VERSO TECHNOLOGIES INC
INTEREST PURCHASE AGREEMENT
<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>7
<FILENAME>g77817exv10w9.txt
<DESCRIPTION>INTEREST PURCHASE AGREEMENT
<TEXT>
<PAGE>
                                                                   EXHIBIT 10.9

                          INTEREST PURCHASE AGREEMENT

                            VERSO TECHNOLOGIES, INC.

                                      and

                          NETRUE COMMUNICATIONS, INC.

                               As of June 4, 2002


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                                                          TABLE OF CONTENTS
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<S>               <C>                                                                                           <C>

ARTICLE 1         PURCHASE AND SALE OF INTEREST...................................................................3
   Section 1.1          Purchase and Sale of Interest.............................................................3
   Section 1.2          Purchase Price............................................................................4
   SECTION 1.3          Adjustment to the Purchase Price..........................................................4

ARTICLE 2         REPRESENTATIONS AND WARRANTIES OF SELLER........................................................5
   Section 2.1          Existence.................................................................................5
   Section 2.2          Authorization; Validity...................................................................6
   Section 2.3          No Breach of Statute or Contract..........................................................6
   Section 2.4          Subsidiaries..............................................................................6
   SECTION 2.5          Assets....................................................................................7
   SECTION 2.6          Notes and Accounts Receivable.............................................................7
   SECTION 2.7          Outstanding Capital Contribution..........................................................7
   Section 2.8          Ownership of the Interest.................................................................7
   Section 2.9          Capitalization; Interest..................................................................7
   Section 2.10         Financial Statements......................................................................8
   Section 2.11         Absence of Undisclosed Liabilities........................................................8
   Section 2.12         Absence of Certain Changes or Events......................................................8
   Section 2.13         Proprietary Rights........................................................................9
   SECTION 2.14         Legal Compliance and Litigation..........................................................10
   SECTION 2.15         Product Liability........................................................................10
   SECTION 2.16         Insurance................................................................................11
   Section 2.17         Contracts and Commitments................................................................11
   Section 2.18         Environmental Matters....................................................................11
   SECTION 2.19         Taxes....................................................................................12
   SECTION 2.20         Employees................................................................................12
   Section 2.21         Company Employee Benefit Plans...........................................................12
   SECTION 2.22         Brokers..................................................................................13

ARTICLE 3         REPRESENTATIONS AND WARRANTIES OF BUYER........................................................13
   Section 3.1          Corporate Existence......................................................................13
   Section 3.2           Authorization; Validity.................................................................13
   Section 3.3          No Breach of Statute or Contract.........................................................14

ARTICLE 4         COVENANTS......................................................................................14
   Section 4.1          Access to Information....................................................................14
   Section 4.2          Agreement to Cooperate...................................................................14
   Section 4.3          Conduct of Business Prior to the Closing Date............................................15
   Section 4.4          Announcements............................................................................16
   Section 4.5          Satisfaction of Conditions...............................................................16
   SECTION 4.6          Notices; Consents; Assignment Provisions.................................................16
   ARTICLE 5            CLOSING..................................................................................17
   SECTION 5.1          Closing..................................................................................17
   Section 5.2          Deliveries by Seller.....................................................................17
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<S>               <C>                                                                                            <C>
   Section 5.3          Deliveries by Buyer......................................................................18

ARTICLE 6.        CONDITIONS PRECEDENT TO OBLIGATIONS............................................................18
   Section 6.1          Conditions to Obligations of Buyer.......................................................18
   Section 6.2          Conditions to Obligations of Seller......................................................19

ARTICLE 7.        INDEMNIFICATION................................................................................20
   Section 7.1          Survival of Covenants and Agreements.....................................................20
   Section 7.2          Survival of Representations and Warranties...............................................20
   Section 7.3          Indemnification..........................................................................20
   Section 7.4          Limitations on Indemnification...........................................................21
   Section 7.5          Procedure for Indemnification with Respect to Third-Party Claims.........................21
   Section 7.6          Procedure For Indemnification with Respect to Non-Third-Party Claims.....................22
   SECTION 7.7          Payment..................................................................................23

ARTICLE 8.        TERMINATION....................................................................................23
   Section 8.1          Termination by Buyer.....................................................................23
   Section 8.2          Termination by Seller....................................................................23
   Section 8.3          Termination by Any Party.................................................................23
   Section 8.4          Termination by Mutual Consent............................................................24
   Section 8.5          Effect of Termination....................................................................24
   Section 8.6          Specific Performance.....................................................................24

ARTICLE 9.        MISCELLANEOUS PROVISIONS.......................................................................24
   SECTION 9.1          Notices..................................................................................24
   Section 9.2          Entire Agreement.........................................................................25
   Section 9.3          Binding Effect; Assignment...............................................................25
   SECTION 9.4          Captions.................................................................................25
   Section 9.5          Expenses of Transaction..................................................................25
   Section 9.6          Waiver; Consent..........................................................................25
   Section 9.7          No Third Party Beneficiaries.............................................................26
   Section 9.8          Counterparts.............................................................................26
   SECTION 9.9          Gender...................................................................................26
   Section 9.10         Governing Law............................................................................26
   SECTION 9.11         Knowledge................................................................................26
   Section 9.12         Incorporation of Exhibit and Schedules...................................................26
   Section 9.13         Costs and Attorneys' Fees................................................................26
   Section 9.14         Certain Definitions......................................................................26
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                          INTEREST PURCHASE AGREEMENT

         THIS INTEREST PURCHASE AGREEMENT (the "Agreement"), dated as of June
4, 2002, is by and between Verso Technologies, Inc., a Minnesota corporation
("Buyer"), and NeTrue Communications, Inc., a California corporation
("Seller").

                                  WITNESSETH:

         WHEREAS, Shanghai Betrue InfoTech Co., Ltd. (the "Company"), a limited
liability joint venture company organized under the laws of the People's
Republic of China ("PRC"), is engaged in the business of developing,
manufacturing and selling network and information software and hardware;
integrating communication systems; and providing communication technology
consulting services and other services (the "Business");

         WHEREAS, Seller is a wholly-owned subsidiary of NeTrue Communications
Inc., a Delaware corporation ("Parent"), and, subject to the satisfaction of
the Outstanding Capital Contribution (as hereinafter defined), is the record
and beneficial owner of 51% of the issued and outstanding registered capital of
the Company (the "Interest");

         WHEREAS, the Company was organized pursuant to that certain Joint
Venture Contract (the "JV Contract") made in Shanghai, PRC, dated October ___,
1998, by and between Shanghai Tangsheng Investment & Development Co., Ltd., a
limited liability company organized under the laws of the PRC ("Shanghai
Tangsheng"), and Seller;

         WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, the Interest upon the terms and subject to the conditions set
forth in this Agreement (the "Purchase"); and

         WHEREAS, certain capitalized terms used herein are defined in Section
9.14 hereof.

         NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, each of Buyer and Seller agrees as follows:

                                   ARTICLE 1
                         PURCHASE AND SALE OF INTEREST

         SECTION 1.1       PURCHASE AND SALE OF INTEREST. Upon the terms and
subject to the conditions set forth in this Agreement, on the Closing Date (as
hereinafter defined), Seller shall sell, convey, assign, transfer and deliver
to Buyer, and Buyer shall purchase from Seller, all right, title and interest
in and to the Interest for an amount equal to the Purchase Price (as
hereinafter defined). On the Closing Date, Seller shall deliver to Buyer a
certificate or certificates representing the Interest, duly endorsed in blank
or accompanied by appropriate transfer powers executed in blank.


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         SECTION 1.2       PURCHASE PRICE. The purchase price for the Interest
(the "Purchase Price") shall be an amount equal to an aggregate of TWO HUNDRED
THOUSAND DOLLARS ($200,000.00) and shall be payable as set forth below.

         (a)      On the Closing Date, Buyer shall pay (i) to the Company, on
behalf of Seller, an amount equal to FIFTY THOUSAND DOLLARS ($50,000.00), with
such payment to be applied by the Company to reduce the capital contribution
Seller owes to the Company with respect to the Interest pursuant to the JV
Contract (the "Outstanding Capital Contribution"), and (ii) to Seller an amount
equal to FIFTY THOUSAND DOLLARS ($50,000.00). Each such payment shall be made
by wire transfer of immediately available funds to a bank account of the payee
specified in writing to Buyer by Seller not later than two (2) days prior to
the Closing Date.

         (b)      On or before the date which is ninety (90) days following the
Closing Date, Buyer shall pay (i) to the Company, on behalf of Seller, an
amount equal to TWENTY FIVE THOUSAND DOLLARS ($25,000.00), with such payment to
be applied by the Company to reduce the Outstanding Capital Contribution, and
(ii) to Seller an amount equal to TWENTY FIVE THOUSAND DOLLARS ($25,000.00),
subject to adjustment as set forth in Section 1.3 below. Each such payment
shall be made by wire transfer of immediately available funds to a bank account
of the payee specified in writing to Buyer by Seller not later than two days
(2) prior to the date such payment is due.

         (c)      On or before the date which is one-hundred eighty (180) days
following the Closing Date, Buyer shall pay (i) to the Company, on behalf of
Seller, an amount equal to TWENTY FIVE THOUSAND DOLLARS ($25,000.00), with such
payment to be applied by the Company to reduce the Outstanding Capital
Contribution, and (ii) to Seller an amount equal to TWENTY FIVE THOUSAND
DOLLARS ($25,000.00), subject to adjustment as set forth in Section 1.3 below.
Each such payment shall be made by wire transfer of immediately available funds
to a United States bank account of the payee specified in writing to Buyer by
Seller not later than two days (2) prior to the date such payment is due.

         SECTION 1.3       ADJUSTMENT TO THE PURCHASE PRICE.

         (a)      Notwithstanding anything set forth in Section 1.2 above, the
aggregate amounts payable to Seller pursuant to Section 1.2(b) and (c) above
(the "Seller Deferred Amounts") shall be reduced by $1.00 for each dollar paid
by Buyer during the six month period following the Closing Date (the "Reduction
Period"), or which Buyer becomes aware during the Reduction Period that it will
be obligated to pay at some later date, which payment, in either case, arises
from or is related to any liability or obligation of the Company (whether
known, unknown, contingent or fixed) existing as of the Closing other than
those arising under the Outstanding Capital Contribution (the "Existing
Liabilities").

         (b)      On any date which the payment of a Seller Deferred Amount is
due pursuant to Section 1.2(b) or 1.2(c), Buyer may deliver to Seller written
notice (the "Existing Liabilities Notice") of the amount of Existing
Liabilities paid or discovered payable by it as of such date, providing
reasonable detail of such Existing Liabilities and accompanying such Existing


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Liabilities Notice with supporting invoices and vouchers, and Buyer shall be
entitled to reduce the payment of such Seller Deferred Amount due on such date
by the amount of such Existing Liabilities, and such reduction of such payment
shall in no way be considered a breach of this Agreement.

         (c)      In the event Seller contests the assertion of any Existing
Liabilities set forth in any Existing Liabilities Notice by delivering to Buyer
a written notice ("Liabilities Contest Notice") announcing Seller's intent to
contest such assertion within ten (10) days of receiving such Existing
Liabilities Notice, if Buyer and Seller, acting in good faith, cannot reach
agreement with respect to such Liabilities Contest Notice within sixty (60)
days following receipt by Buyer of such Liabilities Contest Notice, then Buyer
and Seller may seek any remedy available to them at law or in equity. If Buyer
and Seller are able to reach agreement with respect to such Liabilities Contest
Notice within such sixty (60) days, then any amounts owed by one party to the
other party shall be paid promptly by the party owing such amounts to the other
party.

                                   ARTICLE 2
                    REPRESENTATIONS AND WARRANTIES OF SELLER

         Seller represents and warrants to Buyer that, except as set forth on
the Disclosure Statement to be delivered by Seller to Buyer prior to the
execution of this Agreement (the "Disclosure Statement"), and it being
understood that, notwithstanding anything herein to the contrary, Seller's
representations and warranties made herein with respect to the operations,
business, or financial condition of the Company are limited to the knowledge of
Seller:

         SECTION 2.1       EXISTENCE. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California. The Company is a limited liability joint venture company duly
organized, validly existing and in good standing under the laws of the PRC.
Seller has the corporate power to own, operate or lease its properties and to
carry on its business as now being conducted. The Company has the limited
liability company power to own, operate or lease its properties and to carry on
the Business as now being conducted. Complete and correct copies of the
Articles of Incorporation of Seller and all amendments thereto, certified by
the Secretary of State of California, and of the Bylaws of Seller and all
amendments thereto, certified by the Secretary of Seller, have been provided to
Buyer. Complete and correct copies of the JV Contract and all amendments
thereto, certified and approved by the Foreign Investment Commission of the PRC
and its territorial bodies where the Company is located (the "Examination and
Approval Authority"), and of the Company's Articles of Association and all
amendments thereto, certified and approved by an authorized First-Line Officer
(as that term is defined in the JV Contract) of the Company and the Examination
and Approval Authority, have been provided to Buyer. As a result of the
business conducted by the Company or the character or location of its
properties, the Company is duly qualified to do business and is in good
standing in the states, territories and foreign countries where the nature of
the Business conducted by it or the character or location of its properties
requires such qualification and where the failure to so qualify would have a
material adverse effect on the Business or upon the ability of the Company to
consummate the transactions contemplated by this Agreement (a "Material Adverse
Effect"). The Company has been granted and holds all business licenses,
approvals and authorizations under any legislation,


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regulation or policy of any governmental or other authority of the PRC,
including, without limitation, the Examination and Approval Authority,
necessary or desirable to make effective and legal the JV Contract and the
Company's Articles of Association, as amended, and to enable the Company to
operate or lease its properties and to carry on the Business as now being
conducted.

         SECTION 2.2       AUTHORIZATION; VALIDITY. Subject to (a) satisfaction
of the requirements set forth in the JV Contract with respect to assignment or
transfer of registered capital of the Company (the "Assignment Provisions"),
(b) approval by the Examination and Approval Authority of the Purchase and (c)
approval by Shanghai Tangsheng of the Purchase, Seller has all requisite
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Subject to approval of the Purchase by the Examination and Approval Authority,
no declaration, recording or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by Seller or the
consummation by Seller of the transactions contemplated hereby, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, before or after
the Closing Date, would not, in the aggregate, have a Material Adverse Effect.
All necessary action has been taken by Seller with respect to the execution and
delivery (and, subject to satisfaction of the Assignment Provisions, approval
by the Examination and Approval Authority of the Purchase and approval by
Shanghai Tangsheng of the Purchase, performance) by Seller of this Agreement
and the consummation of the transactions contemplated hereby. Subject to
satisfaction of the Assignment Provisions, approval by the Examination and
Approval Authority of the Purchase and approval by Shanghai Tangsheng of the
Purchase, assuming the due execution and delivery of this Agreement by Buyer,
this Agreement is a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws of general
application affecting the enforcement of creditors' rights and general
principles of equity (whether applied in a proceeding at law or in equity).

         SECTION 2.3       NO BREACH OF STATUTE OR CONTRACT. Subject to
satisfaction of the Assignment Provisions, approval by the Examination and
Approval Authority of the Purchase and approval by Shanghai Tangsheng of the
Purchase, neither the execution and delivery of this Agreement, nor the
consummation by Seller of the transactions contemplated hereby, nor compliance
by Seller with any of the provisions hereof, will (a) violate or cause a
default under any statute, judgment, order, writ, decree, rule or regulation of
any court or governmental authority, foreign or domestic, applicable to Seller
or the Company or any of their respective properties; (b) breach or conflict
with any of the terms, provisions or conditions of the Articles of
Incorporation or Bylaws of Seller or the JV Contract or the Company's Articles
of Association, as amended; or (c) violate, conflict with or breach or require
the authorization, consent or approval of any party under any agreement,
contract, mortgage, instrument, indenture or license to which Seller or the
Company is a party or by which Seller or the Company is or may be bound, or
constitute a default (in and of itself or with the giving of notice, passage of
time or both) thereunder, or result in the creation or imposition of any
encumbrance upon, or give to any other party or parties any claim, interest or
right, including rights of termination or cancellation in, or with respect to,
any


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of their respective assets, properties or the Interest, except in case of
case of clauses (a) and (c), other than as would not have a Material Adverse
Effect.

         SECTION 2.4       SUBSIDIARIES. The Company has no subsidiaries. The
Company has neither agreed nor is obligated to make nor be bound by any
written, oral or other agreement, contract, subcontract, lease, binding
understanding, instrument, note, option, warranty, purchase order, license,
sublicense, insurance policy, benefit plan, commitment or understanding of any
nature, as of the date hereof or as may hereinafter be in effect, under which
it may become obligated to make any future investment in or capital
contribution to any Person. The Company does not directly or indirectly own
equity or similar interest in or any interest convertible, exchangeable or
exercisable for any equity or similar interest in, any Person.

         SECTION 2.5        ASSETS. The Company has good and marketable title
to, or a valid leasehold interest in, the properties and assets used by the
Company in the operation of the Business as currently conducted, located on the
Company's premises, or shown on the Financial Statements (as hereinafter
defined) or acquired after the date thereof, free and clear of all liens,
claims, charges and other encumbrances and restrictions of any kind or nature.
The assets used or leased by the Company in the operations of its Business are
in good working condition and order, subject to reasonable wear and tear, and
are suitable for the operation of the Business.

         SECTION 2.6       NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts
receivable of the Company are reflected properly on the Financial Statements,
are valid receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts, if any, set forth
on the face of the most recent Financial Statements (rather than in any notes
thereto).

         SECTION 2.7       OUTSTANDING CAPITAL CONTRIBUTION. The Outstanding
Capital Contribution shall be fully satisfied upon payment by Buyer to the
Company of the cash amount set forth in Section 1.2(a) and the assignment,
transfer, conveyance and contribution by the Buyer to the Company of certain
assets as set forth in the Amendment (as hereinafter defined). Except for the
Outstanding Capital Contribution, Seller is not obligated to pay the Company
any amount, whether payable in cash, assets or otherwise, as a capital
contribution with respect to the Interest, and Seller is not obligated to pay
to the Company any other amount pursuant to the JV Contract.

         SECTION 2.8       OWNERSHIP OF THE INTEREST. Subject to payment to the
Company of the Outstanding Capital Contribution, Seller is the record and
beneficial owner of the Interest, which represents 51% of the registered
capital of the Company, and the Interest will be transferred to Buyer, free and
clear of all liens, claims, charges and other encumbrances and restrictions of
any kind or nature. Subject to satisfaction of the Assignment Provisions, the
approval of the Purchase by the Examination and Approval Authority and the
approval of the Purchase by Shanghai Tangsheng, Seller has the power, authority
and capacity to transfer and deliver the Interest pursuant to this Agreement
and, except for the JV Contract, is not party to or bound by any agreement,


<PAGE>

arrangement or option restricting in any manner the sale and transfer of any
portion of the Interest.

         SECTION 2.9       CAPITALIZATION; INTEREST. The Company's total
registered capital equals $2.0 million. All of the Company's issued and
outstanding registered capital is duly authorized and validly issued, fully
paid and non-assessable, except for the Outstanding Capital Contribution owed
by Seller with respect to the Interest. Except for the JV Contract, there are
no subscriptions, options, warrants, calls, rights, agreements, commitments,
understandings, restrictions or arrangements of any kind relating to the
issuance, sale or transfer by the Company of any of its registered capital or
relating to the sale or transfer of any of the Company's registered capital or
the Interest, including, without limitation, any rights of conversion or
exchange under any outstanding securities or other instruments. Except for the
JV Contract, there are no voting trusts or other agreements or understandings
of any kind with respect to the Company's registered capital or the Interests.

         SECTION 2.10       FINANCIAL STATEMENTS. The combined financial
statements (including the related notes) of the Company for the years ended
December 31, 2001, 2000 and 1999 and the combined financial statements
(including the related notes) of the Company for the three months ended March
31, 2002 (collectively, the "Financial Statements") heretofore delivered to the
Buyer have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of its operations and changes in financial position for the periods
then ended.

         SECTION 2.11       ABSENCE OF UNDISCLOSED LIABILITIES. The Company has
no debts, liabilities or obligations of any kind, whether recourse,
non-recourse, accrued, absolute, contingent or other, whether due or to become
due, except for (a) liabilities set forth in the Company's combined balance
sheet dated March 31, 2002; (b) debts, liabilities or obligations which have
arisen since March 31, 2002 in the ordinary course of business; or (c) debts,
liabilities or obligations less than $5,000 individually or $10,000 in the
aggregate.

         SECTION 2.12      ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December
31, 2001, through the date hereof there has been no Material Adverse Effect.
Without limiting the generality of the foregoing, since December 31, 2001,
there has not been, with respect to the Company:

         (a)      any change in the Business or its operations which had a
Material Adverse Effect;

         (b)      other than in the ordinary course of business, any net
increase in amounts payable by the Company to or for the benefit of or
committed to be paid by the Company to or for the benefit of any officer,
director, equity holder, consultant, agent or employee of the Company, in any
capacity, or in any net benefits granted under any bonus, stock option, profit
sharing,


<PAGE>

pension, retirement, deferred compensation, insurance, or other direct or
indirect benefit plan with respect to any such person;

         (c)      any transaction entered into or carried out other than in the
ordinary and usual course of its business;

         (d)      any material adverse change made in the methods of doing
business or in the accounting principles or practices or the method of
application of such principles or practices;

         (e)      any mortgage, pledge, lien, security interest, hypothecation,
charge or other encumbrance imposed or agreed to be imposed on or with respect
to any of its properties or assets except for Permitted Liens and financing
statements filed by personal property lessors as a matter of notification only;

         (f)      except in the ordinary course of business, any sale, lease,
license or other disposition of, or any agreement to sell, lease, license or
otherwise dispose of any of its properties, assets or services;

         (g)      except in the ordinary course of business, any purchase of or
any agreement to purchase capital assets or any lease or any agreement to
lease, as lessee, any capital assets;

         (h)      any modification, waiver, change, amendment, release,
rescission or termination of, or accord and satisfaction with respect to, any
material term, condition or provision of any material contract, agreement,
license or other instrument to which the Company is a party, other than any
satisfaction by performance in accordance with the terms thereof;

         (i)      any declaration of, or dividend or other distribution with
respect to the Company's registered capital, any purchase, redemption or
reclassification of any of the Company's registered capital, any split or
consolidation of the Company's registered capital, or any exchange or
recapitalization or execution of any agreement in respect of the foregoing;

         (j)      any damage, destruction or similar loss affecting the
Company's properties or assets, whether or not covered by insurance, which had
a Material Adverse Effect;

         (k)      any transactions with any Affiliate of the Company other than
on an arms' length basis, consistent with past practice;

         (l)      any commitment by the Company to do any of the foregoing; or

         (m)      any amendment or modification made to the JV Contract or the
Company's Articles of Association, as amended.

         SECTION 2.13      PROPRIETARY RIGHTS. The Company is the sole and
exclusive owner of all right, title and interest in and to all material patents
(including all reissues, reexaminations, continuations, continuations-in-part
and divisions thereof), inventions, trade secrets, processes, proprietary
rights, proprietary knowledge, know-how, computer software, trademarks, names,
service marks, trade names, copyrights, symbols, logos, franchises and permits
of the Company and all applications therefor,


<PAGE>

registrations thereof and licenses, sublicenses or agreements in respect
thereof that the Company owns or has the right to use or to which the Company
is a party and all filings, registrations or issuances of any of the foregoing
with or by any federal, state, local or foreign regulatory, administrative or
governmental office or offices (collectively, the "Intellectual Property
Rights"), free and clear of all liens, claims, charges, equities, rights of
use, encumbrances and restrictions whatsoever other than Permitted Liens.
Seller has provided to Buyer a complete and accurate list of all the material
Intellectual Property Rights. Except as would not reasonably be expected to
have a Material Adverse Effect, (a) the Company is not, nor will it be as a
result of the execution and delivery of this Agreement or the performance of
the transactions contemplated hereunder, in violation of any license,
sublicense or other agreement to which it is a party and pursuant to which it
is authorized to use any third-party patents, trademarks, service marks or
copyrights (the "Third-Party Intellectual Property Rights"); (b) no claims with
respect to the patents, registered and material unregistered trademarks and
service marks, registered copyrights, trade names and any applications therefor
owned by the Company (the "Company Intellectual Property Rights"), any trade
secret material to the Company, or Third Party Intellectual Property Rights to
the extent arising out of any use, reproduction or distribution of such Third
Party Intellectual Property Rights or through the Company, are currently
pending or, to the knowledge of Seller, are threatened in writing by any
Person; and (c) Seller does not know of any valid ground for any bona fide
claims (i) to the effect that the manufacture, sale, licensing or use of any
products as now used, sold or licensed or proposed for use, sale or license by
the Company, infringes on any copyright, patent, trademarks, service mark or
trade secrets, copyrights, patents, technology, know-how or computer software
programs and applications used in the business of the Company as currently
conducted or as proposed to be conducted; (ii) challenging the ownership,
validity or effectiveness of any of the Company Intellectual Property Rights or
other trade secret material to the Company; or (iii) challenging the license or
legally enforceable right to use of the Third Party Intellectual Property
Rights by the Company.

         SECTION 2.14      LEGAL COMPLIANCE AND LITIGATION. The Company has
complied with all applicable laws and statutes (including all rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings and
charges thereunder) of all federal, state, local and foreign governments, and
all agencies thereof, including, without limitation, the PRC and the
Examination and Approval Authority, and no action, suit, proceeding, hearing,
investigation, charge, compliant, claim, demand or notice has been filed or
commenced against the Company alleging any failure to do so. Seller has
provided to Buyer a complete and accurate list as of the date hereof of all
claims, actions, suits, proceedings or, to Seller's knowledge, investigations
(collectively, the "Proceedings") pending or, to Seller's knowledge, threatened
against or affecting the Company or any of the Company's properties, assets or,
to Seller's knowledge, any of the


<PAGE>

Company's officers or directors in their capacities as such, in, before or by
any federal, state, local or foreign court, governmental agency or other
governmental body (each a "Governmental Authority"), other than any such
Proceedings which, if adversely determined, would not have a Material Adverse
Effect. Seller shall update the information provided to Buyer in respect of all
Proceedings as of the Closing Date, but any such updated information relating
to Proceedings arising after the date hereof shall not constitute a breach of
this Section 2.14 unless such Proceedings have had or can reasonably be
expected to have a Material Adverse Effect. As of the date hereof, there is no
Proceeding pending or, to the knowledge of Seller, threatened against the
Company or any of the Company's properties, assets or, to Seller's knowledge,
any of the Company's officers or directors in their capacity as such, in,
before or by any Governmental Authority that has had or, with respect to any
threatened Proceeding, can reasonably be expected to have, a Material Adverse
Effect, nor to Seller's knowledge, has any Governmental Authority notified the
Company prior to the date hereof of any intention to conduct any investigation
with respect to the Company. To Seller's knowledge, the Company is not subject
to or in default with the respect to any judgment, order, writ, injunction or
decree or any governmental restriction.

         SECTION 2.15      PRODUCT LIABILITY. The Company does not have any
liability, whether known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, or due or to
become due (and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, compliant, or demand against the
Company), arising out of any injury to individuals or property as a result of
the ownership, possession, or use of any product manufactured, sold, leased, or
delivered by the Company.

         SECTION 2.16      INSURANCE. Seller has provided to Buyer a list and
description of all the material terms of each insurance policy to which the
Company has been a party, a named insured, or otherwise the beneficiary of
coverage at any time within the past three (3) years. With respect to each such
insurance policy: (a) the policy is legal, valid, binding, enforceable and in
full force and effect; (b) the policy will continue to be legal, valid,
binding, enforceable and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (c) the Company is
not in breach or default and no event which, with notice or the lapse of time,
would constitute such breach or default, or permit termination, modification,
or acceleration, under the policy; and (d) no party has repudiated any
provision of such policy. The Company, its properties and assets have been
covered during the past three (3) years by insurance in the scope and amount
customary and reasonable for the Business as conducted by the Company in the
aforementioned period.

         SECTION 2.17      CONTRACTS AND COMMITMENTS. Seller has provided to
Buyer a list of all material personal property leases, contracts, agreements,
contract rights, license agreements, franchise rights and agreements, policies,
purchase and sales orders, quotations and executory commitments, instruments,
third party guaranties, indemnifications, arrangements, obligations and
understandings to which the Company is a party (other than purchase and sale
orders and quotations incurred in the ordinary course of business of the
Company) that are currently in effect and that require payments, individually
or in the aggregate, in excess of $10,000 (collectively, the "Contracts"). To
the knowledge of Seller, each of the Contracts is valid and binding, in full
force and effect and enforceable against the Company in accordance with its
provisions. The Company has not assigned, mortgaged, pledged, encumbered, or
otherwise hypothecated any of its right, title or interest under any of the
Contracts. Neither the Company nor, to Seller's knowledge, any other party
thereto is in violation of, in default in respect of nor has there occurred an
event or condition which, with the passage of time or giving of notice (or
both), would constitute a material violation or a default of any Contract other
than violation or default that would not have a Material Adverse Effect. No
notice has been received by Seller or the Company claiming any such default by
the Company or indicating the desire or intention of any other party thereto to
amend, modify, rescind or terminate the same.


<PAGE>

         SECTION 2.18      ENVIRONMENTAL MATTERS.

         (a)      For the purposes of this Section 2.18, "Environmental Laws"
means any applicable law, statute, ordinance, order, judgment, rule, regulation
or other provision of the PRC having the force and effect of law relating to
the environment, its pollution or protection.

         (b)      The Company is in compliance with all Environmental Laws
applicable to the Business, and Seller has no notice or knowledge of any
violations thereof, whether actual, claimed or alleged, except for those
instances of non-compliance or those violations as are not reasonably likely to
have a Material Adverse Effect.

         (c)      The Company is not the subject of or, to the knowledge of
Seller, being threatened to be the subject of (i) any enforcement proceeding,
or (ii) any investigation, brought in either case under any Environmental Law,
at any time in effect or (iii) any third party claim relating to the violation
of any Environmental Law on or off the properties of the Company except for
such proceedings, investigations or claims that could not reasonably be
expected to have a Material Adverse Effect. The Company has not been notified
that it must obtain any permits and licenses or file documents for the
operation of the Business under any Environmental Laws. The Company has not
been notified of any conditions on or off its properties that can reasonably be
expected to give rise to any liabilities for the Company, known or unknown,
under any Environmental Law and that would reasonably be anticipated to result
in a Material Adverse Effect.

         SECTION 2.19      TAXES.

         The Company has made payments of taxes sufficient to avoid penalties
for late payments or underpayment of taxes. All taxes and other amounts that
the Company is or was required by applicable law to withhold or collect have
been duly withheld and collected and have been paid over to the proper
government authorities in accordance with applicable law. There are no liens
for taxes on any of the Company's assets other than Permitted Liens. No audit
of the returns of the Company's taxes is currently being conducted, and the
Company has not received from any governmental authority with jurisdiction or
other authority as to taxes either a notice that it intends to conduct any
other audit of returns of taxes or any request for information with respect to
taxes. There are no outstanding agreements or waivers extending the statutory
period of limitation applicable to any return of taxes for any period, and
there are no outstanding requests by the Company for rulings from any
governmental authority.

         SECTION 2.20      EMPLOYEES. To the knowledge of Seller, no executive,
key employee or group thereof plans to terminate employment with the Company
during the six month period following the date hereof. The Company is not a
party to or bound by any collective bargaining agreement, nor has the Company
experienced any strike or material grievance, unfair labor practice or other
collective bargaining dispute within the three-year period prior to the date
hereof. To the knowledge of Seller, the Company has not committed any wrongful
discharge or other wrongful act with respect to the employment or termination
of any employee prior to the Closing Date that, individually or in the
aggregate, can reasonably be expected to result in a Material Adverse


<PAGE>

Effect. To the knowledge of Seller, the Company has, at all times, complied
with the rules and regulations of the government of the PRC concerning labor
protection.

         SECTION 2.21      COMPANY EMPLOYEE BENEFIT PLANS.

         (a)      For purposes of this Section 2.21, the term "Company Benefit
Plan" means any plan, program, arrangement, fund, policy, practice, agreement,
custom, habit or contract which, through which or under which the Company
provides any type of benefit or compensation of any nature whatsoever to or on
behalf of employees or former employees of the Company, whether formal or
informal, whether or not written.

         (b)      The company does not have any actual or contingent, direct or
indirect, liability in respect of any Company Benefit Plan.

         (c)      The Company has made available to Buyer a true and complete
copy of each written Company Benefit Plan and a written summary of any Company
Benefit Plan which is not a written plan.

         (d)      To the knowledge of Seller, each Company Benefit Plan has at
all times been maintained and operated in accordance with the terms of such
plan and all laws statues, ordinances, orders, judgment, rules, regulation or
other provision of the PRC applicable to such plans.

         (e)      There are no actions, audits, suits, investigations, notices
or claims known to Seller that are pending or, to the knowledge of Seller,
threatened against or related to any Company Benefit Plan except claims for
benefits made in the ordinary course of the operation of such plans.

         (f)      The termination of or withdrawal from any Company Benefit
Plan immediately after the Closing Date will not subject the Company to any
material liability, obligation, tax or penalty whatsoever. The Company has no
obligation to any retired or former employee of the Company, or any current
employee of the Company upon retirement, under any Company Benefit Plan.

         (g)      From the date of this Agreement to the Closing Date, no
amendment affecting any Company employee or former Company employee shall be
made to any Company Benefit Plan, no commitment shall be made to amend any
Company Benefit Plan in any way that would affect any Company employee or
former employee and no commitment shall be made to continue any Company Benefit
Plan or to adopt any new Company Benefit Plan for the benefit of any employees
of Company except as required by law.

         (h)     The consummation of the transactions contemplated hereby will
not accelerate or increase materially liability under any Company Benefit Plan
because of an acceleration or increase of any of the rights or benefits to which
employees of the Company may be entitled thereunder.


<PAGE>

         SECTION 2.22       BROKERS. All negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on by or on behalf
of Seller, Parent and the Company in such a manner as not to give rise to any
claim against Buyer, any Affiliate thereof, Seller or the Company for a
finder's fee, brokerage commission, advisory fee or other similar payment.

                                   ARTICLE 3
                    REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer represents and warrants to Seller that:

         SECTION 3.1       CORPORATE EXISTENCE. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Minnesota.

         SECTION 3.2       AUTHORIZATION; VALIDITY. Buyer has all requisite
corporate power and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
No declaration, recording or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by Buyer or the
consummation by Buyer of the transactions contemplated hereby, other than such
declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not, in the
aggregate, have a material adverse effect upon the business or financial
condition of Buyer or upon the ability of the Buyer to consummate the
transactions contemplated by this Agreement (a "Buyer Material Adverse
Effect"). All necessary corporate action has been taken by Buyer with respect
to the execution, delivery and performance by Buyer of this Agreement and the
consummation of the transactions contemplated hereby. Assuming the due
execution and delivery of this Agreement by Seller, this Agreement is a legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general application affecting the
enforcement of creditors' rights and general principles of equity (whether
applied in a proceeding at law or in equity).

         SECTION 3.3       NO BREACH OF STATUTE OR CONTRACT. Neither the
execution and delivery of this Agreement, nor the consummation by Buyer of the
transactions contemplated hereby, nor compliance by Buyer with any of the
provisions hereof, will (a) violate or cause a default under any statute,
judgment, order, writ, decree, rule or regulation of any court or governmental
authority applicable to Buyer or any of its material properties; (b) breach or
conflict with any of the terms, provisions or conditions of the Articles of
Incorporation or Bylaws of Buyer (each as amended); or (c) except for the
consent of Silicon Valley Bank, Commercial Finance Division (the "Bank")
pursuant to that certain Loan and Security Agreement dated December 14, 2001,
by and among Buyer, the Bank and certain of Buyer's subsidiaries, and the
related documents executed in connection therewith, violate, conflict with or
breach or require the authorization, consent or approval of any party under any
agreement, contract, mortgage, instrument, indenture


<PAGE>

or license to which Buyer is party or by which Buyer is or may be bound, or
constitute a default (in and of itself or with the giving of notice, passage of
time or both) thereunder, or result in the creation or imposition of any
encumbrance upon, or give to any other party or parties, any claim, interest or
right, including rights of termination or cancellation in, or with respect to,
any of Buyer's properties, except in case of clauses (a) and (c), other than as
would not have a Buyer Material Adverse Effect.

                                   ARTICLE 4
                                   COVENANTS

         SECTION 4.1       ACCESS TO INFORMATION. Seller shall cause the Company
to afford to Buyer and, on a need to know basis, its accountants, counsel,
financial advisors and other representatives (the "Buyer Representatives") full
access throughout the period from the date hereof until the Closing Date to all
of its properties, books, contracts, commitments and records (including,
without limitation, tax returns) and, during such period, shall furnish
promptly to the Buyer or Buyer Representatives such information concerning the
Business as Buyer shall reasonably request, provided that no investigation
pursuant to this Section 4.1 shall amend or modify any representations or
warranties made herein or the conditions to the obligations of the respective
parties to consummate the transactions contemplated hereby.

         SECTION 4.2       AGREEMENT TO COOPERATE. Subject to the terms and
conditions herein provided, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including, without limitation, using its reasonable efforts to
obtain all necessary or appropriate waivers, consents and approvals and to
effect all necessary filings and submissions.

         SECTION 4.3       CONDUCT OF BUSINESS PRIOR TO THE CLOSING DATE.

         (a)      During the period from the date hereof until the Closing
Date, except as otherwise contemplated by this Agreement, consented to or
approved by Buyer in writing, Seller shall cause the Company (i) to conduct its
Business in the usual, regular and ordinary course consistent with past
practice, (ii) to preserve and use its working capital (including cash)
consistent with past practice, and (iii) to use its best efforts to maintain
and preserve intact its business organization, employees, goodwill with
customers and advantageous business relationships and to retain the services of
its officers and key employees.

         (b)      Seller agrees that on and after the date hereof and prior to
the Closing Date, without the prior written consent of Buyer, Seller shall not
cause or otherwise suffer or permit the Company to:

                  (i)      incur or become subject to, or agree to incur or
become subject to, any obligation or liability (absolute or contingent) except
current liabilities incurred, and obligations under contracts entered into, in
the ordinary course of business;


<PAGE>

                  (ii)     discharge or satisfy any lien or encumbrance or pay
any obligation or liability (absolute or contingent) other than liabilities
payable in the ordinary course of business;

                  (iii)    mortgage, pledge or subject to lien, charge or any
encumbrance, any of the Company's properties or assets or agree so to do,
except for Permitted Liens incurred in the ordinary course of business;

                  (iv)     sell or transfer or agree to sell or transfer any of
its assets, properties or services or cancel or agree to cancel any debt or
claim, except in each case in the ordinary course of business;

                  (v)      consent or agree to a waiver of any right of
substantial value;

                  (vi)     enter into any transaction other than in the
ordinary course of its business;

                  (vii)    increase the rate of compensation payable or to
become payable by it to any officers, employees or agents of the Company
outside of the ordinary course of business;

                  (viii)   terminate any contract, agreement, license or other
instrument to which it is a party that provides for monthly payments by or to
the Company in excess of $1,000 except in the ordinary course of business;

                  (ix)     through negotiation or otherwise, make any
commitment or incur any liability or obligation to any labor organization
except in the ordinary course of business consistent with past practice;

                  (x)      make or agree to make any accrual or arrangement for
or payment of bonuses of any kind to any officer, employee or agent, except in
the ordinary course of business, or make or agree to make any accrual or
arrangement for or payment of any special compensation to any such persons;

                  (xi)     terminate any key employee of the Company, other
than for cause, or directly or indirectly pay or make a commitment to pay any
severance or termination pay to any officer, employee or agent except in the
ordinary course of business consistent with past practice;

                  (xii)    introduce any new method of management, operation or
accounting with respect to its Business;

                  (xiii)   offer or extend more favorable prices, discounts or
allowances than were offered or extended regularly on and prior to the date
hereof;

                 (xiv)     make capital expenditures or commitments therefor in
excess of $10,000 (individually or in the aggregate) except for repairs and
maintenance in the ordinary course of business consistent with past practice;

                  (xv)     declare or pay any dividend or make any distribution
with respect to the Company's registered capital;


<PAGE>

                  (xvi)    pay or make provision for the payment of any
intercompany indebtedness, incur any additional intercompany indebtedness from
or engage in any form of intercompany transaction with any Affiliate of the
Seller other than in the ordinary course of business where there is no net
effect on the Company's cash or any other adverse effect on the financial
condition of the Company;

                  (xvii)   pay, satisfy or otherwise make provision for the
payment of any accounts payable of the Company other than in the ordinary
course of business consistent with past practice; or

                  (xviii)  authorize or enter into any agreement to do any of
the foregoing.

         SECTION 4.4       ANNOUNCEMENTS. None of the parties to this Agreement
nor any of their respective Affiliates shall make any public announcements
prior to the Closing Date or any time thereafter with respect to this Agreement
or the transactions contemplated hereby without the written consent of the
other parties hereto, unless advised by counsel that such disclosure is
required by law (in which event such party shall promptly notify the other
parties hereto).

         SECTION 4.5       SATISFACTION OF CONDITIONS. Each of the parties
hereto shall use its commercially reasonable efforts to fulfill or obtain the
fulfillment of all of the conditions to Closing.

         SECTION 4.6       NOTICES; CONSENTS; ASSIGNMENT PROVISIONS. Each party
hereto will give (and Seller will cause the Company to give) any notices to
third parties, and each party hereto will use its best efforts (and Seller will
cause the Company to use its best efforts) to obtain any third party consents
or approvals required to consummate the Purchase as described herein. Each
party hereto will (and Seller will cause the Company to) give any notices to,
make filings with, and use its best efforts to obtain any authorizations,
consents, and approval of governments and governmental agencies necessary to
consummate the Purchase as contemplated herein. Without limiting the generality
of the foregoing, within two (2) business days after the date hereof, Seller
shall notify Shanghai Tangsheng and any other party to the JV Contract of the
Purchase contemplated herein in accordance with the Assignment Provisions.
Seller shall take all steps and perform all actions Seller is required to
perform pursuant to the JV Contract, and Seller shall cause the Company to take
all steps and perform all actions necessary, in order to effectuate the
transactions contemplated hereby in accordance with the terms of the JV
Contract and this Agreement, including, without limitation, obtaining the
approval and consent of the Examination and Approval Authority of the Purchase
as contemplated herein.

                                   ARTICLE 5
                                    CLOSING

         SECTION 5.1       CLOSING. The Purchase shall close and all deliveries
to be made at the time of closing (the "Closing") shall take place at 10:00
a.m., local time, on the date (the "Closing Date") that is two (2) business
days after the date upon which the last of the conditions set forth in Article
6 is satisfied or waived (or


<PAGE>

on such other date as may be agreed upon from time to time in writing by Seller
and Buyer. The Closing shall take place at the offices of Rogers & Hardin LLP,
229 Peachtree Street, 2700 International Tower, Atlanta, Georgia 30303.

         SECTION 5.2       DELIVERIES BY SELLER. On or prior to the Closing
Date, Seller shall deliver to Buyer, duly and properly executed, the following:

         (a)      A certificate or certificates representing the Interest, duly
endorsed in blank for transfer or accompanied by separate transfer powers duly
executed in blank.

         (b)      Resolutions of the Board of Directors of Seller authorizing
the execution and delivery of this Agreement by Seller and the performance of
its obligations hereunder, certified by the Secretary of Seller.

         (c)      A certificate of an appropriate government official of the
PRC dated as of a recent date as to the good standing or some equivalent status
of the company in the PRC.

         (d)      Resolutions of the Board of Directors of the Company
authorizing the Purchase of the Interest as contemplated hereby, certified by a
First-Line-Officer of the Company.

         (e)      A certificate of the President and Secretary of Seller in
accordance with Section 6.1(d).

         (f)      A certificate of the President and Chief Executive Officer of
Seller certifying that the condition set forth in Section 6.1(f) has been
satisfied, accompanied with all evidence of such satisfaction.

         (g)      The Authority Consent (as hereinafter defined).

         (h)      The Shanghai Tangsheng Consent (as hereinafter defined).

         (i)      The Amendment.

         (j)      Such other separate instruments or documents that Buyer may
reasonably deem necessary or appropriate in order to consummate the
transactions contemplated by this Agreement, including, without limitation, all
regulatory and contractual consents of third parties.

         SECTION 5.3       DELIVERIES BY BUYER. On or prior to the Closing Date,
Buyer shall deliver to Seller (unless otherwise stated), all duly and properly
executed, the following:

         (a)      Resolutions of the Board of Directors of Buyer authorizing
the execution and delivery of this Agreement by Buyer and the performance of
its obligations hereunder, certified by the Secretary of Buyer.

         (b)      A certificate of the Secretary of State of Minnesota dated as
of a recent date as to the good standing of Buyer in such state.


<PAGE>

         (c)      A certificate of the President and Secretary of Buyer in
accordance with Section 6.2(d).

         (d)      The payment of $100,000.00 as set forth in Section 1.2 (a),
which shall be paid to the Company on behalf of Seller and applied to reduce
the amount of the Outstanding Capital Contribution.

         (e)      The Bank Consent (as hereinafter defined).

         (f)      Such other separate instruments or documents that Seller may
reasonably deem necessary or appropriate in order to consummate the
transactions contemplated by this Agreement.

                                   ARTICLE 6.
                      CONDITIONS PRECEDENT TO OBLIGATIONS

         SECTION 6.1       CONDITIONS TO OBLIGATIONS OF BUYER. Each and every
obligation of Buyer to be performed on the Closing Date shall be subject to the
satisfaction as of or before the Closing Date of the following conditions
(unless waived in writing by Buyer):

         (a)      Representations and Warranties. Seller's representations and
warranties set forth in Article 2 of this Agreement shall be true and correct
in all material respects at and as of the Closing Date as if such
representations and warranties were as of the Closing Date, except for changes
permitted or contemplated by this Agreement and except to the extent that any
representation or a warranty is made as of a specified date, in which case such
representation or warranty shall be true in all material respects as of such
date.

         (b)      Performance of Agreement. All covenants, conditions and other
obligations under this Agreement which are to be performed or complied with by
Seller shall have been fully performed and complied with in all material
respects on or prior to the Closing Date, including, without limitation, the
delivery of the fully executed instruments and documents in accordance with
Section 5.2 hereof.

         (c)      No Adverse Proceeding. There shall be no pending claim,
action, litigation or proceeding, judicial or administrative, or governmental
investigation against Buyer, Seller, Parent or the Company, for the purpose of
enjoining or preventing the consummation of this Agreement or otherwise
claiming that this Agreement or the consummation hereof is illegal.

         (d)      Certificate. Seller shall have delivered to Buyer a
certificate, dated the Closing Date, executed by Seller's President and
Secretary, to the effect that, to the knowledge of such officers, (i) the
conditions set forth in subsections (a), (b) and (c) of this Section 6.1 have
been satisfied and (ii) the Articles of Incorporation and Bylaws of Seller and
the JV Contract and the Company's Articles of Association, as amended, shall
have not been amended since the date upon which certified copies of each had
been delivered to Buyer and remain in full force and effect.


<PAGE>

         (e)      No Material Adverse Effect. There shall not have occurred any
Material Adverse Effect.

         (f)      Satisfaction of the Assignment Provisions. The Assignment
Provisions set forth in the JV Contract shall have been satisfied in full.

         (g)      Approval and Consent by Examination and Approval Authority.
The Examination and Approval Authority shall have provided to Seller written
consent and approval of the Purchase as contemplated herein (the "Authority
Consent").

         (h)      Approval and Consent by Shanghai Tangsheng. Shanghai
Tangsheng shall have provided to Seller written consent and approval of the
Purchase as contemplated herein (the "Shanghai Tangsheng Consent").

         (i)      Bank Consent. The Bank shall have provided to Buyer written
consent and approval of the Purchase as contemplated herein (the "Bank
Consent").

         (j)      Amendment of JV Contract. The JV Contract shall have been
amended, in compliance with its terms and all applicable law of the PRC, to
change the number of directors on the Board of Directors of the Company and the
process by which such Directors are appointed and to acknowledge that the
Outstanding Capital Contribution shall be satisfied in full through the payment
of the cash amount as set forth in Section 1.2 (a) hereof and the contribution
of certain assets of Buyer, with such amendment (the "Amendment") to be in form
and substance as set forth in Exhibit A attached hereto and executed by the
Company, Seller and Shanghai Tangsheng.

         SECTION 6.2       CONDITIONS TO OBLIGATIONS OF SELLER. Each and every
obligation of Seller to be performed on the Closing Date shall be subject to
the satisfaction as of or before the Closing Date of the following conditions
(unless waived in writing by Seller):

         (a)      Representations and Warranties. Buyer's representations and
warranties set forth in Article 3 of this Agreement shall be true and correct
in all material respects at and as of the Closing Date as if such
representations and warranties were made as of the Closing Date, except for
changes permitted or contemplated by this Agreement and except to the extent
that any representation or a warranty is made as of a specified date, in which
case such representation or warranty shall be true in all material respects as
of such date.

         (b)      Performance of Agreement. All covenants, conditions and other
obligations under this Agreement which are to be performed or complied with by
Buyer shall have been fully performed and complied with in all material
respects on or prior to the Closing Date, including, without limitation, the
delivery and the fully executed instruments and documents in accordance with
Section 5.3 hereof.

         (c)      No Adverse Proceeding. There shall be no pending claim,
action, litigation or proceeding, judicial or administrative, or governmental
investigation against Buyer, Seller, Parent or the Company, for the purpose of
enjoining or preventing the consummation of this Agreement or otherwise
claiming that this Agreement or the consummation hereof is illegal.


<PAGE>

         (d)      Certificate. Buyer shall have delivered to Seller a
certificate, dated the Closing Date, executed by Buyer's President and
Secretary to the effect that, to the knowledge of such officers, the conditions
set forth in subsections (a), (b) and (c) of this Section 6.2 have been
satisfied.

                                   ARTICLE 7.
                                INDEMNIFICATION

         SECTION 7.1       SURVIVAL OF COVENANTS AND AGREEMENTS. Each of the
covenants and agreements contained in this Agreement and in each of the
documents and instruments referred to herein that is intended by its terms to
be performed in whole or in part subsequent to the Closing Date shall survive
the execution and delivery of this Agreement and the Closing.

         SECTION 7.2       SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as
hereinafter provided, none of the representations and warranties contained
herein shall survive the Closing and from and after the Closing Date no party
hereto or any Affiliate of such party shall have any liability or obligation in
respect thereof. Notwithstanding the foregoing, the representations and
warranties contained in Article 2 and Article 3 hereof shall survive until the
date which is six months from the Closing Date.

         SECTION 7.3       INDEMNIFICATION.

         (a)      Subject to the limitations set forth in this Article 7,
Seller shall indemnify and hold harmless Buyer from and against any and all
losses, liabilities, damages, demands, claims, suits, actions, judgments or
causes of action, assessments, costs and expenses, including, without
limitation, interest, penalties, reasonable attorneys' fees, any and all
reasonable expenses incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation (collectively,
"Damages"), asserted against, resulting to, imposed upon, or incurred or
suffered by Buyer, directly or indirectly, as a result of or arising from any
inaccuracy in or breach of the representations and warranties made in Article 2
of this Agreement (individually an "Indemnifiable Claim" and collectively
"Indemnifiable Claims" when used in the context of Buyer as the Indemnified
Party (as hereinafter defined)).

         (b)      Subject to the limitations set forth in this Article 7, Buyer
shall indemnify and hold harmless Seller from and against any and all Damages
asserted against, resulting to, imposed upon, or incurred or suffered by
Seller, directly or indirectly, as a result of or arising from any inaccuracy
in or breach of any of the representations and warranties made by Buyer in
Section 3.2 of this Agreement (individually an "Indemnifiable Claim" and
collectively "Indemnifiable Claims" when used in the context of Seller as the
Indemnified Party).

         (c)      For purposes of this Article 7, all Damages shall be computed
net of any insurance coverage (from the amount of which coverage there shall be
deducted all costs and expenses, including, without limitation, attorneys'
fees, of the Indemnified Party not reimbursed


<PAGE>

by such coverage) with respect thereto that reduces the Damages that would
otherwise be sustained; provided, however, that in all cases, the timing of the
receipt or realization of insurance proceeds shall be taken into account in
determining the amount of reduction of Damages.

         SECTION 7.4       LIMITATIONS ON INDEMNIFICATION. Rights to
indemnification hereunder are subject to the following limitations:

         (a)      The obligation of indemnity in respect of Article 2 and
Article 3 hereof shall terminate on the date which is six months from the
Closing Date.

         (b)      If, prior to the termination of any obligation to indemnify
as provided for herein, written notice of a claimed breach is given by the
party seeking indemnification, including in detail the basis therefor (the
"Indemnified Party"), to the party from whom indemnification is sought (the
"Indemnifying Party") or a suit or action based upon a claimed breach is
commenced against the Indemnified Party, the Indemnified Party shall not be
precluded from pursuing such claimed breach or suit or action, or from
recovering from the Indemnifying Party (whether through the courts or
otherwise) on the claim, suit or action, by reason of the termination otherwise
provided for above.

         (c)      The right of any party hereto to commence or assert an
action, suit, claim or proceeding for Damages in respect of the breach of a
representation or warranty contained herein shall terminate at the same time
that the obligation of indemnification provided herein with respect to such
breach shall terminate.

         SECTION 7.5       PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO THIRD-
PARTY CLAIMS. The Indemnified Party shall give the Indemnifying Party prompt
written notice of any third party claim, demand, assessment, suit or proceeding
to which the indemnification set forth in Section 7.3 applies, which notice to
be effective must describe such claim in reasonable detail (the
"Indemnification Notice"). Notwithstanding the foregoing, the Indemnified Party
shall not have any obligation to give any notice of any assertion of liability
by a third party unless such assertion is in writing, and the rights of the
Indemnified Party to be indemnified hereunder in respect of any third party
claim shall not be adversely affected by its failure to give notice pursuant to
the foregoing unless and, if so, only to the extent that, the Indemnifying
Party is materially prejudiced thereby. The Indemnifying Party shall have the
right to control the defense or settlement of any such action subject to the
provisions set forth below, but the Indemnified Party may, at its election,
participate in the defense of any action or proceeding at its sole cost and
expense. Notwithstanding the foregoing, if there exists a conflict of interest
that would make it inappropriate for the same counsel to represent both the
Indemnified Party, on the one hand, and the Indemnifying Party, on the other
hand, in connection with any Indemnifiable Claim, then the Indemnified Party
shall be entitled to retain its own counsel as is reasonably satisfactory to
the Indemnifying Party at the Indemnifying Party's expense. In the event that
such Indemnified Party shall seek indemnification as provided herein, such
Indemnified Party shall make available to the Indemnifying Party, at its
expense, all witnesses, pertinent records, materials and information in the
Indemnified Party's possession or


<PAGE>

under the Indemnified Party's control relating thereto as is reasonably
required by the Indemnifying Party. Should the Indemnifying Party fail to
defend any such Indemnifiable Claim (except for failure resulting from the
Indemnified Party's failure to timely give notice of such Indemnifiable claim),
then, in addition to any other remedy, the Indemnified Party may settle or
defend such action or proceeding through counsel of its own choosing and may
recover from the Indemnifying Party the amount of such settlement, demand, or
any judgment or decree and all of its costs and expenses, including reasonable
fees and disbursements of counsel. Except as permitted in the immediately
preceding sentence, the Indemnifying Party shall not be liable for any
settlement effected without its written consent, which consent shall not be
unreasonably withheld; provided, however, if such approval is unreasonably
withheld, the liability of the Indemnifying Party shall be limited to the
amount of the proposed compromise or settlement and the amount of the
Indemnified Party's reasonable counsel fees incurred in defending such claim,
as permitted by the immediately preceding sentence, at the time such consent is
unreasonably withheld. Notwithstanding the immediately preceding sentence, the
right of the Indemnified Party to compromise or settle any claim without the
prior written consent of the Indemnifying Party shall only be available if a
complete release of the Indemnifying Party is contemplated to be part of the
proposed compromise or settlement of such third party claim.

         SECTION 7.6       PROCEDURE FOR INDEMNIFICATION WITH RESPECT TO
NON-THIRD-PARTY CLAIMS. In the event that the Indemnified Party asserts the
existence of an Indemnifiable Claim (but excluding claims resulting from the
assertion of liability by third parties), it shall give prompt written notice
to the Indemnifying Party specifying the nature and amount of the claim
asserted (the "Non-Third Party Claim Indemnification Notice"). If the
Indemnifying Party, within thirty (30) days (or such longer time as may be
necessary for the Indemnifying Party to investigate such Indemnifiable Claim
not to exceed sixty (60) days), after receiving the Non-Third Party Claim
Indemnification Notice from the Indemnified Party, shall not give written
notice to the Indemnified Party announcing its intent to contest such assertion
of the Indemnified Party (the "Contest Notice"), such assertion shall be deemed
accepted and the amount of the claim shall be deemed a valid Indemnifiable
Claim. During the time period set forth in the immediately preceding sentence,
the Indemnified Party shall cooperate fully with the Indemnifying Party in
respect of such Indemnifiable Claim. In the event, however, that the
Indemnifying Party contests the assertion of a claim by giving a Contest Notice
to the Indemnified Party within such period, then if the parties hereto, acting
in good faith, cannot reach agreement with respect to such claim within sixty
(60) days after such notice was first given to the Indemnifying Party, such
parties may seek any remedy available to them at law or in equity.

         SECTION 7.7       PAYMENT. In the event that any party is required to
make any payment under this Article 7, such party shall promptly pay the other
party the amount so determined. If there should be a dispute as to the amount
or manner of determination of any indemnity obligation owed under this Article
7, the paying party shall nevertheless pay when due such portion, if any, of
the obligation as shall not be subject to dispute. The difference, if any,
between the amount of the obligation ultimately determined as properly payable
under this Article 7 and the portion, if any, theretofore paid shall bear
interest as provided below. If all or part of any indemnification obligation
under this Agreement is not paid when due, then the paying party shall pay the
other party interest on the


<PAGE>

unpaid amount of the obligation for each day from the date the amount became
due until payment in full, payable on demand, at the fluctuating rate per annum
which at all times shall be equal to (a) the lowest rate of interest generally
charged from time to time by Silicon Valley Bank and publicly announced by such
bank as its so-called "prime rate" plus (b) five percent (5%).

                                   ARTICLE 8.
                                  TERMINATION

         SECTION 8.1       TERMINATION BY BUYER. This Agreement may be
terminated and cancelled at any time prior to the Closing Date by Buyer upon
written notice to Seller if (a) any of the representations or warranties of
Seller contained herein shall prove to be inaccurate or untrue in any material
respect, or (b) any material obligation, term or condition to be performed,
kept or observed by Seller hereunder has not been performed, kept or observed
in any material respect at or prior to the time specified in this Agreement;
provided, however, that Seller shall have fifteen (15) days after written
notice of such breach specifying in reasonable detail the nature of such breach
is given to Seller by Buyer to cure such breach, and Buyer may not terminate
this Agreement under this Section 8.1 if such breach is curable by Seller
through the exercise of its reasonable efforts within such 15-day period and
for so long as Seller continue to exercise such reasonable efforts.

         SECTION 8.2       TERMINATION BY SELLER. This Agreement may be
terminated and cancelled at any time prior to the Closing Date by Seller upon
written notice to Buyer if (a) any of the representations or warranties of
Buyer contained herein shall prove to be inaccurate or untrue in any material
respect, or (b) any material obligation, term or condition to be performed,
kept or observed by Buyer hereunder (including, without limitation, Buyer's
obligation to purchase the Interest pursuant to Section 1.2 hereof no later
than the latest applicable date determined pursuant to Section 5.1 hereof) has
not been performed, kept or observed in any material respect at or prior to the
time specified in this Agreement; provided, however, that Buyer shall have
fifteen (15) days after written notice of such breach specifying in reasonable
detail the nature of such breach is given to Buyer by Seller to cure such
breach, and Seller may not terminate this Agreement under this Section 8.2 if
such breach is curable by Buyer through the exercise of its reasonable efforts
within such 15-day period and for so long as Buyer continues to exercise such
reasonable efforts; and provided further, however, that the immediately
preceding proviso shall not in any event be deemed to extend the Closing Date
beyond the latest applicable Closing Date determined pursuant to Section 5.1
hereof.

         SECTION 8.3       TERMINATION BY ANY PARTY. Any party hereto shall have
the right to terminate and cancel this Agreement if (a) the Closing Date shall
not have occurred on or before August 31, 2002, provided that such failure of
occurrence shall not have resulted from the delay, default or breach of such
party; or (b) a court of competent jurisdiction shall have issued an order,
decree or ruling permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement, and such order, decree, ruling
or other action shall have become final and nonappealable.


<PAGE>

         SECTION 8.4       TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated and cancelled at any time prior to the Closing Date by mutual
written consent of Buyer and Seller.

         SECTION 8.5       EFFECT OF TERMINATION. Except as provided in the
penultimate and last sentences of this Section 8.5, in the event of termination
of this Agreement by any party hereto as provided in this Article 8, this
Agreement shall forthwith become void and there shall be no further obligation
on the part of any party or their respective officers or directors (except as
set forth in this Section 8.5 and in Sections 4.1, 4.4, 9.5 and 9.10 which
shall survive the termination). Nothing in this Section 8.5 shall relieve any
party from liability for any breach or failure of observance of the provisions
of this Agreement.

         SECTION 8.6       SPECIFIC PERFORMANCE. Seller and Buyer agree that
money damages or other remedy at law would not be a sufficient or adequate
remedy for any breach or violation of, or a default under, this Agreement by
them and that in addition to all other remedies available to Buyer or Seller,
Buyer and Seller shall be entitled to the fullest extent permitted by law to an
injunction restraining such breach, violation or default, threatened breach,
violation or default and to any other equitable relief, including, without
limitation, specific performance.

                                   ARTICLE 9.
                            MISCELLANEOUS PROVISIONS

         SECTION 9.1       NOTICES. All notices and other communications
required or permitted under this Agreement shall be deemed to have been duly
given and made when received if in writing and if served either by personal
delivery to the party for whom intended (which shall include delivery by
Federal Express or similar recognized courier service) or five (5) business
days after being deposited, postage prepaid, certified or registered mail,
return receipt requested, in the United States mail bearing the address shown
in this Agreement for, or such other address as may be designated in writing
hereafter by, such party:

         If to Seller:              NeTrue Communications, Inc.
                                    1450 East 820 North
                                    Orem, Utah 84097
                                    Attention:  Thomas E. Sawyer, Chairman

         with a copy to:            Colleen Fee
                                    Global Light Telecommunications, Inc.

                                    --------------------------------
                                    Vancouver, Canada


<PAGE>

         If to Buyer:               Verso Technologies, Inc.
                                    400 Galleria Parkway
                                    Suite 300
                                    Atlanta, Georgia  30339
                                    Attention:  Chief Financial Officer

         with a copy to:            Rogers & Hardin LLP
                                    2700 International Tower, Peachtree Center
                                    229 Peachtree Street, N.E.
                                    Atlanta, Georgia 30303
                                    Attention:  Robert C. Hussle, Esq.

         SECTION 9.2       ENTIRE AGREEMENT. This Agreement and the documents
referred to herein embody the entire agreement and understanding of the parties
hereto with respect to the subject matter hereof, and supersede all prior and
contemporaneous agreements and understandings, oral or written, relative to
said subject matter.

         SECTION 9.3       BINDING EFFECT; ASSIGNMENT. This Agreement and the
various rights and obligations arising hereunder shall inure to the benefit of
and be binding upon Buyer, Seller and Parent and their respective successors
and permitted assigns. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be transferred or assigned (by operation of law
or otherwise) by either of the parties hereto without the prior written consent
of the other party except that Buyer shall have the right to assign its rights
but not its obligations hereunder to any Affiliate thereof, provided Buyer
shall remain liable for all its obligations hereunder. Any transfer or
assignment of any of the rights, interests or obligations hereunder in
violation of the terms hereof shall be void and of no force or effect.

         SECTION 9.4       CAPTIONS. The Article and Section headings of this
Agreement are inserted for convenience only and shall not constitute a part of
this Agreement in construing or interpreting any provision hereof.

         SECTION 9.5       EXPENSES OF TRANSACTION. Seller shall pay all costs
and expenses incurred by them in connection with this Agreement and the
transactions contemplated hereby. Buyer shall pay all costs and expenses
incurred by it in connection with this Agreement and the transactions
contemplated hereby.

         SECTION 9.6       WAIVER; CONSENT. This Agreement may not be changed,
amended, terminated, augmented, rescinded or discharged (other than by
performance), in whole or in part, except by a writing executed by each of the
parties hereto, and no waiver of any of the provisions or conditions of this
Agreement or any of the rights of a party hereto shall be effective or binding
unless such waiver shall be in writing and signed by the party claimed to have
given or consented thereto. Except to the extent that a party hereto may have
otherwise agreed to in writing, no waiver by that party of any condition of
this Agreement or breach by the other party of any of its obligations,
representations


<PAGE>

or warranties hereunder shall be deemed to be a waiver of any other condition
or subsequent or prior breach of the same or any other obligation or
representation or warranty by such other party, nor shall any forbearance by
the first party to seek a remedy for any noncompliance or breach by such other
party be deemed to be a waiver by the first party of its rights and remedies
with respect to such noncompliance or breach.

         SECTION 9.7       NO THIRD PARTY BENEFICIARIES. Subject to the
provisions of Section 9.3 hereof, nothing herein, expressed or implied, is
intended or shall be construed to confer upon or give to any person, firm,
corporation or legal entity, other than the parties hereto, any rights,
remedies or other benefits under or by reason of the provisions of this
Agreement.

         SECTION 9.8       COUNTERPARTS. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.

         SECTION 9.9       GENDER. Whenever the context requires, words used in
the singular shall be construed to mean or include the plural and vice versa,
and pronouns of any gender shall be deemed to include and designate the
masculine, feminine or neuter gender.

         SECTION 9.10      GOVERNING LAW. This Agreement shall in all respects
be construed in accordance with and governed by the laws of the State of
Georgia, without regard to the principles of conflicts of laws thereof.

         SECTION 9.11      KNOWLEDGE. As used in this Agreement, the term
"knowledge", when used herein with respect to Seller or Buyer, shall mean the
knowledge of each of the executive officers of Seller or Buyer, as the case may
be, after due inquiry, including, without limitation, due inquiry of
independent legal, financial and accounting advisors.

         SECTION 9.12      INCORPORATION OF THE EXHIBIT AND SCHEDULES. The
Exhibit and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.

         SECTION 9.13      COSTS AND ATTORNEYS' FEES. In the event that any
dispute among the parties hereto should result in litigation, the prevailing
party shall have and recover against the other parties, in addition to all
court costs, expert witness fees and other disbursements, such sum as the court
may determine to be a reasonable attorneys' fee, and reasonable fees and costs
incurred in connection with the matter prior to the commencement of such
litigation.

         SECTION 9.14      CERTAIN DEFINITIONS. For purposes of this Agreement,
the following terms shall have the meanings given them below:

         "Affiliate" shall mean, with respect to any Person, any Person which,
directly or indirectly, controls, is controlled by, or is under common control
with, the specified Person and


<PAGE>

any other Person that would be deemed to be an "affiliate" or an "associate" of
such Person, as those terms are defined in Rule 12b-2 of the General Rules and
Regulations of the Securities Exchange Act of 1934, as amended.

         "Person" shall mean any individual, group, corporation, partnership or
other organization or entity.

         "Permitted Liens" shall mean any of the following relating solely to
the Company: (i) the security interests, easements or other encumbrances
described in Section 9.14 of the Disclosure Statement; (ii) liens in connection
with workers' compensation, unemployment insurance or other social security or
equivalent obligations; (iii) deposits, pledges or liens to secure the
performance of bids, tenders, contracts, leases, statutory obligations, surety,
customs, appeal, performance and payment bonds and other obligations of like
nature; (iv) mechanics', workers', carriers', warehousemen's, materialmen's,
landlords' or other like liens with respect to obligations which are not due or
which are being contested in good faith and by appropriate proceedings
diligently conducted; and (v) liens for taxes, assessments, fees or
governmental charges or levies not yet due and payable.

                         [Signatures on following page]


<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day and year first above written.

                                  BUYER:

                                  VERSO TECHNOLOGIES, INC.



                                  By: /s/ Steven A. Odom
                                     ----------------------------------
                                   Name: Steven A. Odom
                                   Title: Chief Executive Officer


                                  SELLER:

                                  NETRUE COMMUNICATIONS, INC.



                                  By: /s/ Thomas E. Sawyer
                                     ----------------------------------
                                   Name: Thomas E. Sawyer
                                   Title: Chairman

</TEXT>
</DOCUMENT>
