GUANGDONG NEW GENERATION BUSINESS MANAGEMENT CO. LTD. EQUITY TRANSFER AGREEMENT

 

 

Exhibit 10.1

 

              GUANGDONG NEW GENERATION BUSINESS MANAGEMENT CO. LTD.

                            EQUITY TRANSFER AGREEMENT

 

          The   present agreement is entered   into   among   the following   parties

in   Guangzhou   on   the   20th   day   of   April   2004.

 

          Guoji   Enterprise   Co.,   Ltd., a limited liability company established

with   effective   duration   in   accordance   with   the   laws in the British Virgin

Islands.   Its   address   of   registration   is   Akara   Bldg.   24 De Castro Street,

Wickhams   Cay   I,   Road   Town, Tortola, British Virgin Islands. The company is a

wholly-owned   subsidiary   company   of   China   World Trade Corporation. The legal

representative of the company is Zeng Zhixiong (hereinafter abbreviated as Party

A   or   Transferee).

 

          Guangdong   Huahao   Industries   Group   Co.,   Ltd.,   a limited liability

company   established   with   effective   duration   in   accordance with the laws in

China.   Its   address   of   registration is 15/F, No. 198 Linhexiheng Road, Tianhe

District, Guangzhou City, Guangdong Province, China. The legal representative of

the company is Chen Zeliang (hereinafter abbreviated as Party B, or collectively

referred   to   as   Transferors   together   with   Party   C   and   Party   D).

 

          Huang   Zehua, a natural person of Chinese nationality, whose ID No. is

445221790628656   and   whose place of residence is Denggang Town, Jiedong County,

Guangdong Province (hereinafter abbreviated as Party C, or collectively referred

to   as   Transferors   together   with   Party   B   and   Party   D).

 

          Suo   Hongxia, a natural person of Chinese nationality, whose ID No. is

410311710225004   and   whose place of residence is Room 903, No. 14 Huajing Road,

Guangzhou   City,   Guangdong Province, China (hereinafter abbreviated as Party D,

or   collectively   referred to as Transferors together with Party B and Party C).

 

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                                    PREFACE

 

     Whereas:

          1.   Parties   B,   C   and   D   jointly   invested   in the establishment of

Guangdong   New Generation Business Management Co., Ltd. (hereinafter abbreviated

as "Target Company") on April 3, 1998. The primary business scope of the company

includes   market   research   and   planning, sales agency of airline passenger and

freight   transportation, business agency and consultation on travel information.

Its   address of registration is Ground Floor, No. 980 North Jiefang Road, Yuexiu

District, Guangzhou City, Guangdong Province, China. The legal representative of

the   company   is   Zhu   Jianxin.

 

           2.   The Target Company is a limited liability company established with

effective   duration   in   accordance   with   the   laws   in   China.   The   company's

registered   capital is RMB fifteen million ( 15,000,000.00). The Transferors are

the   existing   shareholders   of   the   Target   Company   and,   as of the date this

agreement is signed, hold one hundred percent (100%) of the shares of the Target

Company.   To   be   specific, Parties B, C and D respectively hold eight-six point

sixty-seven   percent   (86.67%),   ten   percent (10%) and three point thirty-three

percent   (3.33%)   of   the   shares   of   the   Target   Company.

 

          3.   The   Transferors   agree   to   transfer   to the Transferee fifty-one

percent   (51%)   of the shares of the Target Company that they hold in accordance

with   the   prices set in Article 2.2 below as well as other terms and conditions

set   out   in   this agreement. The Transferee agrees to take over the transferred

shares   and   rights as mentioned above in accordance with the conditions set out

in   the   terms   of   this   agreement.

 

          Now   therefore,   the parties hereby enter into the following agreement

on   the basis of equality, voluntariness and consultation and in accordance with

the   existing   laws,   administrative   rules   and   regulatory documents in China:

 

          Article   One           Definition

 

          1.1   In   this agreement the following words and phrases are defined as

follows   unless   otherwise   specified   in   the   context:

 

          (1)   "China"   refers   to the People's Republic of China (not including

Hong   Kong   and   Macao   Special   Administrative   Regions   and   Taiwan Province);

 

          (2)   "Hong Kong" refers to the Hong Kong Special Administrative Region

of   the   People's   Republic   of   China);

 

          (3)   "Renminbi"   refers to the legal currency in the People's Republic

of   China;

 

          (4) "Share" refers to the shareholder's equity as held by the existing

shareholder   based   on   the   proportion   of   the amount of registered capital it

contributes   according   to   the   related   legal documents in the total amount of

registered   capital   of   the   Target Company. Generally speaking, the shares may

take   the   form   of   stocks,   share of equities and so on. In this agreement the

shares   are   calculated   in   percentages.

 

          (5)   "Transferred   shares" refer to the fifty-one percent (51%) of the

equities   in   the Target Company that the Transferors transfer out in accordance

with   the   conditions   and   arrangements   in   this   agreement.

 

          (6)   "Transfer   price"   refers   to   the transfer price as specified in

Articles   2.2.1   and   2.2.2   of   this   agreement.

 

          (7)   "Transfer   completion date" refers to the details in Article 6.1.

 

          (8)   "Existing   shareholders"   refer to the shareholders of the Target

Company   as   specified   by   the   most   recently   dated   effective   contracts   or

regulations   before   this   agreement   is   signed   and   takes   effect,   i.e.   the

transferring shareholders and the Transferors of the equities in this agreement.

 

          (9)   "Several enterprises" refers to the holding and (or) shareholding

companies   by   the   Transferors   as   in   Appendix   1.

 

          (10)   This agreement refers to the entire text, complete appendices of

the   agreement   as well as all other documents that all parties agree to list as

the   appendices   of   the   agreement.

 

          (11) "China World Trade Corporation"   refers to the company registered

in   the   State   of   Nevada   in   the United States of America and approved by the

securities regulatory authority in the United States as listed company. To avoid

misinterpretation,   it   is   important to note that China World Trade Corporation

holds   one   hundred   percent   (100%)   of   the   rights   of   the   Transferee.

 

          (12) "Asset   assessment   date"   refers   to the base date of the   asset

assessment.

 

          1.2   Articles,   clauses,   items   and appendices refer to the articles,

clauses,   items   and   appendices   of   this   agreement.

 

          1.3   The   headings   in   this   agreement   are   made   for   the   sake   of

convenience   and   do   not   affect   the   understanding   and interpretation to the

agreement.

 

          Article   Two           Equity   Transfer

 

          2.1   Share   of   Transfer

 

          2.1.1   All   the   parties   in this agreement agree that the Transferors

will   make   a   one-time transfer to the Transferee of fifty-one percent (51%) of

the   shares   of   the   Target   Company   that   they   hold   in   accordance with the

conditions   set   in   this   agreement.   To   be   specific,   (a)   Party B transfers

thirty-seven   point sixty-seven (37.67%) of the shares it originally owns in the

Target   Company   and retains forty-nine percent (49%) of the shares; (b) Party C

transfers   all of the shares (10%) it originally owns in the Target Company; (c)

Party   D   transfers   all   of the shares (3.33%) it originally owns in the Target

Company.

 

          2.1.2   After   the   paid transfer of the fifty-one percent (51%) of the

shares   from   the   above-mentioned   Target   Company,   the Transferee becomes the

controlling   shareholder   of   the   Target   Company.   Upon   the completion of the

transfer,   the   composition of the shares in the Target Company becomes: Party A

owns   fifty-one   percent (51%) of the shares and Party B owns forty-nine percent

(49%)   of   the   shares.

 

          2.2   Transfer   Price

 

          2.2.1   The   Transferee   purchases   the   "transfer   shares"   from   the

Transferees   at   the   transfer   price   of   RMB   ninety-one million eight hundred

thousand   (91,800,000.00),   in   which parties B, C and D respectively obtain the

transfer   prices   of   RMB seventy-nine million five hundred sixty-three thousand

and   sixty   (79,563,060.00),   RMB   nine   million   one   hundred   eighty   thousand

(9,180,000.00)   and   RMB   three   million   fifty-six   thousand   ninety-four

(3,056,940.00).

 

          2.2.2   The Transfer Price refers to the purchase price of the transfer

shares,   including   the   variety   of   shareholder's   equities   contained   in the

transfer   shares.   Such   shareholder's   equities   refer   to   all the current and

potential   equities   attached to the transfer shares, including all the benefits

represented   by   fifty-one percent (51%) of all the personal properties and real

estate   as   well   as   the tangible and intangible assets that the Target Company

owns.   They   also   include   but are not limited to all the profits and dividends

prior   to   the   completion   date   of   the equity transfer for the year 2004. The

Transfer   Price   does   not include: (a) any liabilities or other account payable

(hereinafter abbreviated as "Undisclosed Liabilities") of the Target Company not

listed   in   Appendix 2 of this agreement and (b) the existing shortfall, damage,

reduction   or loss of use value between the current assets of the Target Company

and   the checklist contents in Appendix 3 (collectively referred to as "Property

Devaluation   or   Damage".)

 

          2.2.3   In   case of Undisclosed Liabilities and Property Devaluation or

Damage   (if   existing),   the   Transferee   shall   shoulder   the   compensation

responsibilities   in   the proportion of fifty-one percent (51%) of the amount of

the   Undisclosed   Liabilities.

 

          Article   Three           Payment

 

          3.1   Means   of   Payment

 

          3.1.1 All the parties of the agreement agree that the Transferee shall

pay   to   the   Transferors the Transfer Price by means of the Renminbi it legally

owns   and the stocks it has the right of disposal of. Among the payment, (a) RMB

thirty   million   (30,000,000.00)   shall   be   made in cash, and (b) the remaining

Transfer   Price   to   the   Transferors   shall   be in the form of the additionally

issued   common stocks from China World Trade Corporation which will apply to the

securities regulatory authority in the United States for such issuance. The unit

price   per   share   of the stocks used for payment is converted as ninety percent

(90%)   of   the   average closing price for the ten (10) trading days prior to the

completion date of the transfer for China World Trade Corporation as well as the

foreign   exchange rate published by the State Administration of Foreign Exchange

of   China   as   of   the   date   of   the   additional   issuance.

 

          3.2   Time   of   Payment

 

          3.2.1   The   Transferee   shall,   on or before May 10, 2004, pay RMB ten

million   (10,000,000.00)   to   Party B of this agreement in the form of loan (see

Appendix 4; the Target Company and the primary shareholder Chen Zeliang of Party

B   shall guarantee such a loan). By the time when all the prerequisites detailed

in Clause 4.1 below are satisfied and fulfilled before the deadline specified in

Clause   5.1,   this   loan   may   be   converted   into   the   Transfer   Price   to the

Transferors.

 

          3.2.2   Within   five   (5)   business   days   of   the   satisfaction   and

fulfillment   of   all   the prerequisites detailed in Clause 4.1 of this agreement

and   of   the   completion   of   procedures by the Target Company with registration

management   authority   for   the   change of shareholders and for the new business

license,   the   Transferee   shall   pay to the Transferors the cash portion of the

remaining   Transfer   Price.   The   stock portion shall be paid to the Transferors

within   two   (2)   months   thereafter.

 

          3.2.3   All   the   parties   shall   pay   the   taxes   incurred   in "Equity

Transfer"   in   this   agreement   in   accordance   with   the   laws and regulations.

 

          3.2.4   The   Transferee   has the right to pay the Transfer Price to the

Transferors in any equivalent foreign currency (if necessary and not contrary to

the   existing   related   laws   and   regulations   in   China).

 

          Article   Four           Prerequisites   of   the   Equity   Transfer

 

          4.1   Only   after   the following prerequisites are completely satisfied

will   the   Transferee   fulfill   the obligation of paying off the entire Transfer

Price.

 

          (1)   For   the   purpose   of   the   transactions   in   this agreement, the

Transferors   shall unconditionally transfer to the Target Company all the shares

they   control   and   own   in   several enterprises so that the Target Company will

legally   become the legitimate shareholders of the several enterprises mentioned

above   and   enjoy   the   shareholder's   rights   in   proportion   to   the   shares

transferred.   The Transferors shall complete the related registration procedures

for   the   change   of   shareholders   on   or   before   June   1,   2004. However, the

registration   procedures   for   the   change   of   shareholders   for   Easy Boarding

Business   Trip   Service   Co., Ltd. of Guangzhou Baiyun International Airport and

Guangzhou Airport Travel Agency Co., Ltd. are not subject to the above-mentioned

time constraint, but such registration procedures for the change of shareholders

shall   be   completed   on   or   before   September   30,   2004.

 

          (2)   For   the   purpose   of   the   transactions   in   this agreement, the

Transferors   shall   urge   the   Target   Company to complete the purchase of sixty

percent   (60%)   of   the shares from each of Hainan Xinkaili Airline Service Co.,

Ltd,   Beijing   Golden   Eagle   Airline   Service   Co.,   Ltd. and Zhengzhou Shaolin

Tourism   Development Co., Ltd. The related registration procedures of the change

of   equities   shall   also   be   completed   on   or   before   June   1,   2004.

 

          (3) For the purpose of the transactions in this agreement, China World

Trade   Corporation   shall   apply   to   the securities regulatory authority in the

United   States   for   the   additional   issuance of common stocks and the approval

shall   be   obtained   on   or   before   June   15,   2004.

 

          (4) The Target Company and Party B of this agreement shall have signed

a   loan   arrangement   d