Share Transfer Agreement
Party A : IMOT Information Technology (Shenzhen) Ltd.
Address : 00/X., Xxxxxx Xxxxxxxx, Xxxxx Xxxx Xxxxx,
Xxxxxxxx Xxxx, Xxxxx (Postcode : 518014)
Party B : Shenzhen Golden Anke Technology Co. Ltd. ("Golden Anke")
Address : Xxxx Xxxx, 0/X., Xxxxx 0, XXX Science and Industry
Park, Huaqiang Road North, Shenzhen, China.
Party C : Intermost Corporation
Address : 00/X., Xxxxxx Xxxxxxxx, Xxxxxx Xxxx Xxxxx, Xxxxxxxx,
Xxxxx (Postcode: 518014)
Party D : Original Shareholders of Golden Anke
TU Guoshen (I.D. No. 360102196509275814)
LI Zhiquan (I.D. No. 000000000000000000)
Section 1 Background
WHEREAS:
1.1 On behalf of its parent company, Intermost Corporation (an OTCBB listed
company, hereby referred to as "IMOT"), IMOT Information Technology
(Shenzhen) Ltd. shall acquire the shareholding of Golden Anke by issuing
common stock of IMOT, so as to participate in and develop network digital
surveillance and security business.
1.2 Golden Anke is the subsidiary of Jiuding Group in Shenzhen. Its registered
capital and paid-up capital is Rmb10 million and under Chinese GAAP its
net asset value shall not be less than Rmb10 million at the date this
Agreement comes into effect. Its major business is the development, sales,
engineering and services of Internet based digital network surveillance
and security systems.
Through friendly consultation, all parties have agreed on the following
agreement:
Section 2 Share Transfer
2.1 Both Party A and Party B agree that Party A shall acquire, by issuing
common stock of IMOT, 51% shareholding of Party B from shareholders
authorized by the shareholders' general meeting of Golden Anke ("Selling
Shareholders of Party B"). Share price of the IMOT common stock to be
issued shall be the average closing price of IMOT trading on the NASD OTCBB
during the two-month period prior to March 20, 2004, (from January 20, 2004
to March 19, 2004) i.e. US$0.336 per share. Based on this share price, IMOT
shall issue 12 million shares of IMOT common stock to the Selling
Shareholders of Party B for the acquisition of Golden Anke's shareholding.
Upon completion of the exchange of shares, Party A shall own 51%
shareholding in Golden Anke and the original shareholders of Golden Anke
shall own 49% shareholding. Under Chinese GAAP the net asset value of
Golden Anke shall not be less than Rmb10 million.
2.2 Both Party A and Party B agree that after this Agreement has come into
effect, Party A shall arrange the issuance and delivery of 12,000,000
shares of IMOT common stock within 25 days after the completion of the
transfer of 51% shareholding of Golden Anke (i.e. the date that all parties
complete the notarization for the change of shareholders at the
notarization authority in Shenzhen City, hereinafter referred to as
"completion date of Golden Anke share transfer").
2.3 Party B undertakes, within 30 days after this Agreement has come into
effect, to complete all the legal procedures regarding the share transfer
to Party A as stipulated in Clause 2.1 of this Agreement.
2.4 Both parties agree that after this Agreement has come into effect, they
shall restructure the board of Golden Anke and shall jointly develop the
business of Golden Anke. Both parties agree that:-
(a) Majority of the directors shall be nominated by Party A.
(b) Chairman and legal representative of Golden Anke shall be nominated by Party
B.
Section 3 Business Development and Future Expansion of Golden Anke
Both Parties agree that, as one of the largest network security companies in
China, Golden Anke shall have good prospect of development. In order to
further develop the business of Golden Anke, Party A shall assist Golden
Anke in restructuring its business development, human resources management,
internal management and financial management practices. All parties are
willing to use their best effort to facilitate the business development of
Golden Anke. The goal of Golden Anke is to become the largest and most
successful Internet based digital network surveillance and security company
in China, and to bring the greatest return to its shareholders.
Section 4 Representation and Warranties of Party A
4.1 Party A represents and warrants that its parent company, IMOT, has
legitimate listing status on the NASD OTCBB and its common shares are in
normal trading status. Party A undertakes that the shares to be issued to
the Selling Shareholders of Party B are valid shares and Party A shall have
the legal authority to implement this share transfer.
4.2 After this Agreement has come into effect, Party A undertakes to deliver
the IMOT common stock to the Selling Shareholders of Party B (or
beneficiaries designated by Selling Shareholders of Party B).
4.3 One year after this Agreement has come into effect, some of the IMOT common
stock to be issued to the Selling Shareholders of Party B shall be eligible
for sale pursuant to Rule 144 of the Securities and Exchange Commission of
the U.S.A. 2 years after the issuance of shares those IMOT common shares
shall be eligible for sale in compliance with relevant regulations of the
Securities and Exchange Commission of the U.S.A.
4.4 After this Agreement has come into effect, Party A undertakes to assist
Golden Anke in its restructuring of business development, human resources
management, internal management, and financial management practices, etc.
4.5 Party A is a legal entity duly incorporated in China and possesses all the
rights and authority to sign and execute this Agreement and related
documents.
Section 5 Representations and Warranties of Party B
5.1 After this Agreement has come into effect, Party B undertakes to arrange
its shareholders to complete the share transfer in accordance with this
Agreement. Party B represents and warrants that the shareholding to be
transferred to Party A is valid and legitimately owned by the shareholders
of Party B, who have full and good title to these shares. All those shares
are free and clear of any liens, adverse claims, encumbrances, security
interests or any other restrictions. Selling Shareholders of Party B have
full and complete legitimate power to execute and implement this Agreement.
Party B undertakes that, within 30 days after this Agreement has come into
effect, it shall complete all the legal procedures required for the
transfer of shareholding to Party A in accordance with Clause 2.1 of this
Agreement.
5.2 Party A and Party B agree that, within the Two-Year Period After
Acquisition, All shareholders of Golden Anke shall receive 10% to 30% of
the net Profit as cash dividend every half year.
5.3 Party B undertakes that Golden Anke will focus on the development of its
core business including, but not limited to, network surveillance and
security, as well as other related business. The other business operation
of Jiuding Group shall not cause any adverse impact on Golden Anke while it
is pursuing its business plan and annual plan.
5.4 After this Agreement has come into effect and upon completion of the share
transfer, Party B shall coordinate with Party A regarding the audit work of
Golden Anke, Within the first 10 days of each month, it shall submit to
Party A the financial statements of Golden Anke for the previous month as
required for the listing companies.
5.5 Party B is a corporate legal entity duly incorporated and in existence
according to China law. It has acquired all the power and authority
necessary for the execution and implementation of this Agreement. All the
liabilities and obligations of Party B have been disclosed and acknowledged
by Party A. Except for all these liabilities and obligations, Party B has
no other hidden or contingent liabilities or obligations.
Section 6 Breach of Contract
6.1 If Party A delays in fulfilling its obligations as stipulated in Clause 4.2
of this Agreement, Party A shall have to pay to Party B a penalty
equivalent to 0.01% of the total consideration for the share transfer for
each day it has delayed in fulfilling its obligations.
6.2 If Party B delays in fulfilling its obligations as stipulated in Clause 5.4
of this Agreement, Party B shall have to pay to Party A penalty equivalent
to 0.1% of the total consideration for the share transfer for each day it
has delayed in fulfilling its obligations.
6.3 If Party B is unable to fulfill its representations as stipulated in Clause
5.5 of this Agreement, any undisclosed liabilities and obligations shall be
borne by the Original Shareholders of Party B. If any loss has been caused
to Party A, original shareholders of Party B shall be liable to pay for the
damages caused. Party A shall also have the right to unilaterally terminate
this Agreement by giving a written notice to the other parties.
Section 7 Settlement of Disputes
In case of any disputes on this Agreement, both parties shall settle them
through friendly consultation. If the disputes cannot be settled through
friendly consultation, they shall be submitted to the Shenzhen Branch of
China International Economic and Trade Arbitration Committee for
arbitration in accordance with its current arbitration principle.
Arbitration results shall be binding on both parties.
Section 8 Joint and Several Guarantee
As the parent company of Party A, Party C shall have joint and several
guarantee obligations regarding this Agreement. As the original
shareholders of Golden Anke, Party D shall have joint and several guarantee
obligations regarding this Agreement.
Section 9 Execution of Agreement
This Agreement shall be executed in quadruplicate. Upon execution by all
parties, evaluation and assessment work will commence. This Agreement shall
come into effect after the evaluation results are approved by the board of
directors of each party.
Section 10 Other Provisions
Prior to the execution of this Agreement, all the promises or agreements, no
matter written or oral, among all parties regarding the subject matter of
this Agreement shall become void. Should any disagreements arise, this
Agreement shall prevail.
Section 11 Exhibits and Legal Force
Exhibits of this Agreement include : Exhibit 1 : Balance sheet of Golden Anke
for 2003; Exhibit 2 : Profit and Loss Account of Golden Anke for 2003;
Exhibit 3 : Resolution of Golden Anke's board of directors for consent of
share transfer by the shareholders. All these exhibits constitutes an
integrated part of this Agreement and shall be legally binding.
Party A : IMOT Information Technology (Shenzhen) Ltd.
Authorized representative
Date: March 31, 2004
Party B : Shenzhen City Golden Anke Technology Ltd.
Authorized representative
Date: March 31, 2004
Party C : Intermost Corporation
Authorized representative
Date: March 31, 2004
Party D : Original Shareholders of Golden Anke
Authorized representative
Date: March 31, 2004
