AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
LEK INTERNATIONAL, INC.
A NEVADA CORPORATION
AND
SAN ▇▇▇▇▇▇▇ OIL & GAS LTD.
A NEVADA CORPORATION
Effective as of December 31, 1999
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION, made and entered into this
15th day of December, 1999, by and between LEK INTERNATIONAL, INC., a Nevada
corporation ("LEK"), and SAN ▇▇▇▇▇▇▇ OIL & GAS LTD., a Nevada corporation, ("San
▇▇▇▇▇▇▇").
P R E M I S E S
A. This Agreement provides for the reorganization of San
▇▇▇▇▇▇▇ with and into LEK, with San ▇▇▇▇▇▇▇ becoming a wholly-owned subsidiary
of LEK, and in connection therewith, the exchange of the outstanding common
stock of San ▇▇▇▇▇▇▇ for shares of common voting stock of LEK, all for the
purpose of effecting a tax-free reorganization pursuant to sections 354 and
368(a) of the Internal Revenue Code of 1986, as amended.
B. The boards of directors of San ▇▇▇▇▇▇▇ and LEK have
determined, subject to the terms and conditions set forth in this Agreement,
that the exchange contemplated hereby, as a result of which San ▇▇▇▇▇▇▇ would
become a wholly-owned subsidiary of LEK, is desirable and in the best interests
of their stockholders. This Agreement is being entered into for the purpose of
setting forth the terms and conditions of the proposed exchange.
A G R E E M E N T
NOW, THEREFORE, on the stated premises and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the mutual
benefits to the parties to be derived herefrom, it is hereby agreed as follows:
ARTICLE I
REPRESENTATIONS, COVENANTS AND WARRANTIES OF SAN ▇▇▇▇▇▇▇
As an inducement to and to obtain the reliance of LEK, San ▇▇▇▇▇▇▇
represents and warrants as follows:
SECTION 1.1 ORGANIZATION. San ▇▇▇▇▇▇▇ is a corporation duly organized,
validly existing, and in good standing under the laws of the State of Nevada and
has the corporate power and is duly authorized, qualified, franchised and
licensed under all applicable laws, regulations, ordinances and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, including qualification
to do business as a foreign corporation in the jurisdiction in which the
character and location of the assets owned by it or the nature of the business
transacted by it requires qualification. Included
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in the San ▇▇▇▇▇▇▇ Schedules (as hereinafter defined) are complete and correct
copies of the articles of incorporation, bylaws and amendments thereto of San
▇▇▇▇▇▇▇ as in effect on the date hereof. The execution and delivery of this
Agreement do not and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not violate any provision of
San Joaquin's articles of incorporation or bylaws. San ▇▇▇▇▇▇▇ has full power,
authority and legal right and has taken all action required by law, its articles
of incorporation, its bylaws or otherwise to authorize the execution and
delivery of this Agreement.
SECTION 1.2 CAPITALIZATION. The authorized capitalization of San
▇▇▇▇▇▇▇ consists of 100,000,000 Common Shares, par value $0.001 per share and
1,000,000 shares of Preferred Shares, of which 70,000 shares of Preferred Stock
have been designated as Series A Convertible Preferred, $0.50 stated value. As
of the Closing Date hereof, San ▇▇▇▇▇▇▇ will have no more than 8,069,000 common
shares issued and outstanding. All issued and outstanding shares are legally
issued, fully paid and nonassessable and are not issued in violation of the
preemptive or other rights of any person. San ▇▇▇▇▇▇▇ has no other securities,
warrants or options authorized or issued.
SECTION 1.3 SUBSIDIARIES AND PREDECESSOR CORPORATIONS. Except as
otherwise set forth in the San ▇▇▇▇▇▇▇ Schedules or as previously provided to
LEK, San ▇▇▇▇▇▇▇ does not have any other subsidiaries and does not own,
beneficially or of record, any shares of any other corporation.
SECTION 1.4 FINANCIAL STATEMENTS. Included in the San ▇▇▇▇▇▇▇ Schedules
is San Joaquin's audited financial statements (including any predecessor
companies) including a balance sheet, statement of operations, shareholder
equity and cash flows and notes thereto, dated as of October 31, 1999. Relevant
thereto:
(a) the San ▇▇▇▇▇▇▇ balance sheet presents fairly as of its
date the financial condition of San ▇▇▇▇▇▇▇; San ▇▇▇▇▇▇▇ does not have,
as of the date of such balance sheet, except as noted and to the extent
reflected or reserved against therein, any liabilities or obligations
(absolute or contingent) which should be reflected in a balance sheet
or the notes thereto and all material assets reflected therein are
properly reported and present fairly the value of the assets of San
▇▇▇▇▇▇▇, in accordance with generally accepted accounting principles;
(b) San ▇▇▇▇▇▇▇ has no material liabilities with respect to
the payment of any provincial, federal, state, county, local or other
taxes (including any deficiencies, interest or penalties), except for
taxes accrued but not yet due and payable;
(c) San ▇▇▇▇▇▇▇ has filed all provincial, state, federal and
local income tax returns required to be filed by it from inception to
the date hereof, if any;
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(d) the books and records, financial and others, of San
▇▇▇▇▇▇▇ are in all material respects complete and correct and have been
maintained in accordance with good business accounting practices; and
(e) except as and to the extent disclosed in the most recent
San ▇▇▇▇▇▇▇ balance sheet and the San ▇▇▇▇▇▇▇ Schedules, San ▇▇▇▇▇▇▇
has no material contingent liabilities, direct or indirect, matured or
unmatured.
SECTION 1.5 INFORMATION. The information concerning San ▇▇▇▇▇▇▇ set
forth in this Agreement and in the San ▇▇▇▇▇▇▇ Schedules is complete and
accurate in all material respects and does not contain any untrue statement of a
material fact or omit to state a material fact required to make the statements
made, in light of the circumstances under which they were made, not misleading.
SECTION 1.6 OPTIONS AND WARRANTS. Except as set forth in the San
▇▇▇▇▇▇▇ Schedules, there are no existing options, warrants, calls or commitments
of any character to which San ▇▇▇▇▇▇▇ is a party and by which it is bound.
SECTION 1.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth
in this Agreement, the San ▇▇▇▇▇▇▇ Schedules, or as otherwise disclosed to LEK,
since October 31, 1999:
(a) there has not been: (i) any material adverse change in the
business, operations, properties, assets or condition of San ▇▇▇▇▇▇▇;
or (ii) any damage, destruction or loss to San ▇▇▇▇▇▇▇ (whether or not
covered by insurance) materially and adversely affecting the business,
operations, properties, assets or condition of San ▇▇▇▇▇▇▇;
(b) San ▇▇▇▇▇▇▇ has not: (i) amended its articles of
incorporation or bylaws; (ii) declared or made, or agreed to declare or
make, any payment of dividends or distributions of any assets of any
kind whatsoever to stockholders or purchased or redeemed or agreed to
purchase or redeem any of its capital stock; (iii) waived any rights of
value which in the aggregate are extraordinary or material considering
the business of San ▇▇▇▇▇▇▇; (iv) made any material change in its
method of management, operation or accounting; (v) entered into any
other material transaction; (vi) made any accrual or arrangement for or
payment of bonuses or special compensation of any kind or any severance
or termination pay to any present or former officer or employee; (vii)
increased the rate of compensation payable or to become payable by it
to any of its officers or directors or any of its employees whose
monthly compensation exceeds $5,000; or (viii) made any increase in any
profit sharing, bonus, deferred compensation, insurance, pension,
retirement or other employee benefit plan, payment or arrangement made
to, for, or with its officers, directors or employees;
(c) San ▇▇▇▇▇▇▇ has not: (i) granted or agreed to grant any
options, warrants or other rights for its stocks, bonds or other
corporate securities calling for the issuance
3
thereof; (ii) borrowed or agreed to borrow any funds or incurred or
become subject to, any material obligation or liability (absolute or
contingent) except liabilities incurred in the ordinary course of
business; (iii) paid any material obligation or liability (absolute or
contingent) other than current liabilities reflected in or shown on the
most recent San ▇▇▇▇▇▇▇ balance sheet and current liabilities incurred
since that date in the ordinary course of business; (iv) sold or
transferred, or agreed to sell or transfer, any of its assets,
properties or rights (except assets, properties or rights not used or
useful in its business which, in the aggregate have a value of less
than $10,000); (v) made or permitted any amendment or termination of
any contract, agreement or license to which it is a party if such
amendment or termination is material, considering the business of San
▇▇▇▇▇▇▇; or (vi) issued, delivered or agreed to issue or deliver any
stock, bonds or other corporate securities, including debentures
(whether authorized and unissued or held as treasury stock); and
(d) to the best knowledge of San ▇▇▇▇▇▇▇, it has not become
subject to any law or regulation which materially and adversely
affects, or in the future may adversely affect, the business,
operations, properties, assets or condition of San ▇▇▇▇▇▇▇.
SECTION 1.8 TITLE AND RELATED MATTERS. San ▇▇▇▇▇▇▇ has good and
marketable title to and is the sole and exclusive owner of all of its
properties, inventory, interests in properties and assets, real and personal
(collectively, the "Assets") which are reflected in the San ▇▇▇▇▇▇▇ audited
balance sheet and the San ▇▇▇▇▇▇▇ Schedules or acquired after that date (except
properties, interests in properties and assets sold or otherwise disposed of
since such date in the ordinary course of business), free and clear of all
liens, pledges, charges or encumbrances except: (a) statutory liens or claims
not yet delinquent; (b) such imperfections of title and easements as do not and
will not, materially detract from or interfere with the present or proposed use
of the properties subject thereto or affected thereby or otherwise materially
impair present business operations on such properties; and (c) as described in
the San ▇▇▇▇▇▇▇ Schedules. Except as set forth in the San ▇▇▇▇▇▇▇ Schedules, San
▇▇▇▇▇▇▇ owns free and clear of any liens, claims, encumbrances, royalty
interests or other restrictions or limitations of any nature whatsoever any and
all procedures, techniques, marketing plans, business plans, methods of
management or other information utilized in connection with San Joaquin's
business. Except as set forth in the San ▇▇▇▇▇▇▇ Schedules, no third party has
any right to, and San ▇▇▇▇▇▇▇ has not received any notice of infringement of or
conflict with asserted rights of others with respect to any product, technology,
data, trade secrets, know-how, proprietary techniques, trademarks, service
marks, trade names or copyrights which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a materially
adverse effect on the business, operations, financial conditions or income of
San ▇▇▇▇▇▇▇ or any material portion of its properties, assets or rights.
SECTION 1.9 LITIGATION AND PROCEEDINGS. To the best of San Joaquin's
knowledge and belief, there are no actions, suits, proceedings or investigations
pending or threatened by or against San ▇▇▇▇▇▇▇ or affecting San ▇▇▇▇▇▇▇ or its
properties, at law or in equity, before any
4
court or other governmental agency or instrumentality, domestic or foreign or
before any arbitrator of any kind that would have a material adverse effect on
the business, operations, financial condition or income of San ▇▇▇▇▇▇▇. San
▇▇▇▇▇▇▇ does not have any knowledge of any default on its part with respect to
any judgment, order, writ, injunction, decree, award, rule or regulation of any
court, arbitrator or governmental agency or instrumentality or of any
circumstances which, after reasonable investigation, would result in the
discovery of such a default.
SECTION 1.10 CONTRACTS.
(a) Except as included or described in the San ▇▇▇▇▇▇▇
Schedules, there are no material contracts, agreements, franchises,
license agreements or other commitments to which San ▇▇▇▇▇▇▇ is a party
or by which it or any of its assets, products, technology or properties
are bound;
(b) except as included or described in the San ▇▇▇▇▇▇▇
Schedules or reflected in the most recent San ▇▇▇▇▇▇▇ balance sheet,
San ▇▇▇▇▇▇▇ is not a party to any oral or written: (i) contract for the
employment of any officer or employee which is not terminable on thirty
(30) days or less notice; (ii) profit sharing, bonus, deferred
compensation, stock option, severance pay, pension benefit or
retirement plan, agreement or arrangement covered by Title IV of the
Employee Retirement Income Security Act, as amended; (iii) agreement,
contract or indenture relating to the borrowing of money; (iv) guaranty
of any obligation, other than one on which San ▇▇▇▇▇▇▇ is a primary
obligor, for collection and other guaranties of obligations, which, in
the aggregate do not exceed more than one year or providing for
payments in excess of $10,000 in the aggregate; (v) consulting or other
similar contracts with an unexpired term of more than one year or
providing for payments in excess of $10,000 in the aggregate; (vi)
collective bargaining agreements; (vii) agreement with any present or
former officer or director of San ▇▇▇▇▇▇▇; or (viii) contract,
agreement or other commitment involving payments by it of more than
$10,000 in the aggregate; and
(c) to San Joaquin's knowledge, all contracts, agreements,
franchises, license agreements and other commitments to which San
▇▇▇▇▇▇▇ is a party or by which its properties are bound and which are
material to the operations of San ▇▇▇▇▇▇▇ taken as a whole, are valid
and enforceable by San ▇▇▇▇▇▇▇ in all respects, except as limited by
bankruptcy and insolvency laws and by other laws affecting the rights
of creditors generally.
SECTION 1.11 MATERIAL CONTRACT DEFAULTS. Except as set forth in the San
▇▇▇▇▇▇▇ Schedules, to the best of San Joaquin's knowledge and belief, San
▇▇▇▇▇▇▇ is not in default in any material respect under the terms of any
outstanding contract, agreement, lease or other commitment which is material to
the business, operations, properties, assets or condition of San ▇▇▇▇▇▇▇, and
there is no event of default in any material respect under any such contract,
agreement, lease or other commitment in respect of which San ▇▇▇▇▇▇▇ has not
taken adequate steps to prevent such a default from occurring.
5
SECTION 1.12 NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which San ▇▇▇▇▇▇▇
is a party or to which any of its properties or operations are subject.
SECTION 1.13 GOVERNMENTAL AUTHORIZATIONS. To the best of San Joaquin's
knowledge, San ▇▇▇▇▇▇▇ has all licenses, franchises, permits or other
governmental authorizations legally required to enable San ▇▇▇▇▇▇▇ to conduct
its business in all material respects as conducted on the date hereof. Except
for compliance with provincial, federal and state securities and corporation
laws, as hereinafter provided, no authorization, approval, consent or order of,
or registration, declaration or filing with, any court or other governmental
body is required in connection with the execution and delivery by San ▇▇▇▇▇▇▇ of
this Agreement and the consummation by San ▇▇▇▇▇▇▇ of the transactions
contemplated hereby.
SECTION 1.14 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of San
Joaquin's knowledge, except as disclosed in the San ▇▇▇▇▇▇▇ Schedules, San
▇▇▇▇▇▇▇ has complied with all applicable statutes and regulations of any
provincial, federal, state or other governmental entity or agency thereof,
except to the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets or condition of San ▇▇▇▇▇▇▇
or would not result in San Joaquin's incurring any material liability.
SECTION 1.15 INSURANCE. All of the insurable properties owned either
directly or indirectly of San ▇▇▇▇▇▇▇ are insured for San Joaquin's benefit in
accordance with the insurance policies disclosed in the San ▇▇▇▇▇▇▇ Schedules
under valid and enforceable policies issued by insurers of recognized
responsibility. Such policy or policies containing substantially equivalent
coverage will be outstanding and in full force at the Closing Date.
SECTION 1.16 APPROVAL OF AGREEMENT. The board of directors and
shareholders of San ▇▇▇▇▇▇▇ have authorized the execution and delivery of this
Agreement by San ▇▇▇▇▇▇▇ and have approved the transactions contemplated hereby.
SECTION 1.17 MATERIAL TRANSACTIONS OR AFFILIATIONS. Except as disclosed
herein and in the San ▇▇▇▇▇▇▇ Schedules, there exists no material contract,
agreement or arrangement between San ▇▇▇▇▇▇▇ and any predecessor and any person
who was at the time of such contract, agreement or arrangement an officer,
director or person owning of record, or known by San ▇▇▇▇▇▇▇ to own
beneficially, ten percent (10%) or more of the issued and outstanding San
▇▇▇▇▇▇▇ Common Shares and which is to be performed in whole or in part after the
date hereof. In all of such transactions, the amount paid or received, whether
in cash, in services or in kind, has been during the full term thereof, and is
required to be during the unexpired portion of the term thereof, no less
favorable to San ▇▇▇▇▇▇▇ than terms available from otherwise unrelated parties
in arms-length transactions. There are no commitments by San ▇▇▇▇▇▇▇, whether
written or oral, to lend any funds to, borrow any money from or enter into any
other material transactions with, any such affiliated person.
6
SECTION 1.18 LABOR RELATIONS. San ▇▇▇▇▇▇▇ has never had a work stoppage
resulting from labor problems. To the best knowledge of San ▇▇▇▇▇▇▇, no union or
other collective bargaining organization is organizing or attempting to organize
any employee of San ▇▇▇▇▇▇▇.
SECTION 1.19 PREVIOUS SALES OF SECURITIES. Since inception, San ▇▇▇▇▇▇▇
has sold San ▇▇▇▇▇▇▇ Common Shares to investors in reliance upon applicable
exemptions from the registration requirements under the laws of the Province of
Alberta, Canada and the United States and all such sales (the "Sales") were made
in accordance with the laws of said jurisdictions.
SECTION 1.20 SAN ▇▇▇▇▇▇▇ SCHEDULES. Upon execution hereof, San ▇▇▇▇▇▇▇
will deliver to LEK the following schedules, which are collectively referred to
as the "San ▇▇▇▇▇▇▇ Schedules" and which consist of separate schedules dated as
of the date of this Agreement and instruments and data as of such date, all
certified by the chief executive officer of San ▇▇▇▇▇▇▇ as complete, true and
correct in all material respects:
(a) copies of the articles of incorporation, bylaws and all
minutes of shareholders' and directors' meetings of San ▇▇▇▇▇▇▇ or such
other corporate documentation and records required to maintain San
▇▇▇▇▇▇▇ in good standing in the State of Nevada;
(b) the financial statements of San ▇▇▇▇▇▇▇ referenced
hereinabove in Section 1.4;
(c) a list indicating the names and addresses of the
stockholders of San ▇▇▇▇▇▇▇, together with the number of shares owned
by them;
(d) copies of all licenses, permits and other governmental
authorizations, requests or applications therefor, pursuant to which
San ▇▇▇▇▇▇▇ carries on or proposes to carry on its business (except
those which in the aggregate, are immaterial to the present or proposed
business of San ▇▇▇▇▇▇▇);
(e) a list of every debt, mortgage, security interest, pledge,
lien, encumbrance or claim of any nature whatsoever in excess of
$10,000 as may affect San ▇▇▇▇▇▇▇, its properties or assets;
(f) a list of all executive employees of San ▇▇▇▇▇▇▇,
including current compensation, with notation as to job description and
whether or not such employee is subject to a written contract;
(g) a description of all real and personal property owned by
San ▇▇▇▇▇▇▇, together with a description of every mortgage, deed of
trust, pledge, lien, agreement, encumbrance, claim or equity interest
of any nature whatsoever in such real and personal property;
(h) copies of all material contracts, leases, agreements or
other instruments to which San ▇▇▇▇▇▇▇ is a party or by which it or its
properties are bound;
7
(i) the name and location of each bank or other institution
with which San ▇▇▇▇▇▇▇ has an account or safety deposit box and the
names of all persons authorized to draw thereon or having access
thereto;
(j) a copy of all material documentation relating to the sale
of San ▇▇▇▇▇▇▇ Common Shares by San ▇▇▇▇▇▇▇ to its present
stockholders;
(k) a list of insurance policies referred to in Section 1.15;
(l) a description of any material adverse change in the
business operations, property, inventory, assets or condition of San
▇▇▇▇▇▇▇ since the most recent San ▇▇▇▇▇▇▇ balance sheet required to be
provided pursuant to Section 1.4; and
(m) any other information, together with any required copies
of documents required to be disclosed in the San ▇▇▇▇▇▇▇ Schedules by
Sections 1.1 through 1.19.
San ▇▇▇▇▇▇▇ shall cause the San ▇▇▇▇▇▇▇ Schedules and the instruments
and data delivered to LEK hereunder to be updated after the date hereof up to
and including the Closing Date, as hereinafter defined.
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES OF LEK
As an inducement to, and to obtain the reliance of San ▇▇▇▇▇▇▇, LEK
represents and warrants as follows:
SECTION 2.1 ORGANIZATION. LEK is a corporation duly organized, validly
existing and in good standing under the laws of the state of Nevada and has the
corporate power and is duly authorized, qualified, franchised and licensed under
all applicable laws, regulations, ordinances and orders of public authorities to
own all of its properties and assets and to carry on its business in all
material respects as it are now being conducted, including qualification to do
business as a foreign corporation in the states in which the character and
location of the assets owned by it or the nature of the business transacted by
it requires qualification. Included in the LEK Schedules (as hereinafter
defined) are complete and correct copies of the articles of incorporation and
bylaws of LEK as in effect on the date hereof. The execution and delivery of
this Agreement does not and the consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof will not, violate any
provision of LEK's articles of incorporation or bylaws. LEK has taken all action
required by law, its articles of incorporation, its bylaws or otherwise to
authorize the execution and delivery of this Agreement. LEK has full power,
authority and legal right and has taken all action required by law, its articles
of incorporation, bylaws or otherwise to consummate the transactions herein
contemplate.
8
SECTION 2.2 CAPITALIZATION. The authorized capitalization of LEK
consists of 1,000,000,000 shares of Common Stock, par value $0.0001 per share.
As of the date hereof there are 1,000,000 Common Shares of LEK issued and
outstanding. As of the Closing Date (as defined herein), there will be no more
than 1,000,000 shares of LEK's common stock issued or outstanding, pre-forward
split.
Simultaneous with the Closing Date, as defined hereinbelow, the Board
of Directors of LEK has undertaken a forward split of its issued and outstanding
Common Stock, whereby 3.7 shares of Common Stock shall be issued in exchange for
each share of Common Stock presently issued and outstanding, in order to
establish the number of issued and outstanding Common Shares of LEK at the
Closing Date to be 3,700,000 shares (the "LEK Common Shares") held by the then
existing security holders of LEK. All issued and outstanding LEK Common Shares
have been legally issued, fully paid and are nonassessable.
SECTION 2.3 SUBSIDIARIES. LEK has no subsidiary companies.
SECTION 2.4 FINANCIAL STATEMENTS.
(a) Included in the LEK Schedules are the audited balance
sheet of LEK for the fiscal years ended March 31, 1999 and 1998, and
the related statements of operations, stockholders' equity and cash
flows for the years then ended, and the unaudited balance sheet and
related statement of operations, stockholders' equity and cash flow for
the six month period ended September 30, 1999, which are included in
the schedules identified in Section 2.19(b).
(b) All such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved. The LEK balance sheets present
fairly as of their respective dates the financial condition of LEK. LEK
did not have as of the date of any of such LEK balance sheets, any
liabilities or obligations (absolute or contingent) which should be
reflected in a balance sheet or the notes thereto prepared in
accordance with generally accepted accounting principles, and all
assets reflected therein are properly reported and present fairly the
value of the assets of LEK, in accordance with generally accepted
accounting principles. The statements of operations, stockholders'
equity and changes in financial position reflect fairly the information
required to be set forth therein by generally accepted accounting
principles.
(c) The books and records, financial and others, of LEK are in
all material respects complete and correct and have been maintained in
accordance with good business accounting practices.
(d) LEK has no liabilities with respect to the payment of any
federal, state, county, local or other taxes (including any
deficiencies, interest or penalties).
9
(e) As of the Closing Date, as defined herein, the LEK balance
sheets and the notes thereto, shall reflect that LEK has: (i) no
receivables; (ii) no accounts payable; and (iii) no contingent
liabilities, direct or indirect, matured or unmatured.
SECTION 2.5 INFORMATION. The information concerning LEK as set forth in
this Agreement and in the LEK Schedules is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.
SECTION 2.6 OPTIONS AND WARRANTS. Other than as previously disclosed by
LEK to San ▇▇▇▇▇▇▇ and as otherwise included in the LEK Schedules, there are no
existing options, warrants, calls or commitments of any character to which LEK
is a party and by which it is bound.
SECTION 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as described
herein or in the LEK Schedules, since September 30, 1999:
(a) LEK has not: (i) amended its articles of incorporation or
bylaws; (ii) waived any rights of value which in the aggregate are
extraordinary or material considering the business of LEK; (iii) made
any material change in its method of management, operation or
accounting; or (iv) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee;
(b) LEK has not: (i) granted or agreed to grant any options,
warrants or other rights for its stocks, bonds or other corporate
securities calling for the issuance thereof, which option, warrant or
other right has not been cancelled as of the Closing Date; or (ii)
borrowed or agreed to borrow any funds or incurred or become subject
to, any material obligation or liability (absolute or contingent)
except liabilities incurred in the ordinary course of business; and
(c) to the best knowledge of LEK, it has not become subject to
any law or regulation which materially and adversely affects, or in the
future may adversely affect, the business, operations, properties,
assets or condition of LEK.
SECTION 2.8 TITLE AND RELATED MATTERS. As of the Closing Date, LEK will
own no real, personal or intangible property.
SECTION 2.9 LITIGATION AND PROCEEDINGS. There are no actions, suits or
proceedings pending or, to the best of LEK's knowledge and belief, threatened by
or against or affecting LEK, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind that would have a material adverse effect on the
business, operations, financial condition, income or business prospects of LEK.
LEK does not have any knowledge of any default on its part with respect to any
judgment, order, writ,
10
injunction, decree, award, rule or regulation of any court, arbitrator or
governmental agency or instrumentality.
SECTION 2.10 CONTRACTS. On the Closing Date:
(a) there are no material contracts, agreements, franchises,
license agreements, or other commitments to which LEK is a party or by
which it or any of its properties are bound, except for those
agreements between LEK and Corporate Stock Transfer, Inc., its transfer
agent and the agreement between LEK and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C., its
legal counsel;
(b) LEK is not a party to any contract, agreement, commitment
or instrument or subject to any charter or other corporate restriction
or any judgment, order, writ, injunction, decree or award which
materially and adversely affects, or in the future may (as far as LEK
can now foresee) materially and adversely affect, the business,
operations, properties, assets or conditions of LEK; and
(c) LEK is not a party to any material oral or written: (i)
contract for the employment of any officer or employee; (ii) profit
sharing, bonus, deferred compensation, stock option, severance pay,
pension, benefit or retirement plan, agreement or arrangement covered
by Title IV of the Employee Retirement Income Security Act, as amended;
(iii) agreement, contract or indenture relating to the borrowing of
money; (iv) guaranty of any obligation for the borrowing of money or
otherwise, excluding endorsements made for collection and other
guaranties of obligations, which, in the aggregate exceeds $1,000; (v)
consulting or other similar contract with an unexpired term of more
than one year or providing for payments in excess of $1,000 in the
aggregate; (vi) collective bargaining agreement; (vii) agreement with
any present or former officer or director of LEK; or (viii) contract,
agreement, or other commitment involving payments by it of more than
$1,000 in the aggregate.
SECTION 2.11 NO CONFLICT WITH OTHER INSTRUMENTS. The execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not result in the breach of any term or provision of, or
constitute an event of default under, any material indenture, mortgage, deed of
trust or other material contract, agreement or instrument to which LEK is a
party or to which any of its properties or operations are subject.
SECTION 2.12 MATERIAL CONTRACT DEFAULTS. To the best of LEK's knowledge
and belief, LEK is not in default in any material respect under the terms of any
outstanding contract, agreement, lease or other commitment which is material to
the business, operations, properties, assets or condition of LEK, and there is
no event of default in any material respect under any such contract, agreement,
lease or other commitment in respect of which LEK has not taken adequate steps
to prevent such a default from occurring.
11
SECTION 2.13 GOVERNMENTAL AUTHORIZATIONS. To the best of LEK's
knowledge, LEK has all licenses, franchises, permits and other governmental
authorizations that are legally required to enable it to conduct its business
operations in all material respects as conducted on the date hereof. Except for
compliance with federal and state securities or corporation laws, no
authorization, approval, consent or order of, or registration, declaration or
filing with, any court or other governmental body is required in connection with
the execution and delivery by LEK of the transactions contemplated hereby.
SECTION 2.14 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of LEK's
knowledge and belief, LEK has complied with all applicable statutes and
regulations of any federal, state or other governmental entity or agency
thereof, except to the extent that noncompliance would not materially and
adversely affect the business, operations, properties, assets or condition of
LEK or would not result in LEK's incurring any material liability. Further, LEK
is, as of the date of this Agreement, a "reporting company" under Section 12 of
the Securities Exchange Act of 1934, as amended, and is current in filing all
reports required to be filed pursuant to said Act.
SECTION 2.15 INSURANCE. LEK has no insurable properties and no
insurance policies will be in effect at the Closing Date, as hereinafter
defined.
SECTION 2.16 APPROVAL OF AGREEMENT. The board of directors and
shareholders of LEK have authorized the execution and delivery of this Agreement
by LEK and have approved the transactions contemplated hereby.
SECTION 2.17 MATERIAL TRANSACTIONS OR AFFILIATIONS. As of the Closing
Date, there will exist no material contract, agreement or arrangement between
LEK and any person who was at the time of such contract, agreement or
arrangement an officer, director or person owning of record, or known by LEK to
own beneficially, ten percent (10%) or more of the issued and outstanding common
stock of LEK and which is to be performed in whole or in part after the date
hereof. LEK has no commitment, whether written or oral, to lend any funds to,
borrow any money from or enter into any other material transactions with, any
such affiliated person.
SECTION 2.18 LABOR RELATIONS. LEK has never had a work stoppage
resulting from labor problems. LEK has no employees other than its officers and
directors.
SECTION 2.19 PREVIOUS SALES OF SECURITIES. Since inception, LEK has
sold LEK Common Shares to investors in reliance upon applicable exemptions from
the registration requirements under the laws of the State of Nevad and the
United States and all such sales were made in accordance with the laws of said
jurisdictions.
SECTION 2.20 LEK SCHEDULES. Upon execution hereof, LEK shall deliver to
San ▇▇▇▇▇▇▇ the following schedules, which are collectively referred to as the
"LEK Schedules" which are dated the date of this Agreement, all certified by an
officer of LEK to be complete, true and accurate:
12
(a) complete and correct copies of the articles of
incorporation and bylaws of LEK as in effect as of the date of this
Agreement;
(b) copies of all financial statements of LEK identified in
Section 2.4(a);
(c) a list indicating the names and addresses of the
stockholders of LEK, together with the number of shares owned by them;
(d) the description of any material adverse change in the
business, operations, property, assets, or condition of LEK since
September 30, 1999, required to be provided pursuant to Section 2.7;
(e) a list of all executive employees of LEK, including
current compensation, with notation as to job description and whether
or not such employee is subject to a written contract; and
(f) any other information, together with any required copies
of documents, required to be disclosed in the LEK Schedules by Sections
2.1 through 2.18.
LEK shall cause the LEK Schedules and the instruments to be
delivered to San ▇▇▇▇▇▇▇ hereunder to be updated after the date hereof up to and
including the Closing Date. It is specifically acknowledged by LEK that it has
no licenses, permits or other governmental authorizations relevant to its
business, nor any debts, material contracts, bank accounts or documentation
relating to the sale of LEK' Common Shares.
ARTICLE III
EXCHANGE PROCEDURE
SECTION 3.1 SHARE EXCHANGE/DELIVERY OF SAN ▇▇▇▇▇▇▇ SECURITIES. On the
Closing Date, the holders of the San ▇▇▇▇▇▇▇ Common Shares shall deliver to LEK
(i) certificates or other documents evidencing all of the issued and outstanding
San ▇▇▇▇▇▇▇ Common Shares, duly endorsed in blank or with executed stock power
attached thereto in transferrable form; and (ii) investment letters, the form of
which is attached hereto as Exhibit "B". On the Closing Date, all previously
issued and outstanding shares of common stock of San ▇▇▇▇▇▇▇ shall be canceled
and all rights in respect thereof shall cease.
SECTION 3.2 ISSUANCE OF LEK COMMON SHARES. In exchange for all of the
San ▇▇▇▇▇▇▇ Common Shares tendered pursuant to Section 3.1, LEK shall issue an
aggregate of 8,069,000 "restricted" LEK Common Shares to the San ▇▇▇▇▇▇▇
shareholders on a share-for-share basis to their existing ownership in San
▇▇▇▇▇▇▇.
SECTION 3.3 EVENTS PRIOR TO CLOSING. Upon execution hereof or as soon
thereafter as practical, management of LEK and San ▇▇▇▇▇▇▇ shall execute,
acknowledge and deliver (or shall
13
cause to be executed, acknowledged and delivered) any and all certificates,
opinions, financial statements, schedules, agreements, resolutions, rulings or
other instruments required by this Agreement to be so delivered, together with
such other items as may be reasonably requested by the parties hereto and their
respective legal counsel in order to effectuate or evidence the transactions
contemplated hereby, subject only to the conditions to Closing referenced
hereinbelow.
SECTION 3.4 CLOSING. The closing of the transaction contemplated by
this Agreement shall be as of the date in which (i) each party hereto has
executed this Agreement; and (ii) all of the shareholders of San ▇▇▇▇▇▇▇ have
approved the terms of this Agreement; and (iii) all conditions to Closing
referenced hereinabove, as well as in Articles V and VI below, have been
satisfied or waived by the appropriate party and all documentation referenced
herein is delivered to the respective party herein, unless a different date is
mutually agreed to in writing by the parties hereto (the "Closing Date").
SECTION 3.5 TERMINATION.
(a) This Agreement may be terminated by the board of directors
of either LEK or San ▇▇▇▇▇▇▇ at any time prior to the Closing Date if:
(i) there shall be any action or proceeding before
any court or any governmental body which shall seek to
restrain, prohibit or invalidate the transactions contemplated
by this Agreement and which, in the judgment of such board of
directors, made in good faith and based on the advice of its
legal counsel, makes it inadvisable to proceed with the
exchange contemplated by this Agreement; or
(ii) any of the transactions contemplated hereby are
disapproved by any regulatory authority whose approval is
required to consummate such transactions; or
(iii) the conditions described in Articles V or VI,
below, as applicable, have not been satisfied in full.
In the event of termination pursuant to this subparagraph (a) of this
Section 3.5, no obligation, right, or liability shall arise hereunder
and each party shall bear all of the expenses incurred by it in
connection with the negotiation, drafting and execution of this
Agreement and the transactions herein contemplated.
(b) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of LEK if San ▇▇▇▇▇▇▇
shall fail to comply in any material respect with any of its covenants
or agreements contained in this Agreement or if any of the
representations or warranties of San ▇▇▇▇▇▇▇ contained herein shall be
inaccurate in any material respect, which noncompliance or inaccuracy
is not cured after 20 days'
14
written notice thereof is given to San ▇▇▇▇▇▇▇. If this Agreement is
terminated pursuant to this subparagraph (b) of this Section 3.5, this
Agreement shall be of no further force or effect and no obligation,
right or liability shall arise hereunder.
(c) This Agreement may be terminated at any time prior to the
Closing Date by action of the board of directors of San ▇▇▇▇▇▇▇ if LEK
shall fail to comply in any material respect with any of its covenants
or agreements contained in this Agreement or if any of the
representations or warranties of LEK contained herein shall be
inaccurate in any material respect, which noncompliance or inaccuracy
is not cured after 20 days written notice thereof is given to LEK. If
this Agreement is terminated pursuant to this subparagraph (c) of
Section 3.5, this Agreement shall be of no further force or effect and
no obligation, right or liability shall arise hereunder.
SECTION 3.6 DIRECTORS OF LEK. Upon the Closing, the present members of
LEK's Board of Directors shall tender their resignations seriatim so that the
following persons are appointed directors of LEK in accordance with procedures
set forth in the LEK bylaws: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
Each director shall hold office until his successor shall have been duly elected
and shall have qualified or until his or her earlier death, resignation or
removal.
SECTION 3.7 OFFICERS OF LEK. Upon the Closing, the present officers of
LEK shall tender their resignations and simultaneous therewith, the following
persons shall be elected as officers of LEK in accordance with procedures set
forth in the LEK bylaws:
NAME OFFICE
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇ President, Assistant Secretary
▇▇▇▇ ▇▇▇▇▇▇ Secretary, Treasurer
ARTICLE IV
SPECIAL COVENANTS
SECTION 4.1 ACCESS TO PROPERTIES AND RECORDS. LEK and San ▇▇▇▇▇▇▇ will
each afford to the officers and authorized representatives of the other full
access to the properties, books and records of LEK and San ▇▇▇▇▇▇▇, as the case
may be, in order that each may have full opportunity to make such reasonable
investigation as it shall desire to make of the affairs of the other and each
will furnish the other with such additional financial and operating data and
other information as to the business and properties of LEK and San ▇▇▇▇▇▇▇, as
the case may be, as the other shall from time to time reasonably request.
SECTION 4.2 AVAILABILITY OF RULE 144. Each of the parties acknowledge
that the stock of LEK to be issued pursuant to this Agreement will be
"restricted securities," as that term is defined in Rule 144 and/or Regulation S
as promulgated pursuant to the Securities Act. LEK is under
15
no obligation to register such shares under the Securities Act, or otherwise.
Notwithstanding the foregoing, however, following the Closing Date, LEK will use
its best efforts to: (a) make publicly available on a regular basis not less
than semi-annually, business and financial information regarding LEK so as to
make available to the shareholders of LEK the provisions of Rule 144 pursuant to
subparagraph (c)(2) thereof; and (b) within ten (10) days of any written request
of any stockholder of LEK, LEK will provide to such stockholder written
confirmation of compliance with such of the foregoing subparagraph as may then
be applicable. The stockholders of LEK holding restricted securities of LEK as
of the date of this Agreement and their respective heirs, administrators,
personal representatives, successors and assigns, are intended third party
beneficiaries of the provisions set forth herein. The covenants set forth in
this Section 4.2 shall survive the Closing and the consummation of the
transactions herein contemplated.
SECTION 4.3 INFORMATION FOR LEK PUBLIC REPORTS. San ▇▇▇▇▇▇▇ will
furnish LEK with all information concerning San ▇▇▇▇▇▇▇ and the San ▇▇▇▇▇▇▇
Stockholders, including all financial statements, required for inclusion in any
registration statement or public report intended to be filed by LEK pursuant to
the Securities Act, the Exchange Act, or any other applicable federal or state
law. San ▇▇▇▇▇▇▇ covenants that all information so furnished for either such
registration statement or other public release by LEK, including the financial
statements described in Section 1.4, shall be true and correct in all material
respects without omission of any material fact required to make the information
stated not misleading.
SECTION 4.4 SPECIAL COVENANTS AND REPRESENTATIONS REGARDING THE LEK
COMMON SHARES TO BE ISSUED IN THE EXCHANGE. The consummation of this Agreement,
including the issuance of the LEK Common Shares to the stockholders of San
▇▇▇▇▇▇▇ as contemplated hereby, constitutes the offer and sale of securities
under the Securities Act, and applicable state statutes. Such transaction shall
be consummated in reliance on exemptions from the registration and prospectus
delivery requirements of such statutes which depend, INTER ALIA, upon the
circumstances under which the San ▇▇▇▇▇▇▇ stockholders acquire such securities.
In connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, San ▇▇▇▇▇▇▇ shall
cause to be delivered, and the San ▇▇▇▇▇▇▇ stockholders shall deliver to LEK,
the investment letter referenced in Section 3.1.
SECTION 4.5 THIRD PARTY CONSENTS. LEK and San ▇▇▇▇▇▇▇ agree to
cooperate with each other in order to obtain any required third party consents
to this Agreement and the transactions herein contemplated.
SECTION 4.6 ACTIONS PRIOR TO CLOSING.
(a) From and after the date of this Agreement until the
Closing Date and except as set forth in the LEK or San ▇▇▇▇▇▇▇
Schedules or as permitted or contemplated by this Agreement, the
parties hereto will each use its best efforts to:
(i) carry on its business in substantially the same
manner as it has heretofore;
16
(ii) maintain and keep its properties in states of
good repair and condition as at present, except for
depreciation due to ordinary wear and tear and damage due to
casualty;
(iii) maintain in full force and effect insurance
comparable in amount and in scope of coverage to that now
maintained by it;
(iv) perform in all material respects all of its
obligations under material contracts, leases and instruments
relating to or affecting its assets, properties and business;
(v) maintain and preserve its business organization
intact, retain its key employees and maintain its relationship
with its material suppliers and customers; and
(vi) fully comply with and perform in all material
respects all obligations and duties imposed on it by all
provincial, federal and state laws and all rules, regulations
and orders imposed by provincial, federal or state
governmental authorities.
(vii) utilize its best efforts in order to establish
a trading market for LEK's Common Stock on a US over the
counter market.
(b) From and after the date of this Agreement until the
Closing Date, neither LEK nor San ▇▇▇▇▇▇▇ will, without the prior
consent of the other party:
(i) except as otherwise specifically set forth
herein, make any change in their respective articles of
incorporation or bylaws;
(ii) declare or pay any dividend on its outstanding
shares of capital stock, except as may otherwise be required
by law, or effect any stock split or otherwise change its
capitalization, except as provided herein;
(iii) enter into or amend any employment, severance
or similar agreements or arrangements with any directors or
officers;
(iv) grant, confer or award any options, warrants,
conversion rights or other rights not existing on the date
hereof to acquire any shares of its capital stock; or
(v) purchase or redeem any shares of its capital
stock, except as disclosed herein.
17
SECTION 4.9 INDEMNIFICATION.
(a) San ▇▇▇▇▇▇▇ hereby agrees to indemnify LEK and each of the
officers, agents and directors of LEK as of the date of execution of
this Agreement against any loss, liability, claim, damage or expense
(including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened or any claim whatsoever), to
which it or they may become subject arising out of or based on any
inaccuracy by San ▇▇▇▇▇▇▇ appearing in or misrepresentation made in
this Agreement. The indemnification provided for in this paragraph
shall survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement for a period of
18 months.
(b) LEK and its officers and directors hereby agree to
indemnify San ▇▇▇▇▇▇▇ and each of the officers, agents, directors and
current shareholders of San ▇▇▇▇▇▇▇ as of the Closing Date against any
loss, liability, claim, damage or expense (including, but not limited
to, any and all expense whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced
or threatened or any claim whatsoever), to which it or they may become
subject arising out of or based on any inaccuracy appearing in or
misrepresentation made in this Agreement and particularly the
representation regarding no liabilities referred to in Section 2.4(b).
The indemnification provided for in this Section shall survive the
Closing and consummation of the transactions contemplated hereby and
termination of this Agreement for a period of 18 months.
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF LEK
The obligations of LEK under this Agreement are subject to the
satisfaction, at or before the Closing Date, of the following conditions:
SECTION 5.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by San ▇▇▇▇▇▇▇ in this Agreement were true when made and shall
be true at the Closing Date with the same force and effect as if such
representations and warranties were made at the Closing Date (except for changes
therein permitted by this Agreement), and San ▇▇▇▇▇▇▇ shall have performed or
complied with all covenants and conditions required by this Agreement to be
performed or complied with by San ▇▇▇▇▇▇▇ prior to or at the Closing. LEK shall
be furnished with a certificate, signed by a duly authorized officer of San
▇▇▇▇▇▇▇ and dated the Closing Date, to the foregoing effect.
SECTION 5.2 STOCKHOLDER APPROVAL. The stockholders of San ▇▇▇▇▇▇▇ shall
have approved this Agreement and the transactions contemplated thereby.
18
SECTION 5.3 OFFICER'S CERTIFICATE. LEK shall have been furnished with a
certificate dated the Closing Date and signed by a duly authorized officer of
San ▇▇▇▇▇▇▇ to the effect that: (a) the representations and warranties of San
▇▇▇▇▇▇▇ set forth in the Agreement and in all Exhibits, Schedules and other
documents furnished in connection herewith are in all material respects true and
correct as if made on the Closing Date; (b) San ▇▇▇▇▇▇▇ has performed all
covenants, satisfied all conditions, and complied with all other terms and
provisions of this Agreement to be performed, satisfied or complied with by it
as of the Closing Date; (c) since the date of San Joaquin's audited Balance
Sheet of October 31, 1999, there has not been any materially adverse change in
the business, prospects, properties or financial condition of San ▇▇▇▇▇▇▇; (d)
since such date and other than as previously disclosed to LEK, San ▇▇▇▇▇▇▇ has
not entered into any material transaction other than transactions which are
usual and in the ordinary course of its business; and (e) no litigation,
proceeding, investigation or inquiry is pending or, to the best knowledge of San
▇▇▇▇▇▇▇, threatened, which might result in an action to enjoin or prevent the
consummation of the transactions contemplated by this Agreement or, to the
extent not disclosed in the San ▇▇▇▇▇▇▇ Schedules, by or against San ▇▇▇▇▇▇▇
which might result in any material adverse change in any of the assets,
properties, business or operations of San ▇▇▇▇▇▇▇.
SECTION 5.4 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business or operations of San
▇▇▇▇▇▇▇.
SECTION 5.5 OTHER ITEMS. LEK shall have received such further
documents, certificates or instruments relating to the transactions contemplated
hereby as LEK may reasonably request.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF SAN ▇▇▇▇▇▇▇
The obligations of San ▇▇▇▇▇▇▇ under this Agreement are subject to the
satisfaction, at or before the Closing Date (unless otherwise indicated herein),
of the following conditions:
SECTION 6.1 ACCURACY OF REPRESENTATIONS. The representations and
warranties made by LEK in this Agreement were true when made and shall be true
as of the Closing Date (except for changes therein permitted by this Agreement)
with the same force and effect as if such representations and warranties were
made at and as of the Closing Date, and LEK shall have performed and complied
with all covenants and conditions required by this Agreement to be performed or
complied with by LEK prior to or at the Closing. San ▇▇▇▇▇▇▇ shall have been
furnished with a certificate, signed by a duly authorized executive officer of
LEK and dated the Closing Date, to the foregoing effect.
SECTION 6.2 OFFICER'S CERTIFICATE. San ▇▇▇▇▇▇▇ shall be furnished with
a certificate dated the Closing Date and signed by a duly authorized officer of
LEK to the effect that: (a) the
19
representations and warranties of LEK set forth in the Agreement and in all
Exhibits, Schedules and other documents furnished in connection herewith are in
all material respects true and correct as if made on the Closing Date; (b) LEK
has performed all covenants, satisfied all conditions, and complied with all
other terms and provisions of the Agreement to be performed, satisfied or
complied with by it as of the Closing Date; (c) since the date of LEK's
unaudited Balance Sheet of September 30, 1999, there has not been any materially
adverse change in the business, prospects, properties or financial condition of
LEK; (d) since such date, LEK has not entered into any material transaction
other than transactions which are usual and in the ordinary course of its
business; and (e) no litigation, proceeding, investigation or inquiry is pending
or, to the best knowledge of LEK, threatened, which might result in an action to
enjoin or prevent the consummation of the transactions contemplated by this
Agreement or, to the extent not disclosed in the LEK Schedules, by or against
LEK which might result in any material adverse change in any of the assets,
properties, business or operations of LEK.
SECTION 6.3 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date,
there shall not have occurred any material adverse change in the financial
condition, business or operations of nor shall any event have occurred which,
with the lapse of time or the giving of notice, may cause or create any material
adverse change in the financial condition, business or operations of LEK.
SECTION 6.4 ADDITIONAL CONDITIONS TO CLOSING. In addition to the
obligations contained herein, LEK's shareholders shall adopt and approve
amendments to the LEK Articles of Incorporation, changing the name of LEK to
"San ▇▇▇▇▇▇▇ Resources Inc." (or such other name as may be available and
acceptable to management of San ▇▇▇▇▇▇▇).
SECTION 6.5 COMPLIANCE WITH REPORTING REQUIREMENTS. As of the Closing
Date, LEK shall be current in and in compliance with all requirements of all
filings required to be tendered to the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended.
SECTION 6.6 OTHER ITEMS. San ▇▇▇▇▇▇▇ shall have received such further
documents, certificates, or instruments relating to the transactions
contemplated hereby as San ▇▇▇▇▇▇▇ may reasonably request.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 BROKERS AND FINDERS. Except as stated in Schedule 7.1, each
party hereto hereby represents and warrants that it is under no obligation,
express or implied, to pay certain finders in connection with the bringing of
the parties together in the negotiation, execution, or consummation of this
Agreement. The parties each agree to indemnify the other against any claim by
any third person not listed in Schedule 7.1 for any commission, brokerage or
finder's fee or other payment with respect to this Agreement or the transactions
contemplated hereby
20
based on any alleged agreement or understanding between the indemnifying party
and such third person, whether express or implied from the actions of the
indemnifying party.
SECTION 7.2 LAW, FORUM AND JURISDICTION. This Agreement shall be
construed and interpreted in accordance with the laws of the State of Nevada.
SECTION 7.3 NOTICES. Any notices or other communications required or
permitted hereunder shall be sufficiently given if personally delivered to it or
sent by registered mail or certified mail, postage prepaid, or by prepaid
telegram addressed as follows:
If to LEK: ▇▇▇▇▇ ▇▇▇▇, President
LEK International, Inc.
Suite 106
1460 Pandosy Street
Kelowna, British Columbia, Canada V14 1P3
If to San ▇▇▇▇▇▇▇: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇, President
San ▇▇▇▇▇▇▇ Oil & Gas Ltd.
c/o ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.
SECTION 7.4 ATTORNEYS' FEES. In the event that any party institutes any
action or suit to enforce this Agreement or to secure relief from any default
hereunder or breach hereof, the breaching party or parties shall reimburse the
non-breaching party or parties for all costs, including reasonable attorneys'
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.
SECTION 7.5 CONFIDENTIALITY. Each party hereto agrees with the other
parties that, unless and until the reorganization contemplated by this Agreement
has been consummated, they and their representatives will hold in strict
confidence all data and information obtained with respect to another party or
any subsidiary thereof from any representative, officer, director or employee,
or from any books or records or from personal inspection, of such other party,
and shall not use such data or information or disclose the same to others,
except: (i) to the extent such data is a matter of public knowledge or is
required by law to be published; and (ii) to the extent that such data or
information must be used or disclosed in order to consummate the transactions
contemplated by this Agreement.
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SECTION 7.6 SCHEDULES; KNOWLEDGE. Each party is presumed to have full
knowledge of all information set forth in the other party's Schedules delivered
pursuant to this Agreement.
SECTION 7.7 THIRD PARTY BENEFICIARIES. This contract is solely among
LEK and San ▇▇▇▇▇▇▇ and, except as specifically provided, no director, officer,
stockholder, employee, agent, independent contractor or any other person or
entity shall be deemed to be a third party beneficiary of this Agreement.
SECTION 7.8 ENTIRE AGREEMENT. This Agreement represents the entire
agreement between the parties relating to the subject matter hereof. This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations or warranties, written or oral,
except as set forth herein. This Agreement may not be amended or modified,
except by a written agreement signed by all parties hereto.
SECTION 7.9 SURVIVAL; TERMINATION. Except as otherwise provided herein,
the representations, warranties and covenants of the respective parties shall
survive the Closing Date and the consummation of the transactions herein
contemplated.
SECTION 7.10 COUNTERPARTS FACSIMILE EXECUTION. For purposes of this
Agreement, a document (or signature page thereto) signed and transmitted by
facsimile machine or telecopier is to be treated as an original document. The
signature of any party thereon, for purposes hereof, is to be considered as an
original signature, and the document transmitted is to be considered to have the
same binding effect as an original signature on an original document. At the
request of any party, a facsimile or telecopy document is to be re-executed in
original form by the parties who executed the facsimile or telecopy document. No
party may raise the use of a facsimile machine or telecopier machine as a
defense to the enforcement of the Agreement or any amendment or other document
executed in compliance with this Section.
SECTION 7.11 AMENDMENT OR WAIVER. Every right and remedy provided
herein shall be cumulative with every other right and remedy, whether conferred
herein, at law, or in equity, and may be enforced concurrently herewith, and no
waiver by any party of the performance of any obligation by the other shall be
construed as a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. At any time prior to the Closing Date, this
Agreement may be amended by a writing signed by all parties hereto, with respect
to any of the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance hereof may be extended by a
writing signed by the party or parties for whose benefit the provision is
intended.
SECTION 7.12 INCORPORATION OF RECITALS. All of the recitals hereof are
incorporated by this reference and are made a part hereof as though set forth at
length herein.
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SECTION 7.13 EXPENSES. Each party herein shall bear all of their
respective costs and expenses incurred in connection with the negotiation of
this Agreement and in the consummation of the transactions provided for herein
and the preparation therefor.
SECTION 7.14 HEADINGS; CONTEXT. The headings of the sections and
paragraphs contained in this Agreement are for convenience of reference only and
do not form a part hereof and in no way modify, interpret or construe the
meaning of this Agreement.
SECTION 7.15 BENEFIT. This Agreement shall be binding upon and shall
inure only to the benefit of the parties hereto, and their permitted assigns
hereunder. This Agreement shall not be assigned by any party without the prior
written consent of the other party.
SECTION 7.16 PUBLIC ANNOUNCEMENTS. Except as may be required by law,
neither party shall make any public announcement or filing with respect to the
transactions provided for herein without the prior consent of the other party
hereto.
SECTION 7.17 SEVERABILITY. In the event that any particular provision
or provisions of this Agreement or the other agreements contained herein shall
for any reason hereafter be determined to be unenforceable, or in violation of
any law, governmental order or regulation, such unenforceability or violation
shall not affect the remaining provisions of such agreements, which shall
continue in full force and effect and be binding upon the respective parties
hereto.
SECTION 7.18 FAILURE OF CONDITIONS; TERMINATION. In the event any of
the conditions specified in this Agreement shall not be fulfilled on or before
the Closing Date, either of the parties have the right either to proceed or,
upon prompt written notice to the other, to terminate and rescind this Agreement
without liability to any other party. The election to proceed shall not affect
the right of such electing party reasonably to require the other party to
continue to use its efforts to fulfill the unmet conditions.
SECTION 7.19 NO STRICT CONSTRUCTION. The language of this Agreement
shall be construed as a whole, according to its fair meaning and intendment, and
not strictly for or against either party hereto, regardless of who drafted or
was principally responsible for drafting the Agreement or terms or conditions
hereof.
SECTION 7.20 EXECUTION KNOWING AND VOLUNTARY. In executing this
Agreement, the parties severally acknowledge and represent that each: (a) has
fully and carefully read and considered this Agreement; (b) has been or has had
the opportunity to be fully apprised by its attorneys of the legal effect and
meaning of this document and all terms and conditions hereof; and (c) is
executing this Agreement voluntarily, free from any influence, coercion or
duress of any kind.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, and entered
into as of the date first above written.
LEK INTERNATIONAL, INC.
ATTEST:
/s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ By:/s/▇▇▇▇▇ ▇▇▇▇
Secretary ▇▇▇▇▇ ▇▇▇▇, President
ATTEST: SAN ▇▇▇▇▇▇▇ OIL & GAS LTD.
/s/▇▇▇▇ ▇▇▇▇▇▇ By:/s/J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Secretary or Assistant Secretary J. ▇▇▇▇▇▇▇ ▇▇▇▇▇, President
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