Global Lock Safety (Intl) Grp CoLtd Amendment to technology support agreement (0059F)

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RNS Number : 0059F

Global Lock Safety (Intl) Grp CoLtd

17 May 2013

Global Lock Safety (International) Group Co., Limited

("Global Lock" or the "Company")

Amendment to exclusive technology support agreement

Global Lock, the provider of security solutions to retailers and other organisations in China, announces that it has amended the exclusive technology support agreement which forms one of the contracts which govern its group structure.

Background

In its admission document published at the time of its admission to trading on AIM in October 2010, Global Lock disclosed that its group (the "Group") carries out its trading business through Shenzhen Global Lock Security System Engineering Co., Limited ("Shenzhen Global Lock"). To enable the Group to seek overseas (i.e. outside the People's Republic of China ("PRC")) public investors (which would otherwise have been in breach of PRC laws), the Group was restructured on 17 October 2010 (the "Restructuring"). Pursuant to the Restructuring Shenzhen Global Lock entered into certain long-term contractual arrangements with Global Lock Safety Technology (Shenzhen) Limited ("Global Lock WFOE"), an indirect wholly owned subsidiary of the Company.

Pursuant to these contractual arrangements full managerial, operational and financial control of Shenzhen Global Lock was granted to Global Lock WFOE and, thereby in turn, the Company. At the same time it was originally intended that these agreements provided that, inter alia, that all profits generated by Shenzhen Global Lock are to be paid to Global Lock WFOE.

Amendment to exclusive technology support agreement

These contractual agreements included an exclusive technology support agreement dated 17 October 2013 (the "Technology Support Agreement") under which Global Lock WFOE agreed to provide technical support and consultancy services to Shenzhen Global Lock in exchange for a service fee which will be calculated based on 20 per cent. to 25 per cent. of the total operating revenue of Shenzhen Global Lock in any profitable quarter.

By an agreement dated 14 May 2013 Global Lock WFOE and Shenzhen Global Lock have agreed to vary the Technology Support Agreement with effect from 1 January 2012 so that instead of the service fee being calculated by reference to the operating revenue of Shenzhen Global Lock in any profitable quarter it will be 25 per cent. of Shenzhen Global Lock's profit before tax for the financial year in question. Without this amendment the directors of the Company believe that it would be very difficult for Shenzhen Global Lock to operate at anything other than a loss.

Potential variation to Group structure

Global Lock is investigating ways of restructuring the Group in order that it may exercise the call option agreement dated 17 October 2010 that Global Lock WFOE holds over the entire issued share capital of Shenzhen Global Lock. However there can be no assurance that Global Lock will in fact be able to restructure the Group in such as way as to permit the exercise of the call option in accordance with PRC laws and further announcements will be made at the appropriate time.

Enquiries:

Global Lock Safety (International) Group

Li Mo Xiang, CEO Tel:[phone]

   Andrew Gee, Non-executive Director                                             Tel:  [phone] 

Allenby Capital Limited Tel: [phone]

Nick Naylor

Alex Price

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