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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: April 18, 2000
(earliest event reported)
HAAS NEUVEUX & COMPANY
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(Exact name of registrant as specified in its charter)
Colorado 33-7945-D 84-1032191
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
94 Rue de Lausanne, CH1202, Geneva, Switzerland
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 011-41-22-9000000
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Former address: 1999 Broadway, Ste. 3250, Denver, Colorado 80209
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(Former name or former address, if changed since last report.)
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ITEM 1. CHANGES IN CONTROL OF THE REGISTRANT
In connection with the acquisition of Beijing Century Milestone S&T
Co., Ltd. ("BCM"), under the Agreement and Plan of Reorganization as set forth
in Item 2, below, Luo Yun was appointed as Chairman, Chief Executive Officer,
and a Director; Xiao Gung was appointed as Secretary, Treasurer and a Director;
Feng Ji Ming was appointed as a Director; and Michael A.J. Harrop remained as a
Director. Mr. Harrop is also acting as President until the next meeting of the
Board of Directors, at which time he will resign from that position.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
AGREEMENT AND PLAN OF REORGANIZATION. On April 26, 2000, the Registrant
executed a Preliminary Plan of Reorganization ("Agreement") with Beijing Century
Milestone S&T Co., Ltd. ("BCM"), and certain Stockholders of BCM pursuant to
which 100% of the issued and outstanding shares of common stock of BCM
(20,000,000 shares), held by the three persons identified below, are to be
exchanged on a one share for one share basis for an aggregate of 20,000,000
shares of restricted common stock of the Registrant. The effective closing date
was April 26, 2000. By virtue of the reorganization, BCM becomes a subsidiary of
the Registrant, and the Registrant will continue to operate through its newly
acquired subsidiary.
The shares due to the Stockholders are to be issued after the effectiveness of a
10 for 1 reverse split of the outstanding shares, which the Company intends to
submit for shareholder approval as soon as practicable.
The following tabulates holdings of common stock of the Registrant by
former stockholders of BCM, giving effect to and as a result of the
reorganization with Elaw.
<TABLE>
<CAPTION>
Owner Shares Owned (1) Percent of Class (2)
- ----- ---------------- --------------------
<S> <C> <C>
Luo Yun 6,666,667 24.3%
Feng Ji Ming 6,666,667 24.3%
Xiao Gang 6,666,666 24.3%
</TABLE>
(1) All Common Shares held by them are "restricted securities" and as such are
subject to limitations on resale. The shares may be resold pursuant to Rule 144
under certain circumstances.
(2) Assumes that there will be 27,405 638 shares of common stock of the
Registrant outstanding immediately after issuance of these shares as required by
the Agreement and Plan of Reorganization, assuming cancellation of other shares
(currently pending) and upon effectiveness of a 10 for 1 reverse split (subject
to shareholder approval).
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DESCRIPTION OF BEIJING CENTURY MILESTONE S&T CO., LTD.
Following is a description of the business of Beijing Century Milestone
S&T Co., Ltd.
COMPANY PROFILE
A. A BRIEF INTRODUCTION
Beijing Century Milestone S&T Co., Ltd. ("BCM") is a high-tech enterprise, which
specializes in multi-media technology, video-processing digitalization,
networking through technological research and production development, along with
application systems integration. The Company has independently designed and
developed the "CenturySight 2000" system, which is a state-of-the-art
multi-media remote video monitoring system. This system employs our unique video
compression technology, which enables the transmission of real-time images of
25-frame QCIF (176X144) per second through a standard, copper telephone line.
The system is a comprehensive combination of various functions including video
monitoring, alarm processing, image transmission, remote video monitoring and
network monitoring, etc. which the Company owns as intellectual property. In the
near future BCM will launch a hard disc video recorder and multi-channel digital
video recording system products, which also utilize BMC's video processing
technology. The following lists the annual sales turnover (unaudited) of our
self-owned products:
<TABLE>
<S> <C>
o AL Alarm Network System RMB 1 million/year
o AL Series Alarm Control Host RMB 8 million/year
o CenturySight 2000 Video Transmission System RMB 5 million/year
o Matrix Host, Decoder Series RMB 2 million/year
</TABLE>
The Company is the largest distributor of Video Monitoring and CCTV equipment in
China with over 400 representative sales agents and representative offices in
the largest cities in China including Guangzhou, Shanghai, Shenzhen and
Changsha, etc. Our distributors handle the products under the Company's agency
as follows:
1) 70% of Japan SANYO CCTV's market in China
2) 50% of Japan Seiko Camera Lens's market in China
3) 50% of U.S DS Safety & Defense Equipment market in China
Our Company independently designs and develops alarm system products and decoder
system products. The AL series computer networking alarm products manufactured
by our Company were awarded the Certificate of National Industrial Product
Manufacture in 1995 issued by the Chinese Ministry of Public Security.
Currently, almost 200 alarm center networks have been established in dozens of
provinces in China (including Guangdong, Guangxi, Fujian, Sichuan, Yunnan,
Zhejiang, Jiangxi, Shandong, Hunan, Hubei, Henan, Shanxi, Shanxi etc), which
cover up to over 40,000 direct users across China.
Projected revenues for this year (2000) are 60 million RMB (Approximately 7
million USD).
Since its foundation, BCM has specialized in video processing. The Company's
research, development and marketing of video compression has been the primary
goal, along with its
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related research in monitoring technology and other related fields. The Company
has conducted long-term research and thus gained experience in the core
technology of multi-media processing, foremost in the video compression
algorithm. At this time, the Company's algorithm performance has measured up to
all world-class standards. The Company has independently designed and developed
the "CenturySight 2000" system, which is a state-of-the-art multi-media remote
video monitoring system. This system employs our unique video compression
technology, which enables the transmission of real-time images of 25-frame QCIF
(176X144) per second through a standard, copper telephone line. The system is a
comprehensive combination of various functions including video monitoring, alarm
processing, image transmission, remote video monitoring and network monitoring,
etc. which the Company owns as intellectual property. In the near future BCM
will launch a hard disc video recorder and multi-channel digital video recording
system products, which also utilize BMC's video processing technology.
Continuous research on the BMC algorithm is a continuous process to stay ahead
of competitors. The Company is making efforts to apply this technology to
various network-centered fields, including such application products as network
video telephone, online video on demand and videoconferencing systems. The
Company will transform its advanced algorithm and related technologies into
developed products and application systems in the corresponding fields, and
anticipates occupying a substantial market share in industries utilizing
compression technology.
On a pilot basis "CenturySight" multi-media monitoring series products have
already been widely used in various fields including finance, post,
tele-communications, hotels, restaurants, roads and bridge management.
"CenturySight" has received a wide range of recognition and favorable reviews
from customers. With the forthcoming launch of hard disc video recorder
products, a new "Century" is going to be created for the field of video recorder
and video recording system digitalization and networking technology.
Currently, the Company has approximately 70 employees located in Beijing and its
branch offices. At present, the Company possesses a wide spread marketing
network across the country and a high-caliber team of R&D technicians and
engineers.
B. CORPORATE MANAGEMENT
1. MANAGEMENT TEAM
BCM has assembled a high-caliber management staff, which has direct technical
skills and experience in corporate management, technological orientation,
product development, market penetration and marketing management.
LUO YUN: General Manager, 36, Master's Degree, graduated from the Software
Institute, Academia of China. He acted as the General Manager of Beijing Orient
LegendMaker Software Development Co., Ltd. He has experience in corporate
capital movement, technical and product orientation, corporate internal
management and finance management, among others.
FENG JI MING, Chief Engineer, 33, Doctor's Degree, graduated from the Software
Institute, Academia of China. He acted as the Chief Engineer in Beijing Orient
LegendMaker Software Development Co., Ltd.
XIAO GANG, Deputy General Manager, 34, graduated from China North Technical
University as a major in Instrument and Apparatus Science. He was the General
Manager of Guangzhou
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Mainline Technology Development Co., Ltd, which is one of the largest companies
in the monitoring industry in China today.
BAI XIAO DI, Deputy General Manager, 46, graduated from the Department of
Automation Science under TsingHua University. He is qualified as a State-level
expert and enjoys special allowances from the State. He acted as the General
Manager of Beijing Changtong Feihua Information Technology Co., Ltd.
YI YANG, Manager of Development Department, Senior Engineer, graduated from the
Department of Computer Science, Zhejiang University. He is regarded as an expert
in UNIX operating systems and IC card operating systems in China.
LIU DAN, Regional Sales Manager, MBA, Bachelor's Degree of Computer Science,
graduated from Zhongnan Technical University.
Our Company has adopted the modern enterprise management method and operates on
the General Manager Responsibility System under the leadership of the Board of
Directors.
C. PRODUCT DEVELOPMENT
The technological focus of our Company is in the digitalization and networking
of video (multi-media) technology. Our goal is to realize the full potential of
video processing & transmission and its relevant applications under the current
communication facilities conditions (at present, the lowest-price application is
the copper wire telephone network, secondly is the ISDN/DDN special line).
Through research into and adaptation of the latest technologies, our Company is
developing application products and then entering the market rapidly via our
existing marketing group. This strategy allows the Company to distinguish itself
from our competitors as a company with advantages in three primary aspects
including technology, product and market share.
The products developed, under development and to be developed by our Company
include:
o Video transmission software;
o Single channel hard disc video recorder, 4-channel hard disc video
recorder;
o Video transmitter;
o Network video telephone;
o Online video on demand;
o Videoconference systems.
1. VIDEO TRANSMISSION SOFTWARE:
Our Company has independently designed and developed the "CenturySight 2000"
system, which is a state-of-the-art multi-media remote video monitoring system.
This system employs our unique video compression technology, which enables the
transmission of real-time images of 25-frame QCIF (176X144) per second through a
regular, copper telephone line. The system is a comprehensive combination of
various functions including video monitoring, alarm processing, image
transmission, remote video monitoring and network monitoring etc. The system
represents the development trend of future monitoring products. The CenturySight
2000 system has been widely applied in such fields as finance, post and
telecommunications, road transportation, etc.
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2. HARD DISC VIDEO RECORDER (DIGITAL VIDEO RECORDER)
Although the traditional analog video recorder has been widely used in the
monitoring industry, with the rapid development of modern technology (especially
the development of video processing technology and network applications), it has
the following obvious drawbacks:
o One reel of magnetic tape in the analog video recorder can only record
for a few hours; even at the expense of sacrificing image quality and
image size, it can only record for up to 8 hours.
o Its recall function can only be conducted "Forward" & "Backward"; i.e.
it is not able to support other ways of recall, such as by time or by
other factors.
o Large space is occupied for storage, causing inconvenience for
management.
o It is hard to accomplish remote transmission & monitoring, and even if
realized, incurs an extremely high cost.
With the advent of a digitized information society, and with the rapid
development of networks and communications technology, the development of
digitalization and networking of video information is inescapable. Only through
the digitalization of video information can computer processing be conducted;
further, only through digitalization can video information networking and remote
transmission be realized. It is inevitable that the hard disc video recorder
(digital video recorder) will replace the traditional analog one, as a result of
scientific and technological development. In the following years to come, the
digital video recorder is bound to dominate the video recorder market. For this
reason, our Company has taken such a prime opportunity to launch the digital
video recorder, and expects huge opportunities and a considerable market share
in this field.
3. VIDEO TRANSMITTER CASE
The video transmission software is divided into two parts: the front end for
capturing, compression and transmission and the rear end for receiving,
management and control. In the regular application case, the rear end acts as
the control center to control and manage a number of front ends. We have
designed the capturing & compression parts of the front end in the video
transmission system into a hardware case, which can be used directly by
engineering contractors. It is not necessary to manage the machine and the
system, start-up can be automatic, as only the power supply needs to be
connected and it is able to resist various harsh environments. As a result, it
not only benefits the engineering contractors in their installation and
maintenance work, but also greatly facilitates customers' operation process.
What's more, it also reduces costs in the case of large-scale applications.
4. NETWORK VIDEO TELEPHONE
Design Objective:
o To realize the video telephone in network environment and Internet;
o To employ the Company's unique video compression technology, so as to
ensure the superiority of technical performance;
o To measure up to the H.324 standard set by the World Telecom
Federation;
o To ensure the real-time effect of voice;
o To focus efforts on image compression in order to realize real-time
transmission and the fastest transmission speed of 25 frames/second;
o To support format options CIF, QCIF and SQCIF;
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o To support and cater to the needs of such industries as electricity
supply sectors, and current customers such as China Industrial &
Commercial Bank and similar major accounts who possess nation-wide
WANs.
o Also to support and cater to the needs of individual and household
users on the Internet.
5. ONLINE VIDEO ON DEMAND:
Design Objective:
o To realize video on demand on LAN, WAN and Internet at the same time;
o To focus efforts on video compression (it is possible to directly use
the Company's unique compression technology in order to enhance the
video compression ratio greatly);
o At the moment, two companies (Realplay and Microsoft) have already
realized such a technology; however, both of them supply
unsatisfactory image quality at a low speed, which makes large-scale
application and extension hardly possible. Instead, our unique video
compression technology distinguishes itself as an optimal solution,
because it is able to improve the image quality and enhance the
transmission speed by many times;
o To be applied in the network film & TV programme playing, video on
demand via network, video reformation on Internet website, and online
video processing;
o To realize online education and network classes;
o Further developments may be to realize the radio, film and TV systems
all in Internet, by which to completely realize the visualization and
humanization of Internet.
6. VIDEO CONFERENCE SYSTEM
Design Objective:
o To get realized on LAN, WAN and Internet;
o To realize the synchronous transmission of voice;
o To realize real-time transmission of 640X480 images;
o Other details are subject to be determined.
D. MARKETING NETWORK
Beijing Century Milestone S&T Co., Ltd. possesses a marketing staff, which has
gained years of experience in both market research and marketing aspects. The
current sales team was developed from the original Guangzhou Mainline Technology
Development Co., Ltd. Thanks to their efforts the Company was the largest agent
Company for Japan SANYO CCTV appliances in China early in 1993, and later in
1996 was further named as the authorized agent in China for the American DS
safety and defense equipment. Also in 1996, Japan Seiko Company, the largest
manufacturer worldwide of CCTV camera lens authorized our Company as its Chinese
agent Company. After several years of unremitting efforts, Beijing Century
Milestone S&T Co., Ltd. has become the largest supplier in China of CCTV (the
largest television station in China) equipment.
The following lists the annual sales turnover (unaudited) of our self-owned
products:
<TABLE>
<S> <C>
o AL Alarm Network System RMB 1 million/year
o AL Series Alarm Control Host RMB 8 million/year
o CenturySight 2000 Video Transmission System RMB 5 million/year
o Matrix Host, Decoder Series RMB 2 million/year
</TABLE>
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Our Company independently designs and develops alarm system products and decoder
system products. The AL series computer networking alarm products manufactured
by our Company was awarded the Certificate of National Industrial Product
Manufacture in 1995 issued by the Chinese Ministry of Public Security. So far,
almost 200 alarm center networks have been established in dozens of provinces in
China (including Guangdong, Guangxi, Fujian, Sichuan, Yunnan, Zhejiang, Jiangxi,
Shandong, Hunan, Hubei, Henan, Shanxi, Shanxi etc), which cover up to over
40,000 direct users across China.
Our distributors handle the products under the Company's agency as follows:
<TABLE>
<S> <C>
1) 70% of Japan SANYO CCTV's market in China RMB 50 million/yearly turnover
2) 50% of Japan Seiko Camera Lens's market in China RMB 12 million/yearly turnover
3) 50% of U.S DS Safety & Defense Equipment market in China RMB 8 million/yearly turnover
</TABLE>
Beijing Century Milestone S&T Co., Ltd. has over 400 distributors and
contractors across China, which can be regarded as the largest and the
fastest-operating marketing network in the CCTV industry in today's China.
Each product manufactured by Beijing Century Milestone S&T Co., Ltd. possesses
the advantages in both aspects of technical superiority and marketing
penetration.
Beijing Century Milestone S&T Co., Ltd. is the largest supplier of CCTV
equipment in China.
RESEARCH AND DEVELOPMENT
The Development Department under Beijing Century Milestone S&T Co., Ltd are
young technical development professionals. The experienced professionals who
have specialized in technical development and research conduct all the research
work on key products and core technology. More than 50% of these professionals
possess Master's Degree and 28% of them have gained Doctorate Degrees and/or
Professor qualifications.
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ITEM 5. OTHER EVENTS
Litigation Settled. The Company has settled its lawsuit against Productos
Forestales de Bolivar, CA ("PFB"), Richard Smith, Norman Piatti and David Bovi,
which was filed on July 28, 1999. Pursuant to a settlement agreement dated April
18, 2000, all parties released each other from all claims relating the lawsuit.
The Company disclaimed any interest in PFB. The defendants acknowledged that
Michael Harrop is the President and sole director of the Company as of the
settlement date and that Richard Smith was not an officer, director. In
connection with the settlement, the Company authorized the sale of the
78,796,000 of the 78,996,000 shares of common stock previously issued to Richard
Smith (i.e., all but 200,000 shares) to several third parties. One of the
Third-party purchasers was Harrop Lees Brown & Co., of which Micheal Harrop is
an affiliate.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired. The required financial
statements will be provided as an amendment to this Form 8-K as soon as
practicable but not later than 60 days after the due date of this report.
(b) Pro Forma Financial Information The required pro forma financial
information will be provided as an amendment to this Form 8-K as soon as
practicable but not later than 60 days after the due date of this report.
(c) Exhibits. The following exhibits are furnished in accordance with
the provisions of Item 601 of Regulation S-B.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
2.1 Preliminary Plan of Reorganization between the
Company and Beijing Century Milestone S&T Co., Ltd.,
dated March 6, 2000 (Filed herewith.)
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HAAS NEUVEUX & COMPANY
By: /s/ Michael J. Harrop
---------------------------------
Michael J. Harrop, President
Date: May 5, 2000
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
2.1 Preliminary Plan of Reorganization between the
Company and Beijing Century Milestone S&T Co., Ltd.,
dated March 6, 2000 (Filed herewith.)
</TABLE>
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PRELIMINARY PLAN OF REORGANIZATION
THIS AGREEMENT is effective the 6th day of March, 2000, and is made by and among
Haas Neuveux & Company, a corporation organized under the laws of the State of
Colorado, United States of America, hereinafter called "HANX", and Beijing
Century Milestone S&T Co., Ltd., a company organized under the laws of the
Peoples Republic of China and with a share capital of 5,000,000 yuan,
hereinafter called "CMST", Luo Yun, Feng Ji Ming, and Xiao Gang hereinafter
called "SHAREHOLDERS", and Harrop, Lees, Brown & Co. represented by Michael A.J.
Harrop., hereinafter called "HLB".
RECITALS:
WHEREAS, HANX desires to acquire 100% of the issued and outstanding
shares of the common stock of CMST, in exchange for 20,000,000 authorized but
unissued shares of the $.001 par value common stock of HANX and the payment of
US$602,409, pursuant to a plan of reorganization; and
WHEREAS, SHAREHOLDERS, whose consent is evidenced in Exhibit 1.02
desire to exchange 100% of the issued and outstanding shares of the common stock
of CMST (the "CMST Shares"), currently owned by SHAREHOLDERS, in exchange for
said 20,000,000 shares of HANX (the "HANX Shares") and the payment of US$
602,409.
WHEREAS, Harrop, Lees, Brown & Co. has agreed to arrange financing in
the amount of US$ 6,000,000 for HANX within ten (10) days of HANX filing the
Amended Form 8-K reflecting the audited consolidated financials as prepared by
BDO International and complying with all Form 10 filing requirements.
NOW THEREFORE, in consideration of the mutual promises, covenants and
representations contained herein, and to consummate the foregoing plan of
reorganization, the parties hereby adopt said plan of organization and agree as
follows:
ARTICLE I
PAYMENT AND EXCHANGE OF SECURITIES
1.01 ISSUANCE OF HANX SHARES. Subject to all of the terms and
conditions of this Agreement, HANX agrees to issue to SHAREHOLDERS as
individuals 20,000,000 fully paid and nonassessable unregistered shares of
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HANX common stock and the payment of US$ 602,409 in exchange for 100% of the
outstanding CMST common stock, all of which is currently owned by SHAREHOLDERS.
1.02 TRANSFER OF CMST SHARES. In exchange for HANX's stock being issued
to SHAREHOLDERS and payment of US$ 602,409 as above described, SHAREHOLDERS
shall deliver to HANX 100% of the outstanding common stock of CMST.
ARTICLE II
REPRESENTATIONS, AGREEMENTS AND WARRANTIES OF
SHAREHOLDERS AND CMST AS OF MARCH 6, 2000
2.01 ORGANIZATION. CMST is a corporation duly organized, validly
existing, and in good standing under the laws of China, has all necessary
corporate powers to own its properties and to carry on its business as now owned
and operated by it, is duly qualified to do business and is in good standings in
any jurisdiction its business requires qualification.
2.02 CAPITAL. The CMST Shares consist of 100% of the shares of common
stock, of Beijing Century Milestone S&T Co., Ltd. currently issued and
outstanding. All of the issued and outstanding shares are validly issued, fully
paid and nonassessable.
2.03 SUBSIDIARIES. CMST does not have any subsidiaries excepting those
subsidiaries as described in Exhibit 2.03 to this Agreement.
2.04 DIRECTORS AND OFFICERS. Exhibit 2.04 to this Agreement contains
the names and titles of all directors and officers of CMST as of the date of
this Agreement.
2.05 FINANCIAL STATEMENTS. Exhibit 2.05 to this Agreement includes the
unaudited pro forma financial statements of CMST as of December 31st, 1999.
2.06 ABSENCE OF CHANGES. Since the date of CMST's most recent financial
statements included in Exhibit 2.05 there have been no changes in its financial
condition or operations, except for changes in the ordinary course of business.
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2.07 ABSENCE OF UNDISCLOSED LIABILITIES. As of the date of CMST's most
recent balance sheet included in Exhibit 2.05 it did not have any material debt,
liability or obligation of any nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, as required by GAAP or other
appropriate standards, that is not reflected in such balance sheet.
2.08 TAX RETURNS. Within the times and in the manner prescribed by law,
CMST has filed all federal, state and local tax returns required by law, has
paid all taxes, assessments and penalties due and payable and has made adequate
provision on its most recent balance sheet for any unpaid taxes. There are no
present disputes as to taxes of any nature payable by CMST.
2.09 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner
reducing or otherwise mitigating the representations contained herein, HANX
and/or its attorneys shall have the opportunity to meet with accountants and
attorneys to discuss the financial condition of CMST. CMST shall make available
to HANX and/or its attorneys all books and records of CMST. If the transaction
contemplated hereby is not completed, all documents received by HANX and/or its
attorneys shall be returned to CMST and all information so received shall be
treated as confidential.
2.10 PATENTS TRADE NAMES AND RIGHTS. CMST owns or holds all necessary
patents, trademarks, service marks, trade names, copyrights and other rights
necessary to the conduct or proposed conduct of its business.
2.11 COMPLIANCE WITH LAWS. As of March 6, 2000, CMST has complied with,
and is not in violation of, applicable federal, state or local statutes, laws
and regulations affecting its properties or the operation of its business.
2.12 LITIGATION. CMST is not a party to, nor to the best of its
knowledge is there pending or threatened, any suit, action, arbitration or
legal, administrative or other proceeding, or governmental investigation
concerning its business, assets or financial condition. CMST is not in default
with respect to any order, writ, injunction or decree of any federal, state,
local or foreign court or agency, nor is it engaged in any lawsuits to recover
monies due to it.
2.13 AUTHORITY. The Board of Directors of CMST authorized the execution
of this Agreement and the consummation of the transactions contemplated herein
and has full power and authority to execute, deliver and perform this agreement.
2.14 ABILITY TO CARRY OUT OBLIGATIONS. The execution and delivery of
this Agreement by CMST and the performance of its obligations hereunder in the
time and manner contemplated will not cause, constitute or conflict with or
result in (i) any breach of the provisions of any license, indenture, mortgage,
charter, instrument, certificate of incorporation, bylaw or other agreement or
instrument to
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which it is a party or by which it may be bound, nor will any consents or
authorizations of any party other than those hereto be required, (ii) an event
that would permit any party to any agreement or instrument to terminate it or to
accelerate the maturity of any indebtedness or other obligation, or (iii) an
event that would result in the creation or imposition of any lien, charge or
encumbrance on any asset.
2.15 FULL DISCLOSURE. None of the representations and warranties made
by SHAREHOLDERS or CMST herein or in any exhibit, certificate or memorandum
furnished or to be furnished by SHAREHOLDERS or CMST, or on either's behalf,
contains or will contain any untrue statement of material fact, or omits any
material fact, the omission of which would be misleading.
2.16 ASSETS. CMST has good and marketable title to all of its property
free and clear of any and all liens, claims or encumbrances except as may be
indicated in Exhibit 2.05.
2.17 INDEMNIFICATION. SHAREHOLDERS and CMST agree to defend and hold
HANX and its officers and directors harmless against and in respect of any and
all claims, demands, losses, costs, expenses, obligations, liabilities or
damages, including interest, penalties and reasonable attorney's fees, that it
shall incur or suffer, which arise out of, result from or relate to any breach
of this Agreement or failure by SHAREHOLDERS or CMST to perform with respect to
any of its representations, warranties or covenants contained in this Agreement
or in any exhibit or other instrument furnished or to be furnished under this
Agreement.
2.18 AUTHORITY TO EXCHANGE. As of the date of this Agreement,
SHAREHOLDERS holds 100% of the shares of CMST common stock. Such shares are
owned of record and beneficially by SHARE-HOLDERS and such shares are not
subject to any lien, encumbrance or pledge. SHAREHOLDERS hold authority to
exchange such shares pursuant to this Agreement.
2.19 INVESTMENT INTENT. SHAREHOLDERS understands and acknowledges that
the shares of HANX common stock offered for exchange or sale pursuant to this
Agreement are being offered in reliance upon the exemption from registration
requirements of the Securities Act of 1993, as amended (the "Act"), pursuant to
Section 4(2) of the Act and the rules and regulations promulgated thereunder,
for nonpublic offerings and makes the following representations, agreements and
warranties with the intent that the same may be relied upon in determining the
suitability of SHAREHOLDERS as a purchaser of HANX common stock:
(a) The shares of HANX common stock are being acquired solely for the
account of SHAREHOLDERS for investment purposes only, and not with a view to, or
for sale in connection with, any distribution thereof, and with no present
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intention of distributing or reselling any part of the HANX common stock
acquired;
(b) SHAREHOLDERS agrees not to dispose of its HANX common stock or any
portion thereof unless and until counsel for HANX shall have determined that the
intended disposition is permissible and does not violate the Act or any
applicable Federal or state securities laws, or the rules and regulations
thereunder.
(c) SHAREHOLDERS agrees that the certificates evidencing the HANX
common stock acquired pursuant to this Agreement will have a legend placed
thereon stating that they have not been registered under the Act or any state
securities laws and setting forth or referring to the restrictions on
transferability and sale of the HANX common stock, and that stop transfer
instructions shall be placed with the transfer agent for said certificate.
(d) SHAREHOLDERS acknowledges that HANX has made all records and
documentation pertaining to HANX common stock available to them and to their
qualified representatives, if any, and has offered such person or persons an
opportunity to ask questions and further discuss the proposed acquisitions of
HANX common stock, and any available information pertaining thereto, with the
officers and directors of HANX, and that all such questions and information
requested have been answered by HANX and its officers and directors to
SHAREHOLDERS' satisfaction.
(e) SHAREHOLDERS has carefully evaluated its financial resources and
investment position and the risks associated with this transaction and is able
to bear the economic risks of this transaction; and it has substantial knowledge
and experience in financial, business and investment matters and is qualified as
a sophisticated investor, and is capable of evaluating the merits and risks of
this transaction; and desires to acquire the HANX common stock on the terms and
conditions set forth;
(f) SHAREHOLDERS is able to bear the economic risk of an investment in
the HANX common stock; and
(g) SHAREHOLDERS understands that an investment in the HANX common
stock is illiquid and SHAREHOLDERS has no need for liquidity in this investment.
2.20 RECEIPT OF RELEVANT INFORMATION. SHAREHOLDERS and CMST have
received from HANX all financial and other information concerning HANX and its
promoters, officers and directors, including, but not limited to Annual Report
on Form 10-K for the year ended September 30, 1999, Forms 10-Q for the quarters
ended March 30th 1999, June 30th 1999, and December 31st 1998,
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<PAGE> 6
as filed with the Securities and Exchange Commission, and all other documents
and information they have requested.
2.21 PUBLIC "SHELL" CORPORATION. CMST and SHAREHOLDERS are aware that
HANX has public shareholders and is a "shell" corporation without significant
assets or liabilities, further that public companies are subject to extensive
and complex state, federal and other regulations. Among other requirements,
SHAREHOLDERS and CMST are aware that a form 8-K must be filed with the United
States Securities and Exchange Commission within fifteen days after closing,
which filing requires that audited financial statements be filed within sixty
days after the filing of the 8-K, and they agree that such filings shall be the
responsibility of the officers and directors of HANX. SHAREHOLDERS and CMST are
aware of the legal requirements and obligations of public companies, understand
that regulatory efforts regarding public shell transactions similar to the
transaction contemplated herein has been and is currently being exerted by some
states, the U.S. Securities and Exchanges Commission and the National
Association of Securities Dealers, Inc. (NASD), and are fully aware of their
responsibilities, following closing, to fully comply will all securities laws
and regulations, and agree to do so.
2.22 NO ASSURANCES OR WARRANTIES. SHAREHOLDERS and CMST acknowledge
that there can be no assurance regarding the tax consequences of this
transaction, nor can there be any assurance that the Internal Revenue Code or
the regulations promulgated thereunder will not be amended in such manner as to
deprive them of any tax benefit that might otherwise be received. SHAREHOLDERS
and CMST are relying upon the advice of their own tax advisors with respect to
the tax aspects of this transaction. No representations or warranties have been
made by HANX or its officers, directors, affiliates or agents, as to the
benefits to be derived by SHAREHOLDERS or CMST in completing this transaction,
nor have any of them made any warranty or agreement, expressed of implied, as to
the tax or securities consequences of the transactions contemplated by this
Agreement or the tax or securities consequences of any action pursuant to or
growing out of this Agreement.
ARTICLE III
REPRESENTATIONS, AGREEMENTS AND WARRANTIES OF HANX
AS OF MARCH 6, 2000
HANX REPRESENTS, AGREES AND WARRANTS THAT:
3.01 ORGANIZATION. HANX is a corporation duly organized, validly
existing, and in good standing under the laws of Colorado, has all necessary
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corporate powers to own properties and carry on its business as now owned and
operated by it, is duly qualified to do business and is in good standing in each
of the jurisdictions where its business requires qualification.
3.02 CAPITAL. The authorized capital stock of HANX consists of
100,000,000 shares of $.001 par value common stock of which 10,000,000 shares
will be issued and outstanding and the remaining 90,000,000 authorized shares
will not have been issued prior to the Closing (as defined in Section 5 herein).
All of the issued and outstanding shares are validly issued, fully paid and
nonassessable. All currently outstanding shares of HANX Common Stock have been
issued in compliance with applicable federal and state securities laws.
Subsequent to the closing of this transaction no present shareholder
beneficially holds 5% or more of HANX Common Stock except Michael A.J. Harrop, a
current director.
3.03 SUBSIDIARIES. HANX has no subsidiaries and does not own any
interest in any other enterprise, whether not such enterprise is a corporation.
3.04 DIRECTORS AND OFFICERS. Exhibit 3.04 to this Agreement contains
the names and titles of all officers and directors of HANX as of the date of
this Agreement.
3.05 FINANCIAL STATEMENTS. Exhibit 3.05 to this Agreement includes
HANX's financial statements as of September 30th 1999. The financial statements
have been prepared in accordance with generally accepted accounting principles
and practices consistently followed throughout the period indicated and fairly
present the financial position of HANX as of the dates of the balance sheets
included in the financial statements and the results of operations for the
periods indicated.
3.06 ABSENCE OF CHANGES. Since the date of HANX's most recent financial
statements, Form 10-K for the year ended September 30th 1999, there has not been
any change in its financial condition or operations except for changes in the
ordinary course of business.
3.07 ABSENCE OF UNDISCLOSED LIABILITIES. As of the date of HANX's most
recent balance sheet, included in Exhibit 3.05, it did not have any material
debt, liability or obligation of any nature, whether accrued, absolute,
contingent or otherwise, and whether due or to become due, that is not reflected
in such balance sheet.
3.08 TAX RETURNS. Within the times and in the manner prescribed by law,
HANX has filed all federal, state or local tax returns required by law, has paid
all taxes, assessments and penalties due and payable and has made adequate
provision on its most recent balance sheet for any unpaid taxes. There are no
present disputes as to taxes of any nature payable by HANX.
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<PAGE> 8
3.09 INVESTIGATION OF FINANCIAL CONDITION. Without in any manner
reducing or otherwise mitigating the representations contained herein, CMST and
SHAREHOLDERS shall have the opportunity to meet with HANX's accountants and
attorneys to discuss the financial condition of HANX. HANX shall make available
to CMST and SHAREHOLDERS all books and records of HANX.
3.10 PATENTS, TRADE NAMES AND RIGHTS. HANX does not use any patents,
trade marks, service marks, trade names or copyrights in its business.
3.11 COMPLIANCE WITH LAWS. HANX has complied with, and is not in
violation of, applicable federal, state or local statues, laws and regulations
affecting its properties, securities or the operation of its business.
3.12 LITIGATION. HANX is not a party to, nor to the best of its
knowledge is there pending or threatened, any suit, action, arbitration or
legal, administrative or other proceedings, or governmental investigation
concerning its business, assets or financial condition. HANX is not in default
with respect to any order, writ, injunction or decree of any federal, state
local or foreign court or agency, nor is it engaged in, nor does it anticipate
it will be necessary to engage in, any lawsuits to recover money or real or
personal property.
3.13 AUTHORITY. The Board of Directors of HANX has authorized the
execution of this Agreement and the transactions contemplated herein (exhibit
5.01c), and it has full power and authority to execute, deliver and perform this
Agreement. A Majority Consent of HANX shareholders has been obtained in approval
of this Agreement (exhibit 3.13).
3.14 ABILITY TO CARRY OUT OBLIGATIONS. The execution and delivery of
this Agreement by HANX and the performance of its obligations hereunder will not
cause, constitute, conflict with or result in (i) any breach of the provisions
of any license, indenture, mortgage, charter, instrument, certificate of
incorporation, bylaw or other agreement or instrument to which it is a party or
by which it may be bound, nor will any consents or authorizations of any party
other than those hereto be required, (ii) an event that would permit any party
to any agreement or instrument to terminate it or to accelerate the maturity of
any indebtedness or other obligation, or (iii) an event that would result in a
creation or imposition of any lien, charge or encumbrance on any asset.
3.15 FULL DISCLOSURE. None of the representations and warranties made
by HANX herein, or in any exhibit, certificate of memorandum furnished or to be
furnished by it or on its behalf, contains or will contain any untrue statement
of a material fact, or omits any material fact the omission of which would be
misleading.
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<PAGE> 9
3.16 ASSETS. HANX has good and marketable title to all of its property
free and clear of any and all liens, claims and encumbrances, except as may be
indicated in Exhibit 3.05.
3.17 INDEMNIFICATION. HANX agrees to indemnify, defend and hold
harmless CMST against and in respect to any and all claims, demands, losses,
cost, expenses, obligations, liabilities or damages, including interest,
penalties and reasonable attorney's fees, incurred or suffered, which arise out
of, result from or relate to any breach of, or failure by HANX to perform, any
of its representations, warranties or covenants in this Agreement or in any
exhibit or other instrument furnished or to be furnished under this Agreement.
3.18 VALIDITY OF HANX SHARES. The shares of HANX $.001 par value common
stock to be issued pursuant to this Agreement will be duly authorized, validly
issued, fully paid and nonassessable under Nevada law.
3.19 NO ASSURANCES OR WARRANTIES. HANX acknowledges that there can be
no assurance regarding the tax consequences of this transaction, nor can there
be any assurance that the Internal Revenue Code or the regulations promulgated
thereunder will not be amended in such manner as to deprive it of any tax
benefit that might otherwise be received. HANX is relying upon the advice of its
own tax advisors with respect to the tax aspects of this transaction. No
representations or warranties have been made by SHAREHOLDERS or CMST or their
officers, directors, affiliates or agents, as to the benefits to be derived by
HANX in completing this transaction, nor have any of them made any warranty or
agreement, expressed or implied, as to the tax or securities consequences of the
transactions contemplated by this Agreement or the tax or securities
consequences of any action pursuant to or growing out of this Agreement.
ARTICLE IV
ACTIONS PRIOR TO CLOSING
4.01 INVESTIGATIVE RIGHTS. Prior to the Closing Date each party shall
provide to the other parties, including the parties' counsel, accountants and
other authorized representatives, full access during normal business hours (upon
reasonable advance written notice) to such parties' books and records.
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<PAGE> 10
4.02 CONDUCT OF BUSINESS. Prior to the Closing Date, each party shall
conduct its business in the normal course and shall not sell, pledge or assign
any assets, without the prior written approval of the other parties. No party
shall amend its certificate of incorporation or bylaws, declare dividends,
redeem or sell stock or other securities, incur additional liabilities, acquire
or dispose of fixed assets, change employment terms, enter into any material or
long-term contract, guarantee obligations of any third party, settle or
discharge any balance sheet receivable for less than its stated amount, pay more
on any liability than its stated amount or enter into any other transaction
other than in the regular course of business.
4.03 STATUS OF SEC FILINGS. Prior to the Closing Date, HANX, and its
officers and directors shall prepare and file all required filings and reports
including the 8-K required by this transaction, but subject to the filing of an
amendment reflecting the audited consolidated balance sheets of the merged
Companies.
ARTICLE V
CLOSING
5.01 CLOSING. The closing (the "Closing") of this transaction shall be
held at the offices of HANX, or such other place as shall be mutually agreed
upon, at such time as final closing documents are prepared and approved by the
appropriate Boards of Directors. (the "Closing Date"):
(a) HANX shall deliver 20,000,000 shares of its $.001 par value common
stock issued pursuant to this Agreement in a certificate or certificates
representing such shares;
(b) SHAREHOLDERS shall deliver the certificates representing 100% of
the shares of CMST common stock (the "CMST shares");
(c) HANX shall deliver a signed consent or minutes of its Board of
Directors. and a Majority Consent of its shareholders, approving this Agreement
and authorizing the matters set forth herein;
(d) CMST shall deliver a signed consent or minutes of its Board of
Directors approving this Agreement and authorizing the matters set forth herein;
(e) HANX's existing Board of Directors will (i) elect three new
directors, as named by SHAREHOLDERS to act as officers and directors of HANX in
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the capacities set forth in Exhibit 5.01(e) and (ii) with the exception of
Michael A.J. Harrop, all of the current directors will resign their positions
with HANX effective the Closing Date.
(f) HANX shall open a bank account at Bank of Montreal, Beijing Branch.
ARTICLE VI
MISCELLANEOUS
6.01 CAPTIONS AND HEADINGS. The article and paragraph headings
throughout this Agreement are for convenience and reference only and shall not
be deemed to define, limit or add to the meaning of any provision of this
Agreement.
6.02 NO ORAL CHANGE. This Agreement may not be changed or modified
except in writing signed by the party against whom enforcement of any change or
modification is sought.
6.03 NON-WAIVER. Except as otherwise expressly provided herein, no
waiver of a covenant, condition or provision of this Agreement shall be deemed
to have been made unless executed in writing and signed by the party against
whom such waiver is charged. The failure of any party to insist in any one or
more cases upon the performance of any covenant, condition or provision of this
Agreement shall not be construed as a waiver or relinquishment for the future of
any such covenant, condition or provision. No waiver by any party of one breach
by the other shall be construed as a waiver with respect to a subsequent breach.
6.04 TIME OF ESSENCE. Time is of the essence of this Agreement and of
each and every provision hereof.
6.05 ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings.
6.06 CHOICE OF LAW/ARBITRATION. This Agreement and its application,
shall be governed under the laws of the State of Nevada. Any and all disputes
and controversies of every kind and nature between the parties hereto arising
out of or relating to this Agreement relating to the existence, construction,
validity, interpretation or meaning, performance, non-performance enforcement,
operation, breach, continuance of termination thereof shall be subject to an
arbitration mutually agreeable to the parties or, in the absence of such mutual
agreement, then subject to arbitration in accordance with International
Arbitration Rules. It is the intent of the parties hereto and the purpose of
this provision to
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make the submission to arbitration of any dispute or controversy arising
hereunder an express condition precedent to any legal or equitable action or
proceeding of any nature whatsoever.
6.07 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same instrument.
6.08 NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been given
on the date of service if served personally on the party to whom notice is to be
given, or on the third day after mailing if mailed to the party to whom notice
is to be given, by first class mail, registered or certified, postage prepaid,
and properly addressed as follows:
HANX CMST and SHAREHOLDERS
FUTRO & TRAUERNICHT LLC BEIJING CENTURYMILESTONE
Attorneys and counselors at law ROOM 1013, CATCH BUILDING
ALAMO PLAZA 31 MIDDLEROAD OF BEI SAN HUAN
1401 SEVENTEENTH STREET HAIDAN DISTRICT, BEIJING, P.R.C.
11TH FLOOR
DENVER, COLORADO 80202
TELEPHONE (303) 297-1400
FACSIMILE (303) 297-9116
6.09 EXPENSES. The parties will pay their own legal, accounting and
other expenses incurred in connection with this Agreement.
6.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations,
warranties and covenants set forth in this Agreement or in any instrument,
certificate, opinion or other writing provided for in it, shall survive the
Closing Date.
6.11 FURTHER DOCUMENTS. The parties agree to execute any and all other
documents and to take such other action or corporate proceedings as may be
necessary or desirable to carry out the terms hereof.
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6.12 LEGAL COUNSEL. This agreement shall be subject to approval by
legal counsel of both CMST and HANX.
6.13 SIGNATURES. This Agreement and its Exhibits when duly signed,
shall be deemed executed by facsimile. Immediate delivery of originals shall
follow any facsimile transmission.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date stated
above.
HAAS NEUVEUX & COMPANY
/s/ Michael A.J. Harrop
- --------------------------
President
BEIJING CENTURY MILESTONE S&T CO., LTD.
/s/ Luo Yun /s/ Feng Ji Ming
- -------------------------------------- -----------------------------------
Luo Yun, General Manager Feng Ji Ming, Chief Engineer
And Personally And Personally
/s/ Xiao Gang
- --------------------------------------
Xiao Gang, Deputy Sales Manager and
And Personally
HARROP, LEES, BROWN & CO.
/s/ Michael A.J. Harrop
- --------------------------------------
Represented by Michael A.J. Harrop
Chairman
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