SHARE EXCHANGE AGREEMENT
by and between
Lexon, Inc., an Oklahoma corporation
and
Provision Operation Systems, Inc., a Nevada corporation
Dated as of October 15, 2003
Share Exchange Agreement-Page 1
TABLE OF CONTENTS
THE SHARE EXCHANGE Page
1.1 The Share Exchange..............................................................................6
1.2 Number of Shares of LEXON Common Stock..........................................................6
1.3 Conversion of PROVISION Common Stock............................................................7
1.4 Effective Time..................................................................................7
1.5 Fractional Shares...............................................................................7
1.6 Reservation of Shares...........................................................................7
1.7 Dissenting Shares...............................................................................7
1.8 Exchange of Certificates........................................................................8
1.9 No Further Ownership Rights in PROVISION Common Stock...........................................8
1.10 Lost, Stolen or Destroyed Certificates..........................................................8
1.11 Exemption From Registration.....................................................................8
1.12 Reporting of Share Exchange.....................................................................8
1.13 Board of Directors and Officers of LEXON........................................................8
1.14 Taking of Necessary Action; Further Action......................................................9
THE CLOSING
2.1 Time and Place of Closing.......................................................................9
2.2 Obligations of PROVISION and the PROVISION Shareholders at or Prior to the Closing..............9
2.3 Obligations of LEXON at or Prior to the Closing.................................................9
REPRESENTATIONS AND WARRANTIES OF PROVISION
3.1 Organization and Standing......................................................................10
3.2 Subsidiaries...................................................................................11
3.3 PROVISION Capital Structure....................................................................11
3.4 Authority......................................................................................12
3.5 No Conflict....................................................................................12
3.6 Consents.......................................................................................12
3.7 PROVISION Financial Statements.................................................................13
3.8 Tax Matters....................................................................................13
3.9 Title to Properties and Assets.................................................................15
3.10 Intellectual Property..........................................................................15
3.11 Material Contracts and Obligations.............................................................16
3.12 Non-Compete Agreements.........................................................................16
3.13 Interested Party Transactions..................................................................16
3.14 Litigation.....................................................................................17
3.15 Compliance.....................................................................................17
3.16 SEC Filings....................................................................................17
3.17 Employee Matters and Benefit Plans.............................................................18
3.18 Insurance......................................................................................20
3.19 Books and Records..............................................................................20
3.20 Environmental Matters..........................................................................21
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3.21 Ownership of Shares............................................................................22
3.22 Violation of Laws, Permits, etc................................................................22
3.23 Undisclosed Liabilities........................................................................22
3.24 Accounts Receivable and Accounts Payable.......................................................22
3.25 Compensation Arrangements; Officers and Directors..............................................23
3.26 Operations.....................................................................................23
3.27 Licenses and Permits...........................................................................24
3.28 No Material Adverse Change.....................................................................25
3.29 Compliance with the Foreign Corrupt Practices Act..............................................25
3.30 Brokers........................................................................................25
3.31 Disclosure.....................................................................................25
3.32 PROVISION Shareholders.........................................................................25
REPRESENTATIONS AND WARRANTIES OF LEXON
4.1 Organization and Standing......................................................................26
4.2 Subsidiaries...................................................................................26
4.3 LEXON Capital Structure........................................................................27
4.4 Authority......................................................................................27
4.5 No Conflict....................................................................................28
4.6 Consents.......................................................................................28
4.7 LEXON Financial Statements.....................................................................28
4.8 Tax Matters....................................................................................29
4.9 Title to Properties and Assets.................................................................30
4.10 Intellectual Property..........................................................................31
4.11 Material Contracts and Obligations.............................................................31
4.12 Non-Compete Agreements.........................................................................32
4.13 Interested Party Transactions..................................................................32
4.14 Litigation.....................................................................................32
4.15 Compliance.....................................................................................32
4.16 SEC Filings....................................................................................33
4.17 Employee Matters and Benefit Plans.............................................................33
4.18 Insurance......................................................................................36
4.19 Books and Records..............................................................................36
4.20 Environmental Matters..........................................................................36
4.21 Violation of Laws, Permits, etc. .............................................................37
4.22 Undisclosed Liabilities........................................................................37
4.23 Accounts Receivable and Accounts Payable.......................................................38
4.24 Compensation Arrangements; Officers and Directors..............................................38
4.25 Operations.....................................................................................38
4.26 Licenses and Permits...........................................................................40
4.27 No Material Adverse Change.....................................................................40
4.28 Compliance with the Foreign Corrupt Practices Act..............................................40
4.29 Brokers........................................................................................41
4.30 Disclosure.....................................................................................41
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4.31 No Material Adverse Change.....................................................................41
4.32 Approval of Share Exchange.....................................................................41
4.33 SEC Reporting Status...........................................................................41
4.34 Investment Company.............................................................................41
4.35 Trading Status.................................................................................41
4.36 Disclosure.....................................................................................41
4.37 SEC Filings; Financial Statements..............................................................42
4.38 Agreements, Contracts and Commitments..........................................................42
4.39 Compliance with the Foreign Corrupt Practices Act..............................................43
ACTIONS PRIOR TO CLOSING
5.1 Corporate Examinations and Investigations......................................................44
5.2 Conduct and Preservation of Business of LEXON..................................................44
5.3 Conduct and Preservation of Business of PROVISION..............................................46
5.4 Advice of Changes..............................................................................47
5.5 No Negotiation.................................................................................47
5.6 OTC Bulletin Board.............................................................................47
5.7 SEC Reports....................................................................................47
5.8 Shareholder Approvals/SEC Filings..............................................................47
5.9 Other Agreements...............................................................................48
5.10 Notification of Certain Matters................................................................48
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions Precedent to the Obligations of LEXON to Complete the Closing..49
6.2 Conditions Precedent to the Obligations of PROVISION to Complete the Closing...................50
POST-CLOSING COVENANTS
7.1 Further Information............................................................................52
7.2 Record Retention...............................................................................52
7.3 Post-Closing Assistance........................................................................52
7.4 SEC Reporting..................................................................................53
SURVIVAL
8.1 Survival of Agreements, Representations and Warranties.........................................53
TERMINATION OF AGREEMENT
9.1 Termination....................................................................................53
9.2 Effect of Termination..........................................................................54
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MISCELLANEOUS
10.1 Expenses.......................................................................................55
10.2 Further Assurances.............................................................................55
10.3 Notices........................................................................................55
10.4 Governing Law/Jurisdiction.....................................................................56
10.5 Press Release..................................................................................56
10.6 Entire Agreement...............................................................................56
10.7 Waivers and Amendments.........................................................................56
10.8 Binding Effect, No Assignment..................................................................56
10.9 Counterparts...................................................................................56
10.10 Exhibits and Schedules.........................................................................56
10.11 Effect of Disclosure on Schedules..............................................................57
10.12 Headings.......................................................................................57
10.13 Severability of Provisions.....................................................................57
10.14 Other Remedies; Specific Performance...........................................................57
10.15 Rules of Construction..........................................................................57
SCHEDULE A - PROVISION SHAREHOLDERS 58
Share Exchange Agreement-Page 5
THIS SHARE EXCHANGE AGREEMENT is entered into as of October 15, 2003, by and
between Lexon, Inc., an Oklahoma corporation ("LEXON"), and ProVision Operation
Systems, Inc., a Nevada corporation ("PROVISION").
Recitals
A. The Boards of Directors of each of LEXON and PROVISION have determined
that it is in the best interests of LEXON and PROVISION and their
respective shareholders that LEXON acquire PROVISION through a
statutory share exchange under the laws of Oklahoma and Nevada (the
"Share Exchange") and, in furtherance thereof, have approved the Share
Exchange, this Agreement and the transactions contemplated hereby.
B. Pursuant to the Share Exchange, among other things, and subject to the
terms and conditions of this Agreement, all of the shares of Common
Stock of PROVISION (the "PROVISION Common Stock") which are issued and
outstanding immediately prior to the Effective Time (as defined below)
shall be converted into the right to receive shares of the Common Stock
of LEXON (the "LEXON Common Stock") on the terms and subject to the
conditions set forth herein.
C. LEXON and PROVISION desire to make certain representations, warranties,
covenants and agreements in connection with the Share Exchange.
Agreement
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements hereinafter set forth, in accordance with the provisions of
applicable law, the parties hereby agree as follows:
ARTICLE I
THE SHARE EXCHANGE
1.1 The Share Exchange. At the Effective Time and upon the terms and
subject to the conditions of this Agreement and the applicable
provisions of the corporate statutes of the State of Oklahoma and all
amendments and additions thereto (the "Oklahoma Law") and the corporate
statutes of the State of Nevada and all amendments and additions
thereto (the "Nevada Law"), by virtue of the Share Exchange and without
any action on the part of LEXON or the holder of any shares of
PROVISION Common Stock, the following shall occur:
1.2 Number of Shares of LEXON Common Stock. At the Effective Time, Lexon
shall issue and/or cause to be reserved shares of its common stock such
that the shareholders and option holders of PROVISION together will own
an aggregate of 90% of the outstanding common stock of LEXON at the
Effective Time. For example, if Lexon has 5,000,000 shares outstanding
prior to the Effective Time, an aggregate of 45,000,000 shares of Lexon
common stock will be available for issuance to PROVISION. The
45,000,000 shares would then be allocated among PROVISION'S
shareholders and its option holders. The shares
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allocated to PROVISION option holders would be reserved by LEXON for
future issuance pursuant to exercise of those options.
The foregoing assumes that Lexon, at the Effective Time, will effect at
least a one (1) for ten (10) reverse split of its outstanding common
stock At the Effective Time, PROVISION shall become a wholly-owned
subsidiary of LEXON.
1.3 Conversion of PROVISION Common Stock. Each share of PROVISION Common
Stock issued and outstanding immediately prior to the Effective Time
(other than any Dissenting Shares, as such term is defined in Section
1.7) will be automatically cancelled and extinguished and each share of
PROVISION Common Stock that is issued and outstanding immediately prior
to the Effective Time shall be converted automatically into the right
to receive shares of LEXON Common Stock proportionate to the sum of the
total number of shares ofPROVISION Common Stock issued and outstanding
immediately prior to the Effective Time plus the number of shares
PROVISION Common Stock to be issued upon the exercise of options and
other convertible securities outstanding (the "Fully Diluted Shares")at
the Effective Time . (Meaning that if ProVision has 15,000,000 Fully
Diluted Shares outstanding at the Effective Time and the number of
Lexon shares of common stock to be issued in the share exchange is
40,000,000 shares, then a shareholder who owns 500,000 shares of
PROVISION Common Stock at the Effective Time will have the right to
receive 5% of the Lexon shares. The foregoing rate of exchange of the
PROVISION Common Stock shall be referred to as the "Exchange Ratio."
1.4 Effective Time. The Share Exchange will become effective upon the
proper filing of Articles of Share Exchange with the Secretary of State
of the States of Oklahoma and Nevada, or such other jurisdictions as
required (the "Effective Time").
1.5 Fractional Shares. No fraction of a share of LEXON Common Stock will be
issued upon such exchange of shares of PROVISION Common Stock. Instead
amounts of shares will be rounded up to the nearest whole number.
1.6 Reservation of Shares. LEXON will reserve sufficient shares of LEXON
Common Stock for issuance pursuant to Section 1.3.
1.7 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of PROVISION Common Stock held by a
holder who has demanded and perfected appraisal rights for
such shares in accordance with Nevada Law and who, as of the
Effective Time, has not effectively withdrawn or lost such
appraisal or dissenters' rights ("Dissenting Shares") shall
not be converted into or represent a right to receive LEXON
Common Stock pursuant to Sections 1.2 and 1.3, but the holder
thereof shall only be entitled to such rights as are granted
by Nevada Law.
(b) Notwithstanding the provisions of Section 1.7(a), if any
holder of shares of PROVISION Common Stock who demands
appraisal of such shares under Nevada Law shall effectively
withdraw or lose (through failure to perfect or otherwise) the
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right to appraisal, then, as of the later of (i) the Effective
Time or (ii) the occurrence of such event, such holder's
shares shall automatically be converted into and represent
only the right to receive LEXON Common Stock as provided in
Sections 1.2 and 1.3, without interest thereon, in accordance
with Sections 1.2 and 1.3.
(c) PROVISION shall give LEXON (i) prompt notice of its receipt of
any written demands for appraisal of any shares of LEXON
Common Stock, withdrawals of such demands, and any other
instruments relating to the Share Exchange received by
PROVISION and (ii) the opportunity to participate in all
negotiations and proceedings with respect to demands for
appraisal under Nevada Law.
1.8 Exchange of Certificates. At Closing, or as soon as practicable
thereafter, LEXON or its transfer agent shall issue a letter of
transmittal to each PROVISION Shareholder of record. After having
received a completed letter of transmittal and certificates
representing such PROVISION Shareholder's PROVISION Common Stock, the
transfer agent shall deliver certificates representing the whole number
of shares of LEXON Common Stock into which such PROVISION Shareholder's
shares of PROVISION Common Stock shall have been exchanged as set forth
herein.
1.9 No Further Ownership Rights in PROVISION Common Stock. All shares of
LEXON Common Stock issued upon the surrender for exchange of shares of
PROVISION Common Stock in accordance with the terms hereof shall be
deemed to have been issued in full satisfaction of all rights
pertaining to such shares of PROVISION Common Stock, and there shall be
no further registration of transfers on the records of PROVISION of
shares of PROVISION Common Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, certificates
are presented to LEXON for any reason, they shall be canceled and
exchanged as provided in this Article 1.
1.10 Lost, Stolen or Destroyed Certificates. In the event any certificates
evidencing shares of PROVISION Common Stock shall have been lost,
stolen or destroyed, the transfer agent for LEXON shall issue
certificates representing such shares of LEXON Common Stock in exchange
for such lost, stolen or destroyed certificates, upon the making of an
affidavit of that fact by the holder thereof.
1.11 Exemption From Registration. The shares of LEXON Common Stock to be
issued pursuant to Sections 1.2 and 1.3 in connection with the Share
Exchange will be issued in a transaction exempt from registration under
the Securities Act of 1933, as amended, including the rules and
regulations promulgated thereunder (the "Securities Act").
1.12 Reporting of Share Exchange. For federal, state, and local income tax
return reporting purposes, all parties agree to treat the Share
Exchange as a nontaxable exchange under Section 368 of the Internal
Revenue Code (the "Code"). PROVISION and LEXON shall (and, following
the Effective Time, LEXON shall cause PROVISION to) take no action with
respect to the capital stock, assets or liabilities of PROVISION that
could reasonably be expected to cause the exchange to fail to qualify
as a nontaxable exchange within the meaning of Section 368 of the Code;
provided, however, that the parties' obligations pursuant to this
Section are subject to their right to terminate this Agreement pursuant
to the
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termination provisions hereof. Neither LEXON nor PROVISION has taken
any action which could reasonably be expected to preclude the exchange
from qualifying as a nontaxable exchange under Section 368 of the Code.
1.13 Board of Directors and Officers of LEXON. Simultaneously at Closing all
of the existing directors of LEXON shall resign and prior to such
resignation shall have appointed ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ as Chairman of the
Board and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as Directors to fill the
vacancies on the board of directors. All of the existing officers of
LEXON shall resign and the new board of directors shall elect persons
to serve as officers of LEXON.
1.14 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any such further action is necessary or desirable to
carry out the purposes of this Agreement, the officers and directors of
LEXON are fully authorized to take, and will use their reasonable
efforts to take, all such lawful and necessary action.
ARTICLE II
THE CLOSING
2.1 Time and Place of Closing. The closing of the Share Exchange (the
"Closing") shall, unless otherwise agreed to in writing by the parties,
take place at a time and place to be determined by the parties, on or
prior to December 31, 2003, provided that the conditions precedent to
closing have been satisfied.
2.2 Obligations of PROVISION and the PROVISION Shareholders at or Prior to
the Closing. At or prior to Closing, and subject to the satisfaction by
LEXON of its obligations hereunder, PROVISION and the PROVISION
Shareholders shall deliver to LEXON the following:
(a) A copy of the Articles of Incorporation of PROVISION, as
amended, certified as of a date within ten days of the Closing
by the Secretary of State of the State of Nevada and certified
by the corporate secretary of PROVISION as to the absence of
any amendments between the date of certification by the
Secretary of State and the Closing;
(b) A certificate from the Secretary of State of the State of
Nevada as to the existence and good standing of PROVISION as
of a date within ten days of the Closing;
(c) A certificate of the corporate secretary of PROVISION
attaching thereto true and correct copies of the bylaws of
PROVISION;
(d) The certificate of PROVISION referred to in Section 6.1
hereof;
(e) Such other documents as are required pursuant to this
Agreement or as may reasonably be requested from PROVISION by
LEXON or its counsel; and
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(f) The certificates evidencing the shares of PROVISION Common
Stock owned by the PROVISION Shareholders, duly endorsed for
transfer to LEXON.
2.3 Obligations of LEXON at or Prior to the Closing. At or prior to
Closing, and subject to the satisfaction by PROVISION of its
obligations hereunder, LEXON shall deliver to PROVISION and the
PROVISION Shareholders the following:
(a) A copy of the Articles of Incorporation of LEXON certified as
of a date within ten days of the Closing by the Secretary of
State of the State of Oklahoma and certified by the corporate
secretary of LEXON as to the absence of any amendments between
the date of certification by the Secretary of State and the
Closing;
(b) A certificate from the Secretary of State of the State of
Oklahoma as to the existence and good standing of LEXON as of
a date within ten days of the Closing;
(c) A certificate of the corporate secretary of LEXON attaching
thereto true and correct copies of the bylaws of LEXON and the
corporate resolutions duly adopted by the board of directors
of LEXON authorizing the consummation of the transactions
contemplated hereby;
(d) The certificate of LEXON referred to in Section 6.2 hereof;
(e) Such other documents as are required pursuant to this
Agreement or as may reasonably be requested from LEXON by
PROVISION or its counsel; and
(f) Certificates evidencing the LEXON Common Stock to be issued to
the PROVISION Shareholders pursuant to Article I hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PROVISION
PROVISION represents and warrants to LEXON, subject to such exceptions
as are specifically disclosed in the disclosure schedule (referencing the
appropriate section and/or paragraph numbers) previously supplied by PROVISION
to LEXON (the "PROVISION Disclosure Schedule"), that on the date hereof and as
of the Effective Time, as though made at the Effective Time, as follows:
3.1 Organization and Standing. PROVISION is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada and has full corporate power and authority to conduct its
business as presently conducted and as proposed to be conducted by it
and to enter into and perform this Agreement and to carry out the
transactions contemplated by this Agreement. PROVISION is duly
qualified and in good standing to do business in each jurisdiction
where the failure to be so qualified would have a PROVISION Material
Adverse Effect (as defined below). For all purposes of this Agreement,
the term "PROVISION Material Adverse Effect" means any change, event or
effect that is
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materially adverse to the business, assets (including intangible
assets), condition (financial or otherwise), results of operations or
prospects of PROVISION and its subsidiaries, taken as a whole.
PROVISION has delivered a true and correct copy of its Articles of
Incorporation and Bylaws, each as amended to date, to LEXON. The
operations now being conducted by PROVISION have not been conducted
under any other name.
3.2 Subsidiaries. Except for the following entities, PROVISION does not
have, and has never had, any subsidiaries and does not otherwise own,
and has not otherwise owned, any shares in the capital of or any
interest in, or control of, directly or indirectly, any corporation,
partnership, association, joint venture or other business entity:
ProVision Business Systems, Inc.; ProVision Seminar Systems, Inc;
ProVision Legal Systems, Inc.; ProVision Management Systems, Inc.;
ProComm2020 Technology, Inc.; and ProVision International Marketing
Systems, Inc.; each a Nevada corporation. The entities in which
PROVISION has a controlling interest are hereinafter occasionally
referred to collectively, as "PROVISION Subsidiaries" and individually
as a "PROVISION Subsidiary."
3.3 PROVISION Capital Structure.
(a) The authorized capital stock of PROVISION consists of
100,000,000 authorized shares of Common Stock;; and 5,000,000
authorized shares of preferred stock. All of the issued and
outstanding shares of ProVision Common Stock has been duly
authorized and validly issued and are fully paid and
nonassessable. All outstanding shares of PROVISION Common
Stock are duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights created by
statute, the Articles of Incorporation or Bylaws of PROVISION
or any agreement to which PROVISION is a party or by which it
is bound and have been issued in compliance with federal and
state securities laws. There are no declared or accrued unpaid
dividends with respect to any shares of PROVISION's Common
Stock. There are no shares of preferred stock issued or
outstanding. PROVISION has no other capital stock authorized,
issued, or outstanding.
(b) Section 3.3(b) of the PROVISION Disclosure Schedule sets forth
each outstanding option to purchase PROVISION Common Stock
(the "PROVISION Options"), the number of shares of PROVISION
Common Stock subject to such PROVISION Options and the
exercise price of such PROVISION Options. Except as set forth
in Section 3.3(b) of the PROVISION Disclosure Schedule,
PROVISION has never adopted or maintained any stock option
plans or other plan providing for equity compensation of any
person. There are no agreements, written or oral, between
PROVISION or PROVISION Subsidiaries and any of their
shareholders or among any PROVISION or PROVISION Subsidiary
shareholders relating to the acquisition (including without
limitation rights of first refusal or preemptive rights),
disposition, registration under the Securities Act of 1933, as
amended (the "Securities Act"), or voting of the capital stock
of PROVISION. Except as set forth in Section 3.3(b) of the
PROVISION Disclosure Schedule, there are no options, warrants,
calls, rights, commitments or agreements of any character,
written or oral, to which PROVISION is a party or by which it
is bound obligating PROVISION or any of its subsidiaries to
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issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares
of the capital stock of PROVISION or obligating PROVISION or
any of its subsidiaries to grant, extend, accelerate the
vesting of, change the price of, otherwise amend or enter into
any such option, warrant, call, right, commitment or
agreement. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or other
similar rights with respect to PROVISION or its subsidiaries.
There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting stock of PROVISION.
3.4 Authority. PROVISION has all requisite power and authority to enter
into this Agreement and any Related Agreements (as hereinafter defined)
to which it is a party and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and
any Related Agreements to which PROVISION is a party and the
consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of
PROVISION, and no further action is required on the part of PROVISION
to authorize the Agreement, any Related Agreements to which it is a
party and the transactions contemplated hereby and thereby, subject
only to the approval of this Agreement by the Shareholders of record as
of the Record Date. This Agreement and the Share Exchange have been
unanimously approved by the Board of Directors of PROVISION. This
Agreement and any Related Agreements to which PROVISION is a party have
been duly executed and delivered by PROVISION and, assuming the due
authorization, execution and delivery by the other parties hereto and
thereto, constitute the valid and binding obligation of PROVISION
enforceable in accordance with their respective terms, subject to the
laws of general application relating to bankruptcy, insolvency and the
relief of debtors and to rules of law governing specific performance,
injunctive relief or other equitable remedies. The "Related Agreements"
shall mean all such ancillary agreements and certificates required in
this Agreement to be executed and delivered in connection with the
transactions contemplated hereby.
3.5 No Conflict. The execution and delivery by PROVISION of this Agreement
and any Related Agreements to which PROVISION is a party do not, and,
the consummation of the transactions contemplated hereby and thereby
will not, conflict with, or result in any violation of, or default
under (with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation, modification or acceleration
of any obligation or loss of any benefit under (any such event, a
"Conflict") (i) any provision of the Articles of Incorporation and
Bylaws of PROVISION, (ii) any mortgage, indenture, lease, contract or
other agreement or instrument (including without limitation any loan
agreements, credit agreements, notes, bonds, or benefit plans), permit,
concession, franchise or license to which PROVISION or any of its
subsidiaries or any of the their respective properties or assets
(including intangible assets) is subject, or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to
PROVISION or its respective properties or assets.
3.6 Consents. No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative
agency or commission or other federal, state, county, local or other
foreign governmental authority, instrumentality, agency or
Share Exchange Agreement-Page 12
commission ("Governmental Entity") is required by or with respect to
PROVISION in connection with the execution and delivery of this
Agreement and any Related Agreements to which PROVISION is a party or
the consummation of the transactions contemplated hereby and thereby,
except for (i) such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be
required under applicable securities laws and (ii) the filing of this
Agreement, or a Certificate of Share Exchange, with the Secretary of
State of the State of Nevada.
3.7 PROVISION Financial Statements. Section 3.7 of PROVISION Disclosure
Schedule sets forth a complete and correct copy of the following
financial statements: (i) the Audited balance sheet at, and statements
of operations, stockholders' equity, and cash flows from inception
through September 30, 2003 (the "Financials"). The Financials have been
prepared in accordance with GAAP. On or before the Closing PROVISION
shall provide LEXON a current balance sheet (included in the definition
of "Financials"). The Financials fairly present in all material
respects the consolidated financial position of PROVISION as at the
respective dates thereof and the consolidated results of its operations
and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and
recurring year-end adjustments which will not be material in
significance.
3.8 Tax Matters.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax"
or, collectively, "Taxes," means (i) any and all federal,
state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added,
ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together
with all interest, penalties and additions imposed with
respect to such amounts; (ii) any liability for the payment of
any amounts of the type described in clause (i) as a result of
being a member of an affiliated, consolidated, combined or
unitary group for any period; and (iii) any liability for the
payment of any amounts of the type described in clause (i) or
(ii) as a result of any express or implied obligation to
indemnify any other person or as a result of any obligations
under any agreements or arrangements with any other person
with respect to such amounts and including any liability for
taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) As of the Effective Time, PROVISION and PROVISION
Subsidiaries will have prepared and timely filed all
required federal, state, local and foreign returns,
estimates, information statements and reports
("Returns") relating to any and all Taxes concerning
or attributable to PROVISION and all PROVISION
Subsidiaries or their operations and such Returns are
true and correct and have been completed in
accordance with applicable law.
Share Exchange Agreement-Page 13
(ii) PROVISION and PROVISION Subsidiaries have not been
delinquent of any material payment of any Tax nor is
there any Tax deficiency outstanding, assessed or
proposed against PROVISION and any of PROVISION
Subsidiaries, nor have PROVISION or any of PROVISION
Subsidiaries executed any waiver of any statute of
limitations on or extending the period for the
assessment or collection of any Tax.
(iii) No audit or other examination of any Return of
PROVISION or of any of PROVISION Subsidiaries is
presently in progress nor has PROVISION or any of
PROVISION Subsidiaries been notified of any request
for such an audit or other examination.
(iv) As of September 30, 2003, PROVISION and PROVISION
Subsidiaries have no liabilities for due but unpaid
federal, state, local and foreign Taxes which have
not been accrued or reserved against on the Balance
Sheet as of September 30, 2003, whether asserted or
unasserted, contingent or otherwise.
(v) There are (and immediately following the Effective
Time there will be) no liens, pledges, charges,
claims, restrictions on transfer, mortgages, security
interests or other encumbrances of any sort
(collectively, "Liens") on the assets of PROVISION
and of PROVISION Subsidiaries relating to or
attributable to Taxes other than Liens for Taxes not
yet due and payable.
(vi) PROVISION and PROVISION Subsidiaries have not filed
any consent agreement under Section 341(f) of the
Code or agreed to have Section 341(f)(4) of the Code
apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned
by PROVISION or of any of PROVISION Subsidiaries.
(vii) PROVISION and PROVISION Subsidiaries are not parties
to any tax sharing, indemnification or allocation
agreement nor does PROVISION or any of PROVISION
Subsidiaries owe any amount under any such agreement.
(viii) PROVISION and PROVISION Subsidiaries are not and have
never been at any time, "United States Real Property
Holding Corporations" within the meaning of Section
897(c)(2) of the Code.
(xii) No adjustment relating to any Return filed by
PROVISION or any of PROVISION Subsidiaries has been
proposed formally or, to the Knowledge of PROVISION
or any of PROVISION Subsidiaries, informally by any
tax authority to PROVISION or any of PROVISION
Subsidiaries or any representative thereof.
(xiii) PROVISION and PROVISION Subsidiaries have not
participated (either as a "distributing" or
"controlled" corporation) in any transaction
described in Section 355 of the Code.
Share Exchange Agreement-Page 14
3.9 Title to Properties and Assets. Except for (i) liens for current taxes
not yet due and payable; (ii) liens imposed by law and incurred in the
ordinary course of business for obligations not past due; (iii) liens
in respect of pledges or deposits under workers' compensation laws or
similar legislation; and (iv) minor defects in title, none of which,
individually or in the aggregate, materially interferes with the use of
such property, PROVISION has good title to or a valid leasehold
interest in all of its properties and assets, which comprise all of the
properties and assets reflected on the Balance Sheet at September 30,
2003, and all of the assets and properties used in the conduct of its
business as currently conducted, and none of such properties or assets
is subject to any lien of any nature whatsoever.
3.10 Intellectual Property. PROVISION or PROVISION Subsidiaries, owns, or
has the right to use under agreements ("Intellectual Property Rights
Agreements"), all of the patents, patent applications, design patents
and applications therefore, trademarks, service marks, trademark and
service ▇▇▇▇ applications, trade names, copyright registrations and
licenses (the "Intellectual Property Rights") currently used by
PROVISION and PROVISION Subsidiaries or necessary for the conduct of
PROVISION's and PROVISION Subsidiaries' business as currently conducted
and has taken all actions reasonable in light of its financial position
to protect the Intellectual Property Rights. To PROVISION's Knowledge,
except as set forth in Section 3.10 of PROVISION Disclosure Schedule,
the business conducted or proposed to be conducted by PROVISION and
PROVISION Subsidiaries does not and will not cause PROVISION and
PROVISION Subsidiaries to infringe or violate any of the patents,
trademarks, service marks, trade names, copyrights, mask-works,
licenses, trade secrets, processes, data, know-how or other
intellectual property rights of any other Person, and does not and will
not require PROVISION and PROVISION Subsidiaries to obtain any license
or other agreement to use any patents, trademarks, service marks, trade
names, copyrights, mask-works, licenses, trade secrets, processes,
data, know-how or other intellectual property rights or patents of
others, except for licenses or agreements that can be obtained in the
ordinary course of business without unreasonable effort, delay, cost or
expense. The Intellectual Property Rights Agreements are valid, binding
and in full force and effect and PROVISION and PROVISION Subsidiaries
are neither in breach under any of the Intellectual Property Rights
Agreements nor have any Knowledge of any claim for breach under any
Intellectual Property Rights Agreements by the other parties thereto.
To PROVISION's Knowledge, there is no person who is challenging,
infringing on, or otherwise violating any right of PROVISION or
PROVISION Subsidiaries with respect to any Intellectual Property
Rights. Neither PROVISION nor any of PROVISION Subsidiaries have
received any notice or otherwise has Knowledge of any pending claim,
order or proceeding with respect to any Intellectual Property Rights
used by PROVISION or PROVISION Subsidiaries; and, to PROVISION's
Knowledge, no Intellectual Property Rights owned or used by PROVISION
or PROVISION Subsidiaries are being used or enforced in a manner that
would reasonably be expected to result in the abandonment, cancellation
or unenforceability of such Intellectual Property Rights.
3.11 Material Contracts and Obligations. All material agreements or
commitments of any
Share Exchange Agreement-Page 15
nature to which PROVISION is a Party or by which it is bound, including
without limitation (i) each agreement that requires future expenditures
by PROVISION in excess of $5,000 or that might result in payments to
PROVISION in excess of $25,000, (ii) all written employment agreements
not stated on their face to be "at-will" employment agreements and all
consulting agreements, employee benefit, bonus, pension,
profit-sharing, stock option, stock purchase and similar plans and
arrangements, and distributor and sales representative agreements, and
(iii) each agreement with any Shareholder, officer or director of
PROVISION, or any Affiliate of such Person, including without
limitation any agreement or other arrangement providing for the
furnishing of services by, rental of real or personal property from, or
otherwise requiring payments to, any such Person, other than employment
agreements required by (ii) (collectively, the "Material Agreements")
are valid, binding and in full force and effect. PROVISION is neither
in breach under any of the Material Agreements nor, except as set forth
in Section 3.11 of PROVISION Disclosure Schedule, has any Knowledge of
any claim for breach under any Material Agreements by the other parties
thereto.
3.12 Non-Compete Agreements. Neither PROVISION nor any of the PROVISION
Subsidiaries is presently bound by any non-compete agreements or any
other agreements or arrangements that limit or otherwise restrict
PROVISION or any of PROVISION Subsidiaries or that would, after the
Effective Time, limit or restrict LEXON (or the Surviving Corporation)
from engaging or competing in any line of business or in any
geographical area.
3.13 Interested Party Transactions. No employee, officer, director or
Shareholder of PROVISION or member of his or her immediate family is
indebted to PROVISION, nor is PROVISION indebted (or committed to make
loans or extend or guarantee credit) to any of them, other than (i) for
payment of salary, bonuses, and other compensation for services
rendered, (ii) reimbursement for reasonable expenses incurred on behalf
of PROVISION, and (iii) for other employee benefits made generally
available to all employees. To PROVISION's Knowledge, none of such
individuals has any direct or indirect ownership interest in any Person
with whom PROVISION is affiliated or with whom PROVISION has a
contractual relationship, or any Person that competes with PROVISION,
except that each employee, Shareholder, officer or director of
PROVISION and members of their respective immediate families may own
less than 5% of the outstanding stock in publicly traded companies that
may compete with PROVISION. Except as set forth in Section 3.13 of
PROVISION Disclosure Schedule, to PROVISION's Knowledge, no officer,
director or Shareholder or any member of his or her immediate families
is, directly or indirectly, interested in any material contract with
PROVISION (other than such contracts as relate to any such individual's
employment, ownership of capital stock or other securities of
PROVISION).
3.14 Litigation.
(a) There is no action, proceeding, investigation, or inquiry
pending or, to the best of PROVISION's knowledge, threatened
(i) against or affecting any of PROVISION's assets or business
that, if determined adversely to PROVISION, would result in a
Share Exchange Agreement-Page 16
Material Effect or (ii) that questions this Agreement or any
action contemplated by this Agreement or in connection with
the Share Exchange.
(b) PROVISION has no knowledge of any state of facts or of the
occurrence or nonoccurrence of any event or group of related
events, which should reasonably cause PROVISION to determine
that there exists any basis for any material claim against
PROVISION for any of the matters described in paragraph (a)
above.
3.15 Compliance. PROVISION has complied in all material respects with all
laws, regulations and orders applicable to its present and proposed
business and has all material permits, variances, orders, approvals,
and licenses required thereby. There is no term or provision of any
mortgage, indenture, contract, agreement or instrument to which
PROVISION is a Party or by which it is bound or of any provision of any
existing state or federal judgment, decree, order, statute, rule or
regulation applicable to or binding upon PROVISION, that would
reasonably cause a PROVISION Material Adverse Effect, or, so far as
PROVISION may now reasonably foresee, in the future is reasonably
likely to cause a PROVISION Material Adverse Effect. To PROVISION's
Knowledge, none of the Shareholders or any other employee of PROVISION
or PROVISION Subsidiaries is in violation of any term of any contract
or covenant (either with PROVISION or with another entity) relating to
employment, patents, proprietary information disclosure, noncompetition
or non-solicitation.
3.16 SEC Filings. None of the information supplied or to be supplied by
PROVISION or any of PROVISION Subsidiaries for inclusion or
incorporation by reference in (i) any materials to be filed with the
Securities and Exchange Commission (the "SEC") by LEXON in connection
with the issuance of the LEXON Common Stock in or as a result of the
Exchange will, at the time such filing becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading; and (ii) the materials to be
filed with the SEC by PROVISION and LEXON pursuant to Section 5.1(a)
hereof will not contain, at the dates mailed to the stockholders of
LEXON and PROVISION, at the times of the Shareholders meeting of
PROVISION (the "PROVISION Shareholders' Meeting") and the Stockholders
meeting of LEXON (the "LEXON Stockholders' Meeting") in connection with
the transactions contemplated hereby and as of the Effective Time, any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading. The materials will comply as to form in all
material respects with the provisions of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act") and the rules and
regulations promulgated by the SEC thereunder.
3.17 Employee Matters and Benefit Plans.
(a) Definitions. For purposes of this Section, the following terms
shall have the meanings set forth below:
(i) "Code" shall mean the Internal Revenue Code of 1986,
as amended;
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(ii) "DOL" shall mean the Department of Labor;
(iii) "Employee" shall mean any current or former or
retired employee, consultant or director of PROVISION
or any PROVISION Subsidiary or any Affiliate;
(iv) "Employee Agreement" shall mean each management,
employment, severance, consulting, relocation,
repatriation, expatriation, visas, work permit or
other agreement, contract or understanding between
PROVISION or any PROVISION Subsidiary or any ERISA
Affiliate and any Employee;
(v) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended;
(vi) "ERISA Affiliate" shall mean any other person or
entity under common control with PROVISION or any
PROVISION Subsidiary within the meaning of Section
414(b), (c), (m) or (o) of the Code and the
regulations issued thereunder;
(vii) "IRS" shall mean the Internal Revenue Service;
(viii) "PROVISION Employee Plan" shall mean any plan,
program, policy, practice, contract, agreement or
other arrangement providing for compensation,
severance, termination pay, deferred compensation,
performance awards, stock or stock-related awards,
fringe benefits or other employee benefits or
remuneration of any kind, whether written or
unwritten or otherwise, funded or unfunded, including
without limitation, each "employee benefit plan,"
within the meaning of Section 3(3) of ERISA which is
or has been maintained, contributed to, or required
to be contributed to, by PROVISION or any PROVISION
Subsidiary, or any ERISA Affiliate for the benefit of
any Employee, or with respect to which PROVISION or
any PROVISION Subsidiary, or any ERISA Affiliate has
or may have any liability or obligation; and
(b) Employee Plans. PROVISION and PROVISION Subsidiaries are in
material compliance with PROVISION Employee Plans. PROVISION
and PROVISION Subsidiaries do not have any plan or commitment
to establish any new PROVISION Employee Plan or Employee
Agreements, to modify any PROVISION Employee Plan (except to
the extent required by law or to conform any such PROVISION
Employee Plan to the requirements of any applicable law, in
each case as previously disclosed to PROVISION in writing, or
as required by this Agreement), or to adopt or enter into any
PROVISION Employee Plan.
(c) Employee Plan Compliance. (i) PROVISION and PROVISION
Subsidiaries have performed in all material respects all
obligations required to be performed by them
Share Exchange Agreement-Page 18
under, are not in material default or violation of, and have
no Knowledge of any default or violation by any other party to
each PROVISION Employee Plan, and each PROVISION Employee Plan
has been established and maintained in all material respects
in accordance with its terms and in material compliance with
all applicable laws, statutes, orders, rules and regulations,
including but not limited to ERISA and the Code; (ii) each
PROVISION Employee Plan intended to qualify under Section
401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code has either received a favorable
determination, opinion, notification or advisory letter from
the IRS with respect to each such PROVISION Employee Plan as
to its qualified status under the Code or has remaining a
period of time under applicable Treasury regulations or IRS
pronouncements in which to apply for such a letter and make
any amendments necessary to obtain a favorable determination
as to the qualified status of each such PROVISION Employee
Plan; (iii) no "prohibited transaction," within the meaning of
Section 4975 of the Code or Sections 406 and 407 of ERISA, and
not otherwise exempt under Section 4975 or Section 408 of
ERISA (or any administrative class exemption issued
thereunder), has occurred with respect to any PROVISION
Employee Plan; (iv) there are no actions, suits or claims
pending, or, to the Knowledge of PROVISION or any PROVISION
Subsidiary, threatened or reasonably anticipated (other than
routine claims for benefits) against any PROVISION Employee
Plan or against the assets of any PROVISION Employee Plan; (v)
there are no audits, inquiries or proceedings pending or, to
the Knowledge of PROVISION or any of PROVISION Subsidiaries,
or any ERISA Affiliates, threatened by the IRS or DOL with
respect to any PROVISION Employee Plan; and (vi) neither
PROVISION, PROVISION Subsidiaries, nor any ERISA Affiliate is
subject to any penalty or tax with respect to any PROVISION
Employee Plan under Section 502(i) of ERISA or Sections 4975
through 4980 of the Code.
(d) Employment Matters. PROVISION and PROVISION Subsidiaries: (i)
are in material compliance in all respects with all applicable
foreign, federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case,
with respect to Employees; (ii) has withheld and reported all
amounts required by law or by agreement to be withheld and
reported with respect to wages, salaries and other payments to
Employees; (iii) is not liable for any arrears of wages or any
taxes or any penalty for failure to comply with any of the
foregoing; and (iv) is not liable for any payment to any trust
or other fund governed by or maintained by or on behalf of any
governmental authority, with respect to unemployment
compensation benefits, social security or other benefits or
obligations for Employees (other than routine payments to be
made in the normal course of business and consistent with past
practice). To PROVISION's Knowledge, there are no pending,
threatened or reasonably anticipated claims or actions against
PROVISION or any PROVISION Subsidiary under any worker's
compensation policy or long-term disability policy.
(e) Labor. To PROVISION's Knowledge, no work stoppage or labor
strike against PROVISION or any PROVISION Subsidiary is
pending, threatened or reasonably anticipated. PROVISION and
PROVISION Subsidiaries do not know of any
Share Exchange Agreement-Page 19
activities or proceedings of any labor union to organize any
Employees. There are no actions, suits, claims, labor disputes
or grievances pending, or, to the Knowledge of PROVISION or
PROVISION Subsidiaries, threatened or reasonably anticipated
relating to any labor, safety or discrimination matters
involving any Employee, including, without limitation, charges
of unfair labor practices or discrimination complaints, which,
if adversely determined, would, individually or in the
aggregate, result in any liability to PROVISION or PROVISION
Subsidiaries. Neither PROVISION nor any of PROVISION
Subsidiaries has engaged in any unfair labor practices within
the meaning of the National Labor Relations Act. PROVISION and
PROVISION Subsidiaries are not presently, nor have they been
in the past, a party to, or bound by, any collective
bargaining agreement or union contract with respect to
Employees and no collective bargaining agreement is being
negotiated by PROVISION or any PROVISION Subsidiary.
3.18 Insurance. PROVISION maintains adequate insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations
and employees of PROVISION and PROVISION Subsidiaries. There is no
claim by PROVISION or any of PROVISION Subsidiaries pending under any
of such policies or bonds as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or bonds. All
premiums due and payable under all such policies and bonds have been
paid, and PROVISION and PROVISION Subsidiaries are otherwise in
compliance with the terms of such policies and bonds (or other policies
and bonds providing substantially similar insurance coverage).
PROVISION and PROVISION Subsidiaries do not have Knowledge of any
threatened termination of, or premium increase with respect to, any of
such policies.
3.19 Books and Records. The books and records of PROVISION (including,
without limitation, the books of account, minute books, and stock
record books) are complete and correct in all material respects and
have been maintained in accordance with sound business practices. The
minute books of PROVISION are complete and current in all material
respects and, as applicable, accurately reflect all actions taken by
the shareholders and the board of directors of PROVISION since the date
of inception of PROVISION, and all signatures contained therein are the
true signatures of the persons whose signatures they purport to be.
3.20 Environmental Matters.
(a) Hazardous Material. Neither PROVISION nor any of the PROVISION
Subsidiaries has: (i) operated any underground storage tanks
at any property that PROVISION or any of the PROVISION
Subsidiaries has at any time owned, operated, occupied or
leased; or (ii) illegally released any material amount of any
substance that has been designated by any Governmental Entity
or by applicable foreign, federal, state, or local law to be
radioactive, toxic, hazardous or otherwise a danger to health
or the environment, including, without limitation, PCBs,
asbestos, petroleum, and urea-formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to
the United States Resource Conservation and Recovery Act of
1976, as amended, and the regulations promulgated pursuant to
said laws (a "Hazardous Material"), but
Share Exchange Agreement-Page 20
excluding office and janitorial supplies properly and safely
maintained. To the Knowledge of PROVISION and PROVISION
Subsidiaries, no Hazardous Materials are present as a result
of the actions of PROVISION or any of PROVISION Subsidiaries
or as a result of any actions of any other person or
otherwise, in, on or under any property, including the land
and the improvements, ground water and surface water thereof,
that PROVISION or any of PROVISION Subsidiaries has at any
time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Neither PROVISION nor any of
PROVISION Subsidiaries has transported, stored, used,
manufactured, disposed of, released or exposed its employees
or others to Hazardous Materials in violation of any law in
effect on or before the Effective Time, nor has either of them
disposed of, transported, sold, or manufactured any product
containing a Hazardous Material (any or all of the foregoing
being collectively referred to as "Hazardous Materials
Activities") in violation of any rule, regulation, treaty or
statute promulgated by any Governmental Entity in effect prior
to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
(c) Permits. PROVISION and PROVISION Subsidiaries currently hold
all environmental approvals, permits, licenses, clearances and
consents (the "Environmental Permits") necessary for the
conduct of PROVISION's or any of PROVISION Subsidiaries'
Hazardous Material Activities, respectively, and other
businesses of PROVISION or any of PROVISION Subsidiaries, as
such activities and businesses are currently being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is
pending, or to the Knowledge of PROVISION or any of PROVISION
Subsidiaries, threatened concerning any Environmental Permit,
Hazardous Material or any Hazardous Materials Activity of
PROVISION or any of PROVISION Subsidiaries. Neither PROVISION
nor any of PROVISION Subsidiaries has Knowledge of any fact or
circumstance which could reasonably be expected to involve
PROVISION or any of PROVISION Subsidiaries in any
environmental litigation or impose upon PROVISION or any of
PROVISION Subsidiaries any environmental liability.
3.21 Ownership of Shares. To the knowledge of PROVISION, the PROVISION
Shareholders possess full authority and legal right to sell, transfer,
and assign the entire legal and beneficial ownership of the shares of
PROVISION common stock, free from all liens, claims, and encumbrances
of any kind.
3.22 Violation of Laws, Permits, etc.
(a) PROVISION is not in violation of any term or provision of its
Articles of Incorporation or bylaws, or of any material term
or provision of any judgment, decree, order, statute, law,
injunction, rule, ordinance, or governmental regulation
Share Exchange Agreement-Page 21
that is applicable to it and where the failure to comply with
which would have a Material Effect.
(b) PROVISION has maintained in full force and effect all
certificates, licenses, and permits material to the conduct of
its business, and has not received any notification that any
revocation or limitation thereof is threatened or pending.
3.23 Undisclosed Liabilities. To the knowledge of PROVISION, PROVISION does
not have any material direct or indirect indebtedness, liability,
claim, loss, damage, deficiency, obligation or responsibility, fixed or
unfixed, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated, secured or
unsecured, accrued, absolute, contingent or otherwise (all of the
foregoing being collectively referred to as "Liabilities" and
individually as a "Liability"), of a kind required by GAAP to be set
forth on a financial statement that is not fully and adequately
reflected or reserved against on the PROVISION Financial Statements.
PROVISION does not have any Liabilities, whether or not of a kind
required by GAAP to be set forth on a financial statement, other than
(a) Liabilities incurred in the ordinary course of business since the
date of the latest balance sheet included in the PROVISION Financial
Statements that are consistent with past practice and are included in
the latest PROVISION Financial Statements, (b) Liabilities that are
fully reflected on or reserved against on the latest balance sheet
included in the PROVISION Financial Statements, or (c) as specifically
disclosed in the PROVISION Financial Statements.
3.24 Accounts Receivable and Accounts Payable. All accounts receivable
reflected on the latest balance sheet of PROVISION included in the
PROVISION Financial Statements, and all accounts receivable arising
subsequent to September 30, 2003 (a) have arisen from bona fide sales
transactions in the ordinary course of business on ordinary trade terms
and (b) have been collected or are collectible in the ordinary course
of business in the aggregate recorded amounts thereof in accordance
with their terms without valid set-off or counterclaim. PROVISION has
made payments on accounts payable and other current obligations arising
subsequent to September 30, 2003, in accordance with past practice of
the business of PROVISION.
3.25 Compensation Arrangements; Officers and Directors. Section 3.25 to the
PROVISION Disclosure Schedule sets forth: (a) the names of all present
officers and directors of PROVISION and current annual salary,
including any promised, expected or customary bonus or such other
amount, and (b) the names and titles of all directors and officers of
PROVISION. PROVISION has not made a commitment or agreement (verbally
or in writing) to increase the compensation or to modify the conditions
or terms of employment of any person listed in Section 3.25 to the
PROVISION Disclosure Schedule. To the knowledge of PROVISION, none of
such persons has made a threat to PROVISION to terminate such person's
relationship with PROVISION.
3.26 Operations. Except as expressly authorized by this Agreement, and
except as set forth in Section 3.26 to the PROVISION Disclosure
Schedule, since September 30, 2003, PROVISION has not:
Share Exchange Agreement-Page 22
(a) amended its Articles of Incorporation or Bylaws or merged with
or into or consolidated with any other entity, or changed or
agreed to rearrange in any manner the character of the
business of PROVISION;
(b) issued, sold or purchased options or rights to subscribe to,
or entered into any contracts or commitments to issue, sell or
purchase, any shares of its capital stock or other equity
interests except in the ordinary course of business and
consistent with past practices;
(c) issued any note, bond or other debt security, created,
incurred or assumed any indebtedness for borrowed money other
than in the ordinary course of business in connection with
trade payables, or guaranteed any indebtedness for borrowed
money or any capitalized lease obligation;
(d) declared, set aside or paid any dividends or declared or made
any other distributions of any kind to the shareholders, or
made any direct or indirect redemption, retirement, purchase
or other acquisition of any shares of its capital stock or
other equity interests;
(e) knowingly waived any right of material value to the business
of PROVISION;
(f) made any change in its accounting methods or practices or made
any changes in depreciation or amortization policies or rates
adopted by it or made any material write-down of inventory or
material write-off as uncorrectable of accounts receivable;
(g) made any wage or salary increase or other compensation payable
or to become payable or bonus, or increase in any other direct
or indirect compensation, for or to any of its officers,
directors, employees, consultants, agents or other
representatives, or any accrual for or commitment or agreement
to make or pay the same, other than increases made in the
ordinary course consistent with past practice;
(h) entered into any transactions with any of its affiliates,
shareholders, officers, directors, employees, consultants,
agents or other representatives (other than employment
arrangements made in the ordinary course of business
consistent with past practice), or any affiliate of any
shareholder, officer, director, consultant, employee, agent or
other representative;
(i) made any payment or commitment to pay any severance or
termination pay to any person or any of its officers,
directors, employees, consultants, agents or other
representatives, other than payments or commitments to pay
such persons or their officers, directors, employees in the
ordinary course of business;
(j) except in the ordinary course of business, incurred or assumed
any debt, obligation or liability (whether absolute or
contingent and whether or not currently due and payable);
Share Exchange Agreement-Page 23
(k) except in the ordinary course of business, made any
acquisition of all or any part of the assets, properties,
capital stock or business of any other person;
(l) except in the ordinary course of business, paid, directly or
indirectly, any of its Liabilities before the same became due
in accordance with their terms or otherwise than in the
ordinary course of business, except to obtain the benefit of
discounts available for early payment;
(m) except in the ordinary course of business, created, incurred
or assumed any indebtedness for borrowed money, or guaranteed
any indebtedness for borrowed money or any capitalized lease
obligation;
(n) except in the ordinary course of business, made any capital
expenditures or commitments for capital expenditures; or
(o) except in the ordinary course of business, terminated, failed
to renew, amended or entered into any contract or other
agreement.
3.27 Licenses and Permits. PROVISION has obtained all material government
permits, licenses, domain name and other registrations, and other
consents and authorizations (federal, state, local and foreign) of any
Governmental or Regulatory Body (collectively, "Permits") are required
to be obtained by PROVISION in connection with its properties or the
business of PROVISION. PROVISION has not received any notice of any
claim of revocation of any such Permit and has no knowledge of any
event, which would be likely to give rise to such a claim. Further,
PROVISION has not received any notice or other communication from any
Governmental or Regulatory Body regarding any actual, alleged, possible
or potential violation of, or failure to comply with, any federal,
state, local, municipal, foreign, international, multinational or other
constitution, law, ordinance, principle of common law, code,
regulation, statute or treaty ("Legal Requirement").
3.28 No Material Adverse Change. Since the date of the PROVISION Financial
Statements, there has not been any material adverse change in the
business, operations, prospects, assets, results of operations or
condition (financial or other) of PROVISION, and no event has occurred
or circumstances exist that may result in such a material adverse
change.
3.29 Compliance with the Foreign Corrupt Practices Act. PROVISION and its
representatives have not, to obtain or retain business, directly or
indirectly offered, paid, or promised to pay, or authorized the payment
of, any money or other thing of value (including any fee, gift sample,
travel expense or entertainment with a value in excess of $100.00 in
the aggregate to any one individual in any year) or any commission
payment in excess of 1% of any amount payable, to: (a) any person who
is an official, officer, agent, employee or representative of any
Governmental or Regulatory Body or of any existing or prospective
customer (whether government owned or non-government owned); (b) any
political party or official thereof; (c) any candidate for political or
political party office; or (d) any other individual or entity; while
knowing or having reason to believe that all or any portion of such
money or thing of
Share Exchange Agreement-Page 24
value would be offered, given, or promised, directly or indirectly, to
any such official, officer, agent, employee, representative, political
party, political party official, candidate, individual, or any entity
affiliated with such customer, political party or official or political
office. PROVISION has made all payments to third parties by check
mailed to such third parties' principal place of business or by wire
transfer to a bank located in the same jurisdiction as such party's
principal place of business. Each transaction is properly and
accurately recorded on the books and records of PROVISION, and each
document upon which entries in PROVISION's books and records are based
is complete and accurate in all respects. PROVISION maintains a system
of internal accounting controls adequate to insure that PROVISION
maintains no off-the-books accounts and that PROVISION's assets are
used only in accordance with PROVISION's management directives.
3.30 Brokers. Except as set forth in Section 3.30 of the PROVISION
Disclosure Schedule, all negotiations relating to this Agreement and
the transactions contemplated hereby have been carried out by PROVISION
directly with LEXON without the intervention of any other person on
behalf of PROVISION in such manner as to give rise to any valid claim
by any person against PROVISION or LEXON for a finder's fee, brokerage
commission or similar payment.
3.31 Disclosure. To the knowledge of PROVISION, neither this Agreement, nor
any Schedule to this Agreement, contains an untrue statement of a
material fact or omits a material fact necessary to make the statements
contained herein or therein not misleading.
3.32 PROVISION Shareholders. To the knowledge of PROVISION, all of the
PROVISION Shareholders approving the Share Exchange understand that the
shares of LEXON Common Stock are restricted securities under the
Securities Act and acknowledge that such PROVISION Shareholder (i) is
acquiring the LEXON Common Stock for his/her/its own account without a
view to distribution within the meaning of the Securities Act; (ii) has
received from LEXON its filings with the Securities and Exchange
Commission and all other information that he has deemed necessary to
make an informed investment decision with respect to an investment in
LEXON in general and the LEXON Common Stock in particular; (iii) is
financially able to bear the economic risks of an investment in LEXON;
and (iv) has such knowledge and experience in financial and business
matters in general and with respect to investments of a nature similar
to the LEXON Common Stock so as to be capable, by reason of such
knowledge and experience, of evaluating the merits and risks of, and
making an informed business decision with regard to, the acquisition of
the LEXON Common Stock. All of the PROVISION Shareholders approving the
Share Exchange understand and agree that the certificates evidencing
the LEXON Common Stock shall bear the usual restrictive legend
pertaining to Rule 144 under the Securities Act and that the LEXON
Common Stock will not be transferable except under an effective
registration statement under the Securities Act or in accordance with
available exemptions from registration under the Securities Act. There
are no more than 35 non-accredited investors among the PROVISION
Shareholders.
ARTICLE IV
Share Exchange Agreement-Page 25
REPRESENTATIONS AND WARRANTIES OF LEXON
LEXON, represents and warrants to PROVISION, subject to such exceptions
as are specifically disclosed in the disclosure schedule (referencing the
appropriate section and/or paragraph numbers) previously supplied by LEXON to
PROVISION (the "LEXON Disclosure Schedule"), that on the date hereof and as of
the Effective Time, as though made at the Effective Time, as follows:
4.1 Organization and Standing. LEXON is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Oklahoma and has full corporate power and authority to conduct its
business as presently conducted and as proposed to be conducted by it
and to enter into and perform this Agreement and to carry out the
transactions contemplated by this Agreement. LEXON is duly qualified
and in good standing to do business in each jurisdiction where the
failure to be so qualified would have a LEXON Material Adverse Effect
(as defined below). LEXON is presently not in compliance with the
reporting requirements of the Securities Exchange Act of 1934, as
amended. LEXON has filed, or will file prior to the Effective Time, all
material required to be filed pursuant to all reporting obligations
(the "LEXON SEC Reports"), under either Section 13(a) or 15(d) of the
1934 Act during the twelve (12) months immediately preceding the date
of this Agreement, in accordance with Sections 6.1(l), 6.1(m) and
6.1(n) and conditioned upon the payments described therein.
For all purposes of this Agreement, the term "LEXON Material Adverse
Effect" means any change, event or effect that is materially adverse to
the business, assets (including intangible assets), condition
(financial or otherwise), results of operations or prospects of LEXON
and its subsidiaries, taken as a whole. LEXON has delivered a true and
correct copy of its Articles of Incorporation and Bylaws, each as
amended to date, to PROVISION. The operations now being conducted by
LEXON have not been conducted under any other name.
4.2 Subsidiaries. LEXON has one subsidiary, Cancer Diagnostics, Inc., an
inactive Florida corporation. The entities in which LEXON has a
controlling interest are hereinafter occasionally referred to
collectively, as "LEXON Subsidiaries" and individually as a "LEXON
Subsidiary."
4.3 LEXON Capital Structure.
(a) The authorized capital stock of LEXON consists of 45,000,000
shares of Common Stock, of which 3,200,000 shares are issued
and outstanding (subsequent to the 1-for-10 reverse split
effected in connection with the Merger), and 5,000,000 shares
of preferred stock (the "Preferred Stock", with the Common
Stock collectively hereinafter referred to as the "Capital
Stock"), of which no shares are issued and outstanding. All of
the issued and outstanding shares of Common Stock and
Preferred Stock have been duly authorized and validly issued
and are fully paid and nonassessable. All outstanding shares
of LEXON Capital Stock are duly authorized, validly issued,
fully paid and non-assessable and not subject to preemptive
rights
Share Exchange Agreement-Page 26
created by statute, the Certificate of Incorporation or Bylaws
of LEXON or any agreement to which LEXON is a party or by
which it is bound and have been issued in compliance with
federal and state securities laws. There are no declared or
accrued unpaid dividends with respect to any shares of LEXON's
Common Stock. LEXON has no other capital stock authorized,
issued or outstanding.
(b) Section 4.3(b) of LEXON Disclosure Schedule sets forth each
outstanding option and warrant to purchase LEXON Common Stock
(a "LEXON Options and Warrants"), the number of shares of
LEXON Common Stock subject to such LEXON Options and Warrants
and the exercise price of such LEXON Options and Warrants.
Except as set forth on Section 4.3(b) of LEXON Disclosure
Schedule, there are no options, warrants, calls, rights,
commitments or agreements of any character, written or oral,
to which LEXON is a party or by which it is bound obligating
LEXON or any of its subsidiaries to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold,
repurchased or redeemed, any shares of the capital stock of
LEXON or obligating LEXON or any of its subsidiaries to grant,
extend, accelerate the vesting of, change the price of,
otherwise amend or enter into any such option, warrant, call,
right, commitment or agreement. There are no outstanding or
authorized stock appreciation, phantom stock, profit
participation, or other similar rights with respect to LEXON
or its subsidiaries. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting
stock of LEXON.
4.4 Authority. LEXON has all requisite power and authority to enter into
this Agreement and any Related Agreements (as hereinafter defined) to
which it is a party and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and
any Related Agreements to which LEXON is a party and the consummation
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of LEXON, and
no further action is required on the part of LEXON to authorize the
Agreement, any Related Agreements to which it is a party and the
transactions contemplated hereby and thereby, subject only to the
approval of this Agreement by the Shareholders of record as of the
Record Date. This Agreement and the Share Exchange have been
unanimously approved by the Board of Directors of LEXON. This Agreement
and any Related Agreements to which LEXON is a party have been duly
executed and delivered by LEXON and, assuming the due authorization,
execution and delivery by the other parties hereto and thereto,
constitute the valid and binding obligation of LEXON enforceable in
accordance with their respective terms, subject to the laws of general
application relating to bankruptcy, insolvency and the relief of
debtors and to rules of law governing specific performance, injunctive
relief or other equitable remedies. The "Related Agreements" shall mean
all such ancillary agreements and certificates required in this
Agreement to be executed and delivered in connection with the
transactions contemplated hereby.
4.5 No Conflict. The execution and delivery by LEXON of this Agreement and
any Related Agreements to which LEXON is a party do not, and, the
consummation of the transactions contemplated hereby and thereby will
not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a
right of
Share Exchange Agreement-Page 27
termination, cancellation, modification or acceleration of any
obligation or loss of any benefit under (any such event, a "Conflict")
(i) any provision of the Certificate of Incorporation and Bylaws of
LEXON, (ii) any mortgage, indenture, lease, contract or other agreement
or instrument (including without limitation any loan agreements, credit
agreements, notes, bonds, or benefit plans), permit, concession,
franchise or license to which LEXON or any of its subsidiaries or any
of the their respective properties or assets (including intangible
assets) is subject, or (iii) any judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to LEXON or its respective
properties or assets.
4.6 Consents. No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative
agency or commission or other federal, state, county, local or other
foreign governmental authority, instrumentality, agency or commission
("Governmental Entity") is required by or with respect to LEXON in
connection with the execution and delivery of this Agreement and any
Related Agreements to which LEXON is a party or the consummation of the
transactions contemplated hereby and thereby, except for (i) such
consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable securities
laws and (ii) the filing of this Agreement with the Secretary of State
of the State of Oklahoma.
4.7 LEXON Financial Statements. Prior to the Effective Date and upon
completion of the conditions precedent to Closing as outlined in
Section 6.1(l), Section 4.7 of LEXON Disclosure Schedule shall set
forth a complete and correct copy of the following financial
statements: (i) the audited balance sheet at December 31, 2002 and
statements of operations, stockholders equity and cash flows for LEXON
for the period from inception to December 31, 2002 and for the years
ended December 31, 2002 and 2001 and the statement of operations of
LEXON for the period ending December 31, 2002 and the unaudited balance
sheets at September 30, 2003 and statements of operations and cash
flows for LEXON for the period from inception to September 30, 2003 and
for the nine months ended September 30, 2003 and 2002 (the "Lexon
Financials"). The Financials will have been prepared in accordance with
GAAP. The LEXON Financials shall fairly present in all material
respects the consolidated financial position of LEXON as at the
respective dates thereof and the consolidated results of its operations
and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and
recurring year-end adjustments which will not be material in
significance.
4.8 Tax Matters.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax"
or, collectively, "Taxes," means (i) any and all federal,
state, local and foreign taxes, assessments and other
governmental charges, duties, impositions and liabilities,
including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added,
ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together
with all interest, penalties and additions imposed with
respect to such amounts; (ii) any liability for the payment of
any amounts of the type described in clause (i) as a result of
being a member of an affiliated, consolidated, combined or
unitary group for any period; and (iii) any
Share Exchange Agreement-Page 28
liability for the payment of any amounts of the type described
in clause (i) or (ii) as a result of any express or implied
obligation to indemnify any other person or as a result of any
obligations under any agreements or arrangements with any
other person with respect to such amounts and including any
liability for taxes of a predecessor entity.
(b) Tax Returns and Audits.
(i) As of the Effective Time, LEXON and LEXON
Subsidiaries will have prepared and timely filed all
required federal, state, local and foreign returns,
estimates, information statements and reports
("Returns") relating to any and all Taxes concerning
or attributable to LEXON and all LEXON Subsidiaries
or their operations and such Returns are true and
correct and have been completed in accordance with
applicable law.
(ii) LEXON and LEXON Subsidiaries have not been delinquent
of any material payment of any Tax nor is there any
Tax deficiency outstanding, assessed or proposed
against LEXON and any of LEXON Subsidiaries, nor have
LEXON or any of LEXON Subsidiaries executed any
waiver of any statute of limitations on or extending
the period for the assessment or collection of any
Tax.
(iii) No audit or other examination of any Return of LEXON
or of any of LEXON Subsidiaries is presently in
progress, nor have LEXON or any of LEXON Subsidiaries
been notified of any request for such an audit or
other examination.
(iv) As of the Balance Sheet Date, LEXON and LEXON
Subsidiaries have no liabilities for due but unpaid
federal, state, local and foreign Taxes which have
not been accrued or reserved against on the Balance
Sheet, whether asserted or unasserted, contingent or
otherwise.
(v) There are (and immediately following the Effective
Time there will be) no liens, pledges, charges,
claims, restrictions on transfer, mortgages, security
interests or other encumbrances of any sort
(collectively, "Liens") on the assets of LEXON and of
LEXON Subsidiaries relating to or attributable to
Taxes other than Liens for Taxes not yet due and
payable.
(vi) LEXON and LEXON Subsidiaries have not filed any
consent agreement under Section 341(f) of the Code or
agreed to have Section 341(f)(4) of the Code apply to
any disposition of a subsection (f) asset (as defined
in Section 341(f)(4) of the Code) owned by LEXON or
of any of LEXON Subsidiaries.
(vii) LEXON and LEXON Subsidiaries are not parties to any
tax sharing, indemnification or allocation agreement
nor does LEXON or any of LEXON
Share Exchange Agreement-Page 29
Subsidiaries owe any amount under any such agreement.
(viii) LEXON and LEXON Subsidiaries are not and have never
been at any time, "United States Real Property
Holding Corporations" within the meaning of Section
897(c)(2) of the Code.
(xii) No adjustment relating to any Return filed by LEXON
or any of LEXON Subsidiaries has been proposed
formally or, to the Knowledge of LEXON or any of
LEXON Subsidiaries, informally by any tax authority
to LEXON or any of LEXON Subsidiaries or any
representative thereof.
(xiii) LEXON and LEXON Subsidiaries have not participated
(either as a "distributing" or "controlled"
corporation) in any transaction described in Section
355 of the Code.
4.9 Title to Properties and Assets. Except for (i) liens for current taxes
not yet due and payable; (ii) liens imposed by law and incurred in the
ordinary course of business for obligations not past due; (iii) liens
in respect of pledges or deposits under workers' compensation laws or
similar legislation; and (iv) minor defects in title, none of which,
individually or in the aggregate, materially interferes with the use of
such property, LEXON has good title to or a valid leasehold interest in
all of its properties and assets, which comprise all of the properties
and assets reflected on the Balance Sheet and all of the assets and
properties used in the conduct of its business as currently conducted,
and none of such properties or assets is subject to any lien of any
nature whatsoever.
4.10 Intellectual Property. LEXON or LEXON Subsidiaries, owns, or has the
right to use under agreements ("Intellectual Property Rights
Agreements"), all of the patents, patent applications, design patents
and applications therefore, trademarks, service marks, trademark and
service ▇▇▇▇ applications, trade names, copyright registrations and
licenses (the "Intellectual Property Rights") currently used by LEXON
and LEXON Subsidiaries or necessary for the conduct of LEXON's and
LEXON Subsidiaries' business as currently conducted and has taken all
actions reasonable in light of its financial position to protect the
Intellectual Property Rights. To LEXON's Knowledge, except as set forth
in Section 2.12 of LEXON Disclosure Schedule, the business conducted or
proposed to be conducted by LEXON and LEXON Subsidiaries does not and
will not cause LEXON and LEXON Subsidiaries to infringe or violate any
of the patents, trademarks, service marks, trade names, copyrights,
mask-works, licenses, trade secrets, processes, data, know-how or other
intellectual property rights of any other Person, and does not and will
not require LEXON and LEXON Subsidiaries to obtain any license or other
agreement to use any patents, trademarks, service marks, trade names,
copyrights, mask-works, licenses, trade secrets, processes, data,
know-how or other intellectual property rights or patents of others,
except for licenses or agreements that can be obtained in the ordinary
course of business without unreasonable effort, delay, cost or expense.
The Intellectual Property Rights Agreements are valid, binding and in
full force and effect and LEXON and LEXON Subsidiaries are neither in
breach under any of the Intellectual Property Rights Agreements nor
have any Knowledge of any claim for breach under any Intellectual
Property Rights Agreements by the other
Share Exchange Agreement-Page 30
parties thereto.
To LEXON's Knowledge, there is no person who is challenging, infringing
on, or otherwise violating any right of LEXON or LEXON Subsidiaries
with respect to any Intellectual Property Rights. Neither LEXON nor any
of LEXON Subsidiaries have received any notice or otherwise has
Knowledge of any pending claim, order or proceeding with respect to any
Intellectual Property Rights used by LEXON or LEXON Subsidiaries; and,
to LEXON's Knowledge, no Intellectual Property Rights owned or used by
LEXON or LEXON Subsidiaries are being used or enforced in a manner that
would reasonably be expected to result in the abandonment, cancellation
or unenforceability of such Intellectual Property Rights.
4.11 Material Contracts and Obligations. Except as described in Section 4.11
of LEXON'S Disclosure Statement there are no other material contracts
or obligations.
4.12 Non-Compete Agreements. Neither LEXON nor any of LEXON Subsidiaries is
presently bound by any non-compete agreements or any other agreements
or arrangements that limit or otherwise restrict LEXON or any of LEXON
Subsidiaries or that would, after the Effective Time, limit or restrict
PROVISION (or the Surviving Corporation) from engaging or competing in
any line of business or in any geographical area.
4.13 Interested Party Transactions. No employee, officer, director or
Shareholder of LEXON or member of his or her immediate family is
indebted to LEXON, nor is LEXON indebted (or committed to make loans or
extend or guarantee credit) to any of them, other than (i) for payment
of salary, bonuses, and other compensation for services rendered, (ii)
reimbursement for reasonable expenses incurred on behalf of LEXON, and
(iii) for other employee benefits made generally available to all
employees. To LEXON's Knowledge, none of such individuals has any
direct or indirect ownership interest in any Person with whom LEXON is
affiliated or with whom LEXON has a contractual relationship, or any
Person that competes with LEXON, except that each employee,
Shareholder, officer or director of LEXON and members of their
respective immediate families may own less than 5% of the outstanding
stock in publicly traded companies that may compete with LEXON. Except
as set forth in Section 4.13 of LEXON Disclosure Schedule, to LEXON's
Knowledge, no officer, director or Shareholder or any member of his or
her immediate families is, directly or indirectly, interested in any
material contract with LEXON (other than such contracts as relate to
any such individual's employment, ownership of capital stock or other
securities of LEXON).
4.14 Litigation. Except as described in Section 4.14 of LEXON'S Disclosure
Statements, the Company is not a party to any pending or threatened
litigation.
4.15 Compliance. Except as disclosed in Section 4.1 of this Agreement, LEXON
has complied in all material respects with all laws, regulations and
orders applicable to its present and proposed business and has all
material permits, variances, orders, approvals, and licenses required
thereby. There is no term or provision of any mortgage, indenture,
contract,
Share Exchange Agreement-Page 31
agreement or instrument to which LEXON is a Party or by which it is
bound or of any provision of any existing state or federal judgment,
decree, order, statute, rule or regulation applicable to or binding
upon LEXON, that would reasonably cause a LEXON Material Adverse
Effect, or, so far as LEXON may now reasonably foresee, in the future
is reasonably likely to cause a LEXON Material Adverse Effect. To
LEXON's Knowledge, none of the Shareholders nor any other employee of
LEXON or LEXON Subsidiaries is in violation of any term of any contract
or covenant (either with LEXON or with another entity) relating to
employment, patents, proprietary information disclosure, noncompetition
or non-solicitation.
4.16 SEC Filings. None of the information supplied or to be supplied by
LEXON or any of LEXON Subsidiaries for inclusion or incorporation by
reference in (i) any materials to be filed with the SEC by LEXON in
connection with the issuance of the LEXON Common Stock in or as a
result of the Exchange will, at the time such filing becomes effective
under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading; and (ii) the
materials to be filed with the SEC by LEXON and LEXON pursuant to
Section 5.1(a) hereof will not contain, at the dates mailed to the
stockholders of PROVISION and LEXON, at the times of the Shareholders
meeting of LEXON (the "LEXON Shareholders' Meeting") and the
Stockholders meeting of LEXON (the "LEXON Stockholders' Meeting") in
connection with the transactions contemplated hereby and as of the
Effective Time, any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The materials will comply as
to form in all material respects with the provisions of the Securities
and Exchange Act and the rules and regulations promulgated by the SEC
thereunder.
4.17 Employee Matters and Benefit Plans.
(a) Definitions. For purposes of this Section, the following terms
shall have the meanings set forth below:
(i) "Code" shall mean the Internal Revenue Code of 1986,
as amended;
(ii) "DOL" shall mean the Department of Labor;
(iii) "Employee" shall mean any current or former or
retired employee, consultant or director of LEXON or
any LEXON Subsidiary or any Affiliate;
(iv) "Employee Agreement" shall mean each management,
employment, severance, consulting, relocation,
repatriation, expatriation, visas, work permit or
other agreement, contract or understanding between
LEXON or any LEXON Subsidiary or any ERISA Affiliate
and any Employee;
(v) "ERISA" shall mean the Employee Retirement Income
Security Act of 1974,
Share Exchange Agreement-Page 32
as amended;
(vi) "ERISA Affiliate" shall mean any other person or
entity under common control with LEXON or any LEXON
Subsidiary within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations issued
thereunder;
(vii) "IRS" shall mean the Internal Revenue Service;
(viii) "LEXON Employee Plan" shall mean any plan, program,
policy, practice, contract, agreement or other
arrangement providing for compensation, severance,
termination pay, deferred compensation, performance
awards, stock or stock-related awards, fringe
benefits or other employee benefits or remuneration
of any kind, whether written or unwritten or
otherwise, funded or unfunded, including without
limitation, each "employee benefit plan," within the
meaning of Section 3(3) of ERISA which is or has been
maintained, contributed to, or required to be
contributed to, by LEXON or any LEXON Subsidiary, or
any ERISA Affiliate for the benefit of any Employee,
or with respect to which LEXON or any LEXON
Subsidiary, or any ERISA Affiliate has or may have
any liability or obligation; and
(b) Employee Plans. LEXON and LEXON Subsidiaries are in material
compliance with LEXON Employee Plans. LEXON and LEXON
Subsidiaries do not have any plan or commitment to establish
any new LEXON Employee Plan or Employee Agreements, to modify
any LEXON Employee Plan (except to the extent required by law
or to conform any such LEXON Employee Plan to the requirements
of any applicable law, in each case as previously disclosed to
PROVISION in writing, or as required by this Agreement), or to
adopt or enter into any LEXON Employee Plan.
(c) Employee Plan Compliance. (i) LEXON and LEXON Subsidiaries
have performed in all material respects all obligations
required to be performed by them under, are not in material
default or violation of, and have no Knowledge of any default
or violation by any other party to each LEXON Employee Plan,
and each LEXON Employee Plan has been established and
maintained in all material respects in accordance with its
terms and in material compliance with all applicable laws,
statutes, orders, rules and regulations, including but not
limited to ERISA and the Code; (ii) each LEXON Employee Plan
intended to qualify under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code has
either received a favorable determination, opinion,
notification or advisory letter from the IRS with respect to
each such LEXON Employee Plan as to its qualified status under
the Code or has remaining a period of time under applicable
Treasury regulations or IRS pronouncements in which to apply
for such a letter and make any amendments necessary to obtain
a favorable determination as to the qualified status of each
such LEXON Employee Plan; (iii) no "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406
and 407 of ERISA, and not otherwise exempt under Section 4975
or Section 408 of ERISA (or any
Share Exchange Agreement-Page 33
administrative class exemption issued thereunder), has
occurred with respect to any LEXON Employee Plan; (iv) there
are no actions, suits or claims pending, or, to the Knowledge
of LEXON or any LEXON Subsidiary, threatened or reasonably
anticipated (other than routine claims for benefits) against
any LEXON Employee Plan or against the assets of any LEXON
Employee Plan; (v) there are no audits, inquiries or
proceedings pending or, to the Knowledge of LEXON or any of
LEXON Subsidiaries, or any ERISA Affiliates, threatened by the
IRS or DOL with respect to any LEXON Employee Plan; and (vi)
neither LEXON, LEXON Subsidiaries, nor any ERISA Affiliate is
subject to any penalty or tax with respect to any LEXON
Employee Plan under Section 502(i) of ERISA or Sections 4975
through 4980 of the Code.
(d) Employment Matters. LEXON and LEXON Subsidiaries: (i) are in
material compliance in all respects with all applicable
foreign, federal, state and local laws, rules and regulations
respecting employment, employment practices, terms and
conditions of employment and wages and hours, in each case,
with respect to Employees; (ii) has withheld and reported all
amounts required by law or by agreement to be withheld and
reported with respect to wages, salaries and other payments to
Employees; (iii) is not liable for any arrears of wages or any
taxes or any penalty for failure to comply with any of the
foregoing; and (iv) is not liable for any payment to any trust
or other fund governed by or maintained by or on behalf of any
governmental authority, with respect to unemployment
compensation benefits, social security or other benefits or
obligations for Employees (other than routine payments to be
made in the normal course of business and consistent with past
practice). To LEXON's Knowledge, there are no pending,
threatened or reasonably anticipated claims or actions against
LEXON or any LEXON Subsidiary under any worker's compensation
policy or long-term disability policy.
(e) Labor. To LEXON's Knowledge, no work stoppage or labor strike
against LEXON or any LEXON Subsidiary is pending, threatened
or reasonably anticipated. LEXON and LEXON Subsidiaries do not
know of any activities or proceedings of any labor union to
organize any Employees. There are no actions, suits, claims,
labor disputes or grievances pending, or, to the Knowledge of
LEXON or LEXON Subsidiaries, threatened or reasonably
anticipated relating to any labor, safety or discrimination
matters involving any Employee, including, without limitation,
charges of unfair labor practices or discrimination
complaints, which, if adversely determined, would,
individually or in the aggregate, result in any liability to
LEXON or LEXON Subsidiaries. Neither LEXON nor any of LEXON
Subsidiaries has engaged in any unfair labor practices within
the meaning of the National Labor Relations Act. LEXON and
LEXON Subsidiaries are not presently, nor have they been in
the past, a party to, or bound by, any collective bargaining
agreement or union contract with respect to Employees and no
collective bargaining agreement is being negotiated by LEXON
or any LEXON Subsidiary.
4.18 Insurance. LEXON maintains adequate insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations
and employees of LEXON and LEXON
Share Exchange Agreement-Page 34
Subsidiaries. There is no claim by LEXON or any of LEXON Subsidiaries
pending under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such
policies or bonds. All premiums due and payable under all such policies
and bonds have been paid, and LEXON and LEXON Subsidiaries are
otherwise in compliance with the terms of such policies and bonds (or
other policies and bonds providing substantially similar insurance
coverage). LEXON and LEXON Subsidiaries do not have Knowledge of any
threatened termination of, or premium increase with respect to, any of
such policies.
4.19 Books and Records. The books and records of LEXON (including, without
limitation, the books of account, minute books, and stock record books)
are complete and correct in all material respects and have been
maintained in accordance with sound business practices. The minute
books of LEXON are complete and current in all material respects and,
as applicable, accurately reflect all actions taken by the shareholders
and the board of directors of LEXON since the date of inception of
LEXON, and all signatures contained therein are the true signatures of
the persons whose signatures they purport to be.
4.20 Environmental Matters.
(a) Hazardous Material. Neither LEXON nor any of LEXON
Subsidiaries has: (i) operated any underground storage tanks
at any property that LEXON or any of LEXON Subsidiaries has at
any time owned, operated, occupied or leased; or (ii)
illegally released any material amount of any substance that
has been designated by any Governmental Entity or by
applicable foreign, federal, state, or local law to be
radioactive, toxic, hazardous or otherwise a danger to health
or the environment, including, without limitation, PCBs,
asbestos, petroleum, and urea-formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to
the United States Resource Conservation and Recovery Act of
1976, as amended, and the regulations promulgated pursuant to
said laws (a "Hazardous Material"), but excluding office and
janitorial supplies properly and safely maintained. To the
Knowledge of LEXON and LEXON Subsidiaries, no Hazardous
Materials are present as a result of the actions of LEXON or
any of LEXON Subsidiaries or as a result of any actions of any
other person or otherwise, in, on or under any property,
including the land and the improvements, ground water and
surface water thereof, that LEXON or any of LEXON Subsidiaries
has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Neither LEXON nor any of LEXON
Subsidiaries has transported, stored, used, manufactured,
disposed of, released or exposed its employees or others to
Hazardous Materials in violation of any law in effect on or
before the Effective Time, nor has either of them disposed of,
transported, sold, or manufactured any product containing a
Hazardous Material (any or all of the foregoing being
collectively referred to as "Hazardous Materials Activities")
in violation of any rule, regulation, treaty or statute
promulgated by any Governmental Entity in effect prior to or
as of the date hereof to prohibit, regulate or control
Share Exchange Agreement-Page 35
Hazardous Materials or any Hazardous Material Activity.
(c) Permits. LEXON and LEXON Subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and
consents (the "Environmental Permits") necessary for the
conduct of LEXON's or any of LEXON Subsidiaries' Hazardous
Material Activities, respectively, and other businesses of
LEXON or any of LEXON Subsidiaries, as such activities and
businesses are currently being conducted.
(d) Environmental Liabilities. No action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is
pending, or to the Knowledge of LEXON or any of LEXON
Subsidiaries, threatened concerning any Environmental Permit,
Hazardous Material or any Hazardous Materials Activity of
LEXON or any of LEXON Subsidiaries. Neither LEXON nor any of
LEXON Subsidiaries has Knowledge of any fact or circumstance
which could reasonably be expected to involve LEXON or any of
LEXON Subsidiaries in any environmental litigation or impose
upon LEXON or any of LEXON Subsidiaries any environmental
liability.
4.21 Violation of Laws, Permits, etc.
(a) LEXON is not in violation of any term or provision of its
Articles of Incorporation or bylaws, or of any material term
or provision of any judgment, decree, order, statute, law,
injunction, rule, ordinance, or governmental regulation that
is applicable to it and where the failure to comply with which
would have a Material Effect.
(b) LEXON has maintained in full force and effect all
certificates, licenses, and permits material to the conduct of
its business, and has not received any notification that any
revocation or limitation thereof is threatened or pending.
4.22 Undisclosed Liabilities. Except as disclosed in Section 4.22 of the
LEXON Disclosure Schedule, LEXON does not have any material direct or
indirect indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility, fixed or unfixed, ▇▇▇▇▇▇ or inchoate,
liquidated or unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise (all of the foregoing being collectively
referred to as "Liabilities" and individually as a "Liability"), of a
kind required by GAAP to be set forth on a financial statement that is
not fully and adequately reflected or reserved against on the LEXON
Financial Statements. LEXON does not have any Liabilities, whether or
not of a kind required by GAAP to be set forth on a financial
statement, other than (a) Liabilities incurred in the ordinary course
of business since the date of the latest balance sheet included in the
LEXON Financial Statements that are consistent with past practice and
are included in the latest LEXON Financial Statements, (b) Liabilities
that are fully reflected on or reserved against on the latest balance
sheet included in the LEXON Financial Statements, or (c) as
specifically disclosed in the LEXON Financial Statements.
4.23 Accounts Receivable and Accounts Payable. All accounts receivable
reflected on the latest balance sheet of LEXON included in the LEXON
Financial Statements, and all
Share Exchange Agreement-Page 36
accounts receivable arising subsequent to December 31, 2002, (a) have
arisen from bona fide sales transactions in the ordinary course of
business on ordinary trade terms and (b) have been collected or are
collectible in the ordinary course of business in the aggregate
recorded amounts thereof in accordance with their terms without valid
set-off or counterclaim. LEXON has made payments on accounts payable
and other current obligations arising subsequent to December 31, 2002,
in accordance with past practice of the business of LEXON.
4.24 Compensation Arrangements; Officers and Directors. Section 4.24 to the
LEXON Disclosure Schedule sets forth: (a) the names of all present
officers and directors of LEXON and current annual salary, including
any promised, expected or customary bonus or such other amount, and (b)
the names and titles of all directors and officers of LEXON. LEXON has
not made a commitment or agreement (verbally or in writing) to increase
the compensation or to modify the conditions or terms of employment of
any person listed in Section 4.24 to the LEXON Disclosure Schedule. To
the knowledge of LEXON, none of such persons has made a threat to LEXON
to terminate such person's relationship with LEXON.
4.25 Operations. Except as expressly authorized by this Agreement, since the
date of the latest LEXON Financial Statements, LEXON has not:
(a) amended its Articles of Incorporation or Bylaws or merged with
or into or consolidated with any other entity, or changed or
agreed to rearrange in any manner the character of the
business of LEXON;
(b) issued, sold or purchased options or rights to subscribe to,
or entered into any contracts or commitments to issue, sell or
purchase, any shares of its capital stock or other equity
interests except in the ordinary course of business and
consistent with past practices;
(c) issued any note, bond or other debt security, created,
incurred or assumed any indebtedness for borrowed money other
than in the ordinary course of business in connection with
trade payables, or guaranteed any indebtedness for borrowed
money or any capitalized lease obligation;
(d) declared, set aside or paid any dividends or declared or made
any other distributions of any kind to the shareholders, or
made any direct or indirect redemption, retirement, purchase
or other acquisition of any shares of its capital stock or
other equity interests;
(e) knowingly waived any right of material value to the business
of LEXON;
(f) made any change in its accounting methods or practices or made
any changes in depreciation or amortization policies or rates
adopted by it or made any material write-down of inventory or
material write-off as uncorrectable of accounts receivable;
Share Exchange Agreement-Page 37
(g) made any wage or salary increase or other compensation payable
or to become payable or bonus, or increase in any other direct
or indirect compensation, for or to any of its officers,
directors, employees, consultants, agents or other
representatives, or any accrual for or commitment or agreement
to make or pay the same, other than increases made in the
ordinary course consistent with past practice;
(h) entered into any transactions with any of its affiliates,
shareholders, officers, directors, employees, consultants,
agents or other representatives (other than employment
arrangements made in the ordinary course of business
consistent with past practice), or any affiliate of any
shareholder, officer, director, consultant, employee, agent or
other representative;
(i) made any payment or commitment to pay any severance or
termination pay to any person or any of its officers,
directors, employees, consultants, agents or other
representatives, other than payments or commitments to pay
such persons or their officers, directors, employees in the
ordinary course of business;
(j) except in the ordinary course of business, incurred or assumed
any debt, obligation or liability (whether absolute or
contingent and whether or not currently due and payable);
(k) except in the ordinary course of business, made any
acquisition of all or any part of the assets, properties,
capital stock or business of any other person;
(l) except in the ordinary course of business, paid, directly or
indirectly, any of its Liabilities before the same became due
in accordance with their terms or otherwise than in the
ordinary course of business, except to obtain the benefit of
discounts available for early payment;
(m) except in the ordinary course of business, created, incurred
or assumed any indebtedness for borrowed money, or guaranteed
any indebtedness for borrowed money or any capitalized lease
obligation;
(n) except in the ordinary course of business, made any capital
expenditures or commitments for capital expenditures; or
(o) except in the ordinary course of business, terminated, failed
to renew, amended or entered into any contract or other
agreement.
4.26 Licenses and Permits. LEXON has obtained all material government
permits, licenses, domain name and other registrations, and other
consents and authorizations (federal, state, local and foreign) of any
Governmental or Regulatory Body (collectively, "Permits") are required
to be obtained by LEXON in connection with its properties or the
business of LEXON. LEXON has not received any notice of any claim of
revocation of any such Permit and has no knowledge of any event, which
would be likely to give rise to such a claim.
Share Exchange Agreement-Page 38
Further, LEXON has not received any notice or other communication from
any Governmental or Regulatory Body regarding any actual, alleged,
possible or potential violation of, or failure to comply with, any
federal, state, local, municipal, foreign, international, multinational
or other constitution, law, ordinance, principle of common law, code,
regulation, statute or treaty ("Legal Requirement").
4.27 No Material Adverse Change. Since the date of the LEXON Financial
Statements, there has not been any material adverse change in the
business, operations, prospects, assets, results of operations or
condition (financial or other) of LEXON, and no event has occurred or
circumstances exist that may result in such a material adverse change.
4.28 Compliance with the Foreign Corrupt Practices Act. LEXON and its
representatives have not, to obtain or retain business, directly or
indirectly offered, paid, or promised to pay, or authorized the payment
of, any money or other thing of value (including any fee, gift sample,
travel expense or entertainment with a value in excess of $100.00 in
the aggregate to any one individual in any year) or any commission
payment in excess of 1% of any amount payable, to: (a) any person who
is an official, officer, agent, employee or representative of any
Governmental or Regulatory Body or of any existing or prospective
customer (whether government owned or non-government owned); (b) any
political party or official thereof; (c) any candidate for political or
political party office; or (d) any other individual or entity; while
knowing or having reason to believe that all or any portion of such
money or thing of value would be offered, given, or promised, directly
or indirectly, to any such official, officer, agent, employee,
representative, political party, political party official, candidate,
individual, or any entity affiliated with such customer, political
party or official or political office. LEXON has made all payments to
third parties by check mailed to such third parties' principal place of
business or by wire transfer to a bank located in the same jurisdiction
as such party's principal place of business. Each transaction is
properly and accurately recorded on the books and records of LEXON, and
each document upon which entries in LEXON's books and records are based
is complete and accurate in all respects. LEXON maintains a system of
internal accounting controls adequate to insure that LEXON maintains no
off-the-books accounts and that LEXON's assets are used only in
accordance with LEXON's management directives.
4.29 Brokers. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried out by LEXON
directly with PROVISION without the intervention of any other person on
behalf of LEXON in such manner as to give rise to any valid claim by
any person against PROVISION or LEXON for a finder's fee, brokerage
commission or similar payment.
4.30 Disclosure. To the knowledge of LEXON, neither this Agreement, nor any
Schedule to this Agreement, contains an untrue statement of a material
fact or omits a material fact necessary to make the statements
contained herein or therein not misleading.
4.31 No Material Adverse Change. Since the date of the LEXON Financial
Statements, there has not been any material adverse change in the
business, operations, prospects, assets,
Share Exchange Agreement-Page 39
results of operations or condition (financial or other) of LEXON, and
no event has occurred or circumstances exist that may result in such a
material adverse change.
4.32 Approval of Share Exchange. The board of directors of LEXON has
approved the Share Exchange without reservation or qualification.
4.33 SEC Reporting Status. LEXON is, or will be at the Effective Time, in
compliance, to the extent applicable, with all reporting obligations
under either Section 12(b), 12(g) or 15(d) of the 1934 Act, and shall
maintain such status on a timely basis. LEXON has registered its Common
Stock pursuant to Section 12 of the 1934 Act and the Common Stock is
listed and trades on the Pink Sheets. LEXON has filed, or will file
prior to the Effective Time, all material required to be filed pursuant
to all reporting obligations (the "LEXON SEC Reports"), under either
Section 13(a) or 15(d) of the 1934 Act during the twelve (12) months
immediately preceding the date of this Agreement, in accordance with
Sections 6.1(l), 6.1(m) and 6.1(n) and conditioned upon the payments
described therein. LEXON has not filed a certification on Form 15
pursuant to Rule 12h-3 of the Exchange Act. There is no fact known to
LEXON (other than general economic conditions known to the public
generally) that has not been publicly disclosed by LEXON or disclosed
in writing to PROVISION which (i) could reasonably be expected to have
a material adverse effect on the condition (financial or otherwise) or
on the earnings, business affairs, properties or assets of LEXON, or
(ii) could reasonably be expected to materially and adversely affect
the ability of LEXON to perform its obligations pursuant to this
Agreement.
4.34 Investment Company. LEXON is not an investment company within the
meaning of Section 3 of the Investment Company Act.
4.35 Trading Status. The LEXON Common Stock is quoted over-the-counter under
the symbol "LXXN". There is no action or proceeding pending or, to the
knowledge of LEXON, threatened against LEXON by the National
Association of Securities Dealers ("NASD")with respect to any intention
by such entity to delist the common stock of LEXON from
over-the-counter quotation.
4.36 Disclosure. To the knowledge of LEXON, neither this Agreement, nor any
Schedule to this Agreement, contains an untrue statement of a material
fact or omits a material fact necessary to make the statements
contained herein or therein not misleading.
4.37 SEC Filings; Financial Statements
(a) The LEXON SEC Reports (i) at the time they were filed,
complied as to form in all material respects with the
requirements of the Securities Act or the Exchange Act, as the
case may be, and (ii) did not at the time they were filed (or
if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact
require to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
Share Exchange Agreement-Page 40
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) (the "LEXON Financial
Statements") contained in the LEXON SEC Reports has been
prepared in accordance with GAAP applied on a consistent basis
throughout the period involved (except as may be indicated in
the notes thereto) and each fairly presents in all material
respects the consolidated financial position of LEXON as at
the respective dates thereof and the consolidated results of
its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or
are subject to normal and recurring year-end adjustments which
will not be material in significance.
4.38 Agreements, Contracts and Commitments. As of the date hereof, except as
set forth in Section 4.38 of LEXON Disclosure Schedule, LEXON is not
bound by:
(a) any employment or consulting agreement, contract or
commitment, other than confidentiality agreements, with an
employee or individual consultant or salesperson or consulting
or sales agreement, contract or commitment with a firm or
other organization,
(b) any agreement or plan, including, without limitation, any
stock option plans, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be increased,
or the vesting of benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions
contemplated by this Agreement,
(c) any fidelity or surety bond or completion bond,
(d) any lease of personal property having a value individually in
excess of $50,000 or $100,000 in the aggregate,
(e) any agreement, contract or commitment containing any covenant
limiting the freedom of LEXON to engage in any line of
business or to compete with any person,
(f) any agreement, contract or commitment relating to capital
expenditures,
(g) any agreement, contract or commitment relating to the
disposition or acquisition of assets or any interest in any
business enterprise outside the ordinary course of the
business of LEXON and the LEXON Subsidiaries,
(h) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments
relating to the borrowing of money or extension of credit,
(i) any purchase order or contract for the purchase of materials,
(j) any construction contracts involving future obligation of
LEXON or any LEXON Subsidiary,
Share Exchange Agreement-Page 41
(k) any dealer, distribution, joint marketing or development
agreement,
(l) any sales representative, original equipment manufacturer,
value added, remarketer, reseller or independent software
vendor or other agreement for use or distribution of the
products or services of LEXON or any LEXON Subsidiary, or
(m) any other agreement, contract or commitment that is not
cancelable without penalty within thirty (30) days.
ARTICLE V
ACTIONS PRIOR TO CLOSING
5.1 Corporate Examinations and Investigations. At or prior to the Closing
Date, each of LEXON and PROVISION shall be entitled to make such
investigation of the assets, properties, business and operations of the
other and such examination of the books, records, Tax Returns,
financial condition and operations of the other as each may wish. Any
such investigation and examination shall be conducted at reasonable
times and under reasonable circumstances and LEXON and PROVISION shall
cooperate fully therein. In order that each of LEXON and PROVISION may
have full opportunity to make such a business, accounting and legal
review, examination or investigation as it may wish of the business and
affairs of the other, LEXON or PROVISION, as the case may be, shall
furnish to the other during such period all such information and copies
of such documents concerning its affairs as LEXON or PROVISION may
reasonably request and cause its officers, employees, consultants,
agents, accountants and attorneys to cooperate fully and provide all
material facts affecting its financial condition and business
operations. Until the Closing and if the Closing shall not occur,
thereafter, LEXON, PROVISION, and its respective affiliates shall keep
confidential and shall not use in any manner inconsistent with the
transactions contemplated by this Agreement and after termination of
this Agreement, LEXON, PROVISION, and its respective affiliates shall
not disclose, nor use for their own benefit, any information or
documents obtained from the other concerning its assets, properties,
business and operations, unless (a) readily ascertainable from public
or published information, or trade sources, (b) received from a third
party not under an obligation to LEXON or PROVISION, as the case may
be, to keep such information confidential or (c) required by any Law or
Order. If this transaction does not close for any reason, LEXON,
PROVISION, and its respective affiliates shall return or destroy all
such confidential information and compilations thereof as is
practicable, and shall certify such destruction or return to LEXON or
PROVISION, as the case may be.
5.2 Conduct and Preservation of Business of LEXON. During the period from
the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, LEXON agrees
(except to the extent that PROVISION shall otherwise consent in
writing) to carry on its business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted, to pay
the debts and Taxes of LEXON when due, to pay or perform other
obligations when due, and, to the extent
Share Exchange Agreement-Page 42
consistent with such business, use its commercially reasonable efforts
consistent with past practice and policies to preserve intact the
present business organizations of LEXON, all with the goal of
minimizing any liabilities of LEXON prior to the Effective Time. LEXON
shall promptly notify PROVISION of any event or occurrence or emergency
not in the ordinary course of business of LEXON and any material event
involving LEXON.
Except as expressly contemplated by this Agreement, LEXON shall not,
without the prior written consent of PROVISION (which consent may be
pursuant to electronic mail, and need not be signed):
(a) declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect
of any of its capital stock, or split, combine or reclassify
any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in
substitution for shares of capital stock of LEXON, or
repurchase, redeem or otherwise acquire, directly or
indirectly, any shares of the capital stock of the LEXON (or
options, warrants or other rights exercisable therefore);
(b) issue, grant, deliver or sell or authorize or propose the
issuance, grant, delivery or sale of, or purchase or propose
the purchase of, any shares of LEXON's capital stock or
securities convertible into, or subscriptions, rights,
warrants or options to acquire, or other agreements or
commitments of any character obligating LEXON to issue or
purchase any such shares or other convertible securities, or
accelerate the vesting of any stock options, except for the
issuance of shares of LEXON Common Stock upon the exercise or
conversion of those options, warrants or other rights, or
convertible securities that are outstanding on the date hereof
and set forth on LEXON Disclosure Schedule;
(c) acquire or agree to acquire by merging or consolidating with,
or by purchasing any assets or equity securities of, or by any
other manner, any business or any corporation, partnership,
association or other business organization or division
thereof;
(d) grant any loans to others or purchase debt securities of
others or amend the terms of any outstanding loan agreement;
(e) grant any severance or termination pay to any director,
officer, employee, or service provider of LEXON;
(f) adopt any employee benefit plan, or enter into any employment
contract, pay or agree to pay any special bonus or special
remuneration to any director or employee, or increase the
salaries or wage rates of its employees;
(g) make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes,
enter into any closing agreement, settle any claim or
assessment in respect of Taxes, or consent to any extension or
waiver of the limitation period applicable to any claim or
assessment in respect of Taxes;
Share Exchange Agreement-Page 43
(h) accelerate the vesting schedule of any of the outstanding
stock options of LEXON;
(i) take, or agree in writing or otherwise to take, any of the
actions described in Sections 5.2(a) through (h) above, or any
other action that would prevent LEXON from performing or cause
LEXON not to perform its covenants hereunder, or any other
action not in the ordinary course of the business or
inconsistent with past practice of LEXON practice or cause any
of the representations of LEXON set froth herein to be
materially incorrect.
5.3 Conduct and Preservation of Business of PROVISION. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, PROVISION agrees
(except to the extent that LEXON shall otherwise consent in writing) to
carry on PROVISION's business in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted, to pay the
debts and Taxes of PROVISION when due, to pay or perform other
obligations when due, and, to the extent consistent with such business,
use its commercially reasonable efforts consistent with past practice
and policies to preserve intact PROVISION's present business
organizations, keep available the services of PROVISION's present
officers and key employees and preserve PROVISION's relationships with
customers, suppliers, distributors, licensors, licensees, and others
having business dealings with it, all with the goal of preserving
unimpaired PROVISION's goodwill and ongoing businesses at the Effective
Time. PROVISION shall promptly notify LEXON of any event or occurrence
or emergency not in the ordinary course of business of PROVISION and
any material event involving PROVISION.
Except as expressly contemplated by this Agreement, PROVISION shall
not, without the prior written consent of LEXON (which consent may be
pursuant to electronic mail, and need not be signed):
(a) declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect
of any of its capital stock, or split, combine or reclassify
any of its capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in
substitution for shares of capital stock of PROVISION, or
repurchase, redeem or otherwise acquire, directly or
indirectly, any shares of the capital stock of PROVISION (or
options, warrants or other rights exercisable therefore)
except for repurchases of shares of PROVISION Common Stock
from employees of PROVISION in connection with the termination
of their employment with PROVISION;
(b) sell or otherwise dispose or agree to do the same with respect
to any of its material properties or assets, except properties
or assets which are not Intellectual Property and commercial
licenses of PROVISION's software in the ordinary course of
business and consistent with past practices;
(c) change its methods of accounting or change its fiscal year; or
Share Exchange Agreement-Page 44
(d) take, or agree in writing or otherwise to take, any of the
actions described in Sections 5.3(a) through (c) above, or any
other action that would prevent PROVISION from performing or
cause PROVISION not to perform its covenants hereunder, or any
other action not in the ordinary course of PROVISION's
business and consistent with past practice or cause any of the
representations of PROVISION set froth herein to be materially
incorrect.
5.4 Advice of Changes. PROVISION will promptly advise LEXON in writing from
time to time prior to the Closing with respect to any matter hereafter
arising and known to them that, if existing or occurring at the date of
this Agreement, would have been required to be set forth or described
in the PROVISION Disclosure Schedule or would have resulted in any
representation of PROVISION in this Agreement being untrue. LEXON will
promptly advise PROVISION in writing from time to time prior to the
Closing with respect to any matter hereafter arising and known to it
that, if existing or occurring at the date of this Agreement, would
have been required to be set forth or described in the LEXON Disclosure
Schedule or would have resulted in any representation of LEXON in this
Agreement being untrue in any material respect.
5.5 No Negotiation. Until such time as this Agreement shall be terminated
pursuant to Section 9.1 hereof, neither PROVISION nor LEXON shall
directly or indirectly solicit, initiate, encourage or entertain any
inquiries or proposals from, discuss or negotiate with, provide any
nonpublic information to or consider the merits of any inquiries or
proposals from any person relating to any business combination
transaction involving PROVISION or LEXON, including a merger or
consolidation transaction, or the sale of business or assets.
Notwithstanding the foregoing, PROVISION shall not be restricted from
entering into any form of joint venture agreement in furtherance of its
business objectives or from selling shares of its common stock.
5.6 Over-The-Counter Quotation. LEXON will use its best efforts to maintain
its Over-The-Counter quotation of the LEXON Common Stock. LEXON shall
take the necessary action to notify NASD Regulation of the Share
Exchange in a timely manner, if needed.
5.7 SEC Reports. LEXON shall file with the SEC all reports and other
documents that are required by the Exchange Act and the rules and
regulations promulgated thereunder to be filed in connection with this
transactions contemplated by this Agreement. The costs of preparing and
filing such reports shall be paid by PROVISION.
5.8 Shareholder Approval/SEC Filings.
(a) As promptly as practicable after the date of this Agreement,
PROVISION and LEXON will prepare and file any other filings
required under the Exchange Act, the Securities Act or any
other Federal, foreign or Blue Sky laws relating to the
Exchange and the transactions contemplated by this Agreement
(the "Other Filings"). Lexon's required filings are described
in Sections 6.1(l), 6.1(m) and 6.1(n) of this Agreement and
conditioned upon the payments described therein. Each party
will notify the other promptly upon the receipt of any
comments from the SEC or its staff and of any request by the
SEC or its staff or any other
Share Exchange Agreement-Page 45
government officials in connection with any filing with the
SEC relating to the Exchange and will supply the other with
copies of all correspondence between such party or any of its
representatives, on the one hand, and the SEC, or its staff or
any other government officials, on the other hand. The filings
will comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated
thereunder. Whenever any event occurs which is required to be
set forth in an amendment or supplement to such Filing,
PROVISION or LEXON, as the case may be, will promptly inform
the other of such occurrence and cooperate in filing with the
SEC or its staff or any other government officials, and/or
mailing to the Shareholders, such amendment or supplement.
(b) Subject to PROVISION's right to terminate this Agreement,
PROVISION will take all lawful action necessary in accordance
with Nevada Law and its Articles of Incorporation and Bylaws
to obtain approval from its Shareholders as soon as
practicable. PROVISION will use commercially reasonable
efforts to solicit from its Shareholders proxies in favor of
the adoption and approval of this Agreement and the approval
of the Exchange and will take all other action necessary or
advisable to secure the vote or consent of its Shareholders
required to obtain such approvals. The materials submitted to
PROVISION's Shareholders shall be subject to review and
approval by LEXON and include information regarding PROVISION,
the terms of the Exchange and this Agreement and the unanimous
recommendation of the Board of Directors of PROVISION in favor
of the Exchange and this Agreement.
(c) Subject to LEXON's right to terminate this Agreement, LEXON
shall take all lawful action necessary in accordance with its
Certificate of Incorporation and Bylaws, Oklahoma Law and the
Exchange Act, and the rules and regulations promulgated
hereunder to obtain approval of its stockholders of the
issuance of the LEXON Common Stock Consideration in the
Exchange. LEXON will use commercially reasonable efforts to
solicit from its stockholders proxies in favor of the issuance
of the LEXON Common Stock Consideration in the Exchange and
will take all other action necessary or advisable to secure
the vote of its stockholders required to issue such shares.
The materials submitted to the LEXON's Shareholders shall be
subject to review by PROVISION and include information
regarding LEXON, the terms of the Exchange and this Agreement
and the unanimous recommendation of the Board of Directors of
LEXON in favor of the Exchange and this Agreement.
5.9 Other Agreements. PROVISION and LEXON agree to take, or cause to be
taken, all actions and to do, or cause to be done, all things
reasonably necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by
this Agreement, including, without limitation, the obtaining of all
necessary waivers, consents and approvals and the effecting of all
necessary registrations and filings, including, but not limited to,
submissions of information requested by Governmental or Regulatory
Bodies and any other persons required to be obtained by them for the
consummation of the
Share Exchange Agreement-Page 46
closing and the continuance in full force and effect of the permits,
contracts and other agreements set forth on the Schedules to this
Agreement.
5.10 Notification of Certain Matters. PROVISION and LEXON shall give prompt
notice to each other of (i) the occurrence or non-occurrence of any
event, the occurrence or non-occurrence of which is likely to cause any
representation or warranty of such party contained in this Agreement to
be untrue or inaccurate and (ii) any failure of such party to comply
with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery
of any notice pursuant to this Section 5.10 shall not limit or
otherwise affect any remedies available to the party receiving such
notice; and provided, further, that the parties' obligations pursuant
to this Section are subject to their right to terminate this Agreement.
Further, disclosure by PROVISION or LEXON pursuant to this Section 5.10
shall not be deemed to amend or supplement their respective Disclosure
Schedules or prevent or cure any misrepresentations, breach of warranty
or breach of covenant.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions Precedent to the Obligations of LEXON to Complete the
Closing. The obligations of LEXON to enter into and complete the
Closing are subject to the fulfillment of the following conditions, any
one or more of which may be waived by LEXON:
(a) (i) All of the terms, covenants, and conditions of this
Agreement to be complied with or performed by PROVISION at or
before the Closing shall have been duly complied with and
performed in all material respects, (ii) the representations
and warranties of PROVISION set forth in Article III shall be
true in all material respects on and as of the Closing Date
with the same force and effect as if such representations and
warranties had been made on and as of the Closing, and (iii)
LEXON shall have received a certificate to such effect from
PROVISION.
(b) All consents, waivers, approvals, licenses, authorizations of,
or filings or declarations with third parties or Governmental
or Regulatory Bodies required to be obtained by PROVISION in
order to permit the transactions contemplated by this
Agreement to be consummated in accordance with agreements and
court orders applicable to PROVISION and applicable
governmental laws, rules, regulations and agreements shall
have been obtained and any waiting period thereunder shall
have expired or been terminated, and LEXON shall have received
a certificate from PROVISION to such effect.
(c) All actions, proceedings, instruments, and documents in
connection with the consummation of the transactions
contemplated by this Agreement, including the forms of all
documents, legal matters, opinions, and procedures in
connection therewith, shall have been approved in form and
substance by counsel for LEXON, which approval shall not be
unreasonably withheld.
Share Exchange Agreement-Page 47
(d) PROVISION shall have furnished such certificates to evidence
compliance with the conditions set forth in this Article, as
may be reasonably requested by LEXON or its counsel.
(e) PROVISION shall not have suffered any Material Effect.
(f) No material information or data provided or made available to
LEXON by or on behalf of PROVISION shall be incorrect in any
material respect.
(g) No investigation and no suit, action, or proceeding before any
court or any governmental or regulatory authority shall be
pending or threatened by any state or federal governmental or
regulatory authority, against PROVISION or any of its
affiliates, associates, officers, or directors seeking to
restrain, prevent, or change in any material respect the
transactions contemplated hereby or seeking damages in
connection with such transactions that are material to
PROVISION.
(h) PROVISION shall have received the necessary approvals from at
least 90% of its shareholders to proceed with the transactions
contemplated herein.
(i) PROVISION shall have completed an audit of its financial
statements and prepared unaudited financial statements, if
necessary, so as to allow LEXON to comply with its reporting
requirements to the SEC in connection with the proposed
transaction.
(j) The issuance of the LEXON Common Stock shall be exempt from
the registration requirements of the Securities Act pursuant
to the exemption contained in Rule 506 of Regulation D.
(k) Lexon shall effect at least a 1 for 10 reverse split of its
common stock;
(l) The audit of LEXON'S financial statements for the year ended
December 31, 2002 and the reviews of its quarterly financial
statements for the quarters ended March 31, 2003, June 30,
2003, and September 30, 2003 shall be completed and all fees
and costs connected therewith, estimated to range from $25,000
to $40,000, shall be paid in full by PROVISION using funds
already paid to ▇▇▇▇▇ ▇▇▇▇▇▇ for this purpose. PROVISION
understands and agrees that if ▇▇▇▇▇ ▇▇▇▇▇▇ fails to pay, then
PROVISION shall be responsible for payment.
(m) The annual report on Form 10-KSB for the year ended December
31, 2002 and the Forms 10-QSB for the quarters ended March 31,
2003, June 30, 2003, and September 30, 2003shall be completed
and filed with the SEC. All fees and costs connected
therewith, estimated to range from $15,000 to $25,000, shall
be paid in full by PROVISION.
(n) The 14C Information Statement containing the details of the
Merger shall be prepared and be ready for filing with the SEC.
All fees and costs connected
Share Exchange Agreement-Page 48
therewith, estimated to range from $10,000 to $20,000, shall
be paid in full by PROVISION.
(o) The Form 8-K concerning the Merger shall be prepared by LEXON
and be ready for filing with the SEC upon Closing of the
Merger. PROVISION shall make available its Audited Financial
Statements to LEXON to be filed with the Form 8-K;
(p) Lexon shall have no assets, other than the stock of its
subsidiary, and shall use its best efforts to enter into
mutual release and settlement agreements related to the
outstanding liabilities as set forth in Exhibit A, hereto, or
in the absence of such releases or settlements, to obtain an
opinion of counsel or similar evidence sufficient to cause
LEXON'S independent accountants to agree that such liabilities
can be removed from LEXON'S balance sheets. There is no
assurance that LEXON will be able to enter into mutual release
and settlement agreements, or obtain an opinion of counsel or
similar evidence sufficient to justify removal of such
liabilities from LEXON's balance sheets.
(q) PROVISION shall pay $30,000 to LEXON for the settlement of
outstanding accounts payable;
(r)
6.2 Conditions Precedent to the Obligations of PROVISION to Complete the
Closing. The obligations of PROVISION to enter into and complete the
Closing are subject to the fulfillment on or prior to the Closing Date,
of the following conditions, any one or more of which may be waived by
PROVISION:
(a) (i) All of the terms, covenants, and conditions of this
Agreement to be complied with or performed by LEXON at or
before the Closing shall have been duly complied with and
performed in all material respects, (ii) the representations
and warranties of LEXON set forth in Article IV shall be true
in all material respects on and as of the Closing Date with
the same force and effect as if such representations and
warranties had been made on and as of the Closing, and (iii)
PROVISION shall have received a certificate to such effect
from LEXON.
(b) All consents, waivers, approvals, licenses, authorizations of,
or filings or declarations with third parties or Governmental
or Regulatory Bodies required to be obtained by LEXON in order
to permit the transactions contemplated by this Agreement to
be consummated in accordance with agreements and court orders
applicable to LEXON and applicable governmental laws, rules,
regulations and agreements shall have been obtained and any
waiting period thereunder shall have expired or been
terminated, and PROVISION shall have received a certificate
from LEXON to such effect.
(c) All actions, proceedings, instruments, and documents in
connection with the consummation of the transactions
contemplated by this Agreement, including the forms of all
documents, legal matters, opinions, and procedures in
connection
Share Exchange Agreement-Page 49
therewith, shall have been approved in form and substance by
counsel for PROVISION, which approval shall not be
unreasonably withheld.
(d) LEXON shall have furnished such certificates to evidence
compliance with the conditions set forth in this Article, as
may be reasonably requested by PROVISION or its counsel.
(e) LEXON shall not have suffered any Material Effect.
(f) No material information or data provided or made available to
PROVISION by or on behalf of LEXON shall be incorrect in any
material respect.
(g) No investigation and no suit, action, or proceeding before any
court or any governmental or regulatory authority shall be
pending or threatened against LEXON and no investigation and
no suit, action, or proceeding before any court or any
governmental or regulatory authority shall be pending or
threatened against any of its affiliates, associates,
officers, or directors seeking to restrain, prevent, or change
in any material respect the transactions contemplated hereby
or seeking damages in connection with such transactions.
(h) LEXON shall not have received notification from the NASD that
it is not in compliance with the rules and regulations or that
quotation of its common stock on the Pink Sheets will cease.
(i) LEXON shall satisfy, in a timely manner, the filing
requirements set forth in Section 15(d) of the Exchange Act,
subject to Section 6.1(l), 6.1(m) and 6.1(n) of this
Agreement.
(j) PROVISION Shareholders holding no more than 10% of the issued
and outstanding PROVISION common stock shall have perfected
appraisal rights for their shares in accordance with the
Oklahoma Law.
(k) LEXON shall have obtained shareholder approval of the Share
Exchange and for an amendment to its articles of incorporation
to effect a name change to "Provision Operation Systems, Inc."
LEXON shall have obtained a new CUSIP number for the common
stock in connection with the name change and requested a new
Pink Sheet trading symbol .
(l) LEXON shall have obtained shareholder approval and shall have
effected a 10 for 1 reverse split of its common stock.
(m) Following the reverse split mentioned above in subsection (l)
the outstanding shares of LEXON common stock shall not exceed
4,757,000 shares and no shares of preferred stock outstanding.
Except as set forth in Schedule 4.3(b) of LEXON'S Disclosure
Schedule, LEXON shall not have any options, warrants,
convertible
Share Exchange Agreement-Page 50
notes, or other securities convertible into LEXON capital
stock outstanding immediately prior to Closing.
(n) PROVISION shall have received from LEXON written resignations
from all of its officers and directors, such resignations to
be effective upon the Closing. LEXON shall have taken any and
all necessary steps, as determined by PROVISION, in its sole
discretion, to insure the election of PROVISION's nominees to
LEXON's Board of Directors, and the appointment of PROVISION's
nominees as officers of LEXON, such elections and appointments
to be effective upon the Closing.
(o) LEXON shall have discontinued all of its presently existing
business operations, and shall have no liabilities.
ARTICLE VII
POST-CLOSING COVENANTS
The parties covenant to take the following actions after the Closing
Date:
7.1 Further Information. Following the Closing, each party will afford to
the other party, its counsel and its accountants, during normal
business hours, reasonable access to the books, records and other data
of PROVISION or LEXON, as the case may be, relating to the business of
PROVISION or LEXON in their possession with respect to periods prior to
the Closing and the right to make copies and extracts therefrom, to the
extent that such access may be reasonably required by the requesting
party (a) to facilitate the investigation, litigation and final
disposition of any claims which may have been or may be made against
any party or its affiliates and (b) for any other reasonable business
purpose.
7.2 Record Retention. Each party agrees that for a period of not less than
five years following the Closing Date, such party shall not destroy or
otherwise dispose of any of the Books and Records of PROVISION or LEXON
relating to the business of PROVISION or LEXON in his or its possession
with respect to periods prior to the Closing Date. Each party shall
have the right to destroy all or part of such Books and Records after
the fifth anniversary of the Closing Date or, at an earlier time by
giving each other party hereto 30 days prior written notice of such
intended disposition and by offering to deliver to the other party or
parties, at the other party's or parties' expense, custody of such
Books and Records as such party may intend to destroy.
7.3 Post-Closing Assistance. PROVISION and LEXON will provide each other
with such assistance as may reasonably be requested in connection with
the preparation of any Tax Return, any audit or other examination by
any taxing authority, or any judicial or administrative proceedings
relating to liability for Taxes, and each will retain and provide the
requesting party with any records or information that may be reasonably
relevant to such return, audit or examination, proceedings or
determination. The party requesting assistance shall reimburse the
other party for reasonable out-of-pocket expenses incurred in providing
Share Exchange Agreement-Page 51
such assistance. Any information obtained pursuant to this Section 7.3
or pursuant to any other Section hereof providing for the sharing of
information or the review of any Tax Return or other schedule relating
to Taxes shall be kept confidential by the parties hereto.
7.4 SEC Reporting. With a view to making available the benefits of certain
rules and regulations of the SEC which may at any time permit the sale
of the LEXON Common Stock to the public without registration, from and
after the Closing, the new management of LEXON will use its best
efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act,
at all times; and
(b) file with the SEC in a timely manner all reports and other
documents required of LEXON under the Exchange Act.
ARTICLE VIII
SURVIVAL
8.1 Survival of Agreements, Representations and Warranties. Notwithstanding
any investigation conducted or notice or knowledge obtained by or on
behalf of any party hereto, each agreement in this Agreement shall
survive the Closing without limitation as to time until fully performed
and each representation and warranty in this Agreement or in the
Exhibits, Schedules or certificates delivered pursuant to this
Agreement shall survive the Closing for a period of two years (other
than the representations and warranties contained in Section 3.5 which
shall survive the Closing without limitation as to time, and other than
the representations and warranties contained in Section 3.14, which
shall survive the Closing until the earlier of (i) three and one-half
years from the Closing Date and (ii) three years following the date on
which LEXON files the Tax Return relating to the taxable period from
January 1, 2002 through the Closing Date). Notice must be given to the
party from whom indemnification is sought of any claim for
indemnification under Article VIII prior to the termination of the
relevant survival period.
8.2 Survival of Indemnification Agreements. As set forth in Section 8.2 of
LEXON's Disclosure Schedule, Lexon's agreements to indemnify certain
current and former officers, directors, employees, consultants and
shareholders shall survive this transaction and shall continue in full
force and effect without limitation as to time.
Share Exchange Agreement-Page 52
ARTICLE IX
TERMINATION OF AGREEMENT
9.1 Termination. This Agreement may be terminated at any time prior to the
Closing as follows:
(a) by mutual written consent of LEXON and PROVISION;
(b) by LEXON or PROVISION by written notice to the other party
hereto, if the Closing shall not have occurred on or prior to
the close of business on December 31, 2003 (unless such event
has been caused by a breach of this Agreement by the party
seeking such termination);
(c) by LEXON or by PROVISION if a Governmental or Regulatory Body
has permanently enjoined or prohibited consummation of the
Share Exchange and such court or government action is final
and nonappealable;
(d) by LEXON if it is not in material breach of its obligations
under this Agreement if PROVISION has failed to comply in any
material respect with any of its covenants or agreements under
this Agreement that are required to be complied with prior to
the date of such termination; or
(e) by PROVISION if it is not in material breach of its
obligations under this Agreement if LEXON has failed to comply
in any material respect with any of its covenants or
agreements under this Agreement that are required to be
complied with prior to the date of such termination.
(f) by LEXON if PROVISION fails to obtain approval of the Merger
by PROVISION Shareholders;
(g) by PROVISION if LEXON fails to obtain approval of the Merger
by the LEXON shareholders;
(h) by PROVISION if there is an action pending or threatened
against LEXON by the NASD with respect to any intention to
suspend LEXON's Common Stock from trading over the counter on
the Pink Sheets.
(i) by either LEXON or PROVISION in the event that such other
party is the subject of any litigation, claim, suit, action or
proceeding, or to such party's Knowledge is aware of the
threat of such litigation, claim, suit, action or proceeding,
the subject of which are the transactions contemplated in this
Agreement.
Should PROVISION terminate this Agreement for any reason other than a
default by LEXON as described in Section 9.1(e) hereof, PROVISION shall
be liable for all damages caused by the failure to close. Similarly, if
LEXON should terminate this Agreement for any reason other than a
default by PROVISION as described in Section 9.1(d) hereof, LEXON shall
be liable for all damages caused by the failure to close.
Share Exchange Agreement-Page 53
9.2 Effect of Termination. In the event of termination of this Agreement as
provided in Section 9.1, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of LEXON or
PROVISION, or their respective officers, directors or Shareholders;
provided, that each party shall remain liable for any willful breaches
of this Agreement prior to its termination; provided further that, the
provisions of Article V and X, and this Section 9.2 shall remain in
full force and effect and survive any termination of this Agreement.
9.3 Funds Advanced by PROVISION. In the event of termination of this
Agreement for any reason other than pursuant to the provisions of
Section 9.1(d), LEXON shall record as liabilities payable to PROVISION
any funds advanced by PROVISION pursuant to Sections 6.1(l), (m), (n),
and (q), or as otherwise provided in this Agreement. Such funds
advanced by PROVISION shall be reduced to a one year 6% promissory note
payable by LEXON to PROVISION effective as of the date of termination
of this Agreement. Such promissory note may by satisfied by LEXON
furnishing to PROVISION an alternative publicly traded company which is
reasonably similar to LEXON and which affords PROVISION the opportunity
to acquire such entity in a transaction which permits the shareholders
of PROVISION to assume at least 85% control of the public corporation.
ARTICLE X
MISCELLANEOUS
10.1 Expenses. Whether or not the Merger is consummated, all fees and
expenses incurred in connection with the Merger including, without
limitation, all legal, accounting, financial advisory, investment
banking, consulting and all other fees and expenses of third parties
("Third Party Expenses") incurred by a party in connection with the
negotiation and effectuation of the terms and conditions of this
Agreement and the transactions contemplated hereby, shall be the
obligation of the respective party incurring such fees and expenses,
except as otherwise provided in this Agreement. The foregoing shall not
preclude either party from seeking such expenses from the other in the
event of termination of this Agreement is due to Section 9.1 (d) or (e)
relating to such party.
10.2 Further Assurances. At any time and from time to time after the Closing
Date at the request of LEXON, and without further consideration,
PROVISION will execute and deliver such other instruments of sale,
transfer, conveyance, assignment and confirmation and take such other
action as LEXON may reasonably deem necessary or desirable in order to
transfer, convey and assign the Shares to LEXON and to assist LEXON in
exercising all rights with respect thereto. The parties shall use their
best efforts to fulfill or obtain the fulfillment of the conditions to
the Closing, including, without limitation, the execution and delivery
of any document or other papers, the execution and delivery of which
are conditions precedent to the Closing.
10.3 Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and
shall be given personally, sent by facsimile transmission or sent by
prepaid air courier or certified or express mail, postage prepaid. Any
Share Exchange Agreement-Page 54
such notice shall be deemed to have been given (a) when received, if
delivered in person, sent by facsimile transmission with receipt of
proof of a successful transmission, or sent by prepaid air courier with
confirmation of delivery, or (b) three (3) business days following the
mailing thereof, if mailed by certified first class mail, postage
prepaid, return receipt requested, in any such case as follows (or to
such other address or addresses as a party may have advised the other
in the manner provided in this Section 10.3):
If to PROVISION:
Provision Operation Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to LEXON:
Lexon, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
10.4 Governing Law/Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma,
regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof. Each of the parties hereto
irrevocably consents to the exclusive jurisdiction and venue of any
court within the State of Oklahoma, in connection with any matter based
upon or arising out of this Agreement or the matters contemplated
herein, agrees that process may be served upon them in any manner
authorized by the laws of the State of Oklahoma for such persons and
waives and covenants not to assert or plead any objection which they
might otherwise have to such jurisdiction, venue and such process. Each
of LEXON and PROVISION hereby irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to this
agreement or the actions of LEXON or PROVISION in the negotiation,
administration, performance and enforcement hereof.
10.5 Press Release. Each of the parties hereto hereby agree that, in the
event that either party exercises its right to terminate this
Agreement, the parties will prepare a mutually agreeable press release
regarding the decision to terminate; provided, however, that such press
release shall be in no way disparaging to either party. Furthermore,
the parties hereby agree that neither party shall issue any further
press releases relating to this matter without the prior written
consent of the other party, which such consent shall not be
unreasonably withheld.
10.6 Entire Agreement. This Agreement (including the Exhibits and Schedules)
and the agreements, certificates and other documents delivered pursuant
to this Agreement contain the entire agreement among the parties with
respect to the transactions described herein, and supersede the Letter
of Intent dated September 10, 2003, and all prior agreements, written
or oral, with respect thereto.
Share Exchange Agreement-Page 55
10.7 Waivers and Amendments. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only
by a written instrument signed by the parties or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof
10.8 Binding Effect, No Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement is not assignable by any party hereto
without the prior written consent of the other parties hereto except by
operation of law and any other purported assignment shall be null and
void.
10.9 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of
a number of copies hereof each signed by less than all, but together
signed by all of the parties hereto.
10.10 Exhibits and Schedules. The Exhibits and Schedules are a part of this
Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall
otherwise require.
10.11 Effect of Disclosure on Schedules. Any item disclosed on any Schedule
to this Agreement shall only be deemed to be disclosed in connection
with (a) the specific representation and warranty to which such
Schedule is expressly referenced, (b) any specific representation and
warranty which expressly cross-references such Schedule and (c) any
specific representation and warranty to which any other Schedule to
this Agreement is expressly referenced if such other Schedule expressly
cross-references such Schedule.
10.12 Headings. The headings in this Agreement are for reference only, and
shall not affect the interpretation of this Agreement.
10.13 Severability of Provisions. If any provision or any portion of any
provision of this Agreement or the application of such provision or any
portion thereof to any person or circumstance, shall be held invalid or
unenforceable, the remaining portion of such provision and the
remaining provisions of this Agreement, or the application of such
provision or portion of such provision as is held invalid or
unenforceable to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby.
10.14 Other Remedies; Specific Performance. Any and all remedies herein
expressly conferred upon a party will be deemed cumulative with and not
exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not
preclude the exercise of any other remedy. The parties hereto agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions
Share Exchange Agreement-Page 56
hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
10.15 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an
agreement or other document will be construed against the party
drafting such agreement or document.
It is understood that the ProVision Disclosure Schedules and the LEXON
Disclosure Schedules shall be provided subsequent to the execution of this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
LEXON, INC. PROVISION OPERATION SYSTEMS, INC.
By: By:
------------------------------------ ---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President Title: President
Share Exchange Agreement-Page 57
Schedule A-1
PROVISION Shareholders
Common Stock
PROVISION Shareholder PROVISION Shares LEXON Shares to be Issued
--------------------- Owned -------------------------
----------------
------------------------------------------------------------
TOTAL
Share Exchange Agreement-Page 58
Schedule A-2
PROVISION Shareholders
Share Exchange Agreement-Page 59