agreement. "Master Separation and Sale Agreement" means that certain Master Separation and Sale Agreement by and among STI, STC, SBV and NPT. Section 1.9 NPT Business. "NPT Business" has the meaning set forth in the Recitals. Section 1.10 NPT Group. "NPT Group" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.11 NPT Patents. "NPT Patents" means the Assigned Patents and every Patent to the extent entitled to a First Effective Filing Date prior to the Separation Date that is owned or controlled by a member of the NPT Group, and applications for the foregoing Patents, including without limitation any continuations, continuations-in-part, divisions and substitutions. Section 1.12 NPT Products. "NPT Products" means the products of the NPT Business as existing on the Separation Date. Section 1.13 NPT Services. "NPT Services" means the services of the NPT Business as existing on the Separation Date. Section 1.14 Patents. "Patents" means patents, utility models, design patents, design registrations, certificates of invention and other governmental grants for the protection of inventions or industrial designs anywhere in the world and all reissues, renewals, reexaminations and extensions of any of the foregoing. Section 1.15 Person. "Person" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.16 Prior Transfers. "Prior Transfers" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.17 Schlumberger Business. "Schlumberger Business" means the businesses of the Schlumberger Group as of the Separation Date, but specifically excluding the NPT Business. Section 1.18 Schlumberger Group. "Schlumberger Group" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.19 Schlumberger Patents. "Schlumberger Patents" means every Patent to the extent entitled to a First Effective Filing Date prior to the Separation Date that is owned or 3 controlled by a member of the Schlumberger Group, and applications for the foregoing Patents, including without limitation any continuations, continuations-in-part, divisions and substitutions. Section 1.20 Schlumberger Products. "Schlumberger Products" means the products of the Schlumberger Business as existing on the Separation Date. Section 1.21 Schlumberger Services. "Schlumberger Services" means the services of the Schlumberger Business as existing on the Separation Date. Section 1.22 Separation Date. "Separation Date" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.23 Subsidiary. "Subsidiary" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.24 Third Party. "Third Party" means a Person other than any member of the NPT Group or the Schlumberger Group. ARTICLE II OWNERSHIP Section 2.1 Ownership of Patents. Subject to Sections 2.2 and 2.3 below, Schlumberger has granted, conveyed and assigned, or hereby grants, conveys and assigns (and agrees to cause other members of the Schlumberger Group to grant, convey and assign) to NPT, by execution hereof (or, where appropriate or required, by execution of separate instruments of assignment), all its (and their) right, title and interest in and to the Assigned Patents, to be held and enjoyed by NPT, its successors and assigns. Schlumberger further has granted, conveyed and assigned, or hereby grants, conveys and assigns (and agrees to cause other members of the Schlumberger Group to grant, convey and assign) to NPT all its (and their) right, title and interest in and to any and all causes of action and rights of recovery for past infringement of the Assigned Patents and the right to claim priority from the Assigned Patents. Where necessary, Schlumberger will, without demanding any further consideration therefor, at the request and expense of NPT (except for the value of the time of the Schlumberger Group employees), provide (and cause other members of the Schlumberger Group to provide) reasonable assistance in prosecuting, sustaining, obtaining continuations of, or reissuing said Assigned Patents and in evidencing, maintaining, recording and perfecting NPT's rights to said Assigned Patents, consistent with its general business practice as of the Separation Date, including but not limited to execution and acknowledgement of (and causing other members of the Schlumberger Group to execute and acknowledge) assignments and other instruments in a form reasonably required by NPT for each Patent jurisdiction. Section 2.2 Prior Grants. NPT acknowledges and agrees that the foregoing assignments are subject to any and all licenses or other rights that may have been granted by the Schlumberger Group with respect to the Assigned Patents prior to the Separation Date. Schlumberger shall respond to reasonable inquiries from NPT regarding any such prior grants. 4 Section 2.3 ASSIGNMENT DISCLAIMER. EACH PARTY ACKNOWLEDGES AND AGREES THAT THE FOREGOING ASSIGNMENTS HAVE BEEN AND ARE MADE ON AN "AS IS, WHERE IS" QUITCLAIM BASIS AND THAT NEITHER PARTY NOR ANY OF ITS SUBSIDIARIES HAS MADE OR WILL MAKE ANY WARRANTY WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY OR NON- INFRINGEMENT, OR VALIDITY OF PATENT CLAIMS (ISSUED OR PENDING). ARTICLE III COVENANTS NOT TO SUE Section 3.1 Covenant Not to Sue by Schlumberger. (a) Schlumberger covenants, on behalf of itself and other members of the Schlumberger Group, not to sue an NPT Group member for infringement of any Schlumberger Patent resulting from or caused by the operation of the NPT Business. (b) Schlumberger covenants, on behalf of itself and other members of the Schlumberger Group, not to sue direct and indirect customers of an NPT Group member for infringement of any Schlumberger Patent resulting from or caused by the use by such customers of NPT Products or NPT Services. (c) Schlumberger covenants, on behalf of itself and other members of the Schlumberger Group, not to sue Third Party manufacturers (subject to the restrictions set forth in the next sentence) of an NPT Group member for infringement of any Schlumberger Patent resulting from or caused by the manufacture by such Third Party manufacturers of NPT Products. The foregoing covenant (i) shall apply only when the portion of the "have made" product covered by the Schlumberger Patents has been designed or created by an NPT Group member and/or one of its subcontractors (not the Third Party manufacturer) that is not a direct competitor of the Schlumberger Group in the field of the product being designed or created and (ii) shall not apply to (A) any methods used, or (B) any products or portions thereof that have been manufactured or marketed, by any Third Party prior to an NPT Group member and/or one of its subcontractors furnishing the designs or creations to such Third Party. (d) No immunity from suit is granted under the foregoing covenants, either directly or by implication, estoppel or otherwise to any Third Parties acquiring products from an NPT Group member for the combination of such products with other items or for the use of such combination; provided, however, that the foregoing covenant shall apply to the direct and indirect customers of an NPT Group member for the combination of any such acquired products with other products of the NPT Group and their use in such combination, where the acquired products have no other substantial noninfringing use aside from the combination with the other products of the NPT Group, that are sold or otherwise transferred by an NPT Group member directly or indirectly to such customer. 5 (e) The foregoing covenants shall continue with respect to each Schlumberger Patent for the term of such Schlumberger Patent. (f) Schlumberger agrees to impose (and agree to cause other members of the Schlumberger Group to impose) the foregoing covenants on any Third Party to whom Schlumberger (or such other members of the Schlumberger Group) assign any Schlumberger Patent. (g) If NPT, after the Separation Date, transfers all or substantially all of its business or assets, or transfers a Subsidiary or business unit, to a Third Party, or undergoes a Change of Control (the Third Party acquiring the business or assets, Subsidiary or business unit, or control of NPT, as the case may be, shall be referred to herein as a "Transferee"), then regardless of whether such transfer is part of an asset sale to a Third Party or a sale of shares or securities in NPT or a Subsidiary of NPT to a Third Party, upon written request by NPT and the Transferee to Schlumberger within sixty (60) days following the transfer, Schlumberger shall grant an immunity from suit to the Transferee under the same terms as the covenants set forth in Sections 3.1(a)-(c) above, subject to the following: (i) the effective date of such covenant shall be the effective date of the transfer; (ii) the products and services and business operations of the Transferee that are subject to such covenant shall be limited to NPT Products, NPT Services and business operations of the portion of the NPT Business that is being transferred; (iii) this Section 3.1(g) shall be excluded from such covenant in any event and therefore Schlumberger shall have no obligation to grant a covenant not to sue to any subsequent transferee; (iv) Schlumberger shall have no obligation to grant such covenant unless the Transferee grants to Schlumberger (and to other members of the Schlumberger Group) and their customers and suppliers a covenant not to sue at no charge on the following terms: (1) the effective date of such covenant shall be the effective date of the transfer; (2) the products and services of Schlumberger (and other members of the Schlumberger Group) that are subject to such covenant shall be limited to Schlumberger Products and Schlumberger Services; and (3) the Patents of the Transferee that are subject to such covenant shall be all NPT Patents that are being transferred to the Transferee; and (v) in the event that any Schlumberger Group member and any such Transferee are engaged in litigation, arbitration or other formal dispute resolution proceedings covering Patent infringement (pending in any court, tribunal, or administrative agency or before 6 any appointed or agreed upon arbitrator in any jurisdiction worldwide), then such Schlumberger Group member shall have no obligation to grant such covenant under this Section 3.1(g). Section 3.2 Covenant Not to Sue by NPT. (a) NPT covenants, on behalf of itself and other members of the NPT Group, not to sue a Schlumberger Group member for infringement of any NPT Patent resulting from or caused by the operation of the Schlumberger Business. (b) NPT covenants, on behalf of itself and other members of the NPT Group, not to sue direct and indirect customers of a Schlumberger Group member for infringement of any NPT Patent resulting from or caused by the use by such customers of Schlumberger Products or Schlumberger Services. (c) NPT covenants, on behalf of itself and other members of the NPT Group, not to sue Third Party manufacturers (subject to the restrictions set forth in the next sentence) of a Schlumberger Group member for infringement of any NPT Patent resulting from or caused by the manufacture by such Third Party manufacturers of Schlumberger Products. The foregoing covenant (i) shall apply only when the portion of the "have made" product covered by the NPT Patents has been designed or created by a Schlumberger Group member and/or one of its subcontractors (not the Third Party manufacturer) that is not a direct competitor of NPT in the field of the product being designed or created and (ii) shall not apply to (A) any methods used, or (B) any products or portions thereof that have been manufactured or marketed, by any Third Party prior to a Schlumberger Group member and/or one of its subcontractors furnishing the designs or creations to such Third Party. (d) No immunity from suit is granted under the foregoing covenants by NPT, either directly or by implication, estoppel or otherwise to any Third Parties acquiring products from a Schlumberger Group member for the combination of such products with other items or for the use of such combination; provided, however, that the foregoing covenant shall apply to the direct and indirect customers of a Schlumberger Group member for the combination of any such acquired products with other products of the Schlumberger Group and their use in such combination, where the acquired products have no other substantial noninfringing use aside from the combination with other products of the Schlumberger Group, that are sold or otherwise transferred by a Schlumberger Group member directly or indirectly to such customer. (e) The foregoing covenants shall continue with respect to each NPT Patent for the term of such NPT Patent. (f) NPT agrees to impose (and agrees to cause other members of the NPT Group to impose) the foregoing covenants on any Third Party to whom NPT (or other members of the NPT Group) assigns any NPT Patent. (g) If any Subsidiary of Schlumberger Group, after the Separation Date, transfers all or substantially all of its business or assets, or transfers a Subsidiary or business unit, to a Third Party, or undergoes a Change of Control (the Third Party acquiring the business or assets, Subsidiary or business unit, or control of NPT, as the case may be, shall be referred to herein as a "Transferee"), then regardless of whether such transfer is part of an asset sale to a 7 Third Party or a sale of shares or securities in Schlumberger or a Subsidiary of Schlumberger to a Third Party, upon written request by Schlumberger and the Transferee to NPT within sixty (60) days following the transfer, NPT shall grant an immunity from suit to the Transferee under the same terms as the covenants set forth in Sections 3.2(a)-(c) above, subject to the following: (i) the effective date of such covenant shall be the effective date of the transfer; (ii) the products and services and business operations of the Transferee that are subject to such covenant shall be limited to Schlumberger Products, Schlumberger Services and business operations of the portion of the Schlumberger Business that is being transferred; (iii) this Section 3.2(g) shall be excluded from such covenant in any event and therefore NPT shall have no obligation to grant a covenant not to sue to any subsequent transferee; (iv) NPT shall have no obligation to grant such covenant unless the Transferee grants to NPT (and to other members of the NPT Group) and its (and their) customers and suppliers a covenant not to sue at no charge on the following terms: (1) the effective date of such covenant shall be the effective date of the transfer; (2) the products and services of NPT (and other members of the NPT Group) that are subject to such covenant shall be limited to NPT Products and NPT Services; and (3) the Patents of the Transferee that are subject to such covenant shall be all Schlumberger Patents that are being transferred to the Transferee; and (v) in the event that any NPT Group member and any such Transferee are engaged in litigation, arbitration or other formal dispute resolution proceedings covering Patent infringement (pending in any court, tribunal, or administrative agency or before any appointed or agreed upon arbitrator in any jurisdiction worldwide), then NPT shall have no obligation to grant such covenant under this Section 3.2(g). ARTICLE IV ADDITIONAL OBLIGATIONS Section 4.1 Additional Obligations with Regard to Assigned Patents. The parties will cooperate to transfer the responsibility for prosecution, maintenance and enforcement of the Assigned Patents from the Schlumberger Group to NPT. Until such transfer has been effected, Schlumberger agrees to continue (and agrees to cause other members of the Schlumberger Group to continue) the prosecution and maintenance of, and ongoing patent litigation (if any) with 8 respect to, the Assigned Patents (including payment of maintenance fees) in the ordinary course of business, and to maintain (and agrees to cause other members of the Schlumberger Group to maintain) the files and records relating to the Assigned Patents using the same standard of care and diligence that it uses with respect to the Schlumberger Patents. NPT will be responsible for the prosecution and maintenance of the Assigned Patents after the Separation Date. The Schlumberger Group will provide NPT with the originals or copies of its files relating to the Assigned Patents upon such transfer or at such earlier time as the parties may agree. (b) Schlumberger shall provide (and agrees to cause other members of the Schlumberger Group to provide) continuing reasonable support to NPT with respect to the Assigned Patents, including by way of example the following: (i) executing all documents prepared by NPT necessary for prosecution, maintenance, and litigation of the Assigned Patents, (ii) making available to NPT or its counsel, inventors and other persons employed by the Schlumberger Group for interviews and/or testimony to assist in good faith in further prosecution, maintenance or litigation of the Assigned Patents, including the signing of documents related thereto, (iii) forwarding copies of all correspondence sent and received concerning the Assigned Patents within a reasonable period of time after receipt by the Schlumberger Group, and (iv) making all relevant documents in the possession or control of the Schlumberger Group and corresponding to the Assigned Patents, or any licenses thereunder, available to NPT or its counsel. Any actual and reasonable out-of-pocket expenses associated with any such patent assistance shall be borne by NPT, expressly excluding the value of the time of the Schlumberger Group employees for assistance provided, if any. In the case of any patent litigation for which either the Schlumberger Group or NPT is providing assistance to the other, the parties shall agree on a case by case basis on compensation, if any, to the provider for the value of the time of its employees as reasonably required in connection with such litigation. Section 4.2 Defensive Protective Measures. For a period of five (5) years from the Separation Date, the parties shall cooperate reasonably and in good faith to the extent consistent with each party's own business objectives in the event that either party is involved in Patent litigation or controversies in which it would be helped in some way by the other party's Patents or relevant knowledge. Such cooperation may include, by way of example, (i) cooperation with respect to knowledge of prior art (whether the other party's or a Third Party's), (ii) consent to the granting of licenses to such other party's Patents, and (iii) assignment to such party of such other party's Patents for the purpose of bringing a counterclaim against a Third Party. The party requesting such cooperation shall bear the actual and reasonable out-of-pocket expenses of the cooperating party (except for the value of the time of the cooperating party's employees). 9 ARTICLE V CONFIDENTIALITY The terms of the Master Confidential Disclosure Agreement shall apply to any Confidential Information (as defined therein) which is disclosed pursuant to this Agreement. ARTICLE VI TERMINATION Section 6.1 Voluntary Termination. By written notice to the other party, each party may voluntarily terminate all or a specified portion of the rights granted to it hereunder by such other party. Such notice shall specify the effective date of such termination and shall clearly specify any affected Patent, Patent application, Invention Disclosure, product or service. Section 6.2 Survival. Any voluntary termination of licenses and rights of a party under Section 6.1 shall not affect such party's rights with respect to any product made or service furnished prior to such termination, and shall not affect the rights granted to the other party hereunder. Section 6.3 No Other Termination. Each party acknowledges and agrees that its remedy for breach by the other party of any provision hereof, shall be, subject to the requirements of Article VII, to bring a claim to recover damages subject to the limits set forth in this Agreement and to seek any other appropriate equitable relief, other than termination of the covenants not to sue provided under this Agreement. ARTICLE VII DISPUTE RESOLUTION The terms of the provisions entitled "Dispute Resolution" in the Master Separation and Sale Agreement shall apply to any claims or controversies or disputes arising hereunder among the parties to this Agreement. ARTICLE VIII LIMITATION OF LIABILITY The terms of the provisions entitled "Limitation of Liability" in the Master Separation and Sales Agreement shall apply to any liabilities or damages incurred by the parties by reason of any breach of this Agreement or the activities of the parties hereunder. 10 ARTICLE IX MISCELLANEOUS PROVISIONS Section 9.1 Disclaimer. EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL PATENTS AND ANY OTHER INFORMATION OR MATERIALS LICENSED OR PROVIDED HEREUNDER OR IN CONNECTION WITH THE PRIOR TRANSFERS ARE LICENSED OR PROVIDED ON AN "AS IS" BASIS AND THAT NEITHER PARTY (NOR ANY OTHER MEMBER OF THE SCHLUMBERGER GROUP AND THE NPT GROUP) MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT THERETO INCLUDING WITHOUT LIMITATION ANY WARRANTIES CONCERNING THE QUALITY OR ENFORCEABILITY OF ANY PATENT, AND ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY OR NON-INFRINGEMENT. EACH PARTY ACKNOWLEDGES THAT IT IS SOLELY RESPONSIBLE FOR ANY RESULTS OBTAINED FROM THE USE OF THE PATENTS AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY CLAIMS IT MAY HAVE OR LATER MAY HAVE AGAINST THE OTHER IN CONNECTION WITH SUCH USE. Without limiting the generality of the foregoing, neither party (nor any other member of the Schlumberger Group and the NPT Group) makes any warranty or representation as to the validity and/or scope of such party's Patent or any warranty or representation that any manufacture, use, importation, offer for sale or sale of any product or service will be free from infringement of any Patent or other intellectual property right of any Third Party. Section 9.2 No Implied Licenses. Nothing contained in this Agreement shall be construed as conferring any rights by implication, estoppel or otherwise, under any intellectual property right, other than the rights expressly granted in this Agreement with respect to the Assigned Patents. Neither party is required hereunder to furnish or disclose to the other any technical or other information except as specifically provided herein. Section 9.3 Infringement Suits. Neither party shall have any obligation hereunder to institute any action or suit against Third Parties for infringement of any Patent or to defend any action or suit brought by a Third Party which challenges or concerns the validity of any Patent. Unless the parties otherwise agree in writing, neither party shall have any right to institute any action or suit against Third Parties for infringement of any Patent owned by the other party. Section 9.4 No Other Obligations. NEITHER PARTY ASSUMES ANY RESPONSIBILITIES OR OBLIGATIONS WHATSOEVER, OTHER THAN THE RESPONSIBILITIES AND OBLIGATIONS EXPRESSLY SET FORTH IN THIS AGREEMENT OR A SEPARATE WRITTEN AGREEMENT BETWEEN THE PARTIES. Without limiting the generality of the foregoing, neither party (nor any other member of the Schlumberger Group and the NPT Group) is obligated to (i) file any Patent application, or to secure any Patent or Patent rights, (ii) to maintain any Patent in force, or (iii) provide any technical assistance, except for the obligations expressly assumed in this Agreement. 11 Section 9.5 Entire Agreement. This Agreement, the Ancillary Agreements and the Exhibits and Schedules referenced or attached hereto and thereto, and the agreements and documents executed and delivered in connection with the Prior Transfers, constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof. Section 9.6 Governing Law. This Agreement shall be construed in accordance with and all Disputes hereunder shall be governed by the laws of the State of Delaware, excluding its conflict of law rules and the United Nations Convention on Contracts for the International Sale of Goods. Section 9.7 Descriptive Headings. The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section, Exhibit or Schedule, such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. Section 9.8 Notices. Notices, offers, requests or other communications required or permitted to be given by either party pursuant to the terms of this Agreement shall be given in writing to the respective parties to the following addresses: if to STI: Schlumberger Technologies, Inc. [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to SBV: Schlumberger BV [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to STC: Schlumberger Technology Corp. [To Come] Attention: [__________] Telephone: [__________] 12 Facsimile: [__________] if to NPT: NPTest, Inc. 150 Baytech Drive San Jose, CA 95134 Attention: General Counsel Telephone: [408- __________] Facsimile: [408- __________] or to such other address as the party to whom notice is given may have previously furnished to the other in writing as provided herein. Any notice involving non-performance, termination, or renewal shall be sent by hand delivery, recognized overnight courier or, within the United States, may also be sent via certified mail, return receipt requested. All other notices may also be sent by fax, confirmed by first class mail. All notices shall be deemed to have been given and received on the earlier of actual delivery or three days from the date of postmark. Section 9.9 Binding Effect; Assignment. No party may, directly or indirectly, in whole or in part, whether by operation of law or otherwise, assign or transfer this Agreement, without the other parties' prior written consent, and any attempted assignment, transfer or delegation without such prior written consent shall be voidable at the sole option of such other parties. Notwithstanding the foregoing, each party (or its permitted successive assignees or transferees hereunder) may assign or transfer this Agreement as a whole without consent to an entity that succeeds to all or substantially all of the business or assets of such party; provided, however, that the covenants not to sue set forth in Article III may not be assigned or transferred in any event (except in the case of a reincorporation of such party in another state); and provided, however, that this prohibition shall not limit either party's obligations in Sections 3.1(g) and 3.2(g) to give covenants not to sue to a Transferee. Without limiting the foregoing, this Agreement will be binding upon and inure to the benefit of the parties and their permitted successors and assigns. Section 9.10 Severability. If any term or other provision of this Agreement or the Exhibits or Schedules attached hereto is determined by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, 13 all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. Section 9.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of either party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the Exhibits or Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available. Section 9.12 Amendment. No change or amendment will be made to this Agreement or the Exhibits or Schedules attached hereto except by an instrument in writing signed on behalf of each of the parties to such agreement. Section 9.13 Counterparts. This Agreement, including the Ancillary Agreement and the Exhibits and Schedules hereto and thereto and the other documents referred to herein or therein, may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. Section 9.14 Authority. Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and general equity principles. 14 IN WITNESS WHEREOF, each of the parties has caused this Master Patent Ownership Agreement to be executed on its behalf by its officers thereunto duly authorized on the day and year first above written. Schlumberger Technologies, Inc. NPTest, Inc. By: ____________________________________ By: _______________________________ Name: Name: Title: Title: Schlumberger BV By: ____________________________________ Name: Title: Schlumberger Technology Corporation By: ____________________________________ Name: Title: ____________________________________ ____________________________________ 15 EXHIBIT A TO MASTER PATENT OWNERSHIP AGREEMENT [Schedule of Patents, Patent applications, and Invention Disclosures assigned to NPT] EX-10.5 9 dex105.txt FORM OF MASTER TRADEMARK OWNERSHIP Exhibit 10.5 Master Trademark Ownership and License Agreement by and among Schlumberger Technologies, Inc., Schlumberger Technology Corporation, Schlumberger BV and NPTest, Inc. _______ __, 2002 TABLE OF CONTENTS -----------------
Page ---- ARTICLE I DEFINITIONS ............................................... 1 - --------------------- Section 1.1 Ancillary Agreements ................................. 1 ----------- -------------------- Section 1.2 Authorized Dealers ................................... 2 ----------- ------------------ Section 1.3 Collateral Materials ................................. 2 ----------- -------------------- Section 1.4 Corporate Identity Materials ......................... 2 ----------- ---------------------------- Section 1.5 Licensed Marks ....................................... 2 ----------- -------------- Section 1.6 Mark ................................................. 2 ----------- ---- Section 1.7 Master Separation and Sale Agreement ................. 2 ----------- ------------------------------------ Section 1.8 NPT Business ......................................... 2 ----------- ------------ Section 1.9 NPT Business Marks ................................... 2 ----------- ------------------ Section 1.10 NPT Business Products ................................ 2 ------------ --------------------- Section 1.11 NPT Group ............................................ 3 ------------ --------- Section 1.12 Person ............................................... 3 ------------ ------ Section 1.13 Prior Transfers ...................................... 3 ------------ --------------- Section 1.14 Quality Standards .................................... 3 ------------ ----------------- Section 1.15 Sale Date ............................................ 3 ------------ --------- Section 1.16 Schlumberger Business ................................ 3 ------------ --------------------- Section 1.17 Schlumberger Group ................................... 3 ------------ ------------------ Section 1.18 Schlumberger Products ................................ 3 ------------ --------------------- Section 1.19 Sell ................................................. 3 ------------ ---- Section 1.20 Separation Date ...................................... 3 ------------ --------------- Section 1.21 Subsidiary ........................................... 3 ------------ ---------- Section 1.22 Third Party .......................................... 3 ------------ ----------- Section 1.23 Trademark Usage Guidelines ........................... 3 ------------ -------------------------- Section 1.24 VAD .................................................. 4 ------------ --- Section 1.25 VAR .................................................. 4 ------------ --- ARTICLE II OWNERSHIP ................................................ 4 - -------------------- Section 2.1 Ownership of NPT Business Marks ...................... 4 ----------- ------------------------------- Section 2.2 Prior Grants ......................................... 4 ----------- ------------ Section 2.3 ASSIGNMENT DISCLAIMER ................................ 4 ----------- --------------------- ARTICLE III LICENSE ................................................. 5 - -------------------
Section 3.1 License Grant ........................................ 5 ----------- ------------- Section 3.2 License Restrictions ................................. 5 ----------- -------------------- Section 3.3 Licensee Undertakings ................................ 5 ----------- --------------------- Section 3.4 Non-Trademark Use .................................... 6 ----------- ----------------- Section 3.5 Reservation of Rights ................................ 6 ----------- --------------------- Section 3.6 Third Party Licenses ................................. 6 ----------- -------------------- ARTICLE IV PERMITTED SUBLICENSES .................................... 7 - ------------------------------- Section 4.1 Sublicenses .......................................... 7 ----------- ----------- Section 4.2 Authorized Dealers' Use of Marks ..................... 7 ----------- -------------------------------- Section 4.3 Enforcement of Agreements ............................ 7 ----------- ------------------------- ARTICLE V TRADEMARK USAGE GUIDELINES ................................ 8 - ------------------------------------ Section 5.1 Trademark Usage Guidelines ........................... 8 ----------- -------------------------- Section 5.2 Trademark Reviews .................................... 8 ----------- ----------------- ARTICLE VI TRADEMARK USAGE GUIDELINE ENFORCEMENT .................... 8 - ------------ --------------------------------- Section 6.1 Initial Cure Period .................................. 8 ----------- ------------------- Section 6.2 Second Cure Period ................................... 8 ----------- ------------------ Section 6.3 Final Cure Period .................................... 9 ----------- ----------------- ARTICLE VII QUALITY STANDARDS ....................................... 9 - ----------------------------- Section 7.1 General .............................................. 9 ----------- ------- Section 7.2 Quality Standards .................................... 9 ----------- ----------------- Section 7.3 Quality Control Reviews .............................. 9 ----------- ----------------------- Section 7.4 Product Discontinuation .............................. 9 ----------- ----------------------- ARTICLE VIII QUALITY STANDARD ENFORCEMENT ........................... 10 - ----------------------------------------- Section 8.1 Initial Cure Period .................................. 10 ----------- ------------------- Section 8.2 Second Cure Period ................................... 10 ----------- ------------------ Section 8.3 Final Cure Period .................................... 10 ----------- ----------------- ARTICLE IX PROTECTION OF LICENSED MARKS ............................. 10 - --------------------------------------- Section 9.1 Ownership and Rights ................................. 10 ----------- -------------------- Section 9.2 Protection of Marks .................................. 11 ----------- ------------------- Section 9.3 Similar Marks ........................................ 11 ----------- ------------- Section 9.4 Infringement Proceedings ............................. 11 ----------- ------------------------ ARTICLE X TERMINATION ............................................... 12 - -----------------------------

ii Section 10.1 Term ................................................... 12 ------------ ---- Section 10.2 Voluntary Termination .................................. 12 ------------ --------------------- Section 10.3 Survival ............................................... 12 ------------ -------- Section 10.4 Other Termination ...................................... 12 ------------ ----------------- ARTICLE XI DISPUTE RESOLUTION ......................................... 12 - ----------------------------- ARTICLE XII LIMITATION OF LIABILITY ................................... 13 - ----------------------------------- ARTICLE XIII MISCELLANEOUS PROVISIONS ................................. 13 - ------------------------------------- Section 13.1 Disclaimer ............................................. 13 ------------ ---------- Section 13.2 No Implied Licenses .................................... 13 ------------ ------------------- Section 13.3 Infringement Suits ..................................... 14 ------------ ------------------ Section 13.4 No Other Obligations ................................... 14 ------------ -------------------- Section 13.5 Entire Agreement ....................................... 14 ------------ ---------------- Section 13.6 Governing Law .......................................... 14 ------------ ------------- Section 13.7 Descriptive Headings ................................... 14 ------------ -------------------- Section 13.8 Notices ................................................ 14 ------------ ------- Section 13.9 Binding Effect; Assignment ............................. 16 ------------ -------------------------- Section 13.10 Severability ........................................... 16 ------------- ------------ Section 13.11 Failure or Indulgence Not Waiver; Remedies Cumulative .. 16 ------------- ----------------------------------------------------- Section 13.12 Amendment .............................................. 16 ------------- --------- Section 13.13 Counterparts ........................................... 16 ------------- ------------ Section 13.14 Authority .............................................. 16 ------------- ---------

iii MASTER TRADEMARK OWNERSHIP AND LICENSE AGREEMENT This Master Trademark Ownership and License Agreement (the "Agreement") is entered into as of _______ __, 2002 (the "Effective Date"), by and among Schlumberger Technologies, Inc., a Delaware corporation ("STI"), Schlumberger Technology Corporation, a Texas corporation ("STC"), Schlumberger BV, a company organized and existing under the laws of the Netherlands ("SBV" and, together with STI and STC, "Schlumberger"), and NPTest, Inc., a Delaware corporation ("NPT"). RECITALS WHEREAS, STI and SBV collectively own all of the currently issued and outstanding common stock of NPT; WHEREAS, NPT is engaged in certain aspects of the automated test equipment business and related businesses as defined in the Master Separation and Sale Agreement (collectively, the "NPT Business"); WHEREAS, the Board of Directors of each of STI, SBV and NPT has determined that it would be appropriate and desirable for the Schlumberger Group (as defined below) to contribute and transfer to NPT, and for NPT to receive and assume, directly or indirectly, certain assets and liabilities currently held by the Schlumberger Group and associated with the NPT Business; WHEREAS, certain Prior Transfers, as defined in the Master Separation and Sale Agreement, have already occurred; and WHEREAS, as part of the foregoing, the parties wish to allocate ownership of the NPT Business Marks (as defined below) to NPT (and to confirm the allocation of ownership of NPT Business Marks to NPT which was accomplished in the Prior Transfers) and to set forth the terms of a license for the Licensed Marks (as defined below) to NPT. NOW, THEREFORE, in consideration of the mutual promises of the parties, and of good and valuable consideration, it is agreed by and between the parties as follows: ARTICLE I DEFINITIONS For the purpose of this Agreement the following capitalized terms are defined in this Article I and shall have the meaning specified herein: Section 1.1 Ancillary Agreements. "Ancillary Agreements" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.2 Authorized Dealers. "Authorized Dealers" means any distributor, dealer, OEM customer, VAR customer, VAD customer, systems integrator or other agent that on or after the Separation Date is authorized to market, advertise, sell, lease, rent, service or otherwise offer NPT Business Products. NPT will provide Schlumberger a list of the then current Authorized Dealers within a reasonable period after Schlumberger's request. Section 1.3 Collateral Materials. "Collateral Materials" means all packaging, tags, labels, advertising, promotions, display fixtures, instructions, warranties and other materials of any and all types associated with the NPT Business Products that are marked with at least one of the Licensed Marks. Section 1.4 Corporate Identity Materials. "Corporate Identity Materials" means materials that are not products or product-related and that NPT may now or hereafter use to communicate its identity, including, by way of example and without limitation, business cards, letterhead, stationery, paper stock and other supplies, and signage on real property and buildings. Section 1.5 Licensed Marks. "Licensed Marks" means the Marks set forth in Exhibit A hereto. Section 1.6 Mark. "Mark" means any trademark, service mark, trade name, domain name, and the like, or other word, name, symbol or device, or any combination thereof, used or intended to be used by a Person to identify and distinguish the products or services of that Person from the products or services of others and to indicate the source of such goods or services, including without limitation all registrations and applications therefor throughout the world and all common law and other rights therein throughout the world. Section 1.7 Master Separation and Sale Agreement. "Master Separation and Sale Agreement" means that certain Master Separation and Sale Agreement by and among STI, STC, SBV and NPT. Section 1.8 NPT Business. "NPT Business" has the meaning set forth in the Recitals. Section 1.9 NPT Business Marks. "NPT Business Marks" means the schedule of Marks set forth in Exhibit B hereto, as it may be updated by the parties upon mutual agreement. Section 1.10 NPT Business Products. "NPT Business Products and Services" means any and all products of the NPT Business commercially released prior to the Separation Date and any and all services of the NPT Business offered prior to the Separation Date. 2 Section 1.11 NPT Group. "NPT Group" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.12 Person. "Person" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.13 Prior Transfers. "Prior Transfers" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.14 Quality Standards. "Quality Standards" means standards of quality applicable to the NPT Business Products, as in use immediately prior to the Separation Date, unless otherwise communicated in writing by Schlumberger from time to time. Section 1.15 Sale Date. "Sale Date" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.16 Schlumberger Business. "Schlumberger Business" means the businesses of the Schlumberger Group as of the Separation Date, but specifically excluding the NPT Business. Section 1.17 Schlumberger Group. "Schlumberger Group" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.18 Schlumberger Products. "Schlumberger Products" means any and all products and services of the businesses in which any member of the Schlumberger Group is now or hereafter engaged (including the business of making (but not having made) Third Party products for Third Parties when such member of the Schlumberger Group is acting as a contract manufacturer or foundry for such Third Parties). Section 1.19 Sell. To "Sell" a product means to sell, transfer, lease or otherwise dispose of a product. "Sale" and "Sold" have the corollary meanings ascribed thereto. Section 1.20 Separation Date. "Separation Date" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.21 Subsidiary. "Subsidiary" of any Person has the meaning set forth in the Master Separation and Sale Agreement. Section 1.22 Third Party. "Third Party" means a Person other than any member of the NPT Group or the Schlumberger Group. Section 1.23 Trademark Usage Guidelines. "Trademark Usage Guidelines" means the guidelines for proper usage of the Licensed Marks, as in use immediately prior to the Separation Date and attached hereto as Exhibit __, as such guidelines may be revised and updated in writing by Schlumberger from time to time. 3 Section 1.24 VAD. "VAD" means value-added dealer. Section 1.25 VAR. "VAR" means value-added reseller or value-added retailer. ARTICLE II OWNERSHIP Section 2.1 Ownership of NPT Business Marks. Subject to Sections 2.2 and 2.3 below, to the extent that any NPT Business Marks are registered in the name of the Schlumberger Group anywhere in the world, or to the extent that the Schlumberger Group otherwise has any ownership rights in and to the NPT Business Marks or any goodwill therein, Schlumberger hereby grants, conveys and assigns (and agrees to cause other members of the Schlumberger Group to grant, convey and assign) to NPT, by execution hereof (or, where appropriate or required, by execution of separate instruments of assignment), all its (and their) right, title and interest in and to the NPT Business Marks, including all goodwill of the NPT Business appurtenant thereto, to be held and enjoyed by NPT, its successors and assigns. Schlumberger further grants, conveys and assigns (and agrees to cause other members of the Schlumberger Group to grant, convey and assign) to NPT all its (and their) right, title and interest in and to any and all causes of action and rights of recovery for past infringement of the NPT Business Marks. Schlumberger hereby confirms the grant, conveyance and assignment which was made in the Prior Transfers of NPT Business Marks and causes of action and rights of recovery for past infringement of NPT Business Marks. Where necessary, Schlumberger will, without demanding any further consideration therefor, at the request and expense of NPT (except for the value of the time of the Schlumberger Group employees), provide (and to cause other members of the Schlumberger Group to provide) reasonable assistance in evidencing, maintaining, recording and perfecting NPT's rights to such NPT Business Marks consistent with its general business practice as of the Separation Date, including but not limited to execution and acknowledgement of (and causing other members of the Schlumberger Group to execute and acknowledge) assignments and other instruments in a form reasonably required by NPT or the relevant governmental or other authorities for each NPT Business Mark in all jurisdictions in which the Schlumberger Group owns rights thereto. Section 2.2 Prior Grants. NPT acknowledges and agrees that the foregoing assignment is subject to any and all licenses or other rights that may have been granted by the Schlumberger Group with respect to the NPT Business Marks prior to the Separation Date. Schlumberger shall respond to reasonable inquiries from NPT regarding any such prior grants. Section 2.3 ASSIGNMENT DISCLAIMER. NPT ACKNOWLEDGES AND AGREES THAT THE FOREGOING ASSIGNMENTS HAVE BEEN AND ARE MADE ON AN "AS-IS", "WHERE IS", QUITCLAIM BASIS AND THAT NEITHER SCHLUMBERGER NOR OTHER MEMBERS OF THE SCHLUMBERGER GROUP 4 HAVE MADE OR WILL MAKE ANY WARRANTY WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF TITLE, ENFORCEABILITY OR NON-INFRINGEMENT. ARTICLE III LICENSE Section 3.1 License Grant. Schlumberger grants (and agrees to cause other members of the Schlumberger Group to grant) to NPT a personal, irrevocable, nonexclusive, worldwide, fully-paid, royalty-free and non-transferable (except as set forth in Section 13.9) license to use the Licensed Marks on the NPT Business Products and in connection with the Sale and offer for Sale of NPT Business Products (or, in the case of NPT Business Products in the form of software, in connection with licensing of NPT Business Products) and to use the Licensed Marks in the advertisement and promotion of such NPT Business Products. Section 3.2 License Restrictions. NPT may not make any use whatsoever, in whole or in part, of the Licensed Marks, or any other Mark owned by the Schlumberger Group, in connection with NPT's corporate, doing business as, or fictitious name, or on Corporate Identity Materials without the prior written consent of the Schlumberger Group, except as expressly set forth in this Section 3.2(a) or in Section 3.4 below. Notwithstanding the foregoing, NPT may use any Corporate Identity Materials for up to six (6) months after the Separation Date in connection with the conduct of the NPT Business, to the extent that, as of the Separation Date, they are in use, in inventory or on order. (b) NPT may not use any Licensed Mark in direct association with another Mark such that the two Marks appear to be a single Mark or in any other composite manner with any Marks of NPT or any Third Party (other than the NPT Business Marks as permitted herein). (c) In all respects, NPT's usage of the Licensed Marks pursuant to the license granted hereunder shall be in a manner consistent with the high standards, quality, reputation and prestige represented by the Licensed Marks, and any usage by NPT that is inconsistent with the foregoing shall be deemed to be outside the scope of the license granted hereunder. As a condition to the license granted hereunder, NPT shall at all times present, position and promote the NPT Business Products marked (or marketed) with one or more of the Licensed Marks in a manner consistent with the high standards, quality and prestige represented by the Licensed Marks. Section 3.3 Licensee Undertakings. As a condition to the licenses granted hereunder, NPT undertakes to the Schlumberger Group that: 5 (a) NPT shall not use the Licensed Marks (or any other Mark of the Schlumberger Group) in any manner which is deceptive or misleading, which ridicules or is derogatory to the Licensed Marks, or which compromises or reflects unfavorably upon the goodwill, good name, reputation or image of the Schlumberger Group or the Licensed Marks, or which might jeopardize or limit the Schlumberger Group's proprietary interest therein. (b) NPT shall not use the Licensed Marks in connection with any products or services other than the NPT Business Products. (c) NPT shall not (i) misrepresent to any Person the scope of its authority under this Agreement, (ii) incur or authorize any expenses or liabilities chargeable to the Schlumberger Group, or (iii) take any actions that would impose upon the Schlumberger Group any obligation or liability to a Third Party other than obligations under this Agreement, or other obligations which the Schlumberger Group expressly approves in writing for NPT to incur on its behalf. (d) All press releases and corporate advertising and promotions that embody the Licensed Marks and messages conveyed thereby shall be consistent with the high standards and prestige represented by the Licensed Marks. Section 3.4 Non-Trademark Use. Each party may make appropriate and truthful references to the other party and the other party's products and technology. Section 3.5 Reservation of Rights. Except as otherwise expressly provided in this Agreement, the Schlumberger Group shall retain all rights in and to the Licensed Marks, including without limitation: (a) All rights of ownership in and to the Licensed Marks; (b) The right to use the Licensed Marks, either alone or in combination with other Marks, in connection with the marketing, offer or provision of any product or service, including any product or service which competes with NPT Business Products; and (c) The right to license Third Parties to use the Licensed Marks. Section 3.6 Third Party Licenses. Schlumberger agrees that they and other members of the Schlumberger Group will not license or transfer the Licensed Marks to Third Parties (other than to and among members of the Schlumberger Group or Joint Ventures (as defined below) of the Schlumberger Group) for use in connection with products or services which compete with NPT Business Products that are listed on a mutually agreed NPT corporate price list as of the Distribution Date until two (2) years after the Separation Date. Such restriction shall be binding on any successors and assigns of the Licensed Marks. As used in this Section 3.6, "Joint Venture" means a corporation or other organization whether incorporated or unincorporated of which at least fifty 6 percent (50%) of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by the Schlumberger Group. ARTICLE IV PERMITTED SUBLICENSES Section 4.1 Sublicenses. Subject to the terms and conditions of this Agreement, including all applicable Quality Standards and Trademark Usage Guidelines and other restrictions in this Agreement, NPT may grant sublicenses to its Subsidiaries to use the Licensed Marks in accordance with the license grant in Section 3.1 above; provided, that (i) NPT enters into a written sublicense agreement with each such Subsidiary sublicensee, and (ii) such agreement does not include the right to grant further sublicenses other than, in the case of a sublicensed Subsidiary of NPT, to another Subsidiary of NPT. NPT shall provide copies of such written sublicense agreements to the Schlumberger Group upon request. If NPT grants any sublicense rights pursuant to this Section 4.1(a) and any such sublicensed Subsidiary ceases to be a Subsidiary, then the sublicense granted to such Subsidiary pursuant to this Section 4.1(a) shall terminate 180 days from the date of such cessation. Section 4.2 Authorized Dealers' Use of Marks. Subject to the terms and conditions of this Agreement, including all applicable Quality Standards and Trademark Usage Guidelines and other restrictions in this Agreement, NPT (and those Subsidiaries sublicensed to use the Licensed Marks pursuant to Section 4.1) may allow Authorized Dealers to, and may allow such Authorized Dealers to allow other Authorized Dealers to, use the Licensed Marks in the advertisement and promotion of NPT Business Products Sold by such Authorized Dealers. Section 4.3 Enforcement of Agreements. NPT shall take all appropriate measures at NPT's expense promptly and diligently to enforce the terms of any sublicense agreement or other agreement with any Subsidiary or Authorized Dealer, or of any existing agreement with any Authorized Dealer, and shall restrain any such Subsidiary or Authorized Dealer from violating such terms, including without limitation (i) monitoring the Subsidiaries' and Authorized Dealers' compliance with the relevant Trademark Usage Guidelines and Quality Standards and causing any noncomplying Subsidiary or Authorized Dealer promptly to remedy any failure, (ii) terminating such agreement and/or (iii) commencing legal action, in each case, using a standard of care consistent with the Schlumberger Group's practices as of the Separation Date. In the event that the Schlumberger Group determines that NPT has failed promptly and diligently to enforce the terms of any such agreement using such standard of care, the Schlumberger Group reserves the right to enforce such terms, and NPT shall reimburse the Schlumberger Group for its fully allocated direct costs and expenses incurred in enforcing such 7 agreement (including legal fees), plus all out-of-pocket costs and expenses, plus five percent (5%). ARTICLE V TRADEMARK USAGE GUIDELINES Section 5.1 Trademark Usage Guidelines. NPT and its Subsidiaries and Authorized Dealers shall use the Licensed Marks only in a manner that is consistent with the Trademark Usage Guidelines. Section 5.2 Trademark Reviews. At the Schlumberger Group's request, NPT agrees to furnish or make available for inspection to the Schlumberger Group samples of all NPT Business Products and Collateral Materials of NPT, its Subsidiaries and Authorized Dealers that are marked with one or more of the Licensed Marks (to the extent that NPT has the right to obtain such samples). If NPT is notified or determines that it or any of its Subsidiaries or Authorized Dealers is not complying with any Trademark Usage Guidelines, it shall notify the Schlumberger Group and the provisions of Article VI and Section 4.3 shall apply to such noncompliance. ARTICLE VI TRADEMARK USAGE GUIDELINE ENFORCEMENT Section 6.1 Initial Cure Period. If the Schlumberger Group becomes aware that NPT or any Subsidiary or Authorized Dealer is not complying with any Trademark Usage Guidelines, the Schlumberger Group shall notify NPT in writing, setting forth in reasonable detail a written description of the noncompliance and any requested action for curing such noncompliance. NPT shall then have sixty (60) days with regard to noncompliance by Authorized Dealers and thirty (30) days with regard to noncompliance by NPT or any Subsidiary after receipt of such notice ("Guideline Initial Cure Period") to correct such noncompliance or submit to the Schlumberger Group a written plan to correct such noncompliance which written plan is reasonably acceptable to the Schlumberger Group. Section 6.2 Second Cure Period. If noncompliance with the Trademark Usage Guidelines continues beyond the Guideline Initial Cure Period, NPT and the Schlumberger Group shall each promptly appoint a representative to negotiate in good faith actions that may be necessary to correct such noncompliance. The parties shall have thirty (30) days following the expiration of the Guideline Initial Cure Period to agree on corrective actions, and NPT shall have thirty (30) days from the date of an agreement of corrective actions to implement such corrective actions and cure or cause the cure of such noncompliance ("Second Guideline Cure Period"). 8 Section 6.3 Final Cure Period. If the noncompliance with the Trademark Usage Guidelines remains uncured after the expiration of the Second Guideline Cure Period, then at the Schlumberger Group's election, NPT, or the noncomplying Subsidiary or Authorized Dealer, whichever is applicable, promptly shall cease using the noncomplying Collateral Materials until the Schlumberger Group determines that NPT, or the noncomplying Subsidiary or Authorized Dealer, whichever is applicable, has demonstrated its ability and commitment to comply with the Trademark Usage Guidelines. Nothing in this Article VI shall be deemed to limit NPT's obligations under Section 4.3 above or to preclude the Schlumberger Group from exercising any rights or remedies under Section 4.3 above. ARTICLE VII QUALITY STANDARDS Section 7.1 General. NPT acknowledges that the NPT Business Products permitted by this Agreement to be marked (or marketed) with one or more of the Licensed Marks must continue to be of sufficiently high quality as to provide protection of the Licensed Marks and the goodwill they symbolize, and NPT further acknowledges that the maintenance of the high quality standards associated with such products is of the essence of this Agreement. Section 7.2 Quality Standards. NPT and its Authorized Dealers and Subsidiaries shall use the Licensed Marks only on and in connection with NPT Business Products that meet or exceed in all respects the Quality Standards. Section 7.3 Quality Control Reviews. At the Schlumberger Group's request, NPT agrees to furnish or make available to the Schlumberger Group for inspection sample NPT Business Products marked with one or more of the Licensed Marks. The Schlumberger Group may also independently conduct customer satisfaction surveys to determine if NPT and its Subsidiaries and Authorized Dealers are meeting the Quality Standards. NPT shall cooperate with the Schlumberger Group fully in the distribution of such surveys. In the event of a challenge by the Schlumberger Group, the Schlumberger Group shall, at the request of NPT, provide NPT with copies of customer surveys used by the Schlumberger Group to determine if NPT is meeting the Quality Standards. If NPT is notified or determines that it or any of its Subsidiaries or Authorized Dealers is not complying with any Quality Standards, it shall notify the Schlumberger Group and the provisions of Article VIII and Section 4.3 shall apply to such noncompliance. Section 7.4 Product Discontinuation. If, at any time during or after the term of this Agreement, NPT discontinues the sale of a NPT Business Product that has been marked with one or more of the Licensed Marks, NPT shall substantially comply with the discontinuation procedure used by the Schlumberger Group for such or similar products immediately prior to Separation Date. 9 ARTICLE VIII QUALITY STANDARD ENFORCEMENT Section 8.1 Initial Cure Period. If the Schlumberger Group becomes aware that NPT or any Subsidiary or Authorized Dealer sublicensee is not complying with any Quality Standards, the Schlumberger Group shall notify NPT in writing, setting forth in reasonable detail a written description of the noncompliance and any requested action for curing such noncompliance. NPT shall then have thirty (30) days after receipt of such notice ("Initial Cure Period") to correct such noncompliance or submit to the Schlumberger Group a written plan to correct such noncompliance which written plan is reasonably acceptable to the Schlumberger Group. Section 8.2 Second Cure Period. If noncompliance with the Quality Standards continues beyond the Initial Cure Period, NPT and the Schlumberger Group shall each promptly appoint a representative to negotiate in good faith actions that may be necessary to correct such noncompliance. The parties shall have thirty (30) days following the expiration of the Initial Cure Period to agree on corrective actions, and NPT shall have thirty (30) days from the date of an agreement of corrective actions to implement such corrective actions and cure or cause the cure of such noncompliance ("Second Cure Period"). Section 8.3 Final Cure Period. If the noncompliance with the Quality Standards remains uncured after the expiration of the Second Cure Period, then at the Schlumberger Group's election, NPT, or the noncomplying Subsidiary or Authorized Dealer, whichever is applicable, promptly shall cease offering the noncomplying NPT Business Products under the Licensed Marks until the Schlumberger Group determines that NPT, or the noncomplying Subsidiary or Authorized Dealer, whichever is applicable, has demonstrated its ability and commitment to comply with the Quality Standards. Nothing in this Article VIII shall be deemed to limit NPT's obligations under Section 4.3 above or to preclude the Schlumberger Group from exercising any rights or remedies under Section 4.3 above. ARTICLE IX PROTECTION OF LICENSED MARKS Section 9.1 Ownership and Rights. NPT agrees not to challenge the ownership or validity of the Licensed Marks. NPT shall not disparage, dilute or take any action to adversely affect the validity of the Licensed Marks. NPT's use of the Licensed Marks shall inure exclusively to the benefit of the Schlumberger Group, and NPT shall not acquire or assert any rights therein. NPT recognizes the value of the goodwill associated with the Licensed Marks, and that the Licensed Marks may have acquired secondary meaning in the minds of the public. 10 Section 9.2 Protection of Marks. NPT shall assist the Schlumberger Group, at the Schlumberger Group's request and expense, in the procurement and maintenance of the Schlumberger Group's intellectual property rights in the Licensed Marks. NPT will not grant or attempt to grant a security interest in the Licensed Marks, or to record any such security interest in the United States Patent and Trademark Office or elsewhere, against any trademark application or registration belonging to the Schlumberger Group. NPT agrees to, and to cause its Subsidiaries to, execute all documents reasonably requested by the Schlumberger Group to effect further registration of, maintenance and renewal of the Licensed Marks, recordation of the license relationship between the Schlumberger Group and NPT, and recordation of NPT as a registered user. The Schlumberger Group makes no warranty or representation that trademark registrations have been or will be applied for, secured or maintained in the Licensed Marks throughout, or anywhere within, the world. NPT shall cause to appear on all NPT Business Products, and all Collateral Materials, such legends, markings and notices as may be required by applicable law or reasonably requested by the Schlumberger Group. Section 9.3 Similar Marks. Other than the mark ASAP (whose usage is the subject of a separate, prior agreement between the parties), NPT agrees not to use or register in any country any Mark that infringes the Schlumberger Group's rights in the Licensed Marks, or any element thereof. If any application for registration is, or has been, filed in any country by NPT which relates to any Mark that infringes the Schlumberger Group's rights in the Licensed Marks, NPT shall immediately abandon any such application or registration or assign it to the Schlumberger Group. To the extent not contrary to applicable law, NPT shall not challenge the Schlumberger Group's ownership of or the validity of the Licensed Marks or any application for registration thereof throughout the world. NPT shall not use or register in any country any copyright, domain name, telephone number or any other intellectual property right, whether recognized currently or in the future, or other designation which would affect the ownership or rights of the Schlumberger Group in and to the Licensed Marks, or otherwise to take any action which would adversely affect any of such ownership rights, or assist anyone else in doing so. NPT shall cause its Subsidiaries and Authorized Dealers to comply with the provisions of this Section 9.3. Section 9.4 Infringement Proceedings. In the event that the NPT General Counsel learns of any infringement or threatened infringement of the Licensed Marks, or any unfair competition, passing-off or dilution with respect to the Licensed Marks, NPT shall notify the Schlumberger Group or its authorized representative giving particulars thereof, and NPT shall provide necessary information and assistance to the Schlumberger Group or its authorized representatives at the Schlumberger Group's expense in the event that the Schlumberger Group decides that proceedings should be commenced. Notwithstanding the foregoing, NPT is not obligated to monitor or police use of the Licensed Marks by Third Parties other than as specifically set forth in Section 4.3. The Schlumberger Group shall have exclusive control of any litigation, opposition, cancellation or related legal proceedings, relating to the use of the licensed trademarks by third parties. The decision whether to bring, maintain or settle any such proceedings shall 11 be at the exclusive option and expense of the Schlumberger Group, and all recoveries shall belong exclusively to the Schlumberger Group. NPT shall not and shall have no right to initiate any such litigation, opposition, cancellation or related legal proceedings in its own name, but, at the Schlumberger Group's request, agrees to be joined as a party in any action taken by the Schlumberger Group to enforce its rights in the Licensed Marks. The Schlumberger Group shall incur no liability to NPT or any other Person under any legal theory by reason of the Schlumberger Group's failure or refusal to prosecute or by the Schlumberger Group's refusal to permit NPT to prosecute, any alleged infringement by Third Parties, nor by reason of any settlement to which the Schlumberger Group may agree. ARTICLE X TERMINATION Section 10.1 Term. The licenses and rights granted to NPT in Article III by Schlumberger (or other members of the Schlumberger Group) shall remain in effect for a period of two (2) years from the Effective Date unless earlier terminated as provided below. Section 10.2 Voluntary Termination. By written notice to Schlumberger, NPT may voluntarily terminate all or a specified portion of the licenses and rights granted to it hereunder by Schlumberger (or other members of the Schlumberger Group). Such notice shall specify the effective date of such termination and shall clearly specify any affected Licensed Marks, NPT Business Products or services. Section 10.3 Survival. Any termination of licenses and rights of NPT under Section 10.2 shall not affect NPT's licenses and rights with respect to any NPT Business Products made or sold prior to such termination. Section 10.4 Other Termination. Schlumberger acknowledges and agrees that its rights to terminate the licenses granted to NPT hereunder are solely as set forth in Section 4.3 and Articles VI and VIII. ARTICLE XI DISPUTE RESOLUTION Excepting disputes arising under Articles VI or VIII, which shall be governed by the provisions set forth therein, the terms of the provisions entitled "Dispute Resolution" in the Master Separation and Sale Agreement shall apply to any claims or controversies or disputes arising hereunder among the parties to this Agreement. 12 ARTICLE XII LIMITATION OF LIABILITY The terms of the provisions entitled "Limitation of Liability" in the Master Separation and Sales Agreement shall apply to any liabilities or damages incurred by the parties by reason of any breach of this Agreement or the activities of the parties hereunder. ARTICLE XIII MISCELLANEOUS PROVISIONS Section 13.1 Disclaimer. EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL LICENSED MARKS AND ANY OTHER INFORMATION OR MATERIALS LICENSED OR PROVIDED HEREUNDER OR IN CONNECTION WITH THE PRIOR TRANSFERS ARE LICENSED OR PROVIDED ON AN "AS IS" BASIS AND THAT NEITHER PARTY (NOR ANY OTHER MEMBER OF THE SCHLUMBERGER GROUP AND THE NPT GROUP) MAKE ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT THERETO INCLUDING WITHOUT LIMITATION ANY WARRANTIES CONCERNING THE QUALITY OR ENFORCEABILITY OF ANY RIGHTS TO THE LICENSED MARKS OR OTHER INFORMATION OR MATERIALS LICENSED OR PROVIDED HEREUNDER, AND ANY IMPLIED WARRANTIES OF TITLE, ENFORCEABILITY OR NON-INFRINGEMENT. NPT ACKNOWLEDGES THAT IT IS SOLELY RESPONSIBLE FOR ANY RESULTS OBTAINED FROM THE USE OF THE LICENSED MARKS OR INFORMATION AND NPT HEREBY IRREVOCABLY WAIVES ANY CLAIMS IT MAY HAVE OR LATER MAY HAVE AGAINST THE SCHLUMBERGER GROUP IN CONNECTION WITH SUCH USE. Without limiting the generality of the foregoing, Schlumberger (and Schlumberger Group) makes no warranty or representation as to the validity of any Mark licensed by it to NPT or any warranty or representation that any use of any Mark with respect to any product or service will be free from infringement of any rights of any Third Party. Section 13.2 No Implied Licenses. Nothing contained in this Agreement shall be construed as conferring any rights by implication, estoppel or otherwise, under any intellectual property right, other than the rights expressly granted in this Agreement with respect to the Licensed Marks. Neither party is required hereunder to furnish or disclose to the other any information (including copies of registrations of the Marks), except as specifically provided herein. 13 Section 13.3 Infringement Suits. Except as set forth in Section 4.3, (i) neither party shall have any obligation hereunder to institute any action or suit against Third Parties for infringement of any of the Licensed Marks or to defend any action or suit brought by a Third Party which challenges or concerns the validity of any of the Licensed Marks and (ii) NPT shall not have any right to institute any action or suit against Third Parties for infringement of any of the Licensed Marks. Section 13.4 No Other Obligations. NEITHER PARTY ASSUMES ANY RESPONSIBILITIES OR OBLIGATIONS WHATSOEVER, OTHER THAN THE RESPONSIBILITIES AND OBLIGATIONS EXPRESSLY SET FORTH IN THIS AGREEMENT OR A SEPARATE WRITTEN AGREEMENT BETWEEN THE PARTIES. Without limiting the generality of the foregoing, neither party (nor any other member of the Schlumberger Group and the NPT Group) is obligated to (i) file any application for registration of any Mark, or to secure any rights in any Marks, (ii) to maintain any Mark registration, or (iii) provide any assistance, except for the obligations expressly assumed in this Agreement. Section 13.5 Entire Agreement. This Agreement, the Ancillary Agreements and the Exhibits and Schedules referenced or attached hereto and thereto, and the agreements and documents executed and delivered in connection with the Prior Transfers, constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof. Section 13.6 Governing Law. This Agreement shall be construed in accordance with and all Disputes hereunder shall be governed by the laws of the State of Delaware, excluding its conflict of law rules and the United Nations Convention on Contracts for the International Sale of Goods. Section 13.7 Descriptive Headings. The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section, Exhibit or Schedule, such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. Section 13.8 Notices. Notices, offers, requests or other communications required or permitted to be given by either party pursuant to the terms of this Agreement shall be given in writing to the respective parties to the following addresses: if to STI: Schlumberger Technologies, Inc. 14 [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to SBV: Schlumberger BV [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to STC: Schlumberger Technology Corp. [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to NPT: NPTest, Inc. [To Come] Attention: General Counsel Telephone: [__________] Facsimile: [__________] or to such other address as the party to whom notice is given may have previously furnished to the other in writing as provided herein. Any notice involving non-performance, termination, or renewal shall be sent by hand delivery, recognized overnight courier or, within the United States, may also be sent via certified mail, return receipt requested. All other notices may also be sent by fax, confirmed by first class mail. All notices shall be deemed to have been given and received on the earlier of actual delivery or three days from the date of postmark. 15 Section 13.9 Binding Effect; Assignment. No party may, directly or indirectly, in whole or in part, whether by operation of law or otherwise, assign or transfer this Agreement, without the other parties' prior written consent, and any attempted assignment, transfer or delegation without such prior written consent shall be voidable at the sole option of such other parties. Notwithstanding the foregoing, each party (or its permitted successive assignees or transferees hereunder) may assign or transfer this Agreement as a whole without consent to an entity that succeeds to all or substantially all of the business or assets of such party. Without limiting the foregoing, this Agreement will be binding upon and inure to the benefit of the parties and their permitted successors and assigns. Section 13.10 Severability. If any term or other provision of this Agreement or the Exhibits or Schedules attached hereto is determined by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. Section 13.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of either party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the Exhibits or Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available. Section 13.12 Amendment. No change or amendment will be made to this Agreement or the Exhibits or Schedules attached hereto except by an instrument in writing signed on behalf of each of the parties to such agreement. Section 13.13 Counterparts. This Agreement, including the Ancillary Agreement and the Exhibits and Schedules hereto and thereto and the other documents referred to herein or therein, may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. Section 13.14 Authority. Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other actions, (c) it has duly 16 and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and general equity principles. 17 IN WITNESS WHEREOF, each of the parties has caused this Master Trademark Ownership and License Agreement to be executed on its behalf by its officers thereunto duly authorized on the day and year first above written. Schlumberger Technologies, Inc. NPTest, Inc. By: _____________________________________ By: ____________________________ Name: Name: Title: Title: Schlumberger BV By: _____________________________________ Name: Title: Schlumberger Technology Corporation By: _____________________________________ Name: Title: _____________________________________ _____________________________________ 18 EXHIBIT A TO MASTER TRADEMARK OWNERSHIP AND LICENSE AGREEMENT LICENSED MARKS Schlumberger Schlumberger Logo EXHIBIT B TO MASTER TRADEMARK OWNERSHIP AND LICENSE AGREEMENT [Schedule of NPT Business Marks] EX-10.6 10 dex106.txt FORM OF EMPLOYEE MATTERS AGREEMENT EXHIBIT 10.6 EMPLOYEE MATTERS AGREEMENT BETWEEN SCHLUMBERGER TECHNOLOGY CORP., SCHLUMBERGER TECHNOLOGIES, INC., SCHLUMBERGER B.V. AND NPTEST, INC. TABLE OF CONTENTS
Page ---- ARTICLE I. DEFINITIONS 1 ACTION .................................................................................... 1 AFFILIATES ................................................................................ 1 AGREEMENT ................................................................................. 2 ANCILLARY AGREEMENTS ...................................................................... 2 ANNUAL BONUS PLAN ......................................................................... 2 BENEFIT RESTORATION PLAN .................................................................. 2 COBRA ..................................................................................... 2 CODE ...................................................................................... 2 COMMON STOCK .............................................................................. 2 DOL ....................................................................................... 2 EMPLOYMENT LIABILITIES .................................................................... 2 ERISA ..................................................................................... 2 FLEXIBLE BENEFITS PLAN .................................................................... 3 FMLA ...................................................................................... 3 FRINGE BENEFITS ........................................................................... 3 GOVERNMENTAL AUTHORITY .................................................................... 3 GROUP INSURANCE POLICIES .................................................................. 3 HCFA ...................................................................................... 3 HEALTH AND WELFARE PLANS .................................................................. 3 HEALTH PLANS .............................................................................. 3 HEALTH PLAN TRANSITION DATE ............................................................... 3 HMO ....................................................................................... 4 HMO AGREEMENTS ............................................................................ 4 INTERNATIONAL PSP ......................................................................... 4 IPO ....................................................................................... 4 IPO CLOSING DATE .......................................................................... 4 IPO RETIREES .............................................................................. 4 IRS ....................................................................................... 4 IS PENSION PLAN ........................................................................... 4 LEAVE OF ABSENCE PROGRAMS ................................................................. 4 LIABILITIES ............................................................................... 4 NPTEST .................................................................................... 4 NPTEST BUSINESS ........................................................................... 5 NPTEST EMPLOYEE ........................................................................... 5 NPTEST GROUP .............................................................................. 5 NPTEST INDEMNITIES ........................................................................ 5 NPTEST RETIRED EMPLOYEE ................................................................... 5 NPTEST TERMINATED EMPLOYEE ................................................................ 5 NPTEST TRANSITION DATE .................................................................... 5 NPTEST UNION EMPLOYEES .................................................................... 5 NPTEST WCP CLAIMS ......................................................................... 6
-i- OPTION .................................................................................... 6 OPTION PLAN ............................................................................... 6 OUTSOURCE ................................................................................. 6 PARTICIPATING COMPANY ..................................................................... 6 PBGC ...................................................................................... 6 PERSON .................................................................................... 6 PLAN ...................................................................................... 6 QDRO ...................................................................................... 6 QMCSO ..................................................................................... 6 SAVINGS PLAN .............................................................................. 6 SAVINGS RESTORATION PLAN .................................................................. 7 SCHLUMBERGER .............................................................................. 7 SEC ....................................................................................... 7 SEPARATION ................................................................................ 7 SEPARATION AGREEMENT ...................................................................... 7 SEPARATION DATE ........................................................................... 7 SEVERANCE PLANS ........................................................................... 7 STC ....................................................................................... 7 STC EMPLOYEE .............................................................................. 7 STC GROUP ................................................................................. 7 STC INDEMNITIES ........................................................................... 7 STC PENSION PLAN .......................................................................... 8 STC TERMINATED EMPLOYEE ................................................................... 8 STC WCP ................................................................................... 8 STOCK PURCHASE PLAN ....................................................................... 8 SUBSIDIARY ................................................................................ 8 TAX SHARING AGREEMENT ..................................................................... 8 TRANSITION SERVICES AGREEMENT ............................................................. 8 UNION PLANS ............................................................................... 8 ARTICLE II. GENERAL PRINCIPLES ........................................................................... 8 2.01 ASSUMPTION OF NPTEST LIABILITIES .......................................................... 8 2.02 EMPLOYMENT LIABILITIES INDEMNIFICATION .................................................... 9 2.03 ESTABLISHMENT OF NPTEST PLANS ............................................................. 11 2.04 NPTEST'S PARTICIPATION IN STC PLANS ....................................................... 11 2.05 TERMS OF PARTICIPATION BY NPTEST EMPLOYEES IN NPTEST PLANS ................................ 13 2.06 NON-U.S. PLANS ............................................................................ 13 ARTICLE III. DEFINED BENEFIT PLAN ........................................................................ 13 3.01 NPTEST EMPLOYEES' PARTICIPATION IN STC PENSION PLAN ....................................... 13 3.02 NPTEST EMPLOYEES PARTICIPATION IN IS PENSION PLAN ......................................... 14 ARTICLE IV. DEFINED CONTRIBUTION PLANS ................................................................... 14 4.01 NPTEST SAVINGS PLAN ....................................................................... 14 4.02 IS PROFIT-SHARING PLAN [Reserved.] ........................................................ 14 4.03 NPTEST RETIRED EMPLOYEES .................................................................. 14

-ii- ARTICLE V. EXECUTIVE AND OTHER PLANS ................................................. 15 5.01 BENEFIT AND SAVINGS RESTORATION PLANS ................................. 15 5.02 SEVERANCE PLANS ....................................................... 15 ARTICLE VI. HEALTH AND WELFARE PLANS ................................................. 16 6.01 ASSUMPTION OF HEALTH AND WELFARE PLAN LIABILITIES ..................... 16 6.02 CLAIMS FOR HEALTH AND WELFARE PLANS ................................... 17 6.03 POST-SEPARATION TRANSITIONAL ARRANGEMENTS ............................. 17 6.04 COBRA AND HIPAA ....................................................... 18 6.05 LEAVE OF ABSENCE PROGRAMS AND FMLA .................................... 18 6.06 STC WORKERS' COMPENSATION PROGRAM ..................................... 18 ARTICLE VII. EQUITY AND OTHER COMPENSATION ........................................... 19 7.01 SCHLUMBERGER OPTIONS .................................................. 19 7.02 STOCK PURCHASE PLAN ................................................... 19 7.03 NPTEST OPTION PLAN .................................................... 19 7.04 ANNUAL BONUS PLAN ..................................................... 20 ARTICLE VIII. FRINGE AND OTHER BENEFITS .............................................. 20 8.01 FRINGE BENEFITS ....................................................... 20 8.02 VACATION .............................................................. 20 8.03 OTHER BENEFITS ........................................................ 20 ARTICLE IX. CERTAIN TRANSITION MATTERS ............................................... 21 9.01 TRANSITION SERVICES AGREEMENT ......................................... 21 9.02 PAYMENT OF LIABILITIES, PLAN EXPENSES AND RELATED MATTERS ............. 21 9.03 SHARING OF PARTICIPANT INFORMATION .................................... 21 9.04 REPORTING AND DISCLOSURE COMMUNICATIONS TO PARTICIPANTS ............... 22 9.05 AUDITS REGARDING VENDOR CONTRACTS ..................................... 22 9.06 BENEFICIARY DESIGNATIONS .............................................. 22 9.07 REQUESTS FOR IRS AND DOL OPINIONS ..................................... 22 9.08 FIDUCIARY MATTERS ..................................................... 22 9.09 CONSENT OF THIRD PARTIES .............................................. 23 9.10 TAX COOPERATION ....................................................... 23 9.11 PLAN RETURNS .......................................................... 23 ARTICLE X. EMPLOYMENT-RELATED MATTERS ................................................ 23 10.01 TERMS OF NPTEST EMPLOYMENT ............................................ 23 10.02 HR DATA SUPPORT SYSTEMS ............................................... 23 10.03 EMPLOYMENT OF EMPLOYEES WITH U.S. WORK VISAS .......................... 23 10.04 CONFIDENTIALITY AND PROPRIETARY INFORMATION ........................... 23 10.05 ACCRUED PAYROLL, BONUSES, PROFIT SHARING AND COMMISSIONS .............. 28 10.06 PAYROLL AND WITHHOLDING ............................................... 28 10.07 PERSONNEL AND PAY RECORDS ............................................. 29

-iii- 10.08 NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY BENEFICIARIES ........... 29 ARTICLE XI. GENERAL PROVISIONS ....................................................... 29 11.01 EFFECT IF IPO AND/OR SEPARATION DOES NOT OCCUR ........................ 29 11.02 RELATIONSHIP OF PARTIES ............................................... 30 11.03 AFFILIATED COMPANIES .................................................. 30 11.04 INCORPORATION OF SEPARATION AGREEMENT PROVISIONS ...................... 30 11.05 GOVERNING LAW ......................................................... 30 11.06 SEVERABILITY .......................................................... 30 11.07 AMENDMENT ............................................................. 30 11.08 TERMINATION ........................................................... 31 11.09 CONFLICT .............................................................. 31 11.10 COUNTERPARTS .......................................................... 31

-iv- EMPLOYEE MATTERS AGREEMENT This EMPLOYEE MATTERS AGREEMENT (this "Agreement") is entered into as of _________________, between Schlumberger Technology Corp., a Texas corporation ("STC"), Schlumberger Technologies, Inc., a Delaware corporation ("STI"), Schlumberger B.V., a Netherlands corporation ("SBV") and NPTest, Inc., a Delaware corporation ("NPTest"). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in Article I hereof. RECITALS WHEREAS, STI and SBV collectively own all of the currently issued and outstanding common stock of NPTest; WHEREAS, shortly hereafter, shares of NPTest common stock will be sold to the public in an initial public offering (the "IPO"), which will reduce STI's and SBV's ownership of NPTest's issued and outstanding shares of common stock by not more than ____%; WHEREAS, each of STI and SBV currently intends to divest its remaining ownership in NPTest through public or private sales of all of the shares of NPTest common stock owned by it at a time subsequent to the date of the IPO. WHEREAS, in furtherance of the foregoing, STC, STI, SBV and NPTest have agreed to enter into this Agreement to allocate between them assets, liabilities and responsibilities with respect to certain employee compensation, benefit plans and programs, and certain employment matters; and NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the parties hereto agree as follows: ARTICLE I. DEFINITIONS Wherever used in this Agreement, the following terms shall have the meanings indicated below, unless a different meaning is plainly required by the context. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Separation Agreement. The singular shall include the plural, unless the context indicates otherwise. Headings of sections are used for convenience of reference only, and in case of conflict, the text of this Agreement, rather than such headings, shall control: ACTION. "Action" means any demand, action, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any federal, state, local, foreign or international Governmental Authority or any arbitration or mediation tribunal. AFFILIATES. "Affiliates" shall have the meaning set forth in the Separation Agreement. -1- AGREEMENT. "Agreement" means this Employee Matters Agreement, including all the Addenda, Schedules and Exhibits hereto, and all amendments made hereto from time to time. ANCILLARY AGREEMENTS. "Ancillary Agreements" shall have the meaning set forth in the Separation Agreement. ANNUAL BONUS PLAN. "Annual Bonus Plan," when immediately preceded by "STC," means the Schlumberger Technology Corp. Performance Incentive Plan. When immediately preceded by "NPTest," "Annual Bonus Plan" means the annual incentive plan to be established by NPTest pursuant to Sections 2.03 and 7.04. BENEFIT RESTORATION PLAN. "Benefit Restoration Plan" means the Schlumberger Supplementary Benefits Plan which relates to restoration of defined benefit accruals limited by the qualified plan rules. COBRA. "COBRA" means the continuation coverage requirements for "group health plans" under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time, and as codified in Code Section 4980B and ERISA Sections 601 through 608. CODE. "Code" means the Internal Revenue Code of 1986, as amended from time to time. COMMON STOCK. "Common Stock," when immediately preceded by "Schlumberger," means the common stock, without par value of Schlumberger. When immediately preceded by "NPTest," "Common Stock" means the common stock, par value $.01 per share, of NPTest. DOL. "DOL" means the United States Department of Labor. EMPLOYMENT LIABILITIES. "Employment Liabilities" means all claims, causes of action, demands, liabilities, debts or damages (known or unknown) related to all employment matters addressed in this Agreement, including but not limited to claims arising under federal, state or local statute (including, without limitation, Title VII of the Civil Rights Act of 1964, as amended ("Title VII"); the Age Discrimination in Employment Act of 1967, including the Older Workers Benefit Protection Act of 1990 ("ADEA"); the Civil Rights Act of 1866, as amended, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1990 ("ADA"), the Energy Reorganization Act, as amended, 42 U.S.C. ss. 5851; the Workers Adjustment and Retraining Notification Act of 1988; the Pregnancy Discrimination Act of 1978; ERISA; FMLA; the Fair Labor Standards Act; the Occupational Safety and Health Act; the Equal Pay Act); claims in connection with workers' compensation or "whistle blower" statutes and/or contract, tort, defamation, slander, wrongful termination or any other state or federal regulatory, statutory or common law or local ordinance. ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. -2- FLEXIBLE BENEFITS PLAN. "Flexible Benefits Plan," when immediately preceded by "STC," means the Schlumberger Technology Corp. Flexible Benefits Plan. When immediately preceded by "NPTest," Flexible Benefits Plan means the flexible benefits plan to be established by NPTest pursuant to Section 2.03 and Article VI that corresponds to the STC Flexible Benefits Plan. FMLA. "FMLA" means the Family and Medical Leave Act of 1993, as amended from time to time. FRINGE BENEFITS. "Fringe Benefits," when immediately preceded by "STC," means the employee assistance program, educational assistance program, executive financial planning program and relocation program sponsored and maintained by STC. When immediately preceded by "NPTest," "Fringe Benefits" means the fringe benefits, plans, programs and arrangements established or to be established by NPTest pursuant to Section 2.03 and Article VIII that correspond to the respective STC Fringe Benefits. GOVERNMENTAL AUTHORITY. "Governmental Authority" shall mean any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority. GROUP INSURANCE POLICIES. "Group Insurance Policies" is defined in Subsection 6.04(b) and the Schedule thereto. HCFA. "HCFA" means the United States Health Care Financing Administration. HEALTH AND WELFARE PLANS. "Health and Welfare Plans," when immediately preceded by "STC," means the STC Health Plans, the Schlumberger Cafeteria, Health Care Spending Account and Dependent Care Spending Account Plan (to the extent not included in the definition of Health Plans below), the Schlumberger Group Life, AD&D and BTA Plan, and the Schlumberger Disability Plan and any similar or successor plans, programs or arrangements established and maintained by STC for the benefit of employees and retirees of any member of the STC Group, and such other welfare plans or programs as may apply to such employees and retirees as of the NPTest Transition Date. When immediately preceded by "NPTest," "Health and Welfare Plans" means the NPTest Health Plans, the NPTest Flexible Benefits Plan, and the health and welfare plans to be established by NPTest pursuant to Section 2.03 and Article VI that correspond to the respective STC Health and Welfare Plans. HEALTH PLANS. "Health Plans," when immediately preceded by "STC," means the Schlumberger Group Health Care Plan, Schlumberger Retiree Medical Plan, and Schlumberger Cafeteria, Health Care Spending Account and Dependent Care Spending Account Plan (to the extent it provides health care spending account benefits), and any similar or successor plans, programs or arrangements. When immediately preceded by "NPTest," "Health Plans" means the health plans, programs and arrangements to be established by NPTest pursuant to Section 2.03 and Article VI that correspond to the respective STC Health Plans. HEALTH PLAN TRANSITION DATE. "Health Plan Transition Date" means January 1, 2003, or such earlier date as STC and NPTest may agree. -3- HMO. "HMO" means a health maintenance organization that provides benefits under the STC Health Plans or the NPTest Health Plans. HMO AGREEMENTS. "HMO Agreements" is defined in Subsection 6.04(c) and Schedule 6.04(c). INTERNATIONAL PSP. "International PSP" when immediately preceded by "STC," means the applicable of the Schlumberger Limited International Staff Profit Sharing Plan and the Schlumberger Profit-Sharing Plan for US Citizens Employed Aboard. When immediately preceded by "NPTest," "Savings Plan" means the profit sharing plans to be established by NPTest pursuant to Section 2.03 and 4.02. IPO. "IPO" has the meaning set forth in the Recitals hereof, as the same is further described in the Separation Agreement. IPO CLOSING DATE. "IPO Closing Date" means the first date on which the proceeds of any sale of NPTest Common Stock to the underwriters in the IPO are received. IPO RETIREES. "IPO Retirees" are NPTest Employees who have attained sufficient age and service credit as of the IPO Closing Date to retire and begin receiving retiree medical benefits under the STC Retiree Medical Plan and pension benefits under the Retirement Pan. IRS. "IRS" means the United States Internal Revenue Service. IS PENSION PLAN. "IS Pension Plan" means the Schlumberger Limited International Staff Pension Plan. LEAVE OF ABSENCE PROGRAMS. "Leave of Absence Programs," when immediately preceded by "STC," means the personal, medical, military and FMLA leave offered from time to time under the personnel policies and practices of STC. When immediately preceded by "NPTest," "Leave of Absence Programs" means the leave of absence programs established and maintained by NPTest. LIABILITIES. "Liabilities" shall mean any and all indebtedness, liabilities and obligations, whether accrued, fixed or contingent, mature or inchoate, known or unknown, reflected on a balance sheet or otherwise, including, but not limited to, those arising under any law, rule, regulation, Action, order, injunction or consent decree of any Governmental Authority or any judgment of any court of any kind or any award of any arbitrator of any kind, and those arising under any contract, commitment or undertaking. NPTEST. "NPTest" means NPTest, Inc., a Delaware corporation. In all such instances in which NPTest is referred to in this Agreement, it shall also be deemed to include a reference to each member of the NPTest Group, unless it specifically provides otherwise; NPTest shall be solely responsible to STC for ensuring that each member of the NPTest Group complies with the applicable terms of this Agreement. -4- NPTEST BUSINESS. "NPTest Business" shall have the meaning set forth in the Separation Agreement. NPTEST EMPLOYEE. "NPTest Employee" means any individual who, as of the Separation Date, is: (a) either actively employed by, or on short-term disability leave or a leave of absence from, any member of the NPTest Group; (b) a NPTest Terminated Employee; (c) an alternate payee under a QDRO, alternate recipient under a QMCSO, beneficiary, covered dependent, or qualified beneficiary (as such term is defined under COBRA), of an employee described in Subsection (a) or (b) above; or (d) an employee or group of employees designated by STC and NPTest, by mutual agreement, as NPTest Employees; but not (e) a NPTest Retired Employee. An employee may be a NPTest Employee pursuant to this Section regardless of whether such employee is, as of the Separation Date, alive, actively employed, on a temporary leave of absence from active employment, on layoff, terminated from employment, retired or on any other type of employment or post-employment status relative to a STC Plan, and regardless of whether, as of the Separation Date, such employee is then receiving any benefits from a STC Plan. NPTEST GROUP. "NPTest Group" shall have the meaning set forth in the Separation Agreement. NPTEST INDEMNITIES. "NPTest Indemnities" means NPTest and each member of the NPTest Group and each of their respective directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing. NPTEST RETIRED EMPLOYEE. "NPTest Retired Employee" means any individual who would have qualified as a NPTest Employee but who retired on or after the NPTest Transition Date and on or before the Separation Date and who is identified as a NPTest Retired Employee by mutual agreement between NPTest and STC on or before the Separation Date. NPTEST TERMINATED EMPLOYEE. "NPTest Terminated Employee" means any individual who is a former employee of any member of the STC Group who was terminated from any member of the NPTest Group on or after the NPTest Transition Date and on or before the Separation Date. Notwithstanding the foregoing, "NPTest Terminated Employee" shall not, unless otherwise expressly provided to the contrary in this Agreement, include: (a) an individual who is a STC Employee at the Separation Date; (b) an individual who is otherwise a NPTest Terminated Employee, but who is subsequently employed by any member of the STC Group on or prior to the Separation Date; or (c) a NPTest Retired Employee. NPTEST TRANSITION DATE. "NPTest Transition Date" means the date or dates that the formal employment of the employees associated with the NPTest Group is transferred from the STC Group to the NPTest Group. NPTEST UNION EMPLOYEES. "NPTest Union Employees" mean NPTest Employees whose employment is covered by the terms of a collective bargaining agreement. -5- NPTEST WCP CLAIMS. "NPTest WCP Claims" is defined in Subsection 6.07(a)(i). OPTION. "Option," when immediately preceded by "STC," means an option to purchase STC common stock pursuant to a Stock Plan. When immediately preceded by "NPTest," "Option" means an option to purchase NPTest common stock pursuant to a plan providing such benefits to be established by NPTest pursuant to Section 2.03 and Article VII. OPTION PLAN. "Option Plan," when preceded by Schlumberger, means any and all of the Schlumberger 2001 Stock Option Plans, Schlumberger 1998 Stock Option Plan or the Schlumberger 1994 Stock Option Plan. When preceded by NPTest, "Option Plan" means the 2002 Stock Option Plan as described in Section 7.03. OUTSOURCE. "Outsource" is defined in Subsection 6.02(b). PARTICIPATING COMPANY. "Participating Company" means: (a) STC; (b) any Person (other than an individual) that STC has approved for participation in, has accepted participation in, and which is participating in, a Plan sponsored by STC; or (c) any Person (other than an individual) which, by the terms of such a Plan, participates in such a Plan sponsored by STC or any employees of which, by the terms of such a Plan, participate in or are covered by such a Plan. PBGC. "PBGC" means the Pension Benefit Guaranty Corporation. PERSON. "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. PLAN. "Plan," depending on the context, may mean any plan, policy, program, payroll practice, arrangement, contract, trust, insurance policy, or any agreement or funding vehicle providing compensation or benefits to employees, former employees or directors of STC or NPTest. QDRO. "QDRO" means a domestic relations order which qualifies under Code Section 414(p) and ERISA Section 206(d) and which creates or recognizes an alternate payee's right to, or assigns to an alternate payee, all or a portion of the benefits payable to a participant under the STC Savings Plan or the STC Pension Plan. QMCSO. "QMCSO" means a medical child support order which qualifies under ERISA Section 609(a) and which creates or recognizes the existence of an alternate recipient's right to, or assigns to an alternate recipient the right to, receive benefits for which a participant or beneficiary is eligible under any of the Health Plans. SAVINGS PLAN. "Savings Plan" when immediately preceded by "STC," means the Schlumberger Technologies, Inc. Savings and Profit Sharing Plan, a defined contribution plan. When immediately preceded by "NPTest," " Savings Plan" means the savings and profit sharing plan to be established by NPTest pursuant to Sections 2.03 and 4.01. -6- SAVINGS RESTORATION PLAN. "Savings Restoration Plan," when immediately preceded by STC, means the Schlumberger Restoration Savings Plan which relates to restoration of defined contribution benefits limited by the qualified plan rules. When immediately preceded by "NPTest," "Savings Restoration Plan" means the plan to be established by NPTest pursuant to Section 5.03(b) which corresponds to the STC Savings Restoration Plan. SCHLUMBERGER. "Schlumberger" means Schlumberger Limited, a Netherland, Antilles corporation. SEC. "SEC" means the United States Securities and Exchange Commission. SEPARATION. "Separation" shall mean the IPO and subsequent offerings or sales of NPTest Common Stock resulting in STC owning less than 50% of the outstanding NPTest Common Stock. SEPARATION AGREEMENT. "Separation Agreement" means the Master Separation and Sale Agreement between STC and NPTest entered into as of _____________. SEPARATION DATE. "Separation Date" means the first date as of which STC Group owns directly or indirectly less than 50% of the outstanding NPTest Common Stock. SEVERANCE PLANS. "Severance Plans," when immediately preceded by "STC," means the severance pay plans established and maintained by STC. When immediately preceded by "NPTest," "Severance Plans" means the severance pay plans established and maintained by NPTest. STC. "STC" means Schlumberger Technology Corp. a Texas corporation. In all such instances in which STC is referred to in this Agreement, it shall also be deemed to include a reference to each member of the STC Group, unless it specifically provides otherwise; STC shall be solely responsible to NPTest for ensuring that each member of the STC Group complies with the applicable terms of this Agreement. Notwithstanding the foregoing, to the extent that this Agreement provides for STC to assume Liabilities associated with non-U.S. employees or employee benefit plans or arrangements, such Liabilities shall be assumed by SBV or its appropriate subsidiary. STC EMPLOYEE. "STC Employee" means an individual who, on the Separation Date, is or was employed with any member of the STC Group and is not a NPTest Employee. STC GROUP. "STC Group" shall mean STC, STI, SBV and each entity (other than an entity which is a member of the NPTest Group) which is a member of the same controlled group of corporations with STC as determined under Section 414(b) or (c) of the Code. STC INDEMNITIES. "STC Indemnities" shall mean STC and each member of the STC Group and each of their respective directors, officers and employees, and each of the heirs, executors, successors and assigns of any of the foregoing. -7- STC PENSION PLAN. "STC Pension Plan" means the Schlumberger Technology Corp. Pension Plan, a defined benefit plan. STC TERMINATED EMPLOYEE. "STC Terminated Employee" means any individual who is a former employee of any member of the STC Group and who, on the Separation Date, is not a NPTest Employee. STC WCP. "STC WCP" means the STC Workers' Compensation Program, comprised of the various arrangements established by a member of the STC Group to comply with the workers' compensation requirements of the states in which the STC Group conducts business. STOCK PURCHASE PLAN. "Stock Purchase Plan" means the Schlumberger Limited Discounted Stock Purchase Plan. SUBSIDIARY. "Subsidiary" shall have the meaning set forth in the Separation Agreement. TAX SHARING AGREEMENT. "Tax Sharing Agreement" means the Ancillary Agreement which is attached as an exhibit to the Separation Agreement. TRANSITION SERVICES AGREEMENT. "Transition Services Agreement" means the Master Transitional Services Agreement, which is attached as an exhibit to the Separation Agreement. UNION PLANS. "Union Plans," means all Plans maintained by STC or NPTest for the benefit of certain of their bargaining unit employees. ARTICLE II. GENERAL PRINCIPLES 2.01 ASSUMPTION OF NPTEST LIABILITIES. Except as specified otherwise in this Agreement, or as mutually agreed upon by NPTest and STC from time to time, STC (or SBV, to the extent relating to non-U.S. employees, employee benefit plans or arrangements) hereby assumes and agrees to pay, perform, fulfill and discharge, in accordance with their respective terms, subject to Section 9.02 and to the indemnification provisions of Section 2.02, all Liabilities relating to NPTest Retired Employees, to the extent relating to, arising out of or resulting from former employment with any member of the STC Group and/or the NPTest Group (including Liabilities arising under or relating to STC Plans and NPTest Plans). Except as specified otherwise in this Agreement, or as mutually agreed upon by NPTest and STC from time to time, NPTest hereby assumes and agrees to pay, perform, fulfill and discharge, in accordance with their respective terms, all of the following subject to Section 9.02 and to the indemnification provisions of Section 2.02: (a) all Liabilities relating to NPTest Employees, in each case relating to, arising out of or resulting from employment by any member of the STC Group before the IPO Closing Date, (including Liabilities arising under or relating to STC Plans and NPTest Plans); (b) all other Liabilities relating to employees of any member of the NPTest Group, to the extent relating to, arising out of or resulting from future, present or -8- former employment with any member of the NPTest Group (including Liabilities arising under or relating to STC Plans and NPTest Plans); (c) all Liabilities relating to, arising out of or resulting from any other actual or alleged employment relationship with any member of the NPTest Group; and (d) all other Liabilities relating to, arising out of or resulting from obligations, liabilities and responsibilities expressly assumed or retained by any member of the NPTest Group or a NPTest Plan, pursuant to this Agreement. 2.02 EMPLOYMENT LIABILITIES INDEMNIFICATION (a) Indemnification by NPTest. Except as otherwise provided in this Agreement, including Subsection 2.02(c), NPTest shall, for itself and as agent for each member of the NPTest Group, indemnify, defend (or, where applicable, pay the defense costs for) and hold harmless the STC Indemnitees from and against any and all Employment Liabilities that any third party seeks to impose upon the STC Indemnitees, or which are imposed upon the STC Indemnitees, if and to the extent such Employment Liabilities relate to, arise out of or result from any of the following items (without duplication): (i) any acts or omissions or alleged acts or omissions by or on behalf of any member or person employed by a member of the NPTest Group in the conduct of the NPTest Business; (ii) any claim by an officer of any member of the NPTest Group (who is an officer as of the IPO Closing Date) against any member or employee of any member of the STC Group except with respect to benefit obligations of NPTest Employees assumed by STC pursuant to a specific provision of this Agreement; (iii) any breach by NPTest or any member or person employed by a member of the NPTest Group of this Agreement, the Separation Agreement or any other Ancillary Agreement; and (iv) the employment of the NPTest Employees by any member of the NPTest Group after the [ ] Date, including Liabilities arising under or relating to STC Plans and NPTest Plans. In the event that any member of the NPTest Group makes a payment to the STC Indemnitees hereunder, and the Employment Liability on account of which such payment was made is subsequently diminished, either directly or through a third-party recovery, STC will promptly repay (or will procure a STC Indemnitee to promptly repay) such member of the NPTest Group the amount by which the payment made by such member of the NPTest Group exceeds the actual cost of the associated indemnified Employment Liability. (b) Indemnification by STC. Except as otherwise provided in this Agreement, including Subsection 2.02(c), STC shall, for itself and as agent for each member of the STC Group, indemnify, defend (or, where applicable, pay -9- the defense costs for) and hold harmless the NPTest Indemnitees from and against any and all Employment Liabilities that any third party seeks to impose upon the NPTest Indemnitees, or which are imposed upon the NPTest Indemnitees, if and to the extent such Employment Liabilities relate to, arise out of or result from any of the following items (without duplication): (i) any acts or omissions or alleged acts or omissions by or on behalf of any member or person employed by a member of the STC Group in the conduct of the STC Business; (ii) any claim by an officer of any member of the STC Group (who is an officer as of the IPO Closing Date) against any member or employee of any member of the NPTest Group; (iii) any breach by STC or any member or person employed by a member of the STC Group of this Agreement, the Separation Agreement or any other Ancillary Agreement; and (iv) the employment of the NPTest Employees by any member of the STC Group before the [ ] Date, including Liabilities arising under or relating to STC Plans and NPTest Plans. In the event that any member of the STC Group makes a payment to the NPTest Indemnitees hereunder, and the Employment Liability on account of which such payment was made is subsequently diminished, either directly or through a third-party recovery, NPTest will promptly repay (or will procure a NPTest Indemnitee to promptly repay) such member of the STC Group the amount by which the payment made by such member of the STC Group exceeds the actual cost of the indemnified Employment Liability. (c) Exceptions. In accordance with the current practice in effect as of the execution of the Agreement, with respect to claims for benefits or compensation, if an underlying act or omission as contemplated in Subsections 2.02(a) or 2.02(b) occurs and such act or omission constitutes the principal basis for such a claim, then Subsection 2.02(a) or (b) shall apply, as applicable, to establish indemnification obligations. If, however, no specific act or omission occurs that is attributable to STC or NPTest and the principal underlying basis for a claim for benefits or compensation involves plan administration or other similar systemic type activities related to maintenance of plans, notwithstanding Subsections 2.02(a) and (b), in accordance with the current practice in effect as of the execution of the Agreement, NPTest and STC shall be responsible for their pro rata allocated share of costs to defend such claim. In addition, if a claim relates specifically to the transfer or other movement of employment between STC and NPTest in connection with the Separation and to the employee benefit changes made in connection therewith, then notwithstanding Subsections 2.02(a) and (b), in accordance with the current practice in effect as of the execution of the -10- Agreement, NPTest and STC shall be responsible for their pro rata allocated share of costs to defend such claim. 2.03 ESTABLISHMENT OF NPTEST PLANS. (a) Health and Welfare Plans and Retiree Medical. Except as specified otherwise in this Agreement, effective as of the Health Plans Transition Date, NPTest intends to establish the NPTest Health and Welfare Plans to the extent financially and administratively practicable. The foregoing NPTest Health and Welfare Plans as in effect as of the Health Plan Transition Date shall be substantially comparable to the STC Health and Welfare Plans as in effect on the Health Plan Transition Date; provided, however, that NPTest does not intend to establish any retiree life or retiree medical program. (b) Savings Plan and Fringe Benefits. Except as specified otherwise in this Agreement, effective as of the earlier of the Separation Date, January 1, 2003, or such other date(s) as STC and NPTest may mutually agree, to the extent financially and administratively practicable, NPTest intends to establish the NPTest Savings Plan as more fully described in Article IV and the NPTest Fringe Benefits as more fully described in Article VIII. (c) Equity and Other Compensation. Except as specified otherwise in this Agreement, effective as of the Separation Date or such other date(s) as STC and NPTest may mutually agree, to the extent financially and administratively practicable, NPTest intends to establish such Plans as NPTest determines to be appropriate, including, without limitation, the NPTest Savings Restoration Plan. The foregoing NPTest Plans shall be substantially comparable to the STC Plans as in effect on the Separation Date. (d) NPTest Under No Obligation to Maintain Plans. Except as specified otherwise in this Agreement, nothing in this Agreement shall preclude NPTest, at any time from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any NPTest Plan, any benefit under any NPTest Plan or any trust, insurance policy or funding vehicle related to any NPTest Plan (to the extent permitted by law). 2.04 NPTEST'S PARTICIPATION IN STC PLANS. (a) Participation in STC Plans. (i) Except as specified otherwise in this Agreement, or as STC and NPTest may mutually agree, NPTest shall adopt as a Participating Company the STC Plans in effect as of NPTest Transition Date, to the extent that NPTest has not yet established substantially comparable Plans. Effective as of any date on or after NPTest Transition Date and before the Separation Date (or such other date as STC and NPTest may mutually agree upon), any member of the NPTest Group not described in the preceding -11- sentence may, at its request and with the consent of STC and NPTest, become a Participating Company in any or all of the STC Plans, to the extent that NPTest has not yet established a substantially comparable Plan. (ii) On and after the Separation Date, or such other date as the STC and NPTest may mutually agree, NPTest shall no longer participate as a participating company in any STC Plans. (b) STC's General Obligations as Plan Sponsor. (i) To the extent that NPTest is a Participating Company in any STC Plan(s), STC shall continue to administer, or cause to be administered, in accordance with their terms and applicable law, such STC Plan(s), and shall have the sole and absolute discretion and authority to interpret the STC Plan(s), as set forth therein. STC shall not discriminate against NPTest Employees in favor of STC Employees with respect to the administration and/or distribution of benefits under the STC Plans. (ii) With regard to NPTest Retired Employees participating in STC Plans after the Separation Date, STC shall continue to administer, or cause to be administered, in accordance with their terms and applicable law, such STC Plans, and shall have sole and absolute discretion and authority to interpret such Plans or amend or terminate such Plans, as set forth therein. (c) NPTest's General Obligations as Participating Company. NPTest shall perform with respect to its participation in the STC Plans, the duties of a Participating Company as set forth in each such Plan or any procedures adopted pursuant thereto, including (without limitation): (i) assisting in the administration of claims, to the extent requested by the claims administrator of the applicable STC Plan; (ii) cooperating fully with STC Plan auditors, benefit personnel and benefit vendors; (iii) preserving the confidentiality of all financial arrangements STC has or may have with any vendors, claims administrators, trustees or any other entity or individual with whom STC has entered into an agreement relating to the STC Plans; and (iv) preserving the confidentiality of participant information (including, without limitation, personal health information) to the extent not specified otherwise in this Agreement. (d) Termination of Participating Company Status. Except as specified otherwise in this Agreement or otherwise may be mutually agreed upon by STC and NPTest, effective as of the Separation Date or such other date as NPTest establishes a substantially comparable Plan (as specified in Section 2.03 or otherwise in this Agreement), NPTest shall automatically cease to be a Participating Company in the corresponding STC Plan. -12- (e) Costs. NPTest shall pay its allocable portion of contributions and administration costs attributable to NPTest Employees while participating in STC Plans as provided in Article IX. 2.05 TERMS OF PARTICIPATION BY NPTEST EMPLOYEES IN NPTEST PLANS. (a) Non-Duplication of Benefits. As of the Separation Date or such other date that applies to the particular NPTest Plan, the separate NPTest Plans shall be, with respect to employees of the NPTest Group, in all respects the successors in interest to, and shall not provide benefits that duplicate benefits provided by, the corresponding STC Plans. STC and NPTest shall mutually agree, if necessary, on methods and procedures, including amending the respective Plan documents, to prevent employees of the NPTest Group from receiving duplicate benefits from the STC Plans and the NPTest Plans. (b) Service Credit. Except as specified otherwise in this Agreement or as required by applicable law, with respect to NPTest Employees, each NPTest Plan shall provide that all service, all compensation and all other benefit-affecting determinations that, as of the Separation Date, were recognized under the corresponding STC Plan shall, as of the Separation Date, receive full recognition and credit and be taken into account under such NPTest Plan to the same extent as if such items occurred under such NPTest Plan, except to the extent that duplication of benefits would result. The service crediting provisions shall be subject to any respectively applicable "service bridging," "break in service," "employment date," or "eligibility date" rules under the NPTest Plans and the STC Plans. 2.06 NON-U.S. PLANS. NPTest and STC each intend that matters, issues, or Liabilities relating to, arising out of, or resulting from non-U.S. Plans, and non-U.S.-related employment matters be handled in a manner that is consistent with comparable U.S. matters, issues, or Liabilities as reflected in this Agreement (to the extent permitted by applicable law or as otherwise specified in Schedule 2.06 hereto). ARTICLE III. DEFINED BENEFIT PLAN 3.01 NPTEST EMPLOYEES' PARTICIPATION IN STC PENSION PLAN. Effective as of the IPO Closing Date, STC shall amend the STC Pension Plan to provide that employees who become employed by any member of the NPTest Group on or after the IPO Closing Date shall not be eligible to participate in the STC Pension Plan. Effective as of the IPO Closing Date, STC shall amend the STC Pension Plan to provide that eligible employees of any member of the NPTest Group shall be fully vested in their accrued benefit under the STC Pension Plan and to provide that such employees shall no longer participate in the STC Pension Plan on and after such date. Effective as of the IPO Closing Date, STC shall assume all Liabilities to or relating to the employees of any member of the NPTest Group and the NPTest -13- Retired Employees under the STC Pension Plan. An IPO Retiree may elect to retire from STC and begin receiving pension benefits from the STC Pension Plan effective as of the IPO Closing Date, so long as STC does not own, directly or indirectly, more than 80% of the common stock of NPTest following the IPO Closing Date. 3.02 NPTEST EMPLOYEES PARTICIPATION IN IS PENSION PLAN. Except as otherwise required by applicable law, (a) effective as of the IPO Closing Date, STC shall amend the IS Pension Plan to provide that employees who become employed by any member of the NPTest Group on or after the IPO Closing Date shall not be eligible to participate in the IS Pension Plan, (b) effective as of the Separation Date, eligible employees of any member of the NPTest Group shall no longer participate in the IS Pension Plan on and after such date and (c) effective as of the Separation Date, STC shall assume all Liabilities to or relating to the employees of any member of the NPTest Group and the NPTest Retired Employees under the IS Pension Plan. ARTICLE IV. DEFINED CONTRIBUTION PLANS 4.01 NPTEST SAVINGS PLAN. Effective as of the earlier of the Separation Date or December 31, 2002, the account balances of the employees of the members of the NPTest Group who participate in the STC Savings Plan shall be fully vested. Effective as of the NPTest Transition Date, NPTest, as a Participating Company in the STC Savings Plan, shall be responsible for providing an employer contribution with respect to NPTest Employees in accordance with the terms of the STC Savings Plan. Effective as of the earlier of the Separation Date or January 1, 2003, NPTest shall establish, or cause to be established, a trust, which is intended to be qualified under Code Section 401(a), exempt from taxation under Code Section 501(a)(1), and forming the separate NPTest Savings Plan. As soon as reasonably practicable following the Separation Date, or such earlier date as mutually agreed to by the parties, STC shall cause to be determined for the STC Savings Plan the amount of assets to be transferred from the STC Savings Plan to the NPTest Savings Plan. Such amount shall be equal to the greater of (a) the amount required under Code Section 414(l), or (b) the amount within the sub-account(s) within the trust associated with the STC Savings Plan that has been separately maintained and accounted for on behalf of employees of the members of the NPTest Group less the amount attributable to NPTest Retired Employees. No participant shall be entitled to a distribution from the Savings Plans solely as a result of the Separation. 4.02 IS PROFIT-SHARING PLAN [Reserved.] 4.03 NPTEST RETIRED EMPLOYEES. Notwithstanding the above, account balances of NPTest Retired Employees, if any, shall remain in the STC Savings Plan after the Separation Date; provided, however, that if an IPO Retiree accepts or continues employment with the NPTest Group, then he shall continue to participate in the NPTest Savings Plan in the same manner as other NPTest Employees. -14- ARTICLE V. EXECUTIVE AND OTHER PLANS 5.01 BENEFIT AND SAVINGS RESTORATION PLANS. (a) Benefit Restoration Plan. Effective as of the IPO Closing Date, employees of the members of the NPTest Group shall no longer accrue benefits under the STC Benefit Restoration Plan. NPTEST Employees who have not reached age 55 as of the Separation Date shall forfeit any benefit under the STC Benefit Restoration Plan. As of the IPO Closing Date, STC shall assume all Liabilities to or relating to the NPTest Retired Employees under the STC Benefit Restoration Plan. (b) Savings Restoration Plan. (i) Establishment of NPTest Savings Restoration Plan. Effective as of the earlier of the Separation Date, January 1, 2003, or such other date as STC and NPTest may mutually agree, NPTest may establish in its sole discretion the NPTest Savings Restoration Plan which shall be substantially comparable to the STC Savings Restoration Plan. As of the NPTest Transition Date, NPTest shall assume all Liabilities to or relating to the NPTest Employees under the STC Savings Restoration Plan. As of the NPTest Transition Date, STC shall assume all Liabilities to or relating to the NPTest Retired Employees under the STC Savings Restoration Plan. (ii) Participation in the NPTest Savings Restoration Plan. Effective as of the date NPTest establishes the NPTest Savings Restoration Plan, if at all, eligible NPTest Employees determined in accordance with the terms of the applicable Plan shall cease to be eligible to participate in the STC Savings Restoration Plan. In any event, NPTest Employees shall not be eligible to participate in the STC Savings Restoration Plan after the earlier of the Separation Date or January 1, 2003. 5.02 SEVERANCE PLANS. NPTest shall establish such severance plans as it deems necessary in its discretion. Except as required by applicable law, the STC Severance Plans shall provide that no NPTest Employee shall become eligible for severance benefits on account of the IPO or Separation. -15- ARTICLE VI. HEALTH AND WELFARE PLANS 6.01 ASSUMPTION OF HEALTH AND WELFARE PLAN LIABILITIES. (a) General - Health and Welfare Plans. STC shall retain all Liabilities incurred through the Health Plans Transition Date under each STC Health and Welfare Plan, whether or not claims are filed before the Health Plan Transition Date, by or on behalf of NPTest Employees or their spouses or dependents. NPTest shall indemnify STC against any Liabilities arising after the [ ] Date and prior to the Health Plans Transition Date by paying the current cost of coverage associated with such NPTest Employees or their spouses or dependents, to the extent not already paid. Claims for benefits incurred by NPTest Employees prior to the Health Plans Transition Date must be submitted to the appropriate STC Health and Welfare Plan within 90 days following the Health Plans Transition Date. Immediately following the Health Plan Transition Date, NPTest Employees shall no longer participate in the STC Health and Welfare Plans, and NPTest shall be responsible for all Liabilities under the NPTest Health and Welfare Plans. NPTest affirmatively covenants to ensure that any NPTest Employee on short-term disability or leave of absence as of the Health Plans Transition Date shall be immediately covered under the NPTest short-term disability coverage and all other NPTest Health and Welfare Plans, and shall receive the same disability benefits as such employee would have received if he had remained an STC Employee. Any NPTest Employee who becomes disabled or goes on leave of absence on or after the Health Plans Transition Date shall receive benefits in accordance with the applicable NPTest Plan, as determined by NPTest in its discretion. (b) Retiree Life and Medical. Effective as of the IPO Closing Date, employees of the members of the NPTest Group shall no longer be eligible to participate in STC's retiree life insurance and retiree medical plans, and STC shall assume all Liabilities under STC's retiree medical plan for those employees of the NPTest Group who as of the IPO Closing Date have attained the requisite age and service requirements under such Plan; provided, however, that such employees shall not accrue any additional benefits under any such Plans. IPO Retirees shall be treated as retirees of Schlumberger for purposes of retiree life and health insurance and shall be eligible to receive retiree medical and life insurance in accordance with STC's retiree plans (as such may be amended from time to time), even if such IPO Retiree accepts or continues employment with the NPTest Group following the IPO. Except as otherwise expressly provided above, after the IPO Closing Date, no other employee of any member of the NPTest Group shall be entitled to benefits under the STC retiree medical plan. -16- 6.02 CLAIMS FOR HEALTH AND WELFARE PLANS. (a) Administration of STC Claims. STC shall administer claims incurred under the STC Health and Welfare Plans by NPTest Employees before the Health Plan Transition Date, but only to the extent that NPTest has not, before the Health Plan Transition Date, established and assumed administrative responsibility for a comparable Plan. Any determination made or settlements entered into by STC with respect to such claims shall be final and binding. (b) Outsourcing of Claims by STC. STC shall have the right to engage a third party administrator, vendor, or insurance company to administer ("Outsource") claims incurred under the STC Health and Welfare Plans, including claims incurred by employees of the members of the NPTest Group before the Health Plans Transition Date; provided, however, that such decision to outsource shall not result in any additional cost to NPTest above that provided in the Transition Services Agreement. STC may determine the manner and extent of such Outsourcing, including the selection of one or more third party administrators, vendors, or insurance companies and the ability to transfer the liability for such claims to one or more independent insurance companies. 6.03 POST-SEPARATION TRANSITIONAL ARRANGEMENTS. (a) Continuance of Elections, Co-Payments and Maximum Benefits. (i) As of the Health Plan Transition Date or such other date as STC and NPTest may mutually agree, NPTest shall cause the NPTest Health and Welfare Plans to maintain substantially comparable coverage and contribution elections, if any, made by NPTest Employees under the STC Health and Welfare Plans and apply such elections under the NPTest Health and Welfare Plans for the remainder of the period or periods, if any, for which such elections are by their terms applicable. The transfer or other movement of employment between STC and NPTest in connection with the Separation shall constitute neither a "status change" under the STC Health and Welfare Plans or the NPTest Health and Welfare Plans nor a "qualifying event," as defined under COBRA. (ii) On and after the Health Plan Transition Date, NPTest shall cause the NPTest Health Plans to recognize and give credit for all benefits paid to NPTest Employees under the STC Health Plans for (A) all amounts applied to deductibles, out of pocket maximums, co-payments and other applicable benefit coverage limits with respect to which such expenses have been incurred by NPTest Employees under the STC Health Plans for the remainder of the calendar year in which the Separation Date occurs and (B) all benefits paid to NPTest Employees under the STC -17- Health Plans for purposes of determining when such persons have reached their lifetime maximum benefits under the NPTest Health Plans. Notwithstanding the above, NPTest's obligations under this Subsection 6.03(a)(ii) shall be limited by the market availability of health insurance products or other arrangements satisfying the criteria described above. NPTest shall use its commercially reasonable best efforts to locate and engage the services of a vendor whose policies or other arrangements meet the requirements above. (b) HCFA Administration. As of the Health Plan Transition Date, NPTest shall assume all Liabilities relating to, arising out of or resulting from claims verified by STC or NPTest under the HCFA data match reports that relate to NPTest Employees. 6.04 COBRA AND HIPAA. STC shall be responsible, through the Health Plan Transition Date, for compliance with the health care continuation coverage requirements of COBRA, the portability requirements under the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") and the STC Health and Welfare Plans with respect to employees of the members of the NPTest Group and qualified beneficiaries (as such term is defined under COBRA). STC shall provide all necessary notices, or cause the notices to be provided, as soon as administratively practical, but in no event later than required under COBRA. NPTest shall be responsible for providing STC or its agents with all necessary employee change notices and related information for covered dependents, spouses, qualified beneficiaries (as such term is defined under COBRA), and alternate recipients pursuant to QMCSO, in accordance with applicable STC COBRA policies and procedures. As soon as administratively practicable after the Separation Date, STC shall provide NPTest, through hard copy, electronic format or such other mechanism as is appropriate under the circumstances, with a list of all qualified beneficiaries (as such term is defined under COBRA) that relate to the members of the NPTest Group and the relevant information pertaining to their coverage elections. Effective as of the Health Plan Transition Date, NPTest shall be solely responsible for compliance with the health care continuation coverage requirements of COBRA and the portability requirements under HIPAA for the NPTest Health and Welfare Plans for NPTest Employees and their qualified beneficiaries (as such term is defined under COBRA). 6.05 LEAVE OF ABSENCE PROGRAMS AND FMLA. Effective as of the Separation Date, NPTest shall establish the NPTest Leave of Absence Programs and FMLA programs and shall be responsible for administering leaves of absence and complying with FMLA with respect to NPTest Employees. 6.06 STC WORKERS' COMPENSATION PROGRAM. (a) Through the Health Plan Transition Date or such other date as STC and NPTest may mutually agree, STC shall continue to be responsible for the administration of all claims that (A) are, or have been, incurred under the STC WCP before the Health Plan Transition Date by employees of the NPTest Group ("NPTest WCP Claims"), and (B) have been historically administered by STC or -18- its third party administrator. However, STC will advise NPTest of and secure approval for any material changes to current policy or practice with respect to the administration of NPTest WCP Claims. (b) Effective as of the Health Plan Transition Date or such other date as STC and NPTest may mutually agree, NPTest shall be responsible for the administration of all NPTest WCP Claims. (c) Each party shall fully cooperate with the other with respect to the administration and reporting of NPTest WCP Claims, the payment of NPTest WCP Claims determined to be payable, and the transfer of the administration of any NPTest WCP Claims to the other party. ARTICLE VII. EQUITY AND OTHER COMPENSATION 7.01 SCHLUMBERGER OPTIONS. (a) Treatment of Outstanding Options. All terms and conditions applicable to the Schlumberger Options (including, but not limited to, the vesting schedule) shall remain applicable to the Schlumberger Options following the IPO Closing Date. Outstanding Schlumberger Options that are vested but unexercised and unexpired as of the Separation Date may be exercised by the option holder for a period of 90 days following the Separation Date; provided that vested options held by employees who have reached age 55 with 5 years of service as of the Separation Date may be exercised for a period of 12 months following the Separation Date in accordance with the existing terms of the option agreements. All unvested options held by NPTest Employees shall be forfeited and cancelled. (b) Certain Non-U.S. Optionees. Except as may otherwise be agreed upon by STC and NPTest, this Section 7.01 shall govern the treatment of Schlumberger Options held by Non-U.S. NPTest Employees. In the event it is determined that the local law applicable to any Non-U.S. Optionee requires a different treatment, STC and NPTest shall take such steps as is required to comply with local law. 7.02 STOCK PURCHASE PLAN. Effective as of the Separation Date, employees of the members of the NPTest group shall no longer be eligible to participate in the Stock Purchase Plan and shall be treated as a terminated employee under the terms of the Stock Purchase Plan. 7.03 NPTEST OPTION PLAN. Effective on or before the IPO Closing Date, or such other date as STC and NPTest may mutually agree, NPTest shall establish the Option Plan for the benefit of employees of the members of the NPTest Group. The Option Plan is intended to allow grants of performance-based compensation consistent with Code Section 162(m). -19- 7.04 ANNUAL BONUS PLAN. (a) STC Payment of Bonuses upon the IPO closing Date. Assuming the IPO Closing Date occurs in 2002, on or as soon as practicable after the IPO Closing Date, or such other date as the parties may agree, STC shall make a one-time bonus payment to each NPTest Employee who participates in the STC Annual Bonus Plan immediately prior to the IPO Closing Date. Such bonus shall be equal to the full annual bonus for calendar year 2002 that such NPTest Employee would have been entitled to receive had such NPTest Employee remained as an employee of STC through December 31, 2002 and was entitled to be paid at maximum bonus. On or before the IPO Closing Date, or such other date as STC and NPTest may mutually agree, STC shall make a one-time bonus payment to those NPTest Employees who do not participate in the STC Annual Bonus Plan in an amount equal to such NPTest Employee's salary for one month at the rate payable as of the IPO Closing Date. If the IPO Closing Date does not occur in 2002, then the provisions above shall not apply and the parties shall mutually agree as to the amount and timing of annual bonus payments. (b) NPTest Annual Bonus Plan. Effective on or before the IPO Separation Date, or such other date as STC and NPTest may mutually agree, NPTest shall establish the NPTest Annual Bonus Plan for the benefit of employees of the members of the NPTest Group and (assuming the IPO Closing Date occurs during 2002) such plan shall be maintained at least through December 31, 2002, and thereafter in the sole discretion of NPTest. The NPTest Annual Bonus Plan is intended to comply with Code Section 162(m). ARTICLE VIII. FRINGE AND OTHER BENEFITS 8.01 FRINGE BENEFITS. Employees of the NPTest Group shall continue to participate in the STC Fringe Benefits through the Separation Date or such other date as STC and NPTest may mutually agree. Effective as of the Separation Date, NPTest shall establish the NPTest Fringe Benefits which NPTest deems appropriate in its sole discretion. Effective as of the Separation Date, eligible NPTest Employees determined in accordance with the terms of the applicable plans or programs shall only be eligible to participate in the NPTest Fringe Benefits. 8.02 VACATION. NPTest Employees in the United States shall be entitled to transfer up to ten (10) vacation days accrued while such NPTest Employee was employed by a member of the STC Group. With respect to any vacation days in excess of ten (10), each NPTest Employee, to the extent applicable shall be entitled to receive a cash amount calculated in accordance with the terms and conditions set forth on Schedule 8.02 hereto. All other NPTest Employees shall have their vacation treated in accordance with local policy and applicable law. 8.03 OTHER BENEFITS. To the extent that STC maintains, sponsors or provides other fringe benefits for its employees not specifically identified in this Article VIII, then STC shall, to the extent permitted by law, continue to make such benefits available to -20- employees of the NPTest Group on substantially similar terms and conditions as are offered to the employees of any member of the STC Group through the Separation Date or such other date upon which NPTest and STC mutually agree. NPTest and STC agree to make commercially reasonable best efforts to mutually agree on whether, when, and on what terms any member of the NPTest Group shall maintain, sponsor or offer fringe benefits. ARTICLE IX. CERTAIN TRANSITION MATTERS 9.01 TRANSITION SERVICES AGREEMENT. On or about the date hereof, STC and NPTest shall enter into the Transition Services Agreement covering the provisions of various services to be provided by STC to NPTest. The provisions of this Agreement shall be subject to the provisions of such Transition Services Agreement. 9.02 PAYMENT OF LIABILITIES, PLAN EXPENSES AND RELATED MATTERS. (a) Shared Costs. NPTest shall pay its allocable share, as determined by STC in good faith, of any contributions made to any trust maintained in connection with a STC Plan while NPTest is a Participating Company in any such STC Plan. (b) Contributions to Trusts. With respect to STC Plans to which employees of NPTest make contributions, STC shall use reasonable procedures to determine NPTest Liabilities associated with such Plans, taking into account such contributions, settlements, refunds and similar payments. (c) Administrative Expenses Not Chargeable to a Trust. To the extent not charged pursuant to this Article IX, and to the extent not otherwise agreed to by STC and NPTest, and to the extent not chargeable to a trust established in connection with a STC Plan, NPTest shall be responsible, through either direct payment or reimbursement to STC, for its allocable share of expenses incurred by STC in the administration of (i) the STC Plans while NPTest participates in such Plans, and (ii) the NPTest Plans, to the extent STC administers such Plans. For this purpose, NPTest's allocable share of such expenses shall be calculated at STC's cost through December 31, 2002, and at a competitive market rate established by STC in good faith thereafter. 9.03 SHARING OF PARTICIPANT INFORMATION. STC and NPTest shall share, or cause to be shared, all participant information that is necessary or appropriate for the efficient and accurate administration of each of the STC Plans and the NPTest Plans during the respective periods applicable to such Plans as NPTest and STC may mutually agree. STC and NPTest and their respective authorized agents shall, subject to applicable laws of confidentiality and data protection, be given reasonable and timely access to, and may make copies of, all information relating to the subjects of this Agreement in the custody of the other party or its agents, to the extent necessary or appropriate for such administration. -21- 9.04 REPORTING AND DISCLOSURE COMMUNICATIONS TO PARTICIPANTS. While NPTest is a Participating Company in the STC Plans, STC shall take, or cause to be taken, all actions necessary or appropriate to facilitate the distribution of all STC Plan-related communications and materials to employees, participants and beneficiaries, including (without limitation) summary plan descriptions and related summaries of material modification(s), summary annual reports, investment information, prospectuses, notices and enrollment material for the STC Plans. NPTest shall provide all information needed by STC to facilitate such STC Plan-related communications. NPTest shall take, or cause to be taken, all actions necessary or appropriate to facilitate the distribution of all NPTest Plan-related communications and materials to employees, participants and beneficiaries. NPTest shall assist, and NPTest shall cause each other applicable member of the NPTest Group to assist, STC in complying with all reporting and disclosure requirements of ERISA, including the preparation of Form Series 5500 annual reports, for the STC Plans, where applicable. 9.05 AUDITS REGARDING VENDOR CONTRACTS. From the period beginning as of the Separation Date or such other date as STC and NPTest mutually agree upon and ending on such date as STC and NPTest may mutually agree, STC and NPTest and their duly authorized representatives shall have the right to conduct joint audits with respect to any vendor contracts that relate to both the STC Health and Welfare Plans and the NPTest Health and Welfare Plans. The scope of such audits shall remain consistent with the current practices and all documents and other information currently made available for review shall continue to be made available. STC and NPTest shall agree on the performance standards, audit methodology, auditing policy and quality measures, reporting requirements, and the manner in which costs incurred in connection with such audits will be shared. 9.06 BENEFICIARY DESIGNATIONS. Subject to Section 9.09, all beneficiary designations made by employees of the NPTest Group for the STC Plans (other than the STC Pension Plan, except to the extent NPTest may be required to establish or assume the sponsorship of a retirement plan(s) pursuant to Section 2.07) shall be transferred to and be in full force and effect under the corresponding NPTest Plans until such time, if ever, any such beneficiary designations are replaced or revoked by the employees of the NPTest Group who made the beneficiary designations. All beneficiary designations made by NPTest Retired Employees for the NPTest Plans shall be transferred to and be in full force and effect under the corresponding STC Plans until such time, if ever, any such beneficiary designations are replaced or revoked by the NPTest Retired Employees who made the beneficiary designations. 9.07 REQUESTS FOR IRS AND DOL OPINIONS. STC and NPTest shall make such applications to regulatory agencies, including the IRS and DOL, as may be necessary or appropriate. NPTest and STC shall cooperate fully with one another on any issue relating to the transactions contemplated by this Agreement for which STC and/or NPTest elects to seek a determination letter or private letter ruling from the IRS or an advisory opinion from the DOL. 9.08 FIDUCIARY MATTERS. STC and NPTest each acknowledge that actions contemplated to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable law, and no party shall be deemed to be in violation of this Agreement if such party fails to comply with any provisions hereof based -22- upon such party's good faith determination that to do so would violate such a fiduciary duty or standard. 9.09 CONSENT OF THIRD PARTIES. If any provision of this Agreement is dependent on the consent of any third party (such as a vendor) and such consent is withheld, STC and NPTest shall use their commercially reasonable best efforts to implement the applicable provisions of this Agreement. If any provision of this Agreement cannot be implemented due to the failure of such third party to consent, STC and NPTest shall negotiate in good faith to implement the provision in a mutually satisfactory manner. 9.10 TAX COOPERATION. In connection with the interpretation and administration of this Agreement, STC and NPTest shall take into account the agreements and policies established pursuant to the Separation Agreement and the Tax Sharing Agreement. 9.11 PLAN RETURNS. Plan Returns shall be filed or caused to be filed by STC or NPTest as the case may be in accordance with the principles established in the Tax Sharing Agreement. For purposes of this Section 9.11, "Plan Returns" means any return, report, certificate, form or similar statement or document required to be filed with a government agency with respect to an employee benefit plan governed by the ERISA, or a program governed by Section 6039D of the Code. ARTICLE X. EMPLOYMENT-RELATED MATTERS 10.01 TERMS OF NPTEST EMPLOYMENT. Employees of the NPTest Group shall be required to execute a new agreement regarding confidential information and proprietary developments in a form approved by NPTest. In addition, nothing in the Separation Agreement, this Agreement, or any Ancillary Agreement should be construed to change the at-will status of any of the employees of any member of the STC Group or the NPTest Group. 10.02 HR DATA SUPPORT SYSTEMS. STC shall provide human resources data support for employees of the members of the NPTest Group in accordance with the terms of the Transition Services Agreement. 10.03 EMPLOYMENT OF EMPLOYEES WITH U.S. WORK VISAS. NPTest will comply with all immigration laws and regulations of the United States of America as such laws and regulations applied to employees of any member of the STC Group in the United States of America pursuant to a work or training visa regardless of visa category. NPTest expressly assumes all obligations, liabilities and undertakings arising from or under attestations made in each certified and effective Labor Condition Application filed by STC. NPTest shall file amended petitions with the Immigration and Naturalization Service, as may be necessary or appropriate. 10.04 CONFIDENTIALITY AND PROPRIETARY INFORMATION. (a) Except as provided in Section 10.04(b) hereof, no provision of this Agreement shall be deemed to release any individual for any violation of -23- the STC non-competition guideline or any agreement or policy pertaining to confidential or proprietary information of any member of the STC Group or NPTest Group, or otherwise relieve any individual of his or her obligations under such non-competition guideline, agreement, or policy. (b) Employee Agreements. As used in this Section 10.04(b), "Employee Agreement" means any employment, severance, supplemental pension agreement or confidentiality agreement, and any corresponding agreements executed by STC or NPTest employees in connection with their employment. Nothing in this Agreement, the Separation Agreement or any other Ancillary Agreement shall be deemed to supercede any provision regarding the conduct of employees mandated by any applicable regulatory authority. (i) Survival of STC Employee Agreement Obligations and STC's Common Law Rights. The STC Employee Agreements of all NPTest Employees and all former STC employees transferred to NPTest on or before the Separation Date shall remain in full force and effect according to their terms, and all Liabilities thereunder shall be assumed by NPTest. Notwithstanding the foregoing to the contrary, none of the following acts committed by former STC or NPTest employees within the scope of their NPTest employment shall constitute a breach of such STC Employee Agreements: (i) the use or disclosure of Confidential Information (as that term is defined in the STC Employee Agreement) for or on behalf of NPTest, if such disclosure is consistent with the assignment or license of rights, businesses and assets granted to NPTest and restrictions imposed on NPTest under any other agreement between the parties, and the rendering of any services, directly or indirectly, to NPTest to the extent such services are consistent with the assignment or license of rights, businesses and assets granted to NPTest and the restrictions imposed on NPTest under any other agreement between the parties. Further, STC retains any rights it has under statute or common law with respect to actions by its former employees to the extent such actions are inconsistent with the assignment or license of rights, businesses and assets granted to NPTest and restrictions imposed on NPTest under any other Ancillary Agreement or any other agreement between the parties. (ii) Survival of NPTest's Employee Agreement Obligations and NPTest's Common Law Rights. The NPTest Employee Agreements of all STC Employees and all former NPTest employees transferred to STC on or before the Separation Date shall remain in full force and effect according to their terms; provided, however, that none of the following acts committed by former NPTest or STC employees within the scope of their STC employment shall constitute a breach of such NPTest Employee -24- Agreements: (i) the use or disclosure of Confidential Information (as that term is defined in the STC Employee Agreement) for or on behalf of STC, if such disclosure is consistent with the rights, businesses and assets retained by STC and restrictions imposed on STC under any other agreement between the parties, and (ii) the rendering of any services, directly or indirectly, to STC to the extent such services are consistent with the rights, businesses and assets retained by STC and the restrictions imposed on STC under any other agreement between the parties. Further, NPTest retains any rights it has under statute or common law with respect to actions by its former employees to the extent such actions are inconsistent with the rights, businesses and assets retained by STC and restrictions imposed on STC under any other agreement between the parties. (iii) Assignment, Cooperation for Compliance and Enforcement. (A) (1) STC retains all rights under the STC Employee Agreements of all former STC employees necessary to permit STC to protect the rights and interests of STC, but hereby transfers and assigns to NPTest its rights under the STC Employee Agreements of all former STC employees to the extent required to permit NPTest to enjoin, restrain, recover damages from or obtain specific performance of the STC Employee Agreements or obtain other remedies against any employee who breaches his or her STC Employee Agreement, and to the extent necessary to permit NPTest to protect its rights and interests. (2) STC and NPTest agree, at their own respective cost and expense, to use their reasonable efforts to cooperate as follows: (A) NPTest shall advise STC of: (1) any violation(s) of the STC Employee Agreements by NPTest or former STC employees, and (2) any violation(s) of the NPTest Employee Agreements which affect STC's rights; and (B) STC shall advise NPTest of any violation(s) of the STC Employee Agreements by current or former STC employees which affect NPTest's rights; provided, however, that the foregoing obligations shall only apply to violation(s) which become known to an attorney within the legal department of the party obligated to provide notice thereof. -25- (3) STC and NPTest each may separately enforce the STC Employee Agreements of NPTest and former STC employees to the extent necessary to reasonably protect their respective interests, provided, however, that (i) NPTest shall not commence any litigation relating thereto without first consulting with STC's General Counsel or his or her designee and (ii) STC shall not commence any litigation relating thereto against any former STC employee who is at the time an employee of the NPTest Group without first consulting with NPTest's General Counsel or his or her designee. If either party, in seeking to enforce any STC Employee Agreement, notifies the other party that it requires, or desires, the other party to join in such action, then the other party shall do so. In addition, if either party commences or becomes a party to any action to enforce a STC Employee Agreement of an employee of the NPTest Group or former STC employee, the other party shall, whether or not it becomes a party to the action, cooperate with the other party by making available its files and employees who have information or knowledge relevant to the dispute, subject to appropriate measures to protect the confidentiality of any proprietary or confidential information that may be disclosed in the course of such cooperation or action and subject to any relevant privacy laws and regulations. Any such action shall be conducted at the expense of the party bringing the action and the parties shall agree on a case by case basis on compensation, if any, of the other party for the value of the time of such other party's employees as reasonably required in connection with the action. (B) (1) NPTest retains all rights under the NPTest Employee Agreements of all former NPTest employees necessary to permit NPTest to protect the rights and interests of NPTest, but hereby transfers and assigns to STC its rights under the NPTest Employee Agreements of all former NPTest employees to the extent required to permit STC to enjoin, restrain, recover damages from or obtain specific performance of the NPTest Employee Agreements or obtain other remedies against any employee who breaches his or her NPTest -26- Employee Agreement, and to the extent necessary to permit STC to protect its rights and interests. (2) STC and NPTest agree, at their own respective cost and expense, to use their reasonable efforts to cooperate as follows: (A) STC shall advise NPTest of: (1) any violation(s) of the NPTest Employee Agreements by STC or former NPTest employees, and (2) any violation(s) of the STC Employee Agreements which affect NPTest's rights; and (B) NPTest shall advise STC of any violations of the NPTest Employee Agreements by current or former NPTest employees which affect STC's rights; provided, however, that the foregoing obligations shall only apply to violations which become known to an attorney within the legal department of the party obligated to provide notice thereof. (3) STC and NPTest each may separately enforce the STC Employee Agreements of STC and former NPTest employees to the extent necessary to reasonably protect their respective interests, provided, however, that (i) STC shall not commence any litigation relating thereto without first consulting with NPTest's General Counsel or his or her designee and (ii) NPTest shall not commence any litigation relating thereto against any former NPTest employee who is at the time a STC Employee without first consulting with STC's General Counsel or his or her designee. If either party, in seeking to enforce any NPTest Employee Agreement, notifies the other party that it requires, or desires, the other party to join in such action, then the other party shall do so. In addition, if either party commences or becomes a party to any action to enforce a NPTest Employee Agreement of a STC Employee or former NPTest employee, the other party shall, whether or not it becomes a party to the action, cooperate with the other party by making available its files and employees who have information or knowledge relevant to the dispute, subject to appropriate measures to protect the confidentiality of any proprietary or confidential information that may be disclosed in the course of such cooperation or action and subject to any relevant privacy laws and regulations. Any such -27- action shall be conducted at the expense of the party bringing the action and the parties shall agree on a case by case basis on compensation, if any, of the other party for the value of the time of such other party's employees as reasonably required in connection with the action. (C) STC and NPTest understand and acknowledge that matters relating to the making, performance, enforcement, assignment and termination of employee agreements are typically governed by the laws and regulations of the national, federal, state or local governmental unit where an employee resides, or where an employee's services are rendered, and that such laws and regulations may supersede or limit the applicability or enforceability of this Section 10.04. In such circumstances, STC and NPTest agree to take action with respect to the employee agreements that best accomplishes the parties' objectives as set forth in this Section 10.04 and that is consistent with applicable law. 10.05 ACCRUED PAYROLL, BONUSES, PROFIT SHARING AND COMMISSIONS. Except as provided in Section 7.04 of this Agreement, NPTest shall be responsible for all Liabilities relating to, arising out of, or attributable to payroll, bonuses, profit sharing and commissions accrued by employees of NPTest from the NPTest Transition Date through the Separation Date. STC and NPTest shall agree on the manner and method of payment for all payroll, bonuses, profit sharing and commissions agreed to on behalf of employees who have been employed by NPTest on or before the Separation Date. Before March 15, 2003, STC shall make a 2002 profit-sharing contribution on behalf of NPTest Employees for the period of time from January 1, 2002 until the NPTest Employees Transition Date. Such contribution shall be determined by STC in its discretion. NPTest shall be responsible for the 2002 profit-sharing contribution for NPTest Employees for the period from the NPTest Transition Date until December 31, 2002, and for all profit-sharing contributions on behalf of NPTest Employees thereafter. STC shall provide or cause to be provided to NPTest in the same manner as in effect on the date of this Agreement all payroll services as required in the Transition Services Agreement. 10.06 PAYROLL AND WITHHOLDING. (a) Income Reporting, Withholding. STC shall perform in the same manner as in effect on the date of this Agreement the income reporting and withholding function under NPTest's employer identification number for employees of the NPTest Group and other service providers as required by the Transition Services Agreement. (b) Delivery of, and Access to, Documents and Other Information. Concurrently with the Separation Date, STC shall cause to be -28- delivered to NPTest, the employee information set forth on all IRS Forms W-4 executed by STC Employees designated as NPTest Employees as of the Separation Date. For the period ending on the Separation Date (and for such additional period as STC and NPTest may mutually agree), STC shall make reasonably available to NPTest all forms, documents or information, no matter in what format stored, relating to compensation or payments made to any employee or service provider of NPTest. Such information may include, but is not limited to, information concerning employee payroll deductions, payroll adjustments, records of time worked, tax records (e.g., IRS Forms W-2, W-4, 940 and 941), and information concerning garnishment of wages or other payments. (c) Consistency of Tax Positions; Duplication. STC and NPTest shall individually and collectively make commercially reasonable best efforts to avoid unnecessarily duplicated federal, state or local payroll taxes, insurance or workers' compensation contributions, or unemployment contributions arising on or after the Separation Date. STC and NPTest shall take consistent reporting and withholding positions with respect to any such taxes or contributions. 10.07 PERSONNEL AND PAY RECORDS. For the period beginning on the date of this Agreement and ending on the Separation Date (and for such additional period as STC and NPTest may mutually agree), STC shall make reasonably available to NPTest for review and reproduction, subject to applicable laws on confidentiality and data protection, all current and historic forms, documents or information, no matter in what format stored, relating to pre-Separation Date personnel and medical records. Such forms, documents or information may include, but is not limited to: (a) information regarding ranking or promotions of employees of the NPTest Group; (b) the existence and nature of garnishment orders or other judicial or administrative actions or orders affecting an employee's or service provider's compensation; and (c) performance evaluations. 10.08 NON-TERMINATION OF EMPLOYMENT; NO THIRD-PARTY BENEFICIARIES. No provision of this Agreement shall be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part of any NPTest Employee or other future, present or former employee of STC or NPTest under any STC Plan or NPTest Plan or otherwise. Without limiting the generality of the foregoing: (a) except as otherwise provided in this agreement or applicable provisions of Plans, neither the Separation nor the termination of the Participating Company status of NPTest or any member of the NPTest Group shall cause any employee to be deemed to have incurred a termination of employment; and (b) no transfer of employment between STC and NPTest before the Separation Date shall be deemed a termination of employment for any purpose hereunder. ARTICLE XI. GENERAL PROVISIONS 11.01 EFFECT IF IPO AND/OR SEPARATION DOES NOT OCCUR. Subject to Section 11.08, if the IPO and/or Separation does not occur, then all actions and events that are, -29- under this Agreement, to be taken or occur effective as of the IPO Closing Date, and/or Separation Date, or otherwise in connection with the IPO and/or Separation, shall not be taken or occur except to the extent specifically agreed by the parties. 11.02 RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be deemed or construed by the parties or any third party as creating the relationship of principal and agent, partnership or joint venture between the parties, the understanding and agreement being that no provision contained herein, and no act of the parties, shall be deemed to create any relationship between the parties other than the relationship set forth herein. This Agreement shall be binding upon and inure solely to the benefit of and be enforceable by each party and its respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 11.03 AFFILIATED COMPANIES. Each of STC and NPTest shall cause to be performed, and hereby guarantee the performance of, any and all actions of any and all members of the STC Group or the NPTest Group, respectively. 11.04 INCORPORATION OF SEPARATION AGREEMENT PROVISIONS. If a dispute, claim or controversy results from or arises out of or in connection with this Agreement, the parties agree to use the procedures set forth in Section 5.9 of the Separation Agreement in lieu of other available remedies, to resolve same. The provisions of Section 5.9 (Dispute Resolution), Section 6.1 (Limitation of Liability) and 6.6 (Notices) of the Separation Agreement are hereby incorporated herein by reference, and unless otherwise expressly specified herein, such provisions shall apply as if fully set forth herein (references in this Section 11.04 to an "Article" or "Section" shall mean Articles or Sections of the Separation Agreement, and, except as expressly set forth herein, references in the material incorporated herein by reference shall be references to the Separation Agreement). 11.05 GOVERNING LAW. To the extent not preempted by applicable federal law, this Agreement shall be governed by, construed and interpreted in accordance with the laws of the State of Delaware, irrespective of the choice of law principles of the State of Delaware, as to all matters, including matters of validity, construction, effect, performance and remedies. 11.06 SEVERABILITY. If any term or other provision of this Agreement is determined to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible and in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest possible extent. 11.07 AMENDMENT. The Boards of Directors of NPTest, STI, SBV and STC may mutually agree to amend the provisions of this Agreement at any time or times, either prospectively or retroactively, to such extent and in such manner as the Boards mutually deem -30- advisable. Each Board may delegate its amendment power, in whole or in part, to one or more Persons or committees as it deems advisable. 11.08 TERMINATION. This Agreement may be terminated and the Separation abandoned at any time prior to the IPO Closing Date by STC in its sole discretion. This Agreement may be terminated at any time after the IPO Closing Date and before the Separation Date by mutual consent of STC, STI, SBV and NPTest. In the event of termination pursuant to this Section, no party shall have any liability of any kind under this Agreement to the other party. 11.09 CONFLICT. In the event of any conflict between the provisions of this Agreement and the Separation Agreement or any Plan, the provisions of this Agreement shall control. 11.10 COUNTERPARTS. This Agreement may be executed in two or more counterparts each of which shall be deemed to be an original, but all of which together shall constitute but one and the same Agreement. -31- IN WITNESS WHEREOF, each of the parties have caused this Employee Matters Agreement to be executed on its behalf by its officers thereunto duly authorized on the day and year first above written. SCHLUMBERGER TECHNOLOGY CORP. By:________________________________________ Name: Title: NPTEST, INC. By:________________________________________ Name: Title: SCHLUMBERGER TECHNOLOGIES, INC. By:________________________________________ Name: Title: SCHLUMBERGER B.V. By:________________________________________ Name: Title: -32- Schedule 2.06 Special Agreements Regarding Non-U.S. Plans -33- Schedule 8.02 Vacation Cashout -34- EX-10.7 11 dex107.txt FORM OF TAX SHARING AGREEMENT EXHIBIT 10.7 TAX SHARING AGREEMENT BY SCHLUMBERGER TECHNOLOGY CORPORATION AND SCHLUMBERGER B.V. AND NPTEST, INC. TAX SHARING AGREEMENT This Agreement is entered into as of July __, 2002 by Schlumberger Technology Corporation ("STC"), a Texas corporation, Schlumberger B.V., a Netherlands corporation ("SBV"), and NPTest, Inc., a Delaware corporation ("NPTest"). Capitalized terms used in this Agreement are defined herein. Unless otherwise indicated, all "Section" references in this Agreement are to sections of this Agreement. RECITALS WHEREAS, STI and SBV collectively own all of the currently issued and outstanding common stock of NPTest; WHEREAS, shortly hereafter, shares of NPTest common stock will be sold to the public in an initial public offering (the "IPO"); WHEREAS, the parties desire to provide for and agree upon the allocation between the parties of liabilities for Taxes arising prior to, as a result of, and subsequent to the IPO, and to provide for and agree upon other matters relating to Taxes; NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: SECTION 1. Definition of Terms. For purposes of this Agreement (including the recitals hereof), the following terms have the following meanings: "Agreement" means this Tax Sharing Agreement. "Carryback" means any net operating loss, net capital loss, excess tax credit, foreign tax credit or other similar Tax Item which may or must be carried from one Tax Year to a prior Tax Year under applicable Tax Law. "Code" means the U.S. Internal Revenue Code of 1986, as amended from time to time, or any successor law. "Combined Return" means any State or Foreign Income Tax Return which is filed by one or more members of the Schlumberger Group and which includes one or more members of the NPTest Group or in which income or deductions of any member of the Schlumberger Group and income or deductions of any member of the NPTest Group are combined. "Combined Year" means any Tax Year for which a Combined Return is filed. "Company" means STC, SBV or NPTest, as the context requires. -1- "Consolidated Return" means any Federal Income Tax Return which is filed by STC, as common parent, and its eligible Subsidiaries and which includes NPTest and its eligible Subsidiaries (if any). "Consolidated Year" means any Tax Year for which a Consolidated Return is filed. "Federal Income Tax" means any Income Tax imposed by the United States government. "Foreign Income Tax" means any Income Tax imposed by any foreign country or any possession of the United States or by any political subdivision of any foreign country or possession of the United States. "Group" means the Schlumberger Group or the NPTest Group, as the context requires. "Income Tax" means all Taxes (x) based upon, measured by, or calculated with respect to, net income or net receipts, proceeds or profits or (y) based upon, measured by, or calculated with respect to multiple bases (including, but not limited to, corporate franchise and occupation Taxes) if such Tax may be based upon, measured by, or calculated with respect to one or more bases described in clause (x) above. "Internal Restructuring" means the transfer by the Schlumberger Group of assets and liabilities of the NPT Business to NPTest or other members of the NPTest Group and other transactions incident to such transfers. "Internal Revenue Service" means the United States Internal Revenue Service. "IPO" has the meaning set forth in the recital hereto. "IPO Date" means the date of the IPO. "NPT Business" means the business of providing advanced test and diagnostic systems, and related product engineering services, and the assets used in connection with that business, that the Schlumberger Group has transferred and will transfer to NPTest. "NPTest Group" means NPTest and all persons that are Subsidiaries of NPTest immediately after the IPO or that become Subsidiaries of NPTest thereafter. While the determination whether an entity is a Subsidiary of NPTest will be made after the IPO, any entity which is thus determined to be a Subsidiary of NPTest and which was a subsidiary of Schlumberger before the IPO will be treated as a member of the NPTest Group for periods before as well as after the IPO. If (x) the parties desired that an entity be a Subsidiary of NPTest immediately after the IPO, (y) the transfer of the entity to NPTest was not completed by the IPO Date because of applicable legal restrictions, and -2- (z) the transfer is subsequently completed, that entity will be treated as a member of the NPTest Group for all periods. "Other Tax" means any Tax that is not an Income Tax. "Payment Date" means (x) with respect to any Consolidated Return, the due date for any required installment of estimated taxes determined under Code Section 6655, the due date (determined without regard to extensions) for filing the return determined under Code Section 6072, and the date the return is filed, and (y) with respect to any Combined Return, the corresponding dates determined under the applicable Tax Law. "Schlumberger" means Schlumberger Limited. "Schlumberger Group" means Schlumberger Limited and its Subsidiaries, other than members of the NPTest Group. "State Income Tax" means any Income Tax imposed by any State of the United States or by any political subdivision of any such State. "Subsidiary" means any entity that directly or indirectly is "controlled" by the person or entity in question. "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through ownership of voting securities, by contract or otherwise. "Tax" or "Taxes" means any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, value added, alternative minimum, estimated or other similar tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax) imposed by any Tax Authority and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing. "Tax Authority" means, with respect to any Tax, the governmental entity or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision. "Tax Benefit" means an actual reduction in the Tax liability of a taxpayer. "Tax Contest" means an audit, review, examination, or any other administrative or judicial proceeding with the purpose or effect of redetermining Taxes of any member of either Group (including any administrative or judicial review of any claim for refund). "Tax Item" means, with respect to any Income Tax, any item of income, gain, loss, deduction, or credit. -3- "Tax Law" means the law of any governmental entity or political subdivision thereof relating to any Tax. "Tax Records" means Tax Returns, Tax Return work papers, documentation relating to any Tax Contests, and any other books of account or records required to be maintained under applicable Tax Laws or under any record retention agreement with any Tax Authority. "Tax Return" means any report of Taxes due, any claims for refund of Taxes paid, any information return with respect to Taxes, or any other similar report, statement, declaration, or document required to be filed under any applicable Tax Law, including any attachments, exhibits, or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing. "Tax Year" means, with respect to any Tax, the year, or shorter period, if applicable, for which the Tax is reported as provided under applicable Tax Law. "Treasury Regulations" means the regulations promulgated from time to time under the Code as in effect for the relevant Tax Year. SECTION 2. Allocation of Income Tax Liabilities. 2.1 Federal Income Taxes. Liability for Federal Income Taxes shall be allocated as follows: (a) Consolidated Years. (i) Except as provided in Section 2.1(a)(ii), for each Consolidated Year, NPTest shall be liable for and pay to STC an amount equal to Federal Income Taxes determined under the "Stand Alone Method." Under this method, NPTest's liability for Taxes for any Consolidated Year shall be computed as if NPTest and eligible Subsidiaries were not required to join and did not join in the Consolidated Return for that Consolidated Year but instead filed their own consolidated Federal Income Tax Return, on which NPTest's tax liability was calculated consistently with the principles of Treasury Regulation section 1.1552-1(a)(2)(ii). (ii) NPTest shall not be liable for any Federal Income Taxes (x) for any Consolidated Year which ends on or before the IPO Date, or (y) for the portion which ends on the IPO Date of any Consolidated Year which begins before and ends after the IPO Date. For purposes of determining the Federal Income Taxes described in clause (y) of the immediately preceding sentence, any Consolidated Year which begins before and ends after the IPO Date shall be treated as two Consolidated Years, one ending on the IPO Date and the other beginning on the following day, and all calculations shall be made by specifically apportioning each Tax Item to the hypothetical Consolidated Year in which such Tax Item was incurred rather than by the use of any otherwise permissible pro ration or estimates. -4- (iii) STC shall be liable for all Federal Income Taxes for all Consolidated Years other than amounts for which NPTest is liable pursuant to this Section 2.1(a). (b) Tax Years Other Than Consolidated Years. NPTest shall be liable for all Federal Income Taxes imposed on members of the NPTest Group with respect to all Tax Years which are not Consolidated Years. STC shall be liable for all Federal Income Taxes imposed on members of the Schlumberger Group with respect to all Tax Years which are not Consolidated Years. 2.2 State Income Taxes. Liability for State Income Taxes shall be allocated between STC and NPTest under the same principles as set forth in Section 2.1(a) with respect to liability for Federal Income Taxes, to the end that (x) STC shall be liable for all State Income Taxes for any Combined Year or portion thereof ending on or before the IPO Date, (y) NPTest shall be liable for State Income Taxes attributable to the NPTest Group, under the principles of the Stand Alone Method, for any Combined Year or portion thereof which begins after the IPO Date, and (z) STC and NPTest shall be liable for all other State Income Taxes imposed on members of the Schlumberger Group or the NPTest Group, respectively. 2.3 Foreign Income Taxes. (a) Liability for Foreign Income Taxes. NPTest shall be liable for and pay to SBV any Foreign Income Taxes with respect to any Combined Year in an amount that is equal to the amount determined under the principles of the Stand Alone Method for such Combined Year. Except as just indicated, SBV shall be liable for all Foreign Income Taxes imposed on members of the Schlumberger Group, and NPTest shall be liable for all Foreign Income Taxes imposed on members of the NPTest Group. (b) Elections Not to Have Combined Years. SBV and NPTest shall cause members of the Schlumberger Group and of the NPTest Group, respectively, to make all elections and take all other steps which are available under applicable law to reduce or eliminate the instances in which Foreign Income Taxes are reflected in a Combined Return. 2.4 Other Taxes. Except as otherwise provided in this Agreement, NPTest shall be liable for any Other Tax that is imposed on any member of the NPTest Group, and STC or SBV, as the case may be, shall be liable for any Other Tax that is imposed on any member of the Schlumberger Group. 2.5 Taxes Resulting from the Internal Restructuring. (a) General. Except as provided in Section 2.5(b) and in Section 4.2, STC and SBV shall be liable for and pay any and all liability for Taxes resulting from the Internal Restructuring. (b) Sales Taxes, Value Added Taxes, and Similar Taxes. NPTest shall be liable for any Taxes resulting from the Internal Restructuring which -5- consist of sales Taxes, value added Taxes, or any similar Taxes, to the extent that such Taxes give rise to a Tax Benefit to any member of the NPTest Group for the same or similar Taxes. NPTest shall pay to STC or SBV, as the case may be, in accordance with Section 5, the amount of any such Tax Benefit. 2.6 Tax Payments and Intercompany Billings. Each Company shall pay the Taxes allocated to it by this Section 2 either to the applicable Taxing Authority or to the other appropriate Company in accordance with Section 5. SECTION 3. Preparation and Filing of Tax Returns. 3.1 Combined Returns and Consolidated Returns. (a) Preparation by Schlumberger. STC or SBV, as applicable, shall be responsible for preparing all Consolidated Returns and Combined Returns. (b) Provision of Information by NPTest. NPTest shall, for each Consolidated Return or Combined Return, provide STC or SBV with all information relating to members of the NPTest Group which STC or SBV needs to prepare such return. NPTest shall use its best efforts to provide such information no later than the first day of the fifth month following the end of the Tax Year to which such information relates, but in any event shall provide such information no later than the fifteenth day of the fifth month following the end of such Tax Year. 3.2 Tax Returns Other than Combined Returns and Consolidated Returns. (a) Tax Returns to be Prepared by STC and SBV. STC or SBV shall be responsible for preparing all Tax Returns which relate solely to one or more members of the Schlumberger Group. (b) Tax Returns to be Prepared by NPTest. NPTest shall be responsible for preparing all Tax Returns which relate solely to one or more members of the NPTest Group. (c) Provision of Information. STC or SBV shall provide to NPTest, and NPTest shall provide to STC or SBV, any information about members of the Schlumberger Group or the NPTest Group, respectively, which the party receiving such information needs to comply with Section 3.2(a) or (b). Such information shall be provided within the time prescribed by Section 3.1(b) for the provision of information for Consolidated Returns and Combined Returns. -6- 3.3 Practices in Preparing Tax Returns. Insofar as a Tax Return prepared by STC or SBV may affect Taxes for which NPTest is liable pursuant to this Agreement, or vice versa: (a) Tax Accounting Practices. The Tax Return shall be prepared consistently with past Tax accounting practices to the extent permissible under applicable Tax Law. (b) Review Prior to Filing. The Company preparing the Tax Return (whether STC or SBV on the one hand or NPTest on the other hand) shall make the Tax Return or relevant portion thereof available to the other Company no later than thirty days before the Tax Return is due and shall in good faith take into account any comments on such Tax Return by the other Company. SECTION 4. Tax Benefits, Refunds, and Carrybacks. 4.1 Compensation for Use of Consolidated Year or Combined Year Tax Items. (a) Tax Benefit Realized by Schlumberger Group. Except as provided in Section 4.1(b), in the event that the Schlumberger Group realizes a Tax Benefit during any Consolidated Year or Combined Year as a result of the use by the Schlumberger Group of Tax Items of the NPTest Group, then STC (in the case of Federal Income Tax Items or State Income Tax Items) or SBV (in the case of Foreign Income Tax Items) shall pay to NPTest, in accordance with Section 5, the amount of the Tax Benefit realized by the Schlumberger Group. (b) Pre-IPO Tax Benefits. The Schlumberger Group shall be entitled to all Tax Benefits, without payment to NPTest, for: (i) any Consolidated Year which ends on or before the IPO Date, (ii) the portion of any Consolidated Year which begins before and ends after the IPO Date, determined in accordance with Section 2.1(a)(ii), (iii) any Combined Year relating to State Income Taxes which ends on or before the IPO Date, and (iv) the portion of any Combined Year relating to State Income Taxes which begins before and ends after the IPO Date, determined in accordance with the principles of Section 2.1(a)(ii). 4.2 Compensation for Income Tax Benefits Arising from the Internal Restructuring. Every year, beginning with NPTest's first Tax Year, and ending with the fifteenth Tax Year, that ends after the IPO Date, NPTest shall calculate the excess of (x) the amount of the NPTest Group's Federal Income Tax liability for that Tax Year determined by excluding the Tax effects of the Internal Restructuring (e.g., basis -7- adjustments) over (y) the amount of the NPTest Group's actual Federal Income Tax liability as shown on their filed Federal Income Tax Return or Returns for such Tax Year, in each case computed assuming that NPTest Group makes all available elections to cause any losses to be carried forward to future Tax Years rather than carried back to prior Tax Years. NPTest will pay to STC, in accordance with Section 5, an amount equal to such Tax Benefit. 4.3 Other Tax Benefits. To the extent not otherwise provided for in this Agreement, if, as a result of an adjustment by a Tax Authority, one Group suffers a Tax detriment and the other Group realizes a related Tax Benefit, STC or SBV shall pay NPTest, or vice versa, in accordance with Section 5, an amount equal to the lesser of the Tax Benefit to the Group receiving the Tax Benefit or the Tax detriment to the Group suffering the Tax detriment. 4.4 Claims for Refund from Carrybacks. (a) Filing Claims and Making Payments for Carrybacks. Except as provided in Section 4.4(b), if the NPTest Group generates a Carryback to a Consolidated Year or Combined Year, then, upon request of NPTest, STC or SBV shall file a claim for refund arising from such Carryback and pay such refund to NPTest in accordance with Section 5. (b) Limitation on Claims. Neither STC nor SBV shall be required under Section 4.4(a) to file a claim for refund arising from a Carryback to a Consolidated Year or Combined Year unless the amount of the refund exceeds $200,000. Refunds claimed for Carrybacks to more than one Consolidated Year or Combined Year will not be aggregated for this purpose. (c) Ordering of and Payment for Carrybacks. In the event that members of both Groups are each entitled to a Carryback to the same Consolidated Year, the Carrybacks shall be applied in the manner set forth in Treasury Regulation section 1.1502-21. Similar principles will be applied in the case of Carrybacks to a Combined Year. (d) Adjustment of Tax Items. In the event that a Carryback by the NPTest Group to a Consolidated Year or Combined Year increases the liability for Taxes of the Schlumberger Group, the amount of the refund to which the NPTest Group shall be entitled to receive, in accordance with Section 5, shall be net of such increased liability to the Schlumberger Group. SECTION 5. Tax Payments and Intercompany Billings. 5.1 Consolidated Returns. (a) Computation and Payment of Tax Due. At least ten business \ days prior to any Payment Date for a Consolidated Return, STC shall compute the amount of Tax required to be paid to the Internal Revenue Service with respect to such Tax Return on such Payment Date and shall notify NPTest in writing of (x) the -8- amount of Tax required to be paid on such Payment Date, and (y) the amount, if any, of such Tax which is allocable to NPTest under Section 2.1(a). STC will pay the amount described in clause (x) of the immediately preceding sentence to the Internal Revenue Service on or before such Payment Date. (b) Computation and Payment of NPTest Liability With Respect to Tax Due. Within thirty days following any Payment Date, NPTest will pay to STC the amount, if any, of Tax paid on such Payment Date for which NPTest is liable in accordance with Section 2.1(a), appropriately adjusted for prior payments made by NPTest with respect to that Consolidated Year. If, at any time, the total amount of payments made by NPTest to STC with respect to Taxes for a Consolidated Year exceeds the amount for which NPTest is liable in accordance with Section 2.1(a), STC will promptly remit the excess to NPTest. 5.2 Combined Returns. Payments, and adjustments thereto, shall be made by NPTest to STC or SBV, as applicable, for all Taxes relating to Combined Returns for which NPTest is liable in accordance with Section 2.2 or Section 2.3, in the same manner as payments for Taxes relating to Consolidated Returns, as described in Section 5.1. 5.3 Payment of Refunds and Tax Benefits. Except as otherwise provided in this Agreement: (a) Refund or Tax Benefit Received by Schlumberger Group. If a member of the Schlumberger Group receives a Tax refund with respect to Taxes for which a member of the NPTest Group is liable hereunder or receives a Tax Benefit for which NPTest is entitled to reimbursement hereunder, STC or SBV shall pay to NPTest, within thirty days following the receipt of the Tax refund or Tax Benefit, an amount equal to such Tax refund or Tax Benefit (or lesser amount required by Section 4.3). (b) Refund or Tax Benefit Received by NPT Group. If a member of the NPTest Group receives a Tax refund with respect to Taxes for which a member of the Schlumberger Group is liable hereunder or receives a Tax Benefit for which STC or SBV is entitled to reimbursement hereunder, NPTest shall pay to STC or SBV, within thirty days after the receipt of the Tax refund or Tax Benefit, an amount equal to such Tax refund or Tax Benefit (or lesser amount required by Section 4.3). 5.4 Initial Determinations and Subsequent Adjustments. The initial determination of the amount of a payment, if any, which one Company is required to make to another under this Agreement shall be made on the basis of the Tax Return as filed, or, if the Tax to which the payment relates is not reported in a Tax Return, on the basis of the amount of Tax initially paid to the Tax Authority. Payments will be made, as appropriate, if additional Taxes to which such determination relates are subsequently paid, or a refund of such Taxes or a Tax Benefit relating to such Taxes is received, whether as a result of an audit by a Tax Authority or for any other reason. Each payment required by the immediately preceding sentence (x) as a result of a payment of additional Taxes will be due thirty days after the date on which the additional Taxes were paid or, if -9- later, thirty days after the date of a request from the other Company for the payment or (y) as a result of the receipt of a refund or Tax Benefit will be due thirty days after the refund or Tax Benefit was received. If a payment is made as a result of an audit by a Tax Authority which does not conclude the matter, further adjusting payments will be made, as appropriate, to reflect the outcome of subsequent administrative or judicial proceedings. 5.5 Indemnification Payments. If any member of one Group is required to make a payment to a Tax Authority of Taxes for which a Company belonging to the other Group is liable under this Agreement, the Company which is liable for such Taxes under this Agreement will remit the amount for which it is liable to the appropriate other Company within thirty days after receiving notification requesting such amount. 5.6 Payments by or to Other Members of the Groups. When appropriate under the circumstances to reflect the underlying liability for a Tax or entitlement to a Tax refund or Tax Benefit, a payment which is required to be made by or to a Company may be made by or to another member of the Group to which that Company belongs, but nothing in this Section 5.6 shall relieve any Company of its obligations under this Agreement. SECTION 6. Assistance and Cooperation. The parties will cooperate (and cause their respective affiliates to cooperate) with each other and with each other's agents, including accounting firms and legal counsel, in connection with Tax matters, including provision of relevant documents and information in their possession and making available to each other, as reasonably requested and available, personnel (including officers, directors, employees and agents of the Companies or their affiliates) responsible for preparing, maintaining, and interpreting information and documents relevant to Taxes, and personnel reasonably required as witnesses or for purposes of providing information or documents in connection with any administrative or judicial proceedings relating to Taxes. Any information or documents provided under this Section 6 shall be kept confidential by the Company receiving the information or documents, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any administrative or judicial proceedings relating to Taxes. SECTION 7. Tax Records. 7.1 Retention of Tax Records. Each Company shall preserve, and shall cause its affiliates to preserve, all Tax Records which are in its possession, and which could affect the liability of any member of the other Group for Taxes, for so long as the contents thereof may become material in the administration of any matter under applicable Tax Law, but in any event until the later of (x) the expiration of any applicable statutes of limitation, as extended, and (y) seven years after the IPO Date. 7.2 Access to Tax Records. The Companies and their respective affiliates shall make available to members of the other Group for inspection and copying during normal business hours upon reasonable notice all Tax Records in their possession to the extent reasonably requested by any such member of the other Group in connection -10- with the preparation of Tax Returns, audits, litigation, or the resolution of items under this Agreement. SECTION 8. Tax Contests. 8.1 Notice. Each of the parties shall provide prompt notice to the other party of any pending or threatened Tax audit, assessment or proceeding or other Tax Contest of which it becomes aware relating to Taxes for which it is indemnified by the other party hereunder. Such notice shall contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Tax Authority in respect of any such matters. If an indemnified party has knowledge of an asserted Tax liability with respect to a matter for which it is to be indemnified hereunder and such party fails to give the indemnifying party prompt notice of such asserted Tax liability, then (x) if the indemnifying party is precluded from contesting the asserted Tax liability in any forum as a result of the failure to give prompt notice, the indemnifying party shall have no obligation to indemnify the indemnified party for any Taxes arising out of such asserted Tax liability, and (y) if the indemnifying party is not precluded from contesting the asserted Tax liability in any forum, but such failure to give prompt notice results in a monetary detriment to the indemnifying party, then any amount which the indemnifying party is otherwise required to pay the indemnified party pursuant to this Agreement shall be reduced by the amount of such detriment. 8.2 Control of Tax Contests. Each Company shall have full responsibility and discretion in handling, settling or contesting any Tax Contest involving a Tax for which it is liable pursuant to Section 2 of this Agreement, except that Schlumberger shall have full responsibility and discretion in handling, settling or contesting any Tax Contest with respect to a Consolidated Return or Combined Return. Furthermore, Schlumberger may participate in any Tax Contest with respect to Taxes arising from the Internal Restructuring regardless of whether it has liability or indemnification obligations with respect to such Taxes under this Agreement. SECTION 9. General Provisions. 9.1 Survival of Obligations. The representations, warranties, covenants and agreements set forth in this Agreement shall be unconditional and absolute and shall remain in effect without limitation as to time. 9.2 Expenses. Each Company and its affiliates shall bear their own expenses incurred in connection with preparation of Tax Returns, Tax Contests, and other matters related to Taxes under the provisions of this Agreement. 9.3 Notices. All notices and other communications hereunder shall be in writing and shall be delivered in person, by telecopy, by express or overnight mail delivered by a nationally recognized air courier (delivery charges prepaid), or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties as follows: -11- (a) If to STC to: Schlumberger Technology Corporation The Forum, 210 Schlumberger Drive Sugar Land, Texas 77478 Attention: Telecopy No.: (b) If to SBV to: Schlumberger B.V. Parkstraat 83-89, 2514 JG The Hague, The Netherlands Attention: Telecopy No.: (c) If to NPTest, to: NPTest, Inc. 150 Baytech Drive San Jose, California 95134 Attention: Telecopy No: or to such other address as the party to whom notice is given may have previously furnished to the others in writing in the manner set forth above. Any notice or communication delivered in person shall be deemed effective on delivery or when delivery is refused. Any notice or communication sent by telecopy or by air courier shall be deemed effective on the first business day at the place at which such notice or communication is received following the day on which such notice or communication was sent. 9.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement. The Agreement may be delivered by facsimile transmission of a signed copy thereof. 9.5 Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be binding upon the parties hereto and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Except with respect to a merger of a party, neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any party hereto without the prior written consent of the other parties, which consent shall not be unreasonably withheld or delayed; provided, however, that STC, SBV and NPTest may assign their respective rights, interests, duties, liabilities and obligations under this Agreement to any other member of their Group, but such assignment shall not relieve STC, SBV or NPTest, as the assignor, of its obligations hereunder. -12- 9.6 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. Any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 9.7 Amendment. This Agreement may not be amended or modified in any respect except by a written agreement signed by all of the parties hereto. 9.8 Effective Time. This Agreement shall become effective upon the closing of the IPO. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by the respective officers as of the date set forth above. SCHLUMBERGER TECHNOLOGY CORPORATION By:_____________________________________ Name: Title: SCHLUMBERGER B.V. By:_____________________________________ Name: Title: NPTEST INC. By:_____________________________________ Name: Title: -13- EX-10.8 12 dex108.txt FORM OF MASTER TRANSITIONAL SERVICES AGREEMENT Exhibit 10.8 Master Transitional Services Agreement by and among Schlumberger Technologies, Inc., Schlumberger Technology Corporation, Schlumberger BV and NPTest, Inc. _______ __, 2002 TABLE OF CONTENTS
Page ARTICLE I DEFINITIONS.............................................................. 3 Section 1.1 Additional Services................................................ 3 Section 1.2 Impracticable...................................................... 3 Section 1.3 IPO Closing Date................................................... 3 Section 1.4 Localized Version.................................................. 4 Section 1.5 Master Confidential Disclosure Agreement........................... 4 Section 1.6 Master Separation And Sale Agreement............................... 4 Section 1.7 Prior Transfers.................................................... 4 Section 1.8 Service(s)......................................................... 4 Section 1.9 Software........................................................... 4 Section 1.10 Source Code. ...................................................... 4 Section 1.11 Source Code Documentation.......................................... 4 ARTICLE II TRANSITION SERVICE SCHEDULES............................................ 4 ARTICLE III SERVICES............................................................... 5 Section 3.1 Services Generally................................................. 5 Section 3.2 Service Boundaries................................................. 5 Section 3.3 Impracticability................................................... 5 Section 3.4 Additional Resources............................................... 5 Section 3.5 Additional Services................................................ 5 Section 3.6 Obligations As To Additional Services.............................. 5 ARTICLE IV TERM.................................................................... 6 ARTICLE V COMPENSATION............................................................. 6 Section 5.1 Charges For Services. ............................................. 6 Section 5.2 Payment Terms...................................................... 6 Section 5.3 Performance Under Ancillary Agreements............................. 7 Section 5.4 Error Correction; True-Ups; Accounting............................. 7 ARTICLE VI GENERAL OBLIGATIONS; STANDARD OF CARE .................................. 7 Section 6.1 Performance by Schlumberger........................................ 7 Section 6.2 Disclaimer Of Warranties........................................... 7 Section 6.3 Performance by NPT................................................ 7 Section 6.4 Transitional Nature Of Services; Changes........................... 7 Section 6.5 Responsibility For Errors; Delays.................................. 7 Section 6.6 Good Faith Cooperation; Consents................................... 8 Section 6.7 Alternatives....................................................... 8 ARTICLE VII TERMINATION............................................................ 8 Section 7.1 Termination........................................................ 8 Section 7.2 Survival........................................................... 9 Section 7.3 User IDs, Passwords................................................ 9
ARTICLE VIII RELATIONSHIP BETWEEN THE PARTIES................................... 9 ARTICLE IX SUBCONTRACTORS....................................................... 9 ARTICLE X INTELLECTUAL PROPERTY................................................. 10 Section 10.1 Allocation Of Rights By Ancillary Agreements................... 10 Section 10.2 Existing Ownership Rights Unaffected........................... 10 Section 10.3 Ownership Of Developed Works................................... 10 Section 10.4 License To Preexisting Works................................... 10 ARTICLE XI SOFTWARE LICENSE..................................................... 10 Section 11.1 Software Deliverable/License................................... 10 Section 11.2 Delivery and Acceptance........................................ 10 Section 11.3 Rights Granted And Restrictions. .............................. 11 Section 11.4 As-Is Warranty................................................. 12 Section 11.5 Miscellaneous.................................................. 12 ARTICLE XII INFRINGEMENT DEFENSE ............................................... 12 ARTICLE XIII CONFIDENTIALITY.................................................... 13 ARTICLE XIV LIMITATION OF LIABILITY ............................................ 13 ARTICLE XV FORCE MAJEURE........................................................ 14 ARTICLE XVI DISPUTE RESOLUTION.................................................. 14 ARTICLE XVII MISCELLANEOUS...................................................... 14 Section 16.1 Entire Agreement. ............................................. 14 Section 16.2 Governing Law.................................................. 14 Section 16.3 Descriptive Headings. ......................................... 14 Section 16.4 Notices........................................................ 15 Section 16.5 Counterparts................................................... 15 Section 16.6 Binding Effect; Assignment..................................... 16 Section 16.7 Severability................................................... 16 Section 16.8 Failure Or Indulgence Not Waiver; Remedies Cumulative.......... 16 Section 16.9 Amendment...................................................... 16 Section 16.10 Authority...................................................... 16

ii MASTER TRANSITIONAL SERVICES AGREEMENT This Master Transitional Services Agreement (the "Agreement") is effective as of the Separation Date as set forth in the Master Separation and Sale Agreement between the parties named below, _______ __, 2002 (the "Effective Date"), by and among Schlumberger Technologies, Inc., a Delaware corporation ("STI"), Schlumberger Technology Corporation, a Texas corporation ("STC"), Schlumberger BV, a company organized and existing under the laws of the Netherlands ("SBV" and, together with STI, and STC, "Schlumberger"), and NPTest, Inc. ("NPT"), a Delaware corporation. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Master Separation and Sale Agreement (as defined below). RECITALS WHEREAS, STI and SBV collectively own all of the currently issued and outstanding common stock of NPT; WHEREAS, NPT is engaged in the NPT Business (as such term is defined in the Master Separation and Sale Agreement); WHEREAS, the parties have entered into a Master Separation and Sale Agreement in connection with the Separation, as there described; and WHEREAS, as provided in the Master Separation and Sale Agreement, the parties desire to set forth certain agreements regarding certain transitional services as requested by NPT and provided by Schlumberger. NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the parties hereto agree as follows: ARTICLE I DEFINITIONS For the purpose of this Agreement, the following capitalized terms shall have the following meanings: Section 1.1 Additional Services. "Additional Services" shall have the meaning set forth in Section 3.5. Section 1.2 Impracticable. "Impracticable" shall have the meaning set forth in Section 3.3.: Section 1.3 IPO Closing Date. "IPO Closing Date" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.4 Localized Version. "Localized Version" means localized versions of the Software. Section 1.5 Master Confidential Disclosure Agreement. "Master Confidential Disclosure Agreement" shall mean that certain Master Confidential Disclosure Agreement by and among STI, STC, SBV and NPT. Section 1.6 Master Separation And Sale Agreement. "Master Separation and Sale Agreement" shall mean that certain Master Separation and Sale Agreement by and among STI, STC, SBV and NPT. Section 1.7 Prior Transfers. "Prior Transfers" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.8 Service(s). "Service(s)" shall have the meaning set forth in Section 3.1. Section 1.9 Software. "Software" means Schlumberger's software program(s), in object code only, listed and described in the relevant Transition Service Schedule. Section 1.10 Source Code. "Source Code" means any human readable code, including interpreted code, of Schlumberger, listed and described in the relevant Transition Service Schedule. Section 1.11 Source Code Documentation. "Source Code Documentation" means the manuals and other documentation that are reasonably necessary to use the Source Code licensed herein, including those items listed and described in the relevant Transition Service Schedule hereto. ARTICLE II TRANSITION SERVICE SCHEDULES This Agreement will govern individual transitional services as requested by NPT and provided by Schlumberger, the details of which are set forth in the Transition Service Schedules attached to this Agreement. Each Service shall be covered by this Agreement upon execution of a transition service schedule in the form attached hereto (each transition service schedule, a "Transition Service Schedule"). For each Service, the parties shall set forth, among other things, the time period during which the Service will be provided if different from the term of this Agreement determined pursuant to Article IV hereof, a summary of the Service to be provided; a description of the Service; and the estimated charge, if any, for the Service and any other terms applicable thereto on the Transition Service Schedule. Obligations regarding each Transition Service Schedule shall be effective upon execution of this Agreement, or upon the later addition of a Transition Service Schedule by mutual agreement of the parties. This Agreement and all the Transition Service Schedules shall be together defined as the "Agreement". 4 ARTICLE III SERVICES Section 3.1 Services Generally. Except as otherwise provided herein, for the term determined pursuant to Article IV hereof, Schlumberger shall provide or cause to be provided to NPT the service(s) described in the Transition Service Schedule(s) attached hereto. The service(s) described on a single Transition Service Schedule shall be referred to herein as a "Service." Collectively, the services described on all the Transition Service Schedules (including Additional Services) shall be referred to herein as "Services." Section 3.2 Service Boundaries. Except as provided in a Transition Service Schedule for a specific Service: (i) Schlumberger shall be required to provide the Services only to the extent and only at the locations such Services are being provided by Schlumberger for NPT immediately prior to the Separation Date; and (ii) the Services will be available only for purposes of conducting the business of NPT substantially in the manner it was conducted prior to the Separation Date. Section 3.3 Impracticability. Schlumberger shall not be required to provide any Service to the extent the performance of such Service becomes "Impracticable" as a result of a cause or causes outside the reasonable control of Schlumberger including unfeasible technological requirements, or to the extent the performance of such Services would require Schlumberger to violate any applicable laws, rules or regulations or would result in the breach of any software license or other applicable contract, or due to Force Majeure. Section 3.4 Additional Resources. Except as provided in a Transition Service Schedule for a specific Service, in providing the Services, Schlumberger shall not be obligated to: (i) hire any additional employees; (ii) maintain the employment of any specific employee; (iii) purchase, lease or license any additional equipment or software; or (iv) pay any costs related to the transfer or conversion of NPT's data to NPT or any alternate supplier of Services. Section 3.5 Additional Services. From time to time after the Separation Date, the parties may identify additional services that one party will provide to the other party in accordance with the terms of this Agreement (the "Additional Services"). Accordingly, the parties shall execute additional Transition Service Schedules for such Additional Services pursuant to Article II. Except as set forth in Section 3.6, the parties may agree in writing on Additional Services during the term of this Agreement. Section 3.6 Obligations As To Additional Services. Except as set forth in the next sentence, Schlumberger shall be obligated to perform, at a charge determined using the principles for determining fees under Section 5.1, any Additional Service that: (a) was provided by Schlumberger immediately prior to the Separation Date, or (b) is essential to effectuate an orderly transition under the Master Separation and Sale Agreement, unless such performance would significantly disrupt Schlumberger's operations or materially increase the scope of its responsibilities under this Agreement. If Schlumberger reasonably believes the performance of Additional Services requested under subparagraphs (a) or (b) would significantly disrupt its operations or materially increase the scope of its responsibility under this Agreement, 5 Schlumberger and NPT shall negotiate in good faith to establish terms under which Schlumberger can provide such Additional Services, but Schlumberger shall not be obligated to provide such Additional Services if, following good faith negotiation, it is unable to reach agreement on such terms. ARTICLE IV TERM The term of this Agreement shall commence on the Effective Date and shall remain in effect through December 31, 2002 (the "Expiration Date"), unless earlier terminated under Article VII. This Agreement may be extended by mutual written agreement of the Parties, either in whole or with respect to one or more of the Services; provided, however, that such extension shall only apply to the Services for which the Agreement was extended. The parties shall be deemed to have extended this Agreement with respect to a specific Service if the Transition Service Schedule for such Service specifies a completion date beyond the aforementioned Expiration Date. The parties may agree on an earlier expiration date respecting a specific Service by specifying such date on the Transition Service Schedule for that Service. Services shall be provided up to and including the date set forth in the applicable Transition Service Schedule, subject to earlier termination as provided herein. ARTICLE V COMPENSATION Section 5.1 Charges For Services. NPT shall pay Schlumberger the charges, if any, set forth on the Transition Service Schedules for each of the Services listed therein as adjusted, from time to time, in accordance with the processes and procedures established under Section 5.4 and Section 5.5 hereof. Such fees shall include the direct costs, as determined using the process described in such Transition Service Schedule, and indirect costs of providing the Services, unless specifically indicated otherwise on a Transition Service Schedule. However, if the term of this Agreement is extended beyond the Expiration Date as provided in Article IV, the parties will negotiate in good faith to determine commercially reasonable charges for such Services. The parties shall use good faith efforts to discuss any situation in which the actual charge for a Service is reasonably expected to exceed the estimated charge, if any, set forth on a Transition Service Schedule for a particular Service; provided, however, that the incurrence of charges in excess of any such estimate on such Transition Service Schedule shall not justify stopping the provision of, or payment for, Services under this Agreement. Section 5.2 Payment Terms. Schlumberger shall bill NPT monthly for all charges pursuant to this Agreement. Such bills shall be accompanied by reasonable documentation or other reasonable explanation supporting such charges. NPT shall pay Schlumberger for all Services provided hereunder within forty-five (45) calendar days after receipt of an invoice therefor. Schlumberger may withhold or suspend those Services for which payment is not received by ninety (90) days after NPT has received an invoice. 6 Section 5.3 Performance Under Ancillary Agreements. Notwithstanding anything to the contrary contained herein, NPT shall not be charged under this Agreement for any obligations that are specifically required to be performed under the Master Separation and Sale Agreement or any other Ancillary Agreement and any such other obligations shall be performed and charged for (if applicable) in accordance with the terms of the Master Separation and Sale Agreement or such other Ancillary Agreement. Section 5.4 Error Correction; True-Ups; Accounting. The parties shall reasonably agree on a process and procedure for conducting internal audits and making adjustments to charges as a result of the movement of employees and functions between parties, the discovery of errors or omissions in charges, as well as a true-up of amounts owed. In no event shall such processes and procedures extend beyond two years after completion of a Service. ARTICLE VI GENERAL OBLIGATIONS; STANDARD OF CARE Section 6.1 Performance by Schlumberger. Subject to Section 3.4 and any other terms and conditions of this Agreement, Schlumberger shall maintain sufficient resources to perform its obligations hereunder. Schlumberger shall use reasonable efforts to provide Services in accordance with the policies, procedures and practices in effect before the Separation Date, and shall exercise the same care and skill as it exercises in performing similar services for itself. Section 6.2 Disclaimer Of Warranties. SCHLUMBERGER MAKES NO WARRANTIES, EXPRESS, IMPLIED OR STATUTORY, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT, WITH RESPECT TO THE SERVICES, SOFTWARE OR OTHER DELIVERABLES PROVIDED BY IT HEREUNDER. Section 6.3 Performance by NPT. NPT shall use reasonable efforts, in connection with receiving Services, to follow the policies, procedures and practices of Schlumberger in effect before the Separation Date, including providing information and documentation sufficient for Schlumberger to perform the Services as they were performed before the Separation Date and making available, as reasonably requested by Schlumberger, sufficient resources and timely decisions, approvals and acceptances in order that Schlumberger may accomplish its obligations hereunder in a timely manner. Section 6.4 Transitional Nature Of Services; Changes. The parties acknowledge the transitional nature of the Services and that Schlumberger may make changes from time to time in the manner of performing the Services if Schlumberger is making similar changes in performing similar services for itself and if Schlumberger furnishes to NPT sixty (60) days' written notice regarding such changes. Section 6.5 Responsibility For Errors; Delays. Schlumberger's sole responsibility to NPT: (a) for errors or omissions in Services, shall be to furnish correct information, payment and/or adjustment in the Services, at no additional cost or expense to NPT; provided, 7 NPT must promptly advise Schlumberger of any such error or omission of which it becomes aware after having used reasonable efforts to detect any such errors or omissions in accordance with the standard of care set forth in Section 6.3; and (b) for failure to deliver any Service because of Impracticability, shall be to use reasonable efforts, subject to Section 3.3, to make the Services available and/or to resume performing the Services as promptly as reasonably practicable. Section 6.6 Good Faith Cooperation; Consents. The parties will use good faith efforts to cooperate with each other in all matters relating to the provision and receipt of Services. Such cooperation shall include exchanging information, performing true-ups and adjustments, and obtaining all third party consents, licenses, sublicenses or approvals necessary to permit each party to perform its obligations hereunder (including by way of example, not by way of limitation, rights to use third party software needed for the performance of Services). The costs of obtaining such third party consents, licenses, sublicenses or approvals shall be borne by NPT. The parties will maintain in accordance with its standard document retention procedures, documentation supporting the information relevant to cost calculations contained in the Transition Service Schedules and cooperate with each other in making such information available as needed in the event of a tax audit, whether in the United States or any other country. Section 6.7 Alternatives. If Schlumberger reasonably believes it is unable to provide any Service because of a failure to obtain necessary consents, licenses, sublicenses or approvals pursuant to Section 6.6 or because of Impracticability, the parties shall cooperate to determine the best alternative approach. Until such alternative approach is found or the problem otherwise resolved to the satisfaction of the parties, Schlumberger shall use reasonable efforts, subject to Section 3.3 and Section 3.4, to continue providing the Service. To the extent an agreed upon alternative approach requires payment above and beyond that which is included in Schlumberger's charge for the Service in question, the parties shall share equally in making any such payment unless they otherwise agree in writing. ARTICLE VII TERMINATION Section 7.1 Termination. This Agreement, and/or any of the Services provided under a Schedule hereto, may be terminated at any time upon the mutual written agreement of the parties. This Agreement may be terminated at any time prior to the IPO Closing Date by and in the sole discretion of Schlumberger without the approval of NPT. After the IPO Closing Date and prior to December 31, 2002, NPT may terminate this Agreement, either with respect to all or with respect to any one or more of the Services provided to NPT hereunder, for any reason or for no reason, at any time upon thirty (30) days' prior written notice to Schlumberger. After December 31, 2002, either party may terminate this Agreement, either with respect to all or with respect to any one or more of the Services provided to NPT hereunder, for any reason or for no reason, at any time upon thirty (30) days' prior written notice to the other party; provided, however, that such right to terminate this Agreement or Services may not be invoked by a party if Services are being provided hereunder under a Schedule where the termination date of said Services is subsequent to December 31, 2002. In addition, after the IPO Closing Date and subject 8 to the provisions of Article XVI below, either party may terminate this Agreement with respect to a specific Service if the other party materially breaches a material provision with regard to that particular Service and does not cure such breach (or does not take reasonable steps required under the circumstances to cure such breach going forward) within thirty (30) days after being given notice of the breach; provided, however, that the non-terminating party may request that the parties engage in a dispute resolution negotiation as specified in Article XVI below prior to termination for breach. Section 7.2 Survival. Those Sections of this Agreement that, by their nature, are intended to survive termination will survive in accordance with their terms. Notwithstanding the foregoing, in the event of any termination with respect to one or more, but less than all Services, this Agreement shall continue in full force and effect with respect to any Services not terminated hereby. Section 7.3 User IDs, Passwords. The parties shall use good faith efforts at the termination or expiration of this Agreement or any specific Service hereto to ensure that all applicable user IDs and passwords are canceled. ARTICLE VIII RELATIONSHIP BETWEEN THE PARTIES The relationship between the parties established under this Agreement is that of independent contractors and neither party is an employee, agent, partner, or joint venturer of or with the other. Schlumberger will be solely responsible for any employment-related taxes, insurance premiums or other employment benefits respecting its personnel's performance of Services under this Agreement. NPT agrees to grant Schlumberger personnel access to sites, systems and information (subject to the provisions of confidentiality in Article XIII below) as necessary for Schlumberger to perform its obligations hereunder. Schlumberger personnel agree to obey any and all security regulations and other published policies of NPT. ARTICLE IX SUBCONTRACTORS Schlumberger may engage a "Subcontractor" to perform all or any portion of Schlumberger's duties under this Agreement, provided that Schlumberger shall have bound any such Subcontractor under the confidentiality obligations at least as protective as the terms of Article XIII regarding confidentiality below, and provided further that Schlumberger remains responsible for the performance of such Subcontractor. As used in this Agreement, "Subcontractor" will mean any individual, partnership, corporation, firm, association, unincorporated organization, joint venture, trust or other entity engaged to perform hereunder. 9 ARTICLE X INTELLECTUAL PROPERTY Section 10.1 Allocation Of Rights By Ancillary Agreements. This Agreement and the performance of this Agreement will not affect the ownership of any copyrights, patents, trademarks, technology or other intellectual property rights allocated in the Ancillary Agreements. Section 10.2 Existing Ownership Rights Unaffected. Neither party will gain, by virtue of this Agreement, any rights of ownership of copyrights, patents, trade secrets, trademarks or any other intellectual property rights owned by the other. Section 10.3 Ownership Of Developed Works. Except as set forth in Section 10.2, Schlumberger will own all copyrights, patents, trade secrets, trademarks and other intellectual property rights subsisting in the Software Deliverables (as defined in Section 11.1 below) and other works developed by Schlumberger for purposes of this Agreement. Section 10.4 License To Preexisting Works. NPT grants Schlumberger a non-exclusive, worldwide, royalty-free license to use, copy, and make derivative works of, distribute, display, perform and transmit NPT's pre-existing copyrighted works or other intellectual property rights solely to the extent necessary for Schlumberger to perform its obligations under this Agreement. ARTICLE XI SOFTWARE LICENSE Section 11.1 Software Deliverable/License. Unless otherwise agreed by the parties under the Ancillary Agreements or any separate license or technology agreement, if Schlumberger supplies NPT with a deliverable that in whole or in part consists of software, firmware, or other computer code (referred to as a "Software Deliverable") as indicated in a Transition Service Schedule, such Software Deliverables will be supplied in object code form only and will be subject to the terms of this Article XI. In the event that such Software Deliverables are licensed to Schlumberger by third parties, NPT agrees to be bound by any different or additional conditions that are required by such third parties and are communicated in writing by Schlumberger to NPT. Section 11.2 Delivery and Acceptance. (a) Delivery. Schlumberger agrees to deliver to NPT one (1): (i) master copy of the Software in object code form only (as specified on the relevant Transition Service Schedule of the Agreement) on the media described on the relevant Transition Service Schedule and (ii) Documentation for the Software on the media described in the relevant Transition Service Schedule ((i) and (ii) collectively a "Complete Copy") as listed in the relevant Transition Service Schedule no later than 10 days after the Separation Date (or any other start date as specifically indicated in the relevant Transition Service Schedule). If Source Code is licensed under this Agreement, Schlumberger agrees to deliver one copy of such Source Code no later 10 than 10 days after the Separation Date (or any other start date as specifically indicated in the relevant Transition Service Schedule). Additional Software or Source Code may be added to this Agreement from time to time by execution by the parties of a Transition Service Schedule. (b) Acceptance of Software (Non-Source Code). NPT agrees and understands that it will be entitled to continue to use the Software in its present form, as currently used in the NPT Business, subject to the provisions of this Agreement. Such Software is accepted by NPT "as is" with no warranties. NPT shall be responsible for any maintenance of such Software and any results it obtains from the use of such Software. Section 11.3 Rights Granted And Restrictions. (a) License To Software. Subject to the terms and conditions of this Agreement, including restrictions imposed by third parties with respect to Software licensed to Schlumberger, Schlumberger hereby grants to NPT, under Schlumberger's intellectual property rights in and to the Software, a non-exclusive, nontransferable worldwide license to (i) use and display the Software for its own internal information processing services and computing needs, and to make sufficient copies as necessary for such use, and (ii) use the Documentation in connection with the permitted use of the Software and make sufficient copies as necessary for such use. (b) License To Source Code. Subject to the terms and conditions of this Agreement, Schlumberger hereby grants to NPT, under Schlumberger's intellectual property rights in and to the Software, a non-exclusive, nontransferable worldwide license to (i) use and reproduce the Source Code for the Software (for archival and back-up purposes only), for the sole purpose of supporting the object code version of the Software (if such object code exists), or, if no object code exists, for the sole purpose of its own internal information processing services and computing needs and (ii) to use Source Code Documentation in connection with the permitted use of the Source Code and make copies for archival and back-up purposes only. (c) Restrictions. NPT shall not itself, or through any Subsidiary, affiliate, agent or third party: (i) sell, lease, license or sublicense the Software, the Source Code, the Documentation or the Source Code Documentation; (ii) decompile, disassemble, or reverse engineer the Software, in whole or in part, except to the extent such restriction is prohibited by applicable law; (iii) allow access to the Software or Source Code by any user other than NPT; (iv) write or develop any derivative software or any other software program based upon the Software or Source Code; (v) use the Software or Source Code to provide processing services to third parties, or (vi) otherwise use the Software or Source Code on a "service bureau" basis; or provide, disclose, divulge or make available to, or permit use of the Software or Source Code by any third party without Schlumberger's prior written consent. (d) Confidentiality. The Source Code and Source Code Documentation are hereby deemed "Confidential Information" and subject to the terms and procedures of the Master Confidential Disclosure Agreement. The period of disclosure shall be one year from the Effective Date of this Agreement or until the termination of Services in which such Software is used (whichever is later), and the period of confidentiality shall be perpetual. 11 (e) Trademarks. Neither party is granted any ownership in or license to the trademarks, marks or trade names (collectively, "Marks") of the other party with respect to the licensed Software. (f) Ownership. Schlumberger hereby reserves all rights to the Software, Source Code and Documentation, and any copyrights, patents, trade secrets, trademarks or other intellectual property rights embodied therein or used in connection therewith, except for the rights expressly granted herein. (g) Copyright Notices. NPT agrees that it will not remove any copyright notices, proprietary markings, trademarks or trade names from the Software, Source Code, Documentation, or Source Code Documentation. (h) Technical Assistance And Training. Schlumberger agrees to provide technical assistance and training to NPT personnel only if such assistance is set forth in the relevant Transition Service Schedule. Section 11.4 As-Is Warranty. As-Is Warranty. THE SOFTWARE AND SOURCE CODE PROVIDED HEREUNDER IS LICENSED ON AN "AS-IS" BASIS ONLY, WITHOUT ANY EXPRESS WARRANTIES OF ANY KIND. Implied Warranty Disclaimer. SCHLUMBERGER MAKES NO WARRANTIES WHATSOEVER, EITHER EXPRESS OR IMPLIED, REGARDING THE SOFTWARE OR SOURCE CODE (INCLUDING DOCUMENTATION AND SOURCE CODE DOCUMENTATION), ITS MERCHANTABILITY OR ITS FITNESS FOR ANY PARTICULAR PURPOSE. NPT ACKNOWLEDGES THAT IT IS SOLELY RESPONSIBLE FOR ANY RESULTS OBTAINED FROM THE USE OF THE SOFTWARE OR SOURCE CODE (INCLUDING DOCUMENTATION AND SOURCE CODE DOCUMENTATION) AND NPT HEREBY IRREVOCABLY WAIVES ANY CLAIMS IT MAY HAVE OR LATER MAY HAVE AGAINST THE SCHLUMBERGER GROUP IN CONNECTION WITH SUCH USE AND RESULTS. Section 11.5 Miscellaneous. No Obligations. NEITHER PARTY ASSUMES ANY RESPONSIBILITY OR OBLIGATIONS WHATEVER, OTHER THAN THE RESPONSIBILITIES AND OBLIGATIONS EXPRESSLY SET FORTH IN THIS AGREEMENT OR A SEPARATE WRITTEN AGREEMENT BETWEEN THE PARTIES Non-Restrictive Relationship. Nothing in this Agreement will be construed to preclude NPT from independently developing, acquiring or marketing computer software packages which may perform the same or similar functions as the Software provided by Schlumberger. ARTICLE XII INFRINGEMENT DEFENSE (a) Notwithstanding anything to the contrary in Article XIII below or the Master Confidential Disclosure Agreement, Schlumberger agrees to defend NPT and its directors, officers, employees and agents against any and all claims, actions or suits (any of the 12 foregoing, a "Claim") incurred by or asserted against NPT based upon infringement of a third party patent or other intellectual property right in connection with the delivery or use of any Software or Service delivered by Schlumberger hereunder. NPT agrees to notify Schlumberger promptly of any Claim and permit Schlumberger at Schlumberger's expense to defend such Claim and will cooperate in the defense thereof. Schlumberger agrees to pay any awards or settlement amounts arising from a Claim. Neither Schlumberger nor NPT will enter into or permit any settlement of any such Claim without the express written consent of the other party. NPT may, at its option and expense, have its own counsel participate in any proceeding that is under the direction of Schlumberger and will cooperate with Schlumberger and its insurer in the disposition of any such matter. (b) Should any Software or Service delivered hereunder become, or in Schlumberger's opinion be likely to become, the subject of a claim of infringement or the like under such patent or copyright laws, NPT shall permit Schlumberger, at Schlumberger's option, to either: (a) procure for NPT the right to continue using the Software or Service; (b) replace or modify the Software or Service so that it becomes non-infringing (provided the same level of functionality is maintained); or (c) accept the return of the Software and cancel NPT's future payment obligations (if any) with respect to its use of the returned Software. If the infringing Software is leased or rented to NPT, or is a Service subject to a service agreement, Schlumberger may terminate the lease or rental or service agreement and NPT's sole remedy in such case shall be the return by Schlumberger of any payments made by NPT for periods after such termination. (c) Schlumberger shall have no liability or obligation to NPT under this Article XII for any patent or copyright infringement or claim thereof based upon: (i) Schlumberger's compliance with NPT's specifications, where such specifications require Schlumberger to modify the Software or Service; (ii) the combination of the Software or Service with other items or services not furnished or approved in writing by Schlumberger; (iii) any unauthorized addition to or modification of the Software, or alteration of the Services at the request of NPT; or (iv) any use of the Software in the performance of a method or process (practice of a process), except where such practice is solely completed by or within the Software. NPT shall defend and hold Schlumberger harmless against any expense, judgment or loss for alleged infringement of any patent, copyright or other proprietary right which results from a claim based upon (i), (ii), (iii), or (iv). ARTICLE XIII CONFIDENTIALITY The terms of the Master Confidential Disclosure Agreement between the parties shall apply to any Confidential Information (as defined therein) that is the subject matter of this Agreement. ARTICLE XIV LIMITATION OF LIABILITY 13 The terms of the provisions entitled "Limitation of Liability" in the Master Separation and Sales Agreement shall apply to any liabilities or damages incurred by the parties by reason of any breach of this Agreement or the activities of the parties hereunder. ARTICLE XV FORCE MAJEURE Each party will be excused for any failure or delay in performing any of its obligations under this Agreement, other than the obligations of NPT to make certain payments to Schlumberger pursuant to Article V hereof for services rendered, if such failure or delay is caused by Force Majeure. "Force Majeure" means any act of God or the public enemy, any accident, explosion, fire, storm, earthquake, flood, or any other circumstance or event beyond the reasonable control of the party relying upon such circumstance or event. ARTICLE XVI DISPUTE RESOLUTION The terms of the provisions entitled "Dispute Resolution" in the Master Separation and Sale Agreement shall apply to any claims or controversies or disputes arising hereunder among the parties to this Agreement. ARTICLE XVII MISCELLANEOUS Section 16.1 Entire Agreement. This Agreement, the Master Separation and Sale Agreement and the other Ancillary Agreements, the Exhibits and Schedules referenced or attached hereto and thereto, and the agreements executed in connection with the Prior Transfers constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof. Section 16.2 Governing Law. This Agreement shall be construed in accordance with and all Disputes hereunder shall be governed by the laws of the State of Delaware, excluding its conflict of law rules and the United Nations Convention on Contracts for the International Sale of Goods. Section 16.3 Descriptive Headings. The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section, Exhibit or Schedule, such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. 14 Section 16.4 Notices. Notices, offers, requests, or other communications required or permitted to be given by either party pursuant to the terms of this Agreement shall be given in writing to the respective parties to the following addresses: if to STI: Schlumberger Technologies, Inc. [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to SBV: Schlumberger BV [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to STC: Schlumberger Technology Corporation [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to NPT: NPTest, Inc. [To Come] Attention: General Counsel Telephone: [__________] Facsimile: [__________] or to such other address as the party to whom notice is given may have previously furnished to the other in writing as provided herein. Any notice involving non-performance, termination, or renewal shall be sent by hand delivery, recognized overnight courier or, within the United States, may also be sent via certified mail, return receipt requested. All other notices may also be sent by fax, confirmed by first class mail. All notices shall be deemed to have been given and received on the earlier of actual delivery or three (3) days from the date of postmark. Section 16.5 Counterparts. This Agreement, and the Schedules hereto, may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. 15 Section 16.6 Binding Effect; Assignment. No party may, directly or indirectly, in whole or in part, whether by operation of law or otherwise, assign or transfer this Agreement, without the other parties' prior written consent, and any attempted assignment, transfer or delegation without such prior written consent shall be voidable at the sole option of such other parties. Notwithstanding the foregoing, each party (or its permitted successive assignees or transferees hereunder) may assign or transfer this Agreement as a whole without consent to an entity that succeeds to all or substantially all of the business or assets of such party. Without limiting the foregoing, this Agreement will be binding upon and inure to the benefit of the parties and their permitted successors and assigns. Section 16.7 Severability. If any term or other provision of this Agreement is determined by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. Section 16.8 Failure Or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of either party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. Section 16.9 Amendment. No change or amendment will be made to this Agreement or the Schedules attached hereto except by an instrument in writing signed on behalf of each of the parties to such agreement. Section 16.10 Authority.Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and general equity principles. 16 IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed in duplicate originals by its duly authorized representatives. Schlumberger Technologies, Inc. NPTest, Inc. By:____________________________ By:________________________ Name: Name: Title: Title: Schlumberger BV By:____________________________ Name: Title: Schlumberger Technology Corporation By:____________________________ Name: Title: 17 TRANSITION SERVICE SCHEDULE TO MASTER TRANSITIONAL SERVICES AGREEMENT 1. Transition Service Schedule #: [__________] (To be inserted by responsible individual or department.) 2. Functional Area: [__________] 3. Start/End Date: The Services start on the Separation Date of the Master Transitional Services Agreement between [Schlumberger ____(legal entity name)] ("Schlumberger") and NPTest, Inc. ("NPT") to which this Transition Service Schedule is attached and end on [__________], 2002 unless otherwise indicated below. Indicate below if other start/end date: Start Date: ___________________________ End Date: ___________________________ If Start and End dates vary by service and/or country, please indicate in Section 5 below. 4. Summary of Services (Describe the service to be provided in appropriate detail. 5. List of services to be provided per country and site: (List all the services to be provided at each site. Enter Start Date and End Date if different than Section 3 above.) Country Site Service(s) Start Date End Date - ------------------ ------------- ---------------- --------------- ----------- 6. Performance parameters/Service level: (State minimum performance expected from each service, if applicable.): 7. Estimated Total Compensation: ____________________________ 8. Describe cost methodology and cost drivers affecting Estimated Total Compensation (Describe on an individual service basis if necessary): 9. Describe the process by which the cost of services will be adjusted in the instance of an increase/reduction in the services provided: (Describe on an individual service basis if necessary.) 10. Software: Will software be used or included with the Services to be provided under this Transition Service Schedule: ____ Yes ____ No If yes, will source code be provided: ____ Yes ____ No List software to be provided: Software Application Number of Licenses to be Provided - ------------------------------------- ------------------------------------- _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ _____________________________________ Upon execution of this Transition Service Schedule by both parties, this Transition Service Schedule is hereby deemed incorporated into and made part of that certain Master Transitional Services Agreement between Schlumberger and NPT. [Schlumberger Limited] NPTest, Inc. By: ________________________________ By: _______________________________ (Authorized Signature) (Authorized Signature) Date: Date: Name: Name: Title: Title: EX-10.9 13 dex109.txt FORM OF REAL ESTATE MATTERS AGREEMENT Exhibit 10.9 Real Estate Matters Agreement by and between Schlumberger Technologies, Inc., Schlumberger Technology Corporation, Schlumberger BV and NPTest, Inc. _______ __, 2000 TABLE OF CONTENTS -----------------
Page ---- ARTICLE I PROPERTY ............................................................................................. 1 - ------------------ Section 1.1 Leased Property .............................................................................. 1 ----------- --------------- Section 1.2 Shared Properties ............................................................................ 2 ----------- ----------------- Section 1.3 Obtaining the Lease Consents ................................................................. 2 ----------- ---------------------------- Section 1.4 Occupation by NPT ............................................................................ 3 ----------- ----------------- Section 1.5 Obligation to Complete ....................................................................... 4 ----------- ---------------------- Section 1.6 Form of Transfer ............................................................................. 4 ----------- ---------------- Section 1.7 Casualty; Lease Termination .................................................................. 5 ----------- --------------------------- Section 1.8 Tenant's Fixtures and Fittings ............................................................... 5 ----------- ------------------------------ Section 1.9 Costs. ....................................................................................... 5 ----------- ----- ARTICLE II MISCELLANEOUS ...................................................................................... 5 ------------------------ Section 2.1 Limitation of Liability ..................................................................... 5 ----------- ----------------------- Section 2.2 Entire Agreement ............................................................................ 5 ----------- ---------------- Section 2.3 Governing Law ............................................................................... 6 ----------- ------------- Section 2.4 Notices ..................................................................................... 6 ----------- ------- Section 2.5 Counterparts ................................................................................ 7 ----------- ------------ Section 2.6 Binding Effect; Assignment .................................................................. 7 ----------- -------------------------- Section 2.7 Severability ................................................................................ 7 ----------- ------------ Section 2.8 Failure or Indulgence Not Waiver; Remedies Cumulative ....................................... 7 ----------- ----------------------------------------------------- Section 2.9 Amendment ................................................................................... 7 ----------- --------- Section 2.10 Authority ................................................................................... 7 ------------ --------- Section 2.11 Interpretation .............................................................................. 8 ------------ -------------- Section 2.12 Disputes .................................................................................... 8 ------------ -------- ARTICLE III DEFINITIONS ....................................................................................... 8 ----------------------- Section 3.1 Disputes .................................................................................... 8 ----------- --------------- Section 3.2 Landlord .................................................................................... 8 ----------- -------- Section 3.3 Lease Consents .............................................................................. 8 ----------- -------------- Section 3.4 Leased Properties ........................................................................... 8 ----------- ----------------- Section 3.5 Sublease Form ............................................................................... 8 ----------- ------------- Section 3.6 Master Separation and Sale Agreement ........................................................ 8 ----------- ------------------------------------ Section 3.7 Prior Transfers ............................................................................. 8 ----------- --------------- Section 3.8 Property .................................................................................... 9 ----------- -------- Section 3.9 Relevant Leases ............................................................................. 9 ----------- --------------- Section 3.10 Separation Date ............................................................................. 9 ------------ --------------- Section 3.11 Shared Properties ........................................................................... 9 ------------ ----------------- Section 3.12 Schlumberger's Lease ........................................................................ 9 ------------ -------------------- Section 3.13 Subsidiary .................................................................................. 9
REAL ESTATE MATTERS AGREEMENT This Real Estate Matters Agreement (this "Agreement") is entered into as of _______ __, 2000 by and among Schlumberger Technologies, Inc., a Delaware corporation ("STI"), Schlumberger Technology Corporation, a Texas corporation ("STC"), Schlumberger BV, a company organized and existing under the laws of the Netherlands ("SBV" and, together with STI and STC, "Schlumberger"), and NPTest, Inc. ("NPT"), a Delaware corporation. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in Article III hereof. RECITALS WHEREAS, NPT is engaged in the NPT Business (as such term is defined in the Master Separation and Sale Agreement); WHEREAS, the parties have entered into a Master Separation and Sale Agreement in connection with the Separation, as there described; and WHEREAS, as provided in the Master Separation and Sale Agreement, the parties desire to set forth certain agreements regarding certain real estate matters. NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the parties hereto agree as follows: ARTICLE I PROPERTY Section 1.1 Leased Property. (a) Schlumberger shall assign or cause its applicable Subsidiary to assign, and NPT shall accept and assume, or cause its applicable Subsidiary to accept and assume, Schlumberger's or its Subsidiary's interest in the Leased Properties, subject to and consistent with the other provisions of this Agreement, the terms of the Master Separation and Sale Agreement, the other Ancillary Agreements and the agreements executed in connection with the Prior Transfers. Such assignment and assumption shall be effective on the later of: (i) the Separation Date; or (ii) the earlier of (A) the fifth business day after the relevant Lease Consent has been granted or (B) the date agreed upon by the parties in accordance with Section 1.6(a) below. (b) Subject to the completion of the assignment to NPT or its applicable Subsidiary of the relevant Leased Property, with respect to each Leased Property which is also a Shared Property, NPT shall grant or cause its applicable Subsidiary to grant to Schlumberger or its applicable Subsidiary a sublease to occupy that part of the relevant Leased Property identified in Section A of Schedule 1 of this Agreement and Schlumberger shall accept or cause its applicable Subsidiary to accept the same. Such sublease shall be completed immediately following completion of the transfer of the relevant Leased Property to NPT or its applicable Subsidiary. Section 1.2 Shared Properties. Schlumberger shall grant or cause its applicable Subsidiary to grant to NPT or its applicable Subsidiary a sublease to occupy those parts of the Shared Properties identified in Section B of Schedule 1 of this Agreement and NPT shall accept or cause its applicable Subsidiary to accept the same, subject to and consistent with the other provisions of this Agreement, the terms of the Master Separation and Sale Agreement, the other Ancillary Agreements and the agreements executed in connection with the Prior Transfers. Such sublease shall be effective on the Separation Date. Section 1.3 Obtaining the Lease Consents. (a) Schlumberger confirms that, with respect to each Leased Property, an application has been made or will be made on or prior to the Separation Date to the relevant Landlord for the Lease Consents required with respect to the transactions contemplated by this Agreement. (b) Schlumberger will use its reasonable efforts to obtain the Lease Consents as to each Leased Property, but Schlumberger shall not be required to commence judicial proceedings for a declaration that a Lease Consent has been unreasonably withheld or delayed, nor shall Schlumberger be required to pay any consideration in excess of that required by the Relevant Lease or that which is typical in the open market to obtain the relevant Lease Consent. NPT shall cooperate as reasonably requested by Schlumberger to obtain the Lease Consents. (c) NPT and Schlumberger will promptly satisfy or cause their applicable Subsidiaries to satisfy the lawful requirements of the Landlord, and NPT will take or cause its applicable Subsidiary to take all steps to assist Schlumberger in obtaining the Lease Consents as to each Leased Property, including, without limitation: (i) if required by the Landlord, entering into an agreement with the relevant Landlord to observe and perform the tenant's obligations contained in the Relevant Lease throughout the remainder of the term of the Relevant Lease, subject to any statutory limitations of such liability; (ii) if required by the Landlord, providing a guarantee, surety or other security (including, without limitation, a security deposit) for the obligations of NPT or its applicable Subsidiary as tenant under the Relevant Lease, and otherwise taking all steps that are reasonably necessary and that NPT or its applicable Subsidiary is reasonably capable of taking to meet the lawful requirements of the Landlord so as to ensure that the Lease Consents are obtained; and (iii) using all reasonable efforts to assist Schlumberger with obtaining the Landlord's consent to the release of any guarantee, surety or other security which Schlumberger or its Subsidiary (other than NPT or its Subsidiaries) may have previously provided to the Landlord and, if required, offering the same or equivalent security to the Landlord in order to obtain such release. Notwithstanding the foregoing, (1) except with respect to guarantees, sureties or other security referenced in Section 1.3(c)(ii) above, NPT shall not be required to obtain a release of any obligation entered into by Schlumberger or any of its Subsidiaries with any Landlord or 2 other third party with respect to any Property and (2) prior to the receipt of each Lease Consent, NPT shall not communicate or permit its applicable Subsidiary to communicate directly with the applicable Landlord unless NPT can show Schlumberger reasonable grounds for doing so. (d) If, with respect to any Leased Properties, Schlumberger and NPT are unable to obtain a release by the Landlord of any guarantee, surety or other security which Schlumberger or its Subsidiary (other than NPT or its Subsidiaries) has previously provided to the Landlord, NPT shall indemnify, defend, protect and hold harmless Schlumberger and its applicable Subsidiaries from and after the Separation Date against all losses, costs, claims, damages, or liabilities incurred by Schlumberger or such Subsidiaries as a result of NPT's occupancy of the Leased Property with respect to such guarantee, surety or other security. Section 1.4 Occupation by NPT. (a) Subject to compliance with Section 1.4(b) below, in the event that the transfer of any Leased Property does not occur on the Separation Date, NPT or its applicable Subsidiary shall, commencing on the Separation Date, be entitled to occupy the relevant Property (except to the extent that the same is a Retained Part) as a subleasee upon the terms and conditions contained in Schlumberger's Lease. Such sublease shall not be revocable prior to the date for completion as provided in Section 1.1(a) unless an enforcement action or forfeiture by the relevant Landlord due to NPT's or its applicable Subsidiary's occupation of the Property constituting a breach of Schlumberger's Lease cannot, in the reasonable opinion of Schlumberger, be avoided other than by requiring NPT or its applicable Subsidiary to immediately vacate the relevant Property, in which case Schlumberger may by notice to NPT immediately require NPT or its applicable Subsidiary to vacate the relevant Property. NPT will be responsible for all costs, expenses and liabilities incurred by Schlumberger or its applicable Subsidiary as a consequence of such occupation, except for any losses, claims, costs, demands and liabilities incurred by Schlumberger or its Subsidiary as a result of any enforcement action taken by the Landlord against Schlumberger or its Subsidiary with respect to any breach by Schlumberger or its Subsidiary of the Relevant Lease in permitting NPT or its applicable Subsidiary to so occupy the Property without obtaining the required Lease Consent, for which Schlumberger or its Subsidiary shall be solely responsible. Neither NPT nor its applicable Subsidiary shall be entitled to make any claim or demand against, or obtain reimbursement from, Schlumberger or its applicable Subsidiary with respect to any costs, losses, claims, liabilities or damages incurred by NPT or its applicable Subsidiary as a consequence of being obliged to vacate the Property or in obtaining alternative premises, including, without limitation, any enforcement action which a Landlord may take against NPT or its applicable Subsidiary. (b) In the event that the transfer of any Leased Property does not occur on the Separation Date, whether or not NPT or its applicable Subsidiary occupies a Property as subleasee as provided in Section 1.4(a) above, NPT shall, effective as of the Separation Date, (i) pay or cause its applicable Subsidiary to pay Schlumberger all rents, service charges, insurance premiums and other sums payable by Schlumberger or its applicable Subsidiary under any Relevant Lease, (ii) observe or cause its applicable Subsidiary to observe the tenant's covenants, obligations and conditions contained in Schlumberger's Lease and (iii) indemnify, defend, protect and hold harmless Schlumberger and its applicable Subsidiary from and against all 3 losses, costs, claims, damages and liabilities arising on account of any breach thereof by NPT or its applicable Subsidiary. (c) Schlumberger shall supply promptly to NPT copies of all invoices, demands, notices and other communications received by Schlumberger or its applicable Subsidiaries or agents in connection with any of the matters for which NPT or its applicable Subsidiary may be liable to make any payment or perform any obligation pursuant to Section 1.4(a) or (b), and shall, at NPT's cost, take any steps and pass on any objections which NPT or its applicable Subsidiary may have in connection with any such matters. NPT shall promptly supply to Schlumberger any notices, demands, invoices and other communications received by NPT or its applicable Subsidiary or agents from any Landlord while NPT or its applicable Subsidiary occupies any Property without the relevant Lease Consent. Section 1.5 Obligation to Complete. (a) If, with respect to any Leased Property, at any time the relevant Lease Consent is formally and unconditionally refused in writing, Schlumberger and NPT shall commence good faith negotiations and use reasonable efforts to determine how to allocate the applicable Property, based on the relative importance of the applicable Property to the operations of each party, the size of the applicable Property, the number of employees of each party at the applicable Property and the potential risk and liability to each party in the event an enforcement action is brought by the applicable Landlord. Such reasonable efforts shall include consideration of alternate structures to accommodate the needs of both parties and the allocation of the costs thereof, including entering into amendments of the size, term or other terms of the Relevant Lease, restructuring a proposed lease assignment to be a sublease and relocating one party. If the parties are unable to agree upon an allocation of the Property within 15 days after commencement of negotiations between the parties as described above, then the terms of the provisions entitled "Dispute Resolution" in the Master Separation and Sale Agreement shall apply to any such disagreement or dispute. Section 1.6 Form of Transfer. (a) The assignment to NPT or its applicable Subsidiary of each relevant Leased Property shall be in substantially the form attached in Schedule 2, with such amendments which in the reasonable opinion of Schlumberger are necessary with respect to a particular Property, including, without limitation, in all cases where a relevant Landlord has required a guarantor or surety to guarantee the obligations of NPT or its applicable Subsidiary contained in the relevant Lease Consent or any other document which NPT or its applicable Subsidiary is required to complete, the giving of such guarantee by a guarantor or surety, and the giving by NPT or its applicable Subsidiary and any guarantor or surety of NPT's or its applicable Subsidiary's obligations of direct obligations to Schlumberger or third parties where required under the terms of any of the Lease Consent or any covenant, condition, restriction, easement, lease or other encumbrance to which the Property is subject. Such amendments shall be submitted to NPT for approval, which approval shall not be unreasonably withheld or delayed. (b) The subleases to be granted by NPT or its applicable Subsidiary to Schlumberger or its applicable Subsidiary, and Schlumberger or its applicable Subsidiary to NPT 4 or its applicable Subsidiary, with respect to the Shared Properties shall be at a rental rate set forth in Schedule 4 hereof and be for a term of 18 months from the Separation Date. Either party shall have the right to terminate the sublease as to any of the Properties upon 30 days' prior written notice. The sublease shall be substantially in the form of the Sublease Form, with such amendments as are, in the reasonable opinion of Schlumberger, necessary with respect to a particular Property. Such amendments shall be submitted to NPT for approval, which approval shall not be unreasonably withheld. Section 1.7 Casualty; Lease Termination. The parties hereto shall grant and accept assignments, leases, subleases or licenses of the Properties as described in this Agreement, regardless of any casualty damage or other change in the condition of the Properties. In addition, subject to Schlumberger's obligations in Section 5.6 of the Master Separation and Sale Agreement, in the event that Schlumberger's Lease with respect to a Leased Property or a Shared Property is terminated prior to the Separation Date, (a) Schlumberger or its applicable Subsidiary shall not be required to assign, sublease or license such Property, (b) NPT or its applicable Subsidiary shall not be required to accept an assignment, sublease or license of such Property and (c) neither party shall have any further liability with respect to such Property hereunder. Section 1.8 Tenant's Fixtures and Fittings. The provisions of the Master Separation and Sale Agreement, the other Ancillary Agreements and the agreements executed in connection with the Prior Transfers shall apply to any trade fixtures and personal property located at each Property. The lease and sublease of the Leased Properties and the subleases as to the Shared Properties shall include the rental of the furniture at such Properties. Section 1.9 Costs. Subject to Section 1.3, Schlumberger shall pay all reasonable costs and expenses incurred in connection with obtaining the Lease Consents, including, without limitation, Landlord's consent fees and attorneys' fees and any costs and expenses relating to re-negotiation of Schlumberger's Leases. ARTICLE II MISCELLANEOUS Section 2.1 Limitation of Liability. IN NO EVENT SHALL ANY MEMBER OF THE SCHLUMBERGER GROUP OR NPT GROUP BE LIABLE TO ANY OTHER MEMBER OF THE SCHLUMBERGER GROUP OR NPT GROUP FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT EACH PARTY'S INDEMNIFICATION OBLIGATIONS FOR LIABILITIES TO THIRD PARTIES AS SET FORTH IN THE INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT. Section 2.2 Entire Agreement. This Agreement, the Master Separation and Sale Agreement, the other Ancillary Agreements, the Exhibits and Schedules referenced or attached 5 hereto and thereto, and the agreements executed in connection with the Prior Transfers constitute the entire agreement between the parties with respect to the subject matter hereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof. Section 2.3 Governing Law. This Agreement shall be construed in accordance with and all Disputes hereunder shall be governed by the laws of the State of Delaware, excluding its conflict of law rules and the United Nations Convention on Contracts for the International Sale of Goods. Notwithstanding the foregoing, the applicable Property transfers shall be performed in accordance with the laws of the state in which the applicable Property is located. Section 2.4 Notices. Notices, offers, requests or other communications required or permitted to be given by either party pursuant to the terms of this Agreement shall be given in writing to the respective parties to the following addresses: if to STI: Schlumberger Technologies, Inc. [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to SBV: Schlumberger BV [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to STC: Schlumberger Technology Corporation [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to NPT: NPTest, Inc. [To Come] Attention: General Counsel Telephone: [__________] Facsimile: [__________] 6 or to such other address as the party to whom notice is given may have previously furnished to the other in writing as provided herein. Any notice involving non-performance, termination, or renewal shall be sent by hand delivery, recognized overnight courier or, within the United States, may also be sent via certified mail, return receipt requested. All other notices may also be sent by fax, confirmed by first class mail. All notices shall be deemed to have been given and received on the earlier of actual delivery or three days from the date of postmark. Section 2.5 Counterparts. This Agreement, including the Schedules and Exhibits hereto, and the other documents referred to herein, may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. Section 2.6 Binding Effect; Assignment. No party may, directly or indirectly, in whole or in part, whether by operation of law or otherwise, assign or transfer this Agreement, without the other parties' prior written consent, and any attempted assignment, transfer or delegation without such prior written consent shall be voidable at the sole option of such other parties. Notwithstanding the foregoing, each party (or its permitted successive assignees or transferees hereunder) may assign or transfer this Agreement as a whole without consent to an entity that succeeds to all or substantially all of the business or assets of such party. Without limiting the foregoing, this Agreement will be binding upon and inure to the benefit of the parties and their permitted successors and assigns. Section 2.7 Severability. If any term or other provision of this Agreement or the Schedules or Exhibits attached hereto is determined by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. Section 2.8 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of either party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement or the Exhibits or Schedules attached hereto are cumulative to, and not exclusive of, any rights or remedies otherwise available. Section 2.9 Amendment. No change or amendment will be made to this Agreement or the Exhibits or Schedules attached hereto except by an instrument in writing signed on behalf of each of the parties to such agreement. Section 2.10 Authority. Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this 7 Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and general equity principles. Section 2.11 Interpretation. The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table or contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Schedule or Exhibit but not otherwise defined therein, shall have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section, Exhibit or Schedule, such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. Section 2.12 Disputes. Any Disputes that arise under this Agreement shall be resolved in accordance with the provisions of Section 5.9 of the Master Separation and Sale Agreement. ARTICLE III DEFINITIONS The following terms, as used herein, shall have the following meanings: Section 3.1 Disputes. "Disputes" has the meaning set forth in the Master Separation and Sale Agreement. Section 3.2 Landlord. "Landlord" means the landlord under Schlumberger's Lease, and its successors and assigns, and includes the holder of any other interest which is superior to the interest of the landlord under Schlumberger's Lease. Section 3.3 Lease Consents. "Lease Consents" means all consents, waivers or amendments required from the Landlord or other third parties under the Relevant Leases to assign the Relevant Leases to NPT or its applicable Subsidiary. Section 3.4 Leased Properties. "Leased Properties" means those Properties listed in Section A of Schedule 1 of this Agreement. Section 3.5 Sublease Form. "Sublease Form" means the form sublease attached hereto as Schedule 3. Section 3.6 Master Separation and Sale Agreement . "Master Separation and Sale Agreement" means that certain Master Separation and Sale Agreement by and among STI, STC, SBV and NPT. Section 3.7 Prior Transfers . "Prior Transfers" has the meaning set forth in the Master Separation and Sale Agreement. 8 Section 3.8 Property. "Property" means the Leased Properties and the Shared Properties. Section 3.9 Relevant Leases. "Relevant Leases" means those of Schlumberger's Leases with respect to which the Landlord's consent is required for assignment or sublease to a third party or which prohibit assignments or subleases. Section 3.10 Separation Date. "Separation Date" has the meaning set forth in the Master Separation and Sale Agreement. Section 3.11 Shared Properties. "Shared Properties" means those Properties listed in (a) Section A of Schedule 1 as a Property involving a sublease back to Schlumberger and (b) Section B of Schedule 1 of this Agreement involving a sublease to NPT. Section 3.12 Schlumberger's Lease. "Schlumberger's Leases" means, in relation to each Property, the lease(s) or sublease(s) or license(s) under which Schlumberger or its applicable Subsidiary holds such Property and any other supplemental document completed prior to the Separation Date. Section 3.13 Subsidiary. "Subsidiary has the meaning set forth in the Master Separation and Sale Agreement. 9 WHEREFORE, the parties have signed this Real Estate Matters Agreement effective as of the date first set forth above. Schlumberger Technologies, Inc. NPTest, Inc. By: ____________________________________ By: ______________________________ Name: Name: Title: Title: Schlumberger BV By: ____________________________________ Name: Title: Schlumberger Technology Corporation By: ____________________________________ Name: Title: 10 Schedule 1 Properties Schedule 2 Form Assignment for Leased Properties Schedule 3 Form Sublease for Shared Properties Schedule 4 Sublease Rental Rates EX-10.10 14 dex1010.txt FORM OF MASTER CONFIDENTIAL DISCLOSURE AGREEMENT Exhibit 10.10 Master Confidential Disclosure Agreement by and among Schlumberger Technologies, Inc., Schlumberger Technology Corporation, Schlumberger BV and NPTest, Inc. _______ __, 2002 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS ........................................................ 1 --------------------- Section 1.1 Ancillary Agreements....................................... 1 ----------- -------------------- Section 1.2 Confidential Information................................... 1 ----------- ------------------------ Section 1.3 Confidentiality Period..................................... 2 ----------- ---------------------- Section 1.4 Disclosing Party........................................... 2 ----------- ---------------- Section 1.5 Highly Confidential Information............................ 2 ----------- ------------------------------- Section 1.6 Master Separation and Sale Agreement....................... 2 ----------- ------------------------------------ Section 1.7 Person..................................................... 2 ----------- ------ Section 1.8 Prior Transfers ........................................... 2 ----------- --------------- Section 1.9 Receiving Party............................................ 2 ----------- --------------- Section 1.10 Separation Date............................................ 3 ------------ --------------- Section 1.11 Subsidiary................................................. 3 ------------ ---------- Section 1.12 Third Party................................................ 3 ------------ ----------- Section 1.13 Transaction Agreements..................................... 3 ------------ ---------------------- ARTICLE II CONFIDENTIALITY ................................................... 3 -------------------------- Section 2.1 Confidentiality And Non-Use Obligations.................... 3 ----------- --------------------------------------- Section 2.2 Disclosure To Sublicensees................................. 3 ----------- -------------------------- Section 2.3 Contract Manufacturers..................................... 3 ----------- ---------------------- Section 2.4 Residuals.................................................. 3 ----------- --------- Section 2.5 Compelled Disclosure....................................... 4 ----------- -------------------- Section 2.6 No Restriction On Disclosing Party......................... 4 ----------- ---------------------------------- Section 2.7 No Restriction On Reassignment............................. 4 ----------- ------------------------------ Section 2.8 Third Party Restrictions................................... 4 ----------- ------------------------ ARTICLE III WARRANTY DISCLAIMER .............................................. 4 ------------------------------- ARTICLE IV CONFIDENTIALITY OF AGREEMENT ...................................... 4 --------------------------------------- ARTICLE V TERM AND TERMINATION ............................................... 5 ------------------------------ Section 5.1 Term....................................................... 5 ----------- ---- Section 5.2 Survival................................................... 5 ----------- -------- ARTICLE VI DISPUTE RESOLUTION ................................................ 5 ----------------------------- ARTICLE VII MISCELLANEOUS PROVISIONS ......................................... 5 ------------------------------------
Section 7.1 Export Restrictions........................................ 5 ----------- ------------------- Section 7.2 No Implied Licenses........................................ 6 ----------- ------------------- Section 7.3 Infringement Suits......................................... 6 ----------- ------------------ Section 7.4 No Other Obligations....................................... 6 ----------- -------------------- Section 7.5 Entire Agreement........................................... 6 ----------- ---------------- Section 7.6 Governing Law.............................................. 6 ----------- -------------- Section 7.7 Descriptive Headings....................................... 6 ----------- -------------------- Section 7.8 Notices.................................................... 6 ----------- ------- Section 7.9 Binding Effect; Assignment................................. 7 ----------- -------------------------- Section 7.10 Severability............................................... 8 ------------ ------------ Section 7.11 Failure Or Indulgence Not Waiver; Remedies Cumulative. .... 8 ------------ ----------------------------------------------------- Section 7.12 Amendment.................................................. 8 ------------ --------- Section 7.13 Counterparts............................................... 8 ------------ ------------ Section 7.14 Authority.................................................. 8 ------------ ---------

ii MASTER CONFIDENTIAL DISCLOSURE AGREEMENT This Master Confidential Disclosure Agreement (the "Agreement") is effective as of _______ __, 2002 (the "Effective Date"), by and among Schlumberger Technologies, Inc., a Delaware corporation ("STI"), Schlumberger Technology Corporation, a Texas corporation ("STC"), Schlumberger BV, a company organized and existing under the laws of the Netherlands ("SBV" and, together with STI, and STC, "Schlumberger"), and NPTest, Inc. ("NPT"), a Delaware corporation. RECITALS WHEREAS, STI and SBV collectively own all of the currently issued and outstanding common stock of NPT; WHEREAS, NPT is engaged in the NPT Business (as such term is defined in the Master Separation and Sale Agreement); WHEREAS, the parties have entered into a Master Separation and Sale Agreement in connection with the Separation, as there described; and WHEREAS, as provided in the Master Separation and Sale Agreement, the parties desire to set forth certain agreements regarding Confidential Information (as defined below). NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the parties hereto agree as follows: ARTICLE I DEFINITIONS For the purpose of this Agreement the following capitalized terms are defined in this Article I and shall have the meaning specified herein: Section 1.1 Ancillary Agreements. "Ancillary Agreements" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.2 Confidential Information."Confidential Information" means business information, technical data, know-how and other information which is not otherwise in the public domain and of which the owner actively undertakes to restrict or control the disclosure to Third Parties in a manner reasonably intended to maintain its confidentiality, and which (i) the Disclosing Party disclosed to the Receiving Party or the Receiving Party had access to on or before the Separation Date, (ii) is the subject of any Transaction Agreement and known to or in the possession of the Receiving Party as of the Separation Date or (iii) is disclosed to the Receiving Party pursuant to any Transaction Agreement for a period of one year after the Effective Date. Confidential Information may include information relating to, by way of example, research, products, services, customers, markets, software, developments, inventions, processes, designs, drawings, engineering, marketing or finances, and may be in writing, disclosed orally or learned by inspection of computer programming code, equipment or facilities. (b) Confidential Information of Third Parties that is known to, in the possession of or acquired by a Receiving Party pursuant to a relationship with the Disclosing Party shall be deemed the Disclosing Party's Confidential Information for purposes herein. (c) Notwithstanding the foregoing provisions of this Section 1.2, Confidential Information shall exclude information that: (i) was in the Receiving Party's possession before receipt from the Disclosing Party and obtained from a source other than the Disclosing Party and other than through the prior relationship of the Disclosing Party and the Receiving Party before the Separation Date; (ii) is or becomes a matter of public knowledge through no fault of the Receiving Party; (iii) is rightfully received by the Receiving Party from a Third Party without a duty of confidentiality; (iv) is disclosed by the Disclosing Party to a Third Party without a duty of confidentiality on the Third Party; (v) is independently developed by the Receiving Party; or (vi) is disclosed by the Receiving Party with the Disclosing Party's prior written approval. Section 1.3 Confidentiality Period. "Confidentiality Period" means, (i) with respect to Confidential Information that is not Highly Confidential Information, five years, and (ii) with respect to Highly Confidential Information, in perpetuity, after either (a) the Separation Date with respect to Confidential Information of the Disclosing Party that is known to or in the possession of the Receiving Party as of the Separation Date or (b) the date of disclosure with respect to Confidential Information that is disclosed by the Disclosing Party to the Receiving Party after the Separation Date. Section 1.4 Disclosing Party. "Disclosing Party" means the party owning or disclosing the relevant Confidential Information. Section 1.5 Highly Confidential Information. "Highly Confidential Information" means Confidential Information that is computer source code for products that are commercially released or for which substantial steps have been taken to commercialization. Section 1.6 Master Separation and Sale Agreement. "Master Separation and Sale Agreement" means that certain Master Separation and Sale Agreement by and among STI, STC, SBV and NPT. Section 1.7 Person. "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. Section 1.8 Prior Transfers. "Prior Transfers" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.9 Receiving Party. "Receiving Party" means the non-owning party or recipient of the relevant Confidential Information. 2 Section 1.10 Separation Date. "Separation Date" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.11 Subsidiary. "Subsidiary" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.12 Third Party. "Third Party" means a Person other than Schlumberger and its Subsidiaries and NPT and its Subsidiaries. Section 1.13 Transaction Agreements. "Transaction Agreements" mean the Master Separation and Sale Agreement, the Ancillary Agreements and the agreements executed in connection with the Prior Transfers. ARTICLE II CONFIDENTIALITY Section 2.1 Confidentiality And Non-Use Obligations. During the Confidentiality Period, the Receiving Party shall (i) protect the Confidential Information of the Disclosing Party by using at least the same degree of care, but no less than a reasonable degree of care, to prevent the unauthorized use, dissemination, or publication of the Confidential Information as Receiving Party uses to protect its own confidential information of a like nature, (ii) not use such Confidential Information in violation of any use restriction in any Transaction Agreement, and (iii) not disclose such Confidential Information to any Third Party, except as expressly permitted under this Agreement, or in the Transaction Agreements or in any other agreements entered into between the parties in writing, without prior written consent of the Disclosing Party. Section 2.2 Disclosure To Sublicensees. The Receiving Party has the right to disclose to its sublicensees permitted under a Transaction Agreement portions of Confidential Information as reasonably necessary in the exercise of the Receiving Party's sublicense rights under such Transaction Agreement, subject to the sublicensee's agreement in writing to confidentiality and non-use terms at least as protective of the Disclosing Party as the provisions of this Agreement. Section 2.3 Contract Manufacturers. The Receiving Party has the right to disclose to its contract manufacturers permitted under any Transaction Agreement portions of the Confidential Information as reasonably necessary in the exercise of the Receiving Party's "have made" rights under any Transaction Agreement, subject to the contract manufacturer's agreement in writing to confidentiality and non-use terms at least as protective of the Disclosing Party as the provisions of this Agreement. Section 2.4 Residuals. Notwithstanding any other provision of this Agreement, the Receiving Party shall be free, and the Disclosing Party hereby grants to the Receiving Party, except as otherwise provided in this Section 2.4, the right, to use or exploit for any purpose and without restriction the Residuals resulting from access to or work with the Confidential Information of the Disclosing Party. "Residuals" means information retained in the unaided memory of an individual who has had access to Confidential Information. The Receiving Party shall have no obligation to pay royalties for any use of Residuals. However, this Section 2.4 3 does not grant the Receiving Party any rights under any patents or copyrights (including derivative works) of the Disclosing Party. Section 2.5 Compelled Disclosure. If the Receiving Party or any of its respective Subsidiaries believes that it will be compelled by a court or other authority to disclose Confidential Information of the Disclosing Party, it shall (i) give the Disclosing Party prompt written notice so that the Disclosing Party may take steps to oppose such disclosure, and (ii) cooperate with the Disclosing Party in its attempts, if any, to legally oppose such disclosure. If the Receiving Party complies with the above, it shall not be prohibited from complying with such requirement to disclose, but shall take all reasonable steps to make such disclosure subject to a suitable protective order or otherwise prevent unrestricted or public disclosure. Section 2.6 No Restriction On Disclosing Party. Nothing in this Agreement shall restrict the Disclosing Party from using, disclosing, or disseminating its own Confidential Information in any way. Section 2.7 No Restriction On Reassignment. This Agreement shall not restrict reassignment of the Receiving Party's employees. Section 2.8 Third Party Restrictions. Nothing in the Agreement supersedes any restriction imposed by Third Parties on their Confidential Information, and there is no obligation on the Disclosing Party to conform Third Party agreements to the terms of this Agreement. ARTICLE III WARRANTY DISCLAIMER EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL CONFIDENTIAL INFORMATION IS PROVIDED ON AN "AS IS, WHERE IS" BASIS AND THAT NEITHER PARTY NOR ANY OF ITS SUBSIDIARIES HAS MADE OR WILL MAKE ANY WARRANTY WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES CONCERNING THE QUALITY OR COMPLETENESS OF THE INFORMATION, ITS SUITABILITY FOR USE, AND ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY OR NON- INFRINGEMENT. EACH PARTY ACKNOWLEDGES THAT IT IS SOLELY RESPONSIBLE FOR ANY RESULTS OBTAINED FROM THE USE OF THE INFORMATION DISCLOSED HEREUNDER AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY CLAIMS IT MAY HAVE OR LATER MAY HAVE AGAINST THE OTHER IN CONNECTION WITH SUCH RESULTS. ARTICLE IV CONFIDENTIALITY OF AGREEMENT Each party agrees that the terms and conditions of the Transaction Agreements marked as confidential shall be treated as Confidential Information and that neither party will disclose such terms or conditions to any Third Party without the prior written consent of the other party, 4 provided, however, that each party may disclose such terms and conditions of such agreements marked as confidential: (a) as required by any court or other governmental body (subject to Section 2.5); (b) as otherwise required by law (subject to Section 2.5); (c) in confidence, to legal counsel of the parties, accountants, and other professional advisors; (d) in confidence to banks, investors and other financing sources and their advisors; (e) in connection with the enforcement of this Agreement or rights under this Agreement; or (f) in confidence, in connection with an actual or prospective merger or acquisition or similar transaction. ARTICLE V TERM AND TERMINATION Section 5.1 Term. This Agreement shall remain in full force and effect unless and until terminated by the mutual written agreement of the parties. Section 5.2 Survival. Articles 2 (with respect to Confidential Information acquired or disclosed prior to the date of termination), 3, 4, 6 and 7 shall survive any termination of this Agreement. ARTICLE VI DISPUTE RESOLUTION The terms of the provisions entitled "Dispute Resolution" in the Master Separation and Sale Agreement shall apply to any claims or controversies or disputes arising hereunder among the parties to this Agreement. ARTICLE VII MISCELLANEOUS PROVISIONS Section 7.1 Export Restrictions. Both parties shall adhere to all applicable laws, regulations and rules relating to the export of technical data where such laws, regulations or rules are applicable to the Information in question, and shall not export or reexport any technical data included in the Information, any products received from Disclosing Party, or the direct product 5 of such technical data, to any proscribed country listed in such applicable laws, regulations and rules unless properly authorized. Section 7.2 No Implied Licenses. Nothing contained in this Agreement shall be construed as conferring any rights by implication, estoppel or otherwise, under any intellectual property right, other than the rights expressly granted in this Agreement with respect to Confidential Information and those licenses expressly granted in certain of the other Ancillary Agreements. Neither party is required hereunder to furnish or disclose to the other any technical or other information. Section 7.3 Infringement Suits. Neither party shall have any obligation hereunder to institute any action or suit against Third Parties for misappropriation of any of its Confidential Information or to defend any action or suit brought by a Third Party that alleges infringement of any intellectual property rights by the Receiving Party's authorized use of the Disclosing Party's Confidential Information. Section 7.4 No Other Obligations. NEITHER PARTY ASSUMES ANY RESPONSIBILITIES OR OBLIGATIONS WHATSOEVER, OTHER THAN THE RESPONSIBILITIES AND OBLIGATIONS EXPRESSLY SET FORTH IN THIS AGREEMENT OR A SEPARATE WRITTEN AGREEMENT BETWEEN THE PARTIES. Section 7.5 Entire Agreement. This Agreement, the Master Separation and Sale Agreement, the other Ancillary Agreements, and the Exhibits and Schedules referenced or attached hereto and thereto, and the agreements executed in connection with the Prior Transfers constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof. Section 7.6 Governing Law. This Agreement shall be construed in accordance with and all Disputes hereunder shall be governed by the laws of the State of Delaware, excluding its conflict of law rules and the United Nations Convention on Contracts for the International Sale of Goods. Section 7.7 Descriptive Headings. The headings contained in this Agreement, in any Exhibit hereto and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Exhibit but not otherwise defined therein, shall have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section or an Exhibit, such reference shall be to an Article or Section of, or an Exhibit to, this Agreement unless otherwise indicated. Section 7.8 Notices. Notices, offers, requests or other communications required or permitted to be given by either party pursuant to the terms of this Agreement shall be given in writing to the respective parties to the following addresses: 6 if to STI: Schlumberger Technologies, Inc. [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to SBV: Schlumberger BV [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to STC: Schlumberger Technology Corporation [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to NPT: NPTest, Inc. [To Come] Attention: General Counsel Telephone: [__________] Facsimile: [__________] or to such other address as the party to whom notice is given may have previously furnished to the other in writing as provided herein. Any notice involving non-performance, termination, or renewal shall be sent by hand delivery, recognized overnight courier or, within the United States, may also be sent via certified mail, return receipt requested. All other notices may also be sent by fax, confirmed by first class mail. All notices shall be deemed to have been given and received on the earlier of actual delivery or three days from the date of postmark. Section 7.9 Binding Effect; Assignment. No party may, directly or indirectly, in whole or in part, whether by operation of law or otherwise, assign or transfer this Agreement, without the other parties' prior written consent, and any attempted assignment, transfer or delegation without such prior written consent shall be voidable at the sole option of such other parties. Notwithstanding the foregoing, each party (or its permitted successive assignees or transferees hereunder) may assign or transfer this Agreement as a whole without consent to an entity that succeeds to all or substantially all of the business or assets of such party. Without 7 limiting the foregoing, this Agreement will be binding upon and inure to the benefit of the parties and their permitted successors and assigns. Section 7.10 Severability. If any term or other provision of this Agreement or the Exhibits attached hereto is determined by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. Section 7.11 Failure Or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of either party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. Section 7.12 Amendment. No change or amendment will be made to this Agreement except by an instrument in writing signed on behalf of each of the parties to such agreement. Section 7.13 Counterparts. This Agreement, including the Ancillary Agreements and the Exhibits and Schedules hereto and thereto and the other documents referred to herein or therein, may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. Section 7.14 Authority. Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and general equity principles. 8 WHEREFORE, the parties have signed this Master Confidential Disclosure Agreement effective as of the date first set forth above. Schlumberger Technologies, Inc. NPTest, Inc. By: __________________________________ By: _____________________________ Name: Name: Title: Title: Schlumberger BV By: __________________________________ Name: Title: Schlumberger Technology Corporation By: __________________________________ Name: Title: 9 EX-10.11 15 dex1011.txt FORM OF INDEMNIFICATION AND INSURANCE MATTERS Exhibit 10.11 Indemnification and Insurance Matters Agreement by and among Schlumberger Technologies, Inc., Schlumberger Technology Corporation, Schlumberger BV and NPTest, Inc. _______ __, 2002 TABLE OF CONTENTS
Page ---- ARTICLE I MUTUAL RELEASES; INDEMNIFICATION ................................................................... 1 - ------------------------------------------ Section 1.1 Release of Pre-Closing Claims.......................................................... 1 ----------- ----------------------------- Section 1.2 Indemnification by NPT................................................................. 2 ----------- ---------------------- Section 1.3 Indemnification by Schlumberger........................................................ 3 ----------- ------------------------------- Section 1.4 Indemnification With Respect to Environmental Actions and Conditions................... 3 ----------- -------------------------------------------------------------------- Section 1.5 Reductions for Insurance Proceeds and Other Recoveries................................. 4 ----------- ------------------------------------------------------ Section 1.6 Procedures for Defense, Settlement and Indemnification of Third Party Claims........... 4 ----------- ---------------------------------------------------------------------------- Section 1.7 Additional Matters..................................................................... 5 ----------- ------------------ Section 1.8 Survival of Indemnities................................................................ 6 ----------- ----------------------- ARTICLE II INSURANCE MATTERS ................................................................................. 6 - ---------------------------- Section 2.1 NPT Insurance Coverage After the Separation Date ...................................... 6 ----------- ------------------------------------------------ Section 2.2 Cooperation and Agreement Not to Release Carriers...................................... 6 ----------- ------------------------------------------------- Section 2.3 Cooperation............................................................................ 7 ----------- ----------- Section 2.4 No Assignment or Waiver................................................................ 7 ----------- ----------------------- Section 2.5 No Liability........................................................................... 7 ----------- ------------ Section 2.6 Further Agreements..................................................................... 7 ----------- ------------------ Section 2.7 Matters Governed by Employee Matters Agreement......................................... 7 ----------- ---------------------------------------------- ARTICLE III MISCELLANEOUS .................................................................................... 7 - ------------------------- Section 3.1 Entire Agreement....................................................................... 8 ----------- ---------------- Section 3.2 Governing Law.......................................................................... 8 ----------- ------------- Section 3.3 Descriptive Headings................................................................... 8 ----------- -------------------- Section 3.4 Dispute Resolution..................................................................... 8 ----------- ------------------ Section 3.5 Notices................................................................................ 8 ----------- ------- Section 3.6 Parties in Interest.................................................................... 9 ----------- ------------------- Section 3.7 Other Agreements Evidencing Indemnification Obligations................................ 9 ----------- ------------------------------------------------------- Section 3.8 Counterparts........................................................................... 9 ----------- ------------ Section 3.9 Binding Effect; Assignment............................................................. 9 ----------- -------------------------- Section 3.10 Severability........................................................................... 10 ------------ ------------ Section 3.11 Failure or Indulgence Not Waiver; Remedies Cumulative.................................. 10 ------------ -----------------------------------------------------
Section 3.12 Amendment................................................ 10 ------------ --------- Section 3.13 Authority................................................ 10 ------------ --------- ARTICLE IV DEFINITIONS ......................................................... 10 - ---------------------- Section 4.1 Action................................................... 10 ----------- ------ Section 4.2 Affiliate................................................ 10 ----------- --------- Section 4.3 Assets................................................... 10 ----------- ------ Section 4.4 Assignment Agreement..................................... 11 ----------- -------------------- Section 4.5 Coverage Amount.......................................... 11 ----------- --------------- Section 4.6 Employee Matters Agreement............................... 11 ----------- -------------------------- Section 4.7 Environmental Actions.................................... 11 ----------- --------------------- Section 4.8 Environmental Conditions................................. 11 ----------- ------------------------ Section 4.9 Environmental Laws....................................... 11 ----------- ------------------ Section 4.10 Hazardous Materials...................................... 11 ------------ ------------------- Section 4.11 Indemnitee............................................... 11 ------------ ---------- Section 4.12 Insurance Policies....................................... 11 ------------ ------------------ Section 4.13 IPO Liabilities.......................................... 11 ------------ --------------- Section 4.14 IPO Registration Statement............................... 12 ------------ -------------------------- Section 4.15 Liabilities.............................................. 12 ------------ ----------- Section 4.16 Master Separation and Sale Agreement..................... 12 ------------ ------------------------------------ Section 4.17 NPT Business............................................. 12 ------------ ------------ Section 4.18 NPT Contracts............................................ 12 ------------ ------------- Section 4.19 NPT Covered Parties...................................... 12 ------------ ------------------- Section 4.20 NPT Facilities........................................... 12 ------------ -------------- Section 4.21 NPT Group................................................ 12 ------------ --------- Section 4.22 NPT Indemnitees.......................................... 12 ------------ --------------- Section 4.23 NPT Liabilities.......................................... 12 ------------ --------------- Section 4.24 Person................................................... 12 ------------ ------ Section 4.25 Pre-Separation Third Party Site Liabilities. ............ 12 ------------ ------------------------------------------- Section 4.26 Prior Transfers.......................................... 12 ------------ --------------- Section 4.27 Release.................................................. 13 ------------ ------- Section 4.28 Sale Date................................................ 13 ------------ --------- Section 4.29 Schlumberger Business.................................... 13 ------------ --------------------- Section 4.30 Schlumberger Facilities.................................. 13 ------------ -----------------------

ii Section 4.31 Schlumberger Group....................................... 13 ------------ ------------------ Section 4.32 Schlumberger Indemnitees................................. 13 ------------ ------------------------ Section 4.33 Separation............................................... 13 ------------ ---------- Section 4.34 Separation Date.......................................... 13 ------------ --------------- Section 4.35 Subsidiary............................................... 13 ------------ ---------- Section 4.36 Tax Sharing Agreement.................................... 13 ------------ --------------------- Section 4.37 Taxes.................................................... 13 ------------ ----- Section 4.38 Third Party Claim........................................ 13 ------------ ----------------- Section 4.39 Underwriting Agreement................................... 13 ------------ ----------------------

iii INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT This Indemnification and Insurance Matters Agreement (this "Agreement") is effective as of _______ __, 2002, by and among Schlumberger Technologies, Inc., a Delaware corporation ("STI"), Schlumberger Technology Corporation, a Texas corporation ("STC"), Schlumberger BV, a company organized and existing under the laws of the Netherlands ("SBV" and, together with STI, and STC, "Schlumberger"), and NPTest, Inc. ("NPT"), a Delaware corporation. Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in Article IV below. RECITALS WHEREAS, STI and SBV collectively own all of the currently issued and outstanding common stock of NPT; WHEREAS, NPT is engaged in the NPT Business (as such term is defined in the Master Separation and Sale Agreement); WHEREAS, the parties have entered into a Master Separation and Sale Agreement in connection with the Separation, as there described; and WHEREAS, as provided in the Master Separation and Sale Agreement, the parties desire to set forth certain agreements regarding indemnification and insurance. NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below, the parties hereto agree as follows: ARTICLE I MUTUAL RELEASES; INDEMNIFICATION Section 1.1 Release of Pre-Closing Claims. (a) NPT Release. Except as provided in Section 1.1(c) and Schedule 1.1 to this Agreement, effective as of the Separation Date, NPT does hereby, for itself and as agent for each member of the NPT Group, remise, release and forever discharge the Schlumberger Indemnitees from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Separation Date, including in connection with the transactions and all other activities to implement any of the Separation, the IPO and the Sale (as such terms are defined in the Master Separation and Sale Agreement). (b) Schlumberger Release. Except as provided in Section 1.1(c) and Schedule 1.1 to this Agreement, effective as of the Separation Date, Schlumberger does hereby, for itself and as agent for each member of the Schlumberger Group, remise, release and forever discharge the NPT Indemnitees from any and all Liabilities whatsoever, whether at law or in equity (including any right of contribution), whether arising under any contract or agreement, by operation of law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed on or before the Separation Date, including in connection with the transactions and all other activities to implement any of the Separation, the IPO and the Sale. (c) No Impairment. Nothing contained in Section 1.1(a) or (b) shall impair any right of any Person to enforce the Master Separation and Sale Agreement, the Underwriting Agreement, any Ancillary Agreement (including this Agreement) or any agreement executed in connection with the Prior Transfers, in each case in accordance with their respective terms. (d) No Actions as to Released Claims. NPT agrees, for itself and as agent for each member of the NPT Group, not to make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against Schlumberger or any member of the Schlumberger Group, or any other Person released pursuant to Section 1.1(a), with respect to any Liabilities released pursuant to Section 1.1(a). Schlumberger agrees, for itself and as agent for each member of the Schlumberger Group, not to make any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against NPT or any member of the NPT Group, or any other Person released pursuant to Section 1.1(b), with respect to any Liabilities released pursuant to Section 1.1(b). (e) Further Instruments. At any time, at the request of any other party, each party shall cause each member of its respective Group to execute and deliver releases reflecting the provisions hereof. Section 1.2 Indemnification by NPT. Except as otherwise provided in this Agreement, NPT shall, for itself and as agent for each member of the NPT Group, indemnify, defend (or, where applicable, pay the defense costs for) and hold harmless the Schlumberger Indemnitees from and against any and all Liabilities that any third party seeks to impose upon the Schlumberger Indemnitees, or which are imposed upon the Schlumberger Indemnitees, and that relate to, arise out of or result from any of the following items (without duplication): (i) the NPT Business, any NPT Liability or any NPT Contract; (ii) any breach by NPT or any member of the NPT Group of the Master Separation and Sale Agreement, any of the Ancillary Agreements (including this Agreement) or any agreement executed in connection with the Prior Transfers; and (iii) any IPO Liabilities. In the event that any member of the NPT Group makes a payment to the Schlumberger Indemnitees hereunder, and any of the Schlumberger Indemnitees subsequently diminishes the Liability on account of which such payment was made, either directly or through a third-party recovery, Schlumberger will promptly repay (or will procure a Schlumberger Indemnitee to promptly repay) such member of the NPT Group the amount by which the payment made by such member of the NPT Group exceeds the actual cost of the associated indemnified Liability. This Section 1.2 shall not apply to any Liability indemnified under Section 1.4. 2 Section 1.3 Indemnification by Schlumberger. Except as otherwise provided in this Agreement, Schlumberger shall, for itself and as agent for each member of the Schlumberger Group, indemnify, defend (or, where applicable, pay the defense costs for) and hold harmless the NPT Indemnitees from and against any and all Liabilities that any third party seeks to impose upon the NPT Indemnitees, or which are imposed upon the NPT Indemnitees, and that relate to, arise out of or result from any of the following items (without duplication): (i) the Schlumberger Business or any Liability of the Schlumberger Group other than the NPT Liabilities; and (ii) any breach by Schlumberger or any member of the Schlumberger Group of the Master Separation and Sale Agreement, any of the Ancillary Agreements (including this Agreement) or any agreement executed in connection with the Prior Transfers. In the event that any member of the Schlumberger Group makes a payment to the NPT Indemnitees hereunder, and any of the NPT Indemnitees subsequently diminishes the Liability on account of which such payment was made, either directly or through a third-party recovery, NPT will promptly repay (or will procure a NPT Indemnitee to promptly repay) such member of the Schlumberger Group the amount by which the payment made by such member of the Schlumberger Group exceeds the actual cost of the indemnified Liability. This Section 1.3 shall not apply to any Liability indemnified under Section 1.4. Section 1.4 Indemnification With Respect to Environmental Actions and Conditions. (a) Indemnification by NPT. NPT shall, for itself and as agent for each member of the NPT Group, indemnify, defend and hold harmless the Schlumberger Indemnitees from and against any and all Environmental Actions relating to, arising out of or resulting from Environmental Conditions (i) arising out of operations occurring on and after the Separation Date at any of the NPT Facilities, or (ii) on any of the NPT Facilities arising from an event causing contamination that first occurs on or after the Separation Date (including any Release of Hazardous Materials occurring after the Separation Date that migrates to any of the NPT Facilities), except to the extent that such Environmental Conditions arise out of the operations of the Schlumberger Group on and after the Separation Date. (b) Indemnification by Schlumberger. Schlumberger shall, for itself and as agent for each member of the Schlumberger Group, indemnify, defend and hold harmless the NPT Indemnitees from and against any and all Environmental Actions relating to, arising out of or resulting from any of the following items: (i) Environmental Conditions (x) existing on or under the NPT Facilities prior to the Separation Date, or (y) arising out of operations occurring on or before the Separation Date at any of the NPT Facilities; (ii) Except as arising out of the operations of the NPT Group on and after the Separation Date, Environmental Conditions on or under, or arising out of operations occurring at any time, whether before or after the Separation Date, at any of the Schlumberger Facilities; and 3 (iii) Pre-Separation Third Party Site Liabilities. (c) Agreement Regarding Payments to Indemnitee. In the event an Indemnifying Party makes any payment to or on behalf of an Indemnitee with respect to an Environmental Action for which the Indemnifying Party is obligated to indemnify under this Section 1.4, and the Indemnitee subsequently receives any payment from a third party on account of the same financial obligation covered by the payment made by the Indemnifying Party for that Environmental Action or otherwise diminishes the financial obligation, the Indemnitee will promptly pay the Indemnifying Party the amount by which the payment made by the Indemnifying Party, exceeds the actual cost of the financial obligation. Section 1.5 Reductions for Insurance Proceeds and Other Recoveries. The amount that any party (an "Indemnifying Party") is or may be required to pay to any other Person (an "Indemnitee") pursuant to Section 1.2, 1.3 or 1.4, as applicable, shall be reduced (retroactively or prospectively) by any Insurance Proceeds or other amounts actually recovered from third parties by or on behalf of such Indemnitee in respect of the related loss. The existence of a claim by an Indemnitee for monies from an insurer or against a third party in respect of any indemnifiable loss shall not, however, delay any payment pursuant to the indemnification provisions contained herein and otherwise determined to be due and owing by an Indemnifying Party. Rather the Indemnifying Party shall make payment in full of the amount determined to be due and owing by it against an assignment by the Indemnitee to the Indemnifying Party of the entire claim of the Indemnitee for Insurance Proceeds or against such third party. Notwithstanding any other provisions of this Agreement, it is the intention of the parties that no insurer or any other third party shall be (i) entitled to a benefit it would not be entitled to receive in the absence of the foregoing indemnification provisions, or (ii) relieved of the responsibility to pay any claims for which it is obligated. If an Indemnitee has received the payment required by this Agreement from an Indemnifying Party in respect of any indemnifiable loss and later receives Insurance Proceeds or other amounts in respect of such indemnifiable loss, then such Indemnitee shall hold such Insurance Proceeds or other amounts in trust for the benefit of the Indemnifying Party (or Indemnifying Parties) and shall pay to the Indemnifying Party, as promptly as practicable after receipt, a sum equal to the amount of such Insurance Proceeds or other amounts received, up to the aggregate amount of any payments received from the Indemnifying Party pursuant to this Agreement in respect of such indemnifiable loss (or, if there is more than one Indemnifying Party, the Indemnitee shall pay each Indemnifying Party, its proportionate share (based on payments received from the Indemnifying Parties) of such Insurance Proceeds). Notwithstanding the other provisions of this Section 1.5, neither party shall be required to make a claim against its insurers for any indemnifiable event under this Agreement. Section 1.6 Procedures for Defense, Settlement and Indemnification of Third Party Claims. (a) Notice of Claims. If a Schlumberger Indemnitee or a NPT Indemnitee (as applicable) (an "Indemnitee") shall receive notice or otherwise learn of the assertion by a Person (including any Governmental Authority) who is not a member of the Schlumberger Group or the NPT Group of any claim or of the commencement by any such Person of any Action (collectively, a "Third Party Claim") with respect to which a party (an "Indemnifying Party") may be obligated to provide indemnification to such Indemnitee pursuant to Section 1.2, 1.3 or 4 1.4, or any other section of the Master Separation and Sale Agreement or any Ancillary Agreement (including this Agreement), Schlumberger or NPT (as applicable) will ensure that such Indemnitee shall give such Indemnifying Party written notice thereof within 30 days after becoming aware of such Third Party Claim. Any such notice shall describe the Third Party Claim in reasonable detail. Notwithstanding the foregoing, the delay or failure of any Indemnitee or other Person to give notice as provided in this Section 1.6(a) shall not relieve the related Indemnifying Party of its obligations under this Article I, except to the extent that such Indemnifying Party is actually and substantially prejudiced by such delay or failure to give notice. (b) Defense By Indemnifying Party. An Indemnifying Party shall have the sole right to manage the defense of and may settle or compromise any Third Party Claim. Within 30 days after the receipt of notice from an Indemnitee in accordance with Section 1.6(a) (or sooner, if the nature of such Third Party Claim so requires), the Indemnifying Party shall notify the Indemnitee that the Indemnifying Party will assume responsibility for managing the defense of such Third Party Claim, which notice shall specify any reservations or exceptions. (c) Defense By Indemnitee. If an Indemnifying Party fails to assume responsibility for managing the defense of a Third Party Claim, or fails to notify an Indemnitee that it will assume responsibility as provided in Section 1.6(a), such Indemnitee may manage the defense of such Third Party Claim; provided, however, that the Indemnifying Party shall reimburse all such costs and expenses in the event it is ultimately determined that the Indemnifying Party is obligated to indemnify the Indemnitee with respect to such Third Party Claim. (d) No Settlement By Indemnitee Without Consent. Unless the Indemnifying Party has failed to manage the defense of the Third Party Claim in accordance with the terms of this Agreement, no Indemnitee may settle or compromise any Third Party Claim without the consent of the Indemnifying Party. (e) No Consent to Certain Judgments or Settlements Without Consent. Notwithstanding any provision of this Section 1.6, no party shall consent to entry of any judgment or enter into any settlement of a Third Party Claim without the consent of the other party (such consent not to be unreasonably withheld) if the effect of such judgment or settlement is to (i) permit any injunction, declaratory judgment, other order or other nonmonetary relief to be entered, directly or indirectly, against the other party or (ii) affect the other party in a material fashion due to the allocation of Liabilities and related indemnities set forth in the Master Separation and Sale Agreement, this Agreement or any other Ancillary Agreement. Section 1.7 Additional Matters. (a) Cooperation in Defense and Settlement. With respect to any Third Party Claim that implicates both NPT and Schlumberger in a material fashion due to the allocation of Liabilities, responsibilities for management of defense and related indemnities set forth in the Master Separation and Sale Agreement, this Agreement or any of the Ancillary Agreements, the parties agree to cooperate fully and maintain a joint defense (in a manner that will preserve the attorney-client privilege with respect thereto) so as to minimize such Liabilities and defense 5 costs associated therewith. The party that is not responsible for managing the defense of such Third Party Claims shall, upon reasonable request, be consulted with respect to significant matters relating thereto and may, if necessary or helpful, associate counsel to assist in the defense of such claims. (b) Substitution. In the event of an Action in which the Indemnifying Party is not a named defendant, if either the Indemnitee or the Indemnifying Party shall so request, the parties shall endeavor to substitute the Indemnifying Party for the named defendant. If such substitution or addition cannot be achieved for any reason or is not requested, the rights and obligations of the parties regarding indemnification and the management of the defense of claims as set forth in this Article I shall not be altered. (c) Subrogation. In the event of payment by or on behalf of any Indemnifying Party to or on behalf of any Indemnitee in connection with any Third Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee, in whole or in part based upon whether the Indemnifying Party has paid all or only part of the Indemnitee's Liability, as to any events or circumstances in respect of which such Indemnitee may have any right, defense or claim relating to such Third Party Claim against any claimant or plaintiff asserting such Third Party Claim or against any other person. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim. (d) Not Applicable to Taxes. This Agreement shall not apply to Taxes, which are covered by the Tax Sharing Agreement. Section 1.8 Survival of Indemnities. Subject to Section 3.9 the rights and obligations of the members of the Schlumberger Group and the NPT Group under this Article I shall survive the sale or other transfer by any party of any Assets or businesses or the assignment by it of any Liabilities or the sale by any member of the Schlumberger Group or the NPT Group of the capital stock or other equity interests of any Subsidiary to any Person. ARTICLE II INSURANCE MATTERS Section 2.1 NPT Insurance Coverage After the Separation Date From and after the Separation Date, NPT shall be responsible for obtaining and maintaining insurance programs for its risk of loss, including comprehensive general liability and directors and officers insurance, and such insurance arrangements shall be separate and apart from Schlumberger's insurance programs. Notwithstanding the foregoing, Schlumberger, upon the request of NPT, shall provide reasonable assistance to NPT in the transition to its own separate insurance programs. NPT shall determine the amount and scope of such insurance after consultation with Schlumberger. Section 2.2 Cooperation and Agreement Not to Release Carriers. Each of Schlumberger and NPT will share such information as is reasonably necessary in order to permit the other to manage and conduct its insurance matters in an orderly fashion. Each of Schlumberger and NPT, at the request of the other, shall cooperate with and use reasonable 6 efforts to assist the other in recoveries for claims made under any insurance policy for the benefit of any insured party, and neither Schlumberger nor NPT, nor any of their Subsidiaries, shall take any action which would intentionally jeopardize or otherwise interfere with either party's ability to collect any proceeds payable pursuant to any insurance policy. Except as otherwise contemplated by the Master Separation and Sale Agreement, this Agreement or any Ancillary Agreement, after the Separation Date, neither Schlumberger nor NPT shall (and shall ensure that no member of their respective Groups shall), without the consent of the other, provide any insurance carrier with a release, or amend, modify or waive any rights under any such policy or agreement, if such release, amendment, modification or waiver would adversely affect any rights or potential rights of any member of the other Group thereunder. However, nothing in this Section 2.2 shall (A) preclude any member of any Group from presenting any claim or from exhausting any policy limit, (B) require any member of any Group to pay any premium or other amount or to incur any Liability, or (C) require any member of any Group to renew, extend or continue any policy in force. Section 2.3 Cooperation. Schlumberger and NPT will cooperate with each other in all respects, and they shall execute any additional documents which are reasonably necessary, to effectuate the provisions of this Article II. Section 2.4 No Assignment or Waiver. This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any member of the Schlumberger Group in respect of any Insurance Policy or any other contract or policy of insurance. Section 2.5 No Liability. NPT does hereby, for itself and as agent for each other member of the NPT Group, agree that no member of the Schlumberger Group or any Schlumberger Indemnitee shall have any Liability whatsoever as a result of the insurance policies and practices of Schlumberger and its Subsidiaries, including as a result of the level or scope of any such insurance, the creditworthiness of any insurance carrier, the terms and conditions of any policy, the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim or otherwise. Section 2.6 Further Agreements. The Parties acknowledge that they intend to allocate financial obligations without violating any laws regarding insurance, self-insurance or other financial responsibility. If it is determined that any action undertake pursuant to the Master Separation and Sale Agreement, this Agreement or any Ancillary Agreement is violative of any insurance, self-insurance or related financial responsibility law or regulation, the parties agree to work together to do whatever is necessary to comply with such law or regulation while trying to accomplish, as much as possible, the allocation of financial obligations as intended in the Master Separation and Sale Agreement, this Agreement and any Ancillary Agreement. Section 2.7 Matters Governed by Employee Matters Agreement. This Article II shall not apply to any insurance policies that are the subject of the Employee Matters Agreement. ARTICLE III MISCELLANEOUS 7 Section 3.1 Entire Agreement. This Agreement, the Master Separation and Sale Agreement, the other Ancillary Agreements and the Exhibits and Schedules attached hereto and thereto, and any agreement executed in connection with the Prior Transfers constitute the entire agreement between the parties with respect to the subject matter hereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof. Section 3.2 Governing Law. This Agreement shall be construed in accordance with and all Disputes hereunder shall be governed by the laws of the State of Delaware, excluding its conflict of law rules and the United Nations Convention on Contracts for the International Sale of Goods. Section 3.3 Descriptive Headings. The headings contained in this Agreement, in any Exhibit or Schedule hereto and in the table or contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Any capitalized term used in any Schedule or Exhibit but not otherwise defined therein, shall have the meaning assigned to such term in this Agreement. When a reference is made in this Agreement to an Article or a Section, Exhibit or Schedule, such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. Section 3.4 Dispute Resolution. The terms of the provisions entitled "Dispute Resolution" in the Master Separation and Sale Agreement shall apply to any claims or controversies or disputes arising hereunder among the parties to this Agreement. Section 3.5 Notices. Notices, offers, requests or other communications required or permitted to be given by either party pursuant to the terms of this Agreement shall be given in writing to the respective parties to the following addresses: if to STI: Schlumberger Technologies, Inc. [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to SBV: Schlumberger BV [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to STC: Schlumberger Technology Corporation 8 [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to NPT: NPTest, Inc. [To Come] Attention: General Counsel Telephone: [__________] Facsimile: [__________] or to such other address as the party to whom notice is given may have previously furnished to the other in writing as provided herein. Any notice involving non-performance, termination, or renewal shall be sent by hand delivery, recognized overnight courier or, within the United States, may also be sent via certified mail, return receipt requested. All other notices may also be sent by fax, confirmed by first class mail. All notices shall be deemed to have been given and received on the earlier of actual delivery or three days from the date of postmark. Section 3.6 Parties in Interest. This Agreement, including the Schedules and Exhibits hereto, and the other documents referred to herein, shall be binding upon Schlumberger, Schlumberger's Subsidiaries, NPT and NPT's Subsidiaries and inure solely to the benefit of the NPT Indemnitees and the Schlumberger Indemnitees and their respective permitted assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other Person any rights or remedies of any nature whatsoever under or by reason of this Agreement. Section 3.7 Other Agreements Evidencing Indemnification Obligations. Schlumberger hereby agrees to execute, for the benefit of any NPT Indemnitee, such documents as may be reasonably requested by such NPT Indemnitee, evidencing Schlumberger's agreement that the indemnification obligations of Schlumberger set forth in this Agreement inure to the benefit of and are enforceable by such NPT Indemnitee. NPT hereby agrees to execute, for the benefit of any Schlumberger Indemnitee, such documents as may be reasonably requested by such Schlumberger Indemnitee, evidencing NPT's agreement that the indemnification obligations of NPT set forth in this Agreement inure to the benefit of and are enforceable by such Schlumberger Indemnitee. Section 3.8 Counterparts. This Agreement, including the Schedules and Exhibits hereto, and the other documents referred to herein, may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. Section 3.9 Binding Effect; Assignment. No party may, directly or indirectly, in whole or in part, whether by operation of law or otherwise, assign or transfer this Agreement, without the other parties' prior written consent, and any attempted assignment, transfer or delegation without such prior written consent shall be voidable at the sole option of such other parties. Notwithstanding the foregoing, each party (or its permitted successive assignees or 9 transferees hereunder) may assign or transfer this Agreement as a whole without consent to an entity that succeeds to all or substantially all of the business or assets of such party. Without limiting the foregoing, this Agreement will be binding upon and inure to the benefit of the parties and their permitted successors and assigns. This Agreement may be enforced separately by each member of the Schlumberger Group and each member of the NPT Group. Section 3.10 Severability. If any term or other provision of this Agreement is determined by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. Section 3.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of either party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. Section 3.12 Amendment. No change or amendment will be made to this Agreement except by an instrument in writing signed on behalf of each of the parties to this Agreement. Section 3.13 Authority. Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other action, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and general equity principles. ARTICLE IV DEFINITIONS Section 4.1 Action. "Action" means any demand, action, suit, countersuit, arbitration, inquiry, proceeding or investigation by or before any federal, state, local, foreign or international governmental authority or any arbitration or mediation tribunal. Section 4.2 Affiliate. "Affiliate" shall have the meaning set forth in the Master Separation and Sale Agreement. Section 4.3 Assets. "Assets" has the meaning set forth in Section 4.4 of the Assignment Agreement. 10 Section 4.4 Assignment Agreement. "Assignment Agreement" means the General Assignment and Assumption Agreement attached as Exhibit C to the Master Separation and Sale Agreement. Section 4.5 Coverage Amount. "Coverage Amount" has the meaning set forth in Section 2.6(a) of this Agreement. Section 4.6 Employee Matters Agreement. "Employee Matters Agreement" means the Employee Matters Agreement attached as Exhibit E to the Master Separation and Sale Agreement. Section 4.7 Environmental Actions. "Environmental Actions" means any notice, claim, act, cause of action, order, decree or investigation by any third party (including, without limitation, any Governmental Authority) alleging potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, damage to flora or fauna caused by Environmental Conditions, real property damages, personal injuries or penalties) arising out of, based on or resulting from the Release of or exposure of any individual to any Hazardous Materials. Section 4.8 Environmental Conditions. "Environmental Conditions" means the presence in the environment, including the soil, groundwater, surface water or ambient air, of any Hazardous Material at a level which exceeds any applicable standard or threshold under any Environmental Law or otherwise requires investigation or remediation (including, without limitation, investigation, study, health or risk assessment, monitoring, removal, treatment or transport) under any applicable Environmental Laws. Section 4.9 Environmental Laws. "Environmental Laws" means all laws and regulations of any Governmental Authority with jurisdiction that relate to the protection of the environment (including ambient air, surface water, ground water, land surface or subsurface strata) including laws and regulations relating to the Release of Hazardous Materials, or otherwise relating to the treatment, storage, disposal, transport or handling of Hazardous Materials, or to the exposure of any individual to a Release of Hazardous Materials. Section 4.10 Hazardous Materials. "Hazardous Materials" means chemicals, pollutants, contaminants, wastes, toxic substances, radioactive and biological materials, hazardous substances, petroleum and petroleum products or any fraction thereof. Section 4.11 Indemnitee. "Indemnitee" has the meaning set forth in Section 1.5(a) hereof. Section 4.12 Insurance Policies. "Insurance Policies" means insurance policies pursuant to which a Person makes a true risk transfer to an insurer. Section 4.13 IPO Liabilities. "IPO Liabilities" means any Liabilities relating to, arising out of or resulting from any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in the IPO 11 Registration Statement or any preliminary, final or supplemental prospectus forming a part of a IPO Registration Statement. Section 4.14 IPO Registration Statement. "IPO Registration Statement" shall have the meaning set forth in the Master Separation and Sale Agreement. Section 4.15 Liabilities. "Liabilities" has the meaning set forth in Section 4.13 of the Assignment Agreement. Section 4.16 Master Separation and Sale Agreement. "Master Separation and Sale Agreement" means that certain Master Separation and Sale Agreement by and among STI, STC, SBV and NPT. Section 4.17 NPT Business. "NPT Business" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.18 NPT Contracts. "NPT Contracts" has the meaning set forth in Section 4.23 of the Assignment Agreement. Section 4.19 NPT Covered Parties. "NPT Covered Parties" has the meaning set forth in Section 2.1(a) of this Agreement. Section 4.20 NPT Facilities. "NPT Facilities" means all of those acilities transferred to NPT on or before the Separation Date as set forth on Schedule 1 to the Real Estate Matters Agreement. Section 4.21 NPT Group. "NPT Group" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.22 NPT Indemnitees. "NPT Indemnitees" means NPT, each member of the NPT Group and each of their respective directors, officers and employees. Section 4.23 NPT Liabilities. "NPT Liabilities" has the meaning set forth in Section 1.3 of the Assignment Agreement. Section 4.24 Person. "Person" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.25 Pre-Separation Third Party Site Liabilities. "Pre-Separation Third Party Site Liabilities" means any and all Environmental Actions arising out of Hazardous Materials found on, under or about any landfill any waste, storage, transfer or recycling site and resulting from or arising out of Hazardous Materials stored, treated, recycled disposed or otherwise handled at such site prior to the Separation Date (whether for the operation of the NPT Business or for the operation of any past or presently (as of the date hereof) existing Schlumberger Business as operated on or before the Separation Date). Section 4.26 Prior Transfers. "Prior Transfers" has the meaning set forth in the Master Separation and Sale Agreement. 12 Section 4.27 Release. "Release" means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment, including, without limitation, the movement of Hazardous Materials through ambient air, soil, surface water, groundwater, wetlands, land or subsurface strata. Section 4.28 Sale Date. "Sale Date" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.29 Schlumberger Business. "Schlumberger Business" means any business of Schlumberger other than the NPT Business. Section 4.30 Schlumberger Facilities. "Schlumberger Facilities" means all of the real property and improvements thereon owned or occupied at any time on or before the Separation Date by any member of the Schlumberger Group, whether for the Schlumberger Business or the NPT Business, excluding the NPT Facilities. Section 4.31 Schlumberger Group. "Schlumberger Group" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.32 Schlumberger Indemnitees. "Schlumberger Indemnitees" means Schlumberger, each member of the Schlumberger Group and each of their respective directors, officers and employees. Section 4.33 Separation. "Separation" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.34 Separation Date. " Separation Date" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.35 Subsidiary. "Subsidiary" has the meaning set forth in the Master Separation and Sale Agreement. Section 4.36 Tax Sharing Agreement. "Tax Sharing Agreement" means the Tax Sharing Agreement, attached as Exhibit F to the Master Separation and Sale Agreement. Section 4.37 Taxes. "Taxes" has the meaning set forth in the Tax Sharing Agreement. Section 4.38 Third Party Claim. "Third Party Claim" has the meaning set forth in Section 1.6(a) of this Agreement. Section 4.39 Underwriting Agreement. "Underwriting Agreement" has the meaning set forth in the Master Separation and Sale Agreement. 13 IN WITNESS WHEREOF, each of the parties has caused this Indemnification and Insurance Matters Agreement to be executed on its behalf by its officers thereunto duly authorized on the day and year first above written. Schlumberger Technologies, Inc. NPTest, Inc. ___________________________________ _______________________________ By: By: Name Name: Title: Title: Schlumberger BV ____________________________________ By: Name: Title: Schlumberger Technology Corporation ____________________________________ By: Name: Title: 14 EX-10.15 16 dex1015.txt FORM OF REGISTRATION RIGHTS AGREEMENT Exhibit 10.15 Registration Rights Agreement by and among Schlumberger Technologies, Inc., Schlumberger BV and NPTest, Inc. _________ __, 2002 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS .......................................................... 1 - --------------------- Section 1.1 Affiliate..................................................... 1 ----------- --------- Section 1.2 Common Stock.................................................. 1 ----------- ------------ Section 1.3 Continuously Effective........................................ 2 ----------- ---------------------- Section 1.4 Exchange Act.................................................. 2 ----------- ------------ Section 1.5 Holders....................................................... 2 ----------- ------- Section 1.6 IPO........................................................... 2 ----------- --- Section 1.7 IPO Closing Date.............................................. 2 ----------- ---------------- Section 1.8 IPO Restricted Period......................................... 2 ----------- --------------------- Section 1.9 Maximum Number................................................ 2 ----------- -------------- Section 1.10 Person........................................................ 2 ------------ ------ Section 1.11 Prospectus.................................................... 2 ------------ ---------- Section 1.12 Registrable Securities........................................ 2 ------------ ---------------------- Section 1.13 Registration Expenses......................................... 3 ------------ --------------------- Section 1.14 Registration Statement........................................ 3 ------------ ---------------------- Section 1.15 Related Securities............................................ 3 ------------ ------------------ Section 1.16 Securities Act................................................ 4 ------------ -------------- Section 1.17 SEC........................................................... 4 ------------ --- Section 1.18 Shelf Registration Statement.................................. 4 ------------ ----------------------------------- Section 1.19 Underwritten Registration or Underwritten Offering............ 4 ------------ -------------------------------------------------- Section 1.20 Underwriters' Representative.................................. 4 ------------ ---------------------------- ARTICLE II SECURITIES SUBJECT TO THIS AGREEMENT ................................ 4 - ----------------------------------------------- ARTICLE III REGISTRATION UNDER THE SECURITIES ACT .............................. 4 - ------------------------------------------------- Section 3.1 Shelf Registration............................................ 4 ----------- ------------------ Section 3.2 Required Registration......................................... 4 ----------- --------------------- Section 3.3 Incidental Registration....................................... 7 ----------- ----------------------- ARTICLE IV BLACKOUT PERIOD ..................................................... 8 - -------------------------- Section 4.1 General....................................................... 8 ----------- -------
Section 4.2 Specific Blackout Procedures................................. 9 ----------- ---------------------------- ARTICLE V SELECTION OF UNDERWRITERS ............................................ 9 - ----------------------------------- ARTICLE VI HOLDBACK AGREEMENT .................................................. 10 - ----------------------------- Section 6.1 Holder Sale or Distribution.................................. 10 ----------- --------------------------- Section 6.2 Company Sale or Distribution................................. 10 ----------- ---------------------------- Section 6.3 Holder Distribution to Stockholders.......................... 10 ----------- ----------------------------------- Section 6.4 Definitions.................................................. 10 ----------- ----------- ARTICLE VII REGISTRATION PROCEDURES ............................................ 11 - ----------------------------------- Section 7.1 Required Procedures.......................................... 11 ----------- ------------------- ARTICLE VIII REGISTRATION EXPENSES ............................................. 15 - ---------------------------------- ARTICLE IX INDEMNIFICATION; CONTRIBUTION ....................................... 15 - ---------------------------------------- Section 9.1 Indemnification by the Company............................... 15 ----------- ------------------------------ Section 9.2 Indemnification by Holders of Registrable Securities ........ 16 ----------- ---------------------------------------------------- Section 9.3 Conduct of Indemnification Proceedings ...................... 16 ----------- -------------------------------------- Section 9.4 Contribution ................................................ 17 ----------- ------------ ARTICLE X RULE 144 ............................................................. 18 - ------------------ ARTICLE XI MISCELLANEOUS ....................................................... 18 - ------------------------ Section 11.1 Remedies..................................................... 18 ------------ -------- Section 11.2 Termination.................................................. 18 ------------ ----------- Section 11.3 Amendment.................................................... 19 ------------ --------- Section 11.4 Entire Agreement............................................. 19 ------------ ---------------- Section 11.5 Notices...................................................... 19 ------------ ------- Section 11.6 Successors and Assigns....................................... 20 ------------ ---------------------- Section 11.7 Authority.................................................... 20 ------------ --------- Section 11.8 Counterparts................................................. 20 ------------ ------------ Section 11.9 Descriptive Headings......................................... 20 ------------ -------------------- Section 11.10 Governing Law................................................ 20 ------------- ------------- Section 11.11 Severability................................................. 20 ------------- ------------

REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT, dated as of _________, 2002, by and among NPTest, Inc., a Delaware corporation (the "Company"), Schlumberger Technologies, Inc., a Delaware corporation ("STI"), and Schlumberger BV, a company organized under the laws of the British Virgin Islands ("SBV"). W I T N E S S E T H: WHEREAS, STI and SBV collectively own all of the currently issued and outstanding common stock of the Company; WHEREAS, the parties hereto have entered into a Master Separation and Sale Agreement (the "Master Separation Agreement") as described in the Registration Statement on Form S-1, Registration No. 333-__________, as amended or supplemented from time to time, pursuant to which the Company's shares will become publicly traded; WHEREAS, the parties hereto desire to set forth the rights of the Holders (as hereinafter defined) and the obligations of the Company with respect to the registration of the Registrable Securities (as hereafter defined) pursuant to the Securities Act (as hereafter defined); and WHEREAS, the execution and delivery of this Agreement by the parties hereto is a condition to the obligations of each of the Holders and the Company under the Master Separation Agreement; NOW, THEREFORE, in consideration of the covenants and agreements of the Holders and the Company contained herein and in the Master Separation Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I DEFINITIONS Capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Master Separation Agreement. For purposes of this Agreement the following terms shall have the following meanings: Section 1.1 Affiliate. "Affiliate" of any Person means any entity that controls, is controlled by, or is under common control with such Person. As used herein, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such entity, whether through ownership of voting securities or other interests, by contract or otherwise. Section 1.2 Common Stock. "Common Stock" means the shares of common stock, par value $0.01 per share, of the Company. Section 1.3 Continuously Effective. "Continuously Effective" with respect to a specified Registration Statement, means that such Registration Statement shall not cease to be effective and available for transfers of Registrable Securities in accordance with the method of distribution set forth therein during the period specified in the relevant provision of this Agreement. Section 1.4 Exchange Act. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder. Section 1.5 Holders. "Holders" means, collectively, Schlumberger Technologies Inc., Schlumberger BV and their respective Affiliates (other than the Company and its controlled Affiliates) who from time to time own Registrable Securities or any transferee of a Holder entitled to the benefits of this Agreement; each of such entities separately is sometimes referred to herein as a "Holder." Section 1.6 IPO. "IPO" means the initial public offering of shares of the Common Stock (the "Shares") contemplated by the Master Separation Agreement. Section 1.7 IPO Closing Date. "IPO Closing Date" has the meaning set forth in the Master Separation and Sale Agreement. Section 1.8 IPO Restricted Period. "IPO Restricted Period" means the period, if any, during which the Holders agree with the representatives of the Underwriters in the IPO not to sell shares of Common Stock, as the same may be waived, shortened or, with the consent of the Holders, extended. Section 1.9 Maximum Number. "Maximum Number" when used in connection with an underwritten offering, shall mean the maximum number of shares of Common Stock (or amount of other Registrable Securities) that the Underwriters' Representative has informed the Company and the Holders may be included as part of such offering without materially and adversely affecting the success or pricing of such offering. Section 1.10 Person. "Person" shall mean any natural person, firm, individual, corporation, partnership, limited liability company, joint venture, business trust, association, trust, company or other organization or entity, whether incorporated or unincorporated. Section 1.11 Prospectus. "Prospectus" means the prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus. Section 1.12 Registrable Securities. "Registrable Securities" means, collectively, (i) the shares of Common Stock owned by the Holders immediately following the first closing of the IPO (the "Shares"), (ii) any stock or other securities (of the Company or any other issuer) into which or for which the Shares may hereafter be changed, converted or exchanged, (iii) any other securities issued or distributed in respect of the Shares by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, reorganization, merger, consolidation or otherwise, and (iv) any other successor securities received in respect of any of the foregoing (i) through (iii); provided that in the event that any Registrable Securities (as defined without giving effect to this proviso) are being registered pursuant hereto, the Holder may include in such registration (subject to the limitations of this Agreement otherwise applicable to the inclusion of Registrable Securities) any shares of Common Stock or securities acquired in respect thereof acquired at any time by such Holder, which shall also be deemed to be "Shares", and accordingly Registrable Securities, for purposes of such registration. Section 1.13 Registration Expenses. "Registration Expenses" means any and all out-of-pocket expenses incident to performance of or compliance with this Agreement, including, without limitation, (i) all SEC and securities exchange registration and filing fees, (ii) all fees and expenses of complying with securities or blue sky laws (including fees and disbursements of counsel for any underwriters in connection with blue sky qualifications of the Registrable Securities) or relating to the National Association of Securities Dealers, Inc. (the "NASD"), (iii) all printing, messenger and delivery expenses, (iv) all fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange pursuant to Section 7(h), (v) the fees and disbursements of counsel for the Company and of its independent public accountants, (vi) all expenses in connection with the preparation, printing and filing of the Registration Statement, any preliminary Prospectus or final Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to any Holders, underwriters and dealers and all expenses incidental to delivery of the Registrable Securities, (vii) subject to the limitations set forth in Section 8, the reasonable fees and disbursements of counsel, other than the Company's counsel, selected by the Holders of the Registrable Securities being registered, (viii) the reasonable fees and expenses of any special experts retained in connection with the requested registration, (ix) any internal expenses of the Company and cost of Company employees, (x) the expenses incurred in connection with making "roadshow" presentations and holding meetings with potential investors to facilitate the distribution and sale of Registrable Securities, but shall not include with respect to Registrable Securities sold by the Holders (a) underwriting discounts and commissions and transfer taxes, if any, and (b) any fees and disbursements of underwriters customarily paid by the issuers or sellers of securities. Section 1.14 Registration Statement. "Registration Statement" means any registration statement of the Company which covers Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statements including post-effective amendments, and all exhibits and all material incorporated by reference in such Registration Statement. Section 1.15 Related Securities. "Related Securities" means any securities of the Company similar or identical to any of the Registrable Securities including, without limitation, Common Stock and all options, warrants, rights and other securities convertible into, or exchangeable or exercisable for Common Stock (other than any of the foregoing to be offered or sold to officers, directors or employees as compensation). Section 1.16 Securities Act. "Securities Act" means the Securities Act of 1933, as amended from time to time, and the rules and regulations thereunder. Section 1.17 SEC. "SEC" means the Securities and Exchange Commission. Section 1.18 Shelf Registration Statement. "Shelf Registration Statement" means a Registration Statement filed with the SEC for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act (or any similar rule that may be adopted by the SEC) covering some or all of the Registrable Securities, as applicable. Section 1.19 Underwritten Registration or Underwritten Offering. "Underwritten Registration or Underwritten Offering" shall mean a registration in which securities of the Company are sold to one or more underwriters for reoffering to the public. Section 1.20 Underwriters' Representative. "Underwriters' Representative" when used in connection with an Underwritten Offering, shall mean the managing underwriter of such offering, or, in the case of a co-managed underwriting, the managing underwriter designated as the Underwriters' Representative by the co-managers. ARTICLE II SECURITIES SUBJECT TO THIS AGREEMENT The securities entitled to the benefits of this Agreement are the Registrable Securities. For the purposes of this Agreement, Registrable Securities will cease to be Registrable Securities when (i) a Registration Statement covering such Registrable Securities has been declared effective under the Securities Act and they have been disposed of pursuant to such effective Registration Statement, (ii) such Registrable Securities are distributed to the public pursuant to Rule 144 (or any similar provision then in force) under the Securities Act, (iii) such Registrable Securities shall have been otherwise transferred to a person who is not a Holder, or (iv) such Registrable Securities shall have ceased to be outstanding. ARTICLE III REGISTRATION UNDER THE SECURITIES ACT Section 3.1 Shelf Registration. Within 120 days after the Company first becomes eligible to use a Shelf Registration Statement (the "Shelf Registration Statement Eligibility Date"), the Company shall file and use its reasonable efforts to cause to become effective not later than the 150th day after the Shelf Registration Statement Eligibility Date, a Shelf Registration Statement on any appropriate form for all the Registrable Securities, which form shall be available for the sale of the Registrable Securities in accordance with the intended method or methods of distribution thereof, as specified by the Holders (including pursuant to one or more Underwritten Offerings); provided that at the request of the Holders, the filing and effectiveness of the Shelf Registration Statement may be delayed for such a period as the Holders request. The Company agrees to use its reasonable efforts, taking into account the unavailability of incorporation by reference prior to the Company's becoming eligible to use Form S-3, to keep such Registration Statement Continuously Effective and usable for resale of Registrable Securities, for a period of twenty-four (24) months from the date on which the SEC declares such Registration Statement effective or such shorter period which will terminate when all the Registrable Securities covered by such Registration Statement cease to be Registrable Securities; provided, however, that the Company may elect that such Registration Statement not be filed or usable during any Blackout Period (as defined in Article IV). No incidental or piggyback registration rights shall be available to any Person (including the Company) with respect to the Shelf Registration Statement, and no Person (including the Company) shall have the right to have any securities other than the Registrable Securities included therein or registered thereon. The registration rights granted pursuant to the provisions of this Section 3.1 shall be in addition to the registration rights granted pursuant to other provisions of this Article III and the number of Demand Registrations provided pursuant to Section 3.2 below shall not be reduced by reason of any underwritten offerings effected pursuant to the Shelf Registration. Section 3.2 Required Registration. (a) The Holders shall have the right to request in writing (a "Request") (which Request shall specify the Registrable Securities intended to be disposed of by such Holders and the intended method of distribution thereof, which may include disposition (1) from time to time or on a continuous or delayed basis pursuant to Rule 415 under the Securities Act (or any similar rule) and accordingly require the filling of a "shelf" registration statement and/or (2) sales for cash or dispositions upon exchange or conversion of securities or dispositions for any form of consideration or no consideration) that the Company register such portion of such Holders' Registrable Securities as shall be specified in the Request (a "Demand Registration") by filing with the SEC, as soon as practicable thereafter, but not later than the 30th day (or the 45th day if the applicable registration form is Form S-1 or S-2) after the receipt of such a Request by the Company, a registration statement (a "Demand Registration Statement") covering such Registrable Securities, and the Company shall use its best efforts to have such Demand Registration Statement declared effective by the SEC as soon as practicable thereafter, but in no event later than the 75th day (or the 90th day if the applicable registration form is Form S-1 or S-2) after the receipt of such a Request; provided that the Company is not required to file any Registration Statement prior to the last day of the IPO Restricted Period (but shall prepare a Registration Statement if requested to enable it to be filed on such last day). The Company agrees to use its best efforts, taking into account the unavailability of incorporation by reference prior to the Company's becoming eligible to use Form S-3, to keep such Demand Registration Statement Continuously Effective for the period specified in the Request, as extended by the length of any Suspension Period (as defined in Article VII) with respect thereto (or for such shorter period which will terminate when all of the Registrable Securities covered by such Demand Registration Statement shall have been sold pursuant thereto), including, if necessary, by filing with the SEC a post-effective amendment or a supplement to the Demand Registration Statement or the related prospectus or any document incorporated therein by reference or by filing any other required document or otherwise supplementing or amending the Demand Registration Statement, if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Demand Registration Statement or by the Securities Act, the Exchange Act, any state securities or blue sky laws, or any rules and regulations thereunder; provided that such period during which the Demand Registration Statement shall remain Continuously Effective shall, in the case of an Underwritten Offering, be extended for such period (if any) as the underwriters shall reasonably require, including to satisfy, in the judgment of counsel to the underwriters, any prospectus delivery requirements imposed by applicable law. The Company shall not be obligated to effect more than four (4) Demand Registrations pursuant to Requests. For purposes of the preceding sentence, a Demand Registration shall not be deemed to have been effected, (i) unless a Demand Registration Statement with respect thereto has become effective, (ii) if after such Demand Registration Statement has become effective, the offer, sale or distribution of Registrable Securities thereunder is prevented by any stop order, injunction or other order or requirement of the SEC or other Governmental Entity for any reason not attributable to any Holder and such effect is not thereafter eliminated, or (iii) in the case of an Underwritten Offering, if the conditions to closing specified in the underwriting agreement entered into in connection with such Registration are not satisfied or waived, other than by reason of a failure on the part of any Holder. If the Company shall have complied with its obligations under this Agreement, a right to a Demand Registration pursuant to this Section 3.2 shall be deemed to have been satisfied upon the earlier of (x) the date as of which all of the Registrable Securities included therein shall have been sold to the underwriters or distributed pursuant to the Demand Registration Statement, and (y) the date as of which such Demand Registration shall have been Continuously Effective for a 60-day period or other period specified in the preceding paragraph following the effectiveness of such Demand Registration Statement. Any Request made pursuant to this Section 3.2 shall be addressed to the attention of the Secretary of the Company, and shall specify (a) the number of Registrable Securities to be Registered (which shall be not less than the lesser of (i) 5% of the total number of shares of Common Stock, provided that the aggregate public offering price of the Registrable Securities to be registered (based on the closing sale price of the Common Stock on the last trading day prior to the delivery of a Request) would not be less than $[____] million), or (ii) the remaining balance of the Registrable Securities then held by the Holders, (b) the intended method of distribution thereof and the requested period of effectiveness, and (c) that the request is for a Demand Registration pursuant to this Section 3.2. (b) The Company may not include in a Demand Registration pursuant to Section 3.2(a) hereof, shares of Common Stock for the account of the Company or any subsidiary of the Company, but, if and to the extent required by a contractual obligation, may, subject to compliance with Section 3.2(c), include shares of Common Stock for the account of any other Person who holds shares of Common Stock entitled to be included therein; provided, however, that, except to the extent modified with the consent of the Holders, if the Underwriters' Representative of any offering described in this Section 3.2 shall have informed the Holders in writing that in its judgment there is a Maximum Number of shares of Common Stock that all Holders and any other Persons desiring to participate in such Registration may include in such offering, then the Company shall include in such Demand Registration all Registrable Securities requested to be included in such Registration by the Holders together with up to such additional number of shares of Common Stock that any other Persons entitled to participate in such Registration desire to include in such Registration up to the Maximum Number that the Underwriters' Representative has informed the Holders may be included in such Registration without materially and adversely affecting the success or pricing of such offering; provided that the number of shares of Common Stock to be offered for the account of all such other Persons participating in such Registration shall be reduced in a manner determined by the Company in its sole discretion. (c) No Holder may participate in any underwritten offering under Article III hereof and no other Person shall be permitted to participate in any such offering pursuant to Section 3.2 or 3.3 hereof unless it completes and executes all customary questionnaires, powers of attorney, custody agreements, underwriting agreements, and other customary documents required under the customary terms of such underwriting arrangements. In connection with any underwritten offering under Article III hereof, each participating Holder and the Company and, except in the case of Section 3.1 hereof, each other Person shall be a party to the underwriting agreement with the underwriters and may be required to make certain customary representations and warranties and provide certain customary indemnifications for the benefit of the underwriters; provided that the Holders shall not be required to make representations and warranties with respect to the Company and its Subsidiaries or their business and operations and shall not be required to agree to any indemnity or contribution provisions less favorable to them than as are set forth herein. Section 3.3 Incidental Registration. (a) If at any time the Company proposes to register any Related Securities under the Securities Act (other than in connection with any acquisition or business combination transaction and other than in connection with stock options and other stock-based employee benefit plans and compensation) either in connection with a primary offering for cash for the account of the Company, a secondary offering or a combined primary and secondary offering, the Company will each time it intends to effect such a registration, give written notice (a "Company Notice") to all Holders of Registrable Securities at least 10 business days prior to the initial filing of a registration statement with the SEC pertaining thereto, informing such Holders of its intent to file such registration statement and of the Holders' right to request the registration of the Registrable Securities held by the Holders. Upon the written request of the Holders made within 7 business days after any such Company Notice is given (which request shall specify the Registrable Securities intended to be disposed of by such Holder and, unless the applicable registration is intended to effect a primary offering of Common Stock for cash for the account of the Company, the intended method of distribution thereof), the Company will use its reasonable efforts to effect the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by the Holders to the extent required to permit the disposition (in accordance with the intended methods of distribution thereof or, in the case of a registration which is intended to effect a primary offering for cash for the account of the Company, in accordance with the Company's intended method of distribution) of the Registrable Securities so requested to be registered, including, if necessary, by filing with the SEC a post-effective amendment or a supplement to the registration statement filed by the Company or the related prospectus or any document incorporated therein by reference or by filing any other required document or otherwise supplementing or amending the registration statement filed by the Company, if required by the rules, regulations or instructions applicable to the registration form used by the Company for such registration statement or by the Securities Act, any state securities or blue sky laws, or any rules and regulations thereunder; provided, however, that if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay such registration of the securities, the Company shall give written notice of such determination to each Holder of Registrable Securities and, thereupon, (A) in the case of a determination not to register, the Company shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay the Registration Expenses incurred in connection therewith), and (B) in the case of a determination to delay such registration, the Company shall be permitted to delay registration of any Registrable Securities requested to be included in such registration statement for the same period as the delay in registering such other securities. The registration rights granted pursuant to the provisions of this Section 3.3 shall be in addition to the registration rights granted pursuant to the other provisions of this Article III. (b) If, in connection with a Registration Statement pursuant to this Section 3.3, the Underwriters' Representative of the offering registered thereon shall inform the Company and the Holders in writing that in its opinion there is a Maximum Number of shares of Common Stock that may be included therein; then (a) in the event such Registration Statement relates to an offering initiated by the Company of Common Stock being offered for the account of the Company, the Company may include in such registration the number of shares it proposes to offer and, if such number is less than the Maximum Number, then the number of shares of Common Stock requested to be included by any Person (including the Holders) other than the Company may be reduced, pro rata in proportion to the respective number of shares of Common Stock owned by such Persons, to the extent necessary to reduce the respective total number of shares of Common Stock requested to be included in such offering to the Maximum Number of shares of Common Stock recommended by such Underwriters' Representative and (b) in the event such a Registration Statement is initiated by any Person other than the Company, except to the extent modified with the consent of the Holders, the number of shares of Common Stock requested to be included by such Person and, any other Person (including the Holders) may be reduced pro rata in proportion to the respective number of shares of Common Stock owned by such Persons, to the extent necessary to reduce the respective total number of shares of Common Stock requested to be included in such offering to the Maximum Number. ARTICLE IV BLACKOUT PERIOD Section 4.1 General. Subject to the provisions in Section 4.2, the Company shall be entitled to elect that a Registration Statement not be usable, or that the filing thereof be delayed beyond the time otherwise required, for a reasonable period of time, but not in excess of 60 days (a "Blackout Period"), if the Company determines in good faith that the registration and distribution of Registrable Securities (or the use or filing of the Registration Statement or related Prospectus) would interfere with any pending material financing, acquisition, corporate reorganization or any other material corporate development involving the Company or any of its subsidiaries or would require premature disclosure thereof and promptly gives the Holders of Registrable Securities written notice of such determination, and if requested by Holders, the Company will promptly deliver to it a general statement of the reasons for such postponement or restriction on use and to the extent practicable an approximation of the anticipated delay; provided, however, that the aggregate number of days included in all Blackout Periods, when taken together with any Suspension Periods (as defined in Article VII), during any consecutive 12 months shall not exceed 90 days. Section 4.2 Specific Blackout Procedures. All Registrable Securities sold or distributed under a Demand Registration shall be made in accordance with the following provisions: (a) Underwritten Offerings. With respect to an Underwritten Offering, the provisions of Section 4.1 shall apply to the delaying by the Company of (i) the filing of a Registration Statement and (ii) causing a Registration Statement to become effective. Once an underwriting agreement as contemplated by Section 7(i) has been entered into in connection with the Underwritten Offering, the terms of such underwriting agreement and Section 3.1, and not the provisions of Section 4.1, shall govern the continued effectiveness and use of the Registration Statement as it relates to such Underwritten Offering. (b) Other Offerings. With respect to an offering other than an Underwritten Offering, the procedures of this Section 4.2(b) shall supplement Section 4.1 with respect to sales after the effectiveness of the Registration Statement. Prior to any sale pursuant to this Section 4.2(b), the Holder shall give notice (by electronic mail) to ______________, ________________ of the Company (_____________@____________.com) and to ______________, ________________ of the Company (_____________@____________.com). The Holder may give notice of such intent to sell three business days prior to the beginning of the two-week period. The Company shall respond as promptly as practicable to any such notice, and shall respond in any event within two business days (by electronic mail) to _____________, __________ of _____________(__________@slb.com) and to _____________, __________ of _____________(__________@slb.com). Such response shall indicate either (A) that the Holder may use the Registration Statement for the next 14 calendar days, unless the Company subsequently gives a Suspension Notice or (B) that the Holder may not use the Registration Statement and that a Blackout Period is in effect as contemplated by Section 4.1. If the Company does not respond within two business days, the lack of response shall be deemed a response described in (A) of the preceding sentence. ARTICLE V SELECTION OF UNDERWRITERS If any offering pursuant to a Shelf Registration Statement or a Demand Registration Statement is an underwritten offering, the Holders will select a managing underwriter or underwriters to administer the offering, in its sole discretion after consultation with the Company. In any incidental registration pursuant to Section 3.2, the Company will select a managing underwriter or underwriters to administer the offering, in its sole discretion after consultation with the Holders. ARTICLE VI HOLDBACK AGREEMENT Section 6.1 Holder Sale or Distribution. If so requested by the Underwriters' Representative in connection with an offering of securities covered by a registration statement filed by the Company, if Registrable Securities of a Holder are included therein or such Holder declined to include therein any Registrable Securities owned by it, such Holder shall agree not to effect any sale or distribution of the Shares, including a sale pursuant to Rule 144, without the prior written consent of the Underwriters' Representative (except as part of such Underwritten Registration), during the 7-day period prior to, and during the 90-day period beginning on, the date such registration statement is declared effective under the Securities Act by the SEC; provided that the Holders are timely notified of such effective date in writing by the Company or the Underwriters' Representative. Notwithstanding the foregoing, a Holder may transfer Registrable Securities to a person who agrees not to effect any sale or distribution of shares without the prior written consent of the Underwriters' Representative during such period. The Holders shall not be subject to the restrictions set forth in this Section 6.1 for longer than 97 days during any 12-month period and a Holder shall no longer be subject to such restrictions at such time as such Holder together with its affiliates shall own less than 5% of the then outstanding shares of Common Stock on a fully-diluted basis. Section 6.2 Company Sale or Distribution. If so requested by the Underwriters' Representative in connection with an offering of any Registrable Securities, the Company shall agree not to effect any sale or distribution of shares of Common Stock, without the prior written consent of the Underwriters' Representative (other than as a part of such offering or in connection with any acquisition or business combination transaction and other than in connection with stock options and employee benefit plans and compensation) during the 7-day period prior to, and during the 90-day period beginning on, the date such registration statement is declared effective under the Securities Act by the SEC and shall use its best efforts to obtain and enforce similar agreements from any other Persons if requested by the Underwriters' Representative; provided that the Company or such Persons shall not be subject to the restrictions set forth in this Section 6.2 for longer than 97 days during any 12-month period. Section 6.3 Holder Distribution to Stockholders. Notwithstanding anything else in this Article VI to the contrary, no Holder shall be precluded from distributing to any or all of its stockholders any or all of the Registrable Securities. Section 6.4 Definitions. As used in Sections 6.1 and 6.2 of this Article VI, "sales" or "distributions" shall be deemed to include, to the extent requested by the Underwriters' Representative, (1) contracts to sell, sales of options or contracts to purchase, purchases of any option or contract to sell, grants of options, rights or warrants to purchase or otherwise transfer or dispose of, directly or indirectly, any of the Shares or any securities convertible into or exercisable or exchangeable for the Shares and (2) swaps or other arrangements that transfer to another, in whole or in part, any of the economic consequences of ownership of the Shares, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of the Shares or such other securities, in cash or otherwise. ARTICLE VII REGISTRATION PROCEDURES Section 7.1 Required Procedures. If and whenever the Company is required to or to use its best efforts to effect or cause the registration of any Registrable Securities under the Securities Act as provided in this Agreement, the Company will, as expeditiously as possible and without limiting any time period or obligation set forth elsewhere in this Agreement: (a) Prepare and file with the SEC a Registration Statement with respect to such Registrable Securities on a form for which the Company then qualifies, and which form shall be available for the sale of the Registrable Securities in accordance with the intended methods of distribution thereof, and use its best efforts to cause such Registration Statement to become and remain effective; provided that, a reasonable time before filing a Registration Statement or Prospectus, or any amendments or supplements thereto (other than reports required to be filed by it under the Exchange Act and the rules and regulations adopted by the SEC thereunder), the Company will furnish to the Holders and their counsel for review and comment, copies of all documents proposed to be filed and provided further, that if the Holders so request (x) they and their counsel and other representatives may participate in the drafting and preparation of such Registration Statement and (y) such information as they believe may be beneficial to be included in the Registration Statement for marketing purposes shall be included therein so long as disclosure of such information (1) is in compliance with applicable law and (2) does not competitively harm the Company; (b) Prepare and file with the SEC amendments and post-effective amendments to each such Registration Statement and such amendments and supplements to the Prospectus used in connection therewith as may be required by the Securities Act or the Exchange Act or otherwise necessary to keep the Registration Statement effective for the applicable period and cause the Prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to otherwise comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement until such time as all of such securities have been disposed of in accordance with the intended methods of disposition set forth in such Registration Statement and Prospectus or such earlier time as the Company's obligations to maintain the effectiveness and availability for use of such Registration Statement ceases; (c) Furnish to each Holder of such Registrable Securities such number of copies of such Registration Statement and of each amendment and post-effective amendment thereto (in each case including all exhibits), the Prospectus and Prospectus supplement, as applicable, and such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities by such Holder (the Company hereby consenting to the use (subject to the limitations set forth in the last paragraph of this Section 7) of the Prospectus or any amendment or supplement thereto in connection with such disposition); (d) Use its best efforts to register or qualify such Registrable Securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions as each Holder shall reasonably request, and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this Section 7(d), it would not be obligated to be so qualified, to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction; (e) Notify each Holder of any such Registrable Securities covered by such Registration Statement, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act within the appropriate period mentioned in Section 7, of the Company's becoming aware that the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, then existing, and at the request of any such Holder, prepare and furnish to such Holder a reasonable number of copies of an amendment or supplement to the Registration Statement or related Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (f) Notify each Holder of Registrable Securities covered by such Registration Statement at any time, (i) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC for amendments or supplements to the Registration Statement or the Prospectus or for additional information, and of any comments, oral or written, by the SEC with respect thereto, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose, (iv) if at any time the representations and warranties of the Company made pursuant to agreements contemplated by paragraph (i)(i) below cease to be true and correct, and (v) of the receipt by the Company of any notification with respect to the suspension of qualification or exemption from qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (g) Otherwise use its best efforts to make available to its security holders, as soon as reasonably practicable (but not more than eighteen months) after the effective date of the Registration Statement, an earnings statement which shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations promulgated thereunder; (h) Cause all such Registrable Securities to be listed on any securities exchange on which the Common Stock is then listed, if such Registrable Securities are not already so listed and if such listing is then permitted under the rules of such exchange, and to provide a transfer agent, CUSIP number and registrar for such Registrable Securities covered by such Registration Statement no later than the effective date of such Registration Statement; (i) Enter into agreements (including underwriting agreements) and take all other appropriate actions in order to expedite or facilitate the disposition of such Registrable Securities as is customarily made or done by issuers of comparable standing in connection with comparable offerings and in such connection (to the extent so customary): (i) make such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, and agree to such indemnification and contribution agreements, in form, substance and scope as are customarily made by issuers to underwriters in comparable underwritten offerings; (ii) obtain opinions of counsel to the Company (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the underwriters, if any, and the Holders of the Registrable Securities being sold) addressed to each Holder and the underwriters, if any, covering the matters customarily covered in opinions requested in comparable underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters; (iii) obtain comfort letters and updates thereof from the Company's independent accountants addressed to the selling Holders of Registrable Securities and the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters by underwriters in connection with comparable underwritten offerings; (iv) if requested, provide the indemnification in accordance with the provisions and procedures of Article IX hereof to all parties to be indemnified pursuant to said Article; and (v) deliver such documents and certificates as may be reason ably requested by the Holders of a majority of the Registrable Securities being sold and the underwriters, if any, to evidence compliance with clause (f) above and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company. The matters set forth in this Section 7.1(i) shall be effected at each closing under any underwriting or similar agreement as and to the extent required thereunder. (j) Cooperate with the Holders of Registrable Securities covered by such Registration Statement and the underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends) representing the securities to be sold under such Registration Statement, and enable such securities to be in such denominations and registered in such names as the underwriter or underwriters, if any, or such Holders may request, or take other appropriate action if the Registrable Securities are to be uncertificated; (k) If requested by the underwriter or underwriters or a Holder of Registrable Securities being sold in connection with an Underwritten Offering, promptly incorporate in a Prospectus supplement or post-effective amendment such information as the underwriters and the Holders of the Registrable Securities being sold agree should be included therein relating to the plan of distribution with respect to such Registrable Securities, including, without limitation, information with respect to the amount of Registrable Securities being sold to such underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering and make all required filings of such Prospectus supplement or post-effective amendment promptly upon being notified of the matters of be incorporated in such Prospectus supplement or post-effective amendment; (l) In the event of any Underwritten Offering, participate, and have senior management available to participate, in any "roadshow" marketing efforts reasonably requested by the underwriters; and (m) Make available for inspection by any Holder of Registrable Securities included in such Registration Statement, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by any such Holder or underwriter in connection with such disposition, such financial and other records and other information, pertinent corporate documents and properties of any of the Company and its Subsidiaries and controlled Affiliates, as shall be reasonably necessary to enable them to exercise their due diligence responsibility. The Company may require each Holder of Registrable Securities as to which any registration is being effected to furnish the Company with such information regarding such Holder and pertinent to the disclosure requirements relating to the registration and the distribution of such securities as the Company may from time to time reasonably request. Each Holder of Registrable Securities agrees that, upon receipt of any notice (the "Suspension Notice") from the Company of the happening of any event of the kind described in Section 7(e), such Holder will forthwith discontinue disposition of Registrable Securities pursuant to the Prospectus or Registration Statement covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 7(e), and, if so directed by the Company, such Holder will use its reasonable efforts to deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event the Company shall give any such notice, the period of time during which the Registration Statement is required to be Continuously Effective pursuant to Article III hereof shall be extended by the number of days during the period (the "Suspension Period") from the date of the giving of such Suspension Notice and through the date when the Holders of Registrable Securities covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 7.1(e). ARTICLE VIII REGISTRATION EXPENSES The Company will pay all Registration Expenses in connection with all registrations of Registrable Securities, and the Holders shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holders' Registrable Securities pursuant to a Registration Statement. ARTICLE IX INDEMNIFICATION; CONTRIBUTION Section 9.1 Indemnification by the Company. The Company agrees to indemnify each Holder of Registrable Securities, its officers and directors and each Person who controls such Holder (within the meaning of the Securities Act), and any agent and investment or financial adviser thereof against all losses, claims, damages, liabilities and expenses (including reasonable attorneys' fees and expenses of investigation) incurred by such party pursuant to any actual or threatened action, suit, proceeding or investigation arising out of or based upon (i) any untrue or alleged untrue statement of material fact contained in a Registration Statement, any Prospectus or preliminary Prospectus, or any amendment or supplement to any of the foregoing or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a Prospectus or a preliminary Prospectus, in light of the circumstances under which they were made) not misleading, except in each case insofar as the same arise out of or are based upon any such untrue statement or omission made in reliance on and in conformity with information furnished in writing to the Company by any indemnified party or its counsel expressly for use therein. In connection with an Underwritten Offering, the Company will indemnify the underwriters thereof, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holders of Registrable Securities (provided that as to each underwriter the exception to such indemnification obligation shall instead be for information with respect to such underwriter furnished in writing by such underwriter or its counsel). Notwithstanding the foregoing provisions of this Section 9.1, in the case of an offering that is not an Underwritten Offering, the Company will not be liable to any Holder of Registrable Securities under the indemnity agreement in this Section 9.1 for any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense that arises out of such Holder's failure to send or give a copy of the final Prospectus (as it may then be amended or supplemented) to the Person asserting an untrue statement or alleged untrue statement or omission or alleged omission at or prior to the written confirmation of the sale of the Registrable Securities to such Person if such statement or omission was corrected in such final Prospectus (as it may then be amended or supplemented) and the Company has previously furnished copies thereof in accordance with this Agreement. Section 9.2 Indemnification by Holders of Registrable Securities. In connection with a Registration Statement, each Holder will furnish to the Company in writing such information, including with respect to the name, address and the amount of Registrable Securities held by such Holder, as the Company reasonably requests for use in such Registration Statement or the related Prospectus and agrees to indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 9.1) the Company, all other prospective Holders or any underwriter, as the case may be, and any of their respective affiliates, directors, officers and controlling Persons (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any untrue or alleged untrue statement of a material fact or any omission or alleged omission of a material fact required to be stated in such Registration Statement or Prospectus or any amendment or supplement to either of them or necessary to make the statements therein (in the case of a Prospectus, in the light of the circumstances then existing) not misleading, but only to the extent that any such untrue statement or omission is made in reliance on and in conformity with information with respect to such Holder furnished in writing to the Company by such Holder or its counsel specifically for inclusion therein. Section 9.3 Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder agrees to give prompt written notice to the indemnifying party after the receipt by such indemnified party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which such indemnified party may claim indemnification or contribution pursuant to this Agreement (provided that failure to give such notification shall not affect the obligations of the indemnifying person pursuant to this Article IX except to the extent the indemnifying party shall have been actually prejudiced as a result of such failure). In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to the indemnified parties and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under these indemnification provisions for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation, except as provided in the following sentence. Any such indemnified party shall have the right to employ separate counsel in any such action, claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be the expenses of such indemnified party unless (i) the indemnifying party has agreed to pay such fees and expenses or (ii) the indemnifying party shall have failed to promptly assume the defense of such action, claim or proceeding or (iii) the named parties to any such action, claim or proceeding (including any impleaded parties) include both such indemnified party and the indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it which are different from or in addition to those available to the indemnifying party and that the assertion of such defenses could, in the good faith judgment of the indemnified party, create a conflict of interest such that counsel employed by the indemnifying party could not faithfully represent the indemnified party (in case of clauses (ii) and (iii), if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party (which counsel shall be reasonably satisfactory to the indemnifying party), the indemnifying party shall not have the right to assume the defense of such action, claim or proceeding on behalf of such indemnified party; it being understood, however, that the indemnifying party shall not, in connection with any one such action, claim or proceeding or separate but substantially similar or related actions, claims or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all such indemnified parties, unless in the good faith judgment of such indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such action, claim or proceeding, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels). The indemnifying party will not be subject to any liability for any settlement made without its consent (which consent will not be unreasonably withheld). Section 9.4 Contribution. To the extent the indemnification from the indemnifying party provided for in this Article IX is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified party in connection with the actions which resulted in such losses, claims, damages, liabilities and expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 9.3, any legal and other fees and expenses reasonably incurred by such indemnified party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 9.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 9.4, no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no Holder of Registrable Securities shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities of such Holder were offered to the public (net of all underwriting discounts and commissions) exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue statement or omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. To the extent indemnification is available under this Article IX, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 9.1 or 9.2, as the case may be, without regard to the relative fault of said indemnifying parties or indemnified party or any other equitable consideration provided for in this Section 9.4. (a) The provisions of this Article IX shall be applicable in respect of each registration pursuant to this Agreement, shall be in addition to any liability which any party may have to any other party and shall survive any termination of this Agreement. ARTICLE X RULE 144 For a period of two years following the IPO Closing Date or, if at the end of such two year period, a Holder is an affiliate (as defined in Rule 144 under the Securities Act) of the Company, until such time as no Holder is an affiliate (as defined in Rule 144 under the Securities Act) of the Company, the Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act (or, if the Company is not required to file such reports, it will, upon the request of any Holder of Registrable Securities, make publicly available other information so long as necessary to satisfy the requirements of Rule 144 under the Securities Act relating to the availability of public information), all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements. ARTICLE XI MISCELLANEOUS Section 11.1 Remedies. No failure or delay on the part of either party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude other or further exercise thereof or of any other right. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available. Each Holder of Registrable Securities in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. Section 11.2 Termination. The right of any Holder to request registration or inclusion in any registration pursuant to this Agreement shall terminate on such date after the IPO Closing Date as all shares of Registrable Securities held or entitled to be held upon conversion by such Holder (and any affiliate that is a Holder) may immediately be sold under Rule 144 during any ninety (90) day period. Section 11.3 Amendment. No change or amendment will be made to this Agreement except by an instrument in writing signed on behalf of the Company and Holders owning a majority of the Registrable Securities. Section 11.4 Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and thereof and shall supersede all prior written and oral and all contemporaneous oral agreements and understandings with respect to the subject matter hereof and thereof. Section 11.5 Notices. Notices, offers, requests or other communications required or permitted to be given by either party pursuant to the terms of this Agreement shall be given in writing to the respective parties to the following addresses: if to the Holders: Schlumberger Technologies, Inc. [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] and: Schlumberger BV [To Come] Attention: [__________] Telephone: [__________] Facsimile: [__________] if to the Company: NPTest, Inc. [To Come] Attention: General Counsel Telephone: [__________] Facsimile: [__________] or to such other address as the party to whom notice is given may have previously furnished to the other in writing as provided herein. Any notice involving non-performance, termination, or renewal shall be sent by hand delivery, recognized overnight courier or, within the United States, may also be sent via certified mail, return receipt requested. All other notices may also be sent by fax, confirmed by first class mail. All notices shall be deemed to have been given and received on the earlier of actual delivery or three days from the date of postmark. Section 11.6 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors of each of the parties and each transferee of Registrable Securities who is an affiliate of a Holder or who is designated to come within the term "Holder" by the transferor. Section 11.7 Authority. Each of the parties hereto represents to the other that (a) it has the corporate or other requisite power and authority to execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly authorized by all necessary corporate or other actions, (c) it has duly and validly executed and delivered this Agreement, and (d) this Agreement is a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and general equity principles. Section 11.8 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. Section 11.9 Descriptive Headings. The headings contained in this Agreement and in the table of contents to this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. When a reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. Section 11.10 Governing Law. This Agreement shall be construed in accordance with, and any dispute, controversy or claim hereunder shall be governed by, the laws of the State of Delaware, excluding its conflict of law rules and the United Nations Convention on Contracts for the International Sale of Goods. Section 11.11 Severability. If any term or other provision of this Agreement is determined by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above. NPTEST, INC. By: ___________________________________ Name: Title: SCHLUMBERGER TECHNOLOGIES, INC. By: ___________________________________ Name: Title: SCHLUMBERGER BV By: ___________________________________ Name: Title: EX-23.1 17 dex231.htm INDEPENDENT AUDITORS' CONSENT Prepared by R.R. Donnelley Financial -- Independent Auditors' Consent
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Registration Statement on Form S-1 of our report dated May 21, 2002 relating to the financial statements and financial statement schedule of NPTest, Inc., which appear in such Registration Statement. We also consent to the references to us under the headings “Experts” and “Selected Combined Financial Data” in such Registration Statement.

PRICEWATERHOUSECOOPERS LLP

San Jose, California

July 19, 2002
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