STOCK PURCHASE AGREEMENT
This agreement is made between Corporate Finance Company, a Colorado
corporation having its principal executive office at 78153 Calle Norte, La
Quinta, CA 92253, hereinafter called "CFC", James Wang and Lei Li, husband and
wife, hereinafter called the "Shareholder", and Shanghai 3 W Information
Technology Company, Ltd., a Chinese limited partnership, having its principal
executive offices in Shanghai, China, hereinafter called "Company".:
RECITALS
(5) The Shareholder is the owner of record of not less than 80% of the
Company, as a limited partner.
(6) CFC desires to purchase, and the shareholder desires to sell all of
their ownership interest in the Company.
CONSIDERATION
In consideration of the above premises, the mutual promises of the
parties, and subject to the terms and conditions hereinafter set forth, the
parties agree as follows:
TERMS AND CONDITIONS
Section One. Exchange of Business Interests.
Prior to the closing date, as hereinafter fixed, the Shareholder shall
deliver in escrow certificates representing all of interest in the Company,
duly indorsed, in a form to be agreed to by the Company. In exchange therefor,
CFC shall deliver to escrow prior to the closing, one certificate representing
three million shares of CFC's common stock issued pursuant to Section 4(2)
under the Securities Act of 1933, as amended (the "Act"), and restricted
pursuant to Rule 144 promulgated thereunder.
Section Three. Closing.
The closing of the exchange shall take place on or before April 30, 2000,
at 12:00 o'clock p.m., at the escrow holder, subject to change by mutual
agreement of the parties.
Section Four. Warranties and Covenants of Shareholder.
The Shareholder represents, warrants, and covenants as follows:
(1) The Shareholder is the owner of record of 80% of the equity of the
Company.
(2) As of the date hereof Company is a limited partnership formed in
China.
(3) The Company is duly organized and authorized to do business under
the laws of China.
(4) The Shareholder, under the laws of China, is able to transfer and
sale his ownership interest in the Company to CFC.
(5) CFC is able, under the laws of China, own 80% or more of the equity
of the Company.
(6) The Company has the power and authority to carry on its business as
currently conducted, and holds, or is duly licensed under all
patents, trademarks, trade names, the operation of its business as
currently conducted, free and clear of all liens, encumbrances, and
claims of any kind whatsoever.
(7) The balance sheets and income statements of Company dated March 31,
2000, attached hereto as Exhibit A and made a part hereof, fully
and accurately reflect respectively the financial condition of the
corporation
(8) No transactions, have been engaged in by the Company from March 31,
2000 to the date hereof, and there has been no material adverse
change in the financial or operating condition of the Company since
March 31, 2000.
(9) As of the date hereof the Company is not, and as of the closing
date, the Company will not be, in default under any contract or
agreement, or under the order or decree of any court. To the
knowledge of the shareholder there is no actions or proceedings
pending or threatened against the Company as of the date hereof,
and neither the execution and delivery of this agreement nor the
consummation of the transaction herein contemplated will conflict
with, result in the breach of, or accelerate the performance
required by any contract or agreement to which the Company or the
Shareholder is now a party.
(10) The Company is not a party to any contract or agreement, and is not
subject to any other restriction, materially and adversely
affecting its business, property, or assets.
(11) Attached hereto as Exhibit B, and made a part hereof is a complete
list of the assets and properties of the Company as of March 31,
2000. Except as otherwise stated in footnotes to Exhibit B,
Company is in good condition and repair and conforms to all
applicable zoning, building, safety, and other regulations.
(12) Attached hereto as Exhibit C, and made a part hereof, is an
accurate list of all insurance policies in effect with respect to
the business and property of Company as of the date hereof. Such
insurance, or comparable coverage shall be kept in effect until the
closing date.
(13) Attached hereto as Exhibit D and made a part hereof is an accurate
list of every lease to which Company is a party, together with the
terms of each such lease.
(14) Attached hereto as Exhibit E and made a part hereof is an accurate
list of accounts and notes receivable by Company as of the date
hereof. If any accounts or notes receivable listed therein or
acquired by Company before the closing date are not fully paid when
due, the Shareholder shall pay them in full on written notice by
CFC of any default, provided that the liability of the Shareholder
hereunder shall be limited to the amount exceeding the reserve for
bad debts shown on the balance sheet of the Company set forth in
Exhibit A.
Section Five. Interim Operations; Additional Covenants of Shareholder.
The Shareholder represents, warrants, and covenants that the Company will
not enter into any transactions, prior to the closing date, other than in the
ordinary course of business, and that the Shareholder will take such action as
is necessary to insure that the Company will not enter into any such
transactions, and in particular will not, without the prior written consent of
CFC:
(1) Create or incur any indebtedness other than unsecured current
liabilities incurred in the ordinary course of business;
(2) Grant or permit to arise any mortgage, deed of trust, security
interest, lien, or encumbrance of any kind;
(3) Sell or otherwise dispose of any of its assets other than
merchandise inventories sold in the ordinary course of business;
(4) Declare or pay any dividends, or repurchase or redeem any of its
shares, or establish a sinking fund or other reserve for such
purpose;
(5) Issue, sell or grant options for the sale of any of its shares,
whether or not previously authorized or issued;
(6) Expend any funds for capital additions or improvements other than
ordinary expenditures for maintenance, repairs, and replacements;
(7) Acquire an interest in any other business enterprise, whether for
cash or in exchange for stock or other securities of Company;
(8) Increase the compensation paid to any of its officers or directors
above the level paid on the date hereof as set forth in Exhibit E
or agree to pay to any of its officers or employees any bonus,
severance pay, or pension, whether under an existing compensation
or deferred compensation plan, or otherwise.
Section Six. Covenants of Acquiring Corporation as to Stock.
CFC hereby represents, covenants, and warrants as follows:
(1) As of the date of this agreement CFC is authorized to issue, in the
aggregate, 20,000,000 shares of common stock, without par value, of
which approximately 6,500,000 shares are issued and outstanding;
(2) Between the date of this agreement and the closing date, CFC will
not, without the prior written consent of the shareholders,
recapitalize, reclassify, or increase its presently authorized
common stock (or issue additional shares thereof).
Section Seven. Indemnification.
The Shareholder agrees to indemnify CFC against any and all loss, damage,
cost, and expense exceeding Ten Thousand Dollars ($10,000.00) that CFC may
sustain as a result of any inaccurate representation or the breach of any
warranty or covenant made by the Shareholder herein. In the event it is
determined, as hereinafter provided, that CFC is entitled to indemnification
hereunder, indemnification shall firs be effected by redelivery to CFC of
shares of common stock of CFC held in escrow as hereinafter provided, such
shares to be valued as follows: Five Dollars per share. To the extent that the
escrow fund is insufficient to effect indemnification, the Shareholder shall be
liable to indemnify CFC, but only to a proportion of the sum owning equal to
the proportion of the total number of shares of CFC received by him hereunder.
Section Eight. Escrow.
Prior to the closing date, the Shareholder shall deliver to an escrow
agent, to be agreed upon by the parties, hereinafter called escrow agent a
certificate evidencing ownership of an 80% equity interest in the Company duly
indorsed. CFC shall deliver to the escrow agent 3,000,000 shares of its common
stock as described in Section One of this agreement. The escrow shall be
subject to the following terms and conditions:
(1) On the Closing Date, the escrow agent shall deliver the shares of
CFC and Company's ownership interest as set forth and provided in
Section One of this agreement.
(2) All fees and expenses of the escrow agent shall be borne equally by
the parties.
(3) Additional shares received by the Shareholder with respect to
shares held in escrow, as a result of stock dividends and stock
splits shall be delivered to the escrow agent and shall be subject
to the terms of this agreement.
(4) The escrow agent shall hold the undistributed shares deposited
hereunder until May 1, 2001, whereupon he shall release to the
Shareholder the balance of shares remaining in escrow after
adjustment as set forth in Section Seven of this agreement and
payment to CFC of all of its indemnity claims, approved as
hereinafter provided, except that in the event a claim that may
result in indemnification hereunder remains undetermined as of May
30, 2001, as adequate number of shares shall be retained in escrow
to provide for payment of such claim.
(5) In the event of any claim by CFC for indemnification hereunder, CFC
shall give written notice to the Shareholder thereof, and the
parties shall attempt to reach agreement in respect thereto. If
the parties fail to reach agreement within ten days after notice of
a claim has been given, the issue shall be submitted to arbitration
in accordance with the rules and requirements of the American
Arbitration Association then obtaining. The decision of the
arbitrator shall be final and binding on all parties, and
appropriate instructions in conformity therewith shall immediately
be given by the arbitrator to the escrow agent, who is authorized
and directed to rely on such instructions.
(6) The Shareholder shall have the right, at his own expense, to be
represented by counsel of his own choice in connection with the
defense of any claim which may be brought against Company in
respect to which CFC may be entitled to indemnification under this
agreement. In the event of any such claim, CFC shall give prompt
written notice thereof to the Shareholder. If, after having
received such notice, the Shareholder elects not to participate in
the defense of such claim, they shall be bound by the result
obtained by CFC in defense thereof.
Section Nine. Conditions Precedent to Obligations of Acquiring Corporation.
The obligations of CFC hereunder are subject to the following conditions:
(a) There shall be tendered for exchange by the Shareholder at the
closing, certificates representing an 80% equity interest in the
Company in form approved by counsel for CFC.
(b) The Shareholder provide the Exhibits referred to herein in a form
acceptable by the counsel for CFC.
(c) The representations of the Shareholder contained herein shall be
true as of the closing date, and the Shareholder shall execute and
deliver to CFC, a certificate to that effect in form and substance
satisfactory to counsel for CFC.
(d) All directors and officers of Company requested by CFC in writing
to do so at least 10 days prior to the closing date shall have
tendered their resignations effective as of the closing date.
(e) Neither the inventories or operating assets of Company shall have
been substantially damaged or destroyed
(f) The CFC's board of directors has approved this agreement.
Section Ten. Condition Precedent to Obligation of Shareholders; Nontaxability
of Exchange.
The obligation of the Shareholder hereunder to deliver to CFC his equity
interest in the Company is subject to the condition that the CFC Board of
Directors approve this transaction and that the exchange of the business
interest in the Company or shares of CFC common stock under the terms of this
agreement can qualify as a tax-free "reorganization" within the meaning of the
Internal Revenue Code.
Section Eleven. Investment Intent.
The Shareholder represents that the shares of common stock of CFC being
acquired by him under this agreement are being acquired for investment purposes
only, and not with a view to reselling the same or dividing participation
therein with others. Shareholder represents that he has no present intent to
resell or otherwise dispose of all or any part of such shares. That such shares
will not be sold unless registered pursuant to the Securities Act of 1933, as
amended, or exempt therefrom.
Section Twelve. Access to Records.
CFC, and its counsel, accountants, engineers, and other representatives
shall have the right at all times during ordinary business hours to inspect all
of the properties, books, and records of Company, and Shareholder shall
cooperate with and furnish to CFC and its representatives, all such information
and documents with respect to their affairs of Company as CFC or its
representatives may reasonably request.
Section Thirteen. Notices.
All notices required or permitted to be given hereunder shall be deemed
duly given which delivered personally or sent by registered or certified mail,
postage prepaid, properly addressed to the party to receive such notice, at the
addresses specified above.
Section Fourteen. Entire Agreement.
This agreement constitutes the entire agreement between the parties;
there are no agreements, warranties, or representations, express or implied,
except those expressly set forth herein. All agreements, representations, and
warranties contained in this agreement shall apply as of the closing date and
shall survive the closing of this agreement.
Section Fifteen. Modification.
This agreement may not be amended or modified, except by written
agreement of the parties.
Section Sixteen. Binding Effect.
This agreement shall bind and inure to the benefit of the parties and
their heirs, legal representatives, successors, and assigns.
Section Seventeen. Governing Law.
This agreement shall be construed under and governed by the laws of the
State of Colorado.
Section Eighteen. Signature in Counterparts.
The parties may execute separate copies of this agreement as original
counterparts and be bound thereby as though each had executed the same document
in the presents of each other.
In witness where of the parties have executed this agreement this 31 day
of March, 2000.
Corporate Finance Company
By: /S/ Ronald S. Tucker
Ronald S. Tucker, Pres.
Shanghai 3W Information Technology Company, Ltd.
By: /S/ James Wang
James Wang, Partner
/S/ James Wang
James Wang
/S/ Lei Li
Lei Li
Exhibit - A
Shanghai Yazheng Information Technology Company, Ltd.
Suite 615, Zhonhe Building
574 West Xijianwan Road
Shanghai, 2000433, China
Balance Sheet
(March 31, 2000, audited)
ASSETS
Current Assets
Cash $ 57,874
Prepaid items 800
-----------
TOTAL CURRENT ASSETS $ 58,674
Property and Equipment $ 22,126
Intangible Assets $ 1,100,000
-----------
TOTAL ASSETS $ 1,180,866
===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Accounts Payable $ 2,499
-----------
TOTAL LIABILITIES 2,499
-----------
Total Stockholder's Equity 1,178,367
-----------
TOTAL LIABILITIES & STOCKHOLDER'S EQUITY $ 1,180,866
===========
EXHIBIT B
LIST OF ASSETS AND PROPERTY
Cash
Equipment - Computers
EXHIBIT C
INSURANCE POLICIES
NONE
EXHIBIT D
LEASES
NONE
EXHIBIT E
ACCOUNTS RECEIVABLE OR NOTES RECEIVABLE
NONE
