SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT ("Agreement") is entered into this 30th
day of April, 2004 by and between (a) Network USA, Inc., a Nevada corporation
("Network"), Xxxxxxx X. Xxxxxx ("Church") and Xxxxxxx X. Xxxx ("Xxxx"), on the
one hand, and (b) each equity owner of SunWin Technology Group, Inc, a Florida
corporation (referred to herein, including its subsidiaries, affiliates and the
like, as "Sunwin" unless the context requires otherwise), whose name appears on
the signature page hereof under the caption "EQUITY OWNER" (referred to
hereinafter singly as a "Equity Owner" and collectively as the "Equity Owners"),
on the other hand.
RECITALS:
WHEREAS, each Equity Owner is the record and beneficial owner of the
number of shares of common stock, par value $0.001 per share, of Sunwin (the
"Sunwin Common Stock") set forth opposite their respective names on Schedule I
hereto; and
WHEREAS, Network desires to acquire from the Equity Owners, and the
Equity Owners desire to convey to Network, all of the issued and outstanding
Sunwin Common Stock, in exchange for shares of common stock, par value $.01 per
share, of Network ("Network Common Stock"), all on the terms, provisions and
conditions set forth hereinafter;
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties set forth herein and other valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties agree as follows:
ARTICLE 1
EXCHANGE OF SHARES
1.1 Sunwin Common Stock. At the Closing, each Equity Owner shall
transfer, convey and deliver to Network the number of shares of Sunwin Common
Stock set forth opposite their respective names on Schedule I hereto, and shall
deliver to Network stock certificates representing the Sunwin Common Stock, duly
endorsed to Network or accompanied by duly executed stock powers.
1.2 Network Common Stock. At the Closing, in exchange for the shares of
Sunwin Common Stock transferred to Network pursuant to Section 1.1 above,
Network shall issue and deliver to each Equity Owner the number of shares of
Network Common Stock set forth opposite their respective names on Schedule I
hereto. The transaction by which the transfer shall take place is referred to
hereinafter as the "Exchange."
ARTICLE 2
THE CLOSING
Subject to the terms, provisions and conditions contained in this
Agreement, the closing of the Exchange (the "Closing") shall take place at 10:00
a.m. local time, on April 30, 2004, or on such other date as Network, Church,
Mead, and the Equity Owners may mutually agree in writing (the "Closing Date").
The Closing may occur at such place and in such manner as the parties hereto may
agree to. The Closing need not be one in which every party hereto is physically
present but may be one in which all documents and instrument necessary to close
the transactions provided for in or contemplated by this Agreement are
transmitted among the parties by means of ordinary or express mails.
ARTICLE 3
[INTENTIONALLY OMITTED]
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF EQUITY OWNERS
Each Equity Owner hereby represents, warrants and agrees, jointly and
severally with respect to all representations, warranties and agreements made in
this ARTICLE 4 except for those contained in Sections 4.4. 4.5, 4.6 and 4.7 with
regard to an Equity Owner (which are made severally, but not jointly), to and
with Network and Church and Xxxx that:
4.1 Organization and Standing of Sunwin. Sunwin is a corporation duly
organized, validly existing, and in good standing under the laws of the state of
Florida. Sunwin has full requisite corporate power and authority to carry on its
business as it is now being conducted, and to own, operate, and lease the
properties now owned, operated, or leased by it. Sunwin is duly authorized and
qualified to carry on its business in the manner as now conducted in each state
in which authorization and qualification is required. Sunwin has made available
to Network and its representatives as requested true, correct and complete
copies of the contents of Sunwin's minute book, which are accurate in all
respects and set forth fully and fairly all of the Sunwin's corporate
transactions required to be authorized by its board of directors and/or
shareholders.
4.2 Capitalization of Sunwin. The authorized capital stock of Sunwin
(the "Sunwin Capital Stock") consists of 500,000,000 shares of Sunwin Common
Stock, 32,500,000 of which were issued and outstanding prior to the consummation
of the Exchange, and 20,000,000shares of Preferred Stock, none of which are
issued and outstanding. The shares of Sunwin Capital Stock issued and
outstanding prior to the consummation of the Exchange are duly and validly
authorized and issued and are fully paid and non-assessable, and were not issued
in violation of the pre-emptive rights of any current or former shareholder. The
shares of Sunwin Capital Stock issued and outstanding prior to the consummation
of the Exchange were issued, and all secondary transfers of such shares
permitted by Sunwin were made, in compliance with all applicable law (including,
without limitation, available exemptions from the securities offering
registration requirements of federal and state law). No option, warrant, call,
subscription, convertible security, or commitment of any kind obligating Sunwin
to issue any Sunwin Capital Stock exists. There is not any compensation plan
applicable to any of the officers, directors, or employees of Sunwin under which
compensation accrued or payable is determined, in whole or in part, by reference
to Sunwin Capital Stock. There are no agreements or commitments obligating
Sunwin to repurchase or otherwise acquire any Sunwin Capital Stock.
4.3 Subsidiaries and Other Ventures. Except for the Sunwin's 80%
ownership interest in Shantong Qufu National Green Engineering Company, Limited,
a Peoples Republic of China entity (the "Subsidiary), Sunwin has no subsidiaries
or affiliated corporations, and owns no capital stock, bond, or other security
of, or has any equity or proprietary interest in, any corporation, partnership,
joint venture, trust, or unincorporated association.
4.4 Ownership of Stock. All of the outstanding shares of Sunwin Capital
Stock is owned free and clear of any mortgage, lien, security interest, claim,
charge, pledge, encumbrance and any restriction on the transfer thereof of any
nature whatsoever. None of the outstanding shares of Sunwin Capital Stock is
subject to any voting trust, voting agreement, or other agreement or
understanding with respect to the voting thereof, nor is any proxy in existence
with respect to any such shares.
4.5 Capacity to Enter into Agreement. Each Equity Owner has full right,
power and authority to execute and deliver this Agreement and all other
agreements, documents and instruments to be executed in connection herewith and
perform such its or his obligations hereunder and thereunder. When this
Agreement and all other agreements, documents and instruments to be executed by
an Equity Owner in connection herewith have been executed by such Equity Owner
(as the case may be) and delivered to Network or Church and Xxxx, this Agreement
and such other agreements, documents and instruments will constitute the valid
and binding agreements of such Equity Owner (as the case may be), enforceable
against such Equity Owner (as the case may be) in accordance with their
respective terms.
4.6 Conflicts. The execution, delivery, and consummation of the
transactions contemplated by this Agreement will not (a) violate, conflict with
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any contract to which
Sunwin or any Equity Owner is a party or by which Sunwin or any Equity Owner is
bound or by which any of the assets of Sunwin or any Equity Owner is bound or
affected, (b) violate any judgment against, or binding upon, Sunwin or any
Equity Owner or upon the assets of Sunwin or any Equity Owner, (c) result in the
creation of any lien, charge or encumbrance upon any assets of Sunwin or any
Equity Owner pursuant to the terms of any such contract, or (d) violate any
provision in the charter documents, bylaws or any other agreement affecting the
governance and control of Sunwin.
4.7 Consents. No consent from, or other approval of, any governmental
entity or any other person, which has not been obtained, is necessary in
connection with the execution, delivery, or performance of this Agreement by
Sunwin or any Equity Owner.
4.8 Financial Statements. Sunwin has attached to this Agreement as
Schedule 4.8 copies of the following financial statements (hereinafter
collectively referred to as the "Financial Statements"): the unaudited balance
sheet and income statements for each of the two years ended December 31, 2003
and 2002 and the unaudited balance sheet and income statement for the three
months ended March 31, 2004 (the "Balance Sheet).
(a) The Financial Statements are complete and correct, present
fairly the financial condition of Sunwin as at the respective
dates thereof, and the results of operations for the
respective periods covered thereby, and have been prepared in
accordance with generally accepted accounting principles
applied on a consistent basis in the Peoples Republic of
China;
(b) There is no basis for the assertion of any liabilities or
obligations, either accrued, absolute, contingent, or
otherwise, which might adversely affect the value, use,
operation or enjoyment of the assets or business of Sunwin,
which liabilities or obligations are not expressly set forth
on the Balance Sheet; and
(c) Sunwin is not a party to or bound either absolutely or on a
contingent basis by any agreement of guarantee,
indemnification, assumption or endorsement or any like
commitment of the obligations, liabilities or indebtedness of
any other person (whether accrued, absolute, contingent or
otherwise).
4.9 Absence of Certain Changes and Events. Since the date of the
Balance Sheet, there has not been:
(a) Any adverse change in the financial condition, operations,
business prospects, employee relations, customer relations,
assets, liabilities (accrued, absolute, contingent, or
otherwise) or income of Sunwin, or the business of Sunwin,
from that shown on the Financial Statements;
(b) Any declaration, setting aside, or payment of any distribution
in respect of the equity interests in Sunwin, or any direct or
indirect redemption, purchase, or any other acquisition of any
such interests;
(c) Any borrowing of, or agreement to borrow any funds or any
debt, obligation, or liability (absolute or contingent)
incurred by Sunwin (whether or not presently outstanding)
except current liabilities incurred, and obligations under
agreements entered into in the ordinary course of business;
(d) Any mortgage, pledge, lien, security interest, charge, claim
or other encumbrance created on or in any of Sunwin's
properties or assets, except liens for current taxes not yet
due and payable;
(e) Any sale, assignment, or transfer of Sunwin's assets, except
in the ordinary course of business, any cancellation of any
debts or claims owed to Sunwin, any capital expenditures or
commitments therefor exceeding in the aggregate $5,000, any
damage, destruction or casualty loss exceeding in the
aggregate $5,000 (whether or not covered by insurance), or any
charitable contributions or pledges;
(f) Any amendment or termination of any contract, agreement,
license, or arrangement to which Sunwin is or was a party or
to which any assets of Sunwin are or were subject, which
amendment or termination has had, or may be reasonably
expected to have, an adverse effect on the financial
condition, properties, assets, liabilities (accrued, absolute,
contingent, or otherwise), income or business of Sunwin; or
(g) Any other material transaction by Sunwin outside the ordinary
course of business or any other event or condition pertaining
to, and adversely affecting the operations, assets,
liabilities (accrued, absolute, contingent, or otherwise),
income or business of Sunwin.
4.10 Assets.
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(a) Sunwin has good and indefeasible title to all of its
properties, interests in properties, and assets, real and
personal, free and clear of all mortgages, liens, pledges,
charges, or encumbrances of any nature whatsoever, except
liens for current taxes not yet due and payable;
(b) All of Sunwin's machinery, equipment, appliances, motor
vehicles and fixtures is in good operating condition and
repair, subject only to ordinary wear and tear;
(c) All of the inventories of Sunwin (including, without
limitation, raw materials, spare parts and supplies,
work-in-process, finished goods) consist of items of a
quality, condition and quantity useable and saleable in the
normal course of business; and
(d) All of the accounts receivable of Sunwin are valid,
subsisting, and genuine, arose out of bona fide transactions
and are current and collectible, subject to reserves reflected
on the Balance Sheet.
4.11 Contracts.
(a) All leases, contracts, agreements, arrangement or commitments
to which Sunwin is a party are in good standing, valid, and
effective; and
(b) There is not, under any such lease, contract, agreement,
arrangement or commitment, any existing or prospective default
or event of default by Sunwin or event which with notice or
lapse of time, or both would constitute a default and in
respect to which Sunwin has not taken adequate steps to
prevent a default from occurring; and, to the knowledge of any
of the Equity Owners, no other party to any such lease,
contract, agreement, arrangement or commitment, is in default
or breach thereof nor has any event occurred which with notice
or lapse of time would constitute a breach or default of any
of such lease, contract, agreement, arrangement or commitment.
4.12 Permits.
(a) Sunwin holds all licenses, permits and authorizations required
to carry on its business, and all such licenses, permits and
authorizations are in good standing;
(b) Sunwin is in full compliance with and not in default or
violation with respect to any term or provision of any of its
licenses, permits and authorizations;
(c) No notice of pending, threatened, or possible violation or
investigation in connection with, or loss of, any license,
permit, or authorization of Sunwin, has been received by
Sunwin;
(d) None of the Equity Owners has any knowledge that the issuance
of such a notice is being considered or of any facts or
circumstances which form the basis for the issuance of such a
notice; and
(e) No license, permit, or authorization of Sunwin is affected by
the transactions provided for herein or contemplated hereby.
4.13 Intellectual Property.
(a) Sunwin possesses all patents, trademarks, service marks, trade
names, business names, copyrights, and registered designs, and
applications and registrations thereof, trade secrets,
confidential know-how and other intellectual property,
including, but not limited to, product formulations, drawings,
technical specifications, manufacturing data, and test and
development data (the foregoing intellectual property is
collectively referred to hereinafter as the "Intellectual
Property") necessary to the conduct of its businesses, and the
loss or expiration of any Intellectual Property or group of
Intellectual Property would not have an adverse effect on the
conduct of its businesses;
(b) No such loss or expiration is threatened, pending or
reasonably foreseeable;
(c) Sunwin owns all right, title, and interest in and to all of
the Intellectual Property;
(d) There have been no claims made against Sunwin for the
assertion of the invalidity, abuse, misuse, or
unenforceability of any of such rights, and there are no
grounds for the same;
(e) Sunwin has not received a notice of conflict with the asserted
rights of others; and
(f) The conduct of Sunwin's business has not infringed any
Intellectual Property of others and, to the best of the
knowledge of any of the Equity Owners, the Intellectual
Property of Sunwin has not been infringed by other persons.
4.14 Employees.
(a) Sunwin is not a party as an employer to any employment
contract, agreement or understanding which is not terminable
at will without any penalty, liquidated damages or other
required payment;
(b) Sunwin has satisfied all salaries, wages, unemployment
insurance premiums, worker compensation payments, income tax,
FICA and other deductions and any like payments required by
law; and
(c) Sunwin's employees are not unionized, and to the knowledge of
any of the Equity Owners, there have not been attempts to
unionize them.
4.15 Employee Benefit Plans.
(a) Neither Sunwin nor any of its ERISA Affiliates sponsors or has
ever sponsored, maintained, contributed to, or incurred an
obligation to contribute to, any Employee Pension Benefit
Plan;
(b) No individual shall accrue or receive additional benefits,
service or accelerated rights to payments of benefits under
any Employee Benefit Plan including the right to receive any
parachute payment, as defined in Section 280G of the Code, or
become entitled to severance, termination allowance or similar
payments as a direct result of the transactions contemplated
by this Agreement;
(c) No Employee Benefit Plan has participated in, engaged in or
been a party to any non-exempt Prohibited Transaction, and
neither Sunwin nor any of its ERISA Affiliates has had
asserted against it any claim for taxes under Chapter 43 of
Subtitle D of the Code and Sections 4971 et. seq. of the Code,
or for penalties under ERISA Section 502(c), (i) or (1) with
respect to any Employee Benefit Plan nor, to the knowledge of
any of the Equity Owners, is there a basis for any such claim.
No officer, director or employee of Sunwin has committed a
breach of any material responsibility or obligation imposed
upon fiduciaries by Title I of ERISA with respect to any
Employee Benefit Plan;
(d) Other than routine claims for benefits, there is no claim
pending or to the knowledge of any of the Equity Owners
threatened, involving any Employee Benefit Plan by any person
against such plan or Sunwin or any ERISA Affiliate. There is
no pending or to the knowledge of any of the Equity Owners
threatened proceeding involving any Employee Benefit Plan
before the Internal Revenue Service, the U.S. Department of
Labor or any other governmental authority;
(e) There is no material violation of any reporting or disclosure
requirement imposed by ERISA or the Code with respect to any
Employee Benefit Plan;
(f) Each Employee Benefit Plan has at all times prior hereto been
maintained in all material respects, by its terms and in
operation, in accordance with ERISA and the Code. Sunwin and
its ERISA Affiliates have made full and timely payment of all
amounts required to be contributed under the terms of each
Employee Benefit Plan and applicable law or required to be
paid as expenses under such Employee Benefit Plan. Each
Employer Benefit Plan intended to be qualified under Code
Section 401(a) has received a determination letter to that
effect from the Internal Revenue Service and no event has
occurred and no amendment has been made that would adversely
affect such qualified status;
(g) With respect to any group health plans maintained by Sunwin or
its ERISA Affiliates, whether or not for the benefit of
Sunwin's employees, Sunwin and its ERISA Affiliate have
complied in all material respects with the provisions of Part
6 of Title I of ERISA and 4980B of the Code. Sunwin is not
obligated to provide health care benefits of any kind to its
retired employees pursuant to any Employee Benefit Plan,
including without limitation any group health plan, or
pursuant to any agreement or understanding; and
(h) Sunwin has made available to Network a copy of the three (3)
most recently filed federal Form 5500 series and accountant's
opinion, if applicable, for each Employee Benefit Plan and all
applicable Internal Revenue Service determination letters.
For purposes of this Section 4.15, the following definitions shall
apply:
(t) "COBRA" means the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, as set forth in Section 4980B of the
Code and Part 6 of Title I of ERISA.
(u) "Code" means the Internal Revenue Code of 1986, as amended.
(v) "Employee Benefit Plan means any employee benefit plan, as
defined in Section 3(3) of ERISA, that is sponsored or
contributed to by Sunwin or any ERISA Affiliate covering
employees or former employees of Sunwin.
(w) "Employee Pension Benefit Plan" means any employee pension
benefit plan, as defined in Section 3(2) of ERISA, that is
subject to Title IV of ERISA.
(x) "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
(y) "ERISA Affiliate" of any person means any other person that,
together with such person as of the relevant measuring date
under ERISA, was or is required to be treated as a single
employer under Section 414 of the Code.
(z) "Prohibited Transaction" means a transaction that is
prohibited under Section 4975 of the Code or Section 406 of
ERISA and not exempt under Section 4975 of the Code or Section
408 of ERISA, respectively.
4.16 Litigation.
(a) There is no pending suit, action, or legal, administrative,
arbitration, or other proceeding or governmental investigation
to which Sunwin is a party or which adversely affects or might
adversely affect Sunwin;
(b) Sunwin is not in default with respect to any judgment, order,
writ, injunction, decree, or award applicable to it of any
court or other governmental instrumentality or arbitrator; and
(c) There is no action, suit, proceeding, or claim pending or, to
the knowledge of any of the Equity Owners, threatened against
Sunwin by persons not a party to this Agreement wherein an
unfavorable decision, ruling, or finding would render unlawful
or otherwise adversely affect the consummation of the
transactions contemplated by this Agreement or would result in
a loss in an amount exceeding $10,000.
4.17 Compliance with Law.
(a) Sunwin is not in violation of, or in default with respect to,
or in alleged violation of or alleged default with respect to,
any applicable law, rule, regulation, permit, or any writ or
decree of any court or any governmental commission, board,
bureau, agency, or instrumentality, including without
limitation, any laws, ordinances, rules, regulations, permits,
or orders relating to the business of Sunwin, or the business
operations and practices, health and safety, and employment
practices of Sunwin;
(b) Sunwin is not delinquent with respect to any report required
to be filed with any governmental commission, board, bureau,
agency, or instrumentality, or with any trade association or
certification organization that has in the past certified or
endorsed the business of Sunwin; and
(c) Sunwin is not delinquent with respect to any reports required
by private covenants or agreements to which it is a party.
4.18 Taxes. Sunwin has delivered to Network or its
representatives as requested true, correct and complete copies of all
federal, state, and other appropriate jurisdictional tax returns,
reports, and estimates regarding Sunwin (collectively, the "Returns").
(a) Each of the Returns is complete, proper and accurate and has
been timely filed with appropriate governmental agencies by
Sunwin for each period for which such Return was due;
(b) All taxes shown by the Returns to be due and payable have been
timely paid;
(c) The tax provision and accruals reflected in the Balance Sheet
are adequate to cover the liability at the date thereof for
all taxes based on income, sales, business, or assets, as well
as any other taxes;
(d) Sunwin has not given or been requested to give, or executed,
any extension of time or waiver of any statute of limitations
with respect to federal, state, or other political subdivision
income or other tax for any period;
(e) Sunwin has not received any notice of deficiency or assessment
issued or proposed deficiency or assessment by the Internal
Revenue Service or any other taxing authority; and
(f) There is no pending audit or inquiry of Sunwin, nor has Sunwin
received any oral or written notice of any proposed audit or
inquiry by any taxing authority or jurisdiction, other than
the Subsidiary's annual audit consistent with applicable law.
4.19 Insurance.
(a) All insurance policies either maintained by Sunwin or
maintained by any other person which relates to Sunwin or its
assets in any manner as of the date hereof (collectively, the
"Insurance Policies") are still in full force and effect, and
all premiums due thereon have been paid;
(b) Sunwin has complied in all material respects with the
provisions of all Insurance Policies;
(c) No claim is pending under any of the Insurance Policies;
(d) There are no outstanding requirements or recommendations by
any insurance company that issued any of the Insurance
policies or by any Board of Fire Underwriters or other similar
body exercising similar functions or by any governmental
authority exercising similar functions which requires or
recommends any changes in the conduct of the business of, or
any repairs or other work to be done on or with respect to any
of the properties or assets of, Sunwin; and
(e) Sunwin has not received any notice or other communication from
any such insurance company within the three (3) years
preceding the date hereof canceling or materially amending or
materially increasing the annual or other premiums payable
under any of the Insurance Policies, and (to any of the Equity
Owners's knowledge) no such cancellation, amendment or
increase of premiums is threatened.
4.20 Environmental Matters.
(a) Sunwin is in compliance with all applicable federal, state and
local laws and regulations relating to pollution control and
environmental contamination including, but not limited to, all
laws and regulations governing the generation, use,
collection, treatment, storage, transportation, recovery,
removal, discharge or disposal of Hazardous Materials (as
defined below) and all laws and regulations with regard to
record keeping, notification and reporting requirements
respecting Hazardous Materials;
(b) Sunwin has not received any notice from any governmental
agency with respect to any alleged violation by it of any
applicable federal, state or local environmental or health and
safety statutes and regulations in connection with Sunwin's
operations, nor does any of the Equity Owners know of any
basis for any investigation or proceeding against it by any
federal, state or local environmental or health and safety
enforcement agency in connection with the operation of the
business;
(c) Sunwin has not been alleged to be in violation of, or has been
subject to any administrative or judicial proceeding pursuant
to, such laws and regulations, either now or at any time
during the past five years, and so far as any of the Equity
Owners is aware, there are no such threatened or proposed
violations with respect to such locations;
(d) There are no permits, licenses, consents, filings or other
approvals necessary or required to be obtained or made by laws
and regulations relating to Hazardous Material, pollution
controls and environmental contamination in connection with
Sunwin's business;
(e) Sunwin is not a party to any contract or other agreement
relating to the storage, transportation, treatment or disposal
of Hazardous Materials;
(f) There are no claims or facts or circumstances that any of the
Equity Owners reasonably believes could form the basis for
the assertion of any claim relating to environmental matters
involving Sunwin, including, but not limited to, any claim
arising from past or present practices of the business of
Sunwin, or with respect to properties now or previously owned
or leased, as asserted under the Comprehensive Environmental
Response, Compensation, nd Liability Act of 1980, 42 X.X.xx.xx
.9601-9657 and any amendments thereto ("CERLA"), or the
Resource Conservation and Recovery Act, 42 U.S..ss.ss.6901-
6987 and any amendments thereto ("RCRA"), any other federal,
state or local environmental statute, or the generation, use,
treatment, disposal, discharge, ownership, operation,
transportation, storage of Hazardous Materials, or any other
related act or omission of Sunwin;
(g) Sunwin is not subject to any remedial obligation under
applicable law or administrative order or decree pertaining to
environmental, health or safety statutes or regulations,
including, without limitation, CERLA, RCRA or any similar
state statute;
(h) Sunwin has determined that no Hazardous Material or other
substances known or suspected to pose a threat to health or
the environmental have been disposed of or otherwise released
on or near any real property or improvements of Sunwin, and
there are no off-site locations where Hazardous Materials
associated in any way with Sunwin have been generated, used,
collected, treated, stored, transported, recycled, discharged
or disposed of; and
(i) To the best of any of the Equity Owners's knowledge and
belief, after diligent investigation and inquiry, no real
property is owned or leased by Sunwin that is on any federal
or state "Superfund" list or subject to any environmentally
related liens, and no claim has been made or threatened
alleging damages arising from any Hazardous Materials or other
substances known or suspected to pose a threat to health or
the environment.
The term "Hazardous Materials" shall mean materials, substances, waste
or by-products defined as "hazardous substances", "hazardous wastes" or "solid
wastes" in CERLA, RCRA or any other federal, state or local environmental
statute or regulation or any unwholesome toxic or radioactive material. For the
purposes of this representation and warranty, the term "claim" shall mean any
and all claims, demands, causes of action, suits, proceedings, administrative
proceedings, losses, judgments, decrees, debts, damages, liabilities, costs, and
attorneys' fees and other expenses regarding or against the assets of Sunwin.
4.21 Transactions with Affiliated Parties.
(a) There are no transactions currently engaged in between Sunwin
and any party affiliated with Sunwin (other than transactions
inherent in the normal capacities of shareholders, officers,
directors, or employees);
(b) Except for the ownership of non-controlling interests in
securities of corporations the shares of which are publicly
traded, no party affiliated with Sunwin has any investment or
ownership interest, directly, indirectly, or beneficially, in
any competitor or potential competitor, major supplier, or
customer of Sunwin; and
(c) There are no agreements to which Sunwin is a party under which
the transactions contemplated by this Agreement (i) will
require payment by Sunwin or any consent or waiver from any
shareholder, officer, director, employee, consultant or agent
of Sunwin, or (ii) will result in any change in the nature of
any rights of any shareholder, officer, director, employee,
consultant or agent of Sunwin under any such agreement.
4.22 Securities Representations. Each Equity Owner believes that such
Equity Owner is familiar with the business and financial condition, properties,
operations and prospects of Network, such Equity Owner has been given full
access to all material information concerning the condition, properties,
operations and prospects of Network, and such Equity Owner has had an
opportunity to ask such questions of, and to receive such information from,
Network as such Equity Owner has desired and to obtain any additional
information necessary to verify the accuracy of the information and data
received; such Equity Owner has such knowledge, skill and experience in
business, financial and investment matters so that such Equity Owner is capable
of evaluating the merits and risks of an acquisition of Network Common Stock;
such Equity Owner has reviewed such Equity Owner's financial condition and
commitments and that, based on such review, such Equity Owner is satisfied that
such Equity Owner (a) has adequate means of providing for contingencies, (b) has
no present or contemplated future need to dispose of all or any of Network
Common Stock to satisfy existing or contemplated undertakings, needs or
indebtedness, (c) is capable of bearing the economic risk of the ownership of
Network Common Stock for the indefinite future, and (d) has assets or sources of
income which, taken together, are more than sufficient so that such Equity Owner
could bear the loss of the entire value of Network Common Stock; such Equity
Owner is acquiring Network Common Stock solely for such Equity Owner's own
beneficial account, for investment purposes, and not with a view to, or for
resale in connection with, any distribution of Network Common Stock; such Equity
Owner understands that Network Common Stock has not been registered under the
Securities Act of 1933 or any state securities laws and therefore Network Common
Stock is "restricted" under such laws; and such Equity Owner has not offered or
sold any portion of Network Common Stock and has no present intention of
reselling or otherwise disposing of any portion of Network Common Stock either
currently or after the passage of a fixed or determinable period of time or upon
the occurrence or non-occurrence of any predetermined event or circumstance.
4.23 Finder's Fees; Certain Expenses. Except as set forth on Schedule
4.23 hereto, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by Sunwin and the Equity Owners
directly with Network, Church and Xxxx, without the intervention of any other
person as the result of any act of any of them, and as far as is known to any of
the Equity Owners, without the intervention of any other person in such manner
as to give rise to any valid claim against any of the parties hereto for a
brokerage commission, finder's fee, or any similar payment.
4.24 Untrue Statements. This Agreement, the schedules and exhibits
hereto, and all other documents and information furnished by Sunwin or any of
the Equity Owners, or any of their respective representatives pursuant hereto or
in connection herewith, do not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements made herein
and therein not misleading or otherwise.
ARTICLE 5
[INTENTIONALLY OMITTED]
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF NETWORK
Network, Church and Xxxx hereby represents, warrants, and agrees,
jointly and severally, to and with each Equity Owner that:
6.1. Organization and Standing of Network. Network is a corporation
organized and in good standing under the laws of the state of Nevada. Network
has full requisite power and authority to carry on its business as it is now
being conducted, and to own, operate, and lease the properties now owned,
operated, or leased by it. Network is duly authorized and qualified to carry on
its business in the manner as now conducted in each state in which authorization
and qualification is required. Network has made available to Sunwin and its
representatives as requested true, correct and complete copies of the contents
of Network's minute book, which are accurate in all respects and set forth fully
and fairly all of Network's corporate transactions required to be approved by
its board of directors and/or shareholders.
6.2 Capacity to Enter into Agreement. Network has full right, power and
authority to execute and deliver this Agreement and all other agreements,
documents and instruments to be executed in connection herewith and perform such
its obligations hereunder and thereunder. The execution and delivery by Network
of this Agreement and all other agreements, documents and instruments to be
executed by Network in connection herewith have been authorized by all necessary
action by Network, other than for the approval of the Board of Directors of
Network, which will be sought pursuant to this Agreement. When this Agreement
and all other agreements, documents and instruments to be executed by Network in
connection herewith are approved and authorized by the Board of Directors of
Network and are executed by Network and delivered to Sunwin, this Agreement and
such other agreements, documents and instruments will constitute the valid and
binding agreements of Network, enforceable against Network in accordance with
their respective terms, except as such enforceability may be limited by or
subject to (a) any bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors' rights generally and (b) general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
6.3 Conflicts. The execution, delivery, and consummation of the
transactions contemplated by this Agreement will not (a) violate, conflict with
or result in the breach or termination of, or otherwise give any other
contracting party the right to terminate, or constitute a default (by way of
substitution, novation or otherwise) under the terms of, any contract to which
Network is a party or by which Network is bound or by which any of the assets of
Network is bound or affected, (b) violate any judgment against, or binding upon,
Network or upon the assets of Network, (c) result in the creation of any lien,
charge or encumbrance upon any assets of Network pursuant to the terms of any
such contract, or (d) violate any provision in the charter documents, bylaws or
any other agreement affecting the governance and control of Network.
6.4 Consents. No consent from, or other approval of, any governmental
entity or any other person, which has not been obtained, is necessary in
connection with the execution, delivery, or performance of this Agreement by
Network.
6.5 Litigation. There is no action, suit, proceeding, or claim pending
or, to the knowledge of Network, threatened against Network by persons not a
party to this Agreement wherein an unfavorable decision, ruling, or finding
would render unlawful or otherwise adversely affect the consummation of the
transactions contemplated by this Agreement.
6.6 Finder's Fees. Except as set forth on Schedule 4.23 hereto, all
negotiations relative to this Agreement and the transactions contemplated hereby
have been carried on by Network and its counsel directly with Sunwin and the
Equity Owners and their counsel, without the intervention of any other person as
the result of any act by Network, and so far as is known to Network, without the
intervention of any other person in such manner as to give rise to any valid
claim against any of the parties hereto for a brokerage commission, finders'
fee, or any similar payment.
6.7 Valid Issuance. Each share of Network Common Stock to be issued to
the shareholders of Sunwin in connection with the Exchange shall (when issued in
accordance with this Agreement) be duly and validly authorized and issued, fully
paid and non-assessable.
6.8 Business Activity. Except as set forth on Schedule 6.8
hereto, Network has engaged in no business activities within the past six years.
6.9 SEC Filings and Related Matters. Since January 1, 2002, Network has
filed all forms, reports, statements and other documents required to be filed
with the U.S. Securities and Exchange Commission, including, without limitation,
all Annual Reports on Form 10-KSB, all Quarterly Reports on Form 10-QSB, all
proxy statements relating to meetings of shareholders (whether annual or
special), all Reports on Form 8-K and all Registration Statements (all such
filings being referred to hereinafter as the "SEC Reports"). All of the SEC
Reports are true and correct in all material respects and such filings have not
included any material misstatement or omitted to state any fact which a
reasonable investor would deem to be material. The financial statements
contained in the Annual Report on Form 10-KSB for the fiscal year ended April
30, 2003 (the "Financial Statements") fully and fairly set forth the financial
position of Network as of the dates thereof and the results of operations for
the periods indicated and have been prepared in accordance with accounting
principles applied on a consistent basis. There is no basis for the assertion of
any liabilities or obligations, either accrued, absolute, contingent, or
otherwise, which might adversely affect Network, or the value, use, operation or
enjoyment of the assets of Network and which is not expressly set forth on the
balance sheet of Network as of January 31, 2004 contained in the Quarterly
Reports on Form 10-QSB for the three months ended as of such date.
6.10 Capitalization of Network. The authorized capital stock of Network (the
"Network Capital Stock") consists of 5,555,555 shares of Network Common Stock,
1,915,378 of which were issued and outstanding prior to the consummation of the
Exchange, and 1,000,000_ shares of Preferred Stock, none of which are issued and
outstanding. The shares of Network Capital Stock issued and outstanding prior to
the consummation of the Exchange are duly and validly authorized and issued and
are fully paid and non-assessable, and were not issued in violation of the
pre-emptive rights of any current or former shareholder. The shares of Network
Capital Stock issued and outstanding prior to the consummation of the Exchange
were issued, and all secondary transfers of such shares permitted by Network
were made, in compliance with all applicable law (including, without limitation,
available exemptions from the securities offering registration requirements of
federal and state law). No option, warrant, call, subscription, convertible
security, or commitment of any kind obligating Network to issue any Network
Capital Stock exists. There is not any compensation plan applicable to any of
the officers, directors, or employees of Network under which compensation
accrued or payable is determined, in whole or in part, by reference to Network
Capital Stock. There are no agreements or commitments obligating Network to
repurchase or otherwise acquire any Network Capital Stock.
ARTICLE 7
COVENANTS
7.1 Conduct of Business. Except as contemplated by this Agreement,
during the period from the date hereof to the Effective Time or the termination
of this Agreement, unless otherwise agreed to in writing by the other entity
party hereto, Church and Xxxx shall cause Network to shall conduct, and each
Equity Owner shall cause Sunwin to conduct, its business in the ordinary course
consistent with past practice and shall use reasonable efforts to keep its
assets in good repair and working order except for ordinary wear and tear,
maintain any existing insurance on the assets, and preserve intact Sunwin's and
Network's respective businesses. Without limiting the generality of the
foregoing, after the date hereof and until the Effective Time or the termination
of this Agreement, Church and Xxxx shall cause Network not to, and each Equity
Owner shall cause Sunwin not to, (a) make any acquisition, by means of a merger
or otherwise, of a material amount of assets or securities, other than
acquisitions in the ordinary course consistent with past practice; (b) agree to
any sale, lease, encumbrance or other disposition of a material amount of assets
or securities or any material change in its capitalization, other than sales or
other dispositions in the ordinary course consistent with past practice; (c)
enter into any material contract other than in the ordinary course of business
or agree to any release or relinquishment of any material contract rights; (d)
incur any long-term debt or short-term debt for borrowed money except for debt
incurred in the ordinary course consistent with past practice; or (e) agree in
writing or otherwise to take any of the foregoing actions.
7.2 Acquisition Proposals. Church and Xxxx agree to cause Network not
to, and each Equity Owner agrees that it shall cause Sunwin not, directly or
indirectly, and shall instruct its officers, directors, employees, agents or
advisors or other representatives or consultants not to, directly or indirectly,
until the Effective Time or the termination of this Agreement, solicit or
initiate any proposals or offers from any person relating to any acquisition,
purchase or sale of all or a material amount of the assets of, or any securities
of, or any merger, consolidation or business combination with, Network or
Sunwin.
7.3 Access to Information. Between the date hereof and the Effective
Time, Church and Xxxx shall cause Network to (a) give to the Equity Owners and
their authorized representatives such access during regular business hours to
Network's books, records, properties, personnel and to such other information as
the Equity Owners reasonably request and shall instruct Network's independent
public accountants to provide access to their work papers and such other
information as the Equity Owners may reasonably request, and (b) cause its
officers to furnish the Equity Owners with such financial and operating data and
other information with respect to the business and properties of Network as the
Equity Owners may reasonably request. Between the date hereof and the Effective
Time, each Equity Owner shall cause Sunwin to, (a) give Network, Church and Xxxx
and their authorized representatives such access during regular business hours
to Sunwin's books, records, properties, personnel and to such other information
as Network, Church and Xxxx reasonably request and shall instruct Sunwin's
independent public accountants to provide access to their work papers and such
other information as Network, Church and Xxxx may reasonably request, and (b)
cause Sunwin's officers to furnish Network, Church and Xxxx with such financial
and operating data and other information with respect to the business and
properties of Sunwin as Network, Church and Xxxx may reasonably request.
7.4 Best Efforts. Upon the terms and subject to the conditions hereof,
all of the parties hereto agree to use their best efforts to take, or cause to
be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement and to cooperate in connection with the
foregoing, including using best efforts (a) to obtain any necessary waivers,
consents and approvals from other parties to material notes, licenses,
agreements, and other instruments and obligations; (b) to obtain any material
consents, approvals, authorizations and permits required to be obtained under
any federal, state or local statute, rule or regulation; (c) to defend all
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby; (d) promptly to effect all
necessary filings and notifications; and (e) to deliver the accounting records
of Network's current auditor to the new auditors designated by the Equity
Owners.
7.5 Board of Directors. Subject to full compliance with all applicable
laws, rules and regulations, as soon as possible after the Effective Time, the
Board of Directors of Network shall be expanded to a total of three seats.
Subject to the preceding, as soon as possible after the Effective Time, Church
and Xxxx shall cause Network to take all action as is necessary to cause three
designees of Sunwin to be elected to such Board of Directors, and (after such
election) Church and. Xxxx shall resign from their respective seats on such
Board of Directors and from all offices that they respectively hold with
Network. Such resignations and elections shall be a condition subsequent to
consummation of the transactions contemplated by this Agreement.
7.6 [INTENTIONALLY OMITTED]
7.7 [INTENTIONALLY OMITTED]
7.8 Press Releases. No party shall issue any press release or otherwise
make any public statement with respect to this Agreement or the transactions
contemplated herein without the prior written consent of the other party (which
consent shall not be unreasonably withheld), except as may be required by
applicable law or stock exchange regulation (provided that such required
statements are provided to the other party in advance with an opportunity to
comment thereon).
ARTICLE 8
INDEMNIFICATION
8.1 Survival of Representations and Warranties. All of the
representations and warranties made by the parties hereto in this Agreement or
pursuant hereto, shall be continuing and shall survive the closing hereof and
the consummation of the transactions contemplated hereby, notwithstanding any
investigation at any time made by or on behalf of any party hereto.
8.2 Indemnification by Equity Owners. Each Equity Owner, jointly and
severally, shall protect, indemnify and hold harmless Network, Church and Xxxx,
and their respective officers, directors, shareholders, attorneys, accountants,
employees, affiliates, successors and assigns, from any and all demands, claims,
actions, causes of actions, lawsuits, proceedings, judgments, losses, damages,
injuries, liabilities, obligations, expenses and costs (including costs of
litigation and attorneys' fees), arising from any breach of any agreement,
representation or warranty made by any Equity Owner in this Agreement; provided,
however, that indemnification as to the representations and warranties contained
in Sections 4.4. 4.5, 4.6 and 4.7 shall be provided severally, but not jointly.
8.3 Indemnification by Church and Xxxx. Church and Xxxx, jointly and
severally, shall protect, indemnify and hold harmless Sunwin and each Equity
Owner, and their respective officers, directors, shareholders, attorneys,
accountants, employees, affiliates, heirs, beneficiaries, legal representatives,
successors and assigns, from any and all demands, claims, actions, causes of
actions, lawsuits, proceedings, judgments, losses, damages, injuries,
liabilities, obligations, expenses and costs (including costs of litigation and
attorneys' fees), arising from any breach of any agreement, representation or
warranty made by Network, Church or Xxxx in this Agreement.
8.4 Limitations on Indemnification Obligations. The Equity Owners shall
have no liability to Network, Church or Xxxx under Section 8.2, and Church and
Xxxx shall have no liability to Sunwin or Equity Owner under Section 8.3, until
the amount of claims under Section 8.2 (in the case of the indemnification of
Network, Church or Xxxx) or under Section 8.3 (in the case of the
indemnification of Sunwin and the Equity Owners), as the case may be, exceeds
$50,000 in the aggregate.
ARTICLE 9
CONDITIONS TO CLOSING
9.1 Conditions to the Parties' Obligations to Close. The respective
obligations of the Equity Owners, Church, Mead, and Network to enter into the
Exchange are subject to the satisfaction at or prior to the Effective Time of
the following conditions:
(a) As of the Effective Time, no action, suit or proceeding shall
have been instituted or, to the knowledge of the parties, be
pending or threatened before any court or other governmental
body by any public agency or governmental authority seeking to
restrain, enjoin or prohibit the consummation of the
transactions contemplated hereby or to seek damages or other
relief in connection therewith against any officer or director
of Sunwin, any Equity Owner, Network, Church or Xxxx; and
(b) All third party and other consents required for the Exchange
shall have been obtained; and
(c) The business, legal, technical and financial due diligence of
each party of the other shall have been completed and shall be
satisfactory to each party in its sole discretion; and
(d) There shall not have been any material adverse change in the
financial condition, operations, business prospects, employee
relations, customer relations, assets, liabilities (accrued,
absolute, contingent, or otherwise) or income of either Sunwin
or Network, or the business of either Sunwin or Network; and
(e) The legal research and analysis as to the availability and
anticipated perfection of exemptions from all applicable
Federal and state securities offering registration
requirements relating to the issuance of the Network Common
Stock in connection with the Exchange shall have been
completed and shall be satisfactory to Network and the Equity
Owners in their sole discretion; and
(f) Certain SunWin stockholders shall have entered into an
agreement with Church and Xxxx whereby it acquires from them
750,000 of the shares of Network's common stock held by them
for a cash purchase price of $175,000.
9.2 Further Conditions to Equity Owners' Obligations to Close. The
obligations of the Equity Owners to enter into the Exchange are further subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Each of the representations and warranties of Network, Church
and Xxxx contained in this Agreement shall be true and correct
in all respects at and as of the Closing as if each such
representation and warranty were made at and as of the
Closing, Network, Church and Xxxx shall have performed in all
respects all agreements and covenants required by this
Agreement to be performed by them separately or collectively
prior to or at the Closing, and at the Closing there shall be
delivered to Equity Owners customary bring-down certificates
(each dated as of the Closing, signed by Network, Church and
Xxxx ) to the foregoing effects; and
(b) Network shall have satisfied all of its periodic reporting
requirements with the Commission through the date of the
Exchange; and
(c) Network shall have no liabilities as of the Closing Date; and
(d) Church and Xxxx shall have delivered the minute books and
other corporate records of Network to the Equity Owners.
9.3 Further Conditions to Network's, Church's and Xxxx'x Obligations to
Close. The obligations of the Network, Church and Xxxx to enter into the
Exchange are further subject to the satisfaction at or prior to the Effective
Time of the following conditions:
(a) Each of the representations and warranties of the Equity
Owners contained in this Agreement shall be true and correct
in all respects at and as of the Closing as if each such
representation and warranty were made at and as of the
Closing, Equity Owners shall have performed in all respects
all agreements and covenants required by this Agreement to be
performed by them separately or collectively prior to or at
the Closing, and at the Closing there shall be delivered to
Network, Church and Xxxx customary bring-down certificates
(each dated as of the Closing, signed by Equity Owners) to the
foregoing effects; and
(b) Network shall have entered into a piggy-back registration
rights agreement with each of Church and Xxxx (satisfactory to
each of Network, Church and Xxxx) whereby Network agrees to
include all shares of Network Common Stock owned separately by
Church and Xxxx in any subsequent registration that Network
undertakes with the Commission; and
(c) Network shall have entered into management consulting and
non-compete agreements with each of Church and Xxxx whereby
Network will issue to Church and Xxxx, respectively, a total
of 118,280 and 48,387 shares of its common stock, adjusted
proportionately for forward and reverse stock splits, stock
dividends, recapitalizations and the like.
ARTICLE 10
ABANDONMENT OF EXCHANGE
Notwithstanding anything contained in this Agreement to the contrary,
this Agreement may be terminated and the Exchange abandoned at any time prior to
the Effective Time:
(a) By mutual consent of the Equity Owners, Network, Church and
Xxxx; or
(b) By the Equity Owners if any of the conditions set forth in
Section 9.1 or 9.2 are not satisfied in any respect or waived
by them on or before the Closing, or if the Closing has not
occurred before the end of business hours on the Closing Date,
other than due to a breach of this Agreement by the Equity
Owners; or
(c) By the Boards of Directors of Network if any of the conditions
set forth in Section 9.1 or 9.3 are not satisfied in any
respect or waived by Network on or before the Closing, or if
the Closing has not occurred before the end of business hours
on the Closing Date, other than due to a breach of this
Agreement by either of Network; or
(d) By the Board of Directors of Network, if such Board of
Directors determine that the consummation of the transaction
provided for herein would not, for any reason, be in the best
interests of Network and its shareholders.
ARTICLE 11
MISCELLANEOUS PROVISIONS
11.1 Complete Agreement. This Agreement contains a complete and
exclusive statement of the agreement of the parties with respect to the subject
matter hereof, and all prior negotiations and agreements between the parties are
superseded by this Agreement.
11.2 Waiver and Amendment. Any representation, warranty, covenant, term
or condition of this Agreement which may legally be waived, may be waived, or
the time of performance thereof extended, at any time by the party entitled to
the benefit thereof, and any term, condition or covenant hereof (including,
without limitation, the period during which any condition is to be satisfied or
any obligation performed) may be amended by the parties at any time. Any waiver,
extension or amendment shall be evidenced by any instrument in writing executed
on behalf of the appropriate party or parties or on its behalf by its Chairman,
President or any Vice President or other person who has been authorized by its
Board of Directors to execute waivers, extensions or amendments on its behalf.
No representation, warranty, covenant, agreement, term or condition of this
Agreement contained in Article 4, Article 7 or Section 8.2 may be amended or
waived unless such amendment or waiver is approved by eighty percent (80%) of
Network stockholders who are not an Equity Owner and who are not affiliated in
anyway with any Equity Owner. Moreover, this Section 11.2 may be amended or
waived only if such amendment or waiver is approved by eighty percent (80%) of
Network stockholders who are not an Equity Owner and who are not affiliated in
anyway with any Equity Owner.
11.3 Assignment; Binding Effect. This Agreement may not be assigned by
either party without the written consent of the other party. This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
11.4 Notices. Any notice, demand, claim or other communication under
this Agreement shall be in writing and shall be deemed to have been given upon
the delivery or mailing thereof, as the case may be, if delivered personally or
sent by certified mail, return receipt requested, postage prepaid, to the
parties at such address as a party may specify by notice to the other.
11.5 Governing Law. AS TO ALL MATTERS OF LAW, THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH NEVADA LAW, REGARDLESS OF THE LAWS
THAT MIGHT OTHERWISE BE APPLICABLE UNDER PRINCIPLES OF CONFLICTS OF LAW.
11.6 Headings. Any headings in this Agreement are solely for
convenience of reference and shall not affect its interpretation.
11.7 Execution of Counterparts. This Agreement may be executed in
several counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
11.8 Severability. If any provision of this Agreement is held or deemed
to be, or in fact is, invalid, inoperative or unenforceable for any reason, this
Agreement shall be construed as though such invalid, inoperative or
unenforceable provision had never been contained in this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
"NETWORK"
NETWORK USA, INC.,
a Nevada corporation
By:_________________________________
Baozhang Yuan, Chief Executive Officer
------------------------------------ ------------------------------------
Xxxxxxx X. (Xxxx) Church Xxxxxxx X. Xxxx
"EQUITY OWNERS"
------------------------------------ ------------------------------------
Xxxxxxx Xxxxx Baozhang Yuan
------------------------------------ ------------------------------------
Xianfeng Kong Xxx Xxxxx
CERTIFICATE
Each of the undersigned hereby certifies and acknowledges that the
undersigned has signed and executed the foregoing agreement with multiple
original signature pages at separate locations to be effective immediately upon
signing and that the transmission of a telecopier facsimile of their respective
signatures, each to the other, shall be sufficient to cause the mutual delivery
of this executed agreement in order to bind the parties and make the agreement
effective upon the date of signing. It is further certified, acknowledged and
agreed that the original signature pages are to be circulated hereafter but that
the failure of any party to obtain the original signature pages hereafter shall
not affect the validity and effectiveness of this agreement which is effective
from and after the execution by all parties and the transmission by telecopier
facsimile of the signature of all parties, each to the other.
IN WITNESS WHEREOF, the parties hereto have signed their names hereto
as of the first date written above.
NETWORK USA, INC.,
a Nevada corporation
By:_________________________________
Baozhang Yuan, Chief Executive Officer
------------------------------------ ------------------------------------
Xxxxxxx X. (Xxxx) Church Xxxxxxx X. Xxxx
"EQUITY OWNERS"
------------------------------------ ------------------------------------
Xxxxxxx Xxxxx Baozhang Yuan
------------------------------------ ------------------------------------
Xianfeng Kong Xxx Xxxxx
SCHEDULE I
Name of Shareholder Title Number of Number of
SunWin Shares Network Shares
Xxxxxxx Xxxxx Chairman, Director 14,500,000 1,264,103
Baozhang Yuan CEO, Director 6,000,000 523,077
Xianfeng Kong CRO, Treasurer, Director 6,000,000 523,077
Xxx Xxxxx Secretary, Director 6,000,000 523,077
TOTAL 32,500,000 2,833,334
Schedule 4.8
Financial Statements
The financial statements following this page shall be the financial
statement to be attached as Schedule 4.8.
Schedule 4.23
Finders Fees
Xxxxxx0.xxx, Inc., Xxxx Xxxxxx, and all other finders as a group
(the "Finder") will receive an aggregate total of
(a) 8,333 common shares of Network as compensation and satisfaction of
all existing agreements between Network, or any of its accountants, attorneys,
consultants, employees, agents and other representatives and Finder, and Church
and Xxxx agree to undertake all necessary actions with the transfer agent to
have the certificates properly transmitted into the name of the Finder; and
(b) SunWin shall issue to Xxxx Xxxxxx and Xxxxxxxx Xxxxxxxxx 10,417 and
10,416 common shares (respectively) as compensation and satisfaction of all
existing agreements between SunWin, or any of its accountants, attorneys,
consultants, employees, agents and other representatives and Finder.
Schedule 6.8
Network's Business Activity
On April 30, 2002, Network commenced real estate activities on an
extremely limited basis when it received an assignment from one of its
stockholders of a 20% interest in One Genesis, Inc., a private Texas corporation
that invested in a single retail shopping center located in Houston, Texas.
Around August 2002, a stockholder of One Genesis purchased Network's interest in
One Genesis. Starting September 25, 2002, Network engage in some securities
trading activities with the proceeds from the sale of the interest in One
Genesis. On September 24, 2003, Network liquidated all of its securities
positions except one that was liquidated on September 26, 2003. The preceding
are Network's sole securities transactions. The results of these activities are
reflected in the financial statements contained in Network's reports filed with
the U.S. Securities and Exchange Commission. Network intentionally limited the
duration of this activity with a view to avoiding becoming an "investment
company" under the Investment Company Act of 1940. In view of this possibility,
Network prepared a directors consent in accordance with the Rule 3a-2 under the
Investment Company Act of 1940 with a view to perfecting "transient investment
company" status and thereby be temporarily exempt from the requirements of such
act. Between August 2002 and the present, Network looked at a number of
properties with prospective joint venture partners and (with such partners) made
several offers, all but one of which were not accepted. When the change in
control of Network to the principals of Sunwin became likely, Network assigned
its interest in the one accepted offer.
