AGREEMENT AND PLAN OF REORGANIZATION
By and Between
XXXXXXXXXXXXXXX.XXX CORPORATION
A Delaware Corporation
and
SONTECH, INC.
A Nevada Corporation
October 2, 2000
Table of Contents
RECITALS.....................................................................6
ARTICLE I....................................................................6
ACQUISITION OF WAC...........................................................6
1.01.Stock of SONTECH and WAC................................................6
(a)WAC Common Stock..........................................................6
(b)Surrender and Exchange of WAC Common Stock................................6
ARTICLE II...................................................................7
STOCKHOLDER APPROVAL, BOARD OF DIRECTORS RECOMMENDATIONS, AND EFFECTIVE TIME.7
2.01.Stockholder Approvals and Board of Directors Recommendations............7
ARTICLE III..................................................................7
REPRESENTATIONS AND WARRANTIES...............................................7
3.01.WAC Representations and Warranties......................................7
(a) Security Holders.........................................................7
(b)Financial Statements......................................................7
(c)Undisclosed Liabilities...................................................7
(d)Absence of Changes........................................................7
(e)Litigation and Claims.....................................................8
(f)Due Organization and Qualification........................................8
(g)Tax Matters...............................................................8
(h)Material Agreements and Employment Contracts..............................8
(i)Title to Property and Related Matters.....................................8
(j)Corporate Records.........................................................9
(k)Licenses, Trademarks and Trade Names......................................9
(l)Corporate Authority.......................................................9
(m)Binding Obligation of WAC.................................................9
(n)Capitalization............................................................9
(o)Full Disclosure...........................................................9
(p)Finders or Brokers........................................................9
(q)Employment Agreements.....................................................9
(r)Share Ownership...........................................................9
(s)Approvals Required........................................................9
3.02.SONTECH Representations and Warranties.................................10
(a)Shares of SONTECH Common Stock...........................................10
(b)Due Authorization and Qualification......................................10
(c)Financial Statements.....................................................10
(d)Undisclosed Liabilities..................................................10
(e)Absence of Changes.......................................................11
(f)Litigation and Claims....................................................11
(g)Due Organization and Qualification.......................................11
(h)Tax Matters..............................................................11
(i)Breach of Agreements.....................................................11
(j)Capitalization...........................................................11
(k)Full Disclosure..........................................................12
(l)Title to Property and Related Matters....................................12
(m)Compliance, Governmental Authorization...................................12
(n)Brokerage Fees...........................................................12
(o)Public Statements........................................................12
(p)Regulatory Filings.......................................................12
(q)Material Agreements and Employment Contracts.............................12
(r)Corporate Records........................................................13
(s)Corporate Authority......................................................13
(t)Binding Obligation of SONTECH............................................13
ARTICLE IV..................................................................13
COVENANTS...................................................................13
4.01.Covenants of WAC.......................................................13
(a)Conduct of Business......................................................13
(b)No Solicitation..........................................................13
(c)WAC Actions..............................................................13
4.02.Covenants of SONTECH...................................................14
(a)Conduct of Business......................................................14
(b)No Solicitation..........................................................14
(c)SONTECH Actions..........................................................14
(d)Agreement to Vote........................................................14
4.03.Covenants of SONTECH and WAC...........................................14
(a)Access to Information....................................................14
(b)Commercially Reasonable Efforts..........................................15
(c)Public Announcements.....................................................15
(d)Notification of Certain Matters..........................................15
(e)Expenses.................................................................15
(f)Failure to Take Action...................................................16
(g)Exhibits, Closing Statements and Schedules...............................16
ARTICLE V...................................................................16
CONDITIONS PRECEDENT TO PARTIES' OBLIGATIONS................................16
5.01.Conditions Precedent to WAC's Obligations..............................16
(a)Accuracy of Representations and Warranties...............................16
(b)Compliance with Covenants................................................16
(c)Form of New Certificates.................................................16
(d)Approval by Counsel......................................................16
(e)Opinion of Counsel.......................................................16
(f)Officer's Certificate....................................................17
(g)Closing Financial Statements.............................................17
5.02.Conditions Precedent to Obligations of SONTECH.........................17
(a)Accuracy of Representations and Warranties...............................17
(b)Compliance with Covenants................................................17
(c)Approval by Counsel......................................................17
(d)Opinion of Counsel.......................................................17
(e)Officers' Certificate....................................................18
(f)Closing Financial Statements.............................................18
5.03.Conditions Precedent to Obligations of WAC and SONTECH.................18
(a)WAC Stockholder Approval.................................................18
(b)Certain Proceedings......................................................18
ARTICLE VI..................................................................18
CLOSING.....................................................................18
6.01.Time and Place.........................................................18
6.02.Documents at Closing...................................................18
(a)Documents by WAC.........................................................18
(b)Documents by SONTECH.....................................................19
ARTICLE VII.................................................................19
TERMINATION AND ABANDONMENT.................................................19
7.01.Termination............................................................19
(a)Mutual Consent...........................................................19
(b)Order of Judicial or Regulatory Authority................................19
7.02.Termination by WAC.....................................................20
7.03.Termination by SONTECH.................................................20
7.04.Procedure for Termination..............................................20
7.05.Effect of Termination and Abandonment..................................20
ARTICLE VIII................................................................20
DISPUTE RESOLUTION..........................................................20
8.1.Agreement Disputes......................................................20
8.2.Arbitration in Accordance with American Arbitration Association Rules...20
0.0.Xxxxx and Binding Awards................................................21
8.4.Costs of Arbitration....................................................21
8.5.Settlement by Mutual Agreement..........................................21
ARTICLE IX..................................................................21
OTHER MATTERS...............................................................21
9.01.The Closing............................................................21
9.02.Survivability and Investigations.......................................21
9.03.Nature of Representations and Warranties...............................21
9.04.Further Assurances.....................................................21
9.05.Waiver of Compliance and Consents......................................21
9.06.Notices................................................................21
9.07.Interpretation.........................................................22
9.08.Counterparts...........................................................22
9.09.Governing Law..........................................................22
9.10.Binding Effect.........................................................22
9.11.Entire Agreement.......................................................22
9.12.Severability...........................................................22
9.13.Default Costs..........................................................22
Schedule 1..................................................................24
Liabilities of WAC Not Disclosed in Financial Statements....................24
Schedule 2..................................................................25
Adverse Changes since the date of the Financial Statements..................25
Schedule 3..................................................................26
Litigation..................................................................26
Schedule 4..................................................................27
Exceptions to Compliance with Laws and Regulations..........................27
Schedule 5..................................................................28
Exceptions with Respect to Tax Matters......................................28
Schedule 6..................................................................29
Material Agreements, Employment Contracts and Employee Benefit Plans........29
Schedule 7..................................................................30
Exceptions to Title to Properties and List of Real Property.................30
Schedule 8..................................................................31
Licenses, Trademarks and Trade Names........................................31
Schedule 9..................................................................32
WAC's Capitalization........................................................32
Schedule 10.................................................................33
Liabilities of SONTECH Not Disclosed in Financial Statements................33
Schedule 11.................................................................34
Adverse Changes Since the Date of the Financial Statements..................34
Schedule 12.................................................................35
Litigation..................................................................35
Schedule 13.................................................................36
Exceptions to Title to Properties...........................................36
Schedule 14.................................................................37
Exceptions to Compliance with Laws and Regulations..........................37
Schedule 15.................................................................38
Commitments to Issue WAC's Acquisition Securities...........................38
Schedule 16.................................................................39
Material Agreements, Employment Contracts and Employee Benefit Plans........39
Schedule 17.................................................................40
Capitalization of SONTECH...................................................40
EXHIBIT A...................................................................41
WAC Common Stock Owned by Stockholders......................................41
SONTECH Common Stock to be Issued...........................................41
EXHIBIT B...................................................................42
Form of Certificate of SONTECH Common Stock.................................42
EXHIBIT C...................................................................43
Members of the Board of Directors of SONTECH at the Effective Time..........43
EXHIBIT D...................................................................44
Senior Officers of WAC Acquisition at the Effective Time....................44
EXHIBIT E...................................................................45
Opinion of SONTECH's Counsel................................................45
EXHIBIT F...................................................................46
Opinion of WAC's Counsel....................................................46
EXHIBIT G-1.................................................................47
SONTECH Officers' Certificate Concerning Accuracy...........................47
EXHIBIT G-2.................................................................48
WAC Officers' Certificate Concerning Accuracy...............................48
EXHIBIT H...................................................................49
List of Definitions and Meaning of Terms....................................49
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("Agreement"), is made and executed
this second day of October, 2000, by and between
(1)XXXXXXXXXXXXXXX.XXX CORPORATION, a Delaware corporation ("WAC"), and
(2)Sontech, Inc., a Nevada corporation ("SONTECH").
The foregoing entities may be referenced by the term "party" or "parties" in
this Agreement where and when necessary.
RECITALS
WHEREAS, the respective Boards of Directors of SONTECH and WAC approved, on
October 2, 2000, the acquisition of WAC by SONTECH, pursuant and subject to
the terms and conditions of this Agreement (the "Reorganization");
WHEREAS, under the terms of the Reorganization, each outstanding share of WAC
common stock, of par value equal to $0.001 per share, at the Effective Time
will be exchanged for an equivalent amount of SONTECH common stock; and
WHEREAS, SONTECH and WAC contemplate that the Reorganization will be
classified as a tax-free reorganization pursuant to Section 368(a)(1)(B) of
the Internal Revenue Code of 1986, as amended ("Code"); and
WHEREAS, SONTECH and WAC desire to make certain representations, warranties,
and agreements in connection with the Reorganization, and to also set forth
the Reorganization's various conditions precedent; and
WHEREAS, the respective Boards of Directors of SONTECH and WAC have adopted
resolutions approving this Agreement; and
WHEREAS, SONTECH is presently registered under Regulation 10SB of the
Securities and Exchange Act of 1934 ("SEA" or the "Act"), as amended, and
therefore files forms 10K and/or other periodic reports with the United States
Securities and Exchange Commission ("SEC");
WHEREAS, this Agreement and Plan of Reorganization may accordingly be subject
to SEC review and approval; and
WHEREAS, the terms used in this Agreement shall have the meanings respectively
attributed to them in Exhibit "H" hereto;
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants
contained in this Agreement, and intending to be legally bound, the parties
agree to the following:
ARTICLE I
ACQUISITION OF WAC
1.01.Stock of SONTECH and WAC.
(a)WAC Common Stock. On the Effective Date, SONTECH ("Acquiring Corporation")
shall acquire all of the issued and outstanding shares of WAC. Each share
of WAC common stock, at par value of $.001 per share ("WAC Common Stock")
outstanding at the Effective Date shall be exchanged for one (1) share of
SONTECH common stock at par value of $.001 per share. If, at Closing, SONTECH
does not acquire "control" (as such term is defined in Section 368(c) of the
Code) of WAC, SONTECH may unilaterally terminate this agreement.
(b)Surrender and Exchange of WAC Common Stock. At Closing, each holder of an
outstanding certificate or certificates (the "Old Certificates") theretofore
representing shares of WAC Common Stock, upon surrender of the same to
SONTECH, shall be entitled to consequently receive and exchange a certificate
or certificates (the "New Certificates"), which SONTECH agrees to make
available at the Effective Time, that represents the number of whole SONTECH
Common Stock shares into and for which the shares of WAC Common Stock
theretofore represented by such surrendered Old Certificates have been
converted. No certificates or scrip for fractional shares of SONTECH Common
Stock will be issued, no WAC stock split or dividend shall relate to any
fractional share interest, and no such fractional share interest shall entitle
the owner thereof to vote or to any rights of a SONTECH stockholder.
ARTICLE II
STOCKHOLDER APPROVAL, BOARD OF DIRECTORS'
RECOMMENDATIONS, AND EFFECTIVE TIME
2.01.Stockholder Approvals and Board of Directors Recommendations. A notice
to the Stockholders of WAC and SONTECH shall be provided in accordance with
Delaware General Corporation Law and the Nevada Revised Statutes
(respectively), as amended, as promptly as possible, announcing, among other
matters, the adoption and approval of this Agreement, the Reorganization, and
the other related transactions contemplated under this Agreement's terms.
Subject to their respective fiduciary duty to stockholders, the parties'
boards of directors and shareholders shall adopt and approve this Agreement,
the Reorganization, and the other transactions contemplated herein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01.WAC Representations and Warranties. WAC, as a material inducement to
SONTECH to enter into this Agreement and to consummate the transactions
contemplated by this Agreement, makes the following representations and
warranties to SONTECH, which will be true and correct in all material respects
at the Effective Time:
(a) Security Holders. The stockholders listed on Exhibit "A" (incorporated
herein by reference) are the only owners, of record and beneficially, of all
issued and outstanding WAC Common Stock shares.
(b)Financial Statements. WAC has given SONTECH audited financial statements
as of June 30, 2000, including balance sheets, income statements, and
cash-flow statements (collectively "Financial Statements").
To the best of WAC's knowledge and belief, these Financial Statements fairly
and accurately represent WAC's financial condition as of the date thereof and
the consolidated results of its operations for the period covered. To the best
of WAC's knowledge and belief, these Financial Statements have been prepared
in accordance with generally accepted accounting principles ("GAAP"),
consistently applied, except as otherwise stated therein; its books and
records, whether financial or other, are in all material respects complete,
correct, and properly maintained in accordance with good business and
accounting practices.
(c)Undisclosed Liabilities. Except as set forth in Schedule 1, at the
Effective Time, and since the date of the Statements, to the best of WAC's
knowledge and belief, WAC's business has been operated in the ordinary course
and
(i) WAC is aware of no material liabilities or obligations of any nature,
whether fixed, contingent, matured, or unmatured, which are not shown or
otherwise disclosed in the Financial Statements, except for liabilities and
obligations arising in the ordinary course of business, none of which are
materially adverse; and
(ii) to the best of WAC's knowledge and belief, no reserves have been
established by WAC and, therefore, are not set forth in the Financial
Statements.
(d)Absence of Changes. Except as set forth in Schedule 2, since the Financial
Statements' preparation date, to the best of WAC's knowledge and belief, the
business of WAC has been operated in the ordinary course and there has not
been:
(i)any material adverse change in the company's condition (financial or
otherwise), assets, liabilities, earnings, net worth, business or prospects
over and for this period, in the aggregate, or at any specific time during the
period;
(ii)any damage, destruction, or loss (whether covered by insurance or not)
materially adversely affecting WAC or its businesses;
(iii)any declaration, set-aside, or payment of any dividend or other
distribution with respect to any WAC capital stock shares, or any direct or
indirect redemption, purchase, or other acquisition of any such stock;
(iv)any stock issuance or sale by WAC or agreement to sell any of its
securities; or
(v)any statute, rule, regulation, or order adopted (including orders of
regulatory authorities with jurisdiction over WAC or its business) which
materially adversely affects WAC or its business affairs.
(e)Litigation and Claims. Except as set forth in Schedule 3, or in the
Financial Statements, WAC is unaware of any material actions, suits, claims,
investigations, legal proceedings, administrative proceedings, or arbitration
proceedings pending or threatened against WAC, its assets or business, whether
at law or in equity, before or by any federal, state, municipal, local,
foreign, or other governmental department, commission, board, bureau, agency,
or other instrumentality. Moreover, WAC does not know of any threat of such
litigation or of any basis for any such action, suit, claim, investigation, or
proceeding.
(f)Due Organization and Qualification. WAC is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Delaware. It is qualified to do business and is in good standing in each
state where it is required to be so qualified and where such qualification is
material to its business. WAC has the power to own its properties and assets
and to carry on its business as such is now presently conducted. The
Certificate of Incorporation and Bylaws of WAC that are to be in effect on the
Effective Time, have been delivered to SONTECH and are made a part hereof.
(g)Tax Matters. Except as set forth in Schedule 5, WAC has filed all federal,
state, and local tax or related returns and reports due or required to be
filed by appropriate law or regulation. The filed reports accurately and
materially reflect in all respects the tax amounts. WAC has paid all amounts
of taxes or assessments which would be delinquent if not paid as of this
Agreement's date, other than those taxes or charges that are being contested
in good faith or that have not yet been finally determined.
(h)Material Agreements and Employment Contracts. Schedule 6 contains a true
and complete list (with brief descriptions) of all written or oral contracts,
agreements (including employment agreements), mortgages, obligations,
understandings, arrangements, restrictions, and other instruments to which WAC
is a party or by which WAC or its assets may be bound. True and correct
copies of all items set forth on Schedule 6 have been or will be made
available to SONTECH prior to Closing. Except as set forth in Schedule 6,
there are no "employee pension benefit plans" as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended
(plans to which WAC and its Subsidiaries, if any, or any of their ERISA
Affiliates, contributes or is obligated to make payments or meet any liability
("WAC Pension Benefit Plans"), covering employees (or former employees), that
are maintained or contributed to by WAC, any of its subsidiaries, or any of
their ERISA Affiliates (as hereinafter defined)). For purposes of this
Agreement, "ERISA Affiliate" shall mean any person (as defined in Section 3(9)
of ERISA) that is a member of any group of persons described in Section
414(b), (c), (m) or (o) of the Code, which includes the referenced person or
its Subsidiaries. No event has occurred (whether with or without notice,
lapse of time, or the happening or occurrence of any other event) which would
constitute a default under any of the agreements set forth in Schedule 6.
(i)Title to Property and Related Matters. WAC has good and marketable title
to all properties, interests in properties, and assets, whether real,
personal, or mixed, of any kind or character, that are reflected as being
owned by it on the Financial Statements or that have been acquired after the
Financial Statements' effective date. Such title is free and clear of any
liens or encumbrances, except
(i) those to which the Financial Statements refer,
(ii) those set forth in Schedule 7, and
(iii) liens for current taxes not yet delinquent.
Except as set forth in Schedule 7, and except for matters that may arise in
the ordinary course of business, WAC's assets are in good operating condition
and repair. To the best of knowledge of WAC, there does not exist any
condition that would materially interfere with the use of any such asset in
the ordinary course of WAC's business.
(j)Corporate Records. WAC's corporate documents, records, and minute books
are complete and correct. SONTECH shall have the right to review all
corporate records of WAC prior to the Effective Time.
(k)Licenses, Trademarks and Trade Names. Schedule 8 contains a true and
complete list of all licenses and all trademarks, trade names, service marks,
copyrights, know-how, patents, and applications for any of the foregoing owned
by or registered in WAC's name. There are no pending or threatened claims or
litigation against WAC that contest this right to use any of the trademarks,
trade names, and/or know-how, that contest the validity of any of the
licenses, copyrights, and patents (as listed on Schedule 8), or that assert
the misuse of any such asset, and there has never been any such claim or
litigation.
(l)Corporate Authority. WAC is authorized to enter into this Agreement and
has taken all corporate action necessary to authorize this Agreement's
execution, full performance, and general consummation of the transactions
contemplated herein. The execution, delivery, and performance of this
Agreement by WAC will not be in conflict with or constitute a default under
any provisions of applicable law, WAC's Certificate of Incorporation or
Bylaws, or any agreement or instrument to which WAC is a party or by which it
or its assets are otherwise bound.
(m)Binding Obligation of WAC. This Agreement constitutes a valid and binding
agreement by WAC, enforceable in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, moratorium,
and other similar laws relating to, limiting, or affecting the enforcement of
creditors' rights generally; and neither the execution and delivery of this
Agreement, the consummation by WAC of the transactions contemplated hereby,
nor the compliance with any provisions hereof, will violate any statute, law,
rule, regulation, order, writ, injunction, or decree of any court or
governmental authority. Further, performance will not violate or conflict
with or constitute a default under (or give rise to any right of termination,
cancellation, or acceleration under) the terms, conditions or provisions of
any note, bond, lease, mortgage, obligation, agreement, understanding,
arrangement, or restriction of any kind to which WAC is a party or by which
WAC or its properties may otherwise be bound.
(n)Capitalization. The authorized capitalization of WAC is as set forth in
the Financial Statements. Except as set forth in said Schedules 2 or 9, there
are no outstanding or presently authorized securities, warrants, preemptive
rights, subscription rights, options or related commitments of any nature to
issue any of WAC's securities which are not reflected in the Financial
Statements or in Schedules 2 or 9.
(o)Full Disclosure. WAC has, and at the Effective Time will have, disclosed
to SONTECH all known events, conditions, and facts that materially affect its
business and prospects. WAC has not and will not have, at the Effective Time,
withheld disclosure of any events, conditions, or facts of which it may have
knowledge, or have had reasonable grounds to know, may materially adversely
affect its business and prospects.
(p)Finders or Brokers. Except as set forth in Schedule 6, neither WAC nor any
Subsidiary of WAC has employed any investment banker, broker, finder, or
intermediary in connection with the transactions contemplated hereby who might
be entitled to a fee or any commission, the receipt of which is conditioned
wholly or partly upon the Reorganization's consummation.
(q)Employment Agreements. WAC has entered into no employment agreements,
except those identified on Schedule 6.
(r)Share Ownership. To the best knowledge of WAC, the shares of WAC Common
Stock are owned, of record and beneficially, as specified on Exhibit "A", free
and clear of all liens and encumbrances of any kind and nature, and have not
been sold, pledged, assigned, or otherwise transferred, except pursuant to
this Agreement.
(s)Approvals Required. To the best WAC 's knowledge, no approval,
authorization, consent, order, or other action of, or filing with, any person,
firm, corporation, or any court is required in connection with the execution
and delivery of this Agreement by WAC or the consummation of the transactions
described herein,
(i)except as disclosed herein; and
(ii)except to the extent that the parties are required to obtain the
approval of any governmental authority or administrative agency, or to file
reports in accordance with relevant regulations under federal and state
securities and tax laws.
3.02.SONTECH Representations and Warranties. SONTECH, as a material
inducement to WAC to enter into this Agreement and to consummate the
transactions contemplated by this Agreement, makes the following
representations and warranties to WAC, which will be true and correct in all
material respects at the Effective Time:
(a)Shares of SONTECH Common Stock. The New Certificates to be delivered to
WAC's shareholders at Closing will be valid and legally issued shares of
SONTECH Investment Common Stock, free and clear of all liens, encumbrances,
and preemptive rights, and will be both fully-paid and non-assessable.
(b)Due Authorization and Qualification. This Agreement has been duly
authorized, executed, and delivered by SONTECH, and constitutes a legal,
valid, and binding obligation of SONTECH, enforceable in accordance with the
Agreement's terms; no consent of any federal, state, municipal, or other
governmental authority is required by SONTECH for the execution, delivery or
performance of this Agreement by SONTECH. No consent of any party to any
contract or agreement to which SONTECH is a party or by which any of their
respective property or assets are subject is required for the execution,
delivery, or performance of this Agreement by SONTECH.
(c)Financial Statements. SONTECH has given WAC audited financial statements as
of June 30, 2000, including balance sheets, income statements, and cash-flow
statements (collectively "Statements"). To the best of WAC's knowledge and
belief, these Statements fairly and accurately reflect SONTECH's financial
condition as of the dates thereof and the results of operations for the
periods reflected therein. To the best of WAC's knowledge and belief, these
Statements have been prepared in accordance with generally accepted accounting
principles (GAAP), consistently applied, except as otherwise stated therein;
and its books and records, whether financial or other, are in all material
respects complete, correct, properly maintained in accordance with good
business and accounting practices.
(d)Undisclosed Liabilities. Except as set forth in Schedule 10, at the
Effective Time, and since the date of the Statements, to the best of SONTECH's
knowledge and belief, SONTECH's business has been operated in the ordinary
course and
(i) SONTECH is aware of no material liabilities or obligations of any
nature, whether fixed, contingent, matured, or unmatured, which are not shown
or otherwise disclosed in the Statements; and
(ii) all reserves established by SONTECH and set forth in the Statements
are adequate, and there are no material loss contingencies (as that term is
used in Statement of Financial Accounting Standards No. 5 of the Financial
Accounting Standards Board) which are not adequately provided for.
(e)Absence of Changes. Except as set forth in Schedule 11, since the
Statements' preparation date, to the best of SONTECH's knowledge and belief,
the business of SONTECH has been operated in the ordinary course and there has
not been:
(i)any material adverse change in the company's condition (financial or
otherwise), assets, liabilities, earnings, net worth, business or prospects
over and for this period, in the aggregate, or at any specific time during the
period;
(ii)any damage, destruction, or loss (whether covered by insurance or not)
materially adversely affecting SONTECH or its businesses;
(iii)any declaration, set-aside, or payment of any dividend or other
distribution with respect to any SONTECH capital stock shares, or any direct
or indirect redemption, purchase, or other acquisition of any such stock;
(iv)any stock issuance or sale by SONTECH or agreement to sell any of its
securities; or
(v)any statute, rule, regulation, or order adopted (including orders of
regulatory authorities with jurisdiction over SONTECH or its business) which
materially adversely affects SONTECH or its business affairs.
(f)Litigation and Claims. Except as set forth in Schedule 12, or in the
Statements, SONTECH is unaware of any material actions, suits, claims,
investigations, legal proceedings, administrative proceedings, or arbitration
proceedings pending or threatened against SONTECH, its assets or business,
whether at law or in equity, before or by any federal, state, municipal,
local, foreign, or other governmental department, commission, board, bureau,
agency or other instrumentality. Moreover, SONTECH does not know of any
threat of such litigation or of any basis for any such action, suit, claim,
investigation, or proceeding.
(g)Due Organization and Qualification. SONTECH is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Nevada. It is qualified to do business and is in good standing in each
state where it is required to be so qualified and where such qualification is
material to its business. SONTECH has the power to own its properties and
assets and to carry on its business as such is now presently conducted. The
Certificate of Incorporation and Bylaws of SONTECH that are to be in effect on
the Effective Time, have been delivered to SONTECH and are made a part hereof.
(h)Tax Matters. SONTECH has filed all federal, state, and local tax or
related returns and reports due or required to be filed by appropriate law or
regulation. The filed reports accurately and materially reflect in all
respects the tax amounts due and owing. SONTECH has paid all amounts of taxes
or assessments which would be delinquent if not paid as of this Agreement's
date, other than those taxes or charges that are being contested in good faith
or that have not yet been finally determined.
(i)Breach of Agreements. SONTECH has not breached, and SONTECH is not aware
of any pending or threatened claims or any legal bases for claims that SONTECH
has breached, any contract or other agreement; nor is it aware of an event
which, with the passing of time, would constitute a breach of any of the terms
or conditions of any agreements, contracts, or commitments to which SONTECH is
a party or by which SONTECH or its assets are bound. SONTECH's execution,
delivery, and performance of this Agreement will not be in conflict with or
constitute a default under any provisions of applicable law, SONTECH's
Certificate of Incorporation, its Bylaws, or any agreement or instrument to
which SONTECH is a party or by which it or its assets are bound.
(j)Capitalization. The authorized capitalization of SONTECH is set forth in
the Statements and in Schedule 17. Except as so set forth, there are no
outstanding or presently authorized securities, warrants, preemptive rights,
subscription rights, options, or related commitments of any nature to issue
any of SONTECH's securities which have not been reflected therein. All
SONTECH outstanding shares of capital stock have been duly authorized, validly
issued, and are fully paid and non-assessable; all such shares were issued in
compliance with all applicable federal and state securities laws. Except as
set forth in the Statements, or in Schedule 15, and except for the issuances
of securities contemplated by this Agreement between SONTECH and WAC with
respect to the acquisition of WAC by SONTECH, there are no outstanding or
presently authorized securities, warrants, preemptive rights, subscription
rights, options, or related commitments of any nature to issue any of
SONTECH's securities.
(k)Full Disclosure. SONTECH has, and at the Effective Time will have,
disclosed to WAC all events, conditions, and facts materially affecting the
business and prospects of SONTECH; SONTECH has not and will not have, at the
Effective Time, withheld disclosure of any events, conditions, and facts which
it may have knowledge of, or have reasonable grounds to know of, that may
materially or adversely affect the business and prospects of SONTECH.
(l)Title to Property and Related Matters. SONTECH has good and marketable
title to all properties, interests in properties, and assets, whether real,
personal, or mixed, of any kind or character, that are reflected as being
owned by it on the Financial Statements or that have been acquired after the
Financial Statements' effective date. Such title is free and clear of any
liens or encumbrances, except
(i) those to which the Financial Statements refer,
(ii) those set forth in Schedule 14, and
(iii) liens for current taxes not yet delinquent.
Except as set forth in Schedule 14, and except for matters that may arise in
the ordinary course of business, SONTECH'S assets are in good operating
condition and repair. To the best of knowledge of SONTECH, there does not
exist any condition that would materially interfere with the use of any such
asset in the ordinary course of SONTECH's or WAC'S respective businesses.
(m)Compliance, Governmental Authorization. Except as set forth in Schedule
14, SONTECH has complied in all respects with all federal, state, local, or
foreign laws, ordinances, regulations, and orders applicable to its business,
including, without limitation, federal and state securities laws applicable to
all offerings prior to the Effective Time. SONTECH has all federal, state,
local and foreign governmental licenses and permits material to and necessary
in the conduct of its business; such licenses, permits, and/or exemptions are
in full force and effect. SONTECH knows of no violations of any such
licenses, permits, or exemptions, and no proceedings are pending or threatened
to revoke or limit the use of such licenses, permits, or exemptions.
(n)Brokerage Fees. SONTECH has not incurred, nor will it incur, any liability
for brokerage or finder's fees or similar charges in connection with this
Agreement or with any of the transactions contemplated hereby.
(o)Public Statements. SONTECH will deliver to WAC's management any public
documents which report the completion of this transaction so that WAC's
management may review and, if acceptable, approve the descriptions contained
therein of SONTECH and the terms of the transactions accomplished by this
Agreement;
(p)Regulatory Filings. SONTECH will deliver to WAC's management, with a copy
to its counsel (at the addresses set forth herein), all reports, registration
statements, and other documents, as filed with the Securities and Exchange
Commission and or National Association of Securities Dealers, Inc.
(q)Material Agreements and Employment Contracts. Schedule 16 contains a true
and complete list (with brief descriptions) of all written or oral contracts,
agreements (including employment agreements), mortgages, obligations,
understandings, arrangements, restrictions, and other instruments to which
SONTECH is a party or by which SONTECH or its assets may be bound. True and
correct copies of all items set forth on Schedule 16 have been or will be made
available to WAC prior to Closing. Except as set forth in Schedule 16, there
are no "employee pension benefit plans" as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), as amended (plans
to which SONTECH and its Subsidiaries, if any, or any of their ERISA
Affiliates, contributes or is obligated to make payments or meet any liability
("SONTECH Pension Benefit Plans"), covering employees (or former employees),
that are maintained or contributed to by SONTECH, any of its subsidiaries, or
any of their ERISA Affiliates (as hereinafter defined). For purposes of this
Agreement, "ERISA Affiliate" shall mean any person (as defined in Section 3(9)
of ERISA) that is a member of any group of persons described in Section
414(b), (c), (m) or (o) of the Code, which includes the referenced person or
its Subsidiaries. No event has occurred which (whether with or without
notice, lapse of time or the happening or occurrence of any other event) would
constitute a default under any of the agreements set forth in Schedule 16.
(r)Corporate Records. SONTECH's corporate documents, records, and minute
books are complete and correct. WAC has the right to review all corporate
records of SONTECH prior to the Effective Time.
(s)Corporate Authority. SONTECH is authorized to enter into this Agreement and
has taken all corporate action necessary to authorize this Agreement's
execution and performance of the transactions contemplated herein. The
execution, delivery, and performance of this Agreement by SONTECH will not be
in conflict with or constitute a default under any provisions of applicable
law, SONTECH's Certificate of Incorporation, SONTECH's Bylaws, or any
agreement or instrument to which SONTECH is a party or by which it or its
assets are bound.
(t)Binding Obligation of SONTECH. This Agreement constitutes a valid and
binding agreement by SONTECH, enforceable in accordance with its terms except
as such enforcement may be limited by applicable bankruptcy, insolvency,
moratorium, and other similar laws relating to, limiting, or affecting the
enforcement of creditors' rights generally; and neither the execution and
delivery of this Agreement, the consummation by SONTECH of the transactions
contemplated hereby, nor the compliance with any provisions hereof, will
violate any statute, law, rule, regulation, order, writ, injunction, or decree
of any court or governmental authority. Further, performance will not violate
or conflict with or constitute a default under (or give rise to any right of
termination, cancellation, or acceleration under) the terms, conditions or
provisions of any note, bond, lease, mortgage, obligation, agreement,
understanding, arrangement, or restriction of any kind to which SONTECH is a
party or by which SONTECH or its properties may otherwise be bound.
ARTICLE IV
COVENANTS
4.01.Covenants of WAC. WAC, as a material inducement to SONTECH to enter into
this Agreement and consummate the transactions contemplated in this Agreement,
covenants, promises, and agrees to the following:
(a)Conduct of Business. Except as contemplated by this Agreement or as
expressly agreed to in writing by SONTECH, during the period from this
Agreement's date to the Effective Time, WAC will conduct its operations
according to its ordinary and usual course of business, consistent with past
practice, and will use all commercially reasonable efforts to preserve intact
its business organization, to keep available the services of its officers and
employees, and to maintain satisfactory relationships with registered
representatives, clearing firms, suppliers, customers, and others having
business relationships with it. It will take no action that would adversely
affect its ability to consummate the Reorganization or the other transactions
contemplated hereby.
(b)No Solicitation. WAC agrees that subsequent to the execution date hereof,
it shall not, and shall not authorize or permit its directors, officers,
employees, agents or representatives to, directly or indirectly, solicit,
initiate, facilitate, or encourage (including by way of furnishing or
disclosing information) any merger, consolidation, or other business
combination involving WAC, the acquisition of all or any substantial portion
of the assets or capital stock of WAC, or inquiries or proposals concerning or
which may reasonably be expected to lead to, any of the foregoing (a "WAC
Transaction"). Neither shall it negotiate, explore, or otherwise communicate
in any way with any third party (other than SONTECH or its affiliates) with
respect to any WAC Transaction or enter into any agreement, arrangement, or
understanding requiring it to abandon, terminate or fail to consummate the
Reorganization or any other transactions contemplated by this Agreement. WAC
is and shall be obligated to immediately advise SONTECH of any inquiries or
proposals relating to an WAC Transaction.
(c)WAC Actions. WAC shall not take, or omit to take, any action within its
reasonable control that would
(i) cause a breach of any representation or warranty of WAC contained in
this Agreement such that the Closing conditions set forth in Section 4.02(a)
would not be satisfied; or
(ii) prevent fulfillment of any conditions in Article IV.
4.02.Covenants of SONTECH. SONTECH, as a material inducement to WAC to enter
into this Agreement and consummate the transactions contemplated in this
Agreement, covenants, promises, and agrees to the following:
(a)Conduct of Business. Except as contemplated by this Agreement or as
expressly agreed to in writing by WAC, during the time period from this
Agreement's date to the Effective Time, SONTECH will conduct its operations
according to its ordinary and usual course of business, consistent with past
practice, and will use all commercially reasonable efforts to preserve intact
its initial capital, to keep available the services of its officers and
employees, and to maintain satisfactory relationships with existing and
prospective suppliers, customers, registered representatives, clearing firms,
and others having existing or prospective business relationships with SONTECH.
It will take no action that would adversely affect its ability to consummate
the Reorganization or the other transactions contemplated hereby.
(b)No Solicitation. SONTECH agrees that subsequent to the execution date
hereof, it shall not, and shall not authorize or permit its directors,
officers, employees, agents or representatives to, directly or indirectly,
solicit, initiate, facilitate, or encourage (including by way of furnishing or
disclosing information) any merger, consolidation, or other business
combination involving SONTECH, the acquisition of all or any substantial
portion of the assets or capital stock of SONTECH, or inquiries or proposals
concerning or which may reasonably be expected to lead to, any of the
foregoing (a "SONTECH Transaction"). Neither shall it negotiate, explore, or
otherwise communicate in any way with any third party (other than WAC or its
affiliates) with respect to any SONTECH Transaction or enter into any
agreement, arrangement, or understanding requiring it to abandon, terminate or
fail to consummate the Reorganization or any other transactions contemplated
by this Agreement. SONTECH is and shall be obligated to immediately advise WAC
of any inquiries or proposals relating to a SONTECH Transaction.
Notwithstanding the foregoing, in the event that there is an unsolicited
written proposal for any merger, consolidation, or other business combination
primarily involving the securities brokerage business or inquiries or
proposals concerning any of the foregoing or which or may reasonably be
expected to lead to any of the foregoing (a "Broker-Dealer Transaction") from
a bona fide financially capable third party or member of the National
Association of Securities Dealers, Inc., SONTECH may furnish non-public
information to, and negotiate with, such third party only if
(i) SONTECH shall have provided two business days' written notice to WAC
of such proposal and WAC approves the proposed Broker-Dealer Transaction, or
(ii) SONTECH's Board of Directors, after having received advice from its
investment banker or bankers and outside counsel to SONTECH, shall have
determined that failure to take the proposed action, furnish such information,
or to commence negotiations would be inconsistent with such Board of
Directors' fiduciary duties.
(c)SONTECH Actions. SONTECH shall not take, or omit to take, any action
within its reasonable control, which would
(i) cause a breach of any representation or warranty of WAC contained in
this Agreement such that the Closing conditions set forth in Section 7.02(a)
would not be satisfied; or
(ii) prevent fulfillment of any conditions in Article VII.
(d)Agreement to Vote. The majority of owners of all of the shares of SONTECH
Common Stock shall agree to vote their shares of SONTECH Common Stock in favor
of approving this Agreement and the transactions contemplated hereby and not
to approve or support any competing transaction.
4.03.Covenants of SONTECH and WAC. SONTECH and WAC, as mutual material
inducements to enter into this Agreement and consummate the transactions
contemplated herein, promise, covenant, and agree, each with the other, to the
following:
(a)Access to Information. From this Agreement's date until the Effective
Time, WAC will give SONTECH and its authorized representatives (including
counsel, consultants, accountants, auditors, broker-dealer regulatory counsel,
and broker-dealer regulatory agents) reasonable access, in light of this
Agreement's terms, and during normal business hours, to all WAC facilities,
personnel, and operations. WAC will also grant reasonable access to all of
its books and records; it will permit SONTECH to make such inspections as
SONTECH may reasonably require or request, from time to time, (including,
without limitation, any agreements for the issuance of securities or
agreements with potential registered representatives deemed necessary by
SONTECH) and it will cause its officers and counsel to furnish SONTECH with
such financial, operating data, and other information with respect to the
business carried on and proposed to be carried on by WAC.
From this Agreement's date until the Effective Time, SONTECH will give WAC and
its authorized representatives (including counsel, consultants, accountants,
auditors, broker-dealer regulatory counsel, and broker-dealer regulatory
agents) reasonable access, in light of this Agreement's terms, and during
normal business hours, to all SONTECH facilities, personnel, and operations.
SONTECH will also grant reasonable access to all of its books and records; it
will permit WAC to make such inspections as WAC may reasonably require or
request, from time to time, (including, without limitation, any agreements for
the issuance of securities or agreements with potential registered
representatives deemed necessary by SONTECH) and it will cause its officers
and counsel, and those of its Subsidiaries, to furnish SONTECH with such
financial, operating data, and other information with respect to the business
and properties of SONTECH as WAC may from time to time reasonably request.
(b)Commercially Reasonable Efforts. Other Efforts. Subject to this
Agreement's terms and conditions, WAC and SONTECH shall use all commercially
reasonable efforts to take, or cause to be taken, all other actions and do, or
cause to be done, all other things necessary, proper, or appropriate, under
all applicable laws and regulations, to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation,
(i) filing the appropriate notification and request for approval of change
of control with the National Association of Securities Dealers ("NASD") and
using all commercially reasonable efforts to respond as promptly and as
practicable to all inquiries received from the NASD for additional information
or documentation, and
(ii) obtaining all necessary third-party consents, approvals, or waivers,
which are required in order to consummate the Reorganization and the other
transactions, contemplated hereby.
To each party's knowledge, Schedule 6 lists all such material consents,
approvals, or waivers that must be obtained by WAC and SONTECH, respectively.
SONTECH shall not take any action that would cause WAC to fail to perform its
obligations hereunder. WAC shall not take any action that would cause SONTECH
to fail to perform its obligations hereunder.
(c)Public Announcements. Before issuing any press release or otherwise making
any public statement with respect to the Reorganization, or any of the other
transactions contemplated hereby, WAC and SONTECH will consult with, and
obtain the consent of, each other as to the statement's form and substance.
Neither party shall issue any such press release or make any such public
statement prior to obtaining such consent, except as may be required by law or
pursuant to any order of any court, governmental agency, tribunal, or
regulatory authority.
(d)Notification of Certain Matters. WAC and SONTECH shall each give prompt
notice to the other party of any notice of, or other communication relating
to, a default or event which, with notice, lapse of time, or both, would
become a default, received by either party subsequent to this Agreement's date
and prior to the Effective Time, where such a notice could be reasonably
expected to have a material adverse effect upon either party. Each party
shall give the other prompt notice of
(i) any notice or other communication from a third party alleging that the
consent of such third party is or may be required in connection with the
Reorganization or any other transactions contemplated by this Agreement, or
(ii) any notice or other communication from any third party alleging and
act or thing which could be reasonably expected to have a material adverse
effect upon WAC or a material adverse effect upon SONTECH.
(e)Expenses. Except as set forth in Section 7.05, WAC and SONTECH shall each
bear their respective expenses incurred in connection with the Reorganization,
including, without limitation, the preparation, execution, and performance of
this Agreement and the transactions contemplated hereby; this provision also
applies to all fees and expenses of investment bankers, finders, brokers,
agents, representatives, counsel and accountants.
(f)Failure to Take Action. Neither WAC nor SONTECH will take any action, or
fail to take any action, if such action (or failure to act) would reasonably
be expected to cause the Reorganization to fail to qualify as a reorganization
within the meaning of Code Section 368(a)1)(B).
(g)Exhibits, Closing Statements and Schedules. WAC and SONTECH agree that, as
promptly as possible upon this Agreement's execution, they will negotiate in
good faith, finalize, and attach all necessary exhibits to this Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO PARTIES' OBLIGATIONS
5.01.Conditions Precedent to WAC's Obligations. All of WAC's obligations
under this Agreement are subject to the fulfillment, prior to or on the
Effective Time, of each of the following conditions:
(a)Accuracy of Representations and Warranties. SONTECH's representations and
warranties (contained in this Agreement or in any certificate or document
delivered to WAC pursuant to the provisions hereof) must be true in all
material respects at and as of the Effective Time as though such
representations and warranties were made at and as of such time.
(b)Compliance with Covenants. SONTECH must have performed and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with prior to or at the Effective Time.
(c)Form of New Certificates. The New Certificates delivered to the
shareholders of WAC and their respective counsel shall conform in all material
respects to the form of such New Certificates attached as Exhibit "B."
(d)Approval by Counsel. SONTECH shall have delivered all exhibits and
schedules required herein to WAC or its stockholders, as the case may be, and
such exhibits and schedules shall have been reasonably acceptable to WAC, its
stockholders, and their respective counsel.
(e)Opinion of Counsel. SONTECH shall have delivered to WAC an opinion of
SONTECH's counsel in the form of Exhibit "E", dated the Effective Time, to the
effect that:
(i) SONTECH is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada;
(ii) SONTECH has the corporate power to carry on its respective businesses
as they are now being or have been conducted;
(iii) This Agreement has been duly authorized, executed and delivered by
SONTECH; it is a valid and binding obligation of SONTECH, enforceable in
accordance with its terms, except to the extent that enforcement is limited by
applicable bankruptcy, reorganization, insolvency, moratorium, or similar laws
affecting creditors' rights and remedies generally or by general equity
principles (and excepting specific performance as a remedy);
(iv) SONTECH has taken all corporate action necessary for its due
performance under this Agreement;
(v) The execution and delivery by SONTECH of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with or
result in a breach of any provisions of, SONTECH's Certificate of
Incorporation or Bylaws; neither will such actions, to the best of such
counsel's knowledge after inquiry and based upon information provided by
SONTECH, constitute a default or give rise to a rights of termination,
acceleration, or cancellation under any agreement to which SONTECH or any of
its properties are bound. Execution and delivery will not violate any court
order, writ, or decree of injunction applicable to SONTECH;
(vi) Counsel does not know, after inquiry, of any actions, suits, or other
legal proceedings or investigations pending, threatened against, relating to,
or materially adversely affecting SONTECH;
(vii) The authorized and, to such counsel's best knowledge after inquiry,
outstanding capitalization of SONTECH is as set forth in Section 5.03(j); all
of the outstanding shares of SONTECH's capital stock are validly issued,
fully-paid, and non-assessable, without preemptive rights. To the best of
counsel's knowledge after inquiry, there are no outstanding subscriptions,
options, rights, warrants, or other transfer agreements (whether oral or
written), other than as set forth in Section 3.02(j) of this Agreement.
(f)Officer's Certificate. There shall have been delivered to WAC an officer's
certificate, executed by SONTECH'S president to the effect that all of
SONTECH's representations and warranties as set forth herein are true and
complete in all material respects as of the Effective Time, and that SONTECH
has complied in all material respects with the Closing Time's required (by the
Closing Time) covenants and agreements (as set forth herein) substantially in
the form of Exhibit "G-1" hereto.
(g)Closing Financial Statements. SONTECH shall deliver to WAC unaudited
financial statements (the "Closing Statements") dated no earlier than five
days prior to the Effective Time. The Closing Statements shall fairly and
accurately reflect SONTECH's consolidated financial condition as of the dates
thereof. The Closing Statements shall fairly and accurately reflect the
results of operations for the period reflected therein, and they shall reflect
no materially adverse change in the financial condition or results of
operations derived from the unaudited Statements. The Closing Statements
shall be prepared in accordance with generally accepting accounting
principles, consistently applied, except as otherwise stated therein.
5.02.Conditions Precedent to Obligations of SONTECH. All obligations of
SONTECH under this Agreement are subject to the fulfillment, prior to or on
the Effective Time, of each of the following conditions:
(a)Accuracy of Representations and Warranties. WAC's representations and
warranties (contained in this Agreement or in any certificate or document
delivered to SONTECH pursuant to the provisions hereof) must be true in all
material respects at and as of the Effective Time as though such
representations and warranties were made at and as of such time.
(b)Compliance with Covenants. WAC shall have performed and complied with all
covenants, agreements, and conditions required by this Agreement to be
performed or complied with by each of them prior to or at the Effective Time.
(c)Approval by Counsel. WAC shall have delivered all of the exhibits and
schedules required herein to SONTECH, and such exhibits and schedules shall
have been reasonably acceptable to SONTECH and its counsel.
(d)Opinion of Counsel. WAC shall have delivered to SONTECH an opinion of
WAC's counsel, in the form of Exhibit "F" hereto, dated the Effective Time, to
the effect that:
(i) WAC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware;
(ii) WAC has the corporate power to carry on its respective businesses as
they are now being or have been conducted;
(iii) This Agreement has been duly authorized, executed and delivered by
WAC; it is a valid and binding obligation of WAC, enforceable in accordance
with its terms, except to the extent that enforcement is limited by applicable
bankruptcy, reorganization, insolvency, moratorium, or similar laws affecting
creditors' rights and remedies generally or by general equity principles (and
excepting specific performance as a remedy);
(iv) WAC has taken all corporate action necessary for its due performance
under this Agreement;
(v) The execution and delivery by WAC of this Agreement and the
consummation of the transactions contemplated hereby will not conflict with or
result in a breach of any provisions of, WAC's Certificate of Incorporation or
Bylaws; neither will such actions, to the best of such counsel's knowledge
after inquiry and based upon information provided by WAC, constitute a default
or give rise to a rights of termination, acceleration, or cancellation under
any agreement to which WAC or any of its properties are bound. Execution and
delivery will not violate any court order, writ, or decree of injunction
applicable to WAC;
(vi) Counsel does not know, after inquiry, of any actions, suits, or other
legal proceedings or investigations pending, threatened against, relating to,
or materially adversely affecting WAC;
(vii) The authorized and, to such counsel's best knowledge after inquiry,
outstanding capitalization of WAC is as set forth in Section 5.03(j); all of
the outstanding shares of WAC's capital stock are validly issued, fully-paid,
and non-assessable, without preemptive rights. To the best of counsel's
knowledge after inquiry, there are no outstanding subscriptions, options,
rights, warrants, or other transfer agreements (whether oral or written),
other than as set forth in Section 3.01(n) of this Agreement.
(e)Officers' Certificate. There shall have been delivered to SONTECH a
certificate executed by WAC's president to the effect that all of WAC's
representations and warranties as set forth herein are true and complete in
all material respects as of the Effective Time, and that WAC has complied in
all material respects with the required (by the Closing Time) covenants and
agreements (as set forth herein) substantially in the form of Exhibit "G-2"
hereto.
(f)Closing Financial Statements. WAC shall deliver to SONTECH unaudited
financial statements (the "Closing Financial Statements") dated no earlier
than five days prior to the Effective Time. The Closing Financial Statements
shall fairly and accurately reflect WAC's consolidated financial condition as
of the dates thereof. The Closing Financial Statements shall fairly and
accurately reflect the results of operations for the period reflected therein,
and they shall reflect no material adverse change in the financial condition
or results of operations from the unaudited Financial Statements. The Closing
Statements shall be prepared in accordance with generally accepting accounting
principles, consistently applied, except as otherwise stated therein.
5.03.Conditions Precedent to Obligations of WAC and SONTECH. Each party's
respective obligations to effect the Reorganization shall be subject to the
fulfillment at or prior to the Closing of each of the following conditions:
(a)WAC Stockholder Approval. The approval of the Reorganization, including
the execution and performance of this Agreement and all transactions
contemplated hereby, by a majority of the outstanding shares of WAC Common
Stock shall have been obtained.
(b)Certain Proceedings. No writ, order, decree, or injunction of a court of
competent jurisdiction or governmental entity shall have been entered against
SONTECH which prohibit or restrict the consummation of the Reorganization, and
no similar such proceeding shall have been threatened or commenced by any
governmental entity which seek to prohibit or restrict the consummation of the
Reorganization.
ARTICLE VI
CLOSING
6.01.Time and Place. Subject to the provisions of Articles V and VII, the
Reorganization's closing (the "Closing") shall take place at the offices of
SONTECH, or at such other place as the parties may agree upon, as soon as
practicable but in no event later than 9:30 A.M., local time, on the second
business day after October 17, 2000, or the date upon which each of the
conditions set forth in Article V have been satisfied or waived by the party
or parties entitled to the benefit of such conditions, whichever first occurs;
or at such other place, at such other time, or on such other date as WAC and
SONTECH may mutually agree. The date on which the Closing actually occurs is
herein referred to as the "Closing Date."
6.02.Documents at Closing. At the Closing, the following transactions shall
occur, and all such transactions will be deemed to occur simultaneously:
(a)Documents by WAC. WAC will deliver, or cause to be delivered, to SONTECH
the following:
(i) stock certificates for the shares of WAC common stock being exchanged
pursuant to this Agreement, duly endorsed or with stock powers attached in
blank but subject to a customary restrictive stock legend.
(ii) a certificate of the president and secretary of WAC to the effect
that all representations and warranties made by WAC under this Agreement are
true and correct as of the Effective Time, as though originally given to
SONTECH on said date, attaching thereto the following:
(A)certified copy of resolutions of WAC authorizing this Agreement;
(B)WAC Certificate of Incorporation, as amended to the Closing Time;
(C)WAC Bylaws, as amended to the Closing Time;
(D)a Certificate from the Delaware Secretary of State dated at or about
the date of Closing that WAC is in good standing under the laws of said state;
(iii) the opinions of WAC's counsel set forth herein; and
(iv) other such instruments, documents, and certificates, if any, as are
required to be delivered pursuant to this Agreement's provisions, or which may
be reasonably requested in furtherance of this Agreement's provisions.
(b)Documents by SONTECH. SONTECH will deliver, or cause to be delivered, to
WAC the following:
(i) the New Certificates, in the form of Exhibit "B" hereto, representing
the shares of SONTECH Common Stock which SONTECH has agreed to deliver
pursuant to Section 1.01(a);
(ii) a certificate of the president and secretary of SONTECH, to the
effect that all representations and warranties of SONTECH made under this
Agreement are reaffirmed at the Effective Time, as though originally given to
Stockholder and SONTECH on said date attaching thereto the following:
(A)Certified copy of resolutions of SONTECH authorizing this Agreement;
(B)Certificate of Incorporation of SONTECH as amended to the Closing
Time;
(C)Bylaws of SONTECH as amended to the Closing Time;
(D)a Certificate from the Nevada Secretary of State dated at or about the
date of Closing that SONTECH is in good standing under the laws of said state;
(iii) the opinions of SONTECH's counsel set forth herein; and
(iv) unaudited financial statements of SONTECH; and
(v) such other instruments and documents, if any, that are required to be
delivered pursuant to this Agreement's provisions, or which may be reasonably
requested in furtherance of this Agreement's provisions.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.01.Termination. This Agreement may be terminated and the Reorganization may
be abandoned at any time prior to the Effective Time, whether before or after
approval by the stockholders of WAC or SONTECH:
(a)Mutual Consent. The Reorganization may be abandoned any time prior to the
Effective Time by mutual consent of the Boards of Directors of WAC and
SONTECH;
(b)Order of Judicial or Regulatory Authority. The Reorganization may be
abandoned at any time prior to the Effective Time by either WAC or SONTECH, if
any court of competent jurisdiction in the United States or other governmental
body in the United States, other than at the request of the parties, or any
affiliate of the parties, in seeking to terminate this Agreement pursuant to
this clause (b), shall have issued an order (other than a temporary
restraining order), decree, or ruling, or taken any other action restraining,
enjoining or otherwise prohibiting the Reorganization, and such order, decree,
ruling, or other action shall have become final and nonappealable.
7.02.Termination by WAC. This Agreement may be terminated, and the
Reorganization may be abandoned, by action of WAC's Board of Directors, at any
time prior to the Effective Time, before or after the approval by the
stockholders of WAC, if
(a) SONTECH shall have failed to comply in any material respect with any of
the covenants or agreements to be complied with or performed by SONTECH at or
prior to such date of termination that are contained in Articles V and VII of
this Agreement, or
(b) there exists a breach or breaches of any SONTECH representation or
warranty contained in this Agreement such that the Closing conditions (set
forth in Section 5.01) would not be satisfied; provided, however, that if such
breach or breaches are capable of being cured prior to the Effective Time,
such breaches shall not have been cured within 15 calendar days of delivery to
SONTECH of written notice of such breach or breaches.
7.03.Termination by SONTECH. This Agreement may be terminated and the
Reorganization may be abandoned at any time prior to the Effective Time,
before or after the approval by SONTECH's stockholders, by action of SONTECH's
Board of the Directors, if
(a) WAC shall have failed to comply in any material respect with any of the
covenants or agreements contained in this Agreement to be complied with or
performed by WAC at or prior to such date of termination, or
(b) there exists a breach or breaches of any representation or warranty of WAC
contained in this Agreement such that the Closing conditions set forth in
Section 5.02 would not be satisfied; provided, however, that if such breach or
breaches are capable of being cured prior to the Effective Time, such breaches
shall not have been cured within 15 calendar days of delivery to WAC of
written notice of such breach or breaches.
7.04.Procedure for Termination. In the event of termination and abandonment
of the Reorganization by WAC or SONTECH pursuant to this Article IX, written
notice thereof shall immediately be given to the other.
7.05.Effect of Termination and Abandonment. In the event of this Agreement's
termination and of the Reorganization's abandonment pursuant to this Article
IX, no party hereto (or any of its directors or officers) shall have any
liability or further obligation to any other party to this Agreement, except
that nothing herein shall relieve any party from liability for any breach of
this Agreement.
ARTICLE VIII
DISPUTE RESOLUTION
8.1.Agreement Disputes. In the event of a controversy, dispute, or claim
arising out of, in connection with, or in relation to the interpretation,
performance, nonperformance, validity, or breach of this Agreement or
otherwise arising out of, or in any way related to, this Agreement, including,
without limitation, any claim based on contract, tort, statute or constitution
(singly, an "Agreement Dispute" and collectively, "Agreement Disputes"), the
party asserting the Agreement Dispute shall give written notice to the other
party of the existence and nature of such Agreement Dispute. Thereafter, the
general counsels (or other designated representatives) of the respective
parties shall negotiate in good faith for a period no less than 60 days after
the date of the notice in an attempt to settle such Agreement Dispute. If
after such 60 calendar day period such representatives are unable to settle
such Agreement Dispute, any party hereto may commence arbitration by giving
written notice to all other party that such Agreement Dispute has been
referred to the American Arbitration Association for arbitration in accordance
with the provisions of this Article.
8.2.Arbitration in Accordance with American Arbitration Association Rules.
All Agreement Disputes shall be settled by arbitration in Salt Lake City,
Utah, before a single arbitrator in accordance with the rules of the American
Arbitration Association (the "Rules"). The arbitrator shall be selected by
the mutual agreement of all parties, but if they do not so agree within 20
days after the date of the notice of arbitration referred to above, the
selection shall be made pursuant to the Rules from the panels of arbitrators
maintained by the American Arbitration Association. The arbitrator shall be an
individual with substantial professional experience with regard to resolving
or settling sophisticated commercial disputes.
0.0.Xxxxx and Binding Awards. Any award rendered by the arbitrator shall be
conclusive and binding upon the parties hereto; provided, however, that any
such award shall be accompanied by a written opinion of the arbitrator giving
the reasons for the award. This provision for arbitration shall be
specifically enforceable by the parties and the decision of the arbitrator in
accordance therewith shall be final and binding, and there shall be no right
of appeal therefrom. The parties agree to comply with any award made in any
such arbitration proceedings that has become final in accordance with the
Rules, and agree to the entry of a judgment in any jurisdiction upon any award
rendered in such proceedings becoming final under the Rules.
8.4.Costs of Arbitration. In the award the arbitrator shall allocate, in his
or her discretion, among the parties to the arbitration all costs of the
arbitration, including, without limitation, the fees and expenses of the
arbitrator and reasonable attorneys' fees, costs, and expert witness expenses
of the parties. Absent such an allocation by the arbitrator, each party shall
pay its own expenses of arbitration, and the expenses of the arbitrator shall
be equally shared.
8.5.Settlement by Mutual Agreement. Nothing contained in this Article shall
prevent the parties from settling any Agreement Dispute by mutual agreement at
any time.
ARTICLE IX
OTHER MATTERS
9.01.The Closing. The Closing (the "Closing") shall take place upon such date
(the "Effective Time") as the parties hereto may mutually agree upon, but
shall be no later than October 17, 2000. The Closing shall take place at such
place as may be mutually agreed upon by the parties.
9.02.Survivability and Investigations. The respective representations and
warranties of WAC and SONTECH contained herein or in any certificates or other
documents delivered prior to or at the Closing shall not be deemed waived or
otherwise affected by any investigation made by any party hereto and shall not
survive the Closing.
9.03.Nature of Representations and Warranties. All of the parties hereto are
executing and carrying out the provisions of this Agreement in reliance upon
the representations, warranties, covenants, and agreements contained in this
Agreement or at the Closing of the transactions herein provided for, and any
investigation which they might have made or any other representations,
warranties, agreements promises or information, written or oral, made by the
other party or any other person shall not be deemed a waiver of any breach of
any such representation, warranty, covenant or agreement.
9.04.Further Assurances. At any time, and from time to time, after the
Closing, each party will execute such additional instruments and take such
action as may be reasonably requested by the other party to confirm or perfect
title to any property transferred hereunder or to otherwise carry out this
Agreement's intent and purposes.
9.05.Waiver of Compliance and Consents. Any failure of WAC, on the one hand,
or SONTECH, on the other hand, to comply with any obligation, covenant,
agreement, or condition herein may be waived by WAC or SONTECH, respectively,
only by a written instrument signed by the party granting such a waiver, but
such waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement, or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto,
such consent shall be given in writing in a manner consistent with the
requirements for a waiver of compliance as set forth in this Section 9.06.
9.06.Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person or sent
by prepaid first-class registered or certified U.S. mail, return receipt
requested, to the following addresses, or to such other addresses as are given
to other parties in the manner set forth herein:
SONTECH: SONTECH, INC.
00 Xxxxx Xxxx Xx., Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxx, President
WAC: XXXXXXXXXXXXXXX.XXX CORPORATION
0000 X. Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
With a copy to: Xxxxx X. Xxxxxxxxxxx, Esq.
Xxxxxxxxxxx and Xxxxxx, Inc.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
9.07.Interpretation. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the
agreement of the parties, and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement,
(a) the term "person" shall mean and include an individual, a partnership, a
joint venture, a corporation, a trust, an association, a company, an
unincorporated organization, a government or any department, political
subdivision, or agency thereof; and
(b) the term "Subsidiary" of any specified corporation shall mean any
corporation of which a majority of the outstanding securities having ordinary
voting power to elect a majority of the board of directors for that
corporation is directly or indirectly beneficially owned by such specified
corporation, or by any other person of which a majority of the equity
interests therein is, directly or indirectly, owned by such specified
corporation.
9.08.Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.09.Governing Law. This Agreement shall be governed by the laws of the State
of Nevada.
9.10.Binding Effect. This Agreement shall be binding upon the parties hereto
and shall inure to the benefit of the parties, their respective heirs,
administrators, executors, successors, and assigns.
9.11.Entire Agreement. This Agreement is the entire agreement of the parties,
covering everything agreed upon or understood in the transaction. There are
no oral promises, conditions, representations, understandings, interpretations
or terms of any kind as conditions or inducements to the execution hereof.
9.12.Severability. If any part of this Agreement is determined by a court of
competent jurisdiction to be unenforceable, the balance of the Agreement shall
remain in full force and effect.
9.13.Default Costs. In the event any party hereto must resort to legal action
to enforce any of the terms hereof, such party shall be entitled to collect
attorneys' fees and other costs from the party in default.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
Attest: SONTECH INC.
By: /s/ signature illegible By: /s/ Xxxxx X. Xxxxx
-------------------------------- ------------------------------
, Secretary Xxxxx X. Xxxxx, President
Attest: XXXXXXXXXXXXXXX.XXX CORPORATION
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxxx Xxxxxx
--------------------------------- -----------------------------
Xxxxx X. Xxxx , Secretary Xxxxx Xxxxxx, Chairman & CEO
Schedule 1
Liabilities of WAC Not Disclosed in Financial Statements
Pursuant to Section 3.01(c)
NONE
Schedule 2
Adverse Changes since the date of the Financial Statements
Pursuant to Section 3.01(d)
NONE
Schedule 3
Litigation
Pursuant to Section 3.01(e)
NONE
Schedule 4
Exceptions to Compliance with Laws and Regulations
NONE
Schedule 5
Exceptions with Respect to Tax Matters
Pursuant to Section 3.01(g)
NONE
Schedule 6
Material Agreements, Employment Contracts and Employee Benefit Plans
Pursuant to Sections 3.01(h), (p), and (q), and Section 4.03(b)
NONE
Schedule 7
Exceptions to Title to Properties and List of Real Property
Pursuant to Section 3.01(i)
NONE
Schedule 8
Licenses, Trademarks and Trade Names.
Pursuant to Section 3.01(k)
NONE
Schedule 9
WAC's Capitalization
500,000,000 common-stock shares authorized with 21,849,350 outstanding.
