DOCUMENT> <TYPE>EX-10 <SEQUENCE>2 <FILENAME>ex10-1.txt <TEXT> SHARE PURCHASE AND MERGER AGREEMENT BY AND AMONG ADVANCE TECHNOLOGIES INC. SXAN ACQUISITION CORP. AND AMERICAN SXAN BIOTECH, INC. DATED AS OF MAY 24, 2007 <PAGE> SHARE PURCHASE AND MERGER...
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>ex10-1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>
EXHIBIT 10.1
SHARE PURCHASE AND MERGER AGREEMENT
BY AND AMONG
ADVANCE TECHNOLOGIES INC.
SXAN ACQUISITION CORP.
AND
AMERICAN SXAN BIOTECH, INC.
DATED AS OF MAY 24, 2007
<PAGE>
SHARE PURCHASE AND MERGER AGREEMENT
SHARE PURCHASE AND MERGER AGREEMENT (the “AGREEMENT”) dated as of May
24, 2007 by and among Advance Technologies Inc., a corporation formed under the
laws of the State of Nevada (“AVTX”), SXAN Acquisition Corp., a corporation
newly formed under the laws of the State of Delaware and a wholly owned
subsidiary of AVTX (the “MERGER SUB”), American SXAN Biotech, Inc., a
corporation formed under the laws of the State of Delaware (“SXAN”), the
individual who is identified on the signature pages of this Agreement as the
Investor (“INVESTOR”), and ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ (the “PRINCIPAL
SHAREHOLDERS”). Each of AVTX, the Merger Sub, SXAN and each of the Investors or
the Principal Shareholders is referred to herein individually as a “PARTY” and
all are referred to collectively as the “PARTIES.”
PREAMBLE
WHEREAS, SXAN owns 100% of the registered capital of Tieli
XiaoXingAnling Forest Frog Breeding Co., Ltd. (“TXFF”), a corporation organized
under the laws of The People’s Republic of China;
WHEREAS, AVTX and SXAN have determined that a business combination
between them is advisable and in the best interests of their respective
companies and stockholders and presents an opportunity for their respective
companies to achieve long-term strategic and financial benefits;
WHEREAS, the Investor is affiliated with SXAN, and wishes to purchase
certain common shares of AVTX (the “PURCHASED SHARES,” as further defined
herein) for cash (the “SHARE PURCHASE”);
WHEREAS, AVTX has proposed to acquire SXAN pursuant to a merger
transaction whereby, pursuant to the terms and subject to the conditions of this
Agreement, SXAN shall become a wholly owned subsidiary of AVTX through the
merger of SXAN with and into the Merger Sub (the “MERGER”); and
WHEREAS, in the Merger, all issued and outstanding shares of capital
stock of SXAN shall be cancelled and converted into the right to receive 100,000
Series B Convertible Shares of AVTX (the “MERGER SHARES”) which Shares, together
with the Purchased Shares, shall represent 93.5 % of the voting power of AVTX
after the Merger;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations and warranties contained herein, the Parties,
intending to be legally bound, hereby agree as follows:
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth below:
“APPLICABLE LAW” means any domestic or foreign law, statute, regulation, rule,
policy, guideline or ordinance applicable to the businesses of the Parties, the
Merger and/or the Parties.
|
|
“DGCL” means Delaware General Corporation Law. |
“KNOWLEDGE” means, in the case of AVTX or SXAN, a particular fact or other
matter of which its Chief Executive Officer or the Chief Financial Officer is
actually aware or which a prudent individual serving in such capacity could be
<PAGE>
expected to discover or otherwise become aware of in the course of conducting a
reasonable review or investigation of the corporation and its business and
affairs.
“LIEN” means, with respect to any property or asset, any mortgage, lien, pledge,
charge, security interest, claim, encumbrance, royalty interest, any other
adverse claim of any kind in respect of such property or asset, or any other
restrictions or limitations of any nature whatsoever.
“MATERIAL ADVERSE EFFECT” with respect to any entity or group of entities means
any event, change or effect that has or would have a materially adverse effect
on the financial condition, business or results of operations of such entity or
group of entities, taken as a whole.
“PERSON” means any individual, corporation, partnership, trust or unincorporated
organization or a government or any agency or political subdivision thereof.
“SURVIVING ENTITY” shall mean SXAN as the surviving entity in the Merger as
provided in Section 1.04.
“TAX” (and, with correlative meaning, “TAXES” and “TAXABLE”) means:
(i) any income, alternative or add-on minimum tax, gross receipts tax,
sales tax, use tax, ad valorem tax, transfer tax, franchise tax, profits tax,
license tax, withholding tax, payroll tax, employment tax, excise tax, severance
tax, stamp tax, occupation tax, property tax, environmental or windfall profit
tax, custom, duty or other tax, impost, levy, governmental fee or other like
assessment or charge of any kind whatsoever together with any interest or any
penalty, addition to tax or additional amount imposed with respect thereto by
any governmental or Tax authority responsible for the imposition of any such tax
(domestic or foreign), and
(ii) any liability for the payment of any amounts of the type described
in clause (i) above as a result of being a member of an affiliated,
consolidated, combined or unitary group for any Taxable period, and
(iii) any liability for the payment of any amounts of the type
described in clauses (i) or (ii) above as a result of any express or implied
obligation to indemnify any other person.
“TAX RETURN” means any return, declaration, form, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
ARTICLE I
THE TRANSACTIONS
|
SECTION 1.01 |
THE SHARE PURCHASE |
(a) On the Closing Date (defined herein), the Share Purchase shall be
consummated, in which the Investor shall purchase from AVTX an aggregate of
fifty seven million, one hundred forty three thousand, three hundred and two
(57,143,302) shares of the Common Stock of AVTX (“PURCHASED SHARES”) for cash
consideration of Three Hundred Twenty Five Thousand and 00/100 Dollars
($325,000.00).
(b) The Parties intend that the issuance of the Purchased Shares to the
Investors pursuant to the Share Purchase shall be exempt from the registration
requirements of the Securities Act of 1933 (the “SECURITIES ACT”) pursuant to
Section 4(2) of the Securities Act and the rules and regulations promulgated
thereunder.
<PAGE>
|
SECTION 1.02 |
THE MERGER |
Upon the terms and subject to the conditions set forth in this
Agreement and in accordance with the DGCL, at the Effective Time (as hereinafter
defined), all SXAN Shares (as hereinafter defined) shall be cancelled and
converted into the right to receive the Merger Shares. In connection therewith,
the following terms shall apply:
(a) CERTIFICATE OF DESIGNATION. Prior to the Closing, AVTX shall file
with the Secretary of State of the State of Nevada a Certificate of Designation
of the Series B Convertible Preferred Shares (“Series B Preferred Shares”) in
the form of SCHEDULE 1.02 hereto.
(b) EXCHANGE AGENT. ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., counsel for SXAN, shall act as
the exchange agent (the “EXCHANGE AGENT”) for the purpose of exchanging SXAN
Shares for the Merger Shares. At or prior to the Closing, AVTX shall deliver to
the Exchange Agent the Merger Shares.
(c) CONVERSION OF SECURITIES.
(i) CONVERSION OF SXAN SECURITIES. At the Effective Time, by
virtue of the Merger and without any action on the part of AVTX, SXAN or the
Merger Sub, or the holders of any of their respective securities:
(A) Each of the issued and outstanding shares of
common stock of SXAN (the “SXAN SHARES”) immediately prior to the Effective Time
shall be converted into and represent the right to receive, and shall be
exchangeable for, that number of Series B Preferred Shares of AVTX as shall be
determined by dividing 100,000 by the number of then issued and outstanding SXAN
Shares.
(B) All SXAN Shares shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive the Merger Shares
to be issued pursuant to this Section 1.02(c)(i) upon the surrender of such
certificate in accordance with Section 1.08, without interest. No fractional
shares may be issued; but each fractional share that would result from the
Merger will be rounded to the nearest number of whole shares.
(C) The Merger Shares (I) together with the Purchased
Shares acquired in the Share Purchase, shall represent 93.5%, on a fully diluted
basis, of the voting power of all classes of issued and outstanding stock of
AVTX at the Effective Time, after giving effect to the Merger, and (II) shall be
convertible into 900,000,000 shares of the Common Stock of AVTX on a fully
diluted basis at any time after the consummation of the spin-off transaction
described in the Operating Subsidiary Agreement (as defined in Section 5.01 (d)
hereof).
(ii) CONVERSION OF MERGER SUB STOCK. At the Effective Time, by
virtue of the Merger and without any action on the part of SXAN, AVTX, the
Merger Sub, or the holders of any of their respective securities, each share of
capital stock of Merger Sub outstanding immediately prior to the Effective Time
shall be converted into one share of the common stock of the Surviving Entity
and the shares of common stock of the Surviving Entity so issued in such
conversion shall constitute the only outstanding shares of capital stock of the
Surviving Entity and the Surviving Entity shall be a wholly owned subsidiary of
AVTX.
(d) EXEMPTION FROM REGISTRATION. The Parties intend that the issuance
of the Merger Shares to the Investors shall be exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) of the Securities
Act and the rules and regulations promulgated thereunder.
<PAGE>
(e) AGREEMENT RE CONVERSION INTO AVTX COMMON STOCK. Each recipient of
Series B Preferred Shares of AVTX pursuant to the Merger hereby agrees not to
convert such shares into Common Stock of AVTX until the authorized number of
shares of AVTX Common Stock is increased.
|
SECTION 1.03 |
CLOSING |
The closing of the Share Purchase and the Merger (the “CLOSING”) will
take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq. within one (1) business day
following the satisfaction or waiver of the conditions precedent set forth in
Article V or at such other date as AVTX and SXAN shall agree (the “CLOSING
DATE”), but in any event no later than June 30, 2007 unless extended by a
written agreement of AVTX and SXAN.
|
SECTION 1.04 |
MERGER; EFFECTIVE TIME |
At the Effective Time and subject to and upon the terms and conditions
of this Agreement, Merger Sub shall, and AVTX shall cause Merger Sub to, merge
with and into SXAN in accordance with the provisions of the DGCL, the separate
corporate existence of Merger Sub shall cease and SXAN shall continue as the
Surviving Entity. The Effective Time shall occur upon the filing with the
Secretary of State of the State of Delaware of a Certificate of Merger, executed
in accordance with the applicable provisions of the DGCL (the “EFFECTIVE TIME”).
The date on which the Effective Time occurs is referred to as the “EFFECTIVE
DATE.” Provided that this Agreement has not been terminated pursuant to Article
VI, the Parties will cause the Certificate of Merger to be filed as soon as
practicable after the Closing.
|
SECTION 1.05 |
EFFECT OF THE MERGER |
The Merger shall have the effect set forth in Title 8, Section 259 of
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all the properties, rights, privileges, powers and
franchises of SXAN and Merger Sub shall vest in the Surviving Entity, and all
debts, liabilities and duties of SXAN and Merger Sub shall become the debts,
liabilities and duties of the Surviving Entity.
|
SECTION 1.06 |
CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND |
OFFICERS
Pursuant to the Merger:
(a) The Certificate of Incorporation and Bylaws of SXAN as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the Surviving Entity immediately following the
Merger.
(b) The directors and officers of the SXAN immediately prior to the
Merger shall be the directors and officers of the Surviving Entity subsequent to
the Merger.
|
SECTION 1.07 |
RESTRICTIONS ON RESALE |
(a) Neither the Purchased Shares issued pursuant to the Share Purchase
nor the Series B Preferred Shares issued pursuant to the Merger will be
registered under the Securities Act, or the securities laws of any state, and
cannot be transferred, hypothecated, sold or otherwise disposed of until: (i) a
registration statement with respect to such securities is declared effective
under the Securities Act, or (ii) AVTX receives an opinion of counsel for the
holders of the shares proposed to be transferred, reasonably satisfactory to
<PAGE>
counsel for AVTX, that an exemption from the registration requirements of the
Securities Act is available.
The certificates representing the Purchased Shares and the Merger
Shares which are being issued hereunder shall contain a legend substantially as
follows:
“THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A
REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE UNDER
SUCH ACT, OR ADVANCE TECHNOLOGIES INC. RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER REASONABLY SATISFACTORY TO COUNSEL FOR ADVANCE
TECHNOLOGIES, INC. THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF SUCH ACT IS AVAILABLE.”
|
SECTION 1.08 |
EXCHANGE OF CERTIFICATES |
(a) EXCHANGE OF CERTIFICATES. After the Effective Time, the holders of
the SXAN Shares shall be required to surrender all their SXAN Shares to the
Exchange Agent, and the holders shall be entitled upon such surrender to receive
in exchange therefor certificates representing the proportionate number of
Merger Shares into which the SXAN Shares theretofore represented by the stock
certificates so surrendered shall have been exchanged pursuant to this
Agreement. Until so surrendered, each outstanding certificate which, prior to
the Effective Time, represented SXAN Shares shall be deemed for all corporate
purposes, subject to the further provisions of this Article I, to evidence the
ownership of the number of whole Merger Shares for which such SXAN Shares have
been so exchanged. No dividend payable to holders of Merger Shares of record as
of any date subsequent to the Effective Time shall be paid to the owner of any
certificate which, prior to the Effective Time, represented SXAN Shares, until
such certificate or certificates representing all the relevant SXAN Shares,
together with a stock transfer form, are surrendered as provided in this Article
I or pursuant to letters of transmittal or other instructions with respect to
lost certificates provided by the Exchange Agent.
(b) FULL SATISFACTION OF RIGHTS. All Merger Shares for which the SXAN
Shares shall have been exchanged pursuant to this Article I shall be deemed to
have been issued in full satisfaction of all rights pertaining to the SXAN
Shares.
(c) EXCHANGE OF CERTIFICATES. All certificates representing SXAN Shares
converted into the right to receive Merger Shares pursuant to this Article I
shall be furnished to AVTX subsequent to delivery thereof to the Exchange Agent
pursuant to this Agreement.
(d) CLOSING OF TRANSFER BOOKS. On the Effective Date, the stock
transfer book of SXAN shall be deemed to be closed and no transfer of SXAN
Shares shall thereafter be recorded thereon.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF AVTX
AVTX, the Principal Shareholders and, where applicable, the Merger Sub
hereby jointly and severally represent and warrant to SXAN and to the Investors,
as of the date of this Agreement, as of the Closing Date and as of the Effective
Time, as follows:
<PAGE>
|
SECTION 2.01 |
ORGANIZATION, STANDING AND POWER |
AVTX is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Nevada, and has corporate power and
authority to conduct its business as presently conducted by it and to enter into
and perform this Agreement and to carry out the transactions contemplated by
this Agreement. Merger Sub is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, and has corporate
power and authority to enter into and perform this Agreement and to carry out
the transactions contemplated by this Agreement.
|
SECTION 2.02 |
SUBSIDIARIES |
AVTX owns all of the outstanding capital stock of the Merger Sub and of
Infrared Systems International, a Nevada corporation (“OPERATING SUB”). Other
than its ownership of the Merger Sub and the Operating Sub, AVTX does not have
an ownership interest in any Person. Merger Sub is a recently formed corporation
and prior to the date hereof and through the Effective Date Merger Sub shall not
conduct any operating business, become a party to any agreements, or incur any
liabilities or obligations. Operating Sub holds the license to certain
technology licensed to it by AVTX as its only asset.
|
SECTION 2.03 |
CAPITALIZATION |
(a) There are 200,000,000 shares of capital stock of AVTX authorized,
consisting of 100,000,000 shares of common stock, $0.001 par value per share
(the “AVTX COMMON SHARES”), and 100,000,000 shares of preferred stock, $0.001
par value per share (“AVTX PREFERRED SHARES”). . As of the date of this
Agreement, there are 39,527,897 AVTX Common Shares issued and outstanding. In
addition, AVTX has issued and outstanding and 27,011,477 rights to acquire AVTX
Common Shares which have been designated Series A Non-Voting Convertible
Preferred Stock, $0.001 par value per share (“SERIES A PREFERRED SHARES”).
(b) No AVTX Common Shares or AVTX Preferred Shares have been reserved
for issuance to any Person, and there are no other outstanding rights, warrants,
options or agreements for the purchase of AVTX Common or Preferred Shares except
as provided in this Agreement.
(c) All outstanding AVTX Common Shares are validly issued, fully paid,
non-assessable, not subject to pre-emptive rights and have been issued in
compliance with all state and federal securities laws or other Applicable Law.
The Series A Preferred Shares are not validly issued, due to the failure to file
a certificate of designations with respect to that class of shares, but
represent a contractual right to acquire AVTX Common Shares, and when that right
is exercised, the AVTX Common Shares so issued will be validly issued, fully
paid, non-assessable, not subject to pre-emptive rights. The Common Shares to be
purchased by the Investors and the Series B Preferred Shares issuable to the
SXAN shareholders pursuant to the Merger will, when issued pursuant to this
Agreement, be duly and validly authorized and issued, fully paid and
non-assessable.
|
SECTION 2.04 |
AUTHORITY FOR AGREEMENT |
The execution, delivery, and performance of this Agreement by each of
AVTX and Merger Sub has been duly authorized by all necessary corporate and
shareholder action, and this Agreement, upon its execution by the Parties, will
constitute the valid and binding obligation of each of AVTX and the Merger Sub,
enforceable against each of them in accordance with and subject to its terms,
except as enforceability may be affected by bankruptcy, insolvency or other laws
of general application affecting the enforcement of creditors’ rights. The
execution and consummation of the transactions contemplated by this Agreement
and compliance with its provisions by AVTX and Merger Sub will not violate any
<PAGE>
provision of Applicable Law and will not conflict with or result in any breach
of any of the terms, conditions, or provisions of, or constitute a default
under, AVTX’s Articles of Incorporation, Merger Sub’s Certificate of
Incorporation, or either of their Bylaws, in each case as amended, or, in any
material respect, any indenture, lease, loan agreement or other agreement or
instrument to which AVTX is a party or by which it or any of its properties is
bound, or any decree, judgment, order, statute, rule or regulation applicable to
AVTX or Merger Sub.
|
SECTION 2.05 |
FINANCIAL CONDITION |
Except as set forth on Schedule 2.05 hereto, the Annual Report on Form
10-KSB filed by AVTX for the year ended September 30, 2006 and the Quarterly
Report on Form 10-QSB filed by AVTX for the period ended March 31, 2007 (the
“SEC Filings”) are true, correct and complete in all material respects, are not
misleading and do not omit to state any material fact which is necessary to make
the statements contained in such public filings not misleading in any material
respect. The financial statements included in the SEC Filings (the “Financial
Statements”) were prepared in accordance with generally accepted accounting
principles and fairly reflect the financial condition of AVTX as of the dates
stated and the results of its operations for the periods presented.
|
SECTION 2.06 |
ABSENCE OF CERTAIN CHANGES OR EVENTS |
Since March 31, 2007, except as reported in the Quarterly Report filed
by AVTX with the Securities and Exchange Commission (“SEC”) on Form 10-QSB for
the period ending on that date, and except as contemplated by this Agreement:
(a) there has not been any Material Adverse Change in the business,
operations, properties, assets, or condition of AVTX;
(b) AVTX has not (i) amended its Articles of Incorporation; (ii)
declared or made, or agreed to declare or make, any payment of dividends or
distributions of any assets of any kind whatsoever to stockholders or purchased
or redeemed, or agreed to purchase or redeem, any outstanding capital stock;
(iii) made any material change in its method of management, operation, or
accounting; (iv) entered into any material transaction; or (v) made any accrual
or arrangement for payment of bonuses or special compensation of any kind or any
severance or termination pay to any present or former officer or employee;
(c) AVTX has not (i) borrowed or agreed to borrow any funds or
incurred, or become subject to, any material obligation or liability (absolute
or contingent) except liabilities incurred in the ordinary course of business;
(ii) paid any material obligation or liability (absolute or contingent) other
than current liabilities reflected in or shown on the most recent AVTX balance
sheet, and current liabilities incurred since that date in the ordinary course
of business; (iii) sold or transferred, or agreed to sell or transfer, any
material assets, properties, or rights, or canceled, or agreed to cancel, any
material debts or claims; or (iv) made or permitted any material amendment or
termination of any contract, agreement, or license to which it is a party.
|
SECTION 2.07 |
GOVERNMENTAL AND THIRD PARTY CONSENTS |
No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other federal, state, county, local or other foreign governmental
authority, instrumentality, agency or commission or any third party, including a
party to any agreement with AVTX, the Operating Sub or Merger Sub, is required
by or with respect to AVTX, the Operating Sub or Merger Sub in connection with
the execution and delivery of this Agreement or the consummation of the
<PAGE>
transactions contemplated hereby, except for such consents, waivers, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under (i) applicable securities laws, or (ii) the Nevada Revised
Statues or the DGCL.
|
SECTION 2.08 |
LITIGATION |
There is no action, suit, investigation, audit or proceeding pending
against, or to the Knowledge of AVTX, threatened against or affecting, AVTX or
the Merger Sub or the Operating Sub or any of their respective assets or
properties before any court or arbitrator or any governmental body, agency or
official.
|
SECTION 2.09 |
INTERESTED PARTY TRANSACTIONS |
Except as disclosed in the SEC Filings, AVTX is not indebted to any
officer or director of AVTX, and no such person is indebted to AVTX.
|
SECTION 2.10 |
COMPLIANCE WITH APPLICABLE LAWS |
To the Knowledge of AVTX, the business of each of AVTX, the Operating
Sub and the Merger Sub has not been, and is not being, conducted in violation of
any Applicable Law.
|
SECTION 2.11 |
TAX RETURNS AND PAYMENT |
AVTX has duly and timely filed all material Tax Returns required to be
filed by it and has duly and timely paid all Taxes shown thereon to be due.
Except as disclosed in Financial Statements filed by AVTX with the SEC, there is
no material claim for Taxes that is a Lien against the property of AVTX other
than Liens for Taxes not yet due and payable, none of which is material. AVTX
has not received written notification of any audit of any Tax Return of AVTX
being conducted or pending by a Tax authority where an adverse determination
could have a Material Adverse Effect on AVTX, no extension or waiver of the
statute of limitations on the assessment of any Taxes has been granted by AVTX
which is currently in effect, and AVTX is not a party to any agreement, contract
or arrangement with any Tax authority or otherwise, which may result in the
payment of any material amount in excess of the amount reflected on the above
referenced AVTX Financial Statements.
|
SECTION 2.12 |
SECURITY LISTING |
AVTX is a fully compliant reporting company under the Securities
Exchange Act of 1934, as amended (the “EXCHANGE ACT”), and all AVTX public
filings required under the Exchange Act have been made. The common stock of AVTX
is listed for quotation on the OTC Bulletin Board. To the Knowledge of AVTX,
AVTX has not been threatened or is not subject to removal of its common stock
from the OTC Bulletin Board.
|
SECTION 2.13 |
FINDERS’ FEES |
AVTX has not incurred, nor will it incur, directly or indirectly, any
liability for brokers’ or finders’ fees or agents’ commissions or investment
bankers’ fees or any similar charges in connection with this Agreement or any
transaction contemplated hereby, except that AVTX will owe $25,000 to ▇▇▇▇▇▇▇
▇▇▇▇▇▇ for services rendered in connection with the transactions contemplated by
this Agreement.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SXAN
SXAN hereby represents and warrants to AVTX and to Merger Sub, as of
the date of this Agreement and as of the Effective Time (except as otherwise
indicated), as follows:
|
SECTION 3.01 |
ORGANIZATION, STANDING AND POWER |
SXAN is a privately held corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and has
full corporate power and authority to conduct its business as presently
conducted by it and to enter into and perform this Agreement and to carry out
the transactions contemplated by this Agreement. SXAN is duly qualified to do
business as a foreign corporation in each state in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it make such qualification necessary.
|
SECTION 3.02 |
CAPITALIZATION |
There are 100,000,000 shares of SXAN capital stock authorized,
consisting of 100,000,000 shares of common stock with $0.00001par value (the
“SXAN COMMON SHARES”). As of the date of this Agreement, there were 10,000
issued and outstanding SXAN Common Shares. No SXAN Common Shares have been
reserved for issuance to any Person, and there are no outstanding rights,
warrants, options or agreements for the purchase of SXAN Common Shares. No
Person is entitled to any rights with respect to the conversion, exchange or
delivery of the SXAN Common Shares. The SXAN Common Shares have been issued in
compliance with Applicable Law.
|
SECTION 3.03 |
AUTHORITY FOR AGREEMENT |
The execution, delivery and performance of this Agreement by SXAN has
been duly authorized by all necessary corporate action, and this Agreement
constitutes the valid and binding obligation of SXAN and each of the Investors,
enforceable against SXAN and each Investor in accordance with its terms, except
as enforceability may be affected by bankruptcy, insolvency or other laws of
general application affecting the enforcement of creditors’ rights. The
execution and consummation of the transactions contemplated by this Agreement
and compliance with its provisions by SXAN and each of the Investors will not
violate any provision of Applicable Law and will not conflict with or result in
any breach of any of the terms, conditions, or provisions of, or constitute a
default under, SXAN’s Certificate of Incorporation or Bylaws, in each case as
amended, or, to the Knowledge of SXAN, in any material respect, any indenture,
lease, loan agreement or other agreement instrument to which SXAN or any
Investor is a party or by which it or any of them or any of its or their
properties are bound, or any decree, judgment, order, statute, rule or
regulation applicable to SXAN or any Investor.
|
SECTION 3.04 |
GOVERNMENTAL OR THIRD PARTY CONSENT |
No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other federal, state, county, local or other foreign governmental
authority, instrumentality, agency or commission or any third party, including a
party to any agreement with SXAN or any Investor, is required by or with respect
to SXAN or any of the Investors in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby,
except for such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under (i) applicable
securities laws, or (ii) the DGCL.
<PAGE>
|
SECTION 3.05 |
BUSINESS OPERATIONS AND LIABILITIES - SXAN. |
SXAN has conducted no business operations other than the acquisition of
ownership of the capital stock of TXFF. SXAN has no liabilities other than
liabilities incurred in the ordinary course that will not exceed $10,000 on the
Closing Date.
|
SECTION 3.06 |
ORGANIZATION AND STANDING - TXFF. |
TXFF is a corporation duly organized, validly existing and in good
standing under the laws of the People’s Republic of China. TXFF has full power
and authority to carry on its business as now conducted and to own and operate
its assets, properties and business.
|
SECTION 3.07 |
OWNERSHIP OF TXFF SHARES. |
SXAN is the owner of one hundred percent (100%) the registered capital
stock of TXFF, free and clear of all Liens, encumbrances, and restrictions
whatsoever. No Person has any right to acquire capital stock of TXFF, whether by
tender of consideration or otherwise.
|
SECTION 3.08. |
CORPORATE RECORDS. |
All of the books and records of each of SXAN and TXFF including,
without limitation, its books of account, corporate records, minute book, stock
certificate books and other records are up-to-date, complete and reflect
accurately and fairly the conduct of its business in all material respects since
its date of incorporation. All reports, returns and statements currently
required to be filed by either SXAN or TXFF with any government agency with
respect to the business and operations of SXAN or TXFF have been filed or valid
extensions have been obtained in accordance with normal procedures and all
governmental reporting requirements have been complied with.
|
SECTION 3.09 |
FINANCIAL STATEMENTS - TXFF |
The financial statements of TXFF for the years ended June 30, 2006 and
2005 previously delivered to AVTX have been prepared in accordance with
accounting principles generally accepted in the United States and fairly present
the financial condition of TXFF at the date presented and the results of
operations of TXFF for those two years.
|
SECTION 3.10 |
TAXES. |
Each of SXAN and TXFF has filed all Tax Returns that it is required to
file with all governmental agencies, wherever situate, and has paid or accrued
for payment all Taxes as shown on such returns except for Taxes being contested
in good faith. There is no material claim for Taxes that is a Lien against the
property of SXAN or TXFF other than Liens for Taxes not yet due and payable. All
Taxes due and owing by either SXAN or TXFF have been paid. Neither SXAN or TXFF
is the beneficiary of any extension of time within which to file any tax return.
|
SECTION 3.11 |
PENDING ACTIONS. |
There are no material legal actions, lawsuits, proceedings or
investigations, either administrative or judicial, pending or threatened,
against or affecting SXAN, TXFF, or against TXFF’s Officers or Directors that
arose out of their operation of TXFF. Neither SXAN, TXFF, nor any of TXFF’s
Officers or Directors are subject to any order, writ, judgment, injunction,
decree, determination or award of any court, arbitrator or administrative,
<PAGE>
governmental or regulatory authority or body which would be likely to have a
material adverse effect on the business of TXFF or SXAN.
|
SECTION 3.12 |
INTELLECTUAL PROPERTY AND INTANGIBLE ASSETS. |
To the knowledge of SXAN, TXFF has full legal right, title and interest
in and to all of the intellectual property utilized in the operation of its
business. TXFF has not received any written notice that the rights of any other
person are violated by the use by TXFF of the intellectual property. None of the
intellectual property has ever been declared invalid or unenforceable, or is the
subject of any pending or, to the knowledge of any of the SXAN Shareholders,
threatened action for opposition, cancellation, declaration, infringement, or
invalidity, unenforceability or misappropriation or like claim, action or
proceeding.
|
SECTION 3.13. |
COMPLIANCE WITH LAWS. |
TXFF’s operations have been conducted in all material respects in
accordance with all applicable statutes, laws, rules and regulations. TXFF Is
not in violation of any law, ordinance or regulation of the People’s Republic of
China or of any other jurisdiction. TXFF holds all the environmental, health and
safety and other permits, licenses, authorizations, certificates and approvals
of governmental authorities (collectively, “Permits”) necessary or proper for
the current use, occupancy or operation of its business, and all of the Permits
are now in full force and effect.
|
SECTION 3.14 |
FINDERS’ FEES |
Neither SXAN nor TXFF has incurred, nor will it incur, directly or
indirectly, any liability for brokers’ or finders’ fees or agents’ commissions
or investment bankers’ fees or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
ARTICLE IV
CERTAIN COVENANTS AND AGREEMENTS
|
SECTION 4.01 |
COVENANTS OF SXAN |
SXAN covenants and agrees that, during the period from the date of this
Agreement until the Closing Date, SXAN shall, other than as contemplated by this
Agreement or for the purposes of effecting the Closing pursuant to this
Agreement, conduct its business as presently operated and solely in the ordinary
course, and consistent with such operation, and, in connection therewith,
without the written consent of AVTX:
(a) shall not amend its Certificate of Incorporation or Bylaws;
(b) shall not pay or agree to pay to any employee, officer or director
compensation that is in excess of the current compensation level of such
employee, officer or director other than salary increases or payments made in
the ordinary course of business or as otherwise provided in any contracts or
agreements with any such employees;
(c) shall not merge or consolidate with any other entity or acquire or
agree to acquire any other entity;
<PAGE>
(d) shall not sell, transfer, or otherwise dispose of any material
assets required for the operations of SXAN’s business, except in the ordinary
course of business consistent with past practices;
(e) shall not declare or pay any dividends on or make any distribution
of any kind with respect to the SXAN Shares; and
(f) shall use commercially reasonable efforts to comply with and not be
in default or violation under any known law, regulation, decree or order
applicable to SXAN’s business, operations or assets where such violation would
have a Material Adverse Effect on SXAN.
|
SECTION 4.02 |
COVENANTS OF AVTX |
AVTX covenants and agrees that, during the period from the date of this
Agreement until the Closing Date, AVTX shall not, other than as contemplated by
this Agreement or for the purposes of effecting the Closing pursuant to this
Agreement, conduct its business as presently operated and solely in the ordinary
course, and consistent with such operation, and, in connection therewith,
without the written consent of SXAN:
(a) shall not amend its Articles of Incorporation or Bylaws, except to
create the Series B Preferred Shares, as provided in Section 1.02 (a);
(b) shall not pay or agree to pay to any employee, officer or director
compensation of any kind or amount;
(c) shall not merge or consolidate with any other entity or acquire or
agree to acquire any other entity;
(d) shall not create, incur, assume, or guarantee any material
indebtedness for money borrowed except in the ordinary course of business, or
create or suffer to exist any mortgage, Lien or other encumbrance on any of its
material assets;
(e) shall not make any material capital expenditure or series of
capital expenditures except in the ordinary course of business;
(f) shall not declare or pay any dividends on or make any distribution
of any kind with respect to AVTX;
(g) shall not issue any additional shares of AVTX capital stock or take
any action affecting the capitalization of AVTX or the AVTX Common or Preferred
Shares; and
(h) shall not grant any severance or termination pay to any director,
officer or any other employees of AVTX.
|
SECTION 4.03 |
COVENANTS OF THE PARTIES |
(a) TAX-FREE REORGANIZATION. The Parties intend that the Merger qualify
as a Tax-free “reorganization” under Sections 368(a) of the Code, as amended,
and the Parties will take the position for all purposes that the Merger shall
qualify as a reorganization under such Section. In addition, the Parties
covenant and agree that they will not engage in any action, or fail to take any
<PAGE>
action, which action or failure to take action would reasonably be expected to
cause the Merger to fail to qualify as a Tax-free “reorganization” under Section
368(a) of the Code, whether or not otherwise permitted by the provisions of this
Agreement.;
(b) ANNOUNCEMENT. Neither SXAN, on the one hand, nor AVTX on the other
hand, shall issue any press release or otherwise make any public statement with
respect to this Agreement or the transactions contemplated hereby without the
prior consent of the other Party (which consent shall not be unreasonably
withheld), except as may be required by applicable law or securities regulation.
Upon execution of this Agreement, AVTX shall issue a press release, which shall
be approved by SXAN, and file a Current Report on Form 8-K reporting the
execution of the Agreement.
(c) NOTIFICATION OF CERTAIN MATTERS. SXAN shall give prompt written
notice to AVTX, and AVTX shall give prompt written notice to SXAN, of:
(i) The occurrence or nonoccurrence of any event the
occurrence or nonoccurrence of which would be reasonably likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time; and
(ii) Any material failure of SXAN or any of the Investors on
the one hand, or AVTX, on the other hand, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
(d) REASONABLE BEST EFFORTS. Before Closing, upon the terms and subject
to the conditions of this Agreement, the Parties agree to use their respective
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable (subject to
applicable laws) to consummate and make effective the Share Purchase and the
Merger and other transactions contemplated by this Agreement as promptly as
practicable including, but not limited to:
(i) The preparation and filing of all forms, registrations and
notices required to be filed to consummate the Share Purchase and the Merger,
including without limitation, any approvals, consents, orders, exemptions or
waivers by any third party or governmental entity; and
(ii) The satisfaction of the Party’s conditions precedent to
Closing.
|
|
(e) |
ACCESS TO INFORMATION |
(i) INSPECTION BY SXAN. AVTX will make available for
inspection by SXAN, during normal business hours and in a manner so as not to
interfere with normal business operations, all of AVTX’s and the Operating Sub’s
records (including tax records), books of account, premises, contracts and all
other documents in AVTX’s or the Operating Sub’s possession or control that are
reasonably requested by SXAN to inspect and examine the business and affairs of
AVTX and the Operating Sub. AVTX will cause its managerial employees and regular
independent accountants to be available upon reasonable advance notice to answer
questions of SXAN concerning the business and affairs of AVTX and the Operating
Sub. SXAN will treat and hold as confidential any information it receives from
AVTX in the course of the reviews contemplated by this Section 4.03(e). No
examination by SXAN will, however, constitute a waiver or relinquishment by SXAN
of its rights to rely on AVTX’s covenants, representations and warranties made
herein or pursuant hereto.
(ii) INSPECTION BY AVTX. SXAN will, if requested, make
available for inspection by AVTX, during normal business hours and in a manner
so as not to interfere with normal business operations, all of SXAN’s and TXFF’s
records (including tax records), books of account, premises, contracts and all
<PAGE>
other documents in SXAN’s possession or control that are reasonably requested by
AVTX to inspect and examine the business and affairs of SXAN or TXFF. SXAN will
cause its managerial employees and regular independent accountants to be
available upon reasonable advance notice to answer questions of AVTX concerning
the business and affairs of SXAN and TXFF. AVTX will treat and hold as
confidential any information it receives from SXAN in the course of the reviews
contemplated by this Section 4.03(e). No examination by AVTX will, however,
constitute a waiver or relinquishment by AVTX of its rights to rely on SXAN’s
covenants, representations and warranties made herein or pursuant hereto.
(f) PROTECTION AGAINST DILUTION. AVTX and SXAN jointly, for the benefit
of the Principal Shareholders, covenant that at no time prior to the first
anniversary of the Closing will AVTX issue any equity securities without the
written consent of ▇▇▇▇ ▇▇▇▇, unless the securities are issued in consideration
of a payment of cash to AVTX in an amount determined by the Board of Directors
to be the fair value of the securities.
ARTICLE V
CONDITIONS PRECEDENT
|
SECTION 5.01 |
CONDITIONS PRECEDENT TO THE PARTIES’ OBLIGATIONS |
The obligations of the Parties as provided herein shall be subject to
each of the following conditions precedent, unless waived in writing by both
AVTX and SXAN:
(a) CONSENTS, APPROVALS. The Parties shall have obtained all necessary
consents and approvals of their respective boards of directors, and all
consents, approvals and authorizations required under their respective charter
documents, and all material consents, including any material consents and
waivers by the Parties’ respective lenders and other third-parties, if
necessary, to the consummation of the transactions contemplated by this
Agreement.
(b) SHAREHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved by the shareholders of SXAN in
accordance with the applicable provisions of the DGCL and its bylaws.
(c) ABSENCE OF CERTAIN LITIGATION. No action or proceeding shall be
threatened or pending before any governmental entity or authority which, in the
reasonable opinion of counsel for the Parties, is likely to result in a
restraint, prohibition or the obtaining of damages or other relief in connection
with this Agreement or the consummation of the transactions contemplated hereby.
(d) OPERATING SUBSIDIARY AGREEMENT. AVTX shall have entered into an
agreement (the “OPERATING SUBSIDIARY AGREEMENT,” in the form attached hereto as
SCHEDULE 5.01 (D)) with the Operating Sub and the individuals identified as
“Managers” in the Operating Subsidiary Agreement regarding (i) the transfer to
the Operating Sub of all of the assets and liabilities of AVTX, (ii) the
management and operation of the Operating Sub following the Closing, (iii) the
indemnification by the Operating Sub and by the AVTX Principal Shareholders of
AVTX and SXAN (and their respective officers, directors and shareholders) from
and against all liabilities of the Operating Sub existing on the Closing Date or
arising thereafter, and (iv) the spinning off of the stock of the Operating Sub
to the holders of AVTX common stock and AVTX Series A Preferred Stock when the
registration statement with respect to the common stock of the Operating Sub has
become effective.
<PAGE>
|
SECTION 5.02 |
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF AVTX |
The obligations of AVTX on the Closing Date as provided herein shall be
subject to the satisfaction, on or prior to the Closing Date, of the following
conditions precedent, unless waived in writing by AVTX:
(a) CONSENTS AND APPROVALS. SXAN shall have obtained all material
consents, including any material consents and waivers by SXAN’s lenders and
other third parties, if necessary, to the consummation of the transactions
contemplated by this Agreement.
(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties
by SXAN in Article III herein shall be true and accurate in all material
respects on and as of the Closing Date with the same force and effect as though
such representations and warranties had been made at and as of the Closing Date,
except to the extent that any changes therein are specifically contemplated by
this Agreement.
(c) PERFORMANCE. SXAN shall have performed and complied in all material
respects with all agreements to be performed or complied with by it pursuant to
this Agreement at or prior to the Closing.
(d) PROCEEDINGS AND DOCUMENTS. All corporate, company and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to AVTX and its counsel, and AVTX
and its counsel shall have received all such counterpart originals (or certified
or other copies) of such documents as they may reasonably request.
(e) CERTIFICATE OF GOOD STANDING. SXAN shall have delivered to AVTX a
certificate as to the good standing of SXAN certified by the Secretary of State
of the State of Delaware on or within fourteen (14) business days prior to the
Closing Date.
(f) MATERIAL CHANGES. Except as contemplated by this Agreement, since
the date hereof, SXAN shall not have suffered a Material Adverse Effect, and,
without limiting the generality of the foregoing, there shall be no pending
litigation to which SXAN is a party which is reasonably likely to have a
Material Adverse Effect on SXAN.
(g) DUE DILIGENCE. AVTX shall have completed to its own satisfaction
due diligence in relation to SXAN, except that this shall cease to be a
condition precedent unless on or prior to May 21, 2007 AVTX shall have delivered
a written notice stating that it is not satisfied with the results of its due
diligence.
(h) SEC FILING. No less than one week prior to the Closing, SXAN shall
have delivered to AVTX the financial statements, report of SXAN’s independent
registered public accountant, and other information required for inclusion in
the Current Report that AVTX will file with the SEC within four business days
after the Closing.
(i) SURRENDER OF OPERATING SUBSIDIARY DIVIDEND. The Investors shall
have executed the Agreement re Operating Subsidiary Dividend in the form of
SCHEDULE 5.02 (I) hereto for the purpose of stating their promise to surrender
for cancellation all shares of stock of the Operating Sub which they receive as
holders of AVTX common stock as a result of the spin off transaction referenced
in Section 5.01 (d).
<PAGE>
|
SECTION 5.03 |
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SXAN |
The obligations of SXAN and the Investors on the Closing Date as
provided herein shall be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions precedent, unless waived in writing by SXAN
and the Investors:
(a) CONSENTS AND APPROVALS. AVTX, the Operating Sub and the Merger Sub
shall have obtained all material consents, including any material consents and
waivers of its respective lenders and other third parties, if necessary, to the
consummation of the transactions contemplated by this Agreement.
(b) REPRESENTATIONS AND WARRANTIES. The representations and warranties
by AVTX and Merger Sub in Article II herein shall be true and accurate in all
material respects on and as of the Closing Date with the same force and effect
as though such representations and warranties had been made at and as of the
Closing Date, except to the extent that any changes therein are specifically
contemplated by this Agreement.
(c) PERFORMANCE. Each of AVTX and Merger Sub shall have performed and
complied in all material respects with all agreements to be performed or
complied with by it pursuant to this Agreement prior to or at the Closing.
(d) PROCEEDINGS AND DOCUMENTS. All corporate, company and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to SXAN and its counsel, and SXAN
and its counsel shall have received all such counterpart originals (or certified
or other copies) of such documents as they may reasonably request.
(e) CERTIFICATES OF GOOD STANDING. AVTX shall have delivered to SXAN a
certificate as to its and the Operating Sub’s good standing in the State of
Nevada, and the Merger Sub shall have delivered to SXAN a certificate as to its
good standing in the State of Delaware, in each case certified by the Secretary
of State not more than fourteen (14) business days prior to the Closing Date.
(f) MATERIAL CHANGES. Except as contemplated by this Agreement, since
the date hereof, neither AVTX, the Operating Sub nor the Merger Sub shall have
suffered a Material Adverse Effect and, without limiting the generality of the
foregoing, there shall be no pending litigation to which AVTX, the Operating Sub
or the Merger Sub is a party which is reasonably likely to have a Material
Adverse Effect on AVTX, the Operating Sub or the Merger Sub.
(g) DUE DILIGENCE. SXAN shall have completed to its own satisfaction
due diligence in relation to AVTX, except that this shall cease to be a
condition precedent unless on or prior to May 21, 2007 SXAN shall have delivered
a written notice stating that it is not satisfied with the results of its due
diligence;
(h) STATUS OF AVTX. As at the Effective Time of the Merger, AVTX (i)
shall be a fully compliant reporting public company under the Exchange Act, and
shall be current in all of its reports required to be filed under the Exchange
Act, (ii) shall not have been threatened or subject to delisting from the OTC
Bulletin Board, and (iii) shall have outstanding 39,527,897 AVTX Common Shares
(excluding the Purchased Shares) and 27,011,477 Series A Preferred Shares; and
there shall be no other AVTX Preferred Shares outstanding nor, except as
provided hereunder, any options, warrants or rights to acquire capital stock of
AVTX whether for additional consideration or on conversion.
<PAGE>
(i) CERTIFICATE OF DESIGNATION. The Board of Directors of AVTX shall
have filed in the Office of the Secretary of State of the State of Nevada a
Certificate of Designation of the Series B Preferred Shares in the form of
Schedule 1.02 hereto.
(j) AVTX BOARD OF DIRECTORS. At the Effective Time of the Merger or in
accordance with applicable law, all of the officers and members of the board of
directors of AVTX shall tender their resignations as officers and directors of
AVTX, and the vacancies created on the AVTX board of directors shall be filled
by persons designated by the Board of Directors of SXAN.
(l) INFORMATION STATEMENT. No less than ten days prior to the Closing,
AVTX shall have filed with the SEC and mailed to its shareholders of record an
information statement containing the information required by SEC Rule 14f-1,
which shall be provided by SXAN and shall be reasonably acceptable in form and
substance to AVTX.
(m) AGREEMENT RE: SERIES A PREFERRED SHARES. The Principal Shareholders
shall have executed an Agreement re: Series A Preferred Shares, in the form of
Schedule 5.03 (m) attached hereto, stating their promises (A) not to convert any
of the AVTX Series A Preferred Shares until the registration statement
referenced in Section 5.01 (d) with respect to the Operating Sub common stock
becomes effective; and (B) to execute and deliver to the Investors at the
Closing an irrevocable voting proxy, to be dated on the date of conversion and
to be effective for a period of one-year thereafter, with respect to the shares
of AVTX common stock issued to the Principal Shareholders upon conversion of
their Series A Preferred Shares.
ARTICLE VI
TERMINATION
|
SECTION 6.01 |
TERMINATION |
This Agreement may be terminated and the Merger may be abandoned at any time
prior to the Effective Time by:
(a) The mutual written consent of the Boards of Directors of AVTX and
SXAN;
(b) Either AVTX, on the one hand, or SXAN, on the other hand, if any
governmental entity or court of competent jurisdiction shall have issued an
order, decree or ruling or taken any other action (which order, decree, ruling
or other action the Parties shall use their commercially reasonable best efforts
to lift), which restrains, enjoins or otherwise prohibits the Share Purchase or
the Merger or the issuance of the Series B Preferred Shares as contemplated
herein and such order, decree, ruling or other action shall have become final
and non-appealable;
(c) AVTX, if SXAN or any of the Investors shall have breached in any
material respect any of its or his representations, warranties, covenants or
other agreements contained in this Agreement, and the breach cannot be or has
not been cured within thirty (30) calendar days after the giving of written
notice by AVTX to SXAN, or by AVTX, if it is not satisfied with the results of
its due diligence investigation and it so notifies SXAN on or before May 21,
2007;
(d) SXAN, if AVTX shall have breached in any material respect any of
its representations, warranties, covenants or other agreements contained in this
Agreement, and the breach cannot be or has not been cured within thirty (30)
calendar days after the giving of written notice by SXAN to AVTX, or by SXAN if
<PAGE>
it is not satisfied with the results of its due diligence investigation and it
so notifies AVTX on or before May 21, 2007; or
(e) Without any action on the part of the Parties if required by
Applicable Law or if the Closing shall not be consummated by June 30, 2007,
unless extended by written agreement of AVTX and SXAN.
|
SECTION 6.02 |
EFFECT OF TERMINATION |
If this Agreement is terminated as provided in Section 6.01, written
notice of such termination shall be given by the terminating Party to the other
Party specifying the provision of this Agreement pursuant to which such
termination is made, this Agreement shall become null and void and there shall
be no liability on the part of AVTX, SXAN or the Investors, PROVIDED, however,
that (a) the provisions of Article VII hereof shall survive the termination of
this Agreement; (b) nothing in this Agreement shall relieve any Party from any
liability or obligation with respect to any willful breach of this Agreement;
and (c) termination shall not affect accrued rights or liabilities of any party
at the time of such termination.
ARTICLE VII
CONFIDENTIALITY
|
SECTION 7.01 |
CONFIDENTIALITY |
AVTX and the AVTX Principal Shareholders, on the one hand, and SXAN and
the Investors, on the other hand, will keep confidential all information and
documents obtained from the other, including but not limited to any information
or documents provided pursuant to Section 4.03(e) hereof (except for any
information disclosed to the public pursuant to a press release authorized by
the Parties); and in the event the Closing does not occur or this Agreement is
terminated for any reason, will promptly return such documents and all copies of
such documents and all notes and other evidence thereof, including material
stored on a computer, and will not use such information for its own advantage,
except to the extent that (i) the information must be disclosed by law, (ii) the
information becomes publicly available by reason other than disclosure by the
Party subject to the confidentiality obligation, (iii) the information is
independently developed without use of or reference to the other Party’s
confidential information, (iv) the information is obtained from another source
not obligated to keep such information confidential, or (v) the information is
already publicly known or known to the receiving Party when disclosed as
demonstrated by written documentation in the possession of such Party at such
time.
ARTICLE VIII
INDEMNIFICATION
|
SECTION 8.01 |
INDEMNIFICATION BY AVTX |
AVTX and the AVTX Principal Shareholders agree, jointly and severally,
to indemnify, defend and hold harmless each of SXAN, any subsidiary or affiliate
thereof and each person who is now, or has been at any time prior to the date
hereof or who becomes prior to the Closing, a shareholder, officer, director or
partner of SXAN, any subsidiary or affiliate thereof or an employee of SXAN, any
subsidiary or affiliate thereof and their respective heirs, legal
representatives, successors and assigns (the “SXAN INDEMNIFIED PARTIES”) against
all losses, claims, damages, costs, expenses (including reasonable attorneys’
fees), liabilities or judgments or amounts that are paid in settlement of or in
connection with any threatened or actual third party claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or
in part out of (i) any material breach of this Agreement by AVTX, or any
<PAGE>
subsidiary or affiliate thereof, including but not limited to failure of any
representation or warranty to be true and correct at or before the Closing, or
(ii) any willful or grossly negligent act, omission or conduct of any officer,
director or agent of AVTX or any subsidiary or affiliate thereof prior to the
Closing, whether asserted or claimed prior to, at or after, the Closing. Any
SXAN Indemnified Party wishing to claim indemnification under this Section 8.01,
upon learning of any such claim, action, suit, proceeding or investigation,
shall notify AVTX in writing, but the failure to so notify shall not relieve
AVTX from any liability that it may have under this Section 8.01, except to the
extent that such failure would materially prejudice AVTX.
|
SECTION 8.02 |
INDEMNIFICATION BY SXAN |
SXAN shall indemnify, defend and hold harmless each of AVTX, any
subsidiary or affiliate thereof and each person who is now, or has been at any
time prior to the date hereof or who becomes prior to the Closing, a
shareholder, officer, director or partner of AVTX, any subsidiary or affiliate
thereof or an employee of AVTX, any subsidiary or affiliate thereof and their
respective heirs, legal representatives, successors and assigns (the “AVTX
INDEMNIFIED PARTIES”) against all losses, claims, damages, costs, expenses
(including reasonable attorneys’ fees), liabilities or judgments or amounts that
are paid in settlement of or in connection with any threatened or actual third
party claim, action, suit, proceeding or investigation based in whole or in part
on or arising in whole or in part out of (i) any material breach of this
Agreement by SXAN, any Investor or any subsidiary or affiliate thereof,
including but not limited to failure of any representation or warranty to be
true and correct at or before the Closing, or (ii) any willful or negligent act,
omission or conduct of any officer, director or agent of SXAN or any subsidiary
or affiliate thereof prior to the Closing, whether asserted or claimed prior to,
at or after, the Closing. Any AVTX Indemnified Party wishing to claim
indemnification under this Section 8.02, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify SXAN in writing, but the
failure to so notify shall not relieve SXAN from any liability that it may have
under this Section 8.02, except to the extent that such failure would materially
prejudice SXAN.
|
SECTION 8.03 |
INDEMNIFICATION OF EXCHANGE AGENT |
AVTX, SXAN, the Operating Sub and Merger Sub (for the purposes of this
Section 8.03, the “INDEMNITORS”) agree to indemnify the Exchange Agent and his
employees and agents (collectively, the “INDEMNITEES”) against, and hold them
harmless of and from, any and all loss, liability, cost, damage and expense,
including without limitation, reasonable counsel fees, which the Indemnitees, or
any of them, may suffer or incur by reason of any action, claim or proceeding
brought against the Indemnitees, or any one of them, arising out of or relating
in any way to the Exchange Agent’s service in such capacity, unless such action,
claim or proceeding is the result of the willful misconduct or gross negligence
of any of the Indemnitees.
ARTICLE IX
MISCELLANEOUS
|
SECTION 9.01 |
EXPENSES |
Except as contemplated by this Agreement, all costs and expenses
incurred in connection with this Agreement and the consummation of the
transactions contemplated by this Agreement shall be paid by the Party incurring
such expenses.
<PAGE>
|
SECTION 9.02 |
APPLICABLE LAW |
Except to the extent that the law of the State of Delaware is
mandatorily applicable to the Merger (which shall be governed by the DGCL), this
Agreement shall be governed by the laws of the State of Nevada, without giving
effect to the principles of conflicts of laws thereof, as applied to agreements
entered into and to be performed in such state.
|
SECTION 9.03 |
NOTICES |
All notices and other communications under this Agreement shall be in
writing and shall be deemed to have been duly given or made as follows:
(a) If sent by reputable overnight air courier (such as Federal
Express), 2 business days after being sent;
(b) If sent by facsimile transmission, with a copy mailed on the same
day in the manner provided in clause (a) above, when transmitted and receipt is
confirmed by the fax machine; or
(c) If otherwise actually personally delivered, when delivered.
All notices and other communications under this Agreement shall be sent
or delivered as follows:
If to SXAN and/or the Investors, to:
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇
American SXAN Biotech, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice):
▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
|
|
Facsimile: |
▇▇▇-▇▇▇-▇▇▇▇ |
If to AVTX and/or the AVTX Principal Shareholders, to:
▇▇▇▇ ▇▇▇▇
Infrared Systems International, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile:
<PAGE>
with a copy to (which shall not constitute notice):
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ #▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Each Party may change its address by written notice in accordance with
this Section.
|
SECTION 9.04 |
ENTIRE AGREEMENT |
This Agreement (including the documents and instruments referred to in
this Agreement) contains the entire understanding of the Parties with respect to
the subject matter contained in this Agreement, and supersedes and cancels all
prior agreements, negotiations, correspondence, undertakings and communications
of the Parties, oral or written, respecting such subject matter including the
Letter of Intent made by SXAN and AVTX dated April 20, 2007.
|
SECTION 9.05 |
ASSIGNMENT |
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned by any of the Parties (whether by
operation of law or otherwise) without the prior written consent of the other
Parties; PROVIDED that in no event may the right to indemnification provided by
Article VIII hereto be assigned by any of the Parties, with or without consent,
except by operation of law. Subject to the immediately foregoing sentence of
this Section 9.05, this Agreement will be binding upon, inure to the benefit of
and be enforceable by, the Parties and their respective successors, assigns,
heirs and representatives.
|
SECTION 9.06 |
COUNTERPARTS; FACSIMILE EXECUTION |
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which shall be considered one
and the same agreement. Execution and delivery of this Agreement by facsimile
shall be deemed to be equivalent to the execution and delivery of an original.
|
SECTION 9.07 |
NO THIRD PARTY BENEFICIARIES |
Except as expressly provided by this Agreement, nothing herein is
intended to confer upon any person or entity not a Party to this Agreement any
rights or remedies under or by reason of this Agreement.
|
SECTION 9.08 |
RULES OF CONSTRUCTION |
The Parties agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
<PAGE>
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the date first above written.
ADVANCE TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
|
Name: |
▇▇▇▇ ▇▇▇▇ |
Title: President
SXAN ACQUISITION CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇
|
Name: |
▇▇▇▇ ▇▇▇▇ |
Title: President
AMERICAN SXAN BIOTECH, INC.
|
|
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇ |
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: President and Chief Executive Officer
|
INVESTOR |
PRINCIPAL SHAREHOLDERS |
|
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇ |
/s/ ▇▇▇▇ ▇▇▇▇ |
|
|
▇▇▇▇▇▇▇ ▇▇▇▇ |
▇▇▇▇ ▇▇▇▇ |
/s/ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
</TEXT>
</DOCUMENT>