EQUITY INTEREST TRANSFER AGREEMENT
Transferor: Wuxi Seamless Oil Pipes Company Limited (hereinafter referred to as
"Party A")
Address: Xx. 00 Xxxxxxxx Xxxx, Xxx Xxxxxxxx, Xxxx, X.X.X.
Postal Code: 214028
Legal Representative: Xxxxx Xxxxx bin Harun
Transferee: Shanghai Hailong Oil Equipment Co., Ltd. (hereinafter referred to as
"Party B")
Address: Xx.0000, Xxxxx Xxxx, Xxxxxxx Xxxx, Xxxxxxxx
Legal Representative: Xxx Xxxxx
Whereas:
1. Party A intends to transfer part of its equity in Wuxi Seamless Drill Pipe
Co., Ltd. (hereinafter referred to as "Drill Pipe Co") and Party B intends
to accept such equity;
2. Other shareholders of Drill Pipe Co have approved Party B to transfer its
equity and have committed not to exercise their preemptive right under
equal conditions;
3. The board of directors of Drill Pipe Co met on September 15th, 2006 and
passed a valid resolution approving the equity transfer and related
matters between Party A and Party B.
Upon mutual friendly and full negotiation and in accordance with the Contract
Law of the PRC and other relevant laws and regulations, Party A and Party B
hereby reach the following agreement with regard to the transfer of certain
equity in Drill Pipe Co from Party A to Party B:
ARTICLE1 THE RELEVANT PARTIES:
1. "Drill Pipe Co", a foreign-invested limited liability company established
on August 30, 2005 with a total investment of USD 7 million and a
registered capital of USD 3.6 million and the business scope focusing on
drill pipe technology development; drill pipe manufacturing and fittings;
sales of self-manufactured products and after-sale service.
2. "Party A", one of the shareholders of Drill Pipe Co, contributes USD 1.83
million to Drill Pipe Co's registered capital and thus now holds 51%
equity of Drill Pipe Co.
3. "Party B": a limited liability company established on January 14, 2005,
with the business scope focusing on oil pipe paints, welding wire, welding
flux, coiled tubing, complete plant equipment of gas stations, heat shrink
sleeve (strips), drilling equipment and fittings, screw thread
manufacturing and screw thread protector, pipe anti-corrosion treatment,
relevant technical service and sales of self-manufacturing products
(certificates shall be obtained if required).
ARTICLE 2 TRANSFER OF EQUITY
1. Party A agrees to transfer 51% equity in Drill Pipe Co and Party B agrees
to accept it (hereinafter referred to as "Target Equity").
2. Both Parties agree that after this Agreement enters into force Party B
shall legally hold the Target Equity and shall be entitled to all rights
and bear all obligations of a shareholder as stipulated in Drill Pipe Co's
Articles of Associations.
3. Party A and Party B agree that, provided this agreement has become
effective by the base date, as provided in Article 3 hereunder, namely
after August 1, 2006, all rights and interests related to or pertaining to
the Target Equity shall belong to Party B.
ARTICLE 3 PRICE FOR TRANSFERRED EQUITY
1. Both parties agree to accept July 31, 2006 as the base date and take the
balance amount up to the base date, confirmed by a finance report
recognized by both parties, as the pricing reference.
2. As of July 31, 2006, the net asset value of Drill Pipe Co, recognized by
both parties, is RMB 29,629,137.94. Based on this value, both parties
agree to set the price for transferred Target Equity as RMB 15,547,740
(equivalent to USD 1.95 million, which is calculated based on the middle
rate 1:7.9732 between USD and RMB issued by the People's Bank of China on
July 31, 2006, and is hereinafter referred to as "Equity Transfer Price").
ARTICLE 4 TERM AND METHOD FOR DELIVERY OF TRANSFERRED EQUITY
1. Payment date for the transferred equity: Party B shall fully pay Party A
for the transferred equity within three (3) months commencing on the date
when Drill Pipe Co obtains a new business license.
2. Party A and Party B shall jointly register the alteration regarding
transfer of target equity with the Industrial and Commerce Administration.
ARTICLE 5 WARRANTIES
1. Party A warrants that the Target Equity is free of assignment, pledge,
seizure or limitation to any other rights or legal dispute, and that it
has the right to transfer the Target Equity.
2. Party B warrants that it is a legally organized and existing legal person
and that it has the right to receive the Target Equity.
3. Party B warrants that it shall, after becoming a shareholder of Drill Pipe
Co, strictly follow Drill Pipe Co's Articles of Associations and fulfill
its duties and obligations as a shareholder.
4. Both parties warrant that each party shall assist the other party in the
transfer of the relevant equity at request of the other party.
ARTICLE 6 DEFAULT AND EXEMPTION
1. Any party that breaches this Agreement shall compensate the other party
for all losses (including direct losses and indirect losses, as well as
the relevant expenses and costs arising from claims), due to such a
breach.
2. If Party B fails to pay for the transferred equity by the agreed upon
date, it shall be liable for a penalty of 0.5% of the balance payable per
day.
3. In case either party fails to perform this Agreement due to war, natural
hazards or other force majeure, the Party in breach shall not be liable
for the other party's loss for such a breach.
ARTICLE 7 GOVERNING LAW AND SETTLEMENT OF DISPUTE
1. This Agreement is governed by the applicable laws, administrative
regulations, local regulations, department rules, and other rules and
regulations of the PRC.
2. All disputes related to this Agreement shall be arbitrated in Shanghai in
accordance with the applicable Arbitration Rules by China International
Economic and Trade Arbitration Shanghai Commission. The arbitration shall
be final and binding on each party.
ARTICLE 8 VALIDITY
This Agreement shall become valid and binding upon seal and/or signature of
Party A and Party B, as well as approval of Drill Pipe Co's original examination
and approval authority.
ARTICLE 9 MISCELLANEOUS
For matters not covered by this Agreement, both parties shall negotiate in good
faith with each other and reach a supplementary agreement.
ARTICLE 10 LANGUAGE AND TEXT
1. This Agreement is written in Chinese and any translation editions are for
reference purpose only.
2. This Agreement is made in eight (8) original copies, with each party
holding two copies, Drill Pipe Co holding one copy, and with all other
copies having been submitted to the relevant governmental departments.
ARTICLE 11 TIME AND DATE FOR MAKING THIS AGREEMENT
1. This Agreement is made on September 18, 2006.
2. This Agreement is signed by both parties in Xinqu, Wuxi, PRC.
(No text hereunder)
Signature Page for Drill Pipe Co equity transfer
Transferor:
Wuxi Seamless Oil Pipes Company Limited (seal)
/s/
--------------------------
Legal Representative or Authorized Representative (Signature)
Transferee:
Shanghai Hailong Oil Equipment Co., Ltd. (Seal)
/s/
--------------------------
Legal Representative or Authorized Representative (Signature)
