AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
BETWEEN
DIAEM RESOURCES, LTD., LKA HOLDINGS, INC. AND
LKA INTERNATIONAL, INC.
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION is made and entered
into as of this 31st day of March, 1988, as amended June 15, 1988 (the
"Agreement"), by and between LKA Holdings, Inc., a corporation organized under
the laws of the State of Utah ("LKA"), DiaEm Resources, Ltd., a corporation
organized under the laws of the Province of British Columbia and to be
continued to and existing under the laws of the State of Wyoming, ("DiaEm"),
and LKA International, Inc., a corporation organized under the laws of the
State of Delaware and a wholly owned subsidiary of DiaEm, ("Subsidiary")
hereinafter collectively referred to as the "Constituent Corporations."
WHEREAS, LKA, is a corporation with interests in gem and precious metals
properties; and
WHEREAS, DiaEm is a corporation with interests in gem properties; and
WHEREAS, the Board of Directors of LKA and DiaEm deem it advisable to
merge into Subsidiary, because each company believes such reorganization is in
the best interests of the stockholders of both companies; and
WHEREAS, LKA and DiaEm intend this Agreement and Plan of Merger and
Reorganization to serve as a plan of reorganization and merger pursuant to the
provisions of Section 368(a)(1)(A) of the United States Internal Revenue Code
of 1986, as amended, to be effectuated by the merger of LKA and DiaEm into
Subsidiary.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein set forth and subject to the satisfaction of the conditions set forth
herein, the parties hereby make the following representations and warranties,
and mutually covenant and agree as follows:
ARTICLE I
MERGER
1.1 Form. At the Effective Date of the merger, LKA and DiaEm shall
be merged with and into Subsidiary pursuant to the provisions of Section 16-
10-66 et seq. Of the Utah Business Corporation Act, Section 251 et seq. Of the
Delaware General Corporation Law, and Section 17-1-401 et seq. Of the Wyoming
Business Corporation Act and Subsidiary shall continue its corporate existence
under the laws of the State of Delaware. The combined companies of LKA, DiaEm
and Subsidiary shall be identified as the "Surviving Corporation" in this
Agreement. The separate existence and corporate organization of LKA and DiaEm
shall cease on the Effective Date of the merger. The corporate existence of
Subsidiary shall continue unaffected and unimpaired by the merger and, as the
Acquiring Corporation and shall continue as a public company governed by the
laws of the State of Delaware.
1.2 Effective Date. The "Effective Date," as that term is used in
this Agreement, shall be the date on which the Articles of Merger of LKA and
DiaEm into Subsidiary as filed with the Secretary of State of Delaware, the
Corporations division of the State of Utah and the Secretary of State of the
State of Wyoming become effective.
1.3 Effect of Merger. From and after the Effective Date, the effect
of the merger shall be as provided in the applicable provisions of Utah,
Wyoming and Delaware law. Without limiting hte generality of the foregoing,
and subject thereto, at the Effective Date all of the following will
transpire:
(a) The separate existence of LKA and DiaEm shall cease;
(b) The Surviving Corporation shall possess all assets and
property of every description, and every interest therein, wherever located,
and the rights, privileges, powers, franchises (whether or not assignable),
immunities, and authority of a public, as well as a private, nature of LKA,
DiaEm and Subsidiary;
(c) All obligations, liabilities and claims existing or pending by
or against DiaEm or LKA shall be vested in and become the obligations,
liabilities, and claims of the Surviving Corporation without further act or
deed, all property (real, personal, and mixed), all debts due on whatever
account, including subscriptions to shares, all other choses in action, and
all and every other interest of or belonging to or due DiaEm or LKA shall be
taken and deemed to be transferred to and vested in the Surviving Corporation
without further act or deed; and
(d) Title to any real estate or any interest therein vested in
DiaEm or LKA shall be preserved unimpaired, and all liens upon the property of
DiaEm or LKA shall be preserved unimpaired, limited in lien to the property
affected by such liens immediately prior to the Effective Date.
1.4 Closing Date. The "Closing Date," as that term is used in this
Agreement, shall be no later than five (5) days after fulfillment of the
conditions specified in Articles VII and VIII hereof. The Closing Date may be
the same date as the Effective Date.
ARTICLE II
CONVERSION OF SHARES
The manner of converting and exchanging the shares of the Constituent
Corporation shall be as follows:
2.1 Basis of Exchange of DiaEm Shares.
(a) Each share of common stock no par value, of DiaEm outstanding
on the Effective Date shall, by virtue of the merger and without any action on
the part of the holders thereof, be converted and exchanged into approximately
..6204 shares of the common stock, $0.001 par value of Subsidiary, rounded to
the nearest whole share.
(b) The maximum number of shares to be isseud to DiaEm
shareholders up to the Effective Date of the merger shall not exceed 3,605,600
shares.
(c) Each share of DiaEm common stock issued and held by DiaEm as
treasury stock or owned by LKA on the Effective Date, or any shares purchased
from dissenting DiaEm shareholders by the Surviving Corporation, shall be
canceled and retired and no shares of common stock of Subsidiary shall be
issued with respect thereto.
2.2 Basis of Exchange of LKA Shares.
(a) Each share of common stock, $0.001 par value, of LKA
outstanding on the Effective Date shall, by virtue of the merger and without
any action on the part of the holders thereof, be converted and exchanged into
approximately .3247 shares of common stock, $0.001 par value of Subsidiary,
rounded to the nearest whole share.
(b) The maximum number to be issued to LKA shareholders up to the
Effective Date of the merger shall not exceed 4,394,400 shares.
(c) Each share of LKA common stock issued and held by LKA as
treasury stock or owned by DiaEm on the Effective Date, or any shares
purchased from dissenting LKA shareholders by the Surviving Corporation, shall
be canceled and retired, and no shares of common stock of Subsidiary shall be
issued with respect thereto.
2.3 Basis of Exchange of Subsidiary Shares. Each share of common
stock, $0.001 par value, of Subsidiary outstanding on the Effective Date
shall, by virtue of the merger and without any action on the part of the
holder thereof, be canceled.
2.4 Options. At the Effective Date of the merger, all outstanding
options to purchase shares of common stock of DiaEm or LKA shall be converted
into an option to purchase shares of common stock of Subsidiary in an amount
equal to the number of shares multiplied by the appropriate exchange ratio,
and at an exercise price equal to the exercise price per share divided by the
appropriate exchange ration, as shall be determined by the Board of Directors
of Subsidiary on the Effective Date.
2.5 Exchange Agent. As promptly as feasible after the Effective
Date, the Constituent Corporations will make available to an Exchange Agent,
mutually agreeable to both LKA's and DiaEm's Board of Directors, for the
holders of record of certificates for common stock of LKA and of DiaEm on the
Effective Date, certificates for shares of common stock of Subsidiary in
sufficient quantities as shall enable shares of LKA and DiaEm to be
surrendered and exchanged as herein provided.
2.6 Surrender and Exchange of Shares. As promptly as feasible after
the Effective Date, each holder of an outstanding certificate or certificates
theretofore representing common stock of LKA and of DiaEm shall be notified by
the Exchange Agent and shall surrender such certificate or certificates to the
Exchange Agent in the manner specified in the Exchange Agent's notification
and such holder shall be entitled upon such surrender to receive in exchange
therefor a certificate representing the aggregate number of whole shares of
common stock of Subsidiary into which the common stock of LKA or of DiaEm
theretofore represented by the certificate or certificates so surrendered
shall have been converted and exchanged as herein provided. Until so
surrendered, each outstanding certificate which, prior to the Effective Date,
represented common stock of LKA or of DiaEm shall not be transferable on the
books of the Constituent Corporations, but shall be deemed, for all corporate
purposes other than the payment of dividends and other distributions, to
evidence ownership of the number of whole shares of common stock of Subsidiary
into which the common stock of LKA and DiaEm, which, prior to the Effective
Date, were represented thereby, shall have been converted and exchanged.
Any dividend or other distribution paid by Subsidiary in respect of its
common stock otherwise payable to the holder of any outstanding certificate
which has not yet been delivered to the Exchange Agent shall be paid to the
Exchange Agent and no such dividend or other distribution payable in respect
of the common stock of Subsidiary shall be paid to the holder of such
outstanding certificate until such certificate shall have been so surrendered
to the Exchange Agent. The Exchange Agent shall hold such dividends or other
distribution in an interest bearing account. Upon surrender of such
outstanding certificate or satisfactory proof of loss and indemnity, there
shall be paid by the Exchange Agent to or at the direction of the holder of
the certificate of common stock of Subsidiary issued in exchange therefor the
amount (without interest thereon) of all dividends and distributions which
have theretofore become payable with respect to the number of whole shares of
common stock of Subsidiary represented by the certificate issued upon such
surrender for exchange.
From and after the Effective Date, the sole rights of the holders of
certificates theretofore representing common stock of LKA and DiaEm, except as
otherwise provided by law, shall be those to which they are entitled as owners
of common stock of Subsidiary into which the shares of common stock of LKA and
DiaEm shall have been converted by the merger as herein provided.
2.7 Transfers. If any certificate for common stock of Subsidiary is
to be issued in a name other than that in which the certificate for common
stock of LKA or of DiaEm surrendered for exchange is registered, such exchange
shall be on the condition that the certificate so surrendered shall be
properly endorsed and otherwise in form for transfer acceptable to the
Exchange Agent and that the person requesting such exchange either shall pay
to Subsidiary or to the Exchange Agent any transfer or other taxes required by
reason of the issuance of such certificate for common stock of Subsidiary or
the Exchange Agent shall have determined that such tax has been paid or is not
applicable.
2.8 Termination of Exchange Agent's Duties. One (1) year after the
Effective Date, all certificates for shares of common stock of Subsidiary and
all dividends or other distributions plus accumulated interest in common stock
of Subsidiary, which have been received by the Exchange Agent and have not
been distributed as hereinbefore provided, shall be returned to Subsidiary or
its agent and the duties of the Exchange Agent shall thereupon terminate.
Thereafter, subject to the applicable law, any stockholder of LKA or of DiaEm
who has not theretofore surrendered his certificate or certificates for
exchange as herein provided shall be entitled, upon surrender of such
certificates or certificates to Subsidiary or its agent, to receive a
certificate for the number of shares of converted and exchanged under this
Agreement, and the amount (without interest thereon) of any dividends and
distributions which have theretofore become payable with respect to such
shares of common stock of Subsidiary.
2.9 Closing of Transfer Books of LKA and DiaEm. At the close of
business on the business day next preceding the Effective Date, the share
transfer books of LKA and DiaEm shall be closed and no transfer of shares of
LKA or DiaEm shall thereafter be made or consummated. LKA and DiaEm, subject
to the merger becoming effective, shall notify its transfer agents at least
ten (10) days before the Effective Date of the fact that no transfer of shares
will be made after the close of business on the next day preceding the
Effective Date.
ARTICLE III
CERTIFICATE OF INCORPORATION, BYLAWS
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
3.1 Certificate of Incorporation. From and after the Effective
Date, the Certificate of Incorporation of Subsidiary shall be the Certificate
of Incorporation of the Surviving Corporation, until thereafter amended as
provided by law.
3.2 Bylaws. From and after the Effective Date, the Bylaws of
Subsidiary shall be the Bylaws of the Surviving Corporation, until thereafter
amended as provided by law.
3.3 Officers and Directors. At the Effective Date, there shall be
four directors of Subsidiary. The directors of Subsidiary shall be Xxx X.
Xxxxxxx, Xxxxx X. Xxxxxxxxx, III, Xxxx X. Xxxxxxxxx and Xxxxxxx Xxxxxx.
Xx. Xxx X. Xxxxxxx shall be the chairman of the Board of Directors,
president and chief executive officer of Subsidiary. Other officers of
Subsidiary will be Xxxxxxx Xxxxxx, secretary and such other officers as may be
appointed by the directors of Subsidiary at the first meeting of such
directors after the merger as set forth herein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF LKA
As an inducement to enter into this Agreement and to consummate the
transactions contemplated herein, LKA represents and warrants to DiaEm and
agrees as follows:
4.1 Organization and Qualification to do Business. LKA is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Utah, and is duly licensed or qualified and authorized to
transact business as a foreign corporation in the jurisdictions listed on
Exhibit 4.1 and certified by LKA's president or vice president, which are the
only jurisdictions in which the properties owned or the activities conducted
by LKA make such licensing or qualification necessary.
4.2 Subsidiaries; Interests in Other Companies. As used herein,
"LKA" means LKA and all of its subsidiaries and affiliates as set forth in
Exhibit 4.2 hereof. LKA does not own, directly or indirectly, any stock or
equity interest of greater than five percent (5%) in any corporation,
partnership, joint venture, business trust or other business entity, except as
listed on Exhibit 4.2, and certified by LKA's president or vice president.
Each such business entity is duly licensed or qualified and authorized to
transact business as a foreign corporation in the jurisdictions listed on
Exhibit 4.2 hereto, which are the only jurisdictions in which the properties
owned or the activities conducted make such licensing or qualifications
necessary.
4.3 Capitalization of LKA. He only authorized capital stock of LKA
consists of 50,000,000 common shares, $0.001 par value, of which 13,532,051
shares were validly issued and outstanding at June 15, 1988 (the "LKA
Shares"). Except as set forth on Exhibit 4.3, there are no other shares,
options to acquire shares, warrants, or other contracts relating to shares of
LKA, and none will be granted, between the date hereof and the Closing Date.
The LKA shares are validly issued, fully paid and non-assessable with no
liability attaching to the ownership thereof and no person has any pre-
emptive, stock purchase or other rights, to acquire any shares of capital
stock of LKA.
4.4 Financial Statements. The balance sheet and statements of
income of LKA as at December 31, 1987, together with appropriate notes to such
financial statements, all accompanied by reports thereon containing opinions
without qualifications, by LKA's certified public accountants, are attached
hereto as Exhibit 4.4. All such balance sheets and statements of income are
correct and complete in all material respects and present fairly the financial
position of LKA as at the dates of such financial statements, all in
accordance with generally accepted accounting principles applied on a
consistent basis. As of December 31, 1987, there was no liability of any
material nature or any material amount that should properly be reflected or
reserved against in a balance sheet prepared in accordance with generally
accepted accounting principles which is not fully reflected or reserved
against in said balance sheets as of December 31, 1987. Since December 31,
1987:
(a) There has been no material adverse change in the financial
condition, assets, liabilities, or business of LKA whether or not in the
ordinary course of business, considered as a whole from that shown on the
December 31, 1987 balance sheet;
(b) Any damage or destruction in the nature of casualty loss,
whether covered by insurance or not, materially and adversely affecting any
property or business of LKA, which is material to its financial condition,
operations, or business considered as a whole;
(c) Any other event, condition, or state of facts of any character
which materially or adversely affects, or threatens to materially and
adversely affect, the present or future results of operations or business,
financial condition or property of LKA.
4.5 Absence of Undisclosed Liabilities. Except as reflected in the
balance sheet and notes thereto in Exhibit 4.4 or in Exhibit 4.8, LKA, as of
the date thereof, had no material liabilities or obligations of any nature,
whether absolute, accrued, contingent or otherwise, and whether due or to
become due. No material claim of any nature has been asserted or threatened
against LKA.
4.6 Properties. LKA has good and marketable title to all material
properties, assets, leasehold assets, (real and personal) owned and used in
its business, including those reflected on Exhibit 4.4 subject to no mortgage,
pledge, lien, conditional sales agreement, encumbrance or charge, and the
property and the assets owned or leased by LKA constitute all of the assets
which are being used in its business, and the fixtures, plan, and operating
assets of LKA are in generally good and serviceable condition (other than any
which are temporarily out of service in the ordinary course of business) and
suitable for the uses for which intended and such property and assets and
their uses conform in all material respects to all applicable law, except for:
(a) liens reflected on Exhibit 4.6(a), certified by LKA's
president or vice president and identified as relating to this Agreement, or
on Exhibit 4.4 (with respect to which no default exists); and
(b) liens for current taxes and assessments not in default; and
(c) obligations reflect on Exhibit 4.6(c) certified by LKA's
president or vice president.
4.7 Absence of Certain Changes. Since December 31, 1987, there has
not been:
(a) Any damage, destruction, or loss having materially adverse
effect on the properties or assets of LKA;
(b) Except as set forth in Exhibit 4.3, any declaration, setting
aside, or payment of any dividend or other distribution in respect of LKA's
stock; any direct or indirect redemption, purchase, or other acquisition of
any stock; any granting of any options to purchase or rights to subscribe to
or purchase any shares of stock; any sale or other disposition of any shares
of stock; any issuance of shares; or
(c) Any discharge of any obligation or liability of LKA (absolute
or contingent) other than (1) current obligations or liabilities shown on the
balance sheet in Exhibit 4.4; and (2) current obligations or liabilities
incurred since December 31, 1987, in the ordinary course of business.
4.8 Material Leases and Contracts. LKA has delivered to DiaEm a
schedule, certified by LKA's president or vice president and identified as
Exhibit 4.8, describing the leases and contracts of the nature described
below. With the exception of the matters set forth in said Exhibit, LKA is
not a party to any written or oral:
(a) Contract with any labor union;
(b) Share purchase or stock option plan;
(c) Lease, whether as lessor or lessee, with respect to any
property, real or personal, at a rental of more than $12,000 per year
(d) Contract with any party involving a commitment in excess of
$25,000;
(e) Agreements with any employee which cannot be terminated in
thirty days or less without cost; or
(f) Contract is not made in the ordinary course of business.
LKA has complied with the provisions of all material leases, contracts
and commitments to which it is a party and is not in default with respect to
any thereof. LKA has, and on the Effective Date will have performed, ina ll
material respects, the obligations required to be performed by it pursuant to
such contracts and leases. Copies of all contracts and agreements will be
made available to DiaEm. No purchase commitment by LKA is in excess of its
ordinary business requirements or at a price in excess of market price at the
date thereof. None of such contracts and agreements will expire or be
terminated or be subject to any modification of terms or conditions by reason
of the consummation of the transactions called for by this Agreement or the
proposed merger of LKA into Subsidiary.
Without written consent of DiaEm, LKA will not:
(a) Make any changes or modifications in any of the foregoing,
make any further additions to its properties, or make any further purchases of
machinery or equipment; or
(b) Incur any further obligations or commitments or purchase any
supplies or materials except in the ordinary course of business.
In the judgment of LKA, none of such contracts or agreements contains
terms unduly burdensome to LKA or is unduly harmful to its business. LKA is
in compliance with, and on the Effective Date will be in material compliance
with, all applicable laws, regulations, rules and orders promulgated (or known
by LKA as of the date hereof to be proposed) by any federal, state or local
governmental authority relating to the operation of its properties and
business. All business and other licenses, permits and authorizations
required by law for the operations of LKA have been obtained.
4.9 Litigation. Except as set forth on Exhibit 4.9, LKA is not a
party defendant to or the subject of any action, suit, proceeding, claim,
counterclaim, investigation, or enforcement proceeding which is pending or, to
the best of its knowledge, threatened.
No stipulation has heretofore been entered into with any governmental
agency, and no consent or other decree or order has heretofore been entered or
issued by any court or governmental agency, which does or may materially and
adversely affect LKA or the property or business of LKA and there involving
LKA for any such action. To the best knowledge of LKA, there is no action,
suit, proceeding, or investigation (pending or threatened) contemplated which
questions the legality, validity or propriety of the transactions contemplated
by this Agreement.
4.10 Tax Returns and Payments. All tax returns and reports of LKA
required by law (including without limiting the generality of the foregoing,
all income tax, gross receipts, business and occupation, unemployment
compensation, social security, sales, use, excise, privilege and franchise tax
laws of the United States or any state, territory, municipal or political
subdivision thereof, or any other nation) to be filed have been duly and
timely filed, and all taxes, assessments, contributions, fees and other
governmental charges, duties or impositions (other than those presently
payable without penalty or interest and those currently being contested in
good faith) upon LKA or upon or measured by the properties, assets or income
of LKA have been paid. Except as set forth on Exhibit 4.10, no federal or
state income and gross receipts tax returns of LKA have been audited by the
Internal Revenue Service or applicable state taxing authority for which
additional amounts remain outstanding. LKA has not received any notice of
assessment or proposed assessment of any federal or state tax upon or measured
by its income and has no knowledge of any basis for any material additional
assessment of any such tax.
4.11 Directors and Officers; Compensation; Banks. LKA has delivered
to DiaEm a list, attached as Exhibit 4.11 and certified by LKA's president or
vice president, setting forth:
(a) The names, addresses and titles of all directors, officers
and 10% shareholders and of all persons whose compensation from LKA as of the
date hereof will equal or exceed at an annual rate the sum of $50,000.
(b) The name and address of each bank in which LKA has an
account or safe deposit box, the identification or account number thereof, and
the names of all persons who are authorized to draw thereon or who have access
thereto; and
(c) The names of all persons holding tax or other power of
attorney from LKA and a summary of the terms thereof.
4.12 Shareholders. LKA will deliver to DiaEm, at least 10 days
prior to Closing, Exhibit 4.12 certified by LKA's president or vice president,
setting forth the names and residences of all lka's shareholders, including
any beneficial owners, if known, and the number of shares of LKA held.
4.13(a) Questionable Payments. To the best of the knowledge of the
officers of LKA, since December 31, 1985:
(i) Neither LKA nor any of its current or former directors,
officers, or employees nor any third party acting on behalf of LKA have,
directly or indirectly, made any bribes, kickbacks or any other payments of a
similar or comparable nature, whether lawful or not, to any person or entity,
public or private, regardless of form, whether in money, property, or
services, to obtain favorable treatment in securing business or to obtain
special concessions or to pay for favorable treatment for business already
secured or for special concessions already obtained;
(ii) No funds or property of any kind of LKA was donated, loaned,
or made available, directly or indirectly, for the benefit of, or for the
purpose of oposing, any government or subdivision thereof, political party,
candidate or committee, either domestic or foreign;
(iii) no officer, employee, contractor, or agent of LKA was
compensated, directly or indirectly, by LKA for time spent or expenses
incurred in performing services for the benefit of, or for the purpose of
opposing, any government or subdivision thereof, political party, candidate or
committee, either domestic or foreign.
(iv) LKA has not made any loan, donations, or other disbursements,
directly or indirectly, to officers or employees of LKA or others for
contributions made, or to be made, directly or indirectly, for the benefit of,
or for the purpose of opposing, any government or subdivision thereof,
political party, candidate or committee either domestic or foreign; and
(v) LKA has not, or any other entity acting on behalf of LKA,
maintained or maintains a bank account or any other account of any kind,
whether domestic or foreign, which account was not reflected in the corporate
books and records, or which account was not listed, titled, or identified in
the name of LKA.
4.13(b) Certain Transactions. Except as shown on Exhibit 4.13(b),
since January 1, 1986, no contracts have been entered into, and no
transactions have occurred, between LKA and any director, officer, or
affiliate of LKA. As to each such contract or transaction, if any, Exhibit
4.13(b) identifies each party thereto, the nature of such contract or
transaction and all other material terms thereof. Copies of all contracts
identified on Exhibit 4.13(b) have been delivered to DiaEm.
4.13(c) Disclosure. Neither this Agreement nor any exhibit hereto
nor any written statement or list furnished or to be furnished to DiaEm
pursuant hereto or in connection with the transactions contemplated hereby or
furnished to the LKA shareholders, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained therein not misleading.
There is no material fact which adversely materially affects the business,
property or assets of LKA or, to the best of the knowledge of LKA, in the
future is likely to adversely affect the business, property or assets of LKA
which has not been described or set forth or referred to in this Agreement or
in the exhibits referred to herein.
4.14 No Finder. LKA has not paid or become obligated to pay any fee
or commission to any broker, finder, or intermediary for or on account of the
transactions provided for in this Agreement.
4.15 Ability to Carry Out Obligations Hereunder. The execution and
delivery of this Agreement of LKA and the performance by LKA of its
obligations hereunder will not conflict with or result in any breach or
violation of any of the provisions of or constitute a default under any
indenture, mortgage, charter instrument, bylaw or other agreement or
instrument to which LKA is a party or by which it may be bound, nor will any
consents or authorizations of any party other than those hereto be required.
4.16 Updating of Exhibits and Statements. On the Closing Date, LKA
will deliver to DiaEm supplemental Exhibit 4.16 certified by LKA's president
or vice president, setting forth any material changes which have occurred in
any statement made, or exhibit or document delivered, under this Agreement.
4.17 Approval by Board of Directors. The execution, delivery, and
performance of this Agreement by LKA has been duly authorized and approved by
its Board of Directors, subject to approval of the Plan and the transactions
contemplated herein by its stockholders as contemplated by Article 6 hereof,
and neither the execution nor the delivery of this Agreement nor the
consummation of the transactions contemplated hereby nor compliance with nor
fulfillment of the terms and provisions of this Agreement, will:
(a) conflict with or result in a breach of the terms, conditions,
or provisions of or constitute a default under any agreement, mortgage,
judgment, order, award, decree, or other restriction to which it is a party or
by which it is bound or any statute or regulatory provisions affecting it, or
(b) with respect to LKA, required the approval, consent or
authorization of any federal, state, or local court, governmental authority or
regulatory body.
Subject to approval of the Plan and the transactions contemplated herein by
the LKA stockholders, LKA has, and will have on the Closing Date, full power
and authority to do and perform all acts and things required to be done by LKA
under this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF DIAEM
As an inducement to LKA to enter into this Agreement and to consummate
the transactions contemplated herein, DiaEm represents and warrants to LKA and
agrees as follows:
5.1 Organization and Qualification to do Business. DiaEm is a
corporation duly organized and validly existing and in good standing under the
laws of British Columbia, and on the Effective Date will have continued its
corporate existence to the State of Wyoming, and is duly licensed or qualified
and authorized to transact business as a foreign corporation in the
jurisdictions listed on Exhibit 5.1, and certified by DiaEm's president or
vice president, which are the only jurisdictions in which the properties owned
or the activities conducted by DiaEm make such licensing or qualifications
necessary.
5.2 Subsidiaries; Interests in Other Companies. As used herein,
"DiaEm" means DiaEm and all of its subsidiaries and affiliates as set forth in
Exhibit 5.2 hereof. DiaEm does not own, directly or indirectly, any stock or
equity interest of greater than five percent (5%) in any corporation,
partnership, joint venture, business trust or other business entity, except as
listed on Exhibit 5.2 and certified by DiaEm's president or vice president.
Each such business entity is duly licensed or qualified and authorized to
transact business as a foreign corporation in the jurisdiction listed on
Exhibit 5.2 hereto, which are the only jurisdictions in which the properties
owned or the activities conducted make such licensing or qualifications
necessary.
5.3 Capitalization of DiaEm. The only authorized capital stock of
DiaEm consists of 10,000,000 common shares, no par value, of which there were
5,811,586 common shares validly issued and outstanding at June 15, 1988 (the
"DiaEm Shares"). Other than as set forth on Exhibit 5.3, there are no other
shares, options to acquire shares, warrants, or other contracts relating to
shares of DiaEm, and none will be granted, between the date hereof and the
Closing Date. The DiaEm Shares are validly issued, fully paid and non-
assessable with no liability attaching to the ownership thereof and no person
has any pre-emptive, stock purchase, or other rights to acquire any shares of
common stock of DiaEm.
5.4 Financial Statements. The consolidated balance sheets and
statements of income of DiaEm as of June 30, 1987 and December 31, 1987,
together with appropriate notes to such financial statements, all accompanied
by reports thereon containing opinions without qualification by DiaEm's
certified public accountants have been delivered to LKA. All such balance
sheets and statements of income will be herein referred to as Exhibit 5.4 and
are correct and complete in all material respects and present fairly the
financial position of DiaEm as of the dates of such financial statements, all
in accordance with generally accepted accounting principles applied on a
consistent basis. As of December 31, 1987, there was no liability of any
material nature or any material nature or any material amount that should
properly be reflected or reserved against in a balance sheet prepared in
accordance with generally accepted accounting principles which is not fully
reflected or reserved against in said balance sheet as of December 31, 1987.
Since December 31, 1987;
(a) There has been no material adverse change in the financial
condition, assets, liabilities, or business of DiaEm, whether or not in the
ordinary course of business, considered as a whole from that shown on said
balance sheet;
(b) Any damage or destruction in the nature of a casualty loss,
whether covered by insurance or not, materially and adversely affecting any
property or business of DiaEm which is material to its financial condition,
operations, or business considered as a whole; and
(c) Any other event, condition, or state of facts of any character
which materially and adversely affects, or threatens to materially and
adversely affect, the present or future results of operations or business,
financial condition or property of DiaEm considered as a whole, in any case
other than as disclosed in this Agreement.
5.5 Absence of Undisclosed Liabilities. Except as reflected in the
balance sheet and notes thereto in Exhibit 5.4 or in Exhibit 5.8, DiaEm, as of
the date hereof, has no material liabilities or obligations of any nature,
whether absolute, accrued, contingent or otherwise, and whether due or to
become due. No material claim of any nature has been asserted or threatened
against DiaEm.
5.6 Properties. DiaEm has good and marketable title to all material
properties, assets, leasehold assets, (real and personal) owned and used in
its business, including those reflected on Exhibit 5.4 subject to no mortgage,
pledge, lien, conditional sales agreement, encumbrance or charge, and the
property and the assets owned or leased by DiaEm constitute all of the assets
which are being sued in its business, and the fixtures, plant, and operating
assets of DiaEm are in generally good and serviceable condition (other than
any which are temporarily out of service in the ordinary course of business)
and suitable for the uses for which intended and such property and assets and
their uses conform in all material respects to all applicable law, except for:
(a) liens reflected on Exhibit 5.6(a), certified by DiaEm's
president or vice president and identified as relating to this Agreement, or
on Exhibit 5.4 (with respect to which no default exists); and
(b) liens for current taxes and assessments not in default; and
(c) obligations reflected on Exhibit 5.6(c), certified by DiaEm's
president or vice president.
5.7 Absence of Certain Changes. Since December 31, 1987, and except
as contemplated by this Agreement, there has not been:
(a) Any damage, destruction, or loss having a materially adverse
effect on the properties or assets of DiaEm;
(b) Any declaration, setting aside, or payment of any dividend or
other distribution in respect of DiaEm's stock, or any direct or indirect
redemption, purchase, or other acquisition of any stock or any granting of any
options to purchase or any rights to subscribe to or purchase any shares of
stock or any sale or other disposition of any shares of stock or any issuance
of shares; or
(c) Any discharge of any obligation or liability of DiaEm
(absolute or contingent) other than: (i) Current obligations or liabilities
shown on the balance sheets in Exhibit 5.4; and (ii) current obligations or
liabilities incurred since December 31, 1987, in the ordinary course of
business.
5.8 Material Leases and Contracts. DiaEm has delivered to LKA a
schedule, certified by DiaEm's president or vice president and identified as
Exhibit 5.8, describing the leases and contracts of the nature described
below. With the exception of the matters set forth in said Exhibit, DiaEm is
not a party to any written or oral:
(a) Contract with any labor union;
(b) Share purchase or stock option plan;
(c) Lease, whether as lessor or lessee, with respect to any
property, real or personal, at a rental of more than $12,000 per year;
(d) Contract with any party involving a commitment in excess of
$25,000;
(e) Agreements with any employee which cannot be terminated in
thirty days or less without cost; or
(f) Contract not made in the ordinary course of business.
DiaEm has complied with the provision so fall material leases, contracts
and commitments to which it is a party and is not in default with respect to
any thereof. DiaEm has and on the Effective Date will have performed in all
material respects the obligations required to be performed by it pursuant to
such contracts and leases. Copies of all contracts and agreements identified
in Exhibit 5.8 will be made available to LKA. No purchase commitment by DiaEm
is in excess of market price at the date thereof. Except as set forth in
Exhibit 5.8 or any other schedule referred to herein, none of such contracts
and agreements will expire or be terminated or be subject to any modification
of terms or conditions by reason of the consummation of the transactions
called for by this Agreement or the proposed merger of DiaEm into Subsidiary.
Without the written consent of LKA, and except as contemplated by this
Agreement, DiaEm will not:
(a) Make any changes or modifications in any of the foregoing,
make any further additions to its properties, or make any further purchases of
machinery or equipment; or
(b) Incur any further obligations or commitments or purchase any
supplies or materials except in the ordinary course of business.
In the judgment of DiaEm, none of such contracts or agreements contains
terms unduly burdensome to DiaEm or is unduly harmful to its business. DiaEm
is in compliance with, and on the Effective Date will be in material
compliance with, all applicable laws, regulations, rules, and orders
promulgated (or know by DiaEm as of the date hereof to be proposed) by any
federal, state, or local governmental authority relating to the operation of
its properties and business. All business and other licenses, permits, and
authorizations required by law for the operation of DiaEm have been obtained.
5.9 Litigation. Except as set forth on Exhibit 5.9, DiaEm is not a
party defendant to or the subject of any action, suit, proceeding, claim,
counterclaim, investigation or enforcement proceeding which is pending or, to
the best of its knowledge, threatened.
No stipulation has heretofore been entered into with any governmental
agency, and no consent or other decree or order has heretofore been entered or
issued by any court or governmental agency which does or may materially and
adversely affect DiaEm or the property or business of DiaEm and there are no
legal or administrative proceedings of any kind now pending or threatened in
any manner involving DiaEm, except as aforesaid, nor is there any basis known
to DiaEm for any such action. There is no action, suit, proceeding or
investigation pending, threatened or, to the knowledge of DiaEm, contemplated
which questions the legality, validity or propriety of the transactions
contemplated by this Agreement.
5.10 Tax Returns and Payments. All tax returns and reports of DiaEm
required by law (including, without limiting the generality of the foregoing,
all income tax, gross receipts, business and occupation, unemployment
compensation, social security, sales, use, excise, privilege and franchise tax
laws of Canada or any province thereof or of the United States or any state,
territory or municipal or political subdivision thereof of any other nation)
to be filed have been duly and timely filed, and all taxes, assessments,
contributions, fees and other governmental charges, duties or impositions
(other than those presently payable without penalty or interest and those
currently being contested in good faith) upon DiaEm or upon or measured by the
properties or assets or income of DiaEm have been paid. No income and gross
receipts tax returns of DiaEm have been audited by the applicable taxing
authority for which additional amounts remain outstanding. DiaEm has not
received any knowledge of any basis for any material additional assessment of
any such tax.
5.11 Directors and Officers; Compensation; Banks. DiaEm has
delivered to LKA a list, attached as Exhibit 5.11, and certified by DiaEm's
president or vice president, setting forth:
(a) The names, addresses, and titles of all directors and officers
and of all persons whose compensation from DiaEm as of the date hereof will
equal or exceed at an annual rate the sum of $50,000;
(b) The name and address of each bank in which DiaEm has an
account or safe deposit box, the identification or account number thereof, and
the names of all persons who are authorized to draw thereon or who have access
thereto; and
(c) The names of all persons holding tax or other power of
attorney from DiaEm and a summary of the terms thereof.
5.12 Shareholders. DiaEm will delivery to LKA, at least ten days
prior to closing, Exhibit 5.12, certified by DiaEm's president or vice
president, setting forth the names and residences of all DiaEm shareholders,
including any beneficial owners, if known, and the number of shares of DiaEm
held.
5.13(a) Questionable Payments. To the best of the knowledge of the
officers of DiaEm since June 30, 1996:
(i) Neither Diaem nor any of its current or former directors, officers,
or employees nor any third party acting on behalf of DiaEm have, directy or
indirectly, made any bribes, kickbacks or other payments of a similar or
comparable nature, whether lawful or not, to any person or entity, public or
private, regardless of form, whether in money, property, or services, to
obtain favorable treatment in securing business or to obtain special
concessions or to pay for favorable treatment for business secured or for
special concessions already obtained;
(ii) No funds or property of any kind of DiaEm was donated, loaned, or
made available, directly or indirectly, for the benefit of, or for the purpose
of opposing, any government or subdivision thereof, political party, candidate
or committee, either domestic or foreign;
(iii) No officer, employee, contractor or agent of DiaEm was
compensated, directly or indirectly, by DiaEm for time spent or expenses
incurred in performing services for the benefit of, or for the purpose of
opposing, any government or subdivision thereof, political party, candidate or
committee, either domestic or foreign.
(iv) DiaEm has not made any loans, donations, or other disbursements,
directly or indirectly, to officers or employees of DiaEm or others for
contributions made or to be made, directly or indirectly, for the benefit of,
or for the purpose of opposing, any government or subdivision thereof,
political party, candidate or committee, either domestic or foreign; and
(v) DiaEm has not, or any other person or entity acting on behalf of
DiaEm, maintained or maintains a bank account, or other account of any kind
whether domestic or foreign, which account was not reflected in the corporate
books and records or which account was not lsited, titled or identified in the
name of DiaEm.
5.13(b) Certain Transactions. Except as shown on Exhibit 5.13(b),
since June 30, 1986, no contracts have been entered into, and no transactions
ahve occurred, between DiaEm and any director, officer or affiliate of DiaEm.
As to each such contract or transaction, if any, Exhibit 5.13(b) identifies
each party thereto, the nature of such contract or transaction, and all other
material terms thereof. Copies of all contracts identified on Exhibit 5.13(b)
have been delivered to LKA.
5.13(c) Disclosure. Neither this Agreement nor any exhibit hereto,
nor any written statement or list furnisehd or to be furnished to LKA pursuant
hereto or in connection with the shareholders' meetings, contains or will
contain any untrue statement of a material fact or omits or will omit to state
a material fact necessary in order to make the statements contained therein
not misleading. There is no material fact which necessary in order to make
the statements contained therein not misleading. There is no material fact
which adversely materially affects the business, property or assets of DiaEm
which has not been described or set forth or referred to in this Agreement or
in the schedules referred to herein.
5.14 No Finder. DiaEm has not paid or become obligated to pay any
fee or commission to any broker, finder or intermediary for or on account of
the transactions provided for in this Agreement.
5.15 Ability to Carry Out Obligations Hereunder. The execution and
delivery of this Agreement by DiaEm and the performance by DiaEm of its
obligations hereunder will not conflict with or result in a breach or
violation of any of the provisions of or constitute a default under any
indenture, mortgage, charter instrument, bylaw, or other agreement or
instrument to which DiaEm is a party or by which it may be bound, nor will any
consents or authorizations of any party other than the Superintendent of
Brokers, the Vancouver Stock Exchange, and those hereto be required.
5.16 Updating of Exhibits and Statements. On the closing date,
DiaEm will deliver to LKA a supplemental Exhibit 5.16 certified by DiaEm's
president or vice president, setting forth any material changes which have
occurred in any statement made, or exhibit or document delivered under this
Agreement.
5.17 Approval by Board of Directors. The execution, delivery, and
performance of this Agreement by DiaEm has been duly authorized and approved
by the Board of Directors, subject to receipt and approval of the exhibits
mentioned herein and further subject to approval of the Plan and the
transactions contemplated herein by its stockholders as contemplated by
Article 6 hereof, and neither the execution nor the delivery of this Agreement
nor the consummation of the transactions contemplated hereby nor compliance
with nor fulfillment of the terms and provisions of this Agreement will:
(a) Conflict with or result in a breach of the terms, conditions
or provisions of or constitute a default under the Articles of Incorporation
or Bylaws of DiaEm, any instrument, agreement, mortgage, judgment, order,
award, decree, or other restriction to which it is a party or by which it is
bound or any statute or regulatory provisions affecting it; or
(b) With respect to DiaEm, require the approval, consent, or
authorization of any federal, state, or local court, governmental authority or
regulatory body other than the Superintendent of Brokers and the Vancouver
Stock Exchange.
Subject to approval of the Plan and the transactions contemplated hereby
(including the continuance to the State of Wyoming) by the DiaEm stockholders,
DiaEm has, and will have on the Closing Date, full power and authority to do
and perform all acts and things required to be done by DiaEm under this
Agreement.
ARTICLE VI
ACTION PRIOR TO EFFECTIVE DATE
The parties covenant to take the following actions between the date
hereof and the Effective Date:
6.1 (a) Approval by stockholders. LKA and DiaEm will, as soon as
reasonably practical after the Registration Statement (as defined
below) shall become effective, each duly call and will promptly hold a
meeting of its stockholders for the purpose of approving the Plan and
the transactions called for herein on the terms and conditions set
forth in this Agreement, and in the case of DiaEm approving the
continuance of its corporate existence to the State of Wyoming or will
obtain the consent of shareholders and in connection therewith will
comply fully with the applicable provisions of the Utah Business
Corporation Act, the British Columbia Company Act, the Delaware
General Corporation Law and the Wyoming Business Corporation Act
relating to the call and holding of meetings of stockholders for such
purpose.
6.1 (b) Registration Statement. As soon as practicable hereafter
Subsidiary will file with the United States Securities and Exchange
Commission (the "Commission") a registration statement on Form S-4
(the "Registration Statement") for the purpose of registering the
shares of Subsidiary to be exchanged for the shares of LKA and DiaEm
pursuant to paragraph 2 of this Agreement. Subsidiary will use all
reasonable efforts to cause the Registration Statement to become
effective as soon as possible.
6.1 (c) Listing on NASDAQ and Vancouver Stock Exchange.
Subsidiary shall use all reasonable efforts to obtain, prior to
the effective time of the merger, approval for the listing on
the National Association of Securities Dealers Automatic
Quotation System, and the Vancouver Stock Exchange upon
official notice of issuance, of (a) the shares of Subsidiary
common stock to be exchanged for the issued and outstanding
shares of LKA capital stock pursuant to paragraph 2 of this
Agreement, and (b) the shares of Subsidiary common stock to be
exchanged for the DiaEm common stock pursuant to paragraph 2 of
this Agreement.
6.1 (d) Access and Information. LKA and DiaEm shall give to the
counsel, accountants, auditors, engineers, and other authorized
representatives of the other, full access during normal business hours
throughout the period prior to the Closing Date to all of each
company's properties, books, contracts, commitments and records for
the purpose of examining the same and shall furnish each other with
all information concerning each company's affairs as may be reasonably
requested. LKA and DiaEm each covenant not to divulge any
confidential information imparted to it by the other hereunder, except
to the extent necessary to take actions reasonably contemplated under
this Agreement.
6.2 Completion of Examinations. LKA and DiaEm shall each complete its
examination under paragraph 6.1(d) on or before the Closing Date. If
such examination discloses that any representations made in Article IV
or V is inaccurate in any material respect or that any deficiencies or
errors in such representations materially and detrimentally impair the
value or utility of the properties or the operation or good will or
the business of either Constituent Corporation, the other Constituent
Corporation shall, not later than the Closing Date, give such other
Constituent Corporation written notice thereof. In such case, unless
all such defects be cured to the reasonable satisfaction of the other
Constituent Corporation prior to the Closing Date, then it may, at its
option, by written notice to the other, either waive the uncured
defects or terminate and rescind this Agreement without any liability
upon any party in favor of another.
6.3 Nature of Statements and Survival of Representations and
Warranties. All statements of fact in this Agreement or contained in
any authorized written statement, certificate or other document
delivered by or on behalf of either LKA or DiaEm pursuant to this
Agreement, shall be deemed representations and warranties of LKA to
DiaEm or Diaem to LKA, as the case may be. Any such representations
and warranties shall survive the Closing Date for a two-year period
notwithstanding any investigation and neither LKA nor DiaEm intends to
nor shall it waive by the closing of this Agreement any rights which
either may have with respect to the breach of said representations or
warranties notwithstanding any knowledge of such breach prior to the
closing.
6.4 Further information. LKA and DiaEm shall furnish to each other
promptly such material and information as may reasonably be required
and requested for inclusion in any filing with any governmental agency
or authority.
6.5 Closing Documents. LKA and DiaEm shall obtain for delivery to
each other on the Closing Date such papers and documents as counsel
may reasonably request in connection with the closing.
6.6 Make No Material Changes. LKA and DiaEm shall, except as
contemplated by this Agreement, make no material change in their
business or operations; declare or pay no dividend (other than
declared regular cash dividends) or make any other distribution to
shareholders; issue n shares (including treasury shares), warrants,
options, notes or other securities or commit itself to do so nor
effect any stock split or share dividend; mortgage, pledge, or subject
to lien any of its properties or assets; alter or amend its Articles
of Incorporation or Bylaws; make no material change in the
compensation of officers or key employees and not enter into any
contract or commitment, waive any rights, or enter into any other
transactions affecting their business other than in accordance with
the terms of this Agreement, or in the ordinary course of business and
in conformity with past practices without the prior approval of the
other.
6.7 Obtain Consents to Assignments. With respect to all contracts,
leases and other agreements to be transferred and assigned to the
Surviving Corporation which require consent of the other party for
such assignment, LKA and DiaEm each agree to use their best efforts to
obtain such consents and modifications, but failure to obtain such
consents and modifications as to matters which are not material to the
transactions contemplated in this Agreement shall not abrogate this
Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF DIAEM
The obligations of DiaEm under this Agreement shall, at the option of
DiaEm, be subject to the fulfillment, on or prior to the Effective Date of the
following conditions:
7.1 No Misrepresentations or Breach of Warranties or Covenants.
There shall have been no breach by LKA in the performance of any
of this covenants herein, each of the representations and
warranties of LKA contained or referred to in this Agreement
shall be true and correct in all material respects on the
Effective Date as though made on the Effective Date, and there
shall have been delivered to DiaEm, a certificate to that effect,
dated the Effective Date, and signed on behalf of LKA by its
president or vice president.
7.2 No Changes or Destruction of Property. There shall have been,
between the date hereof and the Effective Date, no material
adverse change in the condition, financial or otherwise, of LKA,
and the properties and assets of LKA taken as a whole shall not
have been materially damaged by fire, flood, casualty, act of God
or other cause (unless adequately covered by insurance), and
there shall have been delivered to DiaEm a certificate or
certificates to that effect, dated the Effective Date, and signed
on behalf of LKA by its president or vice president.
7.3 Letter of Opinion of LKA's Counsel. DiaEm shall have received
from Messrs. Xxxxxxx Xxxxxx Xxxxxxxxx & Xxxxxx, counsel for LKA,
an opinion dated the Closing Date, in form and substance
satisfactory to DiaEm and its counsel, to the effect that:
(a) LKA is a duly organized and validly existing corporation
in good standing under the laws of the State of Utah; and
LKA has the corporate power and authority to consummate
the merger as provided herein.
(b) The authorized capital of LKA consists of 50,000,000
shares of common stock, $0.001 par value, of which
13,532,051 shares are issued and outstanding; and all of
the issued and outstanding shares of common stock of LKA
at the Effective Date are validly issued, fully paid, and
nonassessable.
(c) This Agreement and the transactions contemplated by such
Agreement have been duly approved by the Board of
Directors and the shareholders of LKA and such agreement
has been duly and validly executed and delivered by LKA;
all corporate and other proceedings required under the
Utah Business Corporation Act, the Delaware General
Corporation Law or otherwise to be taken by or on behalf
of LKA or subsidiary to authorize the execution and
delivery of such Agreement and the consummation of the
merger contemplated in such Agreement have been duly
taken; and such Agreement is the valid and binding
agreement of LKA.
(d) Neither the execution nor delivery of this Agreement, nor
the fulfillment of the terms and provisions thereof will
conflict with or result in the breach of any terms,
conditions, or provisions of, or constitute a default
under, the Articles of Incorporation or the Bylaws of LKA,
or any agreement or instrument known to such counsel to
which LKA is a party or by which it is bound.
(e) Such counsel does not know and has not reason to believe
that any action, suit, proceeding or investigation si
pending or threatened against LKA which might result in a
material adverse change in the properties, business or
assets or in the condition (financial or otherwise) of LKA
or that any action, suit, or proceeding by any
governmental agency is pending which questions the
legality, validity or propriety of this Agreement or of
any action taken by the parties hereto or the shareholders
of LKA pursuant to or in connection with such Agreement.
(f) Upon the completion of the filings intended to effect the
merger of LKA into Subsidiary, the outstanding share of
LKA will be converted into common stock of Subsidiary upon
the basis set forth in this Agreement.
(g) Nothing has come to the attention of such counsel to
indicate that any of the representations and warranties of
LKA contained in this Agreement is untrue or misleading in
any material respect.
(h) While such counsel need make no representation that they
have independently verified the accuracy or completeness
of the information contained in the Registration Statement
(except for the financial statements included therein, as
to which such counsel need express no opinion) they have
no reason to believe that at the time of the mailing of
the Registration Statement, at the time of the meeting of
the stockholders of LKA or at the Closing Date, the
Registration Statement contained (as to LKA and Subsidiary
and the transactions contemplated by this Agreement) any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary
in order to make the statements therein not misleading, in
the light of the circumstances in which they were made.
In giving such opinion, Xxxxxxx Axland Xxxxxxxxx & Xxxxxx may rely, as to
matters of fact, upon certificates of officers of DiaEm, Subsidiary and LKA as
to matters of law upon opinions of other counsel satisfactory to them,
provided that such counsel shall state that they believe that they are
justified in relying upon such certificates and opinions and deliver copies
thereof to DiaEm and LKA prior to the Closing Date.
7.4 Shareholder and Director Approval. The directors and
shareholders of LKA and the directors and shareholders of DiaEm
shall have taken all corporate action necessary to effect the
merger, and in the case of DiaEm to effect the continuance to the
State of Wyoming and LKA shall have furnished DiaEm with
certified copies of resolutions, duly adopted by its directors
and shareholders, in form and content satisfactory to counsel for
DiaEm, in connection with the foregoing.
7.5 No Lawsuit Against Merger. No lawsuit challenging the legality
of the transactions contemplated by this Agreement shall have
been instituted by any governmental agency or any other person
which in the opinion of counsel of DiaEm is materially adverse.
7.6 All Corporate Action Completed by September 30, 1988. All
corporation action by LKA as set forth in this Agreement,
including the approval of this Agreement and the filing of the
Articles of Merger with the proper agencies of the States of
Utah, Wyoming and Delaware, must be completed by September 30,
1988 unless extended by mutual agreement.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF LKA
The obligations of LKA under this Agreement shall, at the option of LKA,
be subject to the fulfillment on or prior to the Effective Date of the
following conditions:
8.1 No Misrepresentations or Breach of Warranties and Covenants.
There shall have been no breach by DiaEm in the performance of
any of its covenants herein, each of the representations and
warranties of DiaEm contained or referred to in this Agreement
shall be true and correct in all material respects on the
Effective Date as though made on the Effective Date, and there
shall have been delivered to LKA a certificate or certificates to
that effect, dated the Effective Date, and signed on behalf of
DiaEm by its president or vice president.
8.2 No Changes or Destruction of Property. There shall have been,
between the date hereof and the Effective Date, no material
adverse change in the condition, financial or otherwise, of DiaEm
and the properties and assets of DiaEm taken as a whole shall not
have been materially damaged by fire, flood, casualty, act of
God, or other cause (unless adequately covered by insurance) and
there shall have been delivered to LKA a certificate or
certificates to that effect, dated the Effective Date, and signed
on behalf of DiaEm by its president or vice president.
8.3 Letter of Opinion of DiaEm's Counsel. LKA shall have received
from counsel for Diaem, opinions dated the Closing Date, in form
and substance satisfactory to LKA and its counsel, to the effect
that:
(a) DiaEm was duly organized under the laws of British
Columbia; the corporate existence of DiaEm has been
continued to the State of Wyoming, and DiaEm is a validly
existing corporation in good standing under the laws of
the State of Wyoming; and DiaEm has the corporate power
and authority to consummate the merger as provided herein.
(b) The authorized capital of DiaEm consists of 10,000,000
shares of common stock, no par value, of which 5,811,586
shares are issued and outstanding; no shares are held as
treasury shares; and all of the issued and outstanding
shares of common stock of DiaEm at the Effective Date are
validly issued, fully paid, and non-assessable.
(c) All corporate and other proceedings required under the
British Columbia Company Act or otherwise to be taken by
or on behalf of DiaEm to authorize DiaEm to be continued
as if it had been incorporated under the laws of the state
of Wyoming have been duly taken.
(d) Such counsel does not know and has no reason to believe
that any action, suit, proceeding, or investigation is
pending or threatened against DiaEm which might result in
a material adverse change in the properties, business or
assets or in the condition (financial or otherwise) of
DiaEm or that any action, suit, or proceeding by any
governmental agency is pending which questions the
legality, validity, or propriety of the continuance or
this Agreement or of any action taken by the parties
hereto or the shareholders of DiaEm pursuant to or in
connection with such Agreement.
In giving such opinions, such counsel may rely, as to matters of fact,
upon certificates of officers of LKA, Subsidiary and DiaEm and as to matters
of law upon opinions of other counsel satisfactory to them, provided that such
counsel shall state that they believe that they are justified in relying upon
such certificates and opinions and deliver copies thereof to LKA, Subsidiary
and DiaEm prior to the Closing Date.
8.4 Shareholders and Director Approval. The directors and
shareholders of DiaEm and the directors and shareholders of LKA
shall have taken all corporate action necessary to effect the
merger, and in the case of DiaEm to effect the continuance to the
State of Wyoming and DiaEm shall have furnished LKA with
certified copies of resolutions duly adopted by its directors and
shareholders, in form and content satisfactory to counsel for
LKA, in connection with the foregoing.
8.5 No Lawsuit Against Merger. No lawsuit challenging the legality
of the transactions contemplated herein (including the
continuance) shall have been instituted by any governmental
agency or any other person which in the opinion of counsel of LKA
is materially adverse.
8.6 All Corporate Action Completed by September 30, 1988. All
corporate action by DiaEm as set forth in this Agreement,
including the approval of this Agreement and the filing of the
Articles of Merger with the proper agencies of the States of
Utah, Wyoming and Delaware must be completed by September 30,
1988, unless extended by mutual agreement.
ARTICLE IX
TERMINATION
Anything contained in this Agreement to the contrary notwithstanding and
notwithstanding approval of this Agreement by the shareholders of LKA and
DiaEm, this Agreement may be terminated and the merger abandoned at any time
prior to the Effective Date:
9.1 By the mutual consent of the Boards of Directors of LKA and
DiaEm.
9.2 By written notice from LKA to DiaEm authorized by the directors
of LKA if any of the conditions set forth in Article VIII of this
Agreement have not been met or have not been waived by LKA.
9.3 By written notice from DiaEm to LKA authorized by the directors
of DiaEm if any of the conditions set forth in Article VII of
this Agreement have not been met or have not been waived by
DiaEm.
9.4 By written notice of either LKA or DiaEm to the other, that any
combination of shareholders of LKA or DiaEm are dissenting to the
proposed merger or continuance so as to result, in the opinion of
either LKA or DiaEm, in a requirement to pay more than $20,000 in
cash to such dissenting shareholders.
ARTICLE X
MISCELLANEOUS
10.1 Expense if Agreement Terminated. If the transactions provided
for in this Agreement shall not be consummated for any reason,
each party hereto shall pay its own fees and expenses relating
to this Agreement and the transactions contemplated herein.
10.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
10.3 Partial Invalidity. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid,
illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not effect any other
provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal or unenforceable provision
or provisions had never been contained herein.
10.4 Notices. Any notices or other communication required or
permitted to be given hereunder shall be sent by certified or
registered mail, return receipt requested, first class postage
prepaid or dispatched by telegram, addressed as follows:
If to DiaEm Resources, Ltd.:
c/o Xxxx Xxxxxxxxx
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X0X0
If to LKA Holdings, Inc.:
c/o Xxx X. Xxxxxxx
00000 Xxxxxxx Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx Xxxxxx Xxxxxxxxx & Xxxxxx
000 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
10.5 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective successors and assigns.
10.6 Amendment. This Agreement may be amended from time to time
(either before or after the shareholders of the Constituent
Corporations have adopted this Agreement), pursuant to due
authorization of the Board of Directors of the Constituent
Corporations in writing duly executed by both Constituent
Corporations.
10.7 Waiver. Either of the Constituent Corporations may, by a duly
executed instrument in writing, waive the performance by the
other party of any covenant or condition, or any breach of any
representation, warranty, covenant, or condition of such other
party contained in this Agreement.
10.8 No Other Agreements. This Agreement sets forth all of the
terms and conditions by and between the parties hereto, and
supersedes and replaces any prior agreements.
10.9 Execution in Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one
and the same agreement, and shall become a binding agreement
when one or more counterparts have been signed by each of the
parties and delivered to each of the other parties.
10.10 Titles and Headings. Titles and headings to sections herein are
inserted for convenience of reference only and are not intended
to be part of or to affect the meaning or interpretation of this
Agreement.
10.11 Exhibits. Exhibits to this Agreement shall be construed with
and as an integral part of this Agreement to the same extent as
if the same had been set forth verbatim herein.
10.12 Attorney's Fees. In the event any action in law or equity or
any arbitration or other proceeding is brought for the
enforcement of this Agreement or in connection with any of the
provisions of this Agreement, the successful or prevailing party
or parties shall be entitled to reasonable attorney's fees and
other costs reasonable uncured in such action or proceeding.
IN WITNESS WHEREOF, the parties have caused this Agreement and Plan of
Merger and Reorganization to be executed by their duly authorized officers on
the day and year first above written.
LKA HOLDINGS, INC.
By: /s/ XXX X. XXXXXXX
----------------------------
Xxx X. Xxxxxxx, as President
DIAEM RESOURCES, LTD.
By: /s/ XXX X. XXXXXXX
----------------------------
Xxx X. Xxxxxxx, as President
LKA INTERNATIONAL, INC.
By: /s/ XXX X. XXXXXXX
-----------------------------
Xxx X. Xxxxxxx, as President
