AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is entered into by and
among LEXON, INC., an Oklahoma corporation ("LEXON"), CANCER DIAGNOSTICS, INC.,
a Florida corporation ("CDI"), and UTEK, LLC, a Florida limited liability
company ("UTEK").
WHEREAS, UTEK is the majority shareholder of CDI; and
WHEREAS, Dr. Jeffrey Strovel and Dr. Judith Stamberg are the inventors
of and Dr. Ed Highsmith, PhD, is the project leader of a team of researchers at
the University of Maryland that has discovered and is developing a new
proprietary blood screen test, technology and related processes for the
identification of Telomerase Assay as a marker for lung and perhaps other forms
of cancer ("Invention") covered by US Provisional Patent Application Nos.
60/074,793; 09/250,336 and 99/03302, each of which is dated February 16,1999
("Patent Applications"), the ownership thereof having been assigned to the
University of Maryland ("UM") as described more precisely in Schedule 2.01(i);
and
WHEREAS, CDI is negotiating to acquire and Exclusive License Agreement
("License") with the UM which will grant CDI the exclusive worldwide right to
manufacture, market and commercialize products covered by the Invention; and
WHEREAS, CDI is also negotiating to enter into a Sponsored Research
Agreement ("Research Agreement") with UM, which provides for the funding of
certain continued research, development and completion of an ELISA based blood
screening test which will detect and measure to presence of the Telomerase Assay
and related research; and
WHEREAS, the parties desire to provide for the terms and conditions
upon which CDI will merge into LEXON in a statutory merger ("Merger") in
accordance with 18 Oklahoma Statutes, Section 1082 of the Oklahoma General
Business Corporation Act ("Oklahoma Act") and Section 607.1107 of the
Corporation Law of Florida ("Florida Act"), upon consummation of which the
assets and business of CDI will be owned by LEXON, all liabilities and
obligations of CDI will become the liabilities and obligations of LEXON, and all
issued and outstanding shares of capital stock of CDI will be exchanged for
common stock of LEXON; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a tax-free reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended ("Code").
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
1.01. The Merger
(a) Agreement to Merge. Subject to the terms and conditions of this
Agreement, at the Effective Time, as defined below, CDI shall be merged with and
into LEXON in accordance with the provisions of this Agreement and the Oklahoma
Act; the separate corporate existence of CDI shall cease; and LEXON shall
continue as the surviving corporation ("Surviving Corporation"). The constituent
corporations ("Constituent Corporations") to the Merger are LEXON and CDI. The
name of the Surviving Corporation, LEXON, INC., which shall not be changed by
reason of the Merger.
(b) Effective Time. The Merger shall become effective ("Effective
Time") upon filing of a Certificate of Merger substantially in the form attached
as Exhibit A ("Certificate of Merger") with the Secretary of State of the State
of Oklahoma in accordance with applicable provisions of the Oklahoma Act.
(c) Appointment of Service Agent. LEXON hereby irrevocably appoints the
Secretary of State of the State of Florida as its agent to accept process in
Florida in any proceeding for the enforcement of any obligation of any
Constituent Corporation in Florida as well as for the enforcement of any
obligation of the Surviving Corporation arising from or by reason of the Merger,
including any suit or other proceeding to enforce appraisal rights of any
shareholder of CDI. LEXON designates that all such process received by the
Secretary of State of Florida shall be sent to LEXON at 8908 South Yale, Suite
409, Tulsa, Oklahoma 74137-3545.
(d) Effect of the Merger. At the Effective Time, all rights, powers,
privileges, franchises, licenses and permits of the Constituent Corporations,
and all property, real, personal and mixed, shall be vested in the Surviving
Corporation; and all debts, duties, liabilities and claims of every kind,
character and description of the Constituent Corporations shall be debts,
duties, liabilities of and claims against of the Surviving Corporation and may
be enforced against the Surviving Corporation to the same extent as if such
debts, duties, liabilities of and claims against had been incurred by it
originally. All rights of creditors of the Constituent Corporations and all
liens upon property of any Constituent Corporation shall be preserved unimpaired
and shall not be altered in any way by reason of the Merger.
1.02. Conversion of Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the shareholders of the Constituent
Corporations:
(i) Each of the shares of CDI that are issued and outstanding at the
Effective Time shall be converted into 500 shares (or 500,000 shares in the
aggregate) of common stock of the Surviving Corporation; and
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(ii) All issued and outstanding options, warrants or other rights to
acquire any capital stock of CDI at the Effective Time shall be reason of the
Merger and without action on the part of the holders of any such rights be
automatically canceled for all purposes; and
(iii) Each share of common stock of LEXON issued and outstanding at the
Effective Time and each right to receive a share of common stock of LEXON upon
the satisfaction of any conditions outstanding at the Effective Time shall
remain issued and outstanding and shall not be effected in any manner by reason
of the Merger.
1.03. Effect of Merger.
(a) Rights in CDI Cease. At and after the Effective Time, the holder of
each certificate of common stock of CDI shall cease to have any rights as a
shareholder of CDI. All dividends or other distributions with respect to CDI
common stock prior to the Effective Time shall be payable to the shareholders of
CDI without interest upon surrender of certificates representing CDI common
stock.
(b) Closure of CDI Stock Records. From and after the Effective Time,
the stock transfer books of CDI shall be closed, and there shall be no further
registration of stock transfers on the records of CDI.
1.04. Certificate of Incorporation of the Surviving Corporation. The
Certificate of Incorporation of the Surviving Corporation shall not be changed
by reason of the Merger.
1.05. Bylaws of the Surviving Corporation. The Bylaws of the Surviving
Corporation shall not be changed by reason of the Merger.
1.06. Directors of the Surviving Corporation. The directors of the
Surviving Corporation immediately after the Effective Time shall be the persons
named in Exhibit B until each of their respective successors is duly elected and
qualified.
1.07. Officers of the Surviving Corporation. The officers of the
Surviving Corporation immediately after the Effective Time shall be the persons
set forth in Exhibit B until each of their respective successors is duly elected
and qualified.
1.08. Closing. The Closing of the Merger shall take place at the
offices of Frederick K. Slicker, 8908 S. Yale, Suite 410, Tulsa, Oklahoma
74137-3545 at 5:00 p.m. local time on a mutually agreed date on or before
January 31, 2000, or on an earlier date as the parties mutually agree ("Closing
Date"). The parties agree to use their good faith efforts to Close the Merger as
soon after but not before January 1, 2000 as is reasonably possible.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.01. General Representations and Warranties of CDI and UTEK. CDI and
UTEK represent and warrant to LEXON that the facts set forth below are true and
correct:
(a) Organization. CDI is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida, is qualified to do
business as a foreign corporation in each other jurisdiction in which the
conduct of its business or the ownership of its properties require such
qualification, and has all requisite power and authority to conduct CDI's
business and operate properties.
(b) Authorization. The execution of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby have been duly
authorized by the Board of Directors and Shareholders of CDI; no other corporate
action on its part is necessary in order to execute, deliver, consummate and
perform its obligations hereunder; and CDI has all requisite corporate and other
authority to execute and deliver this Agreement and consummate the transactions
contemplated hereby.
(c) Capitalization. The authorized capital of CDI consists of 1,000
shares of common stock, no par value per share; at the date hereof and at the
Closing 1,000 shares of its common stock are and will be issued and outstanding
and owned by UTEK, and no shares were held in its treasury. All issued and
outstanding shares of common stock of CDI have been duly and validly issued and
are fully paid and non-assessable shares and have not been issued in violation
of any preemptive or other rights of any other person or any applicable laws.
There are no outstanding options, warrants, commitments, calls or other rights
or agreements requiring it to issue any shares of CDI common stock or securities
convertible into shares of the common stock of CDI to anyone for any reason
whatsoever.
(d) Binding Effect. The execution, delivery, performance and
consummation of the Merger and the transactions contemplated hereby will not
violate any obligation to which CDI is a party and will not create a default
hereunder; and this Agreement constitutes a legal, valid and binding obligation
of CDI, enforceable in accordance with its terms, except as the enforcement may
be limited by bankruptcy, insolvency, moratorium, or similar laws affecting
creditor's rights generally and by the availability of injunctive relief,
specific performance or other equitable remedies.
(e) Litigation Relating to this Agreement. There are no suits, actions
or proceedings pending or to the knowledge of CDI or UTEK threatened which seek
to enjoin the Merger or the transactions contemplated by this Agreement or
which, if adversely decided, would have a materially adverse effect on the
business, results of operations, assets, prospects, the Patents, the Patent
Applications, the License, the Research Agreement or the results of the
operations of CDI.
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(f) No Conflicting Agreements. Neither the execution and delivery of
this Agreement nor the fulfillment of or compliance by CDI and UTEK with the
terms or provisions hereof will result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in a violation of, the
corporate charter or bylaws of CDI, the Patent Applications, the License, the
Research Agreement, or any agreement, contract, instrument, order, judgment or
decree to which either UTEK or CDI is a party or by which UTEK or CDI or any of
its assets is bound, or violate any provision of any applicable law, rule or
regulation or any order, decree, writ or injunction of any court or governmental
entity which materially affects its assets or business.
(g) Consents. No consent from or approval of any court, governmental
entity or any other person is necessary in connection with execution and
delivery of this Agreement by CDI or UTEK or performance of the obligations of
CDI or UTEK hereunder or under any other agreement to which CDI or UTEK is a
party; and the consummation of the transactions contemplated by this Agreement
will not require the approval of any entity or person or prevent the termination
of the Patent Applications, the License, the Research Agreement or any other
material right, privilege, license or agreement relating to CDI or its assets or
business.
(h) Title to Assets. CDI will at Closing have good and marketable title
to its assets (tangible and intangible), free and clear of all liens, claims,
charges, mortgages, options, restrictions, security agreements and other
encumbrances of every kind or nature whatsoever, including the duly executed and
delivered License and Research Agreement.
(i) The Patent Applications, the License and the Research Agreement.
(1) To the best knowledge of UTEK and CDI, the Patent
Applications listed in Schedule 2.01(i) are pending and are
being prosecuted in good faith with diligence; neither UTEK
nor CID has any reason to believe these Patent Applications
will not be granted; and
(2) To the best knowledge of UTEK and CDI, without having made
an independent inquiry, the Invention does not and will not
infringe the intellectual or other rights of another. This
representation and warranty is not a representation or
warranty that there are no infringing intellectual rights of
any other but is a representation and warranty only that
neither CDI nor UTEK has any knowledge thereof; and LEXON
acknowledges that neither UTEK nor CDI has conducted an
independent investigation to determine whether the Invention
infringes the rights of any other party or that the
Invention itself is marketable; and
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(3) The Invention is owned by UM and UM has all right, power,
authority, ownership and entitlement to file, prosecute and
maintain in effect the Patents and Patent Applications with
respect to the Invention listed in Schedule 2.01(i) hereto;
and
(4) Dr. Jeffrey Strovel and Dr. Judith Stamburg are the only
Inventors of the Invention; and each has assigned all of his
and her rights, titles and interests in the Invention to UM;
and
(5) The License, when executed and delivered, will be in full
force and effect at the Closing and will be legal, valid,
binding and enforceable at Closing in accordance with its
terms; and
(6) The Research Agreement, when executed and delivered, will be
in full force and effect at Closing and will be legal,
valid, binding and enforceable at Closing in accordance with
its terms.
(j) Liabilities of CDI. CDI has no assets, no liabilities of any kind,
character or description except those created by the License or the Research
Agreement.
(k) Condition of Tangible Assets. All of the tangible assets of CDI
have been operated in accordance with customary operating practices generally
acceptable in its industry to which and have been maintained and are in good
working order and repair in the ordinary course of business, subject only to
reasonable and ordinary wear and tear.
(l) Financial Statements. The unaudited financial statements of CDI
attached as Schedule 2.01(l) as of the Closing will present fairly its financial
position and the results of its operations on the dates and for the periods
shown therein; provided, however, that interim financial statements are subject
to customary year-end adjustments and accruals that, in the aggregate, will not
have a material adverse effect on the overall financial condition or results of
its operations. CDI has not engaged in any business not reflected in its
financial statements. There have been no material adverse changes in the nature
of its business, prospects, the value of assets or the financial condition since
the date of its financial statements. There are no outstanding obligations or
liabilities of CDI except as specifically set forth in the CDI financial
statements, including the obligation to maintain the Patents from and after the
date of the License, or in a schedule attached hereto and specifically agreed to
by LEXON. In the event the Inventors cease to be employed by UM prior to the
Closing and become employed by another qualified institution eligible to accept
sponsored research funds, CDI shall use its best good faith efforts to cause the
new institution to agree to continue the Research Agreement relating to the
Invention in accordance with an agreement acceptable to LEXON.
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(m) Taxes. All returns, reports, statements and other similar filings
required to be filed by CDI with respect to any federal, state, local or foreign
taxes, assessments, interests, penalties, deficiencies, fees and other
governmental charges or impositions have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such tax returns are
required to be filed; all such tax returns properly reflect all liabilities of
CDI for taxes for the periods, property or events covered thereby; and all
taxes, whether or not reflected on those tax returns, and all taxes claimed to
be due from CDI by any taxing authority, have been properly paid, except to the
extent contested in good faith by appropriate proceedings and reserves have been
established in its financial statements to the full extent if the contest is
adversely decided against it. CDI has not received any notice of assessment or
proposed assessment in connection with any tax returns, CDI has not extended or
waived the application of any statute of limitations of any jurisdiction
regarding the assessment or collection of any taxes. There are no tax liens
(other than any lien which arises by operation of law for current taxes not yet
due and payable) on any of its assets. There is no basis for any additional
assessment of taxes, interest or penalties. CDI has made all deposits required
by law to be made with respect to employees' withholding and other employment
taxes, including without limitation the portion of such deposits relating to
taxes imposed upon CDI.
(n) Absence of Certain Changes or Events. CDI has not, and without the
written consent of LEXON, it will not have:
(i) Sold, encumbered, assigned or transferred any of its
material assets or its interest in the Patents, the Patent
Applications, the Research Agreement, the License or any
other material asset; or
(ii) Amended or terminated the License or the Research Agreement;
or
(iii) Suffered any material damage, destruction or loss; or
(iv) Received notice or have knowledge of any material adverse
effect on the Patents, the Patent Applications, the Research
Agreement or the License or any other material asset or
liability of CDI; or
(v) Made any commitments or agreements for capital expenditures
or otherwise; or
(vi) Entered into any transaction or made any commitment not
disclosed to LEXON; or
(vii)Agreed to take any of the actions set forth in this
paragraph.
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(o) Material Contracts. A complete and accurate copy of all material
agreements, contracts and commitments of the following types, whether written or
oral to which it is a party or is bound, has been provided to LEXON and such
agreements are in full force and effect without amendment. In addition:
(i) There are no outstanding unpaid promissory notes, mortgages,
indentures, deeds of trust, security agreements and other
agreements and instruments relating to the borrowing of
money by or any extension of credit to CDI; and
(ii) There are no outstanding operating agreements, lease
agreements or similar agreements by which CDI is bound; and
(iii)The complete and executed License and the Research
Agreement and the Patents and the Patent Applications with
all schedules, exhibits and amendments related thereto and
all material correspondence with the patent authorities
relating thereto have been provided to LEXON; and
(iv) There are no outstanding licenses to or from others of any
intellectual property and trade names; and
(v) There are no outstanding contracts or commitments to sell,
lease or otherwise dispose of any of the property of CDI.
(p) Compliance with Laws. CDI is in compliance with all applicable
laws, rules, regulations and orders promulgated by any federal, state or local
governmental body or agency relating to its business and operations. CDI owns
all franchises, licenses, permits, easements, rights, applications, filings,
registration and other authorizations which are necessary for it to conduct
business, all of which are valid and in full force and effect, and CDI is in
full compliance therewith.
(q) Litigation. There is no suit or action or any arbitration,
administrative, legal or other proceeding of any kind or character, or any
governmental investigation pending or threatened against CDI or the Patents, the
Patent Applications, the License or the Research Agreement affecting its assets
or business, and there is no factual basis therefor. There are no pending or
threatened actions or proceedings before any court, arbitrator or administrative
agency which would, if adversely determined, individually or in the aggregate,
materially and adversely affect its assets or business.
(r) Employees. CDI has no employees. CDI is not a party to or bound by
any employment agreement or any collective bargaining agreement with respect to
any of the employees.
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(s) Employee Benefit Plans. There are no employee benefit plans in
effect, and there are no outstanding or unfunded liabilities to employees of
CDI.
(t) Books and Records. The books and records of CDI are complete and
accurate in all material respects, fairly present its business and operations,
have been maintained in accordance with good business practices, and accurately
reflect in all material respects its business, financial condition and
liabilities.
(u) No Broker's Fees. Neither UTEK nor CDI has incurred any finder=s,
broker=s, investment banking, financial, advisory or other similar fees or
obligations.
(v) Full Disclosure. All representations or warranties of UTEK and CDI
are true, correct and complete in all material respects on the date hereof and
shall be true, correct and complete in all material respects as of the Closing
as if they were made on such date. No statement made by CDI herein or in the
exhibits and schedules hereto or any document delivered by CDI or on its behalf
pursuant to this Agreement contains an untrue statement of material fact or
omits to state all material facts necessary to make the statements therein not
misleading in any material respect.
2.02. General Representations and Warranties of LEXON. LEXON represents
and warrants to UTEK and CDI that the facts set forth are true and correct:
(a) Organization. LEXON is a corporation duly organized, validly
existing and in good standing under the laws of the State of Oklahoma, is
qualified to do business as a foreign corporation in each other jurisdiction in
which the conduct of its business or the ownership of its properties require
such qualification, and has all requisite power and authority to conduct its
business and operate properties.
(b) Authorization. The execution of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby have been duly
authorized by the Board of Directors and Shareholders of LEXON; no other
corporate action on its part is necessary in order to execute, deliver,
consummate and perform its obligations hereunder; and it has all requisite
corporate and other authority to execute and deliver this Agreement and
consummate the transactions contemplated hereby.
(c) Capitalization. The authorized capital of LEXON consists of
45,000,000 shares of common stock, par value $.001 per share, of which up to
6,802,013 shares are issued and outstanding immediately, and 5,000,000 shares of
Preferred Stock, none of which is issued and outstanding. All issued and
outstanding shares of common stock of LEXON have been duly and validly issued
and are fully paid and non-assessable shares and have not been issued in
violation of any preemptive or other rights of any other person or any
applicable laws. There will be no outstanding options, warrants, commitments,
calls or
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other rights or agreements requiring it to issue any shares of LEXON common
stock or securities convertible into shares of its common stock to anyone for
any reason whatsoever immediately after the Effective Time, except that there
are issued and outstanding options to purchase 2,537,500 shares of common stock
of LEXON.
(d) Binding Effect. The execution, delivery, performance and
consummation of the Merger and the transactions contemplated hereby will not
violate any obligation to which LEXON is a party and will not create a default
hereunder; and this Agreement constitutes a legal, valid and binding obligation
of LEXON, enforceable in accordance with its terms, except as the enforcement
may be limited by bankruptcy, insolvency, moratorium, or similar laws affecting
creditor's rights generally and by the availability of injunctive relief,
specific performance or other equitable remedies.
(e) Litigation Relating to this Agreement. There are no suits, actions
or proceedings pending or to its knowledge threatened which seek to enjoin the
Merger or the transactions contemplated by this Agreement or which, if adversely
decided, would have a materially adverse effect on its business, results of
operations, assets, prospects or the results of its operations of LEXON.
(f) No Conflicting Agreements. Neither the execution and delivery of
this Agreement nor the fulfillment of or compliance by LEXON with the terms or
provisions hereof will result in a breach of the terms, conditions or provisions
of, or constitute a default under, or result in a violation of, its corporate
charter or bylaws, or any agreement, contract, instrument, order, judgment or
decree to which it is a party or by which it or any of the assets is bound, or
violate any provision of any applicable law, rule or regulation or any order,
decree, writ or injunction of any court or governmental entity which materially
affects its assets or business.
(g) Consents. No consent from or approval of any court, governmental
entity or any other person is necessary in connection with its execution and
delivery of this Agreement and performance of the obligations of LEXON hereunder
or under any other agreement to which LEXON is a party; and the consummation of
the transactions contemplated by this Agreement will not require the approval of
any entity or person in order to prevent the termination of any material right,
privilege, license or agreement relating to LEXON or its assets or business.
(h) Title to Its Assets. LEXON has good and marketable title to its
assets (tangible and intangible), free and clear of all charges, claims, liens,
mortgages, options, restrictions, security agreements and other encumbrances of
every kind or nature whatsoever.
(i) Condition of Tangible Assets. All of its tangible assets have been
operated in accordance with customary operating practices generally acceptable
in its industry to
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which and have been maintained and are in good working order and repair in the
ordinary course of business, subject only to reasonable and ordinary wear and
tear.
(j) Financial Statements. The unaudited financial statements of LEXON
attached as Schedule 2.02(j) present fairly its financial position and the
results of its operations on the dates and for the periods shown therein;
provided, however, that interim financial statements are subject to customary
year-end adjustments and accruals that, in the aggregate, will not have a
material adverse effect on the overall financial condition or results of its
operations. LEXON has not engaged in any business not reflected in its financial
statements. There have been no material adverse changes in the nature of its
business, prospects, the value of assets or the financial condition since the
date of its financial statements. There are no material outstanding obligations
or liabilities of LEXON except as specifically set forth in the LEXON financial
statements.
(k) Taxes. All returns, reports, statements and other similar filings
required to be filed by it with respect to any federal, state, local or foreign
taxes, assessments, interests, penalties, deficiencies, fees and other
governmental charges or impositions have been timely filed with the appropriate
governmental agencies in all jurisdictions in which such tax returns are
required to be filed; all such tax returns properly reflect all liabilities of
it for taxes for the periods, property or events covered thereby; and all taxes,
whether or not reflected on those tax returns, and all taxes claimed to be due
from it by any taxing authority, have been properly paid, except to the extent
it has contested in good faith by appropriate proceedings and adequate reserves
have been established in its financial statements to the full extent if the
contest is adversely decided against it. LEXON has not received any notice of
assessment or proposed assessment in connection with any tax returns. LEXON has
not extended or waived the application of any statute of limitations of any
jurisdiction regarding the assessment or collection of any taxes. There are no
tax liens (other than any lien which arises by operation of law for current
taxes not yet due and payable) on any of its assets. LEXON has no knowledge of
any basis for any additional assessment of taxes. LEXON has made all deposits
required by law to be made with respect to employees' withholding and other
employment taxes, including without limitation the portion of such deposits
relating to taxes imposed upon it.
(l) Absence of Certain Changes or Events. LEXON has not and, without
the written consent of CDI, it will not have:
(i) Sold, encumbered, assigned or transferred any of its
material assets for less than fair consideration; or
(ii) Amended or terminated any material agreement; or
(iii) Suffered any material damage, destruction or loss; or
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(iv) Received notice or have knowledge of any material adverse
effect on its material assets; or
(v) Made any commitments or agreements for capital expenditures;
or
(vi) Entered into any transaction other than in the ordinary
course of business consistent with past practice; or
(vii)Agreed to take any of the actions set forth in this
paragraph.
(m) Material Contracts. A complete and accurate copy of all material
agreements, contracts and commitments of the following types, whether written or
oral to which it is a party or is bound, has been provided to CDI:
(i) All material promissory notes, mortgages, indentures, deeds
of trust, security agreements and other agreements and
instruments relating to the borrowing of money by or any
extension of credit to it; and
(ii) All material operating agreements and lease agreements; and
(iii)All material licenses to or from others of any intellectual
property and trade names.
(n) Compliance with Laws. LEXON is in compliance with all applicable
laws, rules, regulations and orders promulgated by any federal, state or local
governmental body or agency relating to its business and operations. LEXON owns
all franchises, licenses, permits, easements, rights, applications, filings,
registration and other authorizations which are necessary for it to conduct
business, all of which are valid and in full force and effect, and it is in full
compliance therewith.
(o) Litigation. There is no suit, action or any arbitration,
administrative, legal or other proceeding of any kind or character, or any
governmental investigation pending or threatened against it affecting its assets
or business, and there is no factual basis therefor. There are no pending or
threatened actions or proceedings before any court, arbitrator or administrative
agency which would, if adversely determined, individually or in the aggregate,
materially and adversely affect its assets or business.
(p) Employees. LEXON has 5 part-time employees, four of whom are
employed but do not receive cash compensation. LEXON has no written agreements
with its employees.
(q) Employee Benefit Plans and Arrangements. LEXON has no employee
benefit plans in effect, and LEXON has no unfunded liabilities to employees.
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(r) Books and Records. The books and records of LEXON are complete and
accurate in all material respects, fairly present its business and operations,
have been maintained in accordance with good business practices, and accurately
reflect in all material respects its business and financial condition.
(s) No Broker's Fees. LEXON has incurred no finder's, broker's,
investment banking, financial, advisory or other similar fee in connection with
this Agreement.
(t) Full Disclosure. All representations or warranties of LEXON are
true, correct and complete in all material respects on the date hereof and shall
be true, correct and complete in all material respects as of the Closing as if
they were made on such date. No statement made by it herein or in the exhibits
and schedules hereto or any document delivered by it or on its behalf pursuant
to this Agreement contains an untrue statement of material fact or omits to
state all material facts necessary to make the statements therein not misleading
in any material respect.
2.03. Investment Representations of UTEK Shareholder. UTEK represents
and warrants to LEXON that:
(a) General. It has such knowledge and experience in financial and
business matters as to be capable of evaluating the risks and merits of an
investment in the shares ("Shares") of common stock of LEXON issuable pursuant
to the Merger. It is able to bear the economic risk of the investment in the
Shares, including the risk of a total loss of the investment in the Shares. The
acquisition of the Shares is for its own account and is for investment. Except
as permitted by law, it has a no present intention of selling, transferring or
otherwise disposing in any way of all or any portion of the Shares. All
information that it has supplied to LEXON in connection with this Agreement is
true and correct. It acknowledges that an investment in the Shares involves a
very high degree of risk. It has conducted all investigations and due diligence
concerning LEXON which it deems appropriate, and it has found all such
information obtained fully acceptable. It is knowledgeable about the prospects,
business, financial condition, operations and possible acquisitions of LEXON. It
has had an opportunity to ask questions of the officers and directors of LEXON
concerning the Shares and the business and financial condition of and prospects
for LEXON, and the officers and directors of LEXON have adequately answered all
questions asked and made all relevant information requested available to it. It
understands that success of LEXON is dependent upon LEXON's receipt of funds
necessary to provide working capital, which may not occur. It understands and
agrees that the following restrictions and limitations are applicable to the
purchase, resale and distribution of the Shares pursuant to applicable
securities laws.
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(b) Stock Transfer Restrictions.
(i) It is aware that it must bear the full economic risk of an
investment in the Shares of LEXON for an indefinite period of
time, because the transaction in which the Shares are being
issued has not been registered under the Securities Act of 1933,
as amended ("Securities Act"), or the securities laws of any
state; and, therefore, the Shares cannot be sold, pledged,
transferred or otherwise disposed of unless registered under
applicable securities laws or an exemption from registration is
available. It further understands that only LEXON can take action
to register the Shares, and the cost of registration is
prohibitive.
(ii) A legend will be placed on the certificates representing the
common stock of LEXON in substantially the following form:
NOTICE OF TRANSFER RESTRICTIONS
The shares evidenced by this Certificate have been acquired for
investment only and have not been registered under the Securities Act
of 1933, as amended, or the securities laws of any state. The Shares
may not be sold, transferred, pledged or otherwise disposed of without
the receipt of an opinion of counsel acceptable to LEXON that no such
registration is required.
(iii)Stop transfer instructions have been placed in LEXON's transfer
records with respect to the Shares to insure that any transfer or
disposition thereof is in full compliance with applicable law. It
agrees that LEXON may refuse or delay transfer of the Shares or
impose other restrictions on the transfer of the Shares if LEXON
is not satisfied that the transfer is lawful. However, LEXON
acknowledges and agrees that this determination must be made
within a reasonable time; and if LEXON finds the transfer is
satisfactory and permitted by applicable law, LEXON will not
refuse or delay the transfer.
ARTICLE III
TRANSACTIONS PRIOR TO CLOSING
3.01. Corporate Approvals. Prior to Closing, each of the parties shall
submit this Agreement to its Board of Directors and Shareholders and obtain
approval thereof. Copies of corporate actions taken shall be provided to each
party.
3.02. Access to Information. Each party agrees to permit upon
reasonable notice the attorneys, accountants, and other representatives of the
other parties reasonable access during normal business hours to its properties
and its books and records to make reasonable
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investigations with respect to its affairs, and to make its officers and
employees available to answer questions and provide additional information as
reasonably requested.
3.03. Expenses. Each party agrees to bear its own expenses in
connection with the negotiation and consummation of the Merger and the
transactions contemplated hereby.
3.04. Covenants. Except as permitted in writing, each party agrees that
it will:
(i) Use its good faith efforts to obtain all requisite licenses,
permits, consents, approvals and authorizations necessary in
order to consummate the Merger; and
(ii) Notify the other parties upon the occurrence of any event
which would have a materially adverse effect upon the Merger
or the transactions contemplated hereby or upon the
business, assets or results of operations; and
(iii)Not modify its corporate structure, except as necessary or
advisable in order to consummate the Merger and the
transactions contemplated hereby.
ARTICLE IV
CONDITIONS PRECEDENT
The obligation of the parties to consummate the Merger and the
transactions contemplated hereby are subject to the following conditions which
may be waived to the extent permitted by law:
(a) Each party must obtain the approval of its Board of Directors and
shareholders in accordance with applicable law, and such approval shall not have
been rescinded or restricted; and
(b) Each party shall obtain all requisite licenses, permits, consents,
authorizations and approvals required to complete the Merger and the
transactions contemplated hereby; and
(c) There shall be no effective injunction, writ or preliminary
restraining order or other order of a similar nature issued by any court or
governmental agency having jurisdiction directing that the Merger or the
transactions contemplated hereby shall not be consummated; and
(d) The representations and warranties of the parties shall be true and
correct in all material respects at the Effective Time; and
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(e) LEXON shall issued to UTEK 500,000 shares of LEXON common stock;
(f) LEXON shall enter into a Consulting Agreement with UTEK in mutually
acceptable form and substance;
(g) The Patent Applications have been prosecuted in good faith with
reasonable diligence; provided that the parties understand and agree that UTEK
is only making a representation and warranty that the patent application has
been prosecuted in good faith with reasonable diligence.
(h) The Research Agreement has been executed and delivered, is valid
and in full force and effect, is in form and substance acceptable to LEXON, and
there has been no default therein; and
(i) The License has been executed and delivered, is valid and in full
force and effect, is in form and substance acceptable to LEXON, and there has
been no default therein; and
(j) The Inventors and Dr. Highsmith have entered into Consulting
Agreements with LEXON in mutually agreed form and substance which provide that
they will be reasonably available to provide consulting services and technical
advice to LEXON from time to time about the Invention, so long as such advice
and consulting services do not unreasonably interfere with their duties and
responsibilities with UM and so long as the same are in accordance with
applicable policies of UM and applicable legal and regulatory requirements
applicable to them; and
(k) LEXON's common stock shall be eligible for trading on a public
market.
ARTICLE V
INDEMNIFICATION
(a) By UTEK. UTEK agrees to indemnify, defend and hold harmless LEXON
and its shareholders, directors, officers, employees, agents and representatives
and their respective successors and assigns against and in respect of any cost,
damage, expense (including reasonable legal fees and actual expenses), liability
or loss incurred or suffered by any of them resulting from or arising out of
the: (i) breach, inaccuracy, misrepresentation or untruth of any representation
or warranty, or the nonfulfillment of any agreement or covenant of UTEK
contained in this Agreement or in any document delivered by UTEK or CDI to LEXON
pursuant hereto; and (ii) any action, assessment, claim, demand, proceeding or
suit incident to any of the foregoing. The liability of UTEK hereunder may be
satisfied by the return to LEXON of shares of LEXON common stock issued pursuant
hereto valued at the fair market value on the date the breach is discovered to
the extent of the breach.
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(b) By LEXON. LEXON agrees to indemnify, defend and hold harmless UTEK
and its member, managers, officers, employees, agents and representatives and
their respective successors and assigns against and in respect of any cost,
damage, expense (including reasonable legal fees and actual expenses), liability
or loss incurred or suffered by any of them resulting from or arising out of:
(i) the breach, inaccuracy, misrepresentation or untruth of any representation,
warranty, or the nonfulfillment of any agreement or covenant of LEXON contained
in this Agreement or in any document delivered by it to UTEK pursuant hereto;
and (ii) any action, assessment, claim, demand, proceeding or suit incident to
any of the foregoing.
(c) Costs. The indemnification rights and obligations of a party hereto
shall include the right to receive and the duty to pay and reimburse the
indemnified party all its reasonable costs and expenses incurred in the
enforcement of its rights hereunder.
(d) Survival of Representations and Warranties.
(1) The representations and warranties made by UTEK shall survive
for a period of 3 years after Closing, and thereafter all such
representations and warranties shall be extinguished, except with
respect to claims then pending for which specific notice has been
given during such 3 year period. UTEK shall have liability and
responsibility for the surviving representations and warranties made
by it herein, notwithstanding any due diligence investigation or
examination by LEXON.
(2) The representations and warranties made by LEXON shall
survive for a period of 3 years after Closing, and thereafter all such
representations and warranties shall be extinguished, except with
respect to claims then pending for which specific notice has been
given during such 3 year period. LEXON shall have liability and
responsibility for the surviving representations and warranties made
to LEXON, notwithstanding any due diligence investigation or
examination by UTEK.
(e) Limitations on Liability. Notwithstanding any other provision
herein to the contrary, neither party hereto shall be liable to the other party
for any cost, damage, expense, liability or loss under this indemnification
provision until after the sum of all amounts individually when added to all
other such amounts in the aggregate exceeds $5,000, and then such liability
shall apply only to matters in excess of $5,000.
(f) Rights of Indemnitors. The indemnified party shall notify the
indemnifying party of the assertion or commencement of such action, claim or
proceeding within a reasonable period of time or, if citation or service of
process has been made, within 15 days thereafter. The indemnified party may, at
its option and at its sole expense, participate in the defense of and contest
any such action, claim or proceeding; provided, however, the indemnified party
shall at all times also have the right to participate fully therein. If the
-17-
indemnifying party, within a reasonable time after receiving such notice, fails
to participate, the indemnified party shall have the right, but shall not be
obligated, to undertake the defense of the action, claim or proceeding for the
account of and at the risk of the indemnifying party; provided, however, in the
event that the indemnified party shall determine to compromise or settle
(exercising its judgment in good faith) any such action, claim or proceeding,
the indemnified party shall be required to give the indemnifying party 15 days'
notice of such determination after its receipt of actual notice of the claim.
The indemnified party shall then be entitled to compromise or settle the action,
claim or proceeding for the account of and at the risk of the indemnifying
party; provided, however, the settlement shall be effective without the consent
of both the indemnifying and indemnified parties, which consent shall not be
reasonably withheld. The parties agree that any indemnified party may join any
indemnifying party in any action, claim or proceeding brought by a third party,
as to which any right of indemnity created by this Agreement would or might
apply, for the purpose of enforcing any right of the indemnity granted to such
indemnified party pursuant to this Agreement.
(g) Additional Rights. Any right of indemnity of any party pursuant to
this Agreement shall be in addition to and shall not operate as a limitation on
any other right to indemnity of such party pursuant to this Agreement, any
document or instrument executed in connection with the consummation of the
transaction contemplated hereby or otherwise.
ARTICLE VI
ARBITRATION
In the event a dispute arises with respect to the interpretation or
effect of this Agreement or concerning the rights or obligations of the parties
hereto, the parties agree to negotiate in good faith with reasonable diligence
in an effort to resolve the dispute in a mutually acceptable manner. Failing to
reach a resolution thereof, either party shall have the right to submit the
dispute to be settled by arbitration under the Commercial Rules of Arbitration
of the American Arbitration Association. The parties agree that all arbitrations
shall be conducted in Tulsa, Oklahoma, unless the parties mutually agree to the
contrary. The cost of arbitration shall be borne by the party against whom the
award is rendered or, if in the interest of fairness, as allocated in accordance
with the judgment of the arbitrators. All awards in arbitration made in good
faith and not infected with fraud or other misconduct shall be final and
binding.
ARTICLE VII
MISCELLANEOUS
No party may assign this Agreement or any right or obligation of it
hereunder without the prior written consent of the other parties hereto. No
permitted assignment shall relieve a party of its obligations under this
Agreement without the separate written consent of the other parties. This
Agreement shall be binding upon and enure to the benefit of the parties
-18-
and their respective permitted successors and assigns. Each party agrees that it
will comply with all applicable laws, rules and regulations in the execution and
performance of its obligations under this Agreement. This Agreement shall be
governed by and construed in accordance with the laws of the State of Oklahoma.
This document constitutes a complete and entire agreement among the parties with
reference to the subject matters set forth herein. No statement or agreement,
oral or written, made prior to or at the execution hereof and no prior course of
dealing or practice by either party shall vary or modify the terms set forth
herein without the prior consent of the other parties hereto. This Agreement may
be amended only by a written document signed by the parties. Notices or other
communications required to be made in connection with this Agreement shall be
delivered to the parties at the address set forth below or at such other address
as may be changed from time to time by giving written notice to the other
parties. This Agreement may be executed in multiple counterparts, each of which
shall constitute one and a single Agreement.
ARTICLE VIII
PIGGYBACK REGISTRATION RIGHTS
LEXON covenants and agrees that if it files with the Securities and
Exchange Commission an underwritten registration statement on SEC Form S-SB1 or
Form S-l or its equivalent which includes the offer of shares owned by
shareholders of LEXON, LEXON will use its best efforts to include some or all of
the shares of LEXON common stock issued to and then held by UTEK pursuant to
this Agreement. If the underwriters include any selling shareholder shares, UTEK
shall be permitted to include some or all of its LEXON shares on a pro rata
basis to the extent and upon the same terms and conditions as other LEXON
shareholders are permitted to have their LEXON shares included in the proposed
offering. If the underwriters do not permit for any reason the inclusion of
selling shareholder shares in the offering, UTEK shares shall also not be
included. It is the expressed intent of this Article that UTEK be treated
exactly the same as any other selling LEXON shareholder in connection with any
underwritten offering of LEXON common stock, no better and no worse. If LEXON
proposes an underwritten offering, LEXON will give UTEK 15 days' prior written
notice thereof, and UTEK shall give LEXON notice within 10 days thereafter of
UTEK's desire as to the number of shares, if any, that UTEK desires to include
in the offering. LEXON will notify the lead underwriters of UTEK's desire, and
LEXON will include UTEK shares in accordance with this Article. As a condition
of including any UTEK shares in the offering, UTEK shall (1) sign all
underwriting agreements, representations, warranties, certificates and other
papers as the underwriters require of UTEK and other LEXON shareholders whose
shares are to be included in the offering; (2) pay pro rata all costs of the
offering to the same extent as other LEXON selling shareholders are required to
pay; and (3) take all other actions and do all other things as are required of
other selling shareholders. Failure of UTEK to respond within 10 days after
notice of LEXON's intention to file an underwritten offering shall constitute a
waiver of the rights set forth in this Article.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by a duly authorized officer this 5th day of August, 1999.
LEXON, INC. CANCER DIAGNOSTICS, INC.
By: /s/ GIFFORD M. MABIE By: /s/ CLIFFORD M. GROSS
- ---------------------------------- --------------------------------
Gifford M. Mabie, President Dr. Clifford M. Gross, President
UTEK, LLC
By: /s/ CLIFFORD M. GROSS
--------------------------------
Dr. Clifford M. Gross, Chief Executive
Officer
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Exhibit B
to
Agreement and Plan of Merger
Directors
Gifford M. Mabie
Officers and Key Consultants
Gifford M. Mabie President and CEO
Rhonda R. Vincent Director of Accounting
Frederick K. Slicker General Counsel
Thomas Coughlin, M. D. Medical Director
EXHIBIT A
CERTIFICATE OF MERGER
TO THE SECRETARY OF STATE OF THE STATE OF OKLAHOMA, 101 State Capitol Bldg.,
Oklahoma City, OK 73105.
This Certificate of Merger is being filed pursuant to Section 1082 of
the Oklahoma General Corporation Act. In lieu of filing an executed Agreement
and Plan of Merger, the Surviving Corporation hereby states and certifies as
follows:
1. The names and states of incorporation of each of the Constituent
Corporations are:
NAME OF CORPORATION STATE OF INCORPORATION
Lexon, Inc. Oklahoma
Cancer Diagnostics, Inc. Florida
2. An Agreement and Plan of Merger has been approved, adopted, certified,
executed and acknowledged by each Constituent Corporation, in accordance
with the provisions of Section 1082 of Title 18 of the Oklahoma Statutes
and Section 601.1107 of the Corporation Laws of Florida.
3. The name of the Surviving Corporation is Lexon, Inc.
4. The Certificate of Incorporation of the Surviving Corporation is not being
changed by reason of the Merger.
5. The executed Agreement and Plan of Merger is on file at the principal place
of business of the Surviving Corporation at 8908 S. Yale, Suite 409, Tulsa,
OK 74137-3545.
6. A copy of the Agreement and Plan of Merger will be furnished on request and
without cost to any shareholder of any Constituent Corporation.
7. The authorized capital of Cancer Diagnostic, Inc. is 1,000 shares of common
stock, no par value, and 1,000 shares are issued, outstanding and voted for
the Merger.
1
IN WITNESS WHEREOF, the Surviving Corporation has caused these Articles
of Merger to be executed by its President and attested by its Assistant
Secretary, this ____of January, 2000.
LEXON, INC.
By: __________________________________
Gifford M. Mabie, President
ATTEST:
By:____________________________
Rhonda Vincent, Assistant Secretary
2
EXHIBIT A
ARTICLES OF MERGER
TO THE SECRETARY OF STATE OF THE STATE OF FLORIDA, 409 EAST GAINES STREET,
TALLAHASSEE, FLORIDA 32299:
These Articles of Merger are being filed pursuant to Section 601.117 of
the Florida General Corporation Laws. In lieu of filing an executed Agreement
and Plan of Merger, the Surviving Corporation hereby states and certifies as
follows:
1. The names and states of incorporation of each of the Constituent
Corporations are:
NAME OF CORPORATION STATE OF INCORPORATION
Lexon, Inc. Oklahoma
Cancer Diagnostics, Inc. Florida
2. An Agreement and Plan of Merger has been approved, adopted, certified,
executed and acknowledged by each Constituent Corporation, in accordance
with the provisions of Section 1082 of Title 18 of the Oklahoma Statutes
and Section 601.1107 of the Corporation Laws of Florida. The Board of
Directors and Shareholders of the Surviving Corporation approved the Merger
August ___,1999 and August ___, 1999, respectively; and the Board of
Directors and Shareholders of Cancer Diagnostics, Inc. approved the Merger
on August __, 1999 and August ___, 1999, respectively.
3. The name of the Surviving Corporation is Lexon, Inc.
4. The Certificate of Incorporation of the Surviving Corporation is not being
changed by reason of the Merger.
5. The executed Agreement and Plan of Merger is on file at the principal place
of business of the Surviving Corporation at 8908 S. Yale, Suite 409, Tulsa,
OK 74137-3545.
6. A copy of the Agreement and Plan of Merger will be furnished on request and
without cost to any shareholder of any Constituent Corporation.
7. The authorized capital of Cancer Diagnostics, Inc. is 1,000 shares of
common stock, no par value, and 1,000 shares are issued, outstanding and
voted for the Merger.
1
IN WITNESS WHEREOF, the Surviving Corporation has caused these Articles
of Merger to be executed by its President and attested by its Assistant
Secretary, this ____of January, 2000.
LEXON, INC.
By: __________________________________
Gifford M. Mabie, President
ATTEST:
By:____________________________
Rhonda Vincent, Assistant Secretary
2
Schedule 2.01(l)
CDI Financial Statements
Schedule 2.01(i)
PATENT APPLICATIONS
TECH DISCLOSURE PATENT
UMB ID# APPLICATION DATE TITLE
1489JS Provisional 2/16/98 Telomerase
Assay or Body
Fluids for
Cancer
Screening and
Assessment of
Disease Stage
and Prognosis
Patent App. 2/16/99
US
09/250,336
Schedule 2.02(j)
LEXON Financial Statements