AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is entered into by and
between Lexon, Inc., an Oklahoma corporation ("Lexon"), Gentest, Inc., a Florida
corporation ("Gentest"), and UTEK Corporation, a Florida corporation ("UTEK").
WHEREAS, UTEK is the sole shareholder of Gentest; and
WHEREAS, Gentest owns all right, title and interest in a license to
manufacture and market a proprietary protein screening process for colon,
ovarian and testicular cancer ("Invention") covered by a pending U.S. patent
application; and
WHEREAS, Lexon intends to establish a public market for its stock on
the NASDAQ Bulletin Board in order to attract new capital for the development,
testing and distribution of test kits using the Invention; and
WHEREAS, the parties desire to provide for the terms and conditions
upon which Gentest 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 Gentest will be owned by Lexon, all liabilities and
obligations of Gentest will become the liabilities and obligations of Lexon, and
all issued and outstanding shares of capital stock of Gentest 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, Gentest shall be merged with
and into Lexon in accordance with the provisions of this Agreement and the
Oklahoma Act; the separate corporate existence of Gentest shall cease; and Lexon
shall continue as the surviving corporation ("Surviving Corporation"). The
constituent corporations ("Constituent Corporations") to the Merger are Lexon
and Gentest. The name of the Surviving Corporation, Lexon, Inc., 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 Gentest. Lexon designates that all such process received shall be
sent to Lexon at 0000 Xxxxx Xxxx, Xxxxx 000, Xxxxx, Xxxxxxxx 00000-0000.
(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 and claims of the Surviving Corporation and may be enforced
against the Surviving corporation to the same extent as if such debts, duties,
liabilities and claims 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 1,000 shares of Gentest that are issued and outstanding
at the Effective Time shall be converted into 1,000,000 shares of common stock
of the Surviving Corporation issued in the name of UTEK on a ratio of 1 share of
Gentest common stock for 1,000 shares of Lexon at an agreed fair market value of
Lexon common stock of $.001 per share; and
(ii) All issued and outstanding options, warrants or other rights to
acquire common stock of Gentest at the Effective Time shall be reason of the
Merger and without action on the part of the holders thereof be automatically
canceled for all purposes; and
(iii) Each share of common stock of Lexon issued and outstanding at the
Effective Time shall remain issued and outstanding as one share of common stock
of the Surviving Corporation.
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1.03. Effect of Merger.
(a) Rights in Gentest Cease. At and after the Effective Time, the
holder of each certificate of common stock of Gentest shall cease to have any
rights as a shareholder of Gentest. All dividends or other distributions with
respect to Gentest common stock prior to the Effective Time shall be payable to
the shareholders of Gentest without interest upon surrender of certificates
representing Gentest common stock.
(b) Closure of Gentest Stock Records. From and after the Effective
Time, the stock transfer books of Gentest shall be closed, and there shall be no
further registration of stock transfers on the records of Gentest.
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 Xxxxxxxxx X. Xxxxxxx, 0000 X. Xxxx, Xxxxx 000, Xxxxx, Xxxxxxxx
00000-0000 at 5:00 p.m. local time on the date earlier than July 9,1998 on which
the last condition set forth herein is fulfilled or waived or at such time and
place as the parties mutually agree ("Closing Date").
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.01. General Representations and Warranties of UTEK.. UTEK represents
and warrants to Lexon that the facts set forth below are true and correct:
(a) Organization. Gentest 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 its
business and operate properties.
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(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 sole Shareholder of Gentest; 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 Gentest consists of 1,000
shares of common stock, par value $1.00 per share; at the date hereof, 1,000
shares of its common stock were issued and outstanding and owned by UTEK; and no
shares were held in its treasury. All issued and outstanding shares of common
stock of Gentest 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 Gentest common stock or securities
convertible into shares of its common stock 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 Gentest is a party and will not create a default
hereunder; and this Agreement constitutes a legal, valid and binding obligation
of Gentest, 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 the business, results of
operations, assets, prospects, the Patent Application, the License, or the
results of the operations of Gentest.
(f) No Conflicting Agreements. Neither the execution and delivery of
this Agreement nor the fulfillment of or compliance by Gentest with the terms or
provisions thereof 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, the Patent Application, the License, 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 execution and
delivery of this Agreement
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by Gentest and performance of the obligations of Gentest hereunder or under any
other agreement to which Gentest 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 the Patent Application,
the License, or any other material right, privilege, license or agreement
relating to Gentest or its assets or business.
(h) Title to Its Assets. Gentest has 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.
(i) The Patent and the License. To the knowledge of UTEK and Gentest
(with Lexon acknowledging that neither UTEK nor Gentest has conducted an
independent investigation to determine whether the Invention infringes the
rights of any other party or that the Invention itself is marketable):
(i) The Invention covering the use of TGF-B4 (Ebaf)
screening for early detection of colon, ovarian and
testicular cancer and products produced therefrom
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 Gentest
nor UTEK has any knowledge thereof; and
(ii) The Invention is owned by the University of South
Florida ("USF") and USF has all right, power,
authority and ownership and entitlement to file the
U.S. Patent Application No. 081,919,421 ("Patent
Application"); and
(iii) Dr. Sioynak-Xxxxxxxxxx and Xx. Xxxx Xxxxxxxxxx are
the only Inventors of the Invention and they have
assigned their rights in the Invention to USF; and
(iv) The license ("License") dated April 9, 1998 by and
between Gentest and the University of South Florida
Research Foundation, Inc., a Florida not for profit
corporation and a direct support organization of the
University of South Florida ("USFRF"), covering the
Invention, is legal, valid, binding and enforceable
in accordance with its terms;
(v) All of the tangible assets of Gentest 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.
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(j) Assets and Liabilities of Gentest. Gentest has no assets, no
liabilities of any kind, character or description except those created by the
License Agreement as follows:
(i) Initial License fee of $100,000.00 payable to the
USFRF on or before July 8, 1998 and the royalty
amount as set forth in its License Agreement with
Gentest as amended; and
(ii) Initial License Fee of $5,000 payable to North Shore
University Hospital Research Corporation on or before
July 8, 1998 and the royalty amount as set forth in
the License Agreement; and
(iii) Sponsored Research Fee of $311,250.00 payable to the
USFRF or North Shore University Hospital Research
Corporation on or before July 8, 1998; and
(iv) Consulting obligation to UTEK for $55,000 for
services rendered to date.
It is understood that if the fees are not received by USFRF or North
Shore University Hospital Research Corporation on or before the date due, then
the License shall become null and void, and the parties shall be released from
its terms and obligations.
(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
reflected on Schedule 2.01(k) where Gentest has contested in good faith by
appropriate proceedings and reserves have been established on its financial
statements to the full extent if the contest is adversely decided against it.
Gentest has not received any notice of assessment or proposed assessment in
connection with any tax returns, Gentest 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. Gentest 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. Gentest has not, and without
the written consent of Lexon, and it will not have:
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(i) Sold, encumbered, assigned or transferred any of its
material assets or its interest in the Patent Application, the
License or any other material asset; or
(ii) Amended or terminated the License; or
(iii) Suffered any material damage, destruction or loss; or
(iv) Received notice or had knowledge of any material adverse
effect on the Patent or the License or any other material
asset or liability; 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.
(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 Lexon and such
agreements are in full force and effect without amendment:
(i) All 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 operating agreements and lease agreements; and
(iii) The complete License and Patent Application with all
schedules, exhibits and amendments related thereto; and
(iv) All licenses to or from others of any intellectual
property and trade names; and
(v) All contracts or commitments to sell, lease or otherwise
dispose of any of its property.
(n) Compliance with Laws. Gentest 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. Gentest
owns all franchises, licenses, permits, easements, rights, applications,
filings, registration and other authorizations which
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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. Gentest has no employees. Gentest is not a party to or
bound by any employment agreement or any collective bargaining agreement with
respect to any of the employees.
(q) Employee Benefit Plans. There are no employee benefit plans in
effect, and there are no outstanding or unfunded liabilities to employees of
Gentest.
(r) Books and Records. The books and records of Gentest 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.
(s) No Broker's Fees. Neither UTEK nor Gentest has incurred any
finder=s, broker=s, investment banking, financial, advisory or other similar
fees or obligations.
(t) Full Disclosure. All representations or warranties of UTEK 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 either UTEK herein or in the
exhibits hereto or any document delivered by Gentest 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.
(u) Offering Memorandum. The draft Lexon Private Offering Memorandum
dated May 7, 1998 is true and correct as it relates to the information relating
to UTEK , the Invention, the Patent Application and the Sponsored Research
Agreement.
2.02. General Representations and Warranties of Lexon. Lexon represents
and warrants to UTEK 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
8
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; and at the
Effective Date of the Merger, up to 5,000,000 shares of its common stock will be
issued and outstanding immediately after the Effective Date. 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 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 Date.
(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 thereof 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.
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(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 Its Tangible Assets. All of its tangible assets 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.
(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.
(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 on 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
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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 Gentest, 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
(iv) Received notice or had 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 Gentest:
(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.
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(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 4 employees. Lexon has no written agreements
with its employees.
(q) Employee Benefit Plans and Arrangements. There are no employee
benefit plans in effect, and there are no unfunded liabilities to employees.
(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.
(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
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.
(u) Offering Memorandum. The draft Lexon Private Offering Memorandum
dated May 7, 1998 is true and correct in all material respects. As to
information regarding UTEK, the Invention, the Patent Application and the
Sponsored Research Agreement, Lexon is relying upon the representations of UTEK.
2.03. Investment Representations of UTEK. UTEK represents and warrants
to Lexon that:
(a) 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 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
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in any way of all or any portion of the Shares. All information that it has
supplied to Lexon 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 he 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
available to them. 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.
(b) (i) It is aware that it must bear the full economic risk of an
investment in 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, unless a valid SEC Regulation D Rule 504 exemption exists, 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 Common Stock, 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. Without such registration, and
unless it is determined by counsel to Lexon that the shares were issued pursuant
to a valid Rule 504 of SEC Regulation D exemption, the shares may not be sold,
transferred, pledged or otherwise disposed of, except upon receipt by Lexon of
an opinion of counsel satisfactory to Lexon that registration is not 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 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.
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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 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:
(i) 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
(ii) Each party shall obtain all requisite licenses, permits, consents,
authorizations and approvals required to complete the Merger and the
transactions contemplated hereby; and
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(iii) 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
(iv) The representations and warranties of the parties shall be true
and correct in all material respects at the Effective Time; and
(v) Lexon shall deposit into escrow $471,250 to insure for all parties
that these liabilities of Gentest, which become Lexon liabilities by reason of
the Merger, shall be paid on or before July 8, 1998, when due.
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 it 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.
(b) By Lexon. Lexon agrees to indemnify, defend and hold harmless UTEK
and its shareholders, officers, directors, 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.
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(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 $500, and then such liability shall
apply only to matters in excess of $500.
(f) Rights of Indemnitors. The indemnified party shall notify the
indemnifying party of the assertion of 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
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.
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(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 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.
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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-1B 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 paragraph. 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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by a duly authorized officer this 11th day of May, 1998.
LEXON, INC. GENTEST, INC.
By: /s/ XXXXXX XXXXXXX By: /s/ XXXXXXXX X. XXXXX
Xxxxxx Xxxxxxx, Vice President Xxxxxxxx X. Xxxxx, President
UTEK, INC.
By: /s/ XXXXXXXX X. XXXXX
Xxxxxxxx X. Xxxxx, President
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