HT201250: Use Time Machine to back up or restore your Mac
Learn about Use Time Machine to back up or restore your Mac
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Jan 28, 2014 5:14 AM in response to rajkotby Paul_31,This article should give you the information you need, providing OS 10.7.x was the OS that was on the Mac when new:
http://support.apple.com/kb/HT5189?viewlocale=en_US&locale=en_US
If you are sellling/passing the Mac on to a new owner and the Mac came with an earlier OS and 2 grey disks then you will need to erase and install using those as the Mac needs to passed on with the original OS installed, together with the grey disks. Post back if you need more info.