Exhibit 10.4

GUARANTY

THIS GUARANTY (this “Guaranty”), dated as of August 15, 2006, is executed by
Lone Star Technologies, a corporation organized under the laws of the State of
Delaware (USA), with its legal address at 15660 N. Dallas Pkwy., Ste. 500,
Dallas, TX 75248, United States of America (the “Guarantor”), in favor of the
Chinese Parties (as defined in the JV Contract defined below) (the Guarantor and
the Chinese Parties are collectively referred to as the “Parties” hereinafter).

WHEREAS, in order to induce the Chinese Parties to enter into the Joint Venture
Contract (the “JV Contract”), dated as of August 15, 2006, by and among Star
China Ltd. (“Star China”) a company duly incorporated and existing under the
laws of Cayman Islands, Hunan Valin Steel Tube and Wire Co., Ltd. (“VTW”), a
company duly incorporated and existing under the laws of People’s Republic of
China (“PRC”, for the purposes of this Guaranty only, not including Hong Kong
Special Administrative Region, Macau Special Administrative Region or Taiwan)
and Hengyang Valin Steel Tube Company Limited (“VST”), a company duly
incorporated and existing under the laws of PRC,  Guarantor has agreed, subject
to the terms and conditions contained in this Guaranty, to guarantee the payment
and performance of all obligations, liabilities and indemnities of Star China
now existing or hereafter arising under the JV Contract, the Capital Increase
Agreement between Star China, VTW, VST and Hengyang Valin MPM Steel Tube Company
Limited (“Valin MPM”), dated as of August 15, 2006 (“CIA”) and the Articles of
Association in respect of Valin MPM between Star China, VTW and VST, dated as of
August 15, 2006 (“AoA”) (JV Contract, CIA and AoA are collectively referred to
as “Transaction Documents”) (collectively, the “Obligations”) and to execute and
deliver this Guaranty;

WHEREAS, Guarantor will benefit, directly or indirectly, from the consummation
of the transactions contemplated by the Transaction Documents;

WHEREAS, each capitalized term defined in the Transaction Documents and not
otherwise defined herein shall have the meaning ascribed thereto in the
Transaction Documents when used herein;

NOW, THEREFORE, in consideration of the foregoing, and intending to be legally
bound hereby, Guarantor agrees as follows:

Section 1.               Unconditional Guarantee.

(a)           Guarantor fully and irrevocably guarantees the payment and
performance of the Obligations when due.  Guarantor is hereby made fully
responsible for the acts and omissions of Star China that constitute a breach of
the Transaction Documents.  This Guaranty shall be a full, unconditional,
irrevocable, absolute and continuing guarantee of payment and performance and
not a guarantee of collection, and Guarantor shall remain liable on the
Obligations hereunder until the payment in full of the Obligations.

(b)           The Obligations of Guarantor hereunder shall not be released,
discharged, diminished or impaired by (i) the renewal, extension, modification
or alteration by Star China and the Chinese Parties, with or without the
knowledge or consent of Guarantor, of the Transaction Documents or of any
liability or obligation of Star China thereunder or of any document or
instrument under which the Obligations arise, (ii) any

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forbearance or compromise granted to Star China by the Chinese Parties when
dealing with Star China except to the extent of such forbearance or compromise,
(iii) any change in corporate structure or ownership of Star China or the
bankruptcy, insolvency, liquidation, receivership, dissolution, winding-up or
termination of Star China or the fact that at any time Star China does not
exist, (iv) the inaccuracy of any of the representations and warranties of Star
China under any of the Transaction Documents, (v) any neglect, delay, omission,
failure or refusal of Star China to take or prosecute any action in connection
with the Transaction Documents, or (vi) the full or partial release of Star
China on any liability or obligation, except that Guarantor shall be released
pro tanto to the extent the Chinese Parties expressly release Star China from
liability with respect to the Obligations.

(d)           Guarantor waives notice of (i) acceptance of this Guaranty,
(ii) the creation, renewal, extension, modification, alteration or existence of
any liability or obligation of Star China constituting part of the Obligations,
and (iii) any breach of or default in the performance of the Obligations.

(e)           If Star China fails to perform Obligations requiring payment, in
whole or in part, when such Obligations are due, Guarantor shall promptly pay
such Obligations in cash.  Guarantor shall pay such amount within ten (10)
Business Days (as defined in the JV Contract) of receipt of demand for payment
from the Chinese Parties.  The Chinese Parties may enforce Guarantor’s
obligations under this Guaranty after suing Star China or joining Star China in
any suit against Guarantor, or enforcing any rights and remedies against Star
China or otherwise pursuing or asserting any claims or rights against Star China
or any other person or entity or any of its or their property which may also be
liable with respect to the matters for which Guarantor is liable under this
Section 1.

(f)            Guarantor reserves the right to assert defenses which Star China
may have to payment or performance of any Obligation.

Section 2.               Representation as to Benefit.  Guarantor warrants and
represents for and as to itself that it has received, or will receive, direct or
indirect benefit from the making of this Guaranty.

Section 3.               Governing Law and Consent to Jurisdiction.  This
Guaranty shall be governed by and construed in accordance with the laws of
China.

Section 4.               Dispute Resolution.  The Parties shall make every
effort to settle amicably any and all disputes, controversies and conflicts
arising out of or relating to or in connection with this Guaranty (a
“Dispute”).  Disputes or claims, if any, which cannot be settled amicably
between the Parties, within thirty (30) days after written notice of such
Dispute has been given by one party to the other party, shall be referred to the
International Court of Arbitration of the International Chamber of Commerce and
finally resolved by arbitration in Hong Kong under the Rules of Arbitration of
the International Chamber of Commerce (“ICC Rules”) for the time being in
force.  The ICC Rules shall be deemed to be incorporated by reference into this
Article within this Guaranty.  The Tribunal shall consist of one (1) arbitrator
who shall be appointed by the Chairman of the International Chamber of
Commerce.  The costs of the arbitration, including administrative and
arbitrator’s fees, shall be borne by the Parties according to the arbitration
award.  Each Party shall bear the costs of its own attorney’s fees and expert
witness fees.  The arbitration proceedings shall be in both English and Chinese
and all pleadings and written evidence shall be in English and Chinese.  The
decision of the arbitrator shall be final, binding and enforceable upon the
Parties and

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judgment upon any award rendered by the arbitrator may be entered in any court
having jurisdiction thereof.  In the event that the failure of a party to this
Guaranty to comply with the decision of the arbitrator requires the other party
to apply to any court for enforcement of such award, the non-complying Party
shall be liable to the other for all cost of such litigation including
attorney’s fees.  The Parties may apply to any court of competent jurisdiction
in accordance with this Article 4 for temporary or permanent injunctive relief,
without breach of this Article 4 or abridgement of the powers of the
arbitrator.  Neither Party shall be entitled to commence or maintain any action
in any court of Law upon any matter in dispute until such matter shall have been
submitted to, and finally determined under, the dispute resolution and
arbitration procedures in this Article 4, and then only for the enforcement of
any arbitral award.

Section 5.               Benefit.  This Guaranty shall inure to the benefit of
the Chinese Parties and their respective successors and assigns, and shall be
binding upon Guarantor and its successors and assigns; provided, however, that
(i) neither the Chinese Parties nor Guarantor shall assign its rights or
obligations under this Guaranty without the prior written consent of the other
except by operation of law, (ii) no assignment or other transfer by, through or
under the Chinese Parties shall operate to increase Guarantor’s obligations
hereunder, and (iii) Guarantor shall be fully protected in making and shall
receive full credit for any payments or other performance made by it to the
Chinese Parties or their successors and assigns with respect to the Obligations
prior to the time Guarantor receives written notice of such assignment or
succession.

Section 6.               Continuing Guarantee.  Subject to the terms, conditions
and limitations hereof, this Guaranty is a continuing guarantee and shall remain
in full force and effect and be binding upon Guarantor until the Obligations
have been satisfied in full.

Section 7.               Notices.  Any notice, demand or other communication
required or permitted under this Guaranty shall be in writing and given by hand
delivery, facsimile, overnight courier, or post.  All notices shall be properly
addressed to the recipient, with all postage and other charges being paid by the
party giving notice.  Notices shall be effective when actually received by the
party being notified.  The addresses of the parties for purposes of notice are
as follows:

If to Guarantor, to:

Lone Star Technologies, Inc.:

15660 N. Dallas Pkwy., Ste. 500,
Dallas, TX 75248
United States of America
Attention: General Counsel
Facsimile No:  (+1) 972-770-6474

with a copy to:

Weil, Gotshal & Manges LLP
200 Crescent Court, Suite 300

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Dallas, Texas 75201
United States of America
Attention:  Mary R. Korby
Fax: (+1) 214-746-7777
E-mail: mary.korby@weil.com

If to the Chinese Parties, to:

Hunan Valin Steel Tube & Wire Co., Ltd.:

Hua Ling Tower, No. 111 Fu Rong Road (M)
Changsha Municipality, Hunan Province
People’s Republic of China
Attention: Head of Securities Department
Facsimile No.: (86) 731-2245196; (86) 731-4447112

Hengyang Valin Steel Tube Co. Ltd.:

No. 10 Dali New Village, Zhengxiang District
Hengyang, Hunan Province
People’s Republic of China
Attention: Head of Office
Facsimile No:  (86)734-8870188

Any party may change its address by giving two days’ advance written notice to
the other party.

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IN WITNESS WHEREOF, the undersigned has executed this Guaranty as of the date
first above written.

GUARANTOR:

 

 

 

Lone Star Technologies, Inc.

 

 

 

By:

/s/ Rhys J. Best

 

 

 

Name:

Rhys J. Best

 

 

 

Title:

Chairman/CEO

 

 

[Signature Page of Guaranty]

 

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