Exhibit 10.37
WUXI HEAT INSULATION TUBING CO., LTD.
SHAREHOLDERS AGREEMENT
Party A: Wuxi Seamless Oil Pipes Company Limited
Party B: ▇▇▇▇▇▇▇▇ ▇▇▇
After discussion and negotiation, both parties hereby mutually agree on the
followings with respect to investments in Wuxi Heat Insulation Tubing Co., Ltd.
(hereinafter referred to as "WSP Heat Insulation") by Party A and Party B:
1. As of June 30, 2007, WSP Heat Insulation had account payable to Party A of
RMB23,910,000, amount payable to other suppliers of RMB577,000, wages
payable to the employees of RMB70,000, and local tax payable of RMB40,000.
(In view of the insufficient capital of WSP Heat Insulation, Part A agrees
to advance 50% of the amount payable to the other suppliers and wages
payable to the employees, i.e., (577+70+40)*50% = 340 (in RMB'000). Since
WSP Heat Insulation is not capable to repay in cash, both parties agree to
use the existing inventory of finished pipes (including finished pipes
without threading) for repayment of the account payable to Party A, i.e.,
23,910 + 340 = 24,250 (in RMB'000). Party A shall not bear joint and
several liability in relation to the other amounts payable to suppliers.
Party B shall be responsible for any dispute on the quality of the finished
pipes. The details are as follows:
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Quantity Unit Amount
Name Specification (tubes) Price (in RMB'000) Remarks
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Finished Pipe 127*6.45 1,155 3,500 4,040
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Finished Pipe 127*6.45 1,400 4,800 6,740 Value-added tax invoice
issued by Panjin Xilin
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Finished Pipe 127*6.45 930 4,400 4,090
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Finished Pipe 127*6.45 639 3,180 2,040
(without threading)
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Finished Pipe 114*6.45 2,382 3,080 7,340
(without threading)
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Total: 6,506 (tubes) 24,250 (in RMB'000)
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The accounts payable to Party A of WSP Heat Insulation have been settled
completely using the inventory of finished pipes as repayment, and the ownership
of the finished pipes shall belong to
Page 1 of 3
Party A. Party B shall thereafter bear all the liabilities of WSP Heat
Insulation to which Party A shall not be liable.
2. Party A and Party B have conducted an on-site physical count of 2,309
finished pipes of 127*6.45 in Panjin region and transferred the said
finished pipes to warehouses for storage. Both Parties have also completed
the formalities of handing over the finished pipes of 127*6.45 to Party A.
If the said finished pipes of 127*6.45 need to undergo the process of
rust-removing, painting, and spraying on selling, the expenses incurred
thereof shall be borne by Party A. In addition, the value-added tax invoice
issued to Panjin Xilin Company previously has expired and cannot be
returned. Upon negotiation, Panjin Xilin Company has agreed to issue back
the value-added tax invoice according to the original quantity and amount
to Party A, and enter into a three-party transfer agreement of the three
parties.
3. Party A shall transfer its 51% equity interest in WSP Heat Insulation to
Party B or a third party designated by Party B in consideration of
RMB5,100,000 (original investment amount). WSP Heat Insulation shall
complete the formalities of changing enterprise legal representative and
equity transfer within three months. WSP Heat Insulation shall cease to use
the trade name of "Xi Mu Lai Si (Seamless)" by December 31, 2007. Party B
shall settle the consideration for the equity transfer by instalments
within two years, during which 50% of the consideration shall be paid each
year; that is, the payments shall be completed by June 30, 2009. ▇▇▇▇▇▇▇▇
▇▇▇ and ▇▇▇▇▇▇ ▇▇▇ of Panjin Weihua High and New Energy Saving Equipment
Company shall bear joint economic responsibility for the payment of the
consideration for the equity transfer.
4. When Party B is acting as the selling agent of the finished pipes, Party
A shall determine the prices and settle with the WSP Heat Insulation after
the change in shareholding according to the terms stated below "The details
are as follows" herein, and shall collect the amount payable in time
according to the due dates stipulated in the relevant sales contracts, and
shall not draw any amount from the returned funds. The profits from the
sales shall be given priority to be used for payment of the consideration
for equity transfer of RMB5,100,000 to Party A (including profits made by
Party A from selling the said products).
5. After the equity transfer, WSP Heat Insulation shall lease and use the
production workshops provided by Party A and shall operate on its own. WSP
Heat Insulation shall pay an annual rent of RMB450,000 to Part A for
leasing the workshops. The rent shall be settled every six months.
Miscellaneous charges, including charges for water and electricity, shall
be settled on monthly basis.
Party A: Wuxi Seamless Oil Pipes Company Limited /s/
Party B: ▇▇▇▇▇▇▇▇ ▇▇▇ /s/ /s/
(August 4, 2007)