SHARE EXCHANGE AGREEMENT By and among RISE ELITE INTERNATIONAL LIMITED, WORLD THROUGH LIMITED and NATIONAL REALTY & MORTGAGE, INC. dated as of June 5, 2007 SHARE EXCHANGE AGREEMENT

 

 

 

This SHARE EXCHANGE AGREEMENT, dated as of June 5, 2007 (the “Agreement”) by and among RISE ELITE INTERNATIONAL LIMITED, a BVI Business Company incorporated in the British Virgin Islands (“ELITE”), WORLD THROUGH LIMITED, a BVI Business Company incorporated in the British Virgin Islands (“WT”) and a wholly-owned subsidiary of ELITE, and NATIONAL REALTY & MORTGAGE, INC., a Nevada corporation (“NRMG”).

 

WHEREAS, ELITE owns 100% of the issued and outstanding capital stock of WT ("WT Shares");

 

WHEREAS, ELITE believes it is in its best interests to exchange the WT Shares for 210,886 shares of newly-designated Series A Convertible Preferred Stock, par value $.001per share, of NRMG (the “NRMG Shares” or the “Purchase Price” as used in Section 8.1 hereof) and NRMG believes it is in its best interests to acquire the WT Shares in exchange for NRMG Shares, upon the terms and subject to the conditions set forth in this Agreement (the “Share Exchange Transaction”);

 

WHEREAS, it the intention of the parties that: (i) NRMG shall acquire 100% of the WT Shares in exchange solely for the amount of NRMG Shares set forth herein; (ii) said exchange of shares shall qualify as a tax-free reorganization under Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the “Code”); and (iii) said exchange shall qualify as a transaction in securities exempt from registration or qualification under the Securities Act of 1933, as amended and in effect on the date of this Agreement (the “Securities Act”); and

 

WHEREAS, immediately following the consummation of the Share Exchange Transaction, NRMG intends to enter into a private placement financing transaction with certain accredited investors whereby NRMG will issue shares of newly-designated Series B Convertible Preferred Stock, par value $.001 per share, of NRMG and related warrants for cash (the “Financing Transaction”); and

 

 

WHEREAS, the parties hereto agree that the capitalization table upon which the transactions contemplated by this Agreement and Financing Transaction are based is set forth as Schedule A hereto.

 

NOW, THEREFORE, in consideration of the mutual terms, conditions and other agreements set forth herein, the parties hereto hereby agree as follows:

 

 

 

Section 1.1 Agreement to Exchange WT Shares for NRMG Shares. On the Closing Date (as hereinafter defined) and upon the terms and subject to the conditions set forth in this Agreement, ELITE shall sell, assign, transfer, convey and deliver the WT Shares to NRMG, and NRMG shall accept the WT Shares from ELITE in exchange for the issuance to ELITE of the NRMG Shares.

 

Section 1.2 Capitalization. On the Closing Date, immediately before the transactions to be consummated pursuant to this Agreement and the Securities Purchase Agreement, dated the date hereof by and among NRMG, Elite, Vision, Richard Astrom, Christopher Astrom, and certain sellers parties thereto, NRMG shall have authorized (a) a total of 100,000,000 shares of Common Stock, par value $.001 per share, 6,472,766 shares of which are issued and outstanding, (b) a total of 1,000,000 shares of Class A Common Stock, 666,667 shares of which are issued and outstanding, and (c) 1,000,000 shares of Preferred Stock, $.001 par value per share (the “Preferred Stock”), none of which has been issued and outstanding, but 400,000 shares shall have been designated as Series A Convertible Preferred Stock (“Series A Stock”) and 400,000 shares shall have been designated as Series B Convertible Preferred Stock (“Series B Stock”).

Section 1.3 Closing. The closing of the exchange to be made pursuant to this Agreement (the "Closing") shall take place at 5:00 p.m. E.D.T. on the day the conditions to closing set forth in Articles V and VI have been satisfied or waived, or at such other time and date as the parties hereto shall agree in writing (the "Closing Date"), at the offices of Guzov Ofsink, LLC, 600 Madison Avenue, 14^th Floor, New York, New York 10022. At the Closing, ELITE shall deliver to NRMG the stock certificates representing 100% of the WT Shares, duly endorsed in blank for transfer or accompanied by appropriate stock powers duly executed in blank. In full consideration and exchange for the WT Shares, NRMG shall issue and exchange with ELITE NRMG Shares.

 

NRMG hereby represents, warrants and agrees that the statements in the following paragraphs of this Section 2 are all true and complete as of the date hereof, and will, except as contemplated by this Agreement, be true and complete as of the Closing Date as if first made on such date:

Section 2.1 Corporate Organization

a. NRMG is a corporation duly organized, validly existing and in good standing under the laws of Nevada, and has all requisite corporate power and authority to own its properties and assets and to conduct its business as now conducted and is duly qualified to do business in good standing in each jurisdiction in which the nature of the business conducted by NRMG or the ownership or leasing of its properties makes such qualification and being in good standing necessary, except where the failure to be so qualified and in good standing will not have a material adverse effect on the business, operations, properties, assets, condition or results of operation of NRMG (a "NRMG Material Adverse Effect");

 

b. Copies of the Articles of Incorporation and By-laws of NRMG as well as the Certificates of Designation of the Series A Stock and the Series B Stock, with all amendments thereto to the date hereof, have been furnished to ELITE, and such copies are accurate and complete as of the date hereof. The minute books of NRMG are current as required by law, contain the minutes of all meetings of the Board of Directors and shareholders of NRMG from its date of incorporation to the date of this Agreement, and adequately reflect all material actions taken by the Board of Directors and shareholders of NRMG.

Section 2.2 Capitalization of NRMG. The authorized capital stock of NRMG consists of (a) a total of 100,000,000 shares of Common Stock, par value $.001 per share, 6,472,766 shares of which are issued and outstanding, (b) a total of 1,000,000 shares of Class A Common Stock, par value $.001 per share, 666,667 shares of which are issued and outstanding, and (c) 1,000,000 shares of Preferred Stock, $.001 par value per share (the “Preferred Stock”), none of which has been issued and outstanding, but 400,000 shares shall have been designated as Series A Convertible Preferred Stock (“Series A Stock”) and 400,000 shares shall have been designated as Series B Convertible Preferred Stock (“Series B Stock”). The parties agree that they have been informed of the issuances of the NRMG Shares, and that all such issuances of NRMG Shares pursuant to this Agreement will be in accordance with the provisions of this Agreement. All of the NRMG Shares to be issued pursuant to this Agreement have been duly authorized and will be validly issued, fully paid and non-assessable and no personal liability will attach to the ownership thereof. Except as pursuant to the Financing Transaction and the Debentures (as hereafter defined), as of the date of this Agreement there are and as of the Closing Date, there will be, no outstanding options, warrants, agreements, commitments, conversion rights, preemptive rights or other rights to subscribe for, purchase or otherwise acquire any shares of capital stock or any un-issued or treasury shares of capital stock of NRMG.

Section 2.3 Subsidiaries and Equity Investments. NRMG represents and warrants that (i) set forth on Schedule 2.3 is a true and correct list of the entities in which NRMG, directly or indirectly, owns capital stock or holds an equity or similar interest, together with their respective jurisdictions of organization and the percentage of the outstanding capital stock or other equity interests of such entity that is held by NRMG; (ii) other than with respect to the entities listed on Schedule 2.3, NRMG does not, directly or indirectly, own any securities or beneficial ownership interests in any other Person (including through joint ventures or partnership arrangements) or have any investment in any other Person; (iii) NRMG and its “Subsidiaries” (which for purposes of this Agreement means any entity in which NRMG or any of its Subsidiaries, directly or indirectly, owns any of the capital stock, equity or similar interests or voting power of such entity at the date of this Agreement) are entities duly organized and validly existing and, except as set forth on Schedule 2.3, in good standing under the laws of the jurisdictions in which they are formed, and have the requisite power and authority to own their properties and to carry on their business as now being conducted; and (iv) if applicable, each of NRMG and the Subsidiaries is duly qualified as a foreign entity to do business and, to the extent legally applicable, is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect

 

Section 2.4 Authorization and Validity of Agreements. NRMG has all corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by NRMG and the consummation by NRMG of the transactions contemplated hereby have been duly authorized by all necessary corporate action of NRMG, and no other corporate proceedings on the part of NRMG are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.

Section 2.5 No Conflict or Violation. The execution and delivery by such party of this Agreement does not, and the performance by NRMG of its obligations under this Agreement and the consummation of the transactions contemplated hereby will not, conflict with or result in a violation or breach of any of the terms, conditions or provisions of any other agreement to which NRMG is a party. Neither NRMG, nor any subsidiary, is in violation of, in conflict with, in breach of or in default under any term or provision of, and no right of any party to accelerate, terminate, modify or cancel has come into existence under, (i) its articles of incorporation or by-laws (each as may have been amended, supplemented or restated), (ii) any provision of any judgment, writ, injunction, decree or order to which the any of them is a party; or (iii) any law, statute, rule or regulation applicable to any of them.

Section 2.6 Consents and Approvals. No consent, waiver, authorization or approval of any governmental or regulatory authority, domestic or foreign, or of any other person, firm or corporation, is required in connection with the execution and delivery of this Agreement by NRMG or the performance by NRMG of its obligations hereunder.

Section 2.7 Material Agreements. NRMG represents that NRMG is not a party to or bound by any contracts, including, but not limited to any:

 

a.

employment, advisory or consulting contract;

 

b.

plan providing for employee benefits of any nature;

 

c.

lease with respect to any property or equipment;

d.

contract, agreement, understanding or commitment for any future expenditure in excess of $1,000 in the aggregate;

e.

contract or commitment pursuant to which it has assumed, guaranteed, endorsed, or otherwise become liable for any obligation of any other person, entity or organization;

 

f.

agreement with any person relating to the dividend, purchase or sale of securities, that has not been settled by the delivery or payment of securities when due, and which remains unsettled upon the date of the Agreement.

 Section 2.8 No Disagreements with Accountants and Lawyers. NRMG represents that there are no disagreements of any kind presently existing, or anticipated by NRMG to arise, between NRMG accountants and lawyers formerly or presently employed by NRMG. NRMG is current with respect to fees owed to its accountants and lawyers.

Section 2.9 Disclosure. This Agreement and any certificate attached hereto or delivered in accordance with the terms hereby by or on behalf of NRMG in connection with the transactions contemplated by this Agreement, when taken together, do not contain any untrue statement of a material fact or omit any material fact necessary in order to make the statements contained herein and/or therein not misleading.

Section 2.10  Litigation. NRMG represents that (i) there is no action, suit, proceeding or investigation pending or, to the best knowledge of NRMG, currently threatened against NRMG or any Subsidiary that may affect the validity of this Agreement or the right of the Sellers to enter into this Agreement or to consummate the transactions contemplated hereby; (ii) there is no action, suit, proceeding or investigation pending or, to the best knowledge of NRMG, currently threatened against NRMG or its Subsidiaries, before any court or by or before any governmental body or any arbitration board or tribunal, nor is there any judgment, decree, injunction or order of any court, governmental department, commission, agency, instrumentality or arbitrator against NRMG or any of its Subsidiaries; (iii) NRMG and its Subsidiaries are not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality; and (iv) there is no action, suit, proceeding or investigation by NRMG or any Subsidiary currently pending or which NRMG intends to initiate. When any reference to the “knowledge” or “best knowledge” of NRMG, CA or Sellers is made in this Agreement, such terms shall mean the knowledge that would be gained from due inquiry into the matters referenced.

Section 2.10 Financial Statements. NRMG represents that (i) NRMG’s financial statements contained in its Filings, (the “Financial Statements”) have been prepared in accordance with U.S. GAAP applied on a consistent basis throughout the periods indicated and with each other, except that the unaudited Financial Statements do not contain all footnotes required by U.S. GAAP; (ii) the Financial Statements fairly present the financial condition and operating results of NRMG as of the dates, and for the periods, indicated therein, subject to normal year-end audit adjustments; (iii) except as set forth in the Financial Statements, NRMG has no material liabilities (contingent or otherwise); (iii) NRMG is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation; and (iv) NRMG maintains and will continue to maintain a standard system of accounting established and administered in accordance with U.S. GAAP until Closing.

 

Section 2.11 Books and Financial Records. NRMG represents that all the accounts, books, registers, ledgers, Board minutes and financial and other material records of whatsoever kind of each of NRMG and its Subsidiaries have been fully properly and accurately kept and completed; there are no material inaccuracies or discrepancies of any kind contained or reflected therein; and they give and reflect a true and fair view of the financial, contractual and legal position of each company.

Section 2.12 Employee Benefit Plans. NRMG represents that he Company does not have any “Employee Benefit Plan” as defined in the U.S. Employee Retirement Income Security Act of 1974 or similar plans under applicable laws.

Section 2.13 Tax Returns, Payments and Elections. NRMG represents that (i) each of NRMG and its Subsidiaries has timely filed all Tax (as defined below) returns, statements, reports, declarations and other forms and documents (including, without limitation, estimated tax returns and reports and material information returns and reports) (“Tax Returns”) required pursuant to applicable law to be filed with any Tax Authority (as defined below) (ii) all such Tax Returns are accurate, complete and correct in all material respects, and each of NRMG and its Subsidiaries has timely paid all Taxes due; and (iii) each of NRMG and its Subsidiaries has withheld or collected from each payment made to each of its employees, the amount of all Taxes (including, but not limited to, United States income taxes and other foreign taxes) required to be withheld or collected therefrom, and has paid the same to the proper Tax Authority. For purposes of this Agreement, the following terms have the following meanings: “Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means any and all taxes including, without limitation, (x) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, value added, net worth, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount imposed by any United States, local or foreign governmental authority or regulatory body responsible for the imposition of any such tax (domestic or foreign) (a “Tax Authority”), (y) any liability for the payment of any amounts of the type described in (x) as a result of being a member of an affiliated, consolidated, combined or unitary group for any taxable period or as the result of being a transferee or successor thereof and (z) any liability for the payment of any amounts of the type described in (x) or (y) as a result of any express or implied obligation to indemnify any other person.

Section 2.14 Survival. Each of the representations and warranties set forth in this Article II shall be deemed represented and made by NRMG at the Closing as if made at such time and shall survive the Closing for a period terminating on the second anniversary of the date of this Agreement.

 

Unless otherwise indicated below, WT and ELITE, severally and not jointly, represents, warrants and agrees, as to itself, that the statements in the following paragraphs of this Section 3 are all true and complete as of the date hereof, and will, except as contemplated by this Agreement, be true and complete as of the Closing Date as if first made on such date:

Section 3.1 Corporate Organization.  WT is a company organized as a BVI Business Company under the laws of the British Virgin Islands, is duly organized, validly existing and in good standing under the laws of the British Virgin Islands and has the requisite power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being or currently planned to be conducted. WT is in possession of all franchises, grants, authorizations, licenses, permits, easements, consents, certificates, approvals and orders (“Approvals”) necessary to own, lease and operate the properties it purports to own, operate or lease and to carry on its business as it is now being conducted, and to consummate the transactions contemplated under this Agreement, except where the failure to have such Approvals could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, operations, properties, assets, condition or results of operation of WT. WT has complete and correct copies of the articles of organization and bylaws or similar governing, organization or charter documents (collectively referred to herein as "Charter Documents"). WT is not in violation of any of the provisions of its Charter Documents. The minute books or the equivalent of WT contain true, complete and accurate records of meetings and consents in lieu of meetings of its board of directors (and any committees thereof), similar governing bodies and stockholders of WT ("Corporate Records"), since the time of its organization. The ownership records of WT Shares are true, complete and accurate records of the ownership of the WT Shares as of the date of such records and contain all transfers of such Shares since the time of WT’s organization (“Share Records”).  

Section 3.2 Capitalization of WT; Title to the WT Shares. On the Closing Date, immediately before the transactions to be consummated pursuant to this Agreement, WT shall have authorized 10,000 WT Shares, of which 10,000 WT Shares will be issued and outstanding. The WT Shares are the sole outstanding shares of capital stock of WT, and there are no outstanding options, warrants, agreements, commitments, conversion rights, preemptive rights or other rights to subscribe for, purchase or otherwise acquire any shares of capital stock or any un-issued or treasury shares of capital stock of WT.

Section 3.3 Subsidiaries and Equity Investments; Assets. Each of the subsidiaries and affiliated companies of WT are set forth on Schedule 3.3.

 

Section 3.4 Authorization and Validity of Agreements. WT has all corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by WT and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action and no other corporate proceedings on the part of WT are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. ELITE has approved this Agreement on behalf of WT and no other stockholder approvals are required to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by ELITE and the consummation of the transactions contemplated hereby by Elite have been duly authorized by all necessary action by Elite and no other proceedings on the part of WT or ELITE are necessary to authorize this Agreement or to consummate the transactions contemplated hereby.

Section 3.5 No Conflict or Violation. The execution, delivery and performance of this Agreement by WT or ELITE does not and will not violate or conflict with any provision of the Charter Documents of WT, and does not and will not violate any provision of law, or any order, judgment or decree of any court or other governmental or regulatory authority, nor violate, result in a breach of or constitute (with due notice or lapse of time or both) a default under or give to any other entity any right of termination, amendment, acceleration or cancellation of any contract, lease, loan agreement, mortgage, security agreement, trust indenture or other agreement or instrument to which WT or ELITE is a party or by which it is bound or to which any of its respective properties or assets is subject, nor result in the creation or imposition of any lien, charge or encumbrance of any kind whatsoever upon any of the properties or assets of WT or ELITE, nor result in the cancellation, modification, revocation or suspension of any of the licenses, franchises, permits to which WT or ELITE is bound.

Section 3.6 Investment Representations.

(a) The NRMG Shares will be acquired hereunder solely for the account of ELITE, for investment, and not with a view to the resale or distribution thereof. ELITE understands and is able to bear any economic risks associated with such investment in the NRMG Shares. ELITE has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the NRMG Shares to be acquired under this Agreement. ELITE further has had an opportunity to ask questions and receive answers from Novack Burnbaum Crystal LLP, counsel for the holders of NRMG’s 8% Series SPD Senior Subordinated Convertible Redeemable Debentures Due October 17, 2003 (the “Debentures”) regarding NRMG. ELITE is an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D promulgated by the Securities and Exchange Commission under the Securities Act).

(b) No offer to enter into this Agreement has been made by NRMG to ELITE in the United States. None of ELITE, any of its affiliate, or any person acting on behalf of ELITE or any behalf of any such affiliate, has engaged or will engage in any activity undertaken for the purpose of, or that reasonably could be expected to have the effect of, conditioning the markets in the United States for the NRMG Shares, including, but not limited to, effecting any sale or short sale of securities through ELITE, or any of its affiliate prior to the expiration of any restricted period contained in Regulation S promulgated under the Securities Act (any such activity being defined herein as a “Directed Selling Effort”). To the best knowledge of ELITE, this Agreement and the transactions contemplated herein are not part of a plan or scheme to evade the registration provisions of the Securities Act, and the NRMG Shares are being acquired for investment purposes by ELITE. ELITE agrees that all offers and sales of NRMG Shares from the date hereof and through the expiration of the any restricted period set forth in Rule 903 of Regulation S (as the same may be amended from time to time hereafter) shall not be made to U.S. Persons or for the account or benefit of U.S. Persons and shall otherwise be made in compliance with the provisions of Regulation S and any other applicable provisions of the Securities Act. Neither ELITE nor the representatives of ELITE have conducted any Directed Selling Effort as that term is used and defined in Rule 902 of Regulation S and neither ELITE nor any representative of ELITE will engage in any such Directed Selling Effort within the United States through the expiration of any restricted period set forth in Rule 903 of Regulation S.

 

Section 3.7 Brokers’ Fees. ELITE does not have any liability to pay any fees or commissions or other consideration to any broker, finder, or agent with respect to the transactions contemplated by this Agreement.

Section 3.8 Disclosure. This Agreement, the schedules hereto and any certificate attached hereto or delivered in accordance with the terms hereby by or on behalf of WT or ELITE in connection with the transactions contemplated by this Agreement, when taken together, do not contain any untrue statement of a material fact or omit any material fact necessary in order to make the statements contained herein and/or therein not misleading.

Section 3.9 Survival. Each of the representations and warranties set forth in this Article III shall be deemed represented and made by WT and ELITE at the Closing as if made at such time and shall survive the Closing for a period terminating on the second anniversary of the date of this Agreement.

Section 4.1 Certain Changes and Conduct of Business.

a. From and after the date of this Agreement and until the Closing Date, NRMG shall conduct its business solely in the ordinary course consistent with past practices and, in a manner consistent with all representations, warranties or covenants of NRMG, and without the prior written consent of WT, will not, except as required or permitted pursuant to the terms hereof and the Financing Transaction:

i.

make any material change in the conduct of its businesses and/or operations or enter into any transaction other than in the ordinary course of business consistent with past practices;

 

 

ii.

make any change in its Charter Documents; issue any additional shares of capital stock or equity securities or grant any option, warrant or right to acquire any capital stock or equity securities or issue any security convertible into or exchangeable for its capital stock or alter in any material term of any of its outstanding securities or make any change in its outstanding shares of capital stock or its capitalization, whether by reason of a reclassification, recapitalization, stock split or combination, exchange or readjustment of shares, stock dividend or otherwise;

iii.

A.

incur, assume or guarantee any indebtedness for borrowed money, issue any notes, bonds, debentures or other corporate securities or grant any option, warrant or right to purchase any thereof, except pursuant to transactions in the ordinary course of business consistent with past practices; or

B.

issue any securities convertible or exchangeable for debt or equity securities of NRMG;

iv.

make any sale, assignment, transfer, abandonment or other conveyance of any of its assets or any part thereof, except pursuant to transactions in the ordinary course of business consistent with past practice;

v.

subject any of its assets, or any part thereof, to any lien or suffer such to be imposed other than such liens as may arise in the ordinary course of business consistent with past practices by operation of law which will not have an NRMG Material Adverse Effect;

vi.

acquire any assets, raw materials or properties, or enter into any other transaction, other than in the ordinary course of business consistent with past practices;

vii.

enter into any new (or amend any existing) employee benefit plan, program or arrangement or any new (or amend any existing) employment, severance or consulting agreement, grant any general increase in the compensation of officers or employees (including any such increase pursuant to any bonus, pension, profit-sharing or other plan or commitment) or grant any increase in the compensation payable or to become payable to any employee, except in accordance with pre-existing contractual provisions or consistent with past practices;

 

 

viii.

make or commit to make any material capital expenditures;

ix.

pay, loan or advance any amount to, or sell, transfer or lease any properties or assets to, or enter into any agreement or arrangement with, any of its affiliates;

x.

guarantee any indebtedness for borrowed money or any other obligation of any other person;

xi.

fail to keep in full force and effect insurance comparable in amount and scope to coverage maintained by it (or on behalf of it) on the date hereof;

xii.

take any other action that would cause any of the representations and warranties made by it in this Agreement not to remain true and correct in all material aspect;

xiii.

make any material loan, advance or capital contribution to or investment in any person;

xiv.

make any material change in any method of accounting or accounting principle, method, estimate or practice;

xv.

settle, release or forgive any claim or litigation or waive any right;

xvi.

commit itself to do any of the foregoing.

b. From and after the date of this Agreement, WT will:

1.

continue to maintain, in all material respects, its properties in accordance with present practices in a condition suitable for its current use;

2.

file, when due or required, federal, state, foreign and other tax returns and other reports required to be filed and pay when due all taxes, assessments, fees and other charges lawfully levied or assessed against it, unless the validity thereof is contested in good faith and by appropriate proceedings diligently conducted;

 

 

3.

continue to conduct its business in the ordinary course consistent with past practices;

4.

keep its books of account, records and files in the ordinary course and in accordance with existing practices; and

5.

continue to maintain existing business relationships with suppliers.

Section 4.2 Access to Properties and Records. WT shall afford NRMG’s accountants, counsel and authorized representatives, and NRMG shall afford to WT's accountants, counsel and authorized representatives full access during normal business hours throughout the period prior to the Closing Date (or the earlier termination of this Agreement) to all of such parties’ properties, books, contracts, commitments and records and, during such period, shall furnish promptly to the requesting party all other information concerning the other party's business, properties and personnel as the requesting party may reasonably request, provided that no investigation or receipt of information pursuant to this Section 4.2 shall affect any representation or warranty of or the conditions to the obligations of any party.

Section 4.3 Negotiations. From and after the date hereof until the earlier of the Closing or the termination of this Agreement, no party to this Agreement nor its officers or directors (subject to such director's fiduciary duties) nor anyone acting on behalf of any party or other persons shall, directly or indirectly, encourage, solicit, engage in discussions or negotiations with, or provide any information to, any person, firm, or other entity or group concerning any merger, sale of substantial assets, purchase or sale of shares of capital stock or similar transaction involving any party except for the Financing Transaction. A party shall promptly communicate to any other party any inquiries or communications concerning any such transaction which they may receive or of which they may become aware of.

Section 4.4 Consents and Approvals. The parties shall:

i.

use their reasonable commercial efforts to obtain all necessary consents, waivers, authorizations and approvals of all governmental and regulatory authorities, domestic and foreign, and of all other persons, firms or corporations required in connection with the execution, delivery and performance by them of this Agreement; and

 

 

ii.

diligently assist and cooperate with each party in preparing and filing all documents required to be submitted by a party to any governmental or regulatory authority, domestic or foreign, in connection with such transactions and in obtaining any governmental consents, waivers, authorizations or approvals which may be required to be obtained connection in with such transactions.

Section 4.5 Public Announcement. Unless otherwise required by applicable law, the parties hereto shall consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement and shall not issue any such press release or make any such public statement prior to such consultation.

Section 4.6 Stock Issuance. From and after the date of this Agreement until the Closing Date, neither NRMG nor WT shall issue any additional shares of its capital stock, except that NRMG may issue up to an aggregate of 165,432 shares of Series B Stock to certain accredited investors in the Financing Transaction pursuant to the terms of a Stock Purchase Agreement by and among NRMG and such investors to be entered into on the Closing Date, a draft of which agreement is attached hereto as Exhibit A.

Section 4.7 Notwithstanding anything to the contrary contained herein, it is herewith understood and agreed that both WT and NRMG may enter into and conclude agreements and/or financing transactions as same relate to and/or are contemplated by any separate written agreements either: (a) as part of or in connection with the Financing Transaction, (b) annexed hereto as exhibits; or (c) entered into by NRMG with WT executed by both parties subsequent to the date hereof. These Agreements shall become, immediately upon execution, part of this Agreement and subject to all warranties, representations and conditions contained herein.

 

The obligations of WT and ELITE to consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or before the Closing Date, of the following conditions, any one or more of which may be waived by both WT and ELITE in their sole discretion:

Section 5.1 Representations and Warranties of NRMG. All representations and warranties made by NRMG in this Agreement shall be true and correct on and as of the Closing Date as if again made by NRMG as of such date.

Section 5.2 Agreements and Covenants. NRMG shall have performed and complied in all material respects to all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing Date.

 

Section 5.3 Consents and Approvals. Consents, waivers, authorizations and approvals of any governmental or regulatory authority, domestic or foreign, and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this Agreement shall be in full force and effect on the Closing Date.

Section 5.4 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or governmental or regulatory authority, domestic or foreign, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any government or governmental or regulatory authority, which declares this Agreement invalid in any respect or prevents the consummation of the transactions contemplated hereby, or which materially and adversely affects the assets, properties, operations, prospects, net income or financial condition of NRMG shall be in effect; and no action or proceeding before any court or governmental or regulatory authority, domestic or foreign, shall have been instituted or threatened by any government or governmental or regulatory authority, domestic or foreign, or by any other person, or entity which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement.

Section 5.5 Other Closing Documents. ELITE shall have received such other certificates, instruments and documents in confirmation of the representations and warranties of NRMG or in furtherance of the transactions contemplated by this Agreement as ELITE or its counsel may reasonably request.

 

 

The obligations of NRMG to consummate the transactions contemplated by this Agreement are subject to the fulfillment, at or before the Closing Date, of the following conditions, any one or more of which may be waived by NRMG in its sole discretion:

Section 6.1 Representations and Warranties of WT and ELITE. All representations and warranties made by WT and ELITE in this Agreement shall be true and correct on and as of the Closing Date as if again made by WT and ELITE, as applicable, on and as of such date.

Section 6.2 Agreements and Covenants. Each of WT and ELITE shall have performed and complied in all material respects to all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing Date.

Section 6.3 Consents and Approvals. All consents, waivers, authorizations and approvals of any governmental or regulatory authority, domestic or foreign, and of any other person, firm or corporation, required in connection with the execution, delivery and performance of this Agreement, shall have been duly obtained and shall be in full force and effect on the Closing Date.

 

Section 6.4 No Violation of Orders. No preliminary or permanent injunction or other order issued by any court or other governmental or regulatory authority, domestic or foreign, nor any statute, rule, regulation, decree or executive order promulgated or enacted by any government or governmental or regulatory authority, domestic or foreign, that declares this Agreement invalid or unenforceable in any respect or which prevents the consummation of the transactions contemplated hereby, or which materially and adversely affects the assets, properties, operations, prospects, net income or financial condition of NRMG, taken as a whole, shall be in effect; and no action or proceeding before any court or government or regulatory authority, domestic or foreign, shall have been instituted or threatened by any government or governmental or regulatory authority, domestic or foreign, or by any other person, or entity which seeks to prevent or delay the consummation of the transactions contemplated by this Agreement or which challenges the validity or enforceability of this Agreement.

Section 6.5 Other Closing Documents. NRMG shall have received such other certificates, instruments and documents in confirmation of the representations and warranties of WT and/or ELITE, as applicable, or in furtherance of the transactions contemplated by this Agreement as NRMG or its counsel may reasonably request.

 

Section 7.1 Methods of Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time before the Closing:

a. By the mutual written consent of ELITE, WT and NRMG;

b. By NRMG, upon a material breach of any representation, warranty, covenant or agreement on the part of WT or ELITE set forth in this Agreement, or if any representation or warranty of WT or ELITE shall become untrue, in either case such that any of the conditions set forth in Article VI hereof would not be satisfied (a "WT/ELITE Breach"), and such breach shall, if capable of cure, has not been cured within ten (10) days after receipt by the party in breach of a notice from the non-breaching party setting forth in detail the nature of such breach;

 

c. By ELITE, upon a material breach of any representation, warranty, covenant or agreement on the part of NRMG set forth in this Agreement, or, if any representation or warranty of NRMG shall become untrue, in either case such that any of the conditions set forth in Article V hereof would not be satisfied (a "NRMG Breach"), and such breach shall, if capable of cure, not have been cured within ten (10) days after receipt by the party in breach of a written notice from the non-breaching party setting forth in detail the nature of such breach;

d. By either NRMG or ELITE, if the Closing shall not have consummated before ninety (90) days after the date hereof; provided, however, that this Agreement may be extended by written notice of either ELITE or NRMG, if the Closing shall not have been consummated as a result of NRMG or ELITE having failed to receive all required regulatory approvals or consents with respect to this transaction or as the result of the entering of an order as described in this Agreement; and further provided, however, that the right to terminate this Agreement under this Section 7.1(d) shall not be available to any party whose failure to fulfill any obligations under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before this date.

e. By either ELITE or NRMG if a court of competent jurisdiction or governmental, regulatory or administrative agency or commission shall have issued an order, decree or ruling or taken any other action (which order, decree or ruling the parties hereto shall use its best efforts to lift), which permanently restrains, enjoins or otherwise prohibits the transactions contemplated by this Agreement.

Section 7.2 Procedure Upon Termination. In the event of termination and abandonment of this Agreement by ELITE or NRMG pursuant to Section 7.1, written notice thereof shall forthwith be given to the other parties and this Agreement shall terminate and the transactions contemplated hereby shall be abandoned, without further action. If this Agreement is terminated as provided herein, no party to this Agreement shall have any liability or further obligation to any other party to this Agreement; provided, however, that no termination of this Agreement pursuant to this Article VII shall relieve any party of liability for a breach of any provision of this Agreement occurring before such termination.

Section 8.1 Purchase Price Adjustment. The parties agree that the total Purchase Price shall be adjusted based on the financial performance of NRMG on a consolidated basis for the fiscal year ended December 31, 2007 following the Closing as follows (as used in this Agreement, “Net Income” means Net Income as defined in accordance with US GAAP and reported by NRMG in its audited financial statements for the fiscal year ending December 31, 2007 (the “2007 Financial Statements”) plus any amounts that may have been recorded as charges or liabilities on the 2007 financial statements due to the application of EITF No. 00-19 that are associated with (A) any outstanding Warrants of the Company, (B) any issuance under a performance based stock incentive plan that was in existence on the Closing Date or (C) the transactions contemplated under the Securities Escrow Agreement dated the date hereof by and among the Company, Elite, Vision Opportunity Master Fund, Ltd. and Loeb and Loeb, LLP, as escrow agent and Section 8.1 of this Agreement): 

a.

If (i) the 2007 Net Income is equal to or greater than $7,000,000 but is less than $8,000,000, and (ii) Earnings Per Share is equal to or greater than $0.37 (calculated as set forth on Schedule I attached hereto), such “Earnings Per Share” to be calculated by dividing the lesser of (i) Net Income, or (ii) cash from operations reported by the Company in accordance with US GAAP on the 2007 Financial Statements plus $1,000,000, by the aggregate number of shares of then outstanding Common Stock on a fully-diluted basis, which number shall include, without limitation, the number of shares of Common Stock issuable upon conversion of the Company’s then outstanding Preferred Stoke and the number of shares of Common Stock issuable upon the exercise of any then outstanding warrants or options of the Company excluding however (X) shares of Common Stock issuable upon conversion of any Series A Convertible Preferred Stock issued to the Principal Stockholder pursuant to this Section 8.1, (Y) shares of Common Stock issuable upon conversion of the Warrants and the Finder Warrant issued by the Company to Kuhns Brothers, Inc. and/or designees in connection with the Share Exchange Transaction and the Financing Transaction; then 50,000 shares of Series A Stock (or 3,000,000 shares of Common Stock if Series A Stock shall have been converted into Common Stock) shall be issued to Elite or its designees by the Company as an adjustment to the Purchase Price.

 

b.

If the 2007 Net Income is equal to or greater than $8,000,000 but is less than $9,000,000, and (ii) Earnings Per Share is equal to or greater than $0.42 (calculated as set forth on Schedule I attached hereto), then 100,000 shares of Series A Stock (or 6,000,000 shares of Common Stock if Series A Stock shall have been converted into Common Stock) shall be issued to Elite as an adjustment to the Purchase Price..

c.

If the 2007 Net Income is equal to or greater than $9,000,000, and (iii) Earnings Per Share is equal to or greater than $0.48 (calculated as set forth on Schedule I attached hereto), then 166,667 shares of Series A Stock (or 10,000,000 shares of Common Stock if Series A Stock shall have been converted into Common Stock shall be issued to Elite as an adjustment to the Purchase Price..

 

 

d.

All share numbers set forth in clauses a, b and c above shall be proportionately adjusted in the event that NRMG consummates a stock split or combination or other recapitalization.

e.

NRMG shall reserve shares of Series A Stock to be issued pursuant to this Section 8.1 and/or shares of Common Stock issuable upon conversion of such Preferred Shares for issuance hereunder.

Section 8.2 Consistency in Reporting. Each party hereto agrees that if the characterization of any transaction contemplated in this agreement or any ancillary or collateral transaction is challenged, each party hereto will testify, affirm and ratify that the characterization contemplated in such agreement was the characterization intended by the party; provided, however, that nothing herein shall be construed as giving rise to any obligation if the reporting position is determined to be incorrect by final decision of a court of competent jurisdiction.

Section 9.1 Survival of Provisions. The respective representations, warranties, covenants and agreements of each of the parties to this Agreement (except covenants and agreements which are expressly required to be performed and are performed in full on or before the Closing Date) shall survive the Closing Date and the consummation of the transactions contemplated by this Agreement, subject to Sections 2.14 and 3.9. In the event of a breach of any of such representations, warranties or covenants, the party to whom such representations, warranties or covenants have been made shall have all rights and remedies for such breach available to it under the provisions of this Agreement or otherwise, whether at law or in equity, regardless of any disclosure to, or investigation made by or on behalf of such party on or before the Closing Date.

Section 9.2 Publicity. No party shall cause the publication of any press release or other announcement with respect to this Agreement or the transactions contemplated hereby without the consent of the other parties, unless a press release or announcement is required by law. If any such announcement or other disclosure is required by law, the disclosing party agrees to give the non-disclosing parties prior notice and an opportunity to comment on the proposed disclosure.

 

Section 9.3 Successors and Assigns. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors and assigns; provided, however, that no party shall assign or delegate any of the obligations created under this Agreement without the prior written consent of the other parties.

Section 9.4 Fees and Expenses. Except as otherwise expressly provided in this Agreement, all legal and other fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees, costs or expenses.

Section 9.5 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been given or made if in writing and delivered personally or sent by registered or certified mail (postage prepaid, return receipt requested) to the parties at the following addresses:

If to WT or ELITE, to:

Rise Elite International (BVI), Ltd.

c/o Daqing Sunway Technology Co., Ltd.

Daqing Hi-Tech Industry Development Zone

Daqing, Helongjiang, Post Code 163316

People’s Republic of China

Attention: Dr. David Wang, CFO

Tel:   ###-###-####

Fax:   ###-###-####

Email:  ***@***

with copies to: 

Guzov Ofsink, LLC

600 Madison Avenue, 14th Floor

New York, New York 10022

Attention: Darren Ofsink

Tel. No.: (212) 371-8008, ext. 127

Fax No.: (212) 688-7273

If to NRMG, to:

National Realty and Mortgage, Inc

c/o Daqing Sunway Technology Co., Ltd.

Daqing Hi-Tech Industry Development Zone

Daqing, Helongjiang, Post Code 163316

People’s Republic of China

Attention: Dr. David Wang, CFO

Tel:   ###-###-####

Fax:   ###-###-####

Email:  ***@***

 

with copies to: 

Guzov Ofsink, LLC

600 Madison Avenue, 14th Floor

New York, New York 10022

Attention: Darren Ofsink

Tel. No.: (212) 371-8008, ext. 127

Fax No.: (212) 688-7273

or to such other persons or at such other addresses as shall be furnished by any party by like notice to the others, and such notice or communication shall be deemed to have been given or made as of the date so delivered or mailed. No change in any of such addresses shall be effective insofar as notices under this Section 9.5 are concerned unless such changed address is located in the United States of America and notice of such change shall have been given to such other party hereto as provided in this Section 9.5

Section 9.6 Entire Agreement. This Agreement, together with the exhibits hereto, represents the entire agreement and understanding of the parties with reference to the transactions set forth herein and no representations or warranties have been made in connection with this Agreement other than those expressly set forth herein or in the exhibits, certificates and other documents delivered in accordance herewith. This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings and agreements between the parties relating to the subject matter of this Agreement and all prior drafts of this Agreement, all of which are merged into this Agreement. No prior drafts of this Agreement and no words or phrases from any such prior drafts shall be admissible into evidence in any action or suit involving this Agreement.

Section 9.7 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible so as to be valid and enforceable.

Section 9.8 Titles and Headings. The Article and Section headings contained in this Agreement are solely for convenience of reference and shall not affect the meaning or interpretation of this Agreement or of any term or provision hereof.

 

Section 9.9 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement.

Section 9.10 Convenience of Forum; Consent to Jurisdiction. The parties to this Agreement, acting for themselves and for their respective successors and assigns, without regard to domicile, citizenship or residence, hereby expressly and irrevocably elect as the sole judicial forum for the adjudication of any matters arising under or in connection with this Agreement, and consent and subject themselves to the jurisdiction of, the courts of the State of New York located in County of New York, and/or the United States District Court for the Southern District of New York, in respect of any matter arising under this Agreement. Service of process, notices and demands of such courts may be made upon any party to this Agreement by personal service at any place where it may be found or giving notice to such party as provided in Section 9.5.

Section 9.11 Enforcement of the Agreement. The parties hereto agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereto, this being in addition to any other remedy to which they are entitled at law or in equity.

Section 9.12 Governing Law. This Agreement shall be governed by and interpreted and enforced in accordance with the laws of the State of New York without giving effect to the choice of law provisions thereof.

Section 9.13 Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by all of the parties hereto.. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

 

 

 

EXHIBIT A

Series B Convertible Preferred Stock Purchase Agreement

 

Schedule 2.3

Subsidiaries of NRMG

None

 

Schedule 3.3

Subsidiary of WT		WT’s Equity Interest
Sunway World Through Technology (Daqing) Co., Ltd.		100%

Schedule A